Community Intelligence and the Heightened Ante to Play in the IC
Six months ago, the Guardian and Washington Post released stories based on Edward Snowden’s testimonies regarding inside information about the National Security Agency (“NSA”). Since then, the NSA and other Intelligence Community (“IC”) agencies have undergone increased public scrutiny and faced heightened political response. Subsequently, news outlets such as the Washington Post have kept these agencies in the headlines and have gone to lengths to provide readers with insight on the “secrets” of the IC, such as the release of the conspicuously-named “black budget” and detail regarding the collection of mobile data.
More importantly is the political response that has ensued over the past half year. President Obama recently announced intent to rein in certain surveillance activities performed by the NSA, but also stood by the agency’s actions. Addressing the issue head-on, the President noted “the Snowden disclosures have identified some areas of legitimate concern. Some of it has also been highly sensationalized. And– you know, has been painted in a way that’s not accurate.” Separately, key senior administration officials have advocated for splitting General Keith Alexander’s duel role of leading the NSA as well as the U.S. Cyber Command. The concern with having one director for both roles has been raised since the inception of the U.S. Cyber Command in 2010, but has since intensified.
It’s no secret that much of the high-end technical work performed by the IC is contracted out to civilian workforce, but the increased stigma surrounding the IC and ongoing political attention raises the question as to how this will affect contractors. Much of the technical innovation keeping the nation one step ahead of its adversaries, both offensively and defensively, is developed by contractors for the IC. With increased exposure to the public and potentially reduced funding by the government, there may be incentive for talent to transition from the Federal sector to the commercial market. Commercial companies are taking a public stance against surveillance activities, hoping to reassure users that their data is protected against agency activities. Following announcements by Google, Facebook, and Yahoo, Microsoft also recently announced that it will encrypt customer information traveling between its data centers in response to government agency activities; event to go so far as calling these activities “advance persistent threats.” This heightened security effort by commercial companies may draw top talent, technology, and R&D away from the government sector, especially during a time of increased Federal pricing pressures and an inability to pay top dollar for high-end services.
Despite the potential exodus of talent and recent headaches across the IC, companies that cater to the IC remain attractive acquisition targets, as highlighted by Vistronix’s acquisition of Kimmich Software Systems, a provider of cyber operations, signals processing, data analytics, software development, and systems engineering, and Eagle Ray’s acquisition of Kore Federal, a provider of IT modernization, in part for the IC. Acquisitions of these types add significant capabilities to existing offerings and present critical mass to market strong IC funding streams relative to the broader federal market. However, the stakes in playing in the IC technology market from a recruitment, retention, and mission execution perspective continue to rise.