Should Private Security Companies be Employed for Counterinsurgency Operations?

Journal of Military Ethics

Volume 12, Issue 3, 2013

Should Private Security Companies be Employed for Counterinsurgency Operations?

David M. Barnesa*

pages 201-224

Abstract

Many of the reasons offered for outsourcing security involve costs and benefits – a consequentialist way of reasoning. Thus, I will explore a consequentialist argument against the use of private security contractors (PSCs) in counterinsurgencies. Discussing the benefits and costs of employing PSCs in these kinds of operations will demonstrate that the hiring of PSCs in many cases (perhaps in most) is consequentially unsound. More precisely, the overall negative consequences of hiring PSCs during counterinsurgencies should preclude their use unless in extreme emergencies. Defenders of the use of PSCs readily point to their financial benefits and expected increase in efficiency as the starting point for their argumentation. On my account, if the benefits really do outweigh the foreseeable and expected costs, then hiring PSCs may, in that case, be a morally viable option. However, I contend that, unless we institute broad contractual control and oversight reform, unless we truly understand the costs and benefits, we should have a standing, prima facie prohibition against employing PSCs in counterinsurgencies.

Key Words

Abstract

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Many of the reasons offered for outsourcing security involve costs and benefits – a consequentialist way of reasoning. Thus, I will explore a consequentialist argument against the use of private security contractors (PSCs) in counterinsurgencies. Discussing the benefits and costs of employing PSCs in these kinds of operations will demonstrate that the hiring of PSCs in many cases (perhaps in most) is consequentially unsound. More precisely, the overall negative consequences of hiring PSCs during counterinsurgencies should preclude their use unless in extreme emergencies. Defenders of the use of PSCs readily point to their financial benefits and expected increase in efficiency as the starting point for their argumentation. On my account, if the benefits really do outweigh the foreseeable and expected costs, then hiring PSCs may, in that case, be a morally viable option. However, I contend that, unless we institute broad contractual control and oversight reform, unless we truly understand the costs and benefits, we should have a standing, prima facie prohibition against employing PSCs in counterinsurgencies.

Key Words

Introduction

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Allegations of misbehavior by ArmorGroup employees in Kabul, combined with doubts that they were adequately fulfilling their embassy security contract,1 highlight potential problems with the employment of private security companies (PSCs) in counterinsurgency campaigns like those in Iraq and Afghanistan (POGO 2009).2 Winning the hearts and minds of the local population, thereby gaining legitimacy in their eyes, is a fundamental line of operation of waging a counterinsurgency. The US Army’s Counterinsurgency Field Manual (USDA 2006: 1–9) further articulates: ‘Security force abuses and the social upheaval caused by collateral damage can be major escalating factors for insurgencies.’

Unfortunately, as demonstrated by the 2007 Blackwater shooting in Baghdad that left 17 dead (Glanz & Rubin 2007), this best practice is often in jeopardy. Furthermore, as the Congressional Research Service (CRS) ‘Department of Defense Contractors in Iraq and Afghanistan’ report points out: ‘abuses and crimes committed by armed private security contractors and interrogators against local nationals may have undermined U.S. efforts in Iraq and Afghanistan’ (Schwartz 2009: 11, see also Singer 2007: 13–15).

A PSC proponent would point to similar episodes of mistreatment of the local population by the military to counter that PSCs are not alone in their counterproductive activities. Often, PSCs – and private military companies (PMCs) in general – are more professional (and often more capable) in their daily duties than a state’s own security forces; many of them served honorably in their state’s military. Nevertheless, hiring of PSCs raises additional worries. First, the local population often draws no distinction between PSC contractors and the military. Any mistreatment by either can be attributed to the ‘occupation’. As Hart Security’s George Simm pondered: ‘Don’t you think if you drive around all day pointing guns at people and shooting at them it will come back to you?’ (Pelton 2006: 291). Second, how PSCs provide their services, their methods, have broad effects. The use of excessive force or the threat of force during the execution of the contract may, in counterinsurgencies especially, erase the hard-won goodwill that the military and government are trying to achieve. While some may argue that better controls through improved contracts and oversight will eliminate this problem, (1) this has not been the case yet, and (2) I argue that the military itself is better suited to adjust to an evolving situation. In the case of counterinsurgencies, being able to adjust how one accomplishes the mission to meet the overall commander’s intent for the campaign is essential; for a PSC, this would require a change in contract as well as a change in how the PSC conducts business.

Many of the reasons offered for outsourcing security involve costs and benefits – a consequentialist way of reasoning. Thus, I will explore a consequentialist argument against the use of PSCs in counterinsurgencies. Discussing the benefits and costs of employing PSCs in these kinds of operations will demonstrate that the hiring of PSCs in many cases (perhaps in most) is consequentially unsound. More precisely, the overall negative consequences of hiring PSCs during counterinsurgencies should preclude their use unless in extreme emergencies. Defenders of the use of PSCs readily point to their financial benefits and expected increase in efficiency as the starting point for their argumentation. On my account, if the benefits really do outweigh the foreseeable and expected costs, then hiring PSCs may, in that case, be a morally viable option. However, I contend that, unless we institute broad contractual control and oversight reform, unless we truly understand the costs and benefits, we should have a standing, prima facie prohibition against employing PSCs in counterinsurgencies.

There have been other attempts to argue against PMCs in general, not just PSCs. I focus on PSCs in this paper, but much of the argument could apply to evaluating the consequences of military outsourcing in general as well. Some argue that hiring PSCs makes force a commodity, and force should never be commodified. Others argue that PSCs are no different from mercenary organizations, or that PSC contractors cannot be the moral equivalent of professional soldiers. In addition, some may argue from either republican ideals or Weber’s monopoly of force that force must be an ‘inherently governmental function’, thereby not eligible for outsourcing. (I discuss each of these in detail elsewhere; Barnes 2011.) Instead, we should look at the very argument that PSC supporters use – that privatization of certain functions, like other forms of governmental outsourcing, results in both cost savings and increased efficiency; is this argument sufficient?

1. The Benefits of Hiring PSCs

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Privatization is historically ‘associated with comparative advantage and competition’, Avant (2005: 35) writes, ‘leading to efficient and effective market responses and contrasted with staid, expensive, and backward-looking’ bureaucracy. Thus, the two readily apparent areas that highlight the benefits of hiring PSCs, and outsourcing in general, are in cost savings and in increased efficiency. In addition, hiring of PSCs leads to other benefits, many of which fall outside of the financial and efficiency categories.3

The apparent sudden hiring of PMCs including PSCs did not happen overnight. The increased use of PMCs began in earnest with corresponding privatization programs occurring in the late 1980s. Market-based approaches began to emerge in various government agencies, such as with the Internal Revenue Service (IRS), and also began to become popular in business, utilities and other industries. With other government departments outsourcing differing requirements, it made sense that the military also was considered. Indeed, the military seemed ideally suited to some for privatization for at least some functions because of the broad range of varied missions and the limited number of times that the military was deployed. This led to the so-called ‘Third Wave’ privatization initiative within the Pentagon (Isenberg 2009).4 Isenberg (2009: 15) observes that many thought it ‘more efficient for the military to call on a group of temporary, highly trained experts in times of war – even if that meant paying them a premium – rather than to rely on a permanent standing army that drained resources (with pension plans, health insurance and so forth) in times of peace.’

