I.

Title
Government Outsourcing;

The Privatization of Today’s Military

II. Abstract

The purpose of this project is to examine the complexity of outsourcing federal

government goods and services, particularly within the United States Department of

Defense. The use of Private Military Firms (PMF) has seen tremendous growth since the

Persian Gulf War in 1991 and has continued to explode during Operation Iraqi Freedom.

This project will trace the history of the PMF, often referred to as mercenary service,

from its origins in Europe and the effects that service had for nations who utilized them.

The outsourcing of government functions, particularly at the federal level to private

entrepreneurs has provided empirical evidence that the unique connection between real

assets controlled by private ownership versus those assets funded by the taxpayer and

managed by bureaucratic oversight deliver much greater returns on productivity.

Finally, examples of successful contemporary PMF are highlighted to demonstrate

their entrenched position within the United States military and the global reliance of

foreign governments to resolve domestic and regional issues through experienced training

methods and actual fighting skills.

III. Introduction to the Problem

The topic of privatization of military functions is not widely known among the public.

The word mercenary conjure images of unscrupulous Rambo-type action figures loaded

with the latest weaponry anticipating their next combat mission in some remote jungle or

Third World assassination objective. This research project will attempt to lift the cloak

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from the black operations mythology and demonstrate the political - economic

advantages of outsourcing traditional military functions.

Mercenary service has historical documentation beginning with the Egyptian King

Psammetichus I of the eighth century B.C. who incorporated Greek warriors into his

military forces (Russell, 1942). These bands of individual warriors provided skilled

military commodities to jurisdictions willing to compensate them for their services. As

the craft grew, these fragmented groups began to implement the earliest business

principles of negotiating work contracts based on services provided for specified

compensation. In Italy, the mercenaries became known as “condotta”, the word-meaning

contract. This was an example of their refinement of the craft of providing mercenary

services and one of the earliest examples of the impact and influence on establishing

business models still in use today.

Today’s military downsizing and globalization is consistent with the goals of former

Secretary of Defense Donald Rumsfeld, whose modern military’s “small footprint” has

personally contributed to the reduction of military forces through outsourcing services

(Scahill, 2007). The United States military has declined from about 2.1 million active-

duty troops during the Cold War to about 1.4 million in 2004. An example of the

complexity of the Iraqi campaign as it affects U.S. force numbers has been the inability to

establish security measures within the country. From the fall of 2003 through April 2006,

the security transition plan was modified numerous times because the Iraqi government

and security forces proved incapable. Many Iraqi security forces around the country have

collapsed, with some units abandoning their posts and in some cases assisting the

insurgency (GAO, 2007).

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 In addition to the smaller forces available, the demand for a technological fighting

force has placed requests of PMF to operate systems and software in combat operations.

Finally, in an effort to reduce budgets, the use of PMF limits the financial liability

because the government is not responsible for the costs of immediate or long-term

healthcare, retirement, or training of those individuals working on contract. Despite the

obvious benefits to PMF outsourcing, the use of the PMF has revealed vulnerabilities in

cost controls, performance evaluation and measurement, jurisdictional authority and

military force application and coordination that have yet to be addressed.

IV. Purpose of the Research

- To trace the historical origins and relevance of mercenary service.

- To identify the current operations of PMF.

- To provide empirical data documenting the advantages of outsourcing federal

government responsibilities.

- To explore and anticipate the future applications of PMF globally and

domestically.

V. Key Words

1. Mercenary

2. Private Military Firm

3. Blackwater Consulting Service

4. MPRI

5. Condotta

6. Privatization

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VI. Operational Definitions

1. Mercenary – Individual who fights for employers other than their home state’s

government to achieve monetary gain. This “cash nexus” distinguishes a

mercenary from a volunteer soldier. Soldiers serve to prevent wars, mercenary

service requires wars.

2. Private Military Firm - Businesses that specialize in providing military services and

skills for profit.

3. Privatization – Soliciting the private sector to provide services ordinarily delivered

by the government. Practice is based on principle that market competition in the

private sector is a more efficient way to provide services and allows for greater

citizen choice.

4. Soldier - one engaged in military service, an enlisted man or woman, a skilled

warrior.

VII. Rationale and Significance

The importance of this project is to examine the paradigm shift from the ideal that the

supreme objective of a government is to protect the nation and its people, which has been

the logic behind many traditional responsibilities of the federal government. The

evolution of the PMF is increasingly encroaching on this practice and has entrenched

itself as a legitimate option and alternative to staffing an entire national citizen army.

