Contracting Gone Wrong?: The Reality of Private Military Contractors

By: Matthew Pesce

The use of mercenaries and their offshoots, private military contractors (PMCs), is a practice as old as warfare itself. Armies around the world have for centuries employed mercenaries and PMCs to supplement their existing manpower and replace the use of standing professional armies. Over the past two centuries, though, the nature and rate of employment of such groups has changed drastically. While other countries previously employed relatively large numbers of military contractors, American dependence remained limited until recently.

The American military has employed at least some PMCs in every major engagement since the American Revolution. In past conflicts, these groups had a very limited role and comprised a small percentage of the overall American military. This changed after the Cold War when professional standing armies, now disorganized and unprofessional, reduced their numbers and armed conflicts, now smaller in scale, changed in nature. These trends, in combination with numerical troop deficiencies and a larger political impetus towards privatization, led to a substantial increase in the number of PMCs employed by the American military.

To put this in perspective, since the end of the Cold War, the number of PMCs employed in theaters of combat has more than quadrupled. During the first Gulf War, roughly 10% of American personal were privately paid. During the height of the second Gulf War, the number of privately employed contractors in Iraq outnumbered the professional soldiers present in the country. These publicly available statistics speak for themselves.

The changing nature of the tasks contractors are given in the modern battle space is more significant than any quantitative increase in contracting. Previously, most contracts were limited strictly to the supply of armies in battle. Today, it is difficult to distinguish the duties of contractors in contemporary warfare from those of their professional military counterparts. In Iraq alone, private contractors have helped to train the Iraqi army, interrogated military prisoners, fight off insurgents, used helicopters as well as chemical weapons and provided security to important administrators.

These two simultaneous trends, increasing use of contractors and a shift in their function, have led to a vibrant debate about the costs and benefits of the employment of PMCs in combat operations worldwide. Proponents and critics make different sets of arguments. Interestingly, these competing claims revolve around the same fundamental questions of efficiency and externalities. Given existing literature it is difficult to reach a conclusion. Nonetheless, the debate is heated and opinionated.

The proponents of contracting make a number of arguments to advance their position. They argue that contracting produces efficiency gains which results in a reduction in public spending (Taibl, 1997; Eland 2001). Former Secretary of Defense Donald Rumsfeld argued on numerous occasions in different speeches that the use of contracting frees up money that allows the military to concentrate on its core mission. Similarly, they argue that contracting creates flexibility, which allows rapid deployment and therefore enhanced effectiveness (Brooks, 2004).

Proponents additionally argue that the use of military contracting creates a pool of private companies with skills needed by international non-governmental organizations to do effective humanitarian work and disaster relief in areas that would otherwise have too much associated risk (Brahimi, 2000). They therefore fill the security gap left by professional armies that cannot or will not provide security to such groups.

Similarly, proponents claim that PMCs can create peace in failed states where the political cost is too high for official government intervention (Malaby, 2001). Related to this argument is the position that employment of the military in these types of conflicts, which are frequently non-combat missions, increases operational tempos, thereby weakening war-fighting capacity. Additionally, such engagement could distract from wider strategic objectives (Shelton, 2002).

Finally, they argue that the capabilities of contractors bring a number of diverse potential benefits to the table. Contractors supplement manpower of militaries and allow professional solders to focus on purely combat roles while serving a critical support function. The result is an enhanced deployment capability of the professional military. Sometimes such manpower is necessary for the military to even function at all. At minimum, it would seem more efficient to allow contractors and companies who invent weapons systems to maintain and operate them (Butler, 2001).

The opponents of contracting make a different set of arguments to advance their position. They argue as a basic objection that the function of the military is too important to be entrusted to contractors that are simply motivated by profit. Due in part to this concern, they are worried that privatization undermines democratic accountability because it allows covert action that is not known to the public. As a result, the debate about contracting is framed frequently as a referendum on American democracy.

Critics argue contacting creates an extra layer of hidden information that prevents an honest and impartial assessment of the costs and benefits of conflict initiation and the progress of already initiated conflicts. In democracies, this lack of information could undermine the structural explanation for democratic peace and increase a country’s propensity to fight other democracies.

