Budget falling short at NSA

The Baltimore Sun

WASHINGTON -- The National Security Agency is facing significant budget shortfalls as the spy agency scrambles to respond to a mounting electricity crisis, modernize its technology, maintain current operations and add workspace, congressional and intelligence officials say.

As a result, they say, the NSA has slowed hiring, pared back upgrades in information technology, delayed equipment purchases and shut offices.

The agency's director, Lt. Gen. Keith B. Alexander, is seeking an increase of nearly $1 billion in supplemental spending for 2007 and a similar boost next year as the White House finalizes its 2008 budget, current and former intelligence officials say.

The money crunch comes despite a doubling of the NSA's budget since the terrorist attacks of Sept. 11, 2001, to approximately $8 billion per year. The agency received essentially the same amount in this year's budget as last year, according to a senior intelligence official speaking on condition of anonymity because intelligence budgets are classified.

"There's this wet blanket over everything that says, 'No new money,'" said a former congressional intelligence aide who requested anonymity.

For 2008, Alexander is seeking about $650 million more for the NSA's spy programs and an added $280 million or so to address the agency's looming power deficit and speed modernization of technology, current and former intelligence officials say. The exact figures are classified, and final amounts are under negotiation.

While Alexander has support from some in the White House, the Office of Management and Budget, which makes the final decision on the president's request, has been skeptical, according to a former official familiar with the budget. The office has been reluctant to approve the increases because Alexander has not provided a clear explanation for how the money would be spent, the former official said.

However, NSA officials are optimistic.

"We are confident that the funding priorities addressed in the budget request submitted for congressional review will continue to be received favorably," said NSA spokesman Ken White in a written statement responding to The Sun.

Alexander has said that current funding levels are not sufficient to sustain operations and modernization efforts. Critics say the NSA has mismanaged much of the money.

But some on Capitol Hill say the NSA's budget gap is a significant problem.

"If we're not giving them the money that they need, then they can't do what needs to be done," said Rep. Peter Hoekstra, a Michigan Republican who chaired the House Intelligence Committee before the Democratic takeover.

Hoekstra said the NSA's budget shortfall is related to agency efforts to adapt its eavesdropping operations to Internet Age communications technology, which have included several expensive failures in programs designed to upgrade its eavesdropping systems.

One area hit hard, said a former government official familiar with the NSA's budget, is the purchase of new information technology for the Signals Intelligence Directorate, the agency's main operations division.

The agency also is scaling back information technology service, the senior intelligence official said. The NSA's Groundbreaker program has three levels of service for fixing information technology problems, and much of the agency will shift to the lowest, "bronze" level in an attempt to cut costs by $500,000 a month, the official said.

Meanwhile, despite a plan to hire 1,500 engineers, linguists, and analysts each year until 2011, hiring has stalled across much of the agency, current and former intelligence officials say. This year, they say, the NSA expects to hire 150 to 275 more people than leave through attrition.

The NSA risks repeating a mistake made in the 1990s, when the agency cut back on personnel amid post-Cold War cost- cutting at the intelligence agencies, said a former senior NSA official who requested anonymity. Those cuts have left the NSA and other intelligence agencies with a lack of midlevel employees able to ascend to leadership posts.

"I'm sure that's not what they wanted to do," the former NSA official said. "But when you've got the pressure of continuing operations ... and modernizing, you have to make some pretty hard decisions."

The NSA has cut off funding for its InnoVisions office, which is charged with developing cutting-edge analytic tools, the senior intelligence official said. It is postponing equipment purchases and eliminating some contracted services.

The need for more NSA funding is not an easy sell to lawmakers, many of whom have grown frustrated with the agency's inability to show how it is spending its money. NSA finances are so tangled that they cannot be properly audited, despite annual directives from Congress in recent years to clean up agency books, two intelligence officials said.

In 2004, Congress prohibited the NSA from launching large projects without congressional and Pentagon approval.

Congress has been investigating the NSA's acquisition practices, and the director of national intelligence has been reviewing the agency's ability to manage large programs, current and former intelligence officials said.

As he asks for more money, Alexander is creating a panel of senior managers inside the agency to more closely monitor spending and the performance of its programs, according to a Jan. 2 memo obtained by The Sun.

The panel will permit expenditures only after ensuring that the spending is in line with Alexander's overall agency strategy. It will also review and approve budget requests, according to his memo.

The need for the NSA to avert a looming electricity shortage, which The Sun reported last year, is also putting pressure on the agency's budget. The problem has been known since the late 1990s, but the agency has only focused on it recently as the shortage became imminent. The NSA has assembled an "issue management team" to focus on it, the former senior NSA official said. Such groups are usually assembled for NSA spy operations.

Three main factors are contributing to the expected power shortage: insufficient power available from Baltimore Gas & Electric Co., lack of capacity at substations serving the NSA, and infrastructure in agency buildings that cannot handle the growing demand for electricity.

"They have rising concerns," the former senior NSA official said, noting that the agency has purchased a number of Cray supercomputers and other hardware. "The question is, will they ever be able to plug in those Crays?"

The NSA now uses 65 to 75 megawatt-hours of electricity, and its needs are projected to increase by 10 to 15 megawatt-hours by the end of this fiscal year, with increases of 5 megawatt-hours more each year thereafter, the senior intelligence official said.

The agency has decided not to plug in some high-end equipment and is cycling other critical equipment on and off to avoid overloading the electrical supply. Building temperatures are being lowered to save electricity.

The NSA is also looking at how it can generate more of its own power and plans to relocate some equipment to other parts of the country, where agency demand for electricity can be better managed, current and former intelligence officials said.

siobhan.gorman@baltsun.com

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