The war in Iraq is exposing private
military companies (PMCs) to an unprecedented degree of
public scrutiny. Many old assumptions are being
questioned and heretofore conventional wisdom is being
shattered.
For example, in regard to the party
line that PMCs are more cost-effective and more flexible
in offering military services, Eric J Fredland, a
professor at the United States Naval Academy, writes in
a forthcoming article in Defence and Peace Economics
that even if there are cost savings, inevitable
contractual hazards sharply limit the combat/combat
support role of these companies.
And as for the
liberal mantra that reliance on PMCs is a Republican
innovation, it is worth remembering that the push for
outsourcing was strongly supported by the administration
of US president Bill Clinton, especially under the
National Performance Review initiated by Clinton's vice
president, Al Gore.
Sometimes PMCs do good
things and sometimes they not. DynCorp personnel had the
distinction of acting unprofessionally when they
escorted CNN journalist Tucker Carlson on a trip to
Baghdad and gave him an AK-47 and commandeered an Iraqi
gas station.
And before the news about the Abu
Gharib prison scandal broke, Titan had been in the news
because the Pentagon's Defense Contract Audit Agency
said it had inadequate systems for documenting its
billing of the Pentagon for labor costs, for tracking
the work of non-US consultants and could have as much as
US$4.9 million in payments withheld until it fixes
accounting deficiencies uncovered by a government audit.
It is also the case that some PMCs are very well
politically connected, which helps them get contracts,
regardless of their innate merit. For example, one of
the PMCs registered with the State Department to do
business in Iraq is Diligence LLC.
Diligence
first set up shop in Baghdad last July to provide
security for companies involved in Iraqi reconstruction.
In December, it established a new subsidiary called
Diligence Middle East, and expanded its services to
include screening, vetting and training of local hires,
and the provision of daily intelligence briefs for its
corporate clients. One of its co-chairmen is Joe
Allbaugh, President George W Bush's campaign manager in
2000. In late 2003 Diligence sold a 40 percent stake in
its new subsidiary to Mohammed al-Sagar, a wealthy
Kuwaiti who also runs the Foreign Relations Committee of
Kuwait's parliament. Last month, it quietly announced it
had formed a joint venture with New Bridge Strategies, a
consulting company headed by Joe Allbaugh and Republican
lobbyist Ed Rogers, which was established in 2003 to
advise companies on business deals in postwar Iraq.
Diligence was founded by William Webster, the
only man to head both the Central Intelligence Agency
(CIA) and the Federal Bureau of Investigation. Mike
Baker, its chief executive officer, spent 14 years at
the CIA as a covert field operations officer
specializing in counter-terrorism and counter-insurgency
operations. Whitley Bruner, its chief operating officer
in Baghdad, was once the CIA station chief in Iraq.
Shortly before the US invasion, he directed a covert
operation for the Bush administration to convince
high-ranking generals loyal to Saddam Hussein to
cooperate with US forces. Although that management team
sounds formidable, it's Diligence's directors and
advisers who are the real power in the
firm.
Richard Burt, the chairman, is the former
US ambassador to Germany and a key adviser to the
Carlyle Group, the Washington private equity fund where
Bush's father, George H W Bush, worked for the past
seven years. Ed Rogers, Diligence's vice chairman, was
one of Bush Sr's top assistants when he was US
president. Among Diligence's senior advisers are John
Major, the former British prime minister and chairman of
Carlyle Europe; Ed Mathias, Carlyle's managing director;
and Lord Charles Powell, a former foreign-policy adviser
to Margaret Thatcher.
Similarly, ArmorGroup
announced that former British Conservative foreign
secretary (1995-97) and defense secretary Sir Malcolm
Rifkind had been appointed its chairman. Rifkind served
in John Major's government during the 1990s and is now
the prospective parliamentary candidate for Michael
Portillo's safe Tory seat of Kensington and Chelsea.
Last month the Steele Foundation announced that
retired US ambassador Robert Frowick had joined its
executive advisory board as an executive director. Prior
to joining the Steele Foundation, Frowick was a career
diplomat appointed to numerous ambassadorships under
four different US presidents.
