It’s one of those ideas that might seem sensible at first-glance: retired military officers hired to serve as “senior mentors” to the armed forces. Only on closer inspection are the potential conflicts of interest revealed: the retired officers were paid by contractors, advising on military services even as they were consulting for companies seeking to sell military products, as reported by USA Today. When news of the program came to light, Defense Secretary Robert Gates ordered changes, but the paper reported Tuesday that “senior mentors will not have to disclose their business ties or finances to the public, under a [July 8 Defense] directive…That falls below what [Defense Secretary Gates] initially called for….”

This Pentagon program is not simply an isolated conflict of interest story, or “coincidence of interest”–where players craft roles across organizations to serve their own agendas, instead of those of the organizations for which they supposedly work. It illustrates the perils of a governing landscape that has transformed in recent years: where once federal employees executed most government work, today more than 75 percent of that work, measured in terms of jobs, is contracted out and many of these jobs involve government functions. Many contractors are integrally involved in formulating and influencing policy on issues ranging from defense (as seen in the mentoring program), to the economy and energy to homeland security and intelligence. Even when many, if not most, of these contractors perform admirably, whether contractors always have the public interest at heart, or whether, beholden to shareholders, they might have their own, is a crucial question.

The Washington Post reported this week on the influence of contractors and the unmanageable growth of the intelligence community since 9/11. I also studied this development (in the area of intelligence and beyond) as part of my research for my book Shadow Elite and in a follow-on study (supported by the Ford Foundation), Selling Out Uncle Sam: How the Myth of Small Government Undermines National Security, soon to be released. In addition to interviews with government and contractor officials, I poured through piles of Government Accountability Office (GAO) reports, inspectors general audits,and congressional testimony evaluating the role of contractors in federal agencies. And a key finding that emerges is that information that once was or should be in official hands is being privatized, ceded to government contractors, at a time when government oversight is increasingly overwhelmed and undercut.

When information that is supposedly of and for government is in private hands, it is not just that government often isn’t kept in the loop. The information, and the power that goes with it, can be used to serve private agendas with the risk of corporate and private players influencing policy to suit those agendas. This is far more insidious than simply hiring a contractor to provide food service or even contracting security assistance in a war-zone like Iraq. Contractors are now routinely carrying out what’s known as “inherently governmental functions,” the work so fundamental to the public interest that only federal workers should conduct. The privatization of information is especially dangerous when these core functions are outsourced.

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