The Other U.S. Military
By Spencer E. Ante and Stan Crock
Newsweek
Friday 21 May 2004 Edition
The private contractor biz is hot, vast, and largely unregulated. Is it out of
control?
Almost since the first American tank rolled into Iraq last year, the role of private military contractors
has been controversial. When Kellogg Brown & Root Inc. (KBR), a subsidiary of Halliburton Co. (HAC ),
billed the government hundreds of millions of dollars to support the invasion, critics griped that it was
receiving preferential treatment because of ties to the Bush Administration -- and was overcharging to
boot. When the bodies of four security guards employed by Blackwater USA were mutilated in Fallujah
in March while escorting food deliveries to U.S. troops, Marines laid siege to the city, igniting
widespread violence. And when a classified U.S. military report came to light in late April alleging
abuses of detainees at the Abu Ghraib prison, private military contractors (PMCS) found themselves in
the center of a firestorm.
The end of the Cold War and Pentagon efforts to increase efficiency, speed the delivery of services,
and free troops for purely military missions have triggered a boom in the outsourcing of work to private
contractors. Indeed, with the strength of America's armed forces down 29%, to 1.5 million, since 1991,
contractors have become a permanent part of the military machine, doing everything from providing food
services to guarding Iraq Administrator L. Paul Bremer.
Now, along with the heady growth, come mounting concerns that an industry dependent on taxpayer
dollars has been spiraling out of control. That has Congress, the Defense Dept., and the Coalition
Provisional Authority (CPA) in Iraq scrambling to draft regulations that make contractors -- both on the
security and services/reconstruction side of the industry -- more accountable.
Like many businesses that have to staff up rapidly, some security contractors have cut corners in the
rush to expand. On the ground in Iraq, contractors appear to have operated with little or no supervision.
Mercenaries are not choirboys, but some outfits have signed up hired guns trained by repressive
regimes. And revelations that civilians are performing sensitive tasks such as interrogation have jolted
Congress and the public. "This outsourcing thing has gone crazy," says Gary D. Solis, a former Marine
Corps judge advocate and now adjunct law professor at Georgetown University. "You have a lot of
people with heavy weaponry answerable to no one."
TAKING A PLEDGE
Contractor problems are not confined to the headline-making security and interrogation side of the
business. The CPA's new inspector general, Stuart W. Bowen, is currently auditing five of the biggest
contractors in Iraq -- Fluor (FLR ), Parsons, Washington Group International, Perini (PCR ), and KBR
--to make sure they are following U.S. laws and codes of ethics, BusinessWeek has learned. "Our
intent is to deter waste, fraud, and abuse and ensure compliance with federal law," Bowen said in a
phone call from Baghdad.
There is no single industry association for contractors, but one group, International Peace Operations
Assn. in Rosslyn, Va., is trying to bring some order to the security outfits. Members of the IPOA must
pledge to follow a code of conduct and "strictly adhere to all relevant international laws and protocols
on human rights." The IPOA currently has just nine members, including ArmorGroup International Inc.,
a British security firm with 900 employees in Iraq. But, says IPOA President Doug Brooks, "companies
are starting to come together and realize the value of having an organization that sets standards."
BIG, BUT HOW BIG?
Although many PMCs agree that the industry would benefit from increased oversight, some say Uncle
Sam's proposals may go too far. Blackwater USA, based in Moyock, N.C., which has been criticized
for employing former Chilean commandos trained during the dictatorship of Augusto Pinochet, takes
issue with a Defense Dept. proposal to apply the Uniform Code of Military Justice to contractors. But,
says Blackwater spokesman Chris Bertelli, "we have no problem with industry standards for hiring
practices."
The exact size of the PMC business is difficult to determine because there is no central register of
contracts, and the Defense Dept. sometimes has other agencies do its purchasing. For example, the
contract with CACI International Inc. (CAI ) at Abu Ghraib prison was administered by the Interior Dept.,
according to The Washington Post. Still, P.W. Singer, a fellow at the Brookings Institution and author
of Corporate Warriors: The Rise of the Privatized Military Industry, estimates it is a $100 billion industry
with several hundred companies operating in more than 100 countries.
In a May 4 letter to the House Armed Services Committee, Defense Secretary Donald H. Rumsfeld
said that approximately 20,000 private security workers are employed in Iraq. That doesn't include the
thousands of civilians reconstructing bridges, roads, and phone lines. In the Gulf War, the military
outsourced only 1% of its work, primarily for airfield maintenance. Singer estimates that contractors are
handling as much as 30% of the military's services -- including reconstruction -- in Iraq. "We have
pushed outsourcing way beyond what anyone contemplated," he says.
Spying a growth business, some big defense contractors are scooping up PMCs, many of which --
especially in the security sector -- are small and privately held. Computer Sciences (CSC ) acquired
DynCorp, Northrop Grumman (NOC ) bought Vinnell, and L-3 Communications nabbed Military
Professional Resources Inc. "[Defense giants] have been buying up these companies like mad," says
Deborah D. Avant, a professor at George Washington University who is writing a book about military
contractors. "This is where they think the future is."
Yet in the wake of Abu Ghraib, critics, including current and former military officials, are starting to
ask some hard questions: Has the military pushed outsourcing too far too fast? Where do you draw the
line? And who's in charge? A June, 2003, report by the General Accounting Office concluded that there
are no Defense Dept.-wide policies "on the use of contractors to support deployed forces," a situation
that sows confusion.
Few analysts see a fundamental problem with contractors building base camps, serving food, and
cleaning toilets -- the logistical side of making war. The growing concern is about using contractors to
perform functions such as security and interrogation. A report by Major General Antonio M. Taguba
concluded that two interrogators-for-hire, one from CACI and one from Titan Corp. (TTN ), in conjunction
with military officers, "were either directly or indirectly responsible for the abuses at Abu Ghraib." Titan
says the individual worked for a subcontractor.
"Why the hell were contractors there in the first place?" asks John D. Hutson, a former Rear Admiral
and Navy judge advocate general who is now dean of the Franklin Pierce Law Center. "I have a problem
with people carrying weapons in an offensive way. And I have a serious problem with people in sensitive
positions, like interrogators."
Blindsided by the Abu Ghraib scandal and allegations that PMCs have hired questionable employees,
Congress is putting the Pentagon on notice to get a grip on mercenaries and even more benign
contractors. House and Senate bills would require Defense to provide Congress with a plan for
collecting data on contractors and clarifying the responsibilities of commanders who manage them.
This Wild West of a business is not going to go away, but it could get a lot tamer fast.
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