Hiring contractors seems to provide significant operational benefits to the Defense Department. First, using PMCs to perform non-combat activities frees up soldiers to perform combat missions. Second, it takes a relatively long time for the military to develop a new capacity (e.g. information warfare), and PMCs can both be hired faster, thereby enabling the military to rapidly adopt a new capability, and be deployed quickly to provide these critical support capabilities. Third, PMCs are also able to provide expertise in specialized fields that the military may lack or not possess in sufficient numbers. A prime example of this is linguist capability.5

One of the most concrete benefits includes the saving of government spending. Schwartz (2009: 2) writes: ‘[PMCs] can be hired when a particular need arises and be let go when their services are no longer needed. Hiring contractors only as needed can be cheaper in the long run than maintaining a permanent in-house capability.’ In fact, a report from the 1995 Defense Science Board ‘suggested that the Pentagon could save up to $12 billion annually by 2002 if it contracted out all support functions except actual war fighting’ (Isenberg 2009: 2). A clear example of how the US Army sought to capitalize on privatization is in logistics. The Logistics Civil Augmentation Program (LOGCAP) is an Army program established in 1985 to use civilian contractors in wartime and other contingencies, such as in Bosnia and Kosovo.6

As a fourth benefit, the international hiring of multinational PMCs, in some respects, has aided in the US government’s foreign security assistance programs. One might also add that in places such as Iraq and Afghanistan, the US Defense Department has relied on PMCs recruited internationally, employing over 242,657 contractors, providing a much larger, international labor pool than could be provided by the military alone (Avant 2005: 123).7 When a mission requires a long-term commitment, such as with training other militaries, PMCs can provide greater stability in such programs, where the same personnel stay beyond a short deployment.

PSCs and other PMCs are widely used in developing countries, where non-state actors such as multinational companies are increasingly reliant upon such PSCs to ‘protect their employees and assets’ (Kinsey 2006: 56). In addition, charities and other non-governmental organizations (NGOs) also use PSCs to train their own employees in survival skills and to directly protect them on the job. International groups, aid organizations, other states, regional coalitions, and even the UN are turning to PSCs to provide security and to PMCs for other support during humanitarian missions. These organizations seem to acknowledge that resolving humanitarian crises may be beyond the capability of any single state. Even the association of PMCs who make up the International Stability Operations Association (ISOA) advertise their focus on supporting humanitarian operations.8 PMCs initially seem well suited to supporting these humanitarian missions.

Hiring PMCs, although widely accepted and utilized, is controversial, but employing PSCs seems to draw the most attention. While much of the literature on the use of PSCs seems negative, supporters of the use of PSCs, such as Carafano (2008: 126), argue: ‘There is no reason that the government should not exploit the advantages of free trade and outsourcing…, if these practices deliver the best value for service.’ Nevertheless, in his enthusiastic endorsement of PSCs, Carafano also reveals some of the potential pitfalls. First, do these benefits apply in every circumstance of PSC employment? Second, while in ‘the best circumstances these contracts can enhance military effectiveness only with minor functional losses (such as increased costs)’ (Avant 2005: 63), war is one of the most chaotic environments. Can reality match expectations?

The US military could not conduct the varied operations in Iraq and Afghanistan without the hiring of PMCs and PSCs. Nevertheless, (1) the need for these other companies was not foreseen, and (2) the reality on the ground, combined with perhaps some miscalculation in terms of both the scope of the task of rebuilding Iraq and the appearance of the insurgency, suggests that perhaps the hiring of PSCs was facilitated by the conflict itself. ‘Since US forces were not available to protect those doing reconstruction work, such firms had no choice but to turn to [PSCs] to protect employees,’ Isenberg (2009: 157) writes. ‘Put another way, while [PSCs] provide valuable services in Iraq, monumentally poor planning created the need for them.’ In economics literature, questions of outsourcing certain functions revolve around the ‘efficiency of contracting’. While PSCs can provide many benefits in the near term, with the changing nature of warfare – especially in counterinsurgency operations – marginal costs often begin to increase.

2. The Costs of Hiring PSCs

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There are certainly negative consequences of hiring private security in terms of financial costs and operational efficiency, but there are additional consequences that are associated with this outsourcing. Moreover, discussions of these other ‘costs’ are often overshadowed by debates of cost savings versus efficiency, as well as legality and control.

Hiring PSCs incurs secondary costs, including personnel and contract replacement, workers’ compensation, increased insurance premiums, evacuation and rescue costs, and increased reconstruction costs.9 Especially when considering the total costs of contract fulfillment, one must question whether outsourcing results in actual, promised cost savings. A Deloitte Touche survey of 1500 chief executives suggests that either the savings are overestimated or not transparent. The survey notes: ‘only 31 percent believed that outsourcing had generated significant savings, and 69 percent were disappointed in the overall outsourcing results’ (Singer 2003: 157). While these results may not be statistically alarming, they do suggest that even when financial costs can be compared, the savings may not exist.

In addition, financial costs alone may not be a sufficient measurement of successful outsourcing. Recall that in the business world one tries to achieve the three successful characteristics of cheap, fast and good; yet, it seems that at most one can only achieve two of the three. Likewise, increased efficiency usually has a price. For example, ‘[l]ogistics officers often talk about value in terms of cost/speed of delivery/quality of service. If you need it tomorrow in the war zone, you can’t expect Federal Express to get it there for you’ (Isenberg 2009: 22).

These business dilemmas, particularly when one is discussing efficiency, are magnified in both the spheres of domestic politics and in international relations. As Verkuil (2007: 4) writes: ‘democracy is not defined by efficiency alone. Accountability is a countervailing principle of democracy. It may but need not be efficient. Indeed, as the Supreme Court has recognized, the Constitution is sometimes intentionally “inefficient”.’ Whenever efficiency outweighs accountability, Verkuil contends, the possibility exists of efficiency undermining democratic values.

These costs are harder to quantify but must be considered. In the debate over the hiring of PSCs, if one merely looks at a make-or-buy choice, then the argument might be only a function of whether a PSC could perform the requirement better and at lower cost – a transactions cost approach (Verkuil 2007). However, as will become apparent, hiring of PSCs is not a mere transaction cost evaluation.

In order to better discuss the negative consequences of hiring PSCs, I will categorize them generally into five areas. The first category is what I call contracting costs or the cost of doing business. This category includes issues arising from contracting uncertainty, issues of traction and repeated contracts, the lack of an ideal marketplace, defining contractual success, dependency on private security, walkouts and strikes, overcharging, and weak oversight leading to wasted money. The second category, control and security contracting, includes concerns of subcontracting, multiple and transnational stakeholders, reliance on third-country nationals, ‘independent contractors’, and shifting companies. The third category introduces the problems associated with PSC agency, the evolving world order, and when the primacy of security conflicts with a competitive market. This category is called private security and the changing international landscape. The fourth category discusses when hiring private security involves a conflict between the public good and the private good. In this category, I will look at the effects of hiring PSCs on alliances and waging counterinsurgency, as well as the international reputation of the hiring government. Finally, I will briefly discuss some in bello problems. I will first turn to contracting costs.

3. Contracting Costs – the Costs of Doing (Government) Business

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Contracting security requires some financial costs, often comparable to government expenditures on security. Nevertheless, security contracting incurs unique contracting costs. Furthermore, contracting security, particularly in a conflict environment, creates other costs not typically found in other outsourcing.

