Issues and Allegations: Military Privatization

• Background
• Conservative Perspective
• Liberal Perspective
• Notes and Sources
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WHY WE USE "CONSERVATIVE" AND "LIBERAL"

Background

After the collapse of the Soviet empire in 1989, the U.S. reduced the size of its armed forces and military budget. Today's military has 1.4 million full-time soldiers, down from 2.1 million in 1990.[1] Military spending declined from $405 billion in 1990 to $295 billion in 1998, in 2003 dollars.[2]

In both Congress and the Pentagon, interest grew in outsourcing (contracting for support services while retaining responsibility for them within the military) and privatization (transferring responsibility for management of a program from the military to private contractors). They were (and are) viewed as ways to cut costs and increase efficiency.

Acquisition rules were changed in the early 1990s to allow the military to buy more commercial technology that has not been specifically designed for the Department of Defense (DOD). In 1996 Congress directed DOD to begin privatizing support services considered commercial in nature. It instructed the Pentagon to submit a plan for increased use of the private sector for services not central to the military's war-fighting mission, and it required the DOD to provide a justification when it recommended that a function not be outsourced.[3]

Every major U.S. military operation since 1990 has involved support from private military companies, including the Persian Gulf War, Somalia, Haiti, Zaire (Congo), Bosnia and Kosovo. In the 1991 Gulf War the ratio of private contractors to soldiers was one in 50; by the time of the 1996 peacekeeping mission in Bosnia the ratio had increased to one in 10.[4]

The 1999 operations in Kosovo illustrate how contractors are used. Before the conflict, the military observers who made up the U.S. contingent of the international verification mission were employees of private companies. During the air war, these employees provided logistics and intelligence. They also constructed and operated refugee camps.[5]

The role of private companies has expanded beyond logistics and support services. Private companies working for the U.S. now train U.S. and foreign troops, provide security, and interdict drugs. The fastest growing area of military privatization is maintenance and operations of high-technology weapons and information systems.[6]

In the 1990s other countries also reduced their military forces. The world's armies shrank by 6 million personnel in that decade.[7] A large number of trained military personnel found themselves out of work. In Russia and South Africa, elite units cut by the government formed private companies. At the same time a flood of low-cost, surplus weapons became available.[8]

Private companies made up of retired military personnel have been hired as mercenaries and consultants on military strategy by governments as well as insurgents. These companies supply their own weapons, and often their own support, including airplanes and helicopters. Only national laws limit the types of weapons they may use.[9]

The market for both battlefield and support services is expected to mushroom. Industry projections prior to the Iraq invasion anticipated the worldwide market for private military services would grow from $55 billion in 1990 to $210 billion in 2010.[10]

By some estimates 20,000 military contractors are working in Iraq, not including contractors working on reconstruction projects. Private companies may be responsible for as much as 30 percent of our military activities in Iraq.[11]

In Iraq, private companies provide logistics, transportation and other support services for troops. They also maintain and operate unmanned aerial surveillance and reconnaissance vehicles. When the U.S. invasion was launched they operated the weapons systems on Navy battleships.[12] Contractors maintain F-117A stealth fighters and B-2 stealth bombers.[13] Private companies provide translators, interrogators, and training for Iraqi security forces.[14]

Contractors provide security for civilians and supply convoys. According to the Coalition Provisional Authority there are at least 20,000 employees of more than 60 private security companies working in Iraq, and more are expected to arrive as reconstruction work picks up.[15]

The question

Should the U.S. rely on private companies to provide military services?

The conservative perspective

Conservatives maintain that privatization and outsourcing can reduce public spending and increase efficiency. They argue that outsourcing made American industry more competitive in the 1990s, and it can do the same for the military.[16] According to one Cato Institute policy analyst, "In all its purchases, DoD, like the commercial sector, should focus on getting the best value for each dollar spent instead of focusing excessively on performance."[17] A report from the Defense Science Board estimates that by changing the way it does business, outsourcing and working more closely with the private sector, the Department of Defense could save $30 billion annually.[18]

Conservatives argue that private military companies offer "surge capacity". They can be mobilized on short notice to add to military capabilities. Without these companies and that capacity, the U.S. would have to maintain a much larger standing military.[19]

