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Spies fear a consulting firm helped hobble U.S. intelligence

Insiders say a multimillion dollar McKinsey-fueled overhaul of the country’s intelligence community has left it less effective.

By NATASHA BERTRAND and DANIEL LIPPMAN

https://www.politico.com/story/2019/07/02/spies-intelligence-community-mckinsey-1390863

So intelligence agencies did what countless other government offices have done: They brought in a consultant. For the past four years, the powerhouse firm McKinsey and Co., has helped restructure the country’s spying bureaucracy, aiming to improve response time and smooth communication.

Instead, according to nearly a dozen current and former officials who either witnessed the restructuring firsthand or are familiar with the project, the multimillion dollar overhaul has left many within the country’s intelligence agencies demoralized and less effective.

These insiders said the efforts have hindered decision-making at key agencies — including the CIA, National Security Agency and the Office of the Director of National Intelligence.

They said McKinsey helped complicate a well-established linear chain of command, slowing down projects and turnaround time, and applied cookie-cutter solutions to agencies with unique cultures. In the process, numerous employees have become dismayed, saying the efforts have at best been a waste of money and, at worst, made their jobs more difficult. It’s unclear how much McKinsey was paid in that stretch, but according to news reports and people familiar with the effort, the total exceeded $10 million.

Additionally, some of McKinsey’s multimillion dollar contracts were awarded without a competitive bidding process, a move meant to speed up timelines but one that critics said enabled the consulting firm to offer formulaic fixes without fear of losing any business.

In each case, bureaucratic changes that slow response time or hamper intelligence collection capabilities could cause the loss of company secrets, private government data, the democratic process and even American lives. Already, some projects at the NSA have been cut or delayed as a result of disgruntled employees leaving the agency.

“At CIA, they shattered longstanding structural constructs that people had invested their whole careers in,” said Larry Pfeiffer, a 32-year intelligence veteran who now serves as the director of the Michael V. Hayden Center for Intelligence, Policy and International Security at George Mason University. It resulted in “a coordination nightmare” widely considered to be “very heavy-handed,” added Pfeiffer, who left government before the restructuring but remains in close contact with current officials.

Pfeiffer said he doesn’t know “a soul at CIA or NSA who would tell you that the reorganizations have made things better.”

But the firm, which even has an internal hedge fund, has also come under scrutiny in recent years for its work with authoritarian and corruption-plagued governments in China, Saudi Arabia, Turkey and South Africa. And in the U.S., activists have criticized the company’s work with U.S. Immigration and Customs Enforcement, although McKinsey has said its work at ICE does not involve implementing the Trump administration’s immigration policy. Last year, McKinsey was also awarded a multimillion dollar contract with the U.S. Customs and Border Protection.

Bad headlines McKinsey has faced in the past year have led to “soul-searching” for some employees, according to one person who left the firm in 2017 but remains in touch with his former colleagues. “Should we be serving X client in Y country and Z country?” this person said. “Those are questions that they should be asking.”

The NSA hired McKinsey to help with a restructuring project nicknamed “NSA21,” launched in 2016 during Adm. Mike Rogers’ time leading the agency.

One outcome was to merge the agency’s offensive and defensive cybersecurity teams, a nod to the increasingly complex nature of digital threats. But the decision exacerbated simmering tensions with the private sector.

Pfeiffer said McKinsey complicated this restructuring, pushing changes that led to an overabundance of voices and perceived inefficiencies. And the reorganization made the mission more muddled, former employees said, expressing frustration with new “mission centers” that combine the traditionally separate analysts and operators.

As a result, some projects intended to make intelligence collection more effective were pushed back or put on ice altogether, The Washington Post reported last year, as disgruntled employees left the agency.

The current NSA director, Gen. Paul Nakasone, is trying to reverse some of the restructuring that has occurred in recent years, according to one former official. “It’s seen as a nod by Nakasone that the Rogers reorganization went too far,” he said.