President Dwight D. Eisenhower's famous warning in 1961 about the rapidly growing “military-industrial complex” focused on the makers of tanks, ships and other military hardware.
His warning proved prescient. Hefty defense budgets and the emergence of the United States as the world's leading military power have turned the defense industry into a manufacturing behemoth. In fiscal 2003, procurement contracts to the top 100 Pentagon contractors totaled $209 billion.
Since Eisenhower's prediction, a new category of defense contractors has emerged: Firms that provide workers to conduct security, interrogation and intelligence — work once performed exclusively by military personnel. After the Cold War ended more than a decade ago, the U.S. military turned increasingly to private military contractors to meet its security and intelligence needs around the world. About 60 such firms are operating in Iraq, and more than 20 in Afghanistan.
The multimillion-dollar global industry can be divided into three major sectors, according to Peter W. Singer, author of the 2003 book Corporate Warriors: The Rise of the Privatized Military Industry:
“Military provider firms” offer seasoned combatants — generally former members of U.S., British or South African special forces — to clients such as weak governments, insurgent forces or international oil or mining companies operating in hostile areas. Executive Outcomes provided forces in several African trouble spots in the 1990s, including Angola and Sierra Leone. London-based Sandline Co., which helped repel a 1998 coup attempt in Nigeria, embarrassed Britain by shipping arms to the region in violation of a U.N. arms embargo. Both firms have since disbanded.
“Military consultant firms” train local police and military forces to fight in foreign conflicts. One of the leading such firms is Military Professional Resources Inc. (MPRI). Founded in 1987 and based in Alexandria, Va., it hires only American ex-soldiers and claims to work only on contracts approved by the U.S. government. MPRI's Defense Department contracts included training the Bosnian and Croatian armies in the 1990s.
Refraining from sending employees into battle has not protected military consultant firms from controversy, however. Employees of Falls Church, Va.-based DynCorp (purchased in 2003 by Computer Sciences Corp.), participated in a child-prostitution ring while working in Bosnia in the late 1990s, according to Human Rights Watch, Army investigators and two whistleblower lawsuits. Although the employees were not immune from prosecution by local authorities for illegal acts committed outside their contractual mission, DynCorp fired them and returned them to the United States, where they did not face charges.
Lawmakers tried to close contractors' legal loopholes by passing the 2000 Military Extraterritorial Jurisdiction Act, which places Defense Department contractors overseas under U.S. legal jurisdiction. But because the alleged offenses in Bosnia preceded passage of the act, the DynCorp employees were not prosecuted.
“Military support firms” are farther removed from combat roles, at least in theory. The Halliburton Co. subsidiary Kellogg, Brown and Root (KBR) and other such firms provide logistics, intelligence, supply and other services to U.S. forces around the world. In Iraq, KBR truck convoys bring food and other supplies to a dozen or more Army camps. According to several KBR drivers, the company bilked American taxpayers by charging the Pentagon for repeatedly moving convoys of empty trucks between U.S. encampments, exposing the truckers to attacks by Iraqi insurgents.
CACI International Inc., another support firm, provides interrogators to U.S. forces administering prisons overseas under a so-called “blanket purchase agreement” that was originally signed with the Interior Department but subsequently utilized by the Pentagon. Steven Stefanowicz, a CACI employee, was one of three private contractors implicated in the recent prisoner-abuse scandal in Iraq. A contract translator employed by another firm, Titan Corp., also was named in an extensive Army report on the abuses by Maj. Gen. Antonio M. Taguba.
Allegations of fraud and waste by private contractors in Iraq continue to mount. At least 14 major contracts in Iraq, including a $7 billion deal for Halliburton to restore the country's oil industry, were awarded with limited or no competition, according to a report issued on June 14, 2004, by the General Accounting Office.
“Increasingly, the administration is turning over essential government functions to the private sector, and it has jettisoned basic safeguards like competition and supervision that are needed to protect the public interest,” said Rep. Henry A. Waxman, D-Calif., a vocal critic of Bush administration contracting practices. “We need more competition, not less. And we need to place the interests of the taxpayer ahead of the interests of the contractors.”
Administration spokesmen reject the allegations of contracting misdeeds, including recent charges that the office of Vice President Cheney, formerly Halliburton's chief executive officer, was instrumental in granting the oil-services giant its no-bid contract in Iraq. “The vice president was not informed” that Halliburton would get the contract, said Kevin Kellems, Cheney's spokesman.
Meanwhile, a report by the Center for Public Integrity, a nonprofit investigative organization in Washington, D.C., found that 14 of the top private contractors in Afghanistan and Iraq made campaign contributions in excess of $1 million from 1990 through fiscal 2002. “Combined, those companies gave nearly $23 million in political contributions since 1990,” the report said.
In addition, in classic Washington revolving-door style, top officers of many of these firms are former Pentagon officials, while many civilian officials at the Pentagon are former employees of major defense contractors. “The center's investigation found that . . . 13 [of the 14 top contractors] employ former government officials or have close ties to various agencies and departments.”