While still evolving, this phenomenon requires a close examination of the practical

application as it exists and the potential for future services provided by PMF either

internationally or domestically. Academic research is relatively limited on the topic and

the covert business practices of the PMF make it equally difficult to discover the full

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scope and effect of the private security industry on world conflict and militarized

authority (Singer, 2004).

This research topic will provide the historical legitimization of mercenary service and

their benefits, both financially and politically. Empirical research is offered to confirm

the economic principles of privatization for federal services and finally, research will

examine the current and future PMF environment to highlight case studies of successful

application.

VIII. Methodology

This research project is based on the evaluation of secondary data relative to the

history of mercenaries and their evolution into an organized business model referred to as

PMF. Empirical studies will also reveal the economic and force multiplier benefits of

outsourcing federal government responsibilities.

The literature was categorized into four distinct classifications to represent Historical

Origins, Current Operations, Economic Advantages and Domestic Applications. Since

the use of PMF is currently fully entrenched in the ongoing campaigns in Iraq and

Afghanistan, there are numerous directions within which to direct this study. For the

sake of focus, the examination of the outsourcing of military services will be limited to

the military provider firms operating in the theater of combat.

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 IX. Review of the Literature

A. Historical Origins

The evolution of military campaigns are recorded throughout history in literature,

poems, academia and Biblical accounts that have established the trade of mercenary as a

legitimate and critical practice for addressing force protection gaps in homeland security

through specialized service and skill sets.

Greece is identified as the earliest supplier of mercenary soldiers to various nations

and city-states beginning in the eighth and seventh centuries BC. Psammetik I of Egypt

was the first ruler to incorporate the use of early Greek mercenaries, the Carians of

southern Asia Minor into his military forces (Russell, 1942.)

Psammetik I utilized mercenaries from Lydia and Caria to defeat the Kushites and

sustain his rule over Egypt. Neither the Egyptians nor the Kushites had encountered a

force fighting in phalanx; a group of heavily armed infantry formed in ranks with shields

joined and long spears overlapping while wearing bronze body armor. The use of

mercenaries to stabilize the land in a time of crisis additionally aided the relationship

between the two countries and thus benefited humanity through the spreading of the

sciences and arts that were so refined between both countries (Macfarquhar, 1966).

Relationships were fragile among countries and nation-states. The spoken word was

the main medium of communication and recorded history. The misunderstanding of a

single term had the potential to break alliances. This was crucial within the world of

mercenary applications as exhibited by the contradictions surrounding the Greek word

“epikouroi”. Mercenary service is included in Homer’s Iliad and the historian

Herodotus’ The Histories and Thucydides historical account Peloponnesian War.

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The term epikourous has been used to mean “fighter alongside” for reward or pay and as

used to mean ally. It was crucial to specify the intention of these terms as entire nation-

state allegiances depended upon them. This was a critical period for Greece’s democracy

and the relationships established during these times helped elevate them from a scattering

of states into a unified nation (Lavelle, 1989). Obviously, the dynamics separating the

fighter alongside versus the fighter for pay held the same importance in today’s

geopolitical conflicts.

The question of how and why this service evolved must be addressed. Greece has

never been found wanting for conflict and war in its earliest history, therefore it was

important to discern the motivations that prompted men to leave their homeland to risk

their lives for another. Poverty was the chief factor among them. The rugged and

desolate regions of the Peloponnesus that hindered agriculture, quickly developed into a

fertile recruiting ground for mercenaries recruited by foreign armies.

Besides poverty, the crowded cities, political troubles, the rule of a landed aristocracy

and the hopes of gaining political position and appointment by the foreign ruling

authority were also causes for able-bodied men to leave their homes. Other mercenaries

joined the foreign armies to serve with honor and to apply the tactics and trade taught to

them since their youth. It was tradition for every young man to participate in either the

Greek army or navy beginning in the fifth and fourth centuries. For some, being a soldier

was all they knew.

Prior to the Peloponnesian War, most cities fielded a fully equipped army consisting

of citizens. The citizen-only army became too demanding as the battle campaigns lasted

longer and the sheer size of the armies expanded. Manpower became the most pressing

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challenge in maintaining domestic protection forces, while also supplying occupying

forces abroad.

As soldier shortages became more pressing, as did the ability to fill certain skill

positions within the armies. Certain countries produced soldiers of particular weapon

skills. These men were recruited by armies to fill the gaps in their traditional military

forces. Cretan mercenaries were renowned for their archery skill and have been

documented as providing service to all large Greek states since the fifth century. Other

specialized weapon skills were developed by the Rhodians, who in service with the

Athenian expedition provided the best slingers who were highly recruited throughout

Europe (Russell, 1942). The skilled Swiss pikemen tradition of mercenary service

continues to this day, as the Swiss Guard provides security to the Pope in Vatican City,

Rome (Singer, 2003).

