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found that NSA had not instituted required internal controls and ignored
laws and regulations, such as the Chief Financial Officers Act, necessary
to produce accurate financial statements. "The NSA FY 1997 financial
statements were materially incomplete and inaccurate," said the report.
"The financial statements omitted real property located at a field site, a
portion of Accounts Payable and a portion of operating expenses." This
was not the first time the Inspector General's Office had found NSA's
books out of order: in August 1996 it found similar inaccuracies.
The mismanagement left Minihan and NSA open to harsh criticism by
House committee members. The agency officials "cannot track allocations
for critical functions," the panel said in its report on the fiscal 1999
Intelligence Authorization Act. As a result, "Fences have been placed on
portions of the [NSA] budget with the prospect that a considerable
amount of money could be programmed for other intelligence community
needs if NSA does not develop strategic and business planning."
Even more humiliatingly, about the same time that the House report
was released, the Pentagon cut Minihan's direct lines to the Secretary of
Defense and the Chairman of the Joint Chiefs of Staff. In a plan
approved in late April 1998, Minihan and other senior NSA officials had
to first report through an assistant defense secretary several rungs down
the ladder, one responsible for command, control, communications, and
intelligence, or "C3I" in intelligence jargon.
Adding to Minihan's woes was the discovery that NSA for years had
been seriously mismanaging its mega-million-dollar high-tech computer
and information technology systems. One organization in NSA would buy



477
a top-of-the-line system only to discover that it was incompatible with
other systems in the agency; millions of dollars' worth of new equipment
would be bought that duplicated”or was inferior to”equipment already
owned by the agency.
To correct the situation, the Secretary of Defense ordered NSA to
install a sort of budget czar overseeing all purchasing and use of
information technology. In 1997 Minihan named Ronald Kemper to the
new post of chief information officer for NSA. Kemper also headed up the
agency's new Enterprise Information Technology Office.
From the moment he walked into his spacious office on the top floor
of OPS 2B as the fourteenth DIRNSA, Minihan had his eye on the new
millennium. He saw a future where wars were fought not on muddy
battlefields but in the invisible ether, in cyperspace, and there the NSA
was king. "Just as control of industrial technology was key to military
and economic power during the past two centuries," he told the citizens
of the secret city, "control of information technology will be vital in the
decades ahead. ... In the future, threats will arise and battles will be
fought and won in the information domain. This is, and has always been,
the natural operating environment of the National Security Agency. . . .
Information will give us the power to pick all the locks."
Searching for a catchy phrase, Minihan came up with "Information
dominance for America." Said Minihan, "And then a couple of times the
Brits and others beat up on me; I figure I got to add 'and its allies.' "
Minihan's metaphor for the future was not a technology superhighway
but a technology sword, a sword that could cut both ways. "Though new
technologies provide tremendous opportunities to share information and
develop new relationships," he warned, "those same technologies are the
primary weapons of the electronic road warriors of the future. 'Techno-
terrorists,' ranging from mischievous teens to sophisticated nation and
state adversaries, have agendas and potential destructive powers far
more wide-ranging than we are accustomed to. Their targets will be our
information databases, emergency services, power grids,
communications systems, and transportation systems. . . . We must
continue this fight."
The centerpiece of Minihan's Year 2000 battle plan for NSA was his
"National Cryptologic Strategy for the 21st Century," in which NSA would
take the lead in the conflicts of the future”both protecting the nation
from cyber attacks and taking the offense with information warfare.
Minihan put this work on the same level as protecting from nuclear
attacks. "Information warfare poses a strategic risk of military failure and
catastrophic economic loss and is one of the toughest threats this nation
faces at the end of this century," he said. "We must be able to determine
if we are being attacked, who is conducting the attack, and what to do if



