Contractors do have their advantages. They can make the often lumbering intelligence or military bureaucracies more nimble in the face of quickly changing circumstances. Without spending years training personnel, for instance, the government can simply purchase the specialties that it needs from an outside firm. And there are no legacy costs for healthcare or pensions.

Then again, outside contractors are generally far more expensive in upfront costs than the aver age federal employee. Congressional investigators estimate that the average federal employee costs the government just over $120,000 per year, while a contractor can cost more than $250,000. And contractors' accountability—particularly for dangerous and politically explosive international projects—is sometimes unclear. The legal accountability of contractors in general is currently being tested by several lawsuits against military contractors for their actions overseas.

Attorney General Eric Holder has appointed John Durham, a veteran prosecutor, to investigate allegations of CIA abuse of prisoners. Outside contractors were involved in the harsh interrogation of suspects, and Durham is expected to look at their actions.

Most intelligence contractors work behind the scenes doing unglamorous jobs in support, technology, and analysis. Gone are the days when the CIA relied on a team of in-house scientists and engineers to custom-design and build all its own communications gear or clandestine gadgets. Much of that technology—from computers to cameras—is now available on the open market. When the intelligence community built its computer infrastructure, for example, much of the work was done by outside contractors, according to officials familiar with the agency's history with contractors.

But the agency is also dipping into the marketplace for frontline operatives. A CIA inspector general's report made public last week detailed severe interrogations of suspected terrorists between 2001 and 2004, which were sometimes administered by CIA contractors. One such instance involved former military trainers from one of the Pentagon's survival schools who went inside the CIA's network of secret prisons to help oversee the interrogation of terrorist suspects.

News also leaked out last month about a clandestine program to kill al Qaeda leaders that was coordinated by the private security company Xe Services, formerly known as Blackwater. Sen. Dianne Feinstein, the California Democrat who chairs the Senate Intelligence Committee, would not confirm the details of that program, but she did say that the spying world was "over-reliant on contractors to carry out its work. This is especially a problem when contractors are used to carry out activities that are inherently governmental."

The law itself has been fuzzy on the issue of contractor accountability. In 2006, Congress passed legislation aiming to immunize contractors from lawsuits, though it has yet to be tested in court. But while contractors' precise legal liability may be different from that of a government employee, says former CIA chief Michael Hayden, agency officials have the "same moral and legal responsibilities" whether employing contractors or full-time staff. The legal memos that established guidelines for the CIA's interrogation program, for instance, are silent on the use of contractors in interrogations.

The reliance on a for-hire workforce in the intelligence community goes back to the end of the Cold War, when the spying budget was slashed. Years later, when the CIA began to pursue al Qaeda after the 9/11 attacks, the agency found itself short staffed, particularly in regard to those with the appropriate language skills. The recent inspector general's report also says that the CIA was woefully short of employees with knowledge about interrogations. Because Congress legislates how many people the CIA and other intelligence agencies can employ, the CIA was forced to turn to contractors to accomplish its missions quickly, say former senior intelligence officials. Those contractors were frequently recently retired CIA and military personnel.

As the demand for those spying skills continued to grow, the number of contractors exploded. By 2008, more than 100,000 contractors were working for the U.S. intelligence community, in excess of a quarter of the entire workforce. At other government agencies, particularly the intelligence unit at the Department of Homeland Security, the percentage is nearly double that. And the spy agency wasn't adding solely contract workers: More than half the CIA's current workforce has joined up in the past eight years, according to agency officials.

Many of the contractor hires were supposed to be only temporary. "It doesn't necessarily make sense to bring people into permanent career positions for a skill that may be needed for a very specific period of time at a surge level," Michael Chertoff told an audience in Washington last month in a forum about the use of contractors in intelligence work. Chertoff defended the DHS intelligence unit's reliance on contractors, which has drawn congressional criticism. He said there was fierce competition for intelligence analysts as the unit was being established entirely from scratch.

It should be noted that Chertoff, who was once DHS chief, now heads the Chertoff Group, a security consulting firm that does business with the federal government and employs several former senior intelligence officials, including Hayden, the former head of both the CIA and the National Security Agency, and Charles Allen, a longtime senior CIA official and the creator of the DHS intelligence unit.

When he ran Langley, Hayden made reducing the number of contractors a priority. He cut the number of so-called green badgers (CIA staff wear blue badges) by 15 percent. Yet as the lure of well-paid private-sector jobs grew during the early years of the war with al Qaeda, the CIA began to lose some of its talent.

Many workers quickly became green badgers only months after resigning from the CIA, sometimes at double or triple their old salaries. Agency employees called the process of quitting only to return to Langley with a green badge "bidding back." Hayden established new regulations barring agency employees from working for the CIA for 12 months after resigning. "I did not want to become the AAA farm team for a bunch of organizations around the beltway and provide them trained personnel to sell back to us," Hayden said last month.

When Leon Panetta took charge of the agency last spring, he also pledged to address the issue of contractors. He instituted a five-year plan to boost the number of CIA personnel with foreign language skills, one of the areas where the agency falls short in in-house abilities. And one of his first acts was barring contractors from conducting interrogations.

Indeed, there is a broader effort to remove contractors from such sensitive tasks. Last week, the Justice Department and the White House announced a new task force for one of the intelligence community's most important and controversial missions—interrogating suspected terrorists.

The FBI will run the new unit, but the CIA will have the No. 2 spot, according to an official familiar with the details of the new program. A Justice Department official, meanwhile, says that only government employees, not independent contractors, will be a part of the newly inaugurated High-Value Detainee Interrogation Group.