Study: CIA's In-Q-Tel 'worth the risk'

[InfoSec News <isn () c4i org>]

Forwarded by: William Knowles <wk () c4i org>

http://www.computerworld.com/storyba/0,4125,NAV47_STO62881,00.html

By DAN VERTON 
August 07, 2001

WASHINGTON -- 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 (download .pdf) released today 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.

The CIA created In-Q-Tel in February 1999 with $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 (see story).

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% to 80% 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.



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