478
we are attacked. . . . We will also continue targeting intelligence for
information warfare at levels of detail and timeliness comparable to those
achieved for conventional and nuclear warfare."
But by the end of his tour, Minihan still had not corrected some of
NSA's most grievous problems, and the House Intelligence Committee
showed him no mercy. It bluntly declared, "The committee believes that
NSA is in serious trouble." Although it continued to pour large sums into
the agency's worldwide eavesdropping network, its satellites and code-
breaking capabilities, the committee said, "money and priority alone will
not revive NSA, nor the overall [signals intelligence] system." The
problem, said the panel, is not lack of money but lack of management.
"The committee believes that NSA management has not yet stepped up to
the line."
In a farewell note to his employees, Minihan talked of both the
successes and setbacks of his tour. "Looking back," he wrote, "we have
accomplished much together. As is our tradition, those successes remain
known only to a few. We have also experienced the continuation of the
largest draw-down in our history. At the same time, we have been
confronted with a tidal wave of new technologies and transnational
threats which some believed threatened our very existence." Privately, in
his office, Minihan was more candid. "It's the hardest job I've ever had,"
he said. "It sucks the life out of you. You know, if you're awake, you're
thinking about this job."
In his last days, Minihan feared that his successor would shift from
the course he had set for the agency. "I think it will be catastrophic if we
allowed the person to drift away from the scheme that we've set up," he
said to several employees in his office. Then he said it was up to them to
keep the new director on course. "And I think that's actually more a
question of you and I and the folks here than it is a question for this guy.
So I've done my part with this guy. But his background is actually
completely different if you look back at us. I've been in the business a lot.
He has not. I was sent here with a 'Do they get it or not?' Now his
question is, 'Are you going to stay the course or not.' "
One week later, on March 15, 1999, Minihan walked between a
double row of well-wishers, past the shiny turnstiles of OPS 2A, and out
into the chilly air of retirement. No more government-paid cook, car, and
chauffeur. No more government housing. No more secrets with his
morning coffee. Gone was his subscription to the Top Secret/Umbra
National SIGINT File, gone was his high-speed connection to the
supersecret Intelink. Now his daily intelligence summary would be found
rolled in a plastic wrapper on the driveway of his new Annapolis,
Maryland, home. In place of a briefing on the latest advances against a
Chinese cipher system, he now had the daily crossword puzzle to tease
his brain.


479
The moving vans, loaded with Minihan's well-traveled belongings, had
barely pulled away from the handsome redbrick house on Butler Avenue
when painters and cleaners arrived to spruce it up for his successor. For
more than four decades this has been the official residence of the
director of NSA. Located in a restricted, tree-shaded corner of Fort
Meade, it is equipped with its own Secure Compartmented Information
Facility (SCIF). Inside the Vault Type Room is a STU-III crypto phone
connected to NSA, about three miles away, and a heavy safe in which to
hold highly classified documents brought home for late-night reading.
On a wall near the kitchen is a plaque containing the names of all the
NSA heads who have lived there”every director except for the first,
Lieutenant General Ralph Canine. After Minihan's departure, a new
brass plate was attached to the plaque, one bearing the name of Michael
V. Hayden, an Air Force lieutenant general and the fifteenth director of
NSA.
In addition to a house, Hayden had inherited an ax. He would have to
use it to slice away at NSA's personnel levels more than other directors
had done. In order to reduce the personnel rolls, NSA for the first time
began turning over to outside contractors highly sensitive work
previously reserved to NSA employees. This project, called Ground-
breaker, was unveiled in 2000 to the dismay of many in the agency.
Projections were that it would "impact more than 3,000 employees." As
many as 1,500 employees and 800 contractors would lose their jobs
under the project. However, those affected would be guaranteed jobs with
whichever contractor won the bidding for the contract. Those who
declined to work for the new contractor would be let go.
Hayden called the project "unprecedented" because it involved turning
over to private industry the management and development of nearly all of
the agency's nonclassified information technology programs. The
contracts were worth $5 billion over ten years. The drastic measures
were taken largely because of years of poor in-house management. "Our
information technology infrastructure is a critical part of our mission and
it needs some repair," said Stephen E. Tate, chief of NSA's Strategic
Directions Team. "It is a burning platform and we've got to fix it."
But some longtime employees think the agency is sacrificing senior
analysts to buy more expensive satellites to collect more information to
be analyzed by fewer experienced people. "They're buying all those new
toys," said one twenty-six-year veteran, "but they don't have the people to
use them. It's always happened that way, but more so in the past seven
or eight years. The people who provide the intelligence aren't there
anymore. So things are starting to slip through the cracks."
Among those cracks was NSA's failure to warn of India's nuclear test