Conservatives maintain that while contractors' pay may seem high, it is cost-effective because they are paid only when needed. Moreover, they argue that when comparing costs one needs to take into account the significant benefits received by enlisted personnel. The average cash compensation to active-duty service members in 2002 was $43,000, but the average total compensation including cash and non-cash benefits was $99,000 (health care, housing, community services, retirement pay and veterans' benefits).[20] The Congressional Budget Office estimates that the reduction in the number of armed forces since the late 1980s has reduced retirement fund payments alone by nearly $12 billion.[21]

Conservatives argue that it is efficient to contract the operation and maintenance of sophisticated weapons systems to the companies that invented them. Rather than managing multiple contracts for a weapons systems, its parts and maintenance, the military can manage one vendor who is responsible for meeting performance goals.[22]

Conservatives also maintain that private companies can provide assistance in areas where the U.S. has interests but where it would be politically difficult to send in U.S. troops. A private company held off rebel uprisings in Sierra Leone from 1995 to 1997.[23] Nigerian peacekeepers restored order in Liberia in the mid-1990s, with the help of U.S.-financed logistical support from an American company. The U.S. has funded anti-narcotics operations by private companies in Colombia since 1998. In Kosovo, private companies provided peacekeepers so the U.S. did not have to call up the National Guard.[24]

Not only are these types of operations less controversial when carried out by private companies, they are less costly. Private company operations in Sierra Leone cost about 4 percent of the costs of a subsequent U.N. peacekeeping operation.[25] It is estimated that the intervention in Liberia would have cost 15 times more if U.S. troops were used.[26]

Conservatives argue that private companies could improve the quality of U.N. missions. The U.N. is slow to deploy peacekeeping troops and the troops are often poorly trained and under-equipped soldiers from developing countries. A private company claimed that it could have intervened to stop the killing in Rwanda within 14 days of hire at a cost of $600,000 per day. The U.N. operation took much longer, cost $3 million per day and did not stop the genocide.[27] A subsequent U.N. report emphasized the importance of rapid deployment and on-call expertise for peacekeeping operations.[28]

Conservatives maintain that private companies can provide security for non-governmental organizations (for example, the Red Cross and Doctors Without Borders), enabling them to do important work in dangerous places. Violence against relief workers greatly increased during the 1990s. In 1998, for the first time, more U.N. staff died providing humanitarian relief than on peacekeeping missions. Private companies can fill the "security gap" when countries are unable to provide security for aid agencies.[29]

Conservatives argue that employing the military for non-combat operations weakens the military by distracting from its core mission of fighting wars abroad. During the 1990s, the U.S. military was often deployed in response to ethnic conflicts and collapsed national governments. One former Chairman of the Joint Chiefs of Staff noted that over this time, "our response to the strategic environment has placed a wide range of demands on the U.S. military" resulting in "imbalance between strategy, force structure and resources."[30] Condoleeza Rice justified withdrawing U.S. troops from the Balkans because peacekeeping missions were "harming morale and reenlistment rates, weakening our military's core mission."[31]

Conservatives argue the military should not be used in actions that are not fundamental to national security, such as drug interdiction and nation building. Since the 1990s there has been a trend toward civilian authorities directing the military to undertake such tasks. This demonstrates a lack of understanding of the purpose of military forces, which is, according to one scholar of security studies, "to destroy things and kill people."[32] According to the U.S. Commission on National Security, "If these trends continue, a small professional military will stand increasingly apart from the country and its leaders."[33] This threatens the country's ability to maintain an apolitical military that serves under the direction of civilian leadership.[34]

The liberal perspective

Liberals argue that many of the activities contractors are performing are too important to entrust to private companies, which are motivated by profit above all else. They maintain that the evidence does not prove that the use of private companies saves money. And they argue that privatization undermines political and legal accountability.