To critics, the military profession is unique because it carries with it a certain set of values that make war fighting successful. The American military is remarkably good at winning wars and the military culture is part of that success. The addition of another force structure without such valuable ethics is dangerous. The contracting process, due to its very structure, results in a combination of next to no oversight and an exceptionally high degree of legal unaccountability (Singer, 2001). Legally most contractors are exempt from virtually any, if not every, action their employees take in the battle space. The result is unaccountability, which has caused war crimes (Schooner, 2005).

Critics of contracting respond to the efficiency argument in great detail. They argue evidence exists to substantiate the claim contractors are less, not more, efficient (Gates, 1998). Many contracts are allocated through sole-source bid mechanisms as a result of officials playing favorites. This process sidesteps market competition. The result is massively inflated costs (Minow, 2005). This is illustrated by Halliburton, which overcharged billions for contracts in Iraq. What’s more, there are simply not enough firms operating in these markets for sufficient competition to exist.

Based on existing literature about the theory of contacting it is hard to conclude either way about its costs and benefits. Therefore, it is necessary to assess its actual effectiveness to shed light on its virtues and vices. On the question of empirical record the evidence is clear. Contracting under most conditions does not work, is frequently counterproductive and has clear negative externalities. To illustrate this reality lets look at three cases where contracting gone wrong.

A. Abu Ghraib

American intelligence gathering in Iraq is often associated with abuses at Abu Ghraib. The photographs produced have had such an enduring catastrophic impact on the American occupation that many commentators have declared no single action more devastating to the U.S.’s overall ability to sustain its current presence in Iraq and future presence throughout the Middle East (Karon, 2004). Even U.S. allies, coalition partners and closest friends reacted in a swift negative manner. In hindsight, it is difficult to imagine how the military let such an action occur with virtually no oversight or accountability for that parties involved.

Although the fact that torture occurred at Abu Ghraib is common knowledge, few people are aware that private military contractors working for Titan and CACI International were deeply involved in many aspects of daily prison function and intelligence gathering. Furthermore, civilians were not simply engaged in support roles at the prison, but also performed jobs traditionally reserved for intelligence personnel and professional soldiers. Paul Krugman describes the revelation of civilian contractor involvement in such functions as “particularly shocking” and condemns the military’s apparent instinct to “privatize everything in sight” regardless of the associated costs (Krugman 2004).

Three classes of interrogators existed at Abu Ghraib: CIA-trained and employed personnel, contracted Titan intelligence personnel and military police that were either directly involved in interrogations or were passive bystanders. Different agencies and corporations employed these separate labor groups. This point is especially important. The split in source of interrogators was not due to a desire to increase efficiency or reduce costs, but rather to avoid accountability for actions.

By outsourcing the dirty side of war, individuals employed under these contracts were able to circumvent American military law as well as international human rights laws.  The experience at Abu Ghraib “while atypical in terms of its brutality and the public outcry it spawned, is sadly typical of a much broader problem that pervades public procurement” (Schooner, 2004).

B. Karzai

The fulfillment of American vision for the reconstruction of Afghanistan hinges almost entirely on cooperation with the country’s president, Hamid Karazi. Without his participation and support for the American vision of Afghanistan’s future, the reconstruction and nation-building process become virtually impossible, which is why he is one of the most heavily guarded individuals in the world.

Unfortunately, many in Afghanistan would gladly kill him if given the chance.

When American forces invaded Afghanistan in 2001, they especially emphasized the protection of Karzai, who had been recently elected as the country’s new leader. Karzai even requested that American Special Forces teams protect him. These teams thwarted numerous assassination attempts before being replaced by PMCs (Tepperman, 2002). The motivations for the replacement of American Special Forces teams with a security detail from the massive American PMC, DynCorp, are unclear to this day.

The official logic was that Rumsfeld could not spare the 40-50 troops necessary to protect the leader. This is not compelling for two reasons. First, there were a total of 40,000 American Special Forces in Afghanistan at the time. Second, American operations during that time period were highly effective, and the need for more manpower was specifically disputed by the Bush Administration. In hindsight, it is now possible to say with some confidence that the motivation was a political one in favor of privatization of all critical security functions (Leslie, 2002). The result was the use of DynCorp security personnel to guard Karzai for many years.

