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+ What do private military contractors do?

Doug Brooks, the president of the International Peace Operations Association, an association of private contractors, describes three categories of companies: logistical support firms, private security firms, and private military companies. The private military companies provide combat forces for hire. These types of companies, such as the now-dissolved South African company Executive Outcomes, are rare and none of them are currently operating in Iraq.

+ When did the relationship between private contractors and the military take off?

"You're talking about an industry that really didn't exist until the start of the 1990s," says Peter Singer, the author of Corporate Warriors: The Rise of the Privatized Military Industry. "And since then, it's grown in size, in monetary terms to about $100 billion worth of revenue a year. In geographic terms, it operates in over 50 different countries. It's operated on every single continent but Antarctica."

Singer says three trends coalesced during this time that drove the industry's growth: the end of the Cold War, which led to military downsizing not only in the U.S., but around the world; a global increase in smaller conflicts; and the ideological shift towards privatizing government functions in general. The Pentagon's use of private contractors has increased dramatically between the two Gulf wars: During the first Gulf War in 1991, there were 50 military personnel for every one contractor; in the 2003 conflict the ratio was 10 to 1.

+ How many private security firms are working in Iraq?

No one knows the exact number of private security contractors that rushed into Iraq following the war. In April 2004, in response to a request from Congress, the Coalition Provisional Authority (CPA) compiled a list of 60 different firms employing a total of 20,000 personnel (including U.S. citizens, Iraqis and third-country nationals).

Before handing over power to the newly elected Iraqi government in January 2005, the CPA established "Memorandum 17," a notice that called for all private security companies operating in Iraq to register by June 1 and established an oversight committee led by Iraq's Ministry of the Interior.

According to Lawrence Peter, a former CPA official and the director of the Private Security Company Association of Iraq, as of June 21, 2005, 37 security contractors have registered with the Iraqi Ministry of the Interior. One is awaiting approval, and at least 18 additional security companies are in the process of registering.

+ Who is employed by the private contracting firms in Iraq?

Here is a breakdown of the numbers:

  • 50,000 support/logistics contractors
    These are civilians hired by KBR, the Halliburton subsidiary which holds the military's logistical support contract. They work as weathermen, cooks, carpenters, mechanics, etc. Most are from Third World countries and the majority are Filipinos.

  • 20,000 non-Iraqi security contractors
    Of these, 5-6,000 are British, American, South African, Russian or European; another 12,000 are from Third World countries, such as Fiji, Colombia, Sri Lanka, and India.

  • 15,000 Iraqi security contractors
    Most of these were hired mainly by the British security firm Erinys to guard Iraq's oil infrastructure.

  • 40-70,000 reconstruction contractors
    Hired to rebuild Iraq. Some are Iraqis, but they're mostly from the U.S. and dozens of other countries and employed by companies such as General Electric, Bechtel, Parsons, KBR, Fluor and Perini.

+ How much do private contractors get paid?

Money is a prime motivator for those working in Iraq. Guards for private security firms can typically make between $400 and $600 per day. Guards employed by Blackwater, a high-profile American company that guarded Ambassador Paul Bremer, the former head of the CPA, are paid up to $1000 per day.

+ How many contractors have been killed in Iraq?

The exact number is not known; not all companies report casualty numbers. In June 2005, when the film originally aired, Erinys said it had lost three employees on its contract with the Army Corps of Engineers, and an additional 16 employees who were killed guarding Iraqi oil infrastructure. KBR, which employs over 50,000 in the region, told FRONTLINE that 65 of its employees, including 16 truckers, have been killed since the beginning of the war.

Update: In November 2005, Knight Ridder obtained insurance-claim statistics from the Department of Labor and reported 428 civilian contractor deaths and 3,963 other casualties. However, the story quoted two companies -- Halliburton and L-3 Communications -- as saying their casualty figures were higher than those reported by the Labor Department for their companies.