3.1. Contractual Uncertainty

Government contracts come in a variety of flavors – from the most common, fixed-price contracts to the more notorious ones, such as cost-plus contracts and sole-source contracts. In terms of transaction cost comparison, a fixed-price contract is preferable, as the agent (contracting company) receives set fees for the services that the contractor provides. Cost efficiency is therefore easier to compare. However, changing conditions on the ground add uncertainty to security operations, which could affect not only the services provided but also the very requirements that the government sought to contract (cf. Avant 2005: 85, Carafano 2008: 77, Friedland 2004, Singer 2003: 152). PSCs often have trouble knowing costs and predicting profits. One alternative is the cost-plus contract. In cost-plus contracting, a PSC can pass on operating expenses to the government, and their profits remain unaffected. As Carafano (2008: 77) points out, PSCs might be more ‘willing to undertake risky contracts where costs might spiral out of control’, but there would be fewer incentives to lower expenses.10 The other alternative is the sole-source contract, where the contract is let to one company without a competition. During a national emergency, the department of defense can let a sole-source contract (see Verkuil 2007: 131).11 The problem with sole-source contracting is that it removes the very market forces that proponents of outsourcing rely upon. Fortunately, since 2007, current US security contracts are awarded under competitive bidding.12

Nevertheless, even when PSCs are contracted in open bidding, these contracts do not adjust easily to changes in the government’s goals. By their nature, contracts are valuable for delivering a product or service to order. Contracts are also rather inflexible; anticipating contractual changes is difficult and, of course, costly.

Some might argue that PSCs are profit motivated, but so too are other entities that provide products or services. Much as a doctor may make money and be motivated to save his or her patients, a security company’s intrinsic motivation is to make its clients more secure. While it is naive to think that PSCs are solely motivated by profit, it would be equally absurd to ignore that profit does matter. In the security arena, the business nature of the company can conflict with the PSC’s intrinsic motivation to provide security. In other words, the financial nature of the contract itself informs how the PSC fulfills it. Profit directs how operations are resourced and conducted. PSCs, therefore, ‘might limit expenditure on the more effective solution to ensure their profit margins’ (Singer 2003: 155). Finally, framed by unforeseen contingencies, wartime contracts are unfortunately rather inflexible. A cost-plus alternative seems to counter the very cost savings that the original PSC contract was intended to provide. While implementing contractual control would alleviate some of these financial issues, the process is difficult at best, and history so far has not provided good examples of making it work.

3.2. Traction

Another consequence of doing business with PSCs is known as traction, where the profit motivation of the PSC not only can affect the current contract, but encourages that the PSC remain profitable by earning contracts (or renewing the same contract) in the future (Singer 2003). The anticipation of future contracts not only builds an increased reliance on the PSC, but the motivation for future contracts can affect how the PSC conducts operations. For example, Blackwater (now Academi)13 claims that it has never lost a protected person; however, critics point to the disruption to Iraqi lives from Blackwater operations. The Coalition Provisional Authority (CPA), furthermore, was not only hiring PSCs and attempting to control PSCs in the country, but also establishing policies requiring other companies and agencies to build private security into their bidding for CPA funding. Before the questions of whether the USA should hire PSCs or how they could be controlled could even be answered, CPA policy was encouraging the increased and future hiring of private security.

3.3. Not an Ideal Market

PSCs do not operate in the ideal, free marketplace. While the military operates with controls ranging from specific domestic and international laws, PSCs are primarily regulated by the market. Traditionally, in the PSC industry, as part of the larger military industry, there is not instant supply and demand. The PSC industry is an entrenched industry, where competition is erratic, and the players remain basically the same. While the company names may change, the key players – those bidding on and executing the contracts – are essentially the same, with long-term contracts passing between a few large PMCs as the contracts are re-let. As Surowiecki writes: ‘Outsourcing works well when there’s genuine competition among suppliers.’14 But, the limited players of an entrenched industry limit competition, where competition should be a self-regulating mechanism. Because there are limited players, and therefore limited competition, the self-regulating mechanism of the market is not sufficient for PSCs. The lack of market regulation increases the costs of providing oversight mechanisms, and the lack of competition may result in not receiving the best price for services rendered. Because the market is not ideal, competition enabling self-regulation will not work as PSC proponents advertise.

3.4. Defining Contractual Success

Identifying successful fulfillment of security service contracts is problematic, much more so than for delivery of a product or even for services rendered in other areas. Much like defining success in Iraq, or determining whether the USA is more secure since 9/11, or more relevantly, whether ArmorGroup is sufficiently protecting the US Embassy in Kabul (POGO),15 PSC contract success is difficult to define. How does the principal know when the contract is fulfilled? How should the contracts’ measures of performance be measured? Much of the potential issues with defining success may be improved with better contract writing, but often the desired successful results are often more complex than a simple metric. For example, Blackwater merely stating that it has not lost a protected person or that a PSC-guarded base has not been attacked are both due to a number of factors – perhaps unrelated to the security contracts’ fulfillment. The problems of the defining contract success combined with the contracts’ inflexibility makes adapting to change in security situations much more difficult.

3.5. Becoming Dependent on PSCs

Continued reliance on PSCs raises another concern. The government may become dependent upon privatized security. This PSC dependency can lead to several problems. First, increased reliance on PSCs, while perhaps providing flexibility in the short term, can limit the government’s military options. Second, in terms of principal agent theory, the PSC might gain dominance over the agency that hired it. Third, at the worst possible time, a private company may abandon the client. And, even if a company may not willfully abandon its client, a fourth problem involves whether the principal can find a replacement if the PSC fails in its contract (cf. Avant 2005: 127, Singer 2003: 159, Verkuil 2007: 131).16 Fifth, once the security function has been outsourced, the government may lose the in-house ability to perform that same function. Private actors can accumulate knowledge and simply transfer it away from the public sphere. Finally, because hiring PSCs is a delegation of force previously performed by the military, the danger of the corresponding transfer of authority with the delegation increases.

3.6. Walkouts, Strikes and Dropped Contracts

PSC dependency also incurs negative, short-term consequences. As with any business contract, private security contracts run the risk of walkouts, strikes and dropped contracts, but the consequences of these potential pitfalls are even greater during wartime and contingency operations. While contractual breaches are not the norm, they have occurred regularly enough to warrant investigation. For example, Gurkha guards in Kabul previously threatened to quit guarding the US embassy in Kabul, and apparently ‘nearly 90% of the incumbent US/Expats left [the ArmorGroup contract in Afghanistan] within the first six months of contract performance’ (POGO 2009).17 Because the PSC is a business, further attention needs to be focused on how mergers, bankruptcies, foreign acquisitions and other business decisions affect the security service contract. Because of the immediate negative effects of a walkout or broken contract, these risks must be evaluated prior to the contracts being let.

3.7. Overcharging and Monies Wasted

Along the same lines as contract breaking is the potential problem of financial abuse. Much of the PMC media debate focuses on issues of monies wasted, and with proper oversight, the risks of these financial abuses could be lessened.18 Nevertheless, poor contract management leads to wasteful spending of billions of dollars and can divert limited resources away from other important US counterinsurgency efforts (Walker 2007). Schwartz’s (2009: 12) CRS report on Defense Department contractors states that ‘wasting resources that could otherwise have been spent on social services and economic development may limit the effectiveness of U.S. efforts’ and ‘may also result in increased fraud, which could similarly undermine the credibility of the U.S. in the eyes of the local population’ (Also see Schwartz and Church 2013). A PSC proponent might counter that the government also wastes money, and fraud and overspending are some of the reasons for the privatization push. I concur; however, it is worth mentioning both overcharging and wasted spending to show that the hiring of PSCs is no guarantee that costs will be saved. Consider the report stating that guarding the US embassy in Iraq costs six times as much as guarding it by military forces would.19 Without true cost savings, the PSC argument loses some traction.

