Oversight: The Need for Transparency and Monitoring of PMFs

Oversight: The Need for Transparency and Monitoring of PMFs

One of the main reasons that the use of PMFs in Iraq has been so problematic is due to the complete lack of oversight and monitoring of the contracts handed out to them. Even in 2002, before the start of the Iraq War, U.S. Army Secretary Thomas E. White stated that the army did not have enough information to manage its rapidly growing numbers of contractors (Green, 2004, p. 1). When looking at the contracting business as a whole the BBC television program Panorama recently  reported that an estimated $USD 23 billion has been wasted, stolen, embezzled or just lost since the beginning of the Iraq War (Panorama, 2008). The huge numbers of contractors involved in the Iraq War and the widespread war profiteering has led to the Coalition of the Willing being redubbed the “Coalition of the Billing” (Singer, 2005, p. 122). Furthermore, the Special Inspector General for Iraq Reconstruction (SIGIR) considers the corruption inside the contracting business in Iraq so great that he has described it as the “second insurgency” (Kelley, 2007, p.1).  With contractor numbers now exceeding that of American combat troops Iraq has become the largest private military market in modern history (Miller, 2007, p.1). This makes the need for careful monitoring and oversight even more important.

Sarah Percy argues that at present the regulation of PMFs at the domestic, international and informal levels is deficient (Percy, 2006, p. 15). There are five main reasons for regulation of the PMF industry. Firstly, the privatisation of military force challenges both political and military control of force. There are three different types of state control over force. Functional, which is the effectiveness of the military; political, which defines the actors, organisations or individuals who control force; and social which is the degree to which the use of force is congruent with broader social values, including democracy, international law, human rights and the protection of civilians in warfare (Percy, 2006, p. 16). These controls should all work together to achieve a ‘good fit’ which results in stable, legitimate and effective civil-military relations. Privatisation of security will affect this balance differently in weak and strong states, however, all three types of control are transformed by privatisation, as is the way they fit together (Percy, 2006, p. 16). One area of great importance in regards to control of violence is the way that privatisation undermines the political safeguards that have been established to make it difficult for someone in power such as a president to launch military actions without the support of their elected representatives. Privatisation undermines these safeguards because there are not the same laws governing the signing of contracts with PMFs as there is when starting a military action with conventional forces. Other less direct methods are also possible through privatisation. An example of this was during the Balkans War when MPRI assisted the Croatians who then turned the tide of war against the Serbs who were not used to fighting a coordinated enemy. This military assistance was carried out away from the public and without congressional debate or oversight (Avant, 2005, p. 128).

The second reason that Percy gives for the need for regulation of PMFs is to improve clarity. By clearing up areas of confusion or complication the battlefield should become safer for contractors, soldiers and civilians (Percy 2006, p. 18). Clarity is also required so that the status of contractors on the battlefield is known to all.  It is also a way to differentiate the responsible PMFs from the ‘cowboys’, and on a personnel level, a procedure needs to be developed for sorting the good contractors from the bad. In Iraq the Blackwater contractor who killed one of the guards to the Iraqi Vice-President was back working in Iraq within two months because there was no system to check the background of contractors (Associated Press, 2008b, p. 1). Similarly, there needs to be either a mechanism or an incentive to stop contractors from switching between PMF and mercenary businesses. This switching was seen during the Kosovo war when former MPRI employees became freelance military advisors to KLA (Avant, 2005, p. 222). Clarification also refers to the need to define contractors in international law to determine whether they are civilians, lawful combatants or unlawful combatants. This is important due to the need to keep contractors accountable for their actions. While contractors working with the U.S. government can now come under the UCMJ, contractors who might be working for other governments or private businesses are still unaccountable.

The third reason for increasing regulation is to provide greater transparency. The PMF industry is shrouded in mystery which is due both to the secrecy of some contracts as well as the incompetence of those who should be monitoring basic information such as the total number of contractors being used for each contract, length of time they are working in Iraq and the value and scope of the contracts. Without reliable statistics and information on the industry, organising effective oversight is much more difficult and it reduces the capacity of governments to make good informed decisions about the use of PMFs. This information is also needed so that policy makers can evaluate the use of contractors from the bigger picture perspective. Only with an accurate view of the contracting business can objective policy be formed regarding whether widespread privatisation is advisable (Percy, 2006, p. 21).

There is also a need for transparency so that the claims made by the PMF industry about the cost savings that contractors offer can be independently evaluated.  The PMF industry claims that it provides savings because contractors can be brought in at short notice and do not need to be kept on payrolls and fed and housed for many years as national soldiers do. They also claim that skills can be brought in as required which saves government on these costs, however, the problem with this analysis is that the PMF industry  

“…uses public funds to provide higher pay and then charges back the military at a higher rate, all for the human capital investment that the public institution originally paid for” (Singer, 2004c, p. 16).

Given the allegations about fraud and corruption that are coming to public attention across the whole of the contracting business in Iraq it seems highly unlikely that contracting military and other services is actually cost effective (Dickinson, 2007, p. 6).

The fourth reason for regulating the PMF industry is accountability. Contractors need to be accountable to the same standards as regular soldiers. Without accountability there are no boundaries on what they can do and, as has been seen, no disincentive for committing crimes such as the Blackwater shootings or Abu Ghraib abuses. Finally, the fifth reason that Percy gives for regulating the PMF industry is to shape its future growth. This is largely about determining what is an appropriate level of privatisation for the future. There is also a need for further debate about the appropriateness of outsourcing inherently government functions. Percy argues that without this regulation growth of the industry will evolve unchecked and unmonitored (2006, p. 23).

