Intelligence Percent of Revenue
Agency: National Security Agency (NSA)
Value: $5 billion (classified)
Prime contractors: Computer Sciences Corporation, Logicon/Northrop Grumman
Implementation Date: November 2001
Contract extended: June 2007
Project Groundbreaker is a $5 billion project to rebuild and operate the NSA’s “nonmission-critical” internal telephone and computer networking systems. The project is managed by a vendor team led by Computer Sciences Corporation and Logicon, the IT subsidiary of Northrop Grumman. It is one of the largest outsourcing projects the federal government has ever attempted.
In managing the project for the NSA, CSC and Logicon created the “Eagle Alliance” consortium that drew in practically every major company involved in defense and intelligence outsourcing. Subcontractors included General Dynamics, BAE Systems, Titan Corp. (now L-3 Communications Inc.), CACI International, TRW (now part of Northrop Grumman), Mantech, Lockheed Martin, and Verizon (one of the companies that allegedly granted the NSA access to its consumer database under the Terrorist Surveillance Program), as well as Dell Computers, Hewlett-Packard, and Nortel Networks.
Under the NSA’s “employee-friendly approach,” contractors received monetary incentives to hire NSA employees. “This type of outsourcing program hits our sweet spot,” said Frank Derwin, Logicon’s vice president at the time of the contract award.
The NSA announced the project in a July 31, 2001 press release. According to Air Force Gen. Michael V. Hayden, then NSA director, the “outsourcing partnership” with CSC and Northrop Grumman will allow the NSA to “refocus assets” on its “core missions of providing foreign signals intelligence and protecting U.S. national security-related information systems” by turning over key IT services “for industry's purview." [ ]
Hayden added: "The ability of NSA to perform its mission depends on an efficient and stable Information Technology Infrastructure, one that is secure, agile, and responsive to evolving mission needs in balance with the requirements to recapitalize and refresh technology.” In describing the project, the NSA said the “government-industry partnership” will “result in service quality improvements, continuous modernization of NSA's Information Technology Infrastructure (ITI), as well as cost avoidance for the agency over the duration of the contract. It is also an employee-friendly approach to redefining NSA's internal corporate structure in that the contractors will receive monetary incentives to hire a significant number of agency employees, and offer them comparable or better pay, benefits, and opportunities. Over the contract duration, Eagle Alliance will manage the selective ITI areas while the NSA provides continuous governance and monitoring based on Service Level Agreements that identify the performance levels required. NSA will continue to provide transition services (e.g., career counseling, resumé preparation, and seminars) for employees interested in moving to the private sector under this contract.”
‘’’Revolving door:’’’ In September 2009, General Hayden joined a CSC “Cyber Advisory Committee,” a “panel of industry experts that will inform the company on its cyber strategy. The committee will provide senior company executives with strategic counsel regarding national security and industry issues related to cyber security, including CSC strategies, offerings and positioning.”
CSC had been in the government contracting business for nearly half a century when it was selected to manage the Groundbreaker project. It was founded in 1959 to write software for defense manufacturers, and in 1963 became the first software company to go public. Over the years, it built a multi-billion dollar business as a systems integrator for companies and government agencies, starting with computer contracts with the National Aeronautics and Space Administration (NASA). After the 9/11 terrorist attacks on the United States, CSC formed a new business unit to go after homeland security and intelligence work. “One reason we did this was the wealth of discussion about sharing data among the agencies and the first responders, especially when it comes to terrorist threats,” said Pat Ways, CSC’s vice president for federal sector business development. [ ] By 2004, largely as a result of Groundbreaker, CSC had become the nation’s third-largest federal contractor, with prime contracts worth more than $4 billion. [ ]
Northrop Grumman, CSC’s partner in the Groundbreaker project, is best known as a designer and manufacturer of military surveillance and combat aircraft, defense electronics and systems, as well as large naval combat ships. It first became an important intelligence contractor in 1999 when it acquired DPC Technologies, a Maryland IT company with close contractual ties to the NSA. It moved deeper into intelligence in 2002 when it acquired TRW, a long-time CIA and NSA contractor. Those acquisitions, plus its 2007 takeover of Essex Corporation, greatly expanded Northrop Grumman’s presence at NSA headquarters in Fort Meade, Maryland.
Project Groundbreaker was marred from the start by technical and managerial problems. In 2006, Siobhan Gorman, the Baltimore Sun’s intelligence reporter, interviewed dozens of NSA officials and contractors involved in the project. She found that Groundbreaker’s $2 billion price tag had doubled, and that technical problems with the system were legion. “Computers are integral to everything NSA does, yet it is not uncommon for the agency’s unstable computer system to freeze for hours, unlike the previous system, which had a backup mechanism that enabled analysts to continue their work,” she wrote. “When the agency’s communications lines become overloaded, the Groundbreaker system has been known to deliver garbled intelligence reports.” Worse, agency linguists told Gorman that the number of conversation segments they could translate in a day had dropped significantly under Groundbreaker. The NSA, she concluded, “has no mechanism to systematically assess whether it is spending its money effectively and getting what it has paid for.” 
In June 2007, the NSA exercised its options in the original contract and extended Project Groundbreaker for another three years. The new contract is worth $528 million.  The NSA’s action “underscores NSA's confidence in the Eagle Alliance's experience and ability to deliver state-of-the-art information technology solutions that result in sound operational performance for the agency," James W. Sheaffer, president of CSC’s North American Public Sector division, announced in a press release.
Most of this information comes from Chapter 6 of Tim Shorrock’s Spies for Hire (Simon & Schuster/2008). Other sources are as follows:
 "National Security Agency Outsources Areas of Non-Mission Information Technology to CSC-Led Alliance Team,” NSA press release, July 31, 2001.
 Dennis McCafferty, “CSC has a lock on government business,” VAR Business, September 30, 2002.
 Anitha Reddy, “Computer systems spur growth for contractors,” Technews.com, May 10, 2004.
 Siobhan Gorman, “Computer ills hinder NSA,” Baltimore Sun, February 26, 2006.
 “CSC-led alliance receives three-year option for NSA Groundbreaker contract,” CSC press release, June 6, 2007.