Yet PMCs are still
viewed as valuable for their on-the-ground operational
expertise. This year it was reported that the United
Nations intended to hire "a top-tier security firm" to
provide services for its global operations after a
highly critical report blamed "dysfunctional" UN
security for unnecessary casualties in the bombing of
its headquarters in Baghdad last August, which killed
23.
A request for security firms to express
their interest in competing for the contract, obtained
by Associated Press, lists a wide-range of specialized
services that the UN. They range from security
assessments and crisis management planning to personal
protection services for VIPs and consultations on
kidnapping.
The rewards for PMCs are clear.
Profit, and lots of it. As attacks by insurgents have
increased security has become an increasingly important
component of reconstruction contracts.
But PMCs
also have increasing costs. Employers are required by
law to provide insurance to all employees in war zones,
under the United States' Defense Base Act, but such
coverage is usually limited to $4,000 a month in the
event of death or disability. Policies for additional
coverage are often needed to attract workers to Iraq -
with potential payments ranging from $250,000 to more
than $1 million - and have been rising in price.
For contractors with employees in Iraq, this
currently costs about 20 percent of insured value. Firms
are guarded about how much they are spending on security
and insurance. But high risk staff, such as PMC workers,
account for the brunt of the costs.
It is
estimated that for every $100 in salary paid by the
employer, $15-$20 is spent on life-insurance premiums.
In light of the worsening security situation in Iraq,
the insurance companies are forced to raise tariffs on a
weekly basis. US law also requires the companies to
insure their Iraqi workers against death or injury. As a
result, companies that were awarded contracts to provide
services in Iraq are forced to foot heavy added expenses
that can amount to 15-20 percent of the total worth of
the project.
Another cost is finding qualified
people. Industry professionals say that the most
important factor in the risk-management trade was
choosing and training the right people. At some firms
all candidates are subjected to a rigorous vetting to
weed out people with a history of everything from
domestic violence and drug use to committing a felony.
Unfortunately, there is no reason to believe
this is true for all PMCs. Demand for experienced staff
in Iraq now outruns supply. "There is a shortage of
quality labor," said David Claridge, head of Janusian
Risk Management, a London-based security company.
"Hiring people takes time now whereas before we had a
database of people we could just call up. Now we have to
wait for people to come off other jobs."
A case
in point is Derek William Adgey. He was a former British
Royal Marine from Belfast, sentenced in 1995 to prison
for four years on 10 counts of soliciting murder for
passing security details to loyalist terrorists in
Ireland, who has been serving with an ArmorGroup armed
protection force in Iraq. The men who recognized Adgey
in Iraq have called for him to be sent home, saying it
was "appalling" that they were expected to carry out
anti-terrorist duties alongside a convicted terrorist.
Critics say the rapid growth of the industry
also raises concerns. There is little regulation of the
quality of training or recruitment by private firms,
they say. The result may be inexperienced, poorly
prepared and weakly led units playing vital roles in
combat situations. Even elite former commandos may not
be well trained for every danger, those critics say.
One of the notable consequences of the Iraq war
on industry is that it has caused those in the PMC
sector to become more self-critical. David Claridge,
managing director of the British company Janusian
Security, said, "Most of the serious players are quite
supportive of bringing in some degree of regulation. It
is traditionally globally an unregulated industry except
with a few exceptions. Iraq is forcing the industry to
grow up and consider how the industry should be
regulated."
Mark Whyte of UK-based company
Pilgrims Security says most of these men are not
directly employed by the firms, but are rather hired as
"freelance consultants". The contracts are usually
short-term and responsibility for any risks taken - and
for paying taxes - rests with the individual.
One of the concerns over PMCs, especially among
people in the regular military, is whether they will
stay the course, ie, not walk away from the job even in
the midst of combat. Thus far the evidence suggests they
largely have stayed on, though there have been some
disturbing reports.
