“What do you know about war? They’ll tell you it’s about patriotism, democracy, or some shit about the other guy hating our freedom. But you wanna know what it’s really about? What do you see? A kid from Arkansas doing his patriotic duty to defend his country? I see a helmet, fire-retardant gloves, body armor and an M16. I see seventeen thousand five hundred dollars. That’s what it costs to outfit one American soldier. Over two million soldiers fought in Iraq and Afghanistan. It cost the American taxpayer $4.5 billion each year just to pay the air conditioning bills for those wars. And that’s what war is really about. War is an economy. Anybody who tells you otherwise is either in on it or stupid.”
That is from the opening scene of the movie War Dogs, which is a true story about two “very entrepreneurial” guys named, Efraim Diveroli and David Packouz.
To understand this story, we have to go back to 2003 and the start of the Iraq War.
Between the US, the UK, Australia, Denmark, Poland, and Peshmerga, there would eventually be over 300,000 invading soldiers in Iraq.
In order to support such an invasion, there is an enormous amount of logistics, infrastructure, and support services that need to be developed.
Everything from sleeping quarters to food services to toilets have to be figured out.
US military base near Baghdad, Iraq. Source: S Meyer
And those costs are in addition to the obvious equipment expenses.
US military forces in northern Kuwait prepare to invade Iraq. Source: CNN
So how much do you think the US has spent on wars since 2001?
ALMOST $5 TRILLION.
Source: Watson, Brown
War is BIG business.
And that’s what David Packouz and Efraim Diveroli took advantage of.
Diveroli started an arms and ammunition company that supplied the US Government’s war efforts in the middle east. He then partnered up with Packouz and they started to go after bigger contracts.
Within their first year working together, they secured over 100 government contracts that totaled more than $10 million.
And then in 2007, they won a huge contract – $298 million – to supply ammunition to the allied forces in Afghanistan.
At the time Diveroli was 21 and Packouz was 25.
The two won the contract because they significantly underbid their competitors by securing Cold War era ammunition in Albania.
However, the ammunition was made in China, which was a violation with the US contract.
To get around the issue, Diveroli and Packouz had the ammunition repackaged to conceal the origin.
While this was going on, the media picked up on the story of two 20-year-olds who had won the enormous government contract. Subsequently, the US Government then did an investigation into their business and discovered the issue with the Chinese manufactured ammunition.
Packouz ended up serving seven months house arrest, while Diveroli served four years in prison.
But, you want to know the real crime?
That one contract only made up 0.006% of the total money that the US Government has spent on wars since 2001.
So where is the rest of the money going?
Obviously, there are the big companies like Boeing ($BA), Lockheed Martin ($LMT), Raytheon ($RTN), and Northrop Grumman ($NOC).
But, what about the others?
Let’s take a look at some of the notable recipients of massive government contracts:
#1 Eurest Support Services (ESS) – is a food catering company that specializes in harsh-environment large-scale food service and facilities management. Its primary clients are military forces and other security services, major defense contractors, and construction, mining, and oil exploration and production facilities worldwide. They are owned by the publicly traded company Compass Group plc.
#2 Academi, which used to be Xe Services, but was originally (and most famously) named Blackwater – is an American private military company that is known worldwide. They have been the recipient of billions of dollars for different contracts… like when they provided security services during Hurricane Katrina for a quarter million dollars per day… or for one contract that totaled $1 billion during the Iraq war. Owned by Constellis, the company has thousands of employees, helicopters, planes, ships, and all kinds of specialized equipment.
#3 Armed Forces Entertainment – is an entertainment company that travels the world stopping at different US military bases. AFE operates year round and has everything from famous singers to MMA fights.
But, you don’t have to be a mega corporation to win these big contracts. In fact, anyone can bid…
There are currently around 40,000 opportunities.
In a nutshell, this is how it works:
- Some department of the US Government posts an ad that describes what they need. Let’s say the Department of Justice needs toilet paper (this is actually a real opportunity on the site).
- The opportunity is posted on FBO.gov and is open for bid by anyone who wants to supply toilet paper.
- Anyone who sees the opportunity on the site can then submit a bid stating what they will provide and for what price.
- The bid is then awarded to the company that provides the most competitive bid. (For the toilet paper one I saw, it was worth $24,000.)
Now you know how the military-industrial complex works.
The more supplies that the government consumes, the more they pay to private bidders, and in theory, the more the economy gets a boost.
So what happens when the government slows down? What happens when there is no war to consume products and services?
Well, we could say there is a conspiracy to start wars to fuel economies… but that would never happen, right?
Photo Source: JS
Pictured above: “Erik Prince, founder of the notorious security firm formerly known as Blackwater, is apparently the architect of a proposal to send 5,500 new contractors and a 90-plane private air force to assist the Afghan government.” -Just Security
Well… Trump is now considering plans to privatize the Afghanistan war.
The plan would save US tax payers over $30 billion dollars a year, and could significantly reduce the number of soldiers currently in Afghanistan.
The idea to privatize the war came from ex-Blackwater CEO Erik Prince.
“Under the proposal, 5,500 private contractors, primarily former Special Operations troops, would advise Afghan combat forces. The plan also includes a 90-plane private air force that would provide air support in the nearly 16-year-old war against Taliban insurgents.”
To make this clear… the US is looking at hiring third party contractors to fight a war.
I’m not going to speculate on any political of ethical issues here…
My point is that whoever gets a hold of these contracts is going to make A LOT of money. And most of the contracts are going to have nothing to do with direct combat. They’re going to be support contracts – the toilets, the beds, the entertainment, and on and on.