Due to the Pentagon’s need for services in a hurry, billions of dollars in contracts were awarded as “cost plus” which means that whatever costs are accrued by a business the Pentagon will meet these costs and then pay a percentage  on top. This has encouraged companies to conduct operations in a wasteful manner because the more they spend the more they make. Examples of this are companies such as KBR who would move empty pallets around so they could bill the U.S. government to increase their profits (Private Warriors, 2005). On top of this flaw in the original structure of many contracts was the problem that the government had not put in place any real mechanisms for oversight and monitoring of the contracts to make sure that public money was not being wasted. At the start of the Iraq war the Government Accountability Office (GAO), which was responsible for conducting audits of the $18 billion in contracts had only five staff members which were increased to fourteen by 2004 (Singer, 2004, p. 26). Clearly the Bush administration was negligent in not ensuring there was appropriate due diligence and that the tax payers of the U.S. were not being ripped off. David Isenberg is correct in his claim that when this lack of oversight is known it will be easier to understand how the abuses at Abu Ghraib could occur because there was very little, if any, monitoring of the contracts, as well as a lack of vetting of individual PMF personnel (Isenberg, 2007, p. 87). One step that the U.S. government took early on was awarding a $293 million contract to Aegis Defense Services to coordinate all the PMFs operating in Iraq. Singer described this as “…logic that would do Kafka proud” (Singer, 2004b, p.1). Unfortunately, even in 2008 it appears that the U.S. government is still relying on private contractors to monitor other private contractors. In April the Pentagon awarded its largest military contract in Iraq to KBR, Fluor and DynCorp with another contract going to the British company Serco for managing and overseeing the other three companies, in conjunction with the U.S. Army (Schewar, 2008, p.1).

The problem with a lot of the US Government private contracting in Iraq is that the corruption appears to run from the top down.  This is a classic example of the ‘fish rotting from the head’. Secretary of Defense Donald Rumsfeld appointed Joseph Schmitz to the role of Inspector General in June of 2001. He was in charge of “prevention of fraud, waste, and abuse in the programs and operations” of the Pentagon (Scahill, 2007a, p. 305). The Los Angeles Times investigative journalist  T. Christian Miller published an expose on Schmitz whom he alleged “…slowed or blocked investigations of senior Bush administration officials, spent taxpayer money on pet projects and accepted gifts that may have violated ethics guidelines” (Miller, 2005, p. 1). Furthermore, Schmitz’s investigators became so worried about his loyalties that they stopped discussing whom they were investigating with him, and resorted to using code words, for fear that Schmitz would tip off his Pentagon superiors (Miller, 2005, p. 1). It seems that Schmitz was largely a political appointee who was friendly with the Bush Administration and would look after his own. This is a common theme running through Bush appointees and can be seen with regard to other appointees such as the Federal Emergency Management Agency (FEMA) who was headed by Michael Brown, a friend of Bush who lacked the proper skills for the job. This resulted in FEMA being heavily criticised for its performance during Hurricane Katrina (Ahlers, 2006, p. 1). Schmitz would also prove where his loyalties lay when he was asked to investigate Republican Neoconservative Richard Perle when Perle was implicated in a conflict of interest scandal.  Perle was an advisor to a telecommunications company called Global Crossing while also working as the chairman of the Defence Policy Board. He was retained by the company to try and get the Defence Department to drop its objections to Global Crossing being sold to a foreign firm. If the sale proceeded Perle stood to make $725,000 (Scahill, 2007a, p. 307). Representative John Conyers called on Schmitz to investigate Perle, who after a six-month investigation concluded “We have completed our inquiry regarding the conduct of Mr. Perle and did not substantiate allegations of misconduct” (Labaton, 2003, p. 1). Given this level of corruption at the highest levels in the Pentagon it is not surprising that such war-profiteering and abuse of contracts has occurred.

It should also be noted that when Schmitz left the Pentagon he found employment with Blackwater. This seems to be a familiar path for former officials who look after these companies while in office, on the proviso that when they leave they will be rewarded with a high-paying senior role at the company. A similar situation occurred with Edward C. Aldridge who was President Bush’s chief weapons buyer at the Pentagon. On his last day in the Pentagon before starting a job with weapons manufacturer Lockheed Martin he approved the Pentagon’s largest lease agreement to date, a $30 billion deal to lease military tanker planes from Lockheed Martin (Daniel, 2003, p. 19).

 One of the major problems with contracts in Iraq has been the way in which they have been awarded without competitive tendering. The Pentagon has claimed that this is because in times of war there is not sufficient time to go through the usual tendering processes and thus it is acceptable to pay a higher price in order to have the services delivered rapidly and often in hostile conditions (Kroft, 2003, p. 1). PMFs have certainly benefited from these types of contracts which are usually more lucrative than standard contracts. A great deal of work for the SIGIR has been created by much larger contracts which have gone to companies such as KBR and Halliburton, sometimes described as the ‘usual suspects’ (Matthews, 2005, p.1). This has meant that the contracts to PMFs have received little attention because they are

not on the same tier as the contracts to the ‘usual suspects’ and are thus susceptible to falling through the cracks (Isenberg, 2007, p. 87).

The other issue that arises as a result of a lack of monitoring and oversight is what

Singer labels as ‘negative externalities’, specifically, events that occur that are out of

your control (Singer, 2004d, p. 1). Examples of this are the lawlessness of private

contractors in Iraq due to the failure for so long to have them under any laws or

regulations. Other examples are Abu Ghraib and the flow on effects from the scandal there which had the involvement of private contractors as well as military personnel. It does not require much imagination to see the ways in which the situation in Iraq might be in a better position today had contractors been properly monitored and regulated from that start and that incidents such as the murder of a guard to the Iraqi Vice-President would have been less likely to have happened had these measures been in place.