3.8. Boom or Bust Cycle of War and Peace 20

As we watch the stock market for the bull and bear cycles, a state is often shifting through periods of war and peace. Often the market fluctuations correspond to the war–peace cycle; often they do not. A price raise during a ‘boom’ period could cause excessive burden on the state. This would be especially costly if the PSC drops the contract (as I mentioned earlier) or even if the PSC decided to renegotiate the contract in a time of crisis. In the middle of a conflict, the government as the client is in no position to counter because of the increase risks of being able to immediately re-let the contract or cover the service in-house. While different PSCs’ leadership may disavow using this kind of business tactic, it is a common practice in the business world, and the consequences of employing this business practice in the security sphere would be keenly felt.

4. Control and Security Privatization

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4.1. Sub-Sub-Contracting

While much attention is focused on the larger PSC companies, such as Academi, Triple Canopy and ArmorGroup, what some fail to realize is that once the contract is let, many of the PSCs further subcontract for security services. For example, the ArmorGroup contract to guard the embassy in Kabul contains a subcontract for Gurkha guards. In 2004, of the 60 ‘PMCs that the CPA identified as working in Iraq, only eight had direct contracts with the CPA’ (Isenberg 2009: 26).

The common practice of subcontracting is in theory a sound one. Properly used, subcontracting allows for greater efficiency and is used in a wide variety of business areas, from manufacturing to construction to software development. Nevertheless, in the security service industry, subcontracting increases the challenges of control, accountability and oversight, often with PSCs ‘working two, three, four, or even more levels down the contracting chain’ (Isenberg 2009: 29). In the 2004 Blackwater Fallujah incident, identifying whom precisely the contractors were providing security for was complicated by just this effect. Although stipulations limiting subcontracting can be incorporated into the PSC service contract, this common business practice is hard to shake. Using military forces has the advantage of having a clear chain of command providing lines of responsibility to the lowest level. This problematic phenomenon was recognized in Iraq, where the CPA attempted to rectify the problem. Its solution was hiring yet another PSC, Aegis, to coordinate all movements of PSCs.

4.2. Multiple (and Transnational) Stakeholders

Control issues are further exacerbated because the PSCs operate globally. The introduction of multiple and transnational stakeholders introduces another set of concerns. States are not the only principals that use PSCs. Often states contract PSCs for military services to international organizations or other states on their behalf. Doing so creates multiple, often competing principals. Certainly, the USA hires its own PSCs, but it also hires foreign ones, and PSCs are hired by foreign governments and even other PSCs. When the PSC contract is let in Washington, for example, but executed in Pakistan, the principal paying for the contract does not directly see the service being provided. If a PSC is publicly held, then its shareholders come from a wide variety of backgrounds and are not necessarily beholden to the government that initiated the contract. Furthermore, PSC shareholders may be external to the conflict; they may have no interest in resolving the conflict other than ensuring financial profitability of the PSC. While the contract itself may force PSC compliance, the differing interests of multiple principals increase the risks of divergent influence and control over the PSC execution of the contract. Therefore, multiple principals may increase issues of control.

Transnational markets in general usually create challenges to oversight and control, and the PSC industry is no different. This raises two further concerns. First, a state may control a particular PSC during a particular contract, but there is no guarantee that this control extends to the PSC’s other interests, nor to other PSC’s. Second, in cases where a weak state hires a PSC, or another stronger state hires one on its behalf, multiple principals operating internationally further diffuse control (see Avant 2005: 75, 130–131).

While proponents of PSCs, especially in the USA, argue from the loyalty of the US-based PSCs, we would be prudent to remember that these companies are transnational and there are multiple principals involved. Erik Prince may have argued that Blackwater will only work for US interests, yet ‘contractors of the late Middle Ages had obligations to the feudal lords even as they sold their services elsewhere. By necessity each of them had two masters: his feudal lord and the one with whom he made a contract’ (Avant 2005: 246).

4.3. Third-Country Nationals

Not only do problems arise from PSCs being transnational, there are additional complications arising from their global hiring. Contractors from country A, who are hired by country B, and work in another country C are commonly called third-country nationals (TCNs). Many of the PSC contractors in Iraq and Afghanistan were and are TCNs.21

The numbers alone are not the issue. First, TCNs are citizens of other states, often ones not party to the conflict,22 and are potentially problematic under international law. Second, TCNs incur the same difficulties with control as the subcontracting practice. Third, TCNs are bound only by the subcontract to perform services; for example, the Gurkha guards in Afghanistan are hired by ArmorGroup, not by the original principal, the US State Department. Because TCNs are subcontracted, hiring of TCNs raises a further area for friction: screening and selection of personnel is left to the PSC. Furthermore, large-scale use of TCNs lends credibility to the appearance that the PSCs are, or at least are hiring, mercenaries.23

4.4. ‘Independent Contractors’

Some PSCs are attempting to distance themselves as a corporation from illegal acts performed by their employees. In 2008, Blackwater reported to Congress that its security guards in places such as Iraq are ‘independent contractors’. Remarkably, as Rep. Waxman (D-CA) reported:

Blackwater has claimed in official communications that its security guards are ‘in no way directly supervised or controlled by Blackwater’; that they ‘do not report to any of the Blackwater entities regarding their work in the field’; and that they ‘do not report to Blackwater regarding their operations in country’. (US Congress HCOGR 2008)24

Therefore, Blackwater’s ‘only real involvement is to pay the independent contractors’ (US Congress HCOGR 2008).

In other words, a PSC such as Blackwater seems to be claiming that it functions as a hiring service when fulfilling these security contracts. Control, or responsibility for lapses of control, then falls back upon the principal, in this case the State Department. These claims seem to imply that in 2009 there were 10,422 independent security contractors operating in Iraq (Schwartz 2009).

4.5. Shifting Companies

PSCs, like other businesses, transform themselves. While contractual controls may be put into the contract to ensure that the contracted service will be provided when the company is acquired by another, other problems remain. If a PSC, C, violates a contract and is banned from bidding on further government contracts, C can dissolve and C’s employees can go work for another PSC, C2, or even form a different PSC, C3, to bid on new government contracts. This allegedly occurred with Custer Battles in Iraq (Isenberg 2009: 90), and some theorize that this is the rationale behind Blackwater’s transformation into Xe then into Academi.

Since PSCs also are transnational, they often establish subsidiaries in many other countries (e.g. British PSC DSL had approximately 20 of these subsidiaries). PSCs desiring to avoid troublesome state regulation can break up and move somewhere else. Finally, once an employee leaves one PSC, he or she can gain employment in another, much like Daniel Fitzsimons, who was fired from both Olive Group and Aegis, and later joined ArmorGroup in Iraq, where he subsequently killed two coworkers.25

4.6. Who Guards the Guards?

The problems of shifting companies and of controlling independent contractors raise what I term the problem of guarding the guards. In contingency operations or war, proper oversight becomes not only more important, it becomes vital to prevent fratricide and other tactical mistakes as well as ensuring compliance with the commander’s operational campaign plan. With any outsourcing, additional layers of control are required by the principal to ensure the contract is meeting the requirements in a manner that the principal desires. Repeatedly, however, even this oversight function is outsourced, as the principal lacks the resources or expertise to provide it themselves.

When the US Government Accountability Office (GAO) reviewed the Army Contracting Agency’s Contracting Center of Excellence, which oversees procurement, it identified that 42 per cent of the Contracting Center of Excellence procurement specialists are themselves contractors (Isenberg 2009: 89). While the GAO reports that relying on contractors creates the risk of loss of government control and accountability, the GAO itself hires contractors to monitor other contractors. ‘Moreover’, Verkuil (2007): 149) writes, ‘in the military setting, the contracts themselves are often secret or severely circumscribed in disclosure, making it difficult for the public to monitor.’

The problem with making force a commodity through hiring PSCs is that it also makes oversight a commodity. Verkuil (2007: 149) argues that government oversight ‘as a public value has been diminished, if not eliminated. Outside monitors may do acceptable work, but they must themselves be monitored’. Because privatization of force redistributes the control of violence, the use of private guardians raises the question of who guards the guards.