Just as the origins of the mercenary trade continue today in the evolved fashion of

PMF, so do the business model practices that began during these early times as a

necessity of the warriors to protect their interests against unscrupulous financiers. Once

military recruiters began actively seeking mercenary service, the concept of the

contractual agreement developed. Within this agreement, details such as payment, length

of service, costs of provisions were clearly detailed.

The mercenaries first hired by Italian noblemen to defend their territories were known

as condotta (“contract” for services rendered) (Gat, 1988). Each condotta was led by a

condottiere, which became synonymous with the term captain (Merriam-Webster, 2008).

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These business-like practices eventually meant that only those cities with a well-

organized financial system could afford to retain the specialized services of these soldiers

for any length of time (Russell, 1942).

Mercenary service historically, just as PMF today, finds their mention in the accounts

of influential militaristic events. The battle at Kadesh was fought between the invincible

Egyptian army and the Hittites and recorded as an overwhelming victory for pharaoh

Ramses II as documented by the long accepted scholarly version presented by American

James Breasted in 1903. His findings have since been challenged and unfortunately, the

Egyptian account may not be entirely accurate (Goedicke, 1966).

Regardless of the outcome, what is relative to the scope of this project is that Ramses

II’s powerful army consisted mainly of Egyptians. Despite that superior force, the

pharaoh used the Sherden, a group of mercenaries as his personal bodyguards. The

Sherdens were a race of people known as the “Sea People” and were fearsome pirates

thought to originate from the coast of Turkey. Little more than a century later, many

Sherden were documented as cultivating plots of their own in Egypt; these were

doubtless rewards given to them for their military services (High, 2001).

Additional documentation of mercenary service to Ramses II was of his rescue from a

Hittite ambush as his Sherden bodyguards joined by the Semtic mercenaries joined to

provide specialized military services to facilitate his escape (Himelfarb, 2000). Though

many of his men fled and were later slaughtered as punishment, his personal bodyguards,

the Sherden stood their ground to fiercely defend the pharaoh and earn honors and

rewards (Santosuosso, 1996).

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 In another example of biased historical accounting, the works of Machiavelli are

revealed as inaccurate and unfairly tainted against mercenary warriors who served Italy

and more particularly, Florence. He believed the militia was the only proper force with

which to fight for ones own nation. Machiavelli promoted the organization of the

national army of citizens to become the sole defenders and conquerors for Italy. To

support this, he attributed the decline of Greece and Rome to their dependence upon the

mercenary soldier, although historical research would dispute his claims.

Machiavelli published an extensive collection of military history and models in the Art

of War. It was presented at a time when war itself was experiencing the most dramatic

revolution seen to date, due to the introduction of the firearm. Machiavelli, who was

usually most insightful, uncharacteristically dismissed the significance of firearms on the

battlefield and refused to amend his doctrine relative to the new strategies of war. He

claimed that firearms were only useful for terrorizing peasants.

Machiavelli’s drive to staff an all citizens’ army may have explained his disdain for

the mercenary service as it was considered so enmeshed in military culture at the time

that he felt compelled to critique it and avoid it at all costs. This questioned his

credibility relative to fighting theory and his veracity for discontinuation of mercenary

service (Gat, 1988).

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 B. Current Operations

The dynamic and evolving version of today’s PMF has had little academic study

relative to their effectiveness as a mass supplier of services to the United States military.

Peter Singer’s work is credited with being the first and most comprehensive scholarly

examination of the burgeoning privatized military industry.

The one hundred billion dollar phenomenon of today’s PMF began after the Cold War

as private companies offered specialized military services for hire. The evolution of the

current PMF model, which is included in the portfolios of Fortune 500 companies, is still

very different from the post-colonial African experience with PMF, whose actions were

so merciless that they earned the moniker “The Terrible Ones”(Singer, 2003).

Within the United States, the Bush administration continues to promote the increased

presence of PMF to supplant the numbers of military soldiers on the ground in the Middle

East. The outsourcing of traditional military services to the PMF claims to be more

operationally effective and economically efficient. Although there is empirical evidence

to show that the properly managed privatization of federal government is a more

economically feasible alternative (Hanke,1985 and Henig, 1990), the problems arise from

the government’s failure to properly manage the massive contracts awarded to these

PMF. President Ronald Reagan, who first created an executive office to promote federal

government privatization, was also aware of the government’s inability to manage capital

resources. He said, “The best minds are not in government. If any were, business would

steal them away” (Singer, 2003)

Critics of the U.S. policy to outsource military functions claim that financial oversight

is only a fraction of the required remedy to this operational error. Some believe that the

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government has gone too far in allowing PMF to assume duties traditionally exclusive to

military forces, particularly in the area of armed combat and counterinsurgency efforts.