+ Given the continuing violence and dangers facing contractors, are the companies having problems hiring?

So far, no. The private companies can increase salaries to correspond with need, and as yet, there haven't been recruitment problems.

+ What are some advantages and disadvantages of hiring private contractors?

The number one reason cited for using private contractors in Iraq is the same reason driving arguments for privatizing other government functions: Outsourcing saves taxpayer money because private firms in a competitive market can do the job more efficiently and at a lower cost. Critics question how money is saved if firms must pay employees higher wages to attract them to work in Iraq, but defenders point out that a) firms can hire and fire based on a surge capacity; b) that employees from non-Western countries can be paid lower wages; and c) that companies don't have to pay all the long-term benefits that are required of the military.

Critics also argue that financial efficiencies are lost when companies subcontract with other companies, as is typical of the private contractors operating in Iraq.

No definitive studies on the cost-effectiveness of military outsourcing have been done yet.

+ Read more on the debate over cost-effectiveness.

One of the major disadvantages of using private contractors in Iraq is that they operate outside of the military chain of command, with two consequences. First, if a situation becomes too dangerous, individuals can halt operations or break their contracts and leave. For example, after an incident on April 9, 2004, in which a 19-truck KBR convoy was ambushed -- six drivers were killed, one was taken hostage, and one is still missing -- FRONTLINE was told that scores of KBR truckers refused to drive until security improved and hundreds of contractors left the country. For weeks, the military was left with dwindling stores of ammunition, fuel and water.

+ Read this July 2005 GAO report on the continuing challenges in getting capable private security contractors, coordinating their working relationship with the U.S. military and tracking the costs of these forces. (pdf file)

Another consequence of contractors being outside the military command structure is the lack of coordination on the battlefield. As Steven Schooner, an expert in government contracting, explains, "[Contractors and the military] don't communicate in the same networks. They don't get the same intelligence information. And so, when things begin to develop quickly, there's an awful lot of people around with weapons who have important tactical responsibilities who don't have the same information and aren't getting the same messages from the tactical leadership." This problem was evident on March 31, 2004, when four contractors working for the private security firm Blackwater were ambushed and killed while escorting a convoy in Fallujah. Marine Col. John Toolan, who at the time was in command of the region including Fallujah, told FRONTLINE that not only did he not know the Blackwater contractors were in the area, but that their deaths forced him to set aside his initial strategy for quelling the insurgency in the area when he was forced to invade the city and find the killers.

In order to remedy the coordination problem, the CPA contracted with another private security firm, the British company Aegis, to coordinate and track all the security teams operating in Iraq through a Reconstruction Operations Center (ROC). But participation is voluntary and because they want to maintain their competitive advantage in the marketplace, some companies are loathe to share information with another company. A July 2005 report from the nonpartisan Government Accountability Office (GAO) found that the ROC had improved coordination between the military and the security contractors, but it also suggested two problems remain. First, there were still incidents when security personnel approached military convoys or checkpoints, and second, upon deployment to Iraq, many military personnel were not aware of security personnel operating within the country.

+ Is the use of private contractors leading to a "brain drain" from the U.S. military?

This is an argument of some critics, who say private security firms are poaching highly trained Special Forces soldiers with salaries that are two to four times what they can earn in the military. According to a report from the British-American Security Information Council, "Reportedly, exhausted American and British Special Forces personnel are resigning in record numbers and taking highly-paid jobs as private security guards in Iraq and Afghanistan." The Pentagon has responded by offering cash bonuses of up to $150,000 for Special Forces to reenlist.

Brooks of the IPOA acknowledges that the industry's growth has created a new market for Special Forces soldiers. However, he argues that the temporary nature of the security industry is unlikely to draw those who didn't already want to leave the military. "How long is Baghdad going to last? How long is there going to be demand for these services? It's not a career-ending decision," he says. "You have to think if you're about ready to leave Special Forces it makes sense. If you're in it for a career, then there's no point in leaving just to do one or two years of personal security work.

