Intelligence, Inc.

Just an hour north of the Mexican border, at the base of the cloud-capped Huachuca Mountains in southern Arizona, lies a military base with a long history of covert military action. In its early days as a military fort, it was the location of the capture of Geronimo, the last Apache warrior to resist the United States. More recently, Fort Huachuca housed the training of many of the interrogators who worked in the prisons of Cuba's Guantanamo Bay and Iraq's now infamous Abu Ghraib prison.

In 2003, just 237 interrogators graduated from the United States Army Intelligence Center, headquartered at the fort. Today, plans call for quadrupling the number of qualified interrogators to 1,000 a year by 2006 and the number of soldiers trained in basic intelligence skills to 7,000. This is an astronomical increase, far beyond the current capabilities of the center.

While military contracting for construction or weapons manufacturing is nothing new, the privatization of intelligence instruction is a new and rapidly expanding sector that came about less than four years ago. One estimate in Mother Jones magazine, compiled from interviews with military experts, suggests that as much 50 percent of the $40 billion given annually to the 15 intelligence agencies in the United States is now spent on private contractors.

James Bamford, the author of The Puzzle Palace (an expose of the National Security Agency which is now used as a textbook at the Defense Intelligence College), is worried about this new trend. "While there is nothing inherently wrong with the intelligence community working closely with private industry," he wrote in The New York Times, "there is the potential for trouble unless the union is closely monitored. Because the issue is hidden under heavy layers of secrecy, it is impossible for even Congress to get accurate figures on just how much money and how many people are involved."

In an interview, Bamford told us he is concerned about the cost of privatization. "After spending millions of dollars training people, taxpayers are having to pay them twice as much to return as rent-a-spies."

Among experts, especially those who have worked in the intelligence business, there is growing concern that privatization also means the government has less control over its own operations and that the costs of privatization may outweigh its benefits.

A Booming Business

Among the private contractors cashing in on the privatization boom is Virginia-based Anteon International Corp., which has grown tenfold in the last decade. The company has become one of the nation's primary contractors for intelligence sharing, intelligence training and video game warfare simulators. One of Anteon's offices is located on the Huachuca base itself, while the second sits a mile away on Main Street, in a bright, freshly-painted pink building, sandwiched between Enterprise Rent-A-Car, with whom it shares a parking lot, and Filiberto's Mexican restaurant.

Although Anteon first came into existence in 1976, its profits really began to soar 20 years later, when former investment banker Frederick Iseman bought the company assets for a mere $48 million. Today, Anteon's annual revenues exceed a billion dollars and its share price has jumped from its initial public offering of $18 to $36 in the last three years.

Iseman, who admits he knew nothing about military contracting before he bought the company (his other investments range from orange juice to waste management), says he realized he needed connections to expand on the business. So he recruited a group of highly-placed former military officials to his board, ranging from William Perry, former head of the Pentagon, to Hugh Shelton, chairman of the Joint Chiefs of Staff under Bill Clinton.