SAIC May Have Exceeded It's Competence

If The Peter Principle can be applied to corporations, then SAIC may be a prime example.

In 1997, William Black, a decorated NSA manager who spent almost 40 years at the agency, retired and became a vice president at SAIC. According to Black's official NSA biography, his expertise lay in "building new organizations and creating new ways of doing business."

In the late 1990s, that's just what SAIC was hoping to do. The company hired Black "for the sole purpose of soliciting NSA business," said Matthew Aid, an intelligence historian who is writing a three-volume history of the agency.

In March 1999, Lt. Gen. Michael Hayden became the NSA's director. Almost immediately, talk began circulating publicly about a massive contract to outsource the agency's data centers, personal computers, telecommunications, and other administrative systems under a program known as "Groundbreaker." SAIC didn't plan to compete for a lead spot in the contract but indicated that it would pursue subcontracting opportunities.

The company would not stay in supporting roles for long, however. Amid the first hints of Groundbreaker, the NSA began another program, called "Trailblazer," to manage its enormous daily catch of intelligence. In 2000, Hayden called Black back to the agency to be his second-in-command.

Two years later SAIC won the Trailblazer contract; Black was in charge of managing the program. "SAIC had made its living acting as a subcontractor on a lot of NSA contracts," Aid said. "Then, under Bill Black, they got promoted to the big leagues." ...

For big projects like the NSA's Trailblazer, a company needs to have depth of experience in managing many different pieces of business and integrating them into a whole. If that was something SAIC truly lacked, it would show.

Trailblazer was an abysmal failure. After more than $1.2 billion in development costs, the agency and SAIC have practically nothing to show for their efforts and have effectively abandoned years of work. The effort "has resulted in little more than detailed schematic drawings filling almost an entire wall," according to The Baltimore Sun, which published an exhaustive account of the Trailblazer fiasco, and SAIC's role in it, in January.

Ultimately, the entrepreneurial idea shop appears to have gotten in over its head. SAIC "did not provide enough people with the technical or management skills to produce such a sophisticated system" and "did not say no when the NSA made unrealistic demands," The Sun reported, citing numerous intelligence and industry officials.

Trailblazer was not SAIC's only setback. It tried in vain to build an electronic case-management system, known as the "Virtual Case File," for the FBI. After what observers and participants described as frequent management failures and a lack of organization -- at the bureau and at the company -- the program was scrapped last year. The FBI had spent more than $100 million.

SAIC was also tapped in 2003, after the invasion of Iraq, to set up a U.S.-friendly television network in Baghdad, which officials hoped to use for messages and stories about reconstruction. SAIC was supposed to train local journalists and set up a newspaper, but the work fell apart amid criticism that the company was producing an amateurish product that did little to get word of U.S. efforts to the Iraqi public.

The Pentagon replaced SAIC in January 2004 with another contractor. "They were clueless as to how to run a media network," (ex-chief U.S. weapons inspector in Iraq--David) Kay said. "It was horribly directed. It shouldn't have been done."

All large companies eventually hit obstacles, some of which are more spectacular than others. But when contractors fail, it's usually not because of a lack of experience in a given area. SAIC's case is troubling, observers say, because it arguably shouldn't have gotten some jobs in the first place.