5. Private Security and the Changing International Landscape

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I now turn to the potential that outsourcing force to PSCs may allow governments to conduct foreign policy by proxy – a view that proponents of PSCs, nevertheless, believe to be absurd. Then, I will focus on the impacts of privatized security in the changing international landscape, specifically in the developing world. Next, I will consider how widespread hiring of PSCs actually increases the threat of violence from private groups, and I will discuss the effects of PSCs in what Mary Kaldor (2006) calls ‘new wars’. I conclude this section with a discussion of what happens when the primacy of security encounters a competitive market.

5.1. Foreign Policy by Proxy

In the USA, the hiring of a PSC is a market transaction by the executive branch. Contracts less than $50 million are not evaluated by Congress. Because PSCs are armed and can use force, especially in the conduct of foreign policy, combined with the apparent control problems, their use can allow for executive agents to bypass normal government checks and balances (cf. Avant 2005: 4, Isenberg 2009: 21, Silverstein 2000: 143, Singer 2003: 211–214). For example, when Congress establishes a troop cap for a country, A, limiting the number of military personnel allowed to be in A, hired PMCs can and have been used to bypass congressional limitations. When President Obama called for a surge of 30,000 soldiers for Afghanistan, he did not mention the estimated 58,000 contractors required to support the troops.

Proponents would counter that the Freedom of Information Act and other legal oversight mechanisms, as well as a motivated and open media, prevent foreign policy by proxy. Perhaps this is true – at least in the USA. But incidents such as the Iran–Contra Affair suggest that this may not always be the case. While some may point to the need and examples of congressional approval even for operations short of a declared war (e.g. the Iraq invasion), the USA has not declared war since the Second World War. US supporters of PSCs should also remember that the USA and its allies are not the only international entities capable of and resourced to hire PSCs. In other words, can one expect a similar amount of transparency in say, Myanmar, Iran, Syria or North Korea, or in wealthy corporations or criminal organizations?

International reputation plays an important role in international relations. Furthermore, while the idea of foreign policy by proxy sounds like a good spy novel, the capacity is there should the conditions be right. Western democracies themselves may be victims of it; more probable, however, is foreign policy by proxy within other states or by non-state actors. One might ask whether Syria is using the Lebanese Hezbollah as a proxy force – a non-state armed force (Barnard 2013). Tyler Cowen in the New York Times even suggested: ‘When it comes to Iraq, we have yet to see the evidence of large practical gain in return; instead, use of contractors may have helped make an ill-advised venture possible.’26

5.2. Security for Those Who Can Afford It

Transnational corporations and NGOs also generate other problems internally. While often inadvertent, the external money that they bring to provide local security is often funneled to the most capable or well-connected in a certain area. Much like the warlords in Afghanistan or the tribal leaders in Iraq, the influx of external monies can create privatized security enclaves that are separate from and in lieu of the public security supposedly to be provided by the state.27 Consider the Syrian war, where the EU and USA are considering military aide to the rebel forces. Two further problems arise. First, security threats are now deflected into poorer areas. Second, the chance that developing states create public security institutions decreases, as parallel, and often competing, security is provided by private means. Or, as is common practice, the state must choose between the financing of public bureaucracies and privatized security, especially if internal threats loom.

Ironically, even in strong state-sponsored development, where the stronger state is coordinating and executing another’s development, such as the USA attempted in Iraq and Afghanistan, the wealthier state’s hiring and subsequent use of PSCs outside the local government’s control, ‘prevents the citizens of post-conflict states from controlling the armed agents working in their territory’ (Percy 2007: 237). The new Libyan government seemed to fear this very problem, refusing to allow armed contractors in large numbers in post-Gaddafi Libya.28 Therefore, almost incredulously, as O’Brien (2007: 33) writes, private security is ‘reconstructing the state and its provision of public security to its citizenry while, at the same time, deconstructing the state’s monopoly on armed force and public violence’. While the lack of security provides the reason for hiring PSCs initially, by hiring PSCs, the external principals themselves undermine the very role of public security that the developing state requires.

5.3. Threats from Private Groups

The struggle in Iraq to eliminate private militias, the international search for a solution to the pirates off of the Somali coast,29 and the Colombian and Mexican governments’ respective conflicts with drug cartels demonstrates how states and international organizations are expending considerable energy and resources to eliminate private forces. Nevertheless, the hiring of PSCs is reintroducing private force back into the equation. While many supposedly legitimate PSCs themselves may not provide an increased threat by themselves, past experiences have shown that depending on their employer, they might pose new threats, and in the future some PSCs may themselves be large enough to compete with states, including former employers.

In her book, Making a Killing, Drohan (2004) provides several examples of how transnational corporations have used force and were linked to armed conflict. Union Minière in Katanga, Lonrho in Mozambique and Shell in Nigeria are just three of the examples that she explores in detail. As Singer (2003: 189) suggests, PSCs ‘represent the next logical step on the services side, and, as such, become simply a more direct extension of the power of outside corporations’. Furthermore, PSCs themselves choose their employers. Some work solely for their home states, conducting security operations in full accordance with their home governments. Others have not. Some have worked for non-state organizations and companies that have been involved in drugs, arms, insurgencies and other illicit projects. Without strong legal regulation and with the right money offered, PSCs will be tempted to continue working for other, more dangerous groups.

Much like the mercantile companies of the past, PSCs have the potential to grow in strength, and, as Executive Outcomes did in Sierra Leone, to become stronger than the state that employed it or its neighbors. While there is no guarantee that a PSC would directly compete with or overthrow its employer, it is very certain that the interests of some PSCs will conflict with some states’ interests. Armed with their own PSCs, corporations, non-state groups or even individuals with the financial means could again be international players. It also means that large PSCs could possibly function as their own international force, not under the employment of a state.

5.4. New Wars and PSCs

In her book, New and Old Wars, Mary Kaldor (2006) describes the term ‘new wars’ to explicate the wars that are not fought between states for traditional reasons such as gaining territory. Rather, new wars reflect other motivations: identity politics, or power over or exclusion of another group. In new wars, whole war economies are often created; some new wars are fought purely based upon economic calculations (Kinsey 2006: 51–52). Into this new war dynamic are a growing numbers of PSCs. Because the new wars are fought on a smaller scale, combined with a lack of stronger state or international organization means or interest, the PSCs themselves are altering the landscape.

Economics, of course, has always been intertwined with war and security, but now there is a nexus between those with means seeking to purchase force and profit-motivated security companies willing to sell their services. Economic and military power is becoming increasingly fungible. New wars are generally more ideologically motivated, they involve criminal activities, and unfortunately they are often marked by large numbers of human rights violations. While PSCs could provide stability in a certain region for a time (e.g. peacekeeping operations by PSCs),30 the cycle will increase demand for PSCs and generate more competing PSCs, therefore increasing opportunities for other, less savory, purchases of force.

6. Public Good vs the Private (Profit) Good of PSCs

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Cost and profit motivation are not the only things that draw a distinction between a private contractor and a civil servant. Private contractors are ‘end state’ focused. They deliver a specific product or service in exchange for money, but the focus is on the ends of contract fulfillment. A civil servant, alternatively, agrees to accept instructions – in this case in exchange for a wage not limited by a specific contract. Determining whether private contractors or civil servants will be most effective is based upon the nature of the task/service. ‘Contracting makes sense’, Avant (2005: 48) notes, ‘if the government knows exactly what it wants and cares more about the ends than the means.’ On the other hand, a civil servant is preferable ‘if the government cares about the means and wants his agents to follow a set of guidelines for how to go about providing a service’.