The result: Karzai dismissed DynCorp as part of an effort to rid Afghanistan of military contractors. How could this possibly happen you ask? Contracted employees are picked precisely because they work in a legal netherworld in which they are not subject to either US law or US military law. This allows DynCorp to fly beneath the radar (Tepperman 2002). The result has been a string of scandals involving contracted personnel, but few, if any, repercussions for wrongdoing.

The historical record of DynCorp alone is telling. The company has been involved in the creation of sex trafficking rings on Bosnia, deals with anti-American dictators and tragic accidents involving American military personnel (Wayne 2002). The recent movie The Whistleblower depicted the horrors of sex trafficking at the hands of DynCorp employees.

C. Reconstruction

A large percentage of the military contracts awarded to private firms have been granted during the wars in Iraq and Afghanistan. Since the Iraq War has finally concluded, it is now possible to look back and assess the effects of contracts. An extreme shortage of regulation and criteria for contract completion quickly become apparent. Two firms, Halliburton and Bechtel, operated unrestricted by almost all regulation in the process of completing their respective contracts. As a result of this regulatory black hole, the labor market for Iraqi reconstruction has developed in a problematic way.

This is significant for a number of reasons. The Iraqi reconstruction process continues to be a monstrous undertaking requiring a massive amount of investment and manpower. Successful reconstruction is a prerequisite for the emergence of law and order and further development of Iraq’s economy. Infrastructure reconstruction is therefore at the heart of the success or failure of the Iraqi democratic project.

Contracts for the reconstruction of Iraq can be divided into two categories. Each type of contract employs a large number of individuals and is independently valued at tens of billions of dollars. The first group consists of rebuilding infrastructure with a focus on the oil sector. The second group serves non-combat support roles to the tens of thousands of soldiers and personnel present in Iraq.

While both of these groups are distinct, their contracts were granted through the same process and serve to illustrate the same point. They will therefore be treated as similar in scope but different in implementation. This example of contracting is vitally important to examine.  It is impossible to understand the role of contracting in modern warfare without an analysis of contracts granted to these firms.

The bidding process facilitated unaccountability on the part of the contractors. The nature of the contracts given to both companies allowed them a high degree of autonomy in the creation of repayment structures and discretion in terms of the means they employed to achieve the mandated end goal. In days after the invasion, both companies were the only entities with enough resources to handle the task and were therefore given a basically blank check. Although there are now discussions about compensation in light of flagrant abuses and deception in the form of overcharging, both companies have never been held accountable for their actions.

In both cases, Halliburton and Bechtel were allowed to pick where to hire their workers from and how much to pay them despite local labor laws and in conflict with the interests of both the United States and the Iraqi people (Pelham, 2003). This was not an accident by any means. The Bush Administration not only employed contractors through close personal connections but also as a means to prevent accurate analysis of the war’s costs. Thus, the true costs of the Iraq War remained hidden.

Halliburton and Bechtel avoided payment of high salaries to Iraqi nationals by hiring workers from Asia to take their place. As a result of this increased competition, salaries of both groups dropped. Although Iraqi nationals needed work after the invasion period ended, there was little to no effort by Halliburton or Bechtel to actually train them with durable and transferable skills (Pitts, 2004).

What’s more, the contracting process led to inefficiencies in cost and number of workers necessary. Since all expenses of both companies were covered by the contract, there was no desire to minimize costs. Instead, the profit incentive led both companies to artificially increase costs. This runs directly counter to those who argue for contracting on the basis of cost reductions.

So what is the takeaway from all of this?

Simply put contracting does not work in the way that it should. It produces inefficiencies, creates a high degree of unaccountability and produces frequent negative unintended consequences. This does not mean contracting never works, but rather that contracting as configured does not work under certain conditions. Going forward it would therefore be wise to be exceedingly wary of contracting without substantial reform.

Matthew Pesce is junior majoring in Political Science and minoring in Development Studies. His research interests relate to American & comparative legal systems as well as international political economy. He focuses regionally on the Middle East and North Africa. 


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