Some Highlights From This Interview

Let's begin by talking about the history of the involvement of private military contractors under contract with the U.S. government. When did it all begin?

With the beginning of the U.S. government. Essentially, we've had private companies or private individuals working to support U.S. military operations since George Washington. He had private people who would support, fix boots or muskets or whatever, or privateers, which was a form of naval action in the 18th, 19th centuries where you would give merchant ships license to attack the merchant shipping of an enemy state, and the U.S. did that quite a bit as well.

But it was small?

Well, it was pretty significant. I don't think our military would have been nearly as effective -- especially our Navy -- without the private sector. Now, you didn't have big companies like Halliburton back in 1776, but there were small firms and individuals who did the stuff, and of course merchant ships, which are a larger sort of company.

But it's fair to say that the role of private military contractors and private security contractors has grown?

It's evolved. I would say it goes up and down. You see throughout history when the military needs it, they go to the private sector, and they get a lot of support. But then during peacetime, you see probably less contractors involved.

Again, you can look at Vietnam and see that there [were] 80,000 contractors at one point supporting the U.S. operations there. And actually during the Tet offensive, interestingly, one particularly large contractor had a higher percentage of casualties than the military did -- not more casualties, but a higher percentage, unfortunately.

But the role in the Iraq war is proportionately greater?

Yeah, it's probably a little bit more.

So why is that?

Well, for a number of reasons. We're doing a lot more of the reconstruction, so a lot of the companies are both supporting the military and supporting the reconstruction. The military is about a third smaller now than it was at the end of the Cold War, and yet I would argue it's much more effective. ...

What they've done is they've focused a lot of their efforts into, as we say, the tooth. If you think about tooth-to-tail ratio, the tooth being the combat arms and the tail being the support units, and the military is focused really on the tooth side, so it's become incredibly capable as a military. But at the same time, what it does is look to the private sector to get the support for its operations, and that's been, I think, a remarkably successful program.

What's going on in Iraq in terms of the logistical support is pretty astonishing. Obviously there are some issues with KBR [Halliburton subsidiary Kellogg, Brown and Root] that a lot of people have -- both political and some of the operational issues they've had. But the amount of materiel they've moved, the amount of cafeterias and things they've set up for the troops -- this is the best-supplied military we've ever had.

And all of this, of course, requires -- the larger the tail, the more protection the tail needs along the way. You have to protect the convoys.

Right. And that would apply whether it's military or civilians that are doing the logistics. Even military logistics need security. So that's always a plight.

So you've had a big expansion in the role of private security and private military contractors.

Right. Now, I think you have to keep in mind that the security companies, their size goes up and down as their contracts go up and down. So we have what has been called ... the Baghdad bubble. Essentially, you have a time when there's a lot of need for security for both the reconstruction effort, for the convoys, to protect a lot of things going on, and the politicians.

And how do you create a democracy when all the politicians are being killed off by insurgents? You've got to protect them. So there's a big role for security right now. Now, as the security situation improves and as the Iraqi military comes online and the police, you'll see less need for the private sector.

In past wars, have ambassadors such as [L. Paul "Jerry"] Bremer or other politicians been protected by private companies?

Right. Well, Afghanistan, of course, they were protected by private companies. And back to Gulf [War] I, in fact, several generals and ambassadors were protected by private security then.

Why? Why not have the U.S. military protect Jerry Bremer?

The military doesn't like to split up its units to do this sort of thing. What they were using in Afghanistan, for example, was SEALs to protect [Afghan President Hamid] Karzai -- Navy SEALs. These are very highly trained people. And you can say you don't need James Bond to do close protection work; you need somebody who's very professional and knows what they're doing and experienced and so on. You don't need a Navy SEAL to do that. There's better jobs for Navy SEALs to do. So the military prefers to outsource that, to look to the private sector, which essentially uses former Navy SEALs or former military people to do this sort of thing so it doesn't impact on the military's capabilities.

But it costs more to the taxpayer or not?

Not really. In terms of salary to salary, if you take a look at, say, a corporal in Iraq, [he]'s probably getting $18,000 a year, which isn't much. But for the U.S., it's costing about $25,000 a month to keep that corporal in Iraq just because of all of the military services and support and so on that goes for that individual. A close protection person or a personal security person -- and you're talking about a former Special Forces person with 30 years' experience in the military, and then experience doing personal security -- they may get upwards of $750 a day to do that job.

