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War Profiteer of the Month: CACI

CACI, founded in the early 1960s as California Analysis Center Inc., is almost entirely a Beltway Bandit—some 94 percent of its revenue is derived from contracts with the U.S. government. About two-thirds of that revenue comes from the Pentagon, but CACI also enjoys the patronage of the Departments of Homeland Security, State, Commerce, Justice and Transportation. At the end of its last fiscal year, CACI had a contract backlog worth some $6.4 billion.

The company started out in the field of simulation software and then rode the wave of increased federal spending on information technology and networks. It has grown to a $2 billion business in part through an aggressive program of acquisitions of other federal contractors. In recent years, many of those purchases were of companies profiting from the boom in outsourcing by U.S. civilian intelligence agencies and the intelligence branches of the military.

One of those acquisitions made CACI somewhat less cocky. When reports of inmate torture and abuse at the U.S-run Abu Ghraib prison in Iraq came to light in 2004, there were charges that civilian interrogators employed by a recently acquired CACI subsidiary were involved. CACI managed to avoid prosecution by the federal government, but it is facing civil litigation brought in U.S. courts on behalf of the Iraqi victims.


CACI, originally California Analysis Center Inc., was formed in 1962 by Herb Karr and Harry Markowitz, who had helped develop a programming language called SIMSCRIPT while at the RAND Corporation. Once SIMSCRIPT, which was designed to allow analysts to build computer representations of complex activities such as air traffic and war games, was released to the public domain, the two men struck out on their own to sell support and training services. They quickly won a $17,000 contract to design an inventory control simulation for the U.S. Navy’s Ship Parts Control Center in Mechanicsburg, Pennsylvania.

The company, which was one of the first to sell proprietary software, changed its name to Consolidated Analysis Centers Inc. in 1967 as it opened branches in New York and Washington. CACI went public in 1968 and later adopted its initials as its official name. During the 1970s CACI open offices in several European cities, while at home it developed extensive contracting relationships with the Defense Department and other federal agencies. It later positioned itself as a provider of information services for state governments and Canadian provincial governments.

With the falloff in military work after the end of the Cold War, CACI’s then-CEO, J.P. “Jack” London turned the company into a prime contractor of information technology systems, focusing on the emerging field of networking. During the 1990s CACI also grew through acquisitions, purchasing a series of modest-sized federal contractors such as IMS Technologies. By the middle of that decade, CACI had joined the ranks of the 25 largest federal prime contractors. Its simulation products were being used, for example, by the Pentagon for its Joint Warfare System development, while its document-handling systems were being used by the Justice Department for major litigation.

CACI rode the wave of rapidly escalating federal spending on information technology. To maximize its access to this huge market, CACI formed strategic alliances with companies such as IBM, Litton, Lockheed Martin, Microsoft, Oracle, Sun Microsystems and Unisys.

CACI entered the intelligence market in 1998 with the acquisition of QuesTech Inc, later renamed CACI Technologies. It then purchased XEN Corp., an engineering and design firm whose clients included intelligence agencies. In 2000 CACI bought most of the government-related assets of another intelligence specialist, Century Technologies. The purchase of Premier Technology Group in 2003 brought with it a $500 million U.S. Army contract that included, in addition to information technology services, the supply of interrogators for Iraq’s Abu Ghraib prison. This would soon turn into a major liability after revelations of torture at the facility. CACI survived an investigation by the General Services Administration and was awarded a new contract for interrogation services in Iraq, but in 2005 CACI announced it was getting out of the interrogation business.

CACI, however, has continued to expand its involvement in intelligence work by making more acquisitions in the field, including companies such as Information Systems Support, Athena Innovative Solutions and Dragon Development Corp. In 2006 CACI was one of seven contractors chosen by the U.S. Army to provide technology and engineering services worth as much as $19 billion over a ten-year period. CACI has also expanded its dealings with the Pentagon through acquisition of more Defense Department contractors such as Wexford Group International. In 2007 Jack London ended his 23-year tenure as CEO of CACI, but he retained the title of “executive chairman.”

Accountability overview

CACI was little known outside the Washington Beltway until May 2004, when an explosive article in The New Yorker by Seymour Hersh revealed that Iraqi detainees at the American-operated Abu Ghraib prison outside Baghdad were being tortured and that interrogators employed by CACI and translators employed by another contractor, Titan Corp., were somehow involved. Two CACI employees were reported to have been cited by name in a secret U.S. Army report about the abuse, with one directly implicated.

As the controversy escalated, CACI acknowledged that its employees had been questioned during the Army’s investigation, which was conducted by Maj. Gen. Antonio Taguba, but the company said it had never heard anything more about the matter and that the individual in question, identified as Steven Stefanowicz, was still on the job. In fact, CACI CEO Jack London told the Washington Post that Stefanowicz was doing “a damn fine job.” (Stefanowicz, known as “Big Steve,” was said to have used unmuzzled attack dogs to intimidate inmates.)

CACI found itself being investigated by the General Services Administration and facing the possibility of being barred from doing business with the federal government. With the help of some high-powered Washington lobbyists, CACI warded off that threat. For good measure, the company announced that its own investigation of the matter found no “credible or tangible evidence” that its employees were involved in abuses at Abu Ghraib. A Pentagon report released in August 2004 concluded that six civilian employees of CACI and Titan (now part of L-3 Communications) had either participated in the abuse or failed to report it. Led by Maj. Gen. George Fay, the generals who wrote the report recommended that the six be prosecuted by the Justice Department, but no charges were ever filed.

CACI and Titan nonetheless were confronted with private litigation. In 2004 two lawsuits were filed against the companies under the Alien Tort Claims Act and other statutes for failing to properly screen and supervise their employees. One case (which included charges of racketeering) was brought by a group of lawyers led by the Center for Constitutional Rights; the other case was brought by lawyers working with the Iraqi Torture Victims Group.

The cases have slowly made their way through the courts. In late 2007 a federal judge allowed the suits against CACI to proceed, even though the actions against Titan had been dismissed. The judge rejected CACI’s argument that it should be immune from the suits because it was operating at the behest of the Pentagon. CACI appealed the ruling and is still trying to have its cases dismissed.

In 2008 a series of new lawsuits were filed by Iraqi civilians against CACI in federal courts in several different states with the help of the Center for Constitutional Rights.

Prior to Abu Ghraib, the biggest scandal in CACI’s history occurred in 1987, when the company had to pay more than $600,000 to settle federal charges that it improperly billed costs relating to commercial work to its Pentagon accounts.

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