For example, last summer
Newhouse News reported that US troops in Iraq suffered
through months of unnecessarily poor living conditions
because some civilian contractors hired by the army for
logistics support failed to show up. Although the
article didn't name a specific PMC, it was obvious that
it was talking about KBR, given that the company is by
far the biggest services contractor in Iraq.
Others say this is largely an urban myth and
that any no-shows are primarily locals who don't show up
or are late because of trouble getting through gate
security.
It may be that a number of people have
declined contracts because the companies offering them
the jobs have not been able to demonstrate an adequate
support structure to back them up (something the
military has no difficulty in providing). And this is
hardly surprising when these companies are being
battered over the head to be as cost-competitive as
possible.
Still, the problem is likely more
serious than that. The US General Accounting Office
issued a report in 2003 that said:
DOD [Department of Defense] uses
contractors to conserve scarce skills, to ensure that
they will be available for future deployments. Despite
requirements established in DOD guidance (Instruction
3020.37), DOD and the services have not identified
those contractors that provide mission essential
services and where appropriate developed backup plans
to ensure that essential contractor-provided services
will continue if the contractor for any reason becomes
unavailable. Service officials told us that, in the
past, contractors have usually been able to fulfill
their contractual obligations and, if they were unable
to do so, officials could replace them with other
contractor staff or military personnel. However, we
found that this may not always be the case. DOD's
agencywide and servicewide guidance and policies for
using and overseeing contractors that support deployed
US forces overseas are inconsistent and sometimes
incomplete. Of the four services, only the army has
developed substantial guidance for dealing with
contractors. DOD's acquisition regulations do not
require any specific contract in deployment locations
for contract workers. Of 183 contractor employees
planning to deploy with an army division to Iraq, for
example, some did not have deployment clauses in their
contracts. This omission can lead to increased
contract costs as well as delays in getting
contractors into the field.
According to
news reports, some PMCs guarding foreign contractors in
Iraq are demanding the right to carry more powerful
weapons after the deaths of a number of bodyguards
during a series of major battles with Iraqi insurgents.
Such a move would add to concerns about the
accountability and regulation of private military
companies in Iraq as well as illustrating the "gray
zone" between their formal role as bodyguards and the
realities of operating during an insurgency, when the
whole country can become a combat zone.
Last
October the British government granted permission for
the export of submachine-guns and pistols for use by
private security firms in Iraq.
US Army
regulations allow contractors performing combat support
services to carry weapons when required by their
combatant commander. But the regulations, which took
effect in November, address only contractors working
directly for the US military.
According to
proposed DOD regulations, military commanders in places
such as Iraq and Afghanistan will be given broad new
powers over contractors, including the ability to arm
them. Published on March 23 in the Federal Register, the
draft regulations have been in the making for nearly a
year. One provision requires deployed contractors to
follow combatant commanders' orders. Those orders would
supersede any existing contract terms or directions from
a contracting officer.
In times of emergency,
the ranking military commander in the immediate area of
operations may direct the contractor or employee to
undertake any action as long as those actions do not
require the employee to engage in armed conflict with an
enemy force.
The draft regulation also proposes
banning contract personnel from carrying privately owned
weapons unless authorized by a military commander, and
from wearing military uniforms. The policy allows the
combatant commander to issue weapons and ammunition to
contractor employees.
Other requirements of the
new regulations insist that contractors and contractor
personnel:
Be familiar with host nation laws, international
treaties and licensing requirements. Comply with
combatant commanders orders relating to military
operations, force protection and health and safety; and
replace any personnel who fail to comply with these
provisions.
Submit information on contractor employees for entry
into military databases.
Make sure all required security and background
checks are completed.
Meet all medical screening and requirements.
Have a plan for replacing employees no longer
available for work in the war zone for any reason,
including injury or death.
Though the numbers of
PMCs and personnel in Iraq may fall in the future, one
thing is clear. US forces may start withdrawing after
the June 30 handoff date to an Iraqi transitional
government, but PMCs will still be there.
David Isenberg, a senior analyst with
the Washington-based British American Security
Information Council (BASIC), has a wide background in
arms control and national security issues. The views
expressed are his own.
(Copyright 2004 Asia
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