Observations as to why mass outsourcing is detrimental to the U.S. objective in Iraq

include the ability of policymakers to avoid key decisions that may have political

ramifications. Americans do not want to see soldiers returned in body bags, but

contractor loss is acceptable because they chose to take the mission and were being

highly compensated for their efforts.

Critics claim that the use of PMF enables a bigger is better operations approach that is

often contrary to military strategy. Independently operating PMF turn indigenous

peoples against the U.S. efforts and damages efforts to win the “hearts and minds” of the

Iraqi people. Outsourcing affects the effort to legitimize a national government as long

as PMF are allowed to operate outside of their authority and has caused policymakers to

change planning strategies because of uncoordinated activities in combat areas. The

ambush of Blackwater contractors in Fallujah caused the U.S. Marines to alter their

strategy in the Sunni Triangle (Neff, 2006). It is argued that the government must

reconsider the current damages and future liabilities caused by the over-extended

outsourcing practices and return the traditional military roles to the citizens who

volunteered to serve and protect their country (Singer, 2007).

Despite the critics, PMF have evolved to the point of providing service deliverables

applicable to every aspect of fundamental military services and in other cases, beyond

those capabilities of the basic military into areas of highly technical weapons and

software applications.

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 The Persian Gulf War, 1991 saw a ratio of military personnel to PMF contractors at 10

to 1, as compared to 2003 numbers during the war in Iraq where the ratio is almost 1 to 1.

The first survey conducted by the U.S. Labor Department has identified that the force of

contractors working in Iraq is nearly equal to the size of the U.S. military force. The

survey shows that the numbers, over 100,000 are significantly higher and wider in scope

than the Pentagon had previously estimated at around 25,000 security contractors.

The Persian Gulf War had previously marked the largest application of private

security contractors on the battlefields with an estimated 9,200. That number has grown

10 times since the Pentagon’s post-Cold War reliance on contractors. Kellogg, Brown

and Root is one of the largest contractors in Iraq and claims to have over 50,000

employees working in Iraq, Afghanistan and Kuwait. By 2007, the Pentagon estimated

that there were more than 160,000 private contractors in Iraq from more than 180 private

military firms conducting training of Iraqi police and military to providing the highest

levels of intelligence gathering and actual combat operations.

The results of this census have provided more evidence before Congress initiating

oversight of this explosive population of private employees on the battlefield. The only

accurate numbers received about contractors has been through the Department of Labor

statistics relative to contractor deaths, which number at about 650 since 2003. An

accurate accounting is required to allow for financial oversight and personal

accountability. Most important is the ability of military commanders to know who is on

their battlefield and to allow them the opportunity to marshal the resources needed for

coordinating efforts (Merle, 2006).

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 To assist in coordinating these efforts, the Reconstruction Operations Center (RCO)

was established in October 2004. Interviews with military commanders advise that PMF

are still entering the battlefield without coordinating with military forces, putting both the

military and security providers at a greater risk. Another issue detrimental to the

coordination between military and PMF is that U.S. military units are not trained prior to

deployment on the operating procedures of private security providers in Iraq and the

mission and role of the ROC (GAO, 2006).

The current industry is segmented primarily into three types of service providers; the

military provider firms, military consulting firms, and military support firms. Each

provides a specific purpose and the individual companies often overlap in deliverables or

merge with firms to offer an expanded menu of services. The military provider firms,

known as PMF are situated at the Tip-of-the-Spear typology in Singer’s description

(Singer, 2003) to provide direct tactical military assistance, including combat operations.

The first of these PMF was the Executive Outcomes, a former South African company

was known for dealing ruthlessly with those who opposed their clients’ authority and

exercising heavy influence over developing-world conflicts, most notably in Africa.

These ruthless PMF were most successful while operating outside of internationally

televised conflict and within the global margins of intra-national and civil warfare

(Singer, 2003).

Military consulting firms provide strategic advisory and military training expertise,

while the final category of PMF is the military support firms. They provide logistics,

intelligence, and maintenance services to the varied military service forces. Although the

scope of this project focuses on the military provider firms, the obvious advantage to the

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entirety of military operations is that in an era of mandated streamlining of services and

personnel, the PMF allow the soldiers to concentrate on combat

Many governments, most notably weak-nation states, see the PMF as a means of

saving money and a way to use low-profile force to solve awkward, potentially

embarrassing situations that develop on the fringes of policy. Because there are no

national issues of allegiance or loyalty, the PMF is usually free to provide their services

to the highest bidder, although they do not always choose their clients with care.

