The Outsourced War "Is Here to Stay"

An expert on military contractors, Deborah Avant talks about America's increasing reliance on these third parties in combat zones
It's impossible to predict the outcome of the war in Iraq. But it's already clear that this is the Contractor War. In the first Gulf War, the military outsourced only 1% of its work to private contractors, primarily for airfield maintenance. But this time, the figure is much higher -- exactly how much is in dispute (see BW, 5/31/04, "The Other U.S. Military").

Deborah D. Avant, a professor of political science and international affairs at George Washington University, who is working on a book about military contractors, estimates that at the start of the current Iraq war Uncle Sam farmed out 1 in 10 jobs to the private sector. Other analysts estimate that contractors are handling as much as 30% of the military's services, including the interrogation of prisoners.

In the wake of the Abu Ghraib prison abuse scandal, BusinessWeek Department Editor Spencer E. Ante spoke with Avant about the military's growing reliance on contractors and efforts to tame this Wild West of an industry. Edited excerpts of their conversation follow:

Q: How many contractors are working in Iraq right now?
A: The range of the things that they're doing make it hard to gauge. A Defense Dept. letter to Representative Ike Skelton said there were 20,000 security contractors in Iraq, working for the Coalition Provisional Authority (CPA) and the reconstruction companies that have been awarded CPA contracts.

The numbers are actually much higher because [that figure] doesn't include contractors working for companies like CACI (CAI ) or Titan (TTN ), which suggests to me the Pentagon doesn't know how many [contracting] personnel are in Iraq.

Q: Although you've followed the explosion of military contracting since the end of the Cold War, even you weren't aware the government was also outsourcing the interrogation of military prisoners. Why is the military outsourcing so much?
A: There has been a mushrooming in demand for intelligence services since 9/11. The U.S. has lot of detainees around the world. They try to fill the void by hiring ex-military personnel. These contractor companies act as matchmakers bringing together people.

Q: What other military functions are being performed?
A: Contractors do almost anything: Logistics, building camps, trucking stuff around, providing protection for convoys and buildings, training the military, and supporting weapons systems such as Predators -- they do everything but launch missiles. There has been huge growth in training forces. In some ways people are almost interchangeable. We haven't outsourced infantry. But what a guard does and infantry does isn't that different.

Q: Why has the contracting industry boomed?
A: This is a response to the downsizing of forces that happened at the end of the Cold War. The number of operations the U.S. military worked was greater in the '90s, but it has shrunk by one-third. There are political advantages [to using contractors]. Leaders seem less than interested in increasing the size of the military. It's easier for political leaders to do things the public might not support 100% if it's using private forces.

Q: Has outsourcing gone too far?
A: That's a political judgment. The Clinton Administration used the private sector for peacekeeping. It does reduce the incentives for leaders to build consensus. I can't draw a line. It's more important for people to understand the consequences.

Q: Who owns these companies?
A: A lot of the companies in the 1990s were small, service-based companies. Now they're small services-based wings of large companies. Defense contractors have been buying up these companies like mad. This is where they think the future is.

Q: Will the outcry over contractors harm the industry?
A: This is probably here to say. I doubt these scandals will slow down these companies. This industry will continue to boom.

Q: But what about all the government regulations coming down the pike aimed at bringing this industry under control?
A: I'm not suggesting nothing will change. There may be amendments to the law. The government may extend the Military Extraterritorial Jurisdiction Act to apply to contractors that are working for any agency, not just the Defense Dept. It's more likely you'll see standards of self-regulation, however.

Congress is going to want to know more about who the U.S. is hiring. It will be very important to see how they define security services. If you look at attachments to the Defense bill [Congress is currently working on the passage of the bill authorizing the Defense Dept.'s 2005 budget] there was a request to count contractors, but the definition [of contractors] was narrow. It excludes all the guys who are running the Predators and providing logistics support. It also doesn't include training. I suggested that they expand the definition.

Q: Are there any pitfalls to rapid growth?
A: The rapid growth was associated with surging demand from Iraq. Companies are recruiting internationally much more. You don't have as [much conformity] if you're bringing in soldiers from abroad. Some people would argue South African forces are better at dealing with these Wild West situations.

Q: What is the quality of these companies?
A: I do think there have been some questionable hiring practices. But I don't think they're limited to upstarts. Every company is pressed to come up with people.

Q: Why don't we have a clearer idea of how the government is using contractors?
A: There are no regularized procedures in the military for dealing with this thing. I hear we're going to see them very soon. I would have thought the degree to which contractors were part of the military effort in Iraq would have induced someone to make sure those regulations were written.

From: http://www.businessweek.com/bwdaily/dnflash/may2004/nf20040521_2913_db052.htm