Privatized operations: government needs to reexamine rules for battlefield contractors.

Privatized military operations have been a constant presence in conflict zones throughout history. Today, private contractors support the United States and its allies in Iraq and Afghanistan in unprecedented numbers.

The contractor headcount in Iraq nearly matches U.S. troop strength, which raises questions of whether the private sector's role in combat operations has outpaced regulatory, doctrinal and management practices.

The contractors behind these privatized military operations do not all fall into traditional industry categories, and the different sectors that make up this industry are not always well understood nor have they been studied in detail.

Earlier this year, a group of 21 military and civilian students, as well as faculty, from the Industrial College of the Armed Forces completed an in-depth report that looked at this sector of the industry. The study, titled, "Privatized Military Operations," resulted from five months of extensive research and dozens of interviews with military officials, civilian leaders, corporate executives and subject matter experts in the United States, United Kingdom and South Africa.

The PMO industry--short for private military operations--and the market it serves are global. Companies such as MPRI and Blackwater USA perform training and logistics services, weapon maintenance and repair, security services and in some cases, defensive military operations.

The wars in Iraq and Afghanistan have brought notoriety to the industry and have exposed issues related to the U.S. government's ability to manage such a wide array of unintended consequences. The Defense and State Departments are reconsidering the roles of some contracting companies in a conflict zone.

Although contracted military support is practically as old as war itself, it has not been deeply studied. Even within the government, it is not well understood as a formal industry segment.

The bulk of the members of this industry are small privately held companies. While most people associate the PMO industry with large corporations such as Kellog Brown and Root (KBR), Blackwater USA, and DynCorp, most are small firms with annual revenues of less than $8 million.

These firms include three broad service categories: consulting, security and logistics.

Military consulting firms provide services such as training assistance--exercise planning and execution, distance learning and tactical instruction--planning assistance, such as doctrine development, planning, recruiting and testing--and technical assistance such as linguistics, systems engineering and testing.

Other contractors provide security services such as executive protection--bodyguards, and personal security detachments--physical security services, including risk assessment, crisis management, intelligence gathering, interpreters and intelligence gathering support; and physical security -convoy escort, facility protection and monitoring services.

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Others provide logistics support such as fuel and cargo transport, subsistence services and sanitation services, base operations support and weapons support--depot and operational maintenance, acquisition logistics and field engineering.

This industry, like most others in the United States, has a trade association--The International Peace Operations Association (IPOA). About 40 percent of the companies it represents did not exist before 9/11.

As the industry expands to satisfy the government's growing demand, it is also consolidating via mergers and acquisitions to create larger and more broadly capable firms. The current wave of consolidation is taking three distinct forms. First, small and medium-sized firms are merging with rivals to strengthen niche positions.

Other firms are acquiring companies in different contracting segments to diversify their offerings and customer base. Perhaps most significantly, large aerospace and defense contractors--Lockheed Martin, Northrop Grumman, L-3 Communications and others--are buying companies to strengthen their footholds in this global market.

The controversies that currently surround PMO contractors make a compelling case for why the United States government should conduct a formal analysis of which functions it routinely plans to outsource, those which are inherently governmental, and those which may be augmented with hybrid military-contractor forces.

Once it has determined a suitable definition for what is inherently governmental, the government should align missions and capabilities, then match them with the appropriate resources. Inherently military functions should be assigned only to billeted armed forces service members, including reserve personnel for surge combat-related capability. Non-combat functions that are inherently governmental should be specifically performed by government civilians or service members.

Non-core missions and specified non-combat related organic functions may be designated for augmentation via outsourced contractor support to create hybrid forces that provide surge capacity. Non-core functions that are readily improved by commercial efficiency and effectiveness should be properly privatized for performance by contractor personnel.

Contractors also must be held accountable for crimes, human rights abuses and behaviors that reflect poorly on the United States. The government must consider a mandatory contracting language that increases contractor liability for employees. Rules should mandate transparent reporting mechanisms for contractors and require contract employees to abide by international human rights laws and improve temporary command and control over contractors in emergency, contingency and combat situations.

Additionally, the government should actively pursue debarment of rogue contractors and "black listing" of errant employees from contract operations.

The government must plan for and exercise the use of contractors to fulfill selected functions and deliver specified capabilities. It must include prime contractors in the exercise planning process and training evolutions, specifically in planning future expeditionary operations where contractor performance on or near the battlefield is virtually guaranteed.

The government must facilitate the prevalent use of service contracting by improving the size and competency of its acquisition workforce and making doctrinal changes to its baseline contracting education. Additionally, it should increase armed services end strength to include additional billets and career tracks for military contracting officers who are readily available for contingency operations and can routinely provide robust contracting capability and oversight on or near the battlefield.

Finally, the government should increase training on services contracting, contractor oversight, and contract administration to improve control and management of the contracted workforce.

The complete ICAF study on privatized military operations can be found on the National Defense Magazine website www.NationalDefenseMagazine.org.

EDITOR'S NOTE: This article is the first of a series that National Defense Magazine will publish in 2008. The stories will highlight studies by the Industrial College of the Armed Forces about specific sectors of the defense industry.

RELATED ARTICLE: Industrial College of the Armed Forces: a primer.

The National Defense University's Industrial College of the Armed Forces is one of the nation's six military colleges.

ICAF is located at Fort McNair, in Washington, D.C. Its mission is to prepare selected military and civilians for strategic leadership and success in developing national security strategy and in evaluating, marshalling, and managing resources in the execution of that strategy.

The ancestor of ICAF is the Army Industrial College which was founded in 1924 to educate officers for the procurement division in the War Department.

Assistant Secretary of War Dwight F. Davis saw the Army Industrial College as a school to "fit officers for the mobilization and direction of the industrial power of this country." The first course lasted five months and had only nine officers, but soon after a small number of Navy and Marine officers began attending.

By December 1941 the college had trained about 1,000 officers of whom 15 percent were from the Navy and Marine Corps

During World War II, the Army Industrial College procurement recommendations were followed by the Army and Navy. During the war more than 90 percent of the ordnance contracts that were negotiated went to firms that had been surveyed in the 1920s and 1930s by the college. Many of the graduates were transferred to the War Production Board when it was formed in 1942. This board directed industrial mobilization during World War II.

The Army Industrial College was recreated late in 1943 to teach contracting officers how to terminate contracts without bankrupting companies--which had happened after World War I ended. The first full class in the college began after Japan surrendered in 1945 and before that class graduated, the name of the school was changed to The Industrial College of the Armed Forces.