Background

Science Applications International Corp., or SAIC as it is commonly known, is owned by its 40,000 or so employees. It is the country's largest employee-owned research and engineering company, chalking up revenue of $5.9 billion in 2002.

SAIC's largest customer by far is the U.S. government, which accounts for 69 percent of its business, according to its SEC filings. The company also derives a sizeable chunk of its revenue from state, local and foreign governments.

The company has worked on a large number of high-profile government projects. SAIC had engineers on the ground in New York the day after the Sept. 11, 2001, terrorist attacks on the World Trade Center, deploying point-to-point microwave systems to restore communications to government offices. The company also built the security command center for the 2002 Winter Olympics in Salt Lake City. Other high-profile projects SAIC has been involved in include the 1993 World Trade Center bombing investigation, the cleanups after the Three Mile Island nuclear disaster and the Exxon Valdez oil spill in Alaska, the first Gulf War, and space missions including the Voyager mission to Mars and the Hubble Space Telescope.

A lower profile, but potentially lucrative, project the company is working on for the Army is called the Future Combat Systems program. SAIC teamed up with Boeing to win the right to be lead system integrator on that project, which could have a total value of $4 billion. The program is supposed to completely retool and transform the entire Army to better respond to future threats, including everything from weapons systems to troop training.

SAIC recently had a management change. Founder and chairman Robert Beyster, who had run the company since its beginning in 1969, announced plans to retire in 2004. In October 2003, Kenneth Dahlberg, a vice president at General Dynamics, joined the company as CEO. There has also been speculation that, following Beyster's retirement, the company might go public.

Iraq contracts

Since February 2003, SAIC has been in charge of the Iraqi Reconstruction and Development Council, a Pentagon-sanctioned group made up of Iraqis that is effectively functioning as the country's temporary government. The senior members of IRDC hold positions at each of 23 Iraqi ministries, where they work closely with U.S. and British officials, including L. Paul Bremer, head of the Coalition Provisional Authority. The Council's official task is to rebuild the structures of a government that are expected to eventually be handed over to an independent Iraqi authority. Members of the IRDC are officially employed by SAIC.

Another Pentagon contract calls for SAIC to, in effect, rebuild Iraq's mass media, including television stations, radio stations and newspapers. SAIC runs the "Voice of the New Iraq," the radio station established in April 2003 at Umm Qasr that is funded by the U.S. government.

Just how the company is going about the task of rebuilding Iraq's media and the overall cost remains a mystery, however. The Pentagon has steadfastly refused to release any specific information on SAIC's media reconstruction work, which has been dubbed the Iraqi Media Network. What little information that has leaked out about the SAIC effort has come mainly from disgruntled employees and press freedom advocates, who have charged the company has bungled the job badly. One report said SAIC had ordered equipment that was incompatible with existing systems in Iraq. SAIC, which appears to have little experience in mass media, was also reported to have been caught flat-footed on programming for the reconstructed network. Its initial solution was to enlist Voice of America, the foreign language broadcasting service of the U.S. government, to patch together a short nightly news show made up entirely of dubbed stories from U.S. television network news shows. There have also been widespread complaints from press freedom organizations about the SAIC effort, including charges of military censorship and cronyism.

SAIC has been awarded seven contracts by the Defense Department to provide experts and advisers on development of representative government in Iraq; restore and upgrade the country's broadcast media; and provide a group of Iraqi expatriates to assist coalition officials working in the country. The value of the contracts, which were obtained by the Center for Public Integrity under the Freedom of Information Act, was blacked out in copies provided by the Defense Department. A Pentagon FOIA officer said keeping the information secret "was an appropriate way to avoid substantial competitive harm to the contractor" and was "due to the sensitive nature of the Iraqi contracts." SAIC officials referred all media calls to the Pentagon.

The value of the SAIC media contract in Iraq is $38 million for the current calendar year and could be worth an additional $90 million next year, according to a congressional source. The value of SAIC's six other contracts in Iraq could not be determined.

Government ties

David Kay, the former U.N. weapons inspector who was hired by the CIA to track down weapons of mass destruction in Iraq, is a former vice president of SAIC. Kay left SAIC, where he oversaw homeland security and counterterrorism work, in October 2002.

Christopher "Ryan" Henry left a senior position at SAIC in February 2003 to become principal deputy undersecretary of Defense for policy. In that role, Henry provides advice and assistance to Secretary of Defense Donald Rumsfeld and other top Pentagon officials on national security policy, military strategy and defense policy. At SAIC, he was vice president for strategic assessment and development.

Executive vice president for Federal Business and director Duane P. Andrews served as assistant secretary of Defense from 1989 to 1993, when he joined SAIC.

From October 2001 to July 2002, board member W.A. Downing served as deputy assistant director for international counter-terrorism initiatives on the National Security Council, where he advised President Bush on terrorism and homeland security issues. Downing retired from the United States Army with the rank of general in 1996 and joined SAIC as a part-time employee in March of that year as an adviser on a wide variety of matters, including the company's long-term strategy for domestic and international business development.

Bobby Ray Inman resigned from SAIC's board in October 2003 after reaching the company's mandatory retirement age of 72. He had served on the board since 1982, when he retired as an admiral in the U.S. Navy. While on active duty, Inman served as director of the National Security Agency and deputy director of Central Intelligence. President Clinton nominated Inman to be defense secretary in December 1993, but Inman later withdrew his name from consideration for the post.

After retiring from the Navy, Inman was chairman and chief executive officer of the Microelectronics and Computer Technology Corporation in Austin, Texas, for four years and chairman, president, and chief executive officer of Westmark Systems Inc., a privately owned electronics industry holding company, for three years. Inman also served as chairman of the Federal Reserve Bank of Dallas from 1987 through 1990. His primary activity since 1990 has been investing in start-up technology companies, where he is a managing partner with Gefinor Ventures. He is also a member of the board of directors of Fluor (which has contracts in Iraq and Afghanistan), Massey Energy Company, SBC Communications and Temple Inland.

From 1993 to 1997, board member Anita K. Jones was director of Defense Research and Engineering for the Pentagon.

Updates

As of December 18, 2003
After receiving new information and additional documents since original publication, the Center has updated the contract value and also posted contracts the company has with the Pentagon. Initially, the total value of each order was redacted from the documents provided to the Center, but after the report was released in October 2003, the Center received unredacted copies of the seven orders, which have a total value of nearly $23.5 million. Congressional sources, however, place the value of SAIC's media contract at $38 million in year one and say it could go up to more than $90 million in 2004. Therefore, the total value of the company's contracts in Iraq could not be definitively ascertained.

—Bob Williams