The Obama administration, rather than reacting defensively, should seize the initiative by trying to control this behemoth. The paradox here is that a smaller, better-controlled intelligence community will actually make the country safer than the unmanaged sprawl we have now.

This is the real mission for the star-crossed Office of the Director of National Intelligence (DNI), which was created in 2005 to bring order out of the intelligence chaos. By picking the wrong fights and conducting turf wars, the DNI has made some of these problems worse. The right model is the Office of Management and Budget -- a coordinating staff of experts that can monitor budgets, personnel and performance.

James Clapper, Obama's nominee for DNI, took some wobbly first steps Tuesday at his confirmation hearing, criticizing "sensationalism" in a Post series that has been widely praised by other intelligence veterans. And he unwisely dismissed the problem of redundancy in the intelligence bureaucracy, which many other experts regard as serious.

"There needs to be a revolution in the intelligence community, not an evolution," says Henry Crumpton, a former top CIA counterterrorism officer who now runs a company that invests in intelligence contractors. "You need to cut back in dramatic ways and empower people in the field," he says. "We've just been throwing money at the problem," producing a "breathtaking lack of coordination."

How did this out-of-control Top Secret America develop, and how can the problems be fixed?

The archipelago of contractors surfaced decades ago, and in some cases it has provided essential and efficient services. Once upon a time, the Navy kept its own herd of cows to provide safe milk for the Naval Academy and made its own rope. The Army insisted that the only reliable weapons were ones made in military-run arsenals. This all changed with the Cold War and the rush of technology, which created what President Dwight Eisenhower called the "military-industrial complex."

The intelligence community's version of this complex features many of the old Cold War giants -- General Dynamics, Northrop Grumman, Raytheon and Lockheed Martin are among the 10 companies doing the most top-secret work, according to The Post. The crowd at the intelligence trough is increasing as defense firms seek lucrative counterterrorism and homeland-security contracts to replace weapons procurements that have been cut.

The intelligence community, to be sure, needs private help. Once upon a time, the CIA's Directorate of Science and Technology managed the cutting-edge breakthroughs that were later copied by industry. But in the information-technology era, this flow has been reversed.

The code-breaking National Security Agency has experienced the upside and the downside of outsourcing. The agency in 2001 launched a successful IT upgrade program called Groundbreaker. A less happy experience was the NSA's Trailblazer program, launched in 2000, which sought private help in upgrading surveillance and data-storage capabilities. That program had big cost overruns and other disappointments.

The war on terrorism has been a magnet for spending, just as the Cold War was. The military's Special Operations Command, based in Tampa, has spun off a vast secret network of contractors doing esoteric jobs ranging from "human terrain mapping" to intelligence collection in war zones. By one estimate, SOCOM has 1,000 people just involved in its secret contracting.

The CIA, too, has been awash in money since Sept. 11. "We expanded so fast we were sometimes bidding against ourselves" for contractor services, recalls retired Gen. Michael Hayden, a former director of the CIA. The agency saw such a rapid migration of its blue-badged employees to better-paying jobs as green-badged contractors doing the same work that Hayden launched a "green to blue" program and banned those resigning from the CIA from contracting there for the next 12 months. But these moves barely dented the problem.

Congressional budgeting has played a role, too. Most Iraq, Afghanistan and war on terrorism funding has come through supplemental appropriations, which must be renewed each year and thus are seen as uncertain. Intelligence agencies have preferred to add this surge capability through "temporary" contractors rather than permanent employees.

The result has been a bloated "community" that combines secrecy and bureaucracy in a ruinous mix, as described by reporters Dana Priest and William Arkin. A couple of years ago I wrote that the problem was so bad that perhaps we should blow up the existing structure and start over. Maybe that's extreme, but the watchword for Clapper should be: Less is more. The Post series dramatized a system that doesn't work, and in this case, leaner will be meaner -- and cheaper, too.

davidignatius@washpost.com