The Cost Risk of Privatizing War

By Dan Kenney

Co-coordinator of

No Private Armies

March 5, 2011

The Bipartisan Congressional commission on Wartime Contracting in Iraq and Afghanistan came out with their second Interim Report to Congress on February 24th. This report dispels any doubts about whether privatization is costing taxpayers too much. The Federal reliance on contractors is not only costing too much but billions are being lost to fraud and waste. The report proves that the unprecedented outsourcing that has occurred in these wars needs to be stopped. The “Commission believes the United States has come to over-rely on contractors.”

The Commission’s conservative estimate is that since October 2001 at least $177 billion has been spent on private contracts and grants to support U.S. operations in Iraq and Afghanistan. This is equivalent to $407,000,000 per Congressional district or $1,505 per U.S. household. Of that misspent amounts run in the tens of billions.

The Special Inspector General for Afghanistan Reconstruction (SIGAR) warned the Commission in January of this year that the entire $11.4 billion for contracts to build nearly 900 facilities for the Afghan National Security Forces is at risk due to inadequate planning. This estimate does not include the waste that has resulted from Afghanistan‘s inability to sustain projects.

In addition to waste there is also the issue of fraud. According to the Association of Fraud Examiners an estimated 7% of revenue is lost to fraud, or $12 billion. Many observers also believe that waste accounts for substantially greater sums than the fraud and abuse.

The Commission conducted more than 900 meetings and briefings, along with a series of trips to Afghanistan and Iraq, and over 19 Commission hearings. After their research they have developed over 30 recommendations for congress and the Obama Administration.

The Obama Administration has been just as silent as the previous administration on this issue privatization. In March of 2009 Obama issued a memo on government contracting in which he stated:

“The Federal Government must have sufficient capacity

to manage and oversee the contracting process from start

to finish, so as to ensure that taxpayer funds are spent wisely

and are not subject to excessive risk.”

The Obama administration failure to act on this memo however is made evident in a statement made by the Special Inspector General of Afghanistan Reconstruction. Major General Arnold Fields told the Commission in a hearing entitled “Recurring Problems in Afghan Construction” January 24th 2011, “We don’t have enough trained folks within the federal establishment to provide the oversight of the very contractors we are brining on board.” When government agencies lack experienced and qualified workers to provide oversight, the potential for waste, fraud, and abuse in contract performances increases exponentially. In some cases contractors are hired to perform the oversight of other contractors for the federal agencies. To this fact the Commission stated, “The Commission firmly believes that contractors need to be managed by military and government civilian personnel. Anything less is unacceptable.”

During the same January 2011 hearing Secretary of Defense Gates expressed his own concern for the government’s “level of dependency” on contractors.

“Although there is historical precedent for contracted support to our military forces, I am concerned about the risks introduced by our current level of dependency, our future total force mix, and the need to better plan for { operational contract support} in the future. . . The time is now-while the lessons learned from recent operations are fresh- to institutionalize the changes necessary to influence a cultural shift.”

The issue of accountability is also covered in the report. The report states, “A serious concern with relying on armed security contractors is a potential gap in legal accountability.” This “legal gray zone” in which these private military contractors operate can lead to diplomatic conflicts with the host nations. Iraq, Afghanistan, and Pakistan governments have all demanded private military companies to leave their countries. But this demand has not been met for the very dependency we have touched on earlier. As a nation the U.S. can not operate in Central Asia or any where else without the support of private companies. These present wars have become the most privatized wars in America’s history. We have moved into new territory and the Commission’s report makes it clear that this has been done haphazardly with great consequence to human life and taxpayer money.

Whether Congress listens to the Commission’s findings is yet to be seen. The report was ignored, coming out during the budget battle, although the connection between the Nation’s deficit and a war that is costing $700 million per week and nearly 50% of that amount going into contracts with over 600 companies operating in these war zones. And now we have the evidence to show that tens of billions of that money is being wasted or stolen. Also at this time of growing attacks on unions, workers, and the middle class in this country under the guise of budget deficits, it seems to be the most responsible choice to draw parallels between this wasting and thievery of public funds by private war profiteers and mercenaries.

In its conclusion the Commission said, “If, on the other hand, the federal government cannot muster the resources and the will to strategically employ, manage, and oversee mission-critical contractors effectively, then it should reconsider using contractors, or reconsider the scope of its mission with a view to trimming them.”

Now that we have a majority in Congress that is dedicated to the Market solving all problems, and seemingly bent on breaking government down to a postage stamp size capabilities of real oversight, than it seems time for the citizens to call for the passing of the S.O.S. Act. The S.O.S. Act is the Stop Outsourcing Security Act, H.R. 4650, introduced by Rep. Jan Schakowsky D-IL and into the Senate by Mr. Sanders, I-VT.

The S.O.S. Act calls for the U.S. to phase out use of private military contractors. It seems that given the lack of will in Congress and in this administration to take oversight of these contractors seriously, we should end our use of them. This will be a difficult task given the present climate; it will require a great outpouring of citizen support to make such a cultural change within the Department of Defense, the State Department, and within the intelligence community. (75% of the intelligence agencies activities are performed by private contractors.)

If the resolve and will of the government is missing than this policy change must come from the people. It is after all, our money, the lives of our loved ones, and the future of our nation at risk.