The FBI already pays three telecoms, including AT&T and Verizon, about $1.8 million a year to process written "emergency" requests for telephone and internet records. It says the 2008 requested funding will get them more than that.

The requested funding will allow for the development of data storage and retrieval systems by each contractor, accessible only by the contractor, for at least two years’ worth of network calling records. In addition, each contractor would provide a dedicated on-site employee to process the exigent lawful requests for data.

The Justice Department has long been pushing the nation's phone companies and internet providers to keep records about Americans' communications for longer periods of time. These contracts largely achieve the FBI's goals without having to persuading Congress or federal regulators to mandate data retention guidelines as Europe has. The new databases will store years of land line phone call, calling card, cell phone call and internet communication records.

The contracts were first revealed after the Justice Department's Inspector General put out a report in March showing that a key anti-terrorism office were getting phone records from telecoms with letters that included knowingly false statements.

FBI employees in the Communications Analysis Unit, which analyzes phone records for investigators, sent more than 700 "emergency letters" to those telecoms asking for phone records, promising falsely that a follow-up subpoena was in the works.

Those employees had no authority to ask for records themselves, according to the Inspector General's reort. Top FBI officials told privacy groups last week that a criminal investigation was underway.

The Telecommunications Data Collection Center, the unit in the FBI's anti-terrorism component that is requesting the money, warns that without the government-funded snooping databases, counter-terrorism investigators will face obstacles:

Market demands on these companies only require them to keep records online (quickly available) for the short period required to collect bills. After billing periods have passed, records are archived; therefore, retrieving them in a time frame shorter than several weeks is not possible.

The requested funding would allow for the continuation of telecommunications industry participation at the current level of three carriers, providing access to land-line phone call, calling card, cellular phone call, and Internet communications records, all delivered in an electronic format that can be exploited immediately to help resolve terrorist threats.

The Justice Department has refused to respond to Wired News' open government request for copies of the contracts.