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[] BS 25.11.03 Change At NSA Causes Concern,

Baltimore Sun
November 25, 2003

Change At NSA Causes Concern

Shift in acquisitions power could hurt Maryland firms; Pentagon to
control finances; Agency has pumped millions into economy

By Ariel Sabar, Sun Staff

Over the past year, the National Security Agency has given big contracts

to Maryland technology companies, enticed major contractors to open
offices with hundreds of new jobs just outside its Fort Meade
headquarters and helped start the country's first homeland security
business incubator.

But excitement among the state's business boosters over the growing role

of the global eavesdropping agency in Maryland's high-tech economy is up

against a sobering reality: the NSA no longer controls the purse strings

for hundreds of millions of dollars in technology contracts.

As part of the defense authorization bill that President Bush signed
into law yesterday, Congress stripped the NSA of power to buy everything

from desktop computers to software that sifts through intercepted phone
conversations. Lawmakers moved that authority to the Pentagon, which
they say has the fiscal discipline that the NSA has been unable to

Critics have said that the move will mire contracts in the Pentagon
bureaucracy and hurt the NSA's ability to quickly buy equipment to keep
pace with changes in foreign communications and encryption technology.
Some also see it as a possible setback to economic development in

They say that the legislation could slow the flow of multimillion-dollar

contracts to the private sector. And some see a more subtle concern:
that the shift of acquisitions power out of Maryland and to the Pentagon

will deprive Maryland firms with ties to the NSA of an inside track to

Northern Virginia far outpaces suburban Maryland in the competition for
federal procurement dollars, experts say, in large part because of the
dense cluster of defense firms around the Pentagon, in Arlington, Va.

"What I would be concerned about is the decision-making being remote
from the agency, because of political agendas ... trying steer the
contracts to one place vs. another," said Bill Badger, president and
chief executive officer of the Anne Arundel Economic Development
Corporation, which has tried to foster the image of the county as a
high-tech haven.

Steve Walker, the president of Walker Ventures, a Glenwood firm that has

provided start-up funding to technology companies doing business with
the NSA, said the legislation is likely to put a brake on NSA spending.

"It's clearly going to slow down the process," said Walker, a former NSA

computer scientist. "The longer it lasts, the more negative effect there

will be on the economic activities in the state."

Fiscal reform

For Congress, however, the bigger issue is what lawmakers see as faulty
fiscal controls at a spy agency with an estimated $6 billion budget. The

legislation, which cleared Congress this month, comes after three years
of mounting criticism of the way the NSA takes stock of its technology
needs and gives out contracts.

Lawmakers fault the agency's procedures and management structure, and
say that the NSA has been given enough chances to fix the problem on its


"We want to make sure that taxpayers get the intelligence systems that
are needed at the best possible cost," says John Ullyot, a spokesman for

Sen. John W. Warner, a Virginia Republican who heads the Senate Armed
Services Committee, which led the push for the legislation. "Speed is
important, but getting the right systems at the right cost is just as
important, and they are not mutually exclusive."

The NSA has been moving to address its congressional critics. It
dissolved some offices this year and streamlined chains of command so
that more contracting programs report directly to the top acquisitions
executive. "The NSA acquisition reform process has taken great strides
over the past few years, but there is still work ahead," the agency said

last week in a statement.

Boosting local economy

The NSA's expanding role in the Maryland economy has made the dispute
over the legislation more than just a bureaucratic squabble.

For most of its 50-year history, it designed much of its computer
technology in-house because it feared spies and because few outsiders
had the know-how.

But with the high-tech boom of the late 1990s, the agency's director,
Air Force Lt. Gen. Michael V. Hayden, began to look to private industry
for new ideas.

Since the Sept. 11 attacks, the agency's largess -- hundreds of millions

of dollars in contracts -- has drawn company after company to the
National Business Park, at Route 32 and the Baltimore-Washington
Parkway, just outside the agency's razor wire fences.

The park's landlord moved five tenants out to make room for satellite
offices for giants such as Boeing, Northrop Grumman, Lockheed Martin,
Titan Corp. and Computer Sciences Corp.

The NSA has welcomed the attention. Last month, it teamed up with Anne
Arundel County to launch the Chesapeake Innovation Center, billed as the

country's first incubator for homeland security technology businesses.
This month, the NSA and the state were co-hosts of a "Tech Partnering
Showcase" in Linthicum Heights at which NSA officials put on 11
presentations on commercial uses for its non-sensitive communications

"In the last couple of years, they've been making a very good outreach
into the community," said Dyan Brasington, president of the Technology
Council of Maryland, a nonprofit business group that plans a three-part
seminar next year on winning contracts from the NSA.

In just the past few months, the NSA has awarded a $23.8 million
contract to Scientific & Engineering Solutions Inc. of Annapolis
Junction, and a contract worth up to $100 million to Raba Technologies
of Columbia.

An NSA spokeswoman and some economic development officials say it is too

early to gauge whether the legislation will affect visions of turning
the 30,000-employee agency into a commercial hub for information

But an NSA employee who spoke on condition of anonymity said the measure

would raise costs and hinder the agency's expanding practice of buying
technology from the private sector. "Our fear is that the administrative

burdens alone could slow our critical acquisition processes," the
employee said.

A spokeswoman for the Pentagon office taking over NSA acquisitions said
the Defense Department had no comment yesterday.

Some economic development officials shrug off the legislative change.

The NSA, they say, still will have significant input into contract
awards. The companies doing business with the NSA are so specialized
that they are not likely to lose agency business. And firms next door to

the agency, by their sheer proximity, are still better situated to grasp

the agency's needs than those in other states.

"I'm not really that worried about it, to tell the truth," said
Christopher C. Foster, a senior official with the Department of Business

and Economic Development who is charged with improving the business
climate for technology firms. "Just because [contracting power] moved to

the Pentagon doesn't mean that all this work will get outsourced to

Even so, he made clear that hopes for a bustling Maryland information
technology sector ride in large part on the NSA.

"NSA basically makes Maryland the center of the information security
world," he said. "What we want to see is the National Business Park turn

into the information assurance equivalent of Silicon Valley."

Bobby R. Inman, a retired admiral who directed NSA from 1977 to 1981,
said his biggest worry was that the legislation would hinder the NSA's
ability to react quickly to changes in terrorist networks.

He predicted that the legislation would stretch the turnaround time for
critical intelligence projects to as long as 15 years.

"The large contractors that do a lot of business at the Department of
Defense aren't going to be hurt -- it's just going to take longer and
cost more," said Inman, a professor at the University of Texas at
Austin, who met with Sen. Warner in an unsuccessful bid to alter the
legislation. "Smaller businesses not accustomed to dealing with DOD will

discover a whole new bureaucracy."

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