480
in 1998, a mistake that John Pike of the Federation of American
Scientists called "the intelligence failure of the decade." Pike added, "The
question of 'toys versus boys' in the NSA budget has been, and will
remain, controversial. It's my understanding that Minihan's view of this
is, they've got too many people and they need more toys. They're clearly
trying to have their cake and eat it, too."
In order to cut as few linguists and analysts as possible, some of the
heaviest reductions were made in support functions at NSA”turning the
agency into a colder and less personal environment. "There is a
significant amount of concern from Congress and from our overseers,"
Terry Thompson told a group of technical employees, "about how much
money and resources we're devoting to human resources activity at
NSA." He joked: "We have thousands of people doing resources
management at NSA; half of them spend time generating work for the
other half. If we had a good business process and a good way of handling
our budget . . . we could free up a lot of those to do other things."
Thus, just as NSA's vast unclassified information technology
operations were turned over to outside contractors, so were many of the
agency's human resources activities. The contract went to Peoplesoft, a
California corporation that specializes in automating human resources
functions. "The transition from working with a human being down the
hall to working with a computer on your desktop to do most of your
human resources business is a tough transition for everybody," said
Thompson.
For employees stressed out by all the changes, the agency has its own
mental health clinic. Hidden away in the Parkway Corporate Center in
Hanover, Maryland, to provide "anonymity and confidentiality," the
center has a staff of thirteen fully cleared clinical psychologists and
social workers. In addition to courses in stress management and coping
with organizational change, the NSA's Employee Assistance Service
provides a wide range of programs, on topics such as assertiveness
training, bereavement, dealing with difficult people, weight control,
eating disorders, and even social skills enhancement. A "significant
number" of EAS clients, says one report, are treated for depression. The
EAS also has branch offices at NSA's major listening posts in England
and Germany.
Seventy-two percent of NSA employees who visit EAS are "self-
referred"; others are sent by their supervisors. A person's boss may call
the psychology office to verify that the employee kept an appointment,
but cannot probe into the problems discussed. To ensure confidentiality,
all EAS files are kept separate from normal NSA personnel and security
files. Nevertheless, the Office of Security is made aware when a person
visits the office. And if it is determined that "national security is
threatened," the confidentiality of the sessions can be broken.


481
Ironically, while one group of senior managers at NSA is searching for
ways to reduce the employment rolls, another group, in the Information
Security Directorate, is attempting to stem the brain drain caused by big-
bucks offers from private industry. As computers take over more and
more segments of society, so does the demand grow for highly
experienced computer and information security specialists to protect that
data. At the top of the list of places to which corporate headhunters are
now turning is NSA. "It's a real worry," said one senior NSA executive. "If
the issue is salary, we're in a noncompetitive position."
"Our hiring program skims off the cream from the available hiring
pool year after year," said Terry Thompson. "And so we have a very, very
high-quality workforce. All of that says that when you go out, shopping
yourself around for a job, if you have NSA on your resume, it's worth
more than the ten thousand dollars or whatever the amount [the
increase in salary] is for having a TS/SI [Top Secret/Special Intelligence]
clearance. There's a brand-name recognition that goes above that for
people who work at NSA."
According to a study by the U.S. Department of Commerce, "While
average starting salaries [in the private sector] for graduates with
bachelor's degrees in computer engineering grew to more than $34,000
in 1995, the federal government's entry-level salary for computer
professionals with bachelor's degrees ranged from about $18,700 to
$23,000 that year." To help overcome the disparity, NSA in 1996 raised
the pay of its mathematicians, computer scientists, and engineers.
Agency officials, however, say it is not the money that attracts many
NSA employees but "the unique nature of our work." In an effort to find
new talent, NSA set up its own recruitment web page, which has been
responsible for bringing in about 20 percent of its applicants. The agency
also began posting job openings on employment web sites like Job Web
and Career Mosaic.
By the mid-1990s NSA had scaled back hiring to only about 100 new
employees a year. A commission established to look into the intelligence
community saw problems down the road in consequence of such drastic
cutbacks in hiring. "This is simply insufficient to maintain the health and
continuity of the workforce," the report said. It went on to warn that if
the pattern continued, NSA would face a future in which large segments
of its workforce would leave "at roughly the same time without a
sufficient cadre of skilled personnel to carry on the work."
NSA's decade-long diet had left it nearly a third lighter at the start of
the new century. "Our budget has declined by almost thirty percent over
the last ten years," said Thompson in late 1999. "And our workforce has
gone down at a commensurate rate. But our requirements [the work
assigned to NSA] have gone up and we have a hard time saying no, so it's



482
hard for us to stop doing things."
Thompson believes that Congress neglected NSA for many years
because it had fewer high-cost defense contractors on its payroll than
some other agencies, and thus far fewer lobbyists to pressure Congress
for more money for NSA. "One of the reasons we don't get more support
on the Hill for the budget," he said, "is we don't have a strong lobby in
the defense industry. You know the NRO has a seven-billion-dollar
budget. And anytime somebody talks about taking a nickel away from

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