In other words, if one is concerned with how a contract will be filled, one must outline all the specifics, including these considerations in addition to measures of performance in the contract itself. Not only is this process time consuming, perhaps resulting in an unwieldy contract, it may negate the increase in efficiency that the principal sought with outsourcing. Further contractual changes to account for unforeseen second-order effects could also turn costly. Agents of the government may perform the same service, but their scope of work can be quickly adjusted without contract negotiation. Which is better depends upon the desired requirements.

For example, to a state that hires a PSC for security, security is not merely an important task, it is a necessary one. The hiring principal must balance the primacy of security with the very business competitiveness that caused the government to look towards outsourcing in the first place. Often these cannot be balanced. Furthermore, cost savings alone are not the only consideration. Neither are concerns of control. The decision to privatize force often blurs the line between the public good and the private good as the contractors become essentially agents of the state.

6.1. Alliances and Security Assistance

Even long-standing international alliances are often fragile. Within an alliance itself there are concerns of power sharing, financing, treaty obligations and nuances of diplomacy, especially over decisions to commit the forces of the alliance. Internationally, alliances allow smaller states to retain some authority against stronger states and other alliances. Historically, alliances have sometimes resulted in wide-scale conflicts such as the First World War, but have more often maintained a kind of balance of power in certain regions. Adding PSCs changes the equation; the question is to what degree. There have not been any studies conducted on the impact of hiring PSCs on these alliances. However, one possible result is that states may alter the balance of power within alliances or between alliances through the hiring of private forces. Burden sharing within alliances might become less necessary as states that can afford private force hire PSCs or the alliances themselves hire them. Recall that the prime minister of Papua New Guinea turned to Sandline because its traditional ally, Australia, declined its request of support for specialty military training and equipment (Singer 2003: 177).

Another issue is that alliances and coalitions rely upon common training, processes and shared experience to be militarily effective. The use of PSCs as proxy security assistant providers places these relationships at risk. Much of the impact of PSCs on alliances also affects a state’s reputation but manifests itself when alliances or coalitions conduct complex operations like counterinsurgencies.

6.2. International Reputation

Representative Schakowski (D-IL), in reference to Abu Ghraib, wrote: ‘I maintain that the use of private military contractors by the United States is a misguided policy that costs the American people untold amounts in terms of dollars, US lives and is damaging our reputation with the international community.’31

Much of the problem in terms of reputation stems from the historical ties of PSCs to mercenaries. As Isenberg (2009: 165) points out:

With the exception of a few companies that have used ex-British Army Gurkhas…, the recent trend is to strip Third World armies of full battalions in order to be the lowest bidder. It lends a bit of truth to the accusations that MNF-I is paying foreign mercenaries.

In addition, the fact that there has been misconduct, as well as issues of overbilling and other contractual oversight problems, seems to confirm the perception of many that PSCs ‘are wholly independent from any constraints built into the nation-state system’ (Percy 2007). Percy (2007: 58) writes: ‘The element of accountability is the tacit standard that underlies the international antipathy for mercenary activity and truly determines mercenary status.’

States often cannot separate themselves from the conduct of PSCs when they have hired them in the past. Furthermore, the conduct of the PSC often reinforces the mercenary reputation of the company and the state that hired it. Alternatively, the use of PSCs may increase a state’s ability to act unilaterally, without the prior investment into a larger standing military force. This ability may affect, for example, the Obama’s administration’s attempt to assure the international community that the USA has no desire to ‘go it alone’ in current or future conflicts. The perception of another state’s intentions and its international reputation have always played a significant role in interstate diplomacy, and the use of PSCs affects both perception and reputation.

6.3. Conflict between Public and Private Spheres

Some (e.g. Verkuil 2007) have proposed that liberal democracy is actually about answering the question of what can be made public and what should remain private. The notion of public and private spheres is enshrined in the US Constitution and also grounds much of the common law. Often, the lines are clearly drawn; other times the spheres seem to collide. With a return to the use of privatized force, however, the public–private debate has raised some new tensions in domestic and international politics and norms. Consider the cleanup after Hurricane Katrina. When Blackwater patrolled the streets of New Orleans after Katrina, were its agents private or public? Can contractors enforce the law? In the USA, the Posse Comitatus Act limits the use of military forces for domestic law enforcement. Does the use of PSCs domestically challenge Posse Comitatus?

Furthermore, providing for the common defense is an accepted function of government. Security becomes a public service, and it requires a ‘special public trust’. The public perception is that security is a public good, one to be provided by the government, not reliant upon the market. Consider the Bush administration’s decision not to outsource airport security; instead the Transportation Security Administration (TSA) is a government agency. Because of the perception that security is a public good and that providing airport security is a symbol of the government’s commitment to public security, it was not privatized (Verkuil 2007: 57–71).

While it seems that one can argue that as long as the state does provide for the common defense, it should not matter whether the forces are public or privatized, one of the apparent concerns is that when the state outsources to PSCs, it is delegating an essential responsibility. Even if it is an actual delegation, it can be perceived by its citizens as an abdication of responsibility. This issue is compounded because the public good is not identical to the private good. Recall that the organizing intent of PSCs is to generate profits, as any business does. It does so by providing a security service. But, then it seems as though the citizens of a state no longer ‘enjoy security by right of their membership in a state. Rather, it results from the coincidence between the firm’s contract parameters, its profitability, and the specific contracting members’ interests’ (Singer 2003: 126). Privatized security may thus challenge the often presumed republican ideals of the rights and responsibilities of the relationship between states and peoples.

7. In Bello Discrimination

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Finally, there is another cost relating to target discrimination and the Law of Armed Conflict (LOAC). The in bello principle of discrimination, to be effective, entails that one can discern between combatants and noncombatants. However, in practice, this is genuinely difficult, as former Navy Seal Marcus Luttrell, among many others, recounts from Afghanistan (Luttrell & Robinson 2007). The introduction of armed PSC contractors on the battlefield increases this risk. On the one hand, contractors are sometimes in uniform, similar to what the participating soldiers wear, and other times they are in civilian clothing (Byers 2005: 119).32 The US government also holds that all contractors, including PSCs, are legally noncombatants.

Nevertheless, PSC contractors are armed in much the same way as combatants, even using helicopters and other military vehicles. As Singer (2003: 212) writes: ‘when a local guerrilla force is hit by U.S.-made gunships, piloted by U.S. citizens, and using U.S. tactics, it is completely logical for them to assume that the attack involved official United States forces.’ This inability to distinguish between combatants and PSC employees also blurs the lines for other, non-PSC personnel such as journalists, who are often either mistaken for combatants or grouped with them in the eyes of the enemy. Isenberg (2009: 45) relates the story of an Iraqi interpreter, who said: ‘If the insurgents catch us, they will cut off our heads because the imams say we were spies.’33 Although the distinction between combatants and PSC contractors may be readily apparent to some, it is often not the case.

According to the LOAC, combatants are allotted certain privileges that correspond to their responsibilities during war. In turn, noncombatants are immune from deliberate targeting but must refrain from bearing arms. It seems unreasonable, however, to conclude that PSC employees are noncombatants in the traditional sense when they openly carry and use arms. Yet, it also seems untenable to call these armed contractors ‘combatants’.

The problem becomes even murkier if these armed individuals are captured. As a combatant, those in the military are to be treated according to the Geneva Conventions as prisoners of war (POWs). A POW has certain rights; an illegal combatant has none. At best, an illegal combatant would be classified as a criminal and be subject to the criminal justice system. There are no agreed-upon, international conventions to cover these new, armed contractors; the laws governing mercenaries do not apply. Therefore, their legal status remains uncertain. Recall when the Blackwater employees were killed in Fallujah. If alternatively those four were captured and somehow brought to an international court, what would be the outcome?