Therefore, the risk of states losing control of military policy to militaries outside the state

systems, responsible only to their clients, managers, and stockholders is a major concern.

The largest military provider firm operating in Iraq is Blackwater USA, owned by

former U.S. Navy SEAL, Eric Prince. Recently Blackwater has received negative press

surrounding the actions of their contractors. This media attention has turned the spotlight

onto an enterprise that benefits from operating in the shadows. Baghdad’s Nisour Square

incident on September 17, 2007, resulted in the shooting deaths of seventeen Iraqi

civilians by Blackwater guards. A subsequent inquiry by the Federal Bureau of

Investigations found that of those killed by Blackwater’s guards, fourteen were without

justification and violated the rules governing deadly force (Jakes, 2007), thus prompting

the initiation of a federal grand jury to fully explore the matter and recommend bills of

indictment for anyone complicit in the wrongful acts (Johnston and Broder, 2007).

Although the Iraqi government called for the expulsion of Blackwater from its country

and the prosecution of those involved, the government was powerless to discipline these

contractors under Order 17 issued by U.S. administrator L. Paul Bremer in June 30, 2004;

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all U.S. contractors had been declared “immune from the Iraqi legal process.” (CPA,

2004).

The Iraqi government has also charged that Blackwater security guards killed Iraqi

civilians, including the bodyguard of one of Iraq’s vice presidents in December 2006 and

were involved in the killing of another nine civilians in Baghdad without provocation

(Fainaru, S). Besides Blackwater’s benefiting from the immunity of Order 17, the United

States Army investigations into the Abu Ghraib detention center provided the legal

loophole to prevent contractors from prosecution although military personnel were

charged and convicted of those same actions.

Although the loss of civilian life was unfortunate, the true impact of these killings was

that it put the spotlight on the costs of private military firms. It was disclosed that the

nearly 1,000 Blackwater security guards in Iraq were each costing U.S. taxpayers about

$1,200 a day and that Blackwater had earned nearly $1 billion in federal contracts,

including $830 million from the State Department. Prince and a host of high-power

consultants have masterfully handled the spike in negative attention and continue to

operate at demands for service increasing regularly.

The above-mentioned immunity provided by the Order 17 was a result of the former

proconsul, L. Paul Bremmer III, as head of the Coalition Provisional Authority in

occupied Baghdad by signing a legal document referred to as “The Law” on the eve of

his departure from Iraq. More specifically, Order 17 created an International Zone within

Baghdad and more importantly for the PMF operating within that zone, total absolution

for all actions while operating in Iraq. This extended to every foreigner connected to the

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occupation enterprise who was allowed the full freedom of the land and to not be

interfered with in any way by Iraqis or their political institutions.

While in Baghdad, Blackwater served as Bremmer’s personal bodyguards and not

U.S. military soldiers. Most U.S. official traveling to Iraq are protected by Blackwater

and are complimentary of the dedication to keeping their principle safe while in country

(Fainaru, Sept. 07). Drafting the language for Order 17 was Bremmer’s staff advisor

Lawrence Peter, now the director of the Private Security Company Association of Iraq

that oversees at least 50 security companies. Peter advised that the order clarified the

status of security consultants relative to their standing under foreign government rule and

local courts (Engelhardt, 2007). The relationships such as these cast such speculation

over an industry already shrouded in mystery. In a decision that has further enraged Iraqi

leaders, the Bush administration has ensured that U.S. troops will maintain immunity

from prosecution by Iraqi courts after the occupation ends by extending Order 17 as

executed (Wright, 2004).

Economic Advantages

While the PMF conduct combat missions to legitimatize their industry on the

battlefield; economists, bureaucrats and corporations carry out theoretical deliberations

armed with empirical evidence and antidotal objections relative to the operational

effectiveness and economic efficiency of federal government privatization of military

functions.

Hanke’s study provides empirical data relative to the theory that privatization of goods

and services are delivered at a more economical and efficient manner than those provided

by public sectors, particularly at the federal level.

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 State and local governments have been successfully utilizing privatization for many

years. The benefits of privatization realized by these public bodies has been the efficient

delivery of goods and services at lower prices, the freeing of revenues for operating

budgets, control over future budgets and allowing the private sector to maintain unused or

underused public assets.

