Study: CIA’s In-Q-Tel ‘worth the risk’

The CIA’s private-sector IT research and development firm, In-Q-Tel Inc., faces significant hurdles in breaking through the agency’s secretive culture, but by most industry standards the two-year old start-up has “a good track record” and is “worth the risk,” according to a report released Wednesday by an independent panel of experts.

The report by the 30-member Independent Panel on the Central Intelligence Agency In-Q-Tel Venture, called for by Congress as part of the fiscal 2000 Intelligence Authorization Act, concluded that In-Q-Tel’s business model “makes sense,” but stopped short of recommending that the firm’s charter be expanded to other agencies.

“It is unrealistic to expect such a venture to have produced strategic change at this point, but In-Q-Tel has achieved significant early progress,” the report concluded. “To date, In-Q-Tel has reviewed hundreds of business plans, made more than a dozen investments, brought five technologies and services to the Agency for use or demonstration, and has implemented three pilots since its charter was signed in July 1999. By private-sector standards, this represents a noteworthy accomplishment.”

The Washington-based think tank Business Executives for National Security (BENS) managed the panel’s work and development of the final report. The panel was comprised entirely of industry representatives, including Kenneth Novack, vice chairman of AOL Time Warner Inc.; Thomas Wessels, vice president of Merrill Lynch & Co.; and Raphael Benaroya, chairman and CEO of United Retail Group Inc., among others.

In February1999 the CIA created In-Q-Tel with US$28 million in venture capital. The goal was to tap into the private sector’s technology expertise and deliver new commercial technologies to the CIA more rapidly. In-Q-Tel does that by investing in cutting-edge technology firms that normally wouldn’t do business with the government.

Just last month, Computerworld reported on an internal agency memo that questioned the CIA’s usefulness, concerns that In-Q-Tel is partially aimed at addressing.

Gilman Louie, In-Q-Tel’s CEO, said he’s very pleased with the report, which credits him with expanding In-Q-Tel’s outreach to firms developing innovative technologies.

“The value proposition to the agency is clearly the technologies,” said Louie. To date, In-Q-Tel has created more than 60 major venture funds with private IT companies, “70 percent to 80 percent of which the agency has never had contact with,” he said.

That exposure has led to the injection of five major technologies and services into the CIA’s IT architecture. Of note has been the Presidential Information Dissemination System (PIDS), an electronic briefing tool used by analysts to brief the president-elect during the transition period from one administration to another. In addition, PIDS serves as the basis for the CIA’s iWeb program, which aims to develop a Web-based portal for analyst groups.

Although PIDS doesn’t currently have a commercial use, In-Q-Tel is working with Fairfax, Va.-based SRA International Inc. and Fuji Xerox Co. to commercialize portions of the system, according to the BENS report.

In-Q-Tel’s commercial partners credit the firm with not only fueling technology innovation in the market, but also creating a new “seal of approval” for firms to attach to their products.

For example, in February, In-Q-Tel commissioned SafeWeb, a leading privacy technology developer based in Oakland, Calif., to create an Internet privacy and security product to protect confidential communications. Jon Chun, president and co-founder of SafeWeb, said his company’s relationship with In-Q-Tel has been critical to its technology development.

“It has put SafeWeb and our technologies through the rigors of the CIA’s stringent review process, which far exceeds those of the ordinary enterprise client,” said Chun. “This is a very significant seal of approval.”

“In-Q-Tel wants us to be successful in the commercial market with really solid technology for the future,” said Mahendra Vora, CEO of Intelliseek Inc., a Cincinnati-based firm that has used In-Q-Tel funding to develop future Web-based intelligent agent and knowledge discovery technologies. “That was my No. 1 attraction,” said Vora. He added that the initial development meetings with In-Q-Tel officials presented him with “the toughest technical due diligence I’ve ever been through.”

While that seal of approval can be difficult for vendors to achieve, In-Q-Tel has also found it difficult to convince some CIA employees that there is a benefit to opening the agency to the private sector. Some view the CIA’s funding of In-Q-Tel as a tax on CIA funds, according to the BENS report.

Members of the CIA’s 13-member In-Q-Tel Interface Center (QIC), which is responsible for marketing In-Q-Tel-developed technologies within the agency, told the panel that they have run up against “resistance to change” and the “not invented here syndrome” among some agency employees.

“Every agency has its own culture,” said Louie. “But what breaks through those walls is success. Every time we put a technology in the agency, word begins to spread.”

The BENS report recommended to Congress that another review of In-Q-Tel progress not be conducted until the end of its initial charter in 2004.