There was another armed contractor incident in Fallujah where US Marines detained 16 Zapata Engineering contractors.34 I also witnessed my own in bello discrimination issue. My unit had employed snipers atop a prominent building to over-watch approaches into a vitally important entry control point (ECP). Coincidently, a VIP convoy planned to move through the area, and its hired PSC had emplaced a sniper on the same building. The soldiers and the contracted sniper had the wherewithal to coordinate their efforts, but if my soldier’s engagement criteria were different (and they were) from the contracted sniper’s, there obviously could be issues. Who would be responsible for the aftermath? Fortunately, in this example, the convoy passed without incident, and we were able to agree upon some coordination and communication measures between the unit and the contractors for future operations.

8. Benefits and Costs

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Proponents of PSCs and outsourcing in general argue in terms of cost-benefit analysis; hiring PSCs reduces government costs and increases efficiency. Certainly, at least in the short run for specific services, PSCs can make good on their savings. Nevertheless, as I have shown, the benefits and costs associated with the question of privatizing security are not restricted to the financial arena. Issues as diverse as contractual control and international reputation help illustrate the other costs of doing business with PSCs, especially in complex counterinsurgency environments. Furthermore, the financial cost savings attributed to using PSCs are also not apparent. When deciding whether to privatize airport security, for example, ‘the notion of private contractors conducting safety inspections struck both legislators and the public as a distortion of government responsibilities. When it equated airport security officials with custom officials, Congress in effect endorsed the necessity for public service’ (Verkuil 2007: 60). Reassuring the public of government security of its citizens was more beneficial than any foreseeable financial saving to be gained by the hiring of PSCs.

In certain circumstances, when the benefits of hiring PSCs outweighs the negative consequences of doing so, then using PSCs becomes morally viable. As I have mentioned here, generally speaking, the negative consequences of hiring PSCs counterbalances the benefits. Some may counter that these negative consequences are merely expected and may not occur. This may be the case, but one might point out that so too are the benefits of privatizing security merely predicted; further, those benefits have historically fallen short of expectations. Clearly, then, a serious exploration of the foreseeable risks of hiring PSCs must be undertaken prior to entering into a security contract. And, all things being equal, a prohibition against the hiring of PSCs during counterinsurgency operations makes sense. The measurement of costs and benefits is always open to interpretation. But, when the clearly measurable costs savings fail to materialize and when the risks of foreseeable consequences is so great, as is the case with hiring PSCs, states should make it their business to stay out of the PSC business.35

ACKNOWLEDGEMENTS

I would like to thank the audiences at the 2010 International Society for Military Ethics (ISME) and the 2010 Zentrum für ethische Bildung in den Streitkräften (zebis) Conference, Alastair Norcross, David Boonin, Ben Hale, Eric Chwang, George Lucas, Richard Schoonhoven and Martin Cook, as well as the anonymous referees for Journal of Military Ethics, for their comments on earlier versions of this paper.

Notes

1. The views expressed in this paper are those of the author and do not necessarily reflect the official policy or position of the Department of the Army, the Department of Defense or the US government.

2. In this paper, I will refer to the broad grouping of private military companies, from those who support logistics to those who could conduct full-scale military operations, as PMCs. Singer (2003) calls these companies private military firms (PMFs); the Montreux Document (Maurer 2008) calls them private military and security companies (PMSCs); others, to include Kinsey (2006), Chesterman & Lehnardt (2007), and Cockayne (2007), call them PMCs. I adopt the term ‘private security company’ (PSC) to focus on the companies that provide policing and security services. By their nature, PSCs are PMCs; they are PMCs of a certain sort, providing a more limited range of services, all involving the use or potential use of force. I discuss the differences in detail elsewhere (Barnes 2011: Ch. 3).

3. For example, these may include both immediate benefits, including ‘reduced expertise acquisition costs, reduced expertise maintenance cost, reduce administration costs, and increased efficiency through specialization’, as well as long-term benefits, such as ‘binding multiple principals to a common delegation arrangement, reducing negotiation costs, [and] decision-making efficiencies’ (Cockayne 2007: 198). Cockayne also lists blame shifting, ‘because agents – not principles – carry the consequences of unpopular decisions’. Although the last may or may not be a benefit overall, I think that it is not one. Blame shifting invokes matters of government transparency, which are worth discussing later.

4. Isenberg (2009: 17) writes:

The Third Wave had three purposes: (1) to free up military manpower and resources for the global war on terrorism, (2) to obtain non-core products and services in the private sector to enable Army leaders to focus on the Army’s core competencies, and (3) support the President’s Management Agenda. The Third Wave not only asked what activities could be performed at less cost by private sources, but also asked on what activities the Army should focus its energies.

5. Examples in the current war are Arabic, Farsi, Pashto and Dari linguists. See also Avant (2005: 123):

PSCs can draw on a deeper pool of personnel with area expertise. In the ACRI program, for example, MPRI was able to provide French-speaking instructors for francophone African states that would not be available from the ranks of the Special Forces.

6. LOGCAP provides all preplanned logistics and ‘engineering/construction-oriented contingency contracts and includes everything from fixing trucks to warehousing ammunition to doing laundry, running mess halls, and building whole bases abroad’ (Isenberg 2009: 3). LOGCAP has also been used in Iraq and Afghanistan. Currently the Pentagon is operating under LOGCAP 4, and three contractors, KBR, DynCorp and Fluor Corporation, make up the contract.

7. Data from the CENTCOM 2d Quarterly Contractor Census Report; see Schwartz (2009) and Schwartz and Church (2013).

8. From the International Stability Operations Association (ISOA) (formally the International Peace Operations Association – IPOA) website, http://www.stability-operations.org. The ISOA is a 501(C)(6) nonprofit trade association, whose members are active in the stability operations industry.

9. In addition, Cockayne (2007: 198) notes that ‘screening costs in selecting agents; negotiation costs, including building and institutional checks into principal-agent arrangements; monitoring costs, whether from police-patrol monitoring (direct monitoring by the principle) or fire alarm monitoring (relying on third-party testimony or whistle-blowing); and the cost of sanctions’ must be taken into consideration in addition to the contract costs and the above secondary costs.

10. Carafano (2008: 78) also notes that cost-plus contracts in the USA:

more than doubled in the five years after 9/11 to $110 billion. They [were] used extensively in Iraq. The single largest cost-plus contract is LOGCAP. In 2005 it was worth over $5 billion to KBR, but that hardly meant that KBR made outrageous profits. On average, the company’s profits for LOGPAC in Iraq were lower than those for the LOGCAP contracts it fulfilled in Bosnia. Nor was the KBR deal unprecedented. In 2005, the Defense Department handed out three costs-plus contracts for managed health care which totaled almost $6 billion. Interestingly, although the KBR contract garnered many headlines and smart salacious stories, the healthcare contracts attracted scant attention from the national media.

11. Carafano (2008: 78) writes:

In the year before 9/11, according to one congressional report, the federal government issued $67.5 billion in sole-sourced contracts, but in 2005 the figure more than doubled to $145 billion. Sole-source and limited-competition contracts are used extensively in Iraq. Many reconstruction projects let in 2003, for example, were limited to a handful of companies bidding for cost-plus contracts worth billions.