The driving theory behind private enterprises having an advantage over the public

sector is that they have a unique incentive for delivering services in the most efficient and

economical manner. Profit is gained by the private sector when services are delivered at

a price lower than market standards. The ability to keep costs lower than those of public

service deliverables is due in large part to the flexibility of the private enterprise and the

oversight it provides for the workforce to ensure maximum efficiency of productivity.

The connection between use of private assets and their owner’s wealth has profound

consequences. Taxpayers are the true owners of public assets and they do not provide

sufficient and direct supervision of the public service behaviors. Therefore, little

incentive is placed on public managers and employees to operate in the most efficient

manner.

Hanke provides numerous cost comparative examples of goods and services delivered

by public and private enterprises. Examples of productivity and pay between private and

public sectors show federal employees earning more than their civilian counterparts do,

but produce much less in comparable skill sets. Administrative comparisons show

private business, again operates more efficient. The evidence continues with categories

to include custodial service and maintenance, day care centers, electricity, fire protection

services, forestry, hospitals and health services, military support and maintenance,

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prisons and security. In every instance examined, the private sector outperformed the

public agency by delivering a better product at a lower cost with more efficiency

(Hanke, 1985).

A second critical study of outsourcing examines the emergence of the role of

privatization as a legitimate national policy for federal government operations. The

Reagan administration initiated the first focused effort to move the theory of privatization

into federal practice. Theorists promoting the privatization application helped to

refurbish the laissez faire philosophy of the current political attitude by defining

government’s role in explaining, guiding and motivating their constituents’ wishes. The

hands-off approach of government was not producing the effects of efficient and effective

government as promised by countless political regimes.

The theory, if placed into practice would allow the citizens to act as a consumer of

government services. They would have the ability to compare the services among

various private service providers and choose those most conducive to their needs. This

environment of competition was thought to promote the best mechanism for providing a

diverse package of public services.

This theory became more receptive during the early 1970s, when the nation sensed

that the Great Society programs had failed to address poverty, housing, education and

unemployment. The time was ripe for a new direction, and the privatization theorists

were prepared to strike. Privatization had been successfully commonplace on the local

level for many years. San Francisco franchised garbage collection as early as 1932 and

bridge and highway tolls have existed as long as the services have been established.

Empirical evidence was established through two research studies conducted by Roger

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Ahlbrandt on the privatization of fire service and E.S. Savas on refuse collection. Both

services were traditional city government products, but both studies showed that

privatization worked.

Before Reagan advocated the use of private companies for public service deliverables,

President Eisenhower authorized in 1955 the Bureau of the Budget Bulletin 55-4 that

required no government service be undertaken that can be provided by private enterprise.

The 1970s experienced the Carter administration and their efforts at deregulation and

public-private partnerships. This marked a distinctive paradigm shift in the role of the

federal government and helped pave the way for privatization.

Although privatization has been successful, it is not without opposition. Privatization

is most successful in its operations when it is least visible, programmatic and politicized.

Maintaining a covert nature towards PMF business models and client contracts has

potentially been the cornerstone of their success. Opposition to the movement

capitalized on examples where the ideals of personal freedom, antisocialism and

creativity were pushed to the extremes, but in the majority of federal government

experiences with privatization, it has been positive and effective progression in service

deliverables. These findings nearly twenty years ago remain relevant today, as the main

criticism of the PMC is accountability and jurisdictional oversight (Henig, 1990).

An example of the need for fiduciary oversight has been the massive amounts of

overpayments made to the security contractors. The U.S. military has paid $548 million

over the past three years to two British companies that protect the U.S. Army Corps of

Engineers. This is more than $200 million over budget.

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 The cost overruns are attributed to the increasing security demands of protecting a

largely civilian workforce. The Corps of Engineers has requested additional manpower

and armor in the field, which has naturally driven the cost upwards. Due to lack of troops

and growing violence, security contractors have flourished with contracts signed with the

Department of Defense, State Department, Iraqi government, media, humanitarian

organizations and other private companies. The complexity and lucrative nature of these

contracts are highly sought after and not easily eliminated. The size of the PMF

companies operating in Iraq has never been documented. Although PMF have been used

in previous wars, it has never been to this scale (Fainaru, Aug. 2007).

The enormity of scale has also exposed weaknesses in the DOD’s attempted $15.4

billion program aimed at supporting the development and sustainment of Iraqi security

forces. Unfortunately, the DOD’s reliance on contractors in Iraq, its long-standing

contract and contract management problems, and poor security conditions provide

opportunities for fraud, waste, and abuse. An example of the waste attributed to limited

visibility on the part of the DOD has allowed an estimated $43 million loss each year on

free meals provided to contractor employees at deployed locations who also receive a per

diem food allowance. This is just on food! (GAO, 2007).

