CIA pays McKinsey 10 million in fees for reorganisation

In a bid to improve the organisation of the CIA the foreign intelligence arm of the US has brought in the expertise of McKinsey & Company. The move comes with a hefty price tag, reportedly $10 million, and involves a broad range of strategy and management consultancy services. While the board stresses a third party perspective is needed, internal pundits are questioning the value of the money spent.

The CIA is about to enter into one of its most ambitious restructuring exercises in its history. In March Director John O. Brennan unveiled the blueprint, and the plan is set to have a massive impact on the organisation structure of the major directorates of espionage and analysis, which have been part of the agencies structure for decades. In its new model the agency will create a hybrid unit that combines analysts and operators in centres which are focused on specific regions, such as the Middle East, as well as on security issues including weapons proliferation. The new approach is modelled on the success of the CIA’s Counterterrorism Centre, which has enjoyed considerable influence since the attacks of September 11, 2001.

To realise the wide scale restructuring, the agency hired consultants from McKinsey & Company, an advisory firm renown for managing the corporate restructuring of large and complex organisations.

Costing the restructure
As part of the restructuring effort the CIA has asked a number of departments to give up a portion of their budget to cover the costs associated with the transformation. Departments have though found it challenging to release the funds, and against the backdrop of the $10 million in fees the consultants are set to charge, cynicism at the investment in the advice of McKinsey & Company has been expressed by legislators on Capitol Hill.

Not only those on the Hill are concerned about the cost of McKinsey’s services contract, staff at the agency have also expressed their surprise at the fact that the costs have not been disclosed earlier by Brennan in his announcement of changes at the agency. “What is the rationale?” asked an official familiar with the contract. “When you’re talking about millions and millions of dollars, there ought to be a reason why the money is being spent.” According to some, the services could just as easily be provided through in-house expertise.

While the value of the contract is a drop in the ocean of the CIAs budget, which tops $12 billion, the deal is also one of the most costly the agency has been involved with in the matter of rearrangement. A spokesmen for the agency, Dean Boyd, said however that they will be “implementing this plan within our existing budget and without seeking additional funds from Congress.” A spokesperson for McKinsey declined to comment about the deal.

Outside perspective
With the expense seen by many as frivolous, the question of why the restructuring effort is being made with outside intelligence has been posed by a number of officials. According to advocates of McKinsey’s role, the introduction of a third party perspective is key to break through the culture of resistance to change experienced within the agency. The CIA has had a number of reorganisation in recent years, and many of those have not realised their planned potential, with a culture of conservatism and being a stick in the mud within old structures as reasons cited for the mixed track record.

“It’s probably a good thing to bring in outside perspective at a time when you’re doing something this challenging,” says a former senior US intelligence official. He adds, “there is a scepticism and cynicism toward spending money on anything except mission.” Another former employee says that “this place is famous for doing a rope-a-dope. By bringing in McKinsey, [Brennan’s] got an independent overseer not only to drive the process but report back the results.”