12. Isenberg (2009: 30) writes:

In June of 2005, DynCorp, Blackwater USA, and Triple Canopy were awarded contracts under what is now known as the WPPS II [(Worldwide Personal Protective Services)] contract. Personnel qualifications, training, equipment, and management requirements were substantially upgraded under WPPS II because of the ever changing program requirements in the combat environment of Iraq. The current contract was awarded in July 2005. DS utilizes the WPPS II umbrella contract under which it issues task orders to the three qualified companies: Blackwater USA, DynCorp, and Triple Canopy. The bulk of the contractors come from Blackwater. The contract has a ceiling of $1.2 billion per contractor over five years (one base +4 option years). There are currently seven active task orders under WPPS II: Jerusalem, Kabul, Bosnia, Baghdad, REO Basrah, REO Al Hillah, and REO Kirkuk (including USAID Erbil). An eight operational task order for aviation services in Iraq was awarded to Blackwater USA on September 4, 2007, and performance was to begin in late November 2007. Task Order 1 covers the contractors’ local program management offices in the Washington DC area.

13. Blackwater’s name has changed several times over. Blackwater USA changed to Xe Services LLC. Now it is called Academi (http://www.academi.com). While this rebranding may seem innocuous, one cannot help but speculate as to the reasons behind the name changes. As one anonymous reviewer thoughtfully commented, PSC names can change, but an army’s does not.

14. Army Inc., New Yorker, 12 January; accessed 24 September 2013, available at: http://www.newyorker.com/archive/2004/01/12/040112ta_talk_surowiecki; Internet.

15. Singer (2003: 157) also cites another example:

For example, a common complaint with PSCs landmine clearance operations is that they often clear only major roads (both easier to clear and also more common measures of contract success), and the risky, but still necessary operations, such as clearing rural footpaths or the areas around schools are generally ignored.

16. As Avant notes, hiring PSCs also reduces incentives for the military to reorganize to fill the service requirements.

17. Also, in 2004 60 South Korean subcontractors north of Baghdad quit work on an Iraqi electrical project when two fellow workers were killed (Army Inc., New Yorker, 12 January; accessed 24 September 2013, available at: http://www.newyorker.com/archive/2004/01/12/040112ta_talk_surowiecki; Internet). In addition, in May 2006, 450 British PSC Control Risks employees, who provided personal protection in Iraq, threatened resignation (Isenberg 2009: 86).

18. Nevertheless, there is a risk that the government would be overcharged for the service provided. Custer Battles company representatives accidentally left a spreadsheet behind, which was later discovered by CPA employees. ‘The spreadsheet showed that the currency exchange operation had cost the company $3,738,592, but the CPA was billed $9,801,550 a markup of 162 percent’ (Isenberg 2009: 87).

19. Corporate Warfare. Editorial, Financial Times, 24 August 2009; accessed 24 September, 2013, available at: http://www.ft.com/cms/s/0/0e46624a-90f2-11de-bc99-00144feabdc0.html; Internet.

20. I thank Ben Hale for alerting me to this issue.

21. As of March 2009, according to the CENTCOM 2nd Quarterly Contractor Census Report, TCNs make up 45 per cent of the US Department of Defense-hired PMC workforce in Iraq, while TCNs provide 10 per cent in Afghanistan for a combined total exceeding 67,000 (see also Insurance System for Injured War Contractors is Broken The Washington Post, 16 August 2009; accessed 24 September 2013, available at: http://www.washingtonpost.com/wp-dyn/content/article/2009/08/14/AR2009081401665.html; Internet). (These numbers do not include other non-Department of Defense-hired PMCs.)

22. For instance, Lt. Gen. (Ret.) Jay Garner, who was the director of the Office for Reconstruction and Humanitarian Assistance for Iraq following the 2003 invasion, was protected by former South African military personnel (Isenberg 2009: 38, cf. Desperation Drives Kin of Four Abducted Mercenaries to Speak Out. An Exodus of Highly Paid Guns Alarms, Embarrasses Pretoria, Los Angeles Times, 17 October 2007, A10).

23. Isenberg (2009: 39) writes:

In May 2005 Honduras’s Labor Ministry announced an offer it had been asked to relay from the US firm Triple Canopy, which was willing to pay comparatively high salaries to recruit 2,000 Hondurans to work as security guards in Iraq and Afghanistan.

24. Employment Practices of Blackwater Worldwide, discussed in detail by Isenberg (2009: 53).

25. Mad, Bad, or Just Dangerous to Know?, The Sunday Times, 16 August 2009; accessed 24 September, 2013, available at: http://www.thesundaytimes.co.uk/sto/news/uk_news/article182257.ece; Internet. Avant (2005: 222) discusses a different example:

Reports that MPRI was training the Kosovo Liberation Army (KLA) in the midst of the war in Kosovo – vociferously denied by MPRI – were due to just this dynamic. Though MPRI’s claims were true, persons who had worked for MPRI at one time also did freelance consulting with the Albanian government and may have provided services to portions of the Kosovo resistance.

26. To Know Contractors, Know Government, New York Times, 28 October 2007; accessed 24 September 2013, available at: http://www.nytimes.com/2007/10/28/business/28view.html; Internet.

27. For discussion of warlordism, see Kinsey (2006: 112–115) (cf. Avant 2005: 182, Singer 2003: 227). Kinsey (2006: 115) writes:

Taken to its logical conclusion, warlord politics sees collective and private authorities resembling one another, but with the emphasis on different values. For example, each type of authority provides security. In the case of collective authority, security is a right of membership to the state, while in the private sphere security is a consequence of other factors, most notably economic interests.

28. After Benghazi Attack, Private Security Hovers as an Issue, New York Times, 12 October 2012; accessed 24 September 2013, available at: http://www.nytimes.com/2012/10/13/world/africa/private-security-hovers-as-issue-after-embassy-attack-in-benghazi-libya.html?pagewanted=all&_r=0; Internet.

29. Perhaps ironically, shipping companies are now turning to PSCs to protect their ships from piracy, often encouraged by both insurance companies and the state navies.

30. Singer (2003: 175) raises another concern:

The shift in capabilities can affect assessments of power, and the balancing that results, in numerous manifestations, including the potential increase in miscalculation. Possibly engendered by a firm overselling his services, a client could develop a misplaced belief in the dominance of their reinvigorated offense and initiate war when they are actually not at an advantage. This was a concern with contracts of military consultant firms in the unstable Balkans.

31. Reprinted in Isenberg (2009: 114).

32. For an in-depth discussion of the combatant–noncombatant problem as it relates to the employment of PSCs, see Barnes (2011: Ch. 5).

33. As Avant (205: 21–22) also observes:

Also many jobs not typically considered core military tasks nonetheless have taken on greater danger or ability to inflict harm when performed in the midst of an insurgency. Truck driving may not sound like a core militaries responsibility, but KBR employees have died transporting fuel to troops when they have had to pass through combat zones to get there.

34. How Do You Like Your Contractor Money?, Fox News.com, 30 June 2005; accessed 24 September 2013, available at: http://www.foxnews.com/story/0,2933,161261,00.html; Internet. Liza Porteus conducted a four-part series on tensions between the military and contractors in Iraq; this article focuses on the Zapata incident in Fallujah. The Naval Criminal Investigative Service conducted an investigation, and each of the Zapata detainees was given a memo barring them from working in the Al Anbar province.

35. For a different perspective highlighting other ethical and political consequences of hiring PSCs, see Marble-Barranca (2009) and Petersohn (2011). The University of Denver’s Private Security Monitor contains an extensive collection of articles on security privatization (see http://psm.du.edu/articles_reports_statistics/scholarly_articles.html).

REFERENCES

  • 1. Avant, Deborah (2005) The Market for Force: The Consequences of Privatizing Security (Cambridge: Cambridge University Press). [CrossRef]
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