Liberals point to concern among military commanders that private companies may be unwilling or unable to provide needed services in danger zones. U.S. troops suffered through months of unnecessarily poor living conditions because contractors refused to go into danger zones.[35] A contractor hired to train the Iraqi military did such a poor job that the Jordanian army had to be called in for assistance.[36]

Worse yet, Iraqi soldiers who underwent basic training conducted by private contractors refused to fight in support of U.S. Marines in the April 2004 siege of Fallujah. U.S. military officials concluded it had been a mistake to have private contractors conduct basic training and ordered a wholesale revision of the training system. This delayed the deployment of Iraqi army units, leading directly to a shortage of Iraqi troops to assist in fighting the insurgency.[37]

Liberals point out that no systematic study of the cost-effectiveness of military privatization and outsourcing exists because there has not been adequate oversight or auditing of military contracts.[38] There is reason to believe that outsourcing may not be cost effective. Pentagon contracts are often awarded with limited or no competition. And they are awarded on a cost-plus basis, under which contractors have an incentive to inflate costs.[39] (A BusinessWeek correspondent asks, "Why take a 2% profit – about what the margins are for Halliburton on its Iraq work – on $100 of costs when you can take 2% on $200 of costs?"[40])

Liberals note that cost-plus contracts allow companies to bill the government for the cost of hiring private security companies, which have skyrocketed in recent months. Private security employees can make $500 to $1500 per day, compared with infantry soldiers' wages that are around $70 per day.[41] And the cost of employing contractors of any kind increases during war. For example, insurance rates for civilian contractors increased by 300 to 400 percent in the period leading up to the invasion of Iraq.[42]

Liberals point out that although replacing military cooks with civilians might save money, it risks lives. Unarmed support contractors cannot defend themselves, nor can they provide backup. Service members in non-combat positions receive military training and may be called to fight, as they were in the Battle of the Bulge during World War II.[43]

Liberals argue that outsourcing non-combat positions leads to a military that is less diverse in race and gender. African-Americans are underrepresented in direct combat specialties relative to their overall numbers in the military, and overrepresented in combat-support and administrative specialties.[44] Non-combat positions are also the only ones open to women without restriction.[45]

Liberals point out that there is little distinction between the roles of soldiers and military contractors. Contractors are almost invariably armed, and there is no way to distinguish between contractors and soldiers, or armed contractors and unarmed contractors.[46] Contractors have been awarded battlefield commendations, including the Purple Heart and the Bronze Star.[47] But soldiers and contractors are distinct in two important ways. First, the government does not track civilian deaths as it does soldiers. It is believed that more than 50 contractors have died in Iraq, but the true number is unknown.[48]

Second, contractors are not subject to orders from battlefield commanders because they are not part of the military chain of command. This means that contractors cannot be ordered into battles, and nothing but their employment contracts prevent them from leaving. The Ghurka Security Guards, who currently hold the contract for guarding the Coalition Provisional Authority, broke their contract with the Sierra Leonian government in 1994 when their commander was killed in a rebel ambush. The government was unable to continue fighting the rebels until it hired a new company.[49]

Liberals maintain that military contractors are often legally unaccountable. They are not subject to the Uniform Code of Military Justice, as soldiers are. In general they are subject to the laws of the country they operate in, but in Iraq, for example, the Coalition Provisional Authority (CPA) issued an order providing immunity from Iraqi law for actions by contractors or their employees in the course of their official activities.[50] The laws under which an American civilian contractor might be prosecuted for actions abroad are restrictive and have never been tested.[51]

Legal accountability becomes even more difficult if the contractors are not U.S. citizens, or if the country they work in does not have a functioning legal system (as is often the case when there is conflict or a humanitarian crisis). Under these circumstances, contractors are accountable only to the organization that pays them.[52]

Liberals say private military companies fill a demand for security that would otherwise be met by increasing the number of U.S. troops deployed, or by convincing allies to send troops. The availability of contractors allows policymakers to undertake or continue military activities without the support of Congress, the American people, or U.S. allies.

Liberals maintain that leaders can avoid normal constraints on foreign policy by sending a private company, but the consequences of this may be serious. The U.S. circumvented an arms embargo on the Balkans by encouraging the Croatian government to contract for military training with a private company, MPRI, made up of retired American officers. With a stronger military, Croatia was able to push the Serbs into peace negotiations. But the newly trained military also uprooted 150,000 to 170,000 Serbs from their homes in a bloody campaign of ethnic cleansing.[53]

Revised 11/07/04