D. Domestic Applications

August 29, 2005 marked the first time Blackwater USA had deployed forces on

domestic soil. Immediately following Hurricane Katrina, the PMF had one hundred and

fifty contractors based in the French Quarter. Their presence in New Orleans, known as

Baghdad on the bayou prompted many questions regarding their legitimacy and

jurisdictional authority to operate heavily armed missions inside the United States.

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 Within days of arrival, it was discovered that Blackwater was under DHS contract and

additionally carried authorization from the state of Louisiana to carry weapons and

exercise force if necessary. As part of a no-bid contract through DHS to protect federal

construction projects for FEMA, Blackwater had been paid over seventy-three million

dollars for services provided by June 2006.

Although Katrina marked the first official deployment of private contractors for

Blackwater, the foundation for the domestic application of PMF was laid as the Bush-

Rumsfeld Doctrine announced on September 10, 2001, suggesting that the role of

policing and border enforcement could be outsourced and subcontracted. Considering

that free market ideologies germinate in spaces that are inhospitable to democracy, there

is no better place to experiment with privatizing federal policy than with immigration.

The culture post-9/11 made the anti-immigrant campaign popular throughout the

United States as a way for the citizens to realize local benefits to anti-terrorism by

stemming the tide of the illegal immigrants flooding the country. In 2005, the anti-

immigrant cause received support as the Minutemen Project Civil Defense Corps arrived

on the U.S. – Mexican boarder. Their mission was to provide volunteers to assist the out-

manned Boarder Patrol Agency in preventing illegal boarder crossings. The group

received Congressional acceptance and opened the door for the entrance of organized for

profit assistance to the boarder effort.

May 18, 2005 the DHS Security Authorization Bill approved the hiring of two

thousand new boarder patrol agents. One week later, the issue of training these agents

was addressed by a Senate sub-committee focusing on the cost and feasibility of

contracting out the training of the new hires. Alabama Congressman Mike Rogers (R)

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was critical of the government’s cost to training these new employees and advised, “It’s

going to cost more to train a boarder patrol officer in a ten-month program than it is to get

a four year degree at Harvard University.” During the Senate Security Committee’s

meeting, Rogers questioned Blackwater’s Gary Jackson if his company could provide

equal or better training at a cheaper rate, he replied yes and all within one years time

(Scahill, 2007).

Recently, Blackwater reported it was expanding their base of operations in U.S.-based

immigration control. Blackwater West is planned as an 824-acre military-style training

complex just 45 miles east of San Diego and will be located in the heart of one of the

most active regions in the United States for illegal border crossings. According to San

Diego Congressman Bob Filner, Blackwater is positioning itself to move into the border

security business. While they are not the first to intermingle domestic privatization and

immigration, they are symbolic of a much larger immigration industrial complex,

privatizing decades of border militarization and low intensity conflict waged against

border crossers and residents since the 1970s.

The official authorization for the intermingling of immigration and security began

with President Bush’s Homeland Security Presidential Directive 2, “Combating

Terrorism through Immigration Policies,” The decision to include immigration within

Homeland Security was no accident. The bureaucratic linking of immigration to the war

on terror was accomplished with the creation of DHS, which would include the Border

Patrol, port of entry inspectors from Customs and INS. The next step in bringing the

PMF to the domestic security table was the Bush Administration’s Executive Order

13260 (March 21, 2002) to establish an advisory council, as reconstituted by statute in the

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DHS where government formed and private actors gained direct access to the

immigration control policy process. As an outcome, the Customs and Border Protection's

Expedited Removal Program has contracted with Kellogg, Brown and Root (KBR), to

oversee the expansion of the federal government's capacity to detain immigrants. This

$385 million KBR contract would set-up temporary processing, detention and deportation

facilities.

Private prison companies are also competing for an immigrant “super jail” facility in

Laredo Texas that would hold two thousand eight hundred detainees. In December 2005,

Corrections Corporation of America (CCA) announced a contract with Immigration,

Customs Enforcement (ICE) to hold up to six hundred immigrant detainees in Tyler,

Texas. Privatizing immigrant detention is nothing new. During the early 1980s, the

federal government began experimenting with incarcerating people for profit. In 1984,

CCA signed its first deal with the federal government to operate INS detention centers in

Houston and Laredo, Texas. Since then, private incarceration has become a boom

industry.