+ What is the legal status of private contractors in Iraq? Are they accountable under U.S. or Iraqi law?

One of the real problems in regulating all private contractors is their somewhat ambiguous legal status. As Singer wrote in a March 2005 article in Foreign Affairs, "Although private military firms and their employees are now integral parts of many military operations, they tend to fall through the cracks of current legal codes, which sharply distinguish civilians from soldiers. Contractors are not quite civilians, given that they often carry and use weapons, interrogate prisoners, load bombs and fulfill other critical military roles. Yet they are not quite soldiers, either."

In June 2003, the Coalition Provisional Authority handed down Memorandum 17, which grants foreign contractors immunity from Iraqi law while working within the boundaries of their contracted tasks. The memo placed private contractors under the legal authority of the workers' home countries. In June 2004, one day before the CPA transferred sovereignty in Iraq to the interim Iraqi government, Paul Bremer signed a revised version of Memorandum 17, which stipulates that the rule remain in effect until multinational forces are withdrawn from Iraq or until it is amended by Iraqi lawmakers.

U.S. government contracts worth $50 million or more with private companies must be reported to Congress, and the companies must comply with the U.S. International Traffic in Arms Regulations (ITAR), which regulates the import and export of arms material and services. But, for example, of the 60 known private security companies operating in Iraq, only eight worked directly for the CPA; the rest are subcontracted to provide protection for the primary contractors or even other subcontractors. When companies are not contracted directly to the government, they are accountable only to the contractor whom employs them.

Companies that contract with the Pentagon are required to follow a set of rules known as the Defense Acquisition Regulation Supplement (DFARS). DFARS governs all aspects of contract enforcement, from accounting procedures to use of government property, and contains a section on "Contractor Standards of Conduct" covering proper behavior and a hotline for reporting improper conduct. DFARS was amended on June 6, 2005, to hold contractors working to provide support to U.S. forces deployed overseas accountable under U.S. and international laws as well as those of the host country. It also permits contractors to carry weapons at the discretion of the military commander.

American private contractors are also subject to the Military Extraterritorial Jurisdiction Act (MEJA), which allows for the prosecution of civilians employed by or accompanying the military while overseas and was signed by President Bill Clinton in October 2000. MEJA has been criticized for loopholes, which came to attention after reports surfaced of abuse at Iraq's Abu Ghraib prison. Although private contractors stand accused in a series of lawsuits filed in U.S. courts by former detainees, the companies might not be liable under MEJA because the law deals only with contractors employed by the Department of Defense. As of June 2005, the only person to be prosecuted under MEJA was Latasha Lorraine Arnt, who in February 2005 was sentenced to eight years in prison for killing her husband, a military policeman stationed at a U.S. Air Force Base in Turkey.

+ Have any contractors been prosecuted for misbehavior in Iraq?

No, according to Peter Singer. However, there have been civil lawsuits filed against some of the PMCs; for example, the families of the four Blackwater guards killed in Fallujah are suing for wrongful death.

+ What about allegations against Halliburton/KBR?

KBR has inspired a cottage industry of critics charging undue political influence -- as its parent company Halliburton was formerly run by Vice President Dick Cheney -- and financial fraud. The company has been the subject of numerous audits: One by the U.S. Government Accountability Office of dining hall costs for one four-month period alleges KBR charged $88 million for meals it never served. And Pentagon audits allege that KBR overcharged $212 million for fuel and billed the government $1.8 billion in other unsupported costs. The Pentagon terminated the fuel contract. As for meals, KBR says workers prepared food that just wasn't consumed. And the unsupported $1.8 billion, they say, is a paperwork issue that's being resolved.

But for all the controversy, there are many in Wall Street and in Washington who believe KBR is making only a slim profit, and that they've simply been overwhelmed by the military's needs and failed to adequately track costs.

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posted june 21, 2005

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