Operation Sandwedge was a proposed clandestine intelligence-gathering operation against the political enemies of U.S. President Richard Nixon's administration. The proposals were put together by Nixon's Chief of Staff H. R. Haldeman, domestic affairs assistant John Ehrlichman and staffer Jack Caulfield in 1971. Caulfield, a former police officer, created a plan to target the Democratic Party and the anti-Vietnam War movement, inspired by what he believed to be the Democratic Party's employment of a private investigation firm.

The operation was planned to help Nixon's 1972 re-election campaign. Operation Sandwedge included proposed surveillance of Nixon's enemies to gather information on their financial status and sexual activities, to be carried out through illegal black bag operations. The operation would have targeted not only the anti-Vietnam war movement and the political opposition, but rivals within Nixon's own Republican Party as well.

Control of Sandwedge was passed to G. Gordon Liddy, who abandoned it in favor of a strategy of his own devising, Operation Gemstone, which detailed a plan to break into Democratic Party offices in the Watergate complex. Liddy's plan eventually led to the downfall of Nixon's presidency, which Caulfield believed would have been avoided had Sandwedge been acted upon.

In 1968, Richard Nixon, the Republican Party nominee, won the presidential election, defeating Democrat Hubert Humphrey, the incumbent Vice President. Nixon's margin of victory in the popular vote was seven-tenths of a percent. Nixon had previously contested the 1960 election, narrowly losing to Democrat John F. Kennedy by a margin of less than 118,000 votes, which amounted to less than two-tenths of a percent of the total. The close margins involved in these elections—in particular, a swing of 28,000 votes in Texas or 4,500 in Illinois would have changed the outcomes in those states—have been cited by historian Theodore H. White as the impetus for future Nixon campaigns valuing every potential vote and not merely seeking a majority. White also makes the claim that electoral fraud was widespread within both main parties of the 1960 election. Nixon appointed H. R. Haldeman as his Chief of Staff; a position which granted Haldeman a relatively large degree of control over the activities of the presidential administration. Haldeman had first worked for Nixon in 1956, when Nixon was running as Dwight D. Eisenhower's vice-presidential candidate in the 1952 election.

By 1971, Nixon's staff were receiving a cursory intelligence report from Haldeman's assistant, Gordon C. Strachan; Strachan's reports essentially collated information about political rallies and campaign groups that had already been gathered by the police and the Federal Bureau of Investigation. Nixon's initial re-election bid had already involved planting rumors and false information about his opponents as a dedicated strategy; these tactics had been dubbed "political hardball" by Nixon's opposition researcher, Pat Buchanan. In August 1971, Strachan had convinced Jeb Stuart Magruder, a member of the Committee for the Re-Election of the President (CRP)—the campaign group for Nixon's re-election bid—to infiltrate the office of Edmund Muskie. Muskie was a Democratic senator who had been Humphrey's 1968 vice-presidential candidate, and was a front-runner for his party's presidential bid for the 1972 campaign.

In late 1971, John Dean, the White House Counsel, pushed to expand the existing intelligence program ahead of the 1972 re-election campaign. Dean delegated the task to Jack Caulfield, a member of his staff who was a former New York police officer. According to Dean, Caulfield himself was interested in work outside of politics; he intended to create a private security company, and felt that if the Nixon cabinet were an early client, it would lead to lucrative future clients within the private sector. Caulfield reportedly requested $511,000 (equivalent to $3,967,493 in 2024) from the campaign to establish field offices in Washington, New York, and Chicago. Fred Emery, a journalist for The Times and BBC, disputes this, claiming in his book Watergate: The Corruption & Fall of Richard Nixon that the idea of a private sector security firm was simply a front for a committed campaign of surveillance working for Nixon and the Republican Party, with political donations to the re-election campaign able to be diverted through the company as though they were unrelated transactions.

John Ehrlichman, who was a long-time friend of Haldeman and had also served as White House Counsel, had been part of the operation's inception; by 1971 he was Nixon's domestic affairs assistant. Ehrlichman had initially hired Caulfield in 1969. Ehrlichman intended that Caulfield should conduct private investigations while undercover as a private sector employee; it was Caulfield who insisted on working from the White House. Caulfield's work to this end had already resulted in two wiretaps on phone lines—one on Nixon's brother Donald, and another on journalist Joseph Kraft.

Caulfield prepared a twelve-page draft proposal detailing an intelligence-gathering strategy, aimed at the opposition Democratic Party; he worked on this draft for several months and presented it to Nixon's staff in September 1971. The proposal, dubbed "Operation Sandwedge", called for a budget of $500,000 (equivalent to $3,882,087 in 2024), primarily to cover private investigative work and security for the Republican National Convention, although Caulfield intimated privately that it would also include electronic surveillance.