Beyond the activity of detaining illegal immigrants, the federal government has

deployed the National Guard and plans to construct over seven hundred miles of fencing

along the southern U.S. boarder. To support this fencing project the federal government

in May 2006 solicited bids from military contractors Boeing, Lockheed Martin,

Raytheon, Ericsson and Northrop Grumman, for a multibillion-dollar contract to build a

"virtual fence" of unmanned aerial vehicles, ground surveillance satellites, motion-

detection video equipment and databases to store information of the identity of millions

of non-citizens along the border.

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 The stage is set for the PMF to apply their for-profit-practices upon domestic soil as

they appeal to the patriotic duty of protecting America. The reality is, they are better

prepared than the federal government or military to efficiently assume command over the

boarder patrol functions. Beyond costs, one of the benefits of privatizing is that the

masters of this virtual domain are less accountable for mistakes and outright abuse.

Immigration is such a volatile situation that many politicians are attempting to avoid

directly going hands-on with the issues. With Blackwater out front, along with DynCorp,

which is also seeking to put “feet on the ground” along the border, you get a virtual fence

that has private contractors, guns for hire, the National Guard and Border Patrol

welcoming newcomers at ports of entry.

In the wake of the media attention cast upon Blackwater following the September

2007 massacre in Iraq, they remain skilled at using the publicity to generate an

opportunity to re-brand itself and expand its mission. The recognizable company logo

was altered by removing the sniper scope and changing their name to Blackwater

Worldwide. To make the mercenary image more marketable, they also refer to their

contractors as “global stabilization professionals.”

The privatization of immigration control places Blackwater, Boeing, Accenture,

Anteon, CCA and others in a position of effecting important immigration and security

policy. This premise of conflicting allegiances continues to grow as the goal of

profitability must be weighed against what is best for national security. Further,

privatization removes the government from having to assume responsibility over the legal

process that defines a country’s sovereignty, particularly as it pertains to how immigrants

are treated as they seek to regularize their status. The outsourcing of immigration

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control, though economically superior to federal government services, more importantly

must address the question of national policy determinism over PMF contractual

obligations (Koulish, 2007).

IX. ANALYSIS

Research particular to federal government outsourcing expects that although the

practice of PMF implementation into traditional combat and close campaign support roles

is not without fault, the overarching application will prove successful, relative to the

efficient and flexible provisioning of military deliverables. Government estimators have

researched cost analysis that formed the contractual basis for issuing request for

proposals and identifying within that RFP, a scope of work. These contracts have been

developed and awarded with efficiency of economics and superior service response times

included. Unfortunately, it has been the failure of the initiating government to effectively

manage and measure the operations of these massive contract awards.

With little exception in the literature, the actual services performed and individual

competencies and qualifications are not criticized. The objection to PMF has been the

absolute oversight of product accountability and clarification of jurisdictional authority.

Because the latest evolutionary version of the PMF is still dynamic, it is unclear what

regulations, prohibitions or expanded capabilities will develop. It is expected that

because of the superior service and product delivery potential, the PMF will continue to

entrench itself in military and civil law enforcement disciplines. To quote Blackwater

founder, Eric Prince speaking at the January 11, 2006 West Conference, “Our corporate

goal is to do for the national security apparatus what FedEx did to the postal service”

(Scahill, 2007).

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 X. Feasibility and Limitations

This research topic will rely upon relevant literature and articles related to the

privatization of U.S. military services through the use of PMF. The first limitation to

empirical research is the historic accounts of the earliest applications for mercenary use

and the chronology of their professional evolution that are dependent upon examination

of ancient records and drawings as interpreted by historical and anthropological scholars.

Studies relative to the benefits of federal privatization are presented through empirical

research and are determined as offering a high degree of validity with regard to

qualitative examination and application.

Finally, the most limiting factor to validity is the information relative to the operations

and contractual agreements of the PMF. The very nature of state controlled violence

used to maintain order or effect a desired result requires secrecy and operations of a

covert nature. The PMF are private corporations and are under no obligation to reveal the

details of contracts and services with their clients. The information discovered and

shared by the PMF is provided to sustain and support the viability of the business, not to

advance the accumulation of knowledge or academic research. The vast number of

resources used for this research project is valuable in providing parallel data in

comparing the similar PMF data available. These comparative data themes are used to

increase the level of validity through the cross-verification of data sources.

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 XI. References Cited

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 XII. Investigator’s Biography

L. Scott Silverii (lssilver@uno.edu) is a PhD candidate in the University of New

Orleans’ Urban Studies program. He has earned a Master of Public Administration

from UNO with a concentration in hazards planning. His research interests include

emergency management, homeland security, criminal justice and law enforcement

operations.

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