But as soon as the job's over, you stop paying them, whereas the corporal you're still paying. To keep the corporal, you're paying for any benefits they get in terms of GI Bill, in terms of VA [Department of Veterans Affairs] -- all sorts of other things. So you're hiring a surge capacity. You need a lot of people right now to do this sort of job, and it ends up being far cheaper to go through the private sector to do that.

There is a significant public investment in some of these contractors if they've been trained to be a Navy SEAL or an Army commando.

Absolutely. And if somebody decides to go Special Forces, they're committing themselves to a lot of years of military operation. You can't just jump out in the middle of that. They have to finish that commitment. Now, they can re-sign up again, or they can go to the private sector. ...

There are some people on the Hill that have complained about the drain on the Special Forces because the private military contractors pay so much better.

Well, it's a problem because there's now a market for these guys. But think of it this way: The Air Force, their pilots have always had a market outside the Air Force. If you train to be a jet pilot in the Air Force, you know there's probably a pretty good job waiting for you when you leave the Air Force. Better-paying, certainly.

So what the Air Force does is it increases the pay as much as it can; it increases the conditions that these people live under, eases the burden on them so it's not such a strain on the family and tries to keep them in that way. It's actually the Air Force that's competing against the airlines.

But it is a problem?

Well, the Air Force has dealt with it, I think, fairly successfully.

But that doesn't mean it's not a --

Now, with the Special Forces, of course, they have the same issue. Before there wasn't really that much of a market for former Special Forces people, so people could stay in Special Forces for a long time. But now there's a market.

And, you know, at some point, when somebody reaches age 40, they start thinking maybe their family needs the money more than they need to stay in Special Forces for a few years. Now, there's already been some programs to keep people in Special Forces. If you're a 19-year veteran in the Special Forces, they will give you $150,000 to stay in six more years. That's fine. And I think for a lot of Special Forces people, the job satisfaction is much higher doing that than what they would do in private security, guarding gates, who knows.

And of course private security is very temporary. 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. 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. ...

So what is the size of the business in both numbers and in the kind of dollars we're talking about?

It's hard to come up with because nobody's really come up with a good formula as to what counts as a private military company and what doesn't. The numbers that keep getting batted around are the whole industry is worth $100 billion to $200 billion. That may be true if you're including people mopping the Pentagon, if you're including the Korean dry cleaners next to Fort Dix or something like that. ...

If you think about it this way, though, the biggest contract in Iraq so far is KBR's contract, which since 2003 is $14 billion, which is a lot of money. It becomes very difficult to see how it could all add up to $100 billion a year if you're really thinking about companies operating in conflict, post-conflict environments.

So revise it downwards for us. You're president of the IPOA [International Peace Operations Association].

(Laughs.) Thank you. But it's hard to wrap your head around. Any number you come up with, you're basically pulling it out of a bag, because people say, "Well, those companies should be included, but those shouldn't." We focus on companies that work in conflict, post-conflict environments in other countries, and within that I would guess that your market top would be $20 billion maybe.

[The Brookings Institution's] Peter Singer says there are 15,000 to 20,000 private military security contractors in Iraq.

Well, be careful, because he often will mix in the support personnel, the truck drivers and so on, as well as the security guys. If you're looking at the actual armed, non-Iraqi security in Iraq right now, best estimates that I've seen are between 6,000 and 8,000 from all nationalities.

On top of that, though, you have Iraqis that work for Western security companies. That may be another 20,000 armed Iraqis that are working for these companies. And that's a trend. These companies will use locals, Iraqis, as much as possible to do the security. It just makes a lot of sense. But then on top of that, you have all the truck drivers, the cafeteria workers, the cleaners and so on. So you're probably talking about 150,000 private contractors working in Iraq, doing everything from reconstruction for security to supporting military operations.

But by your numbers, you would say there's about 26,000 to 28,000 private --

Including Iraqis. I think that's really important to say. And there's also Iraqi security companies on top of that which have nothing to do with Western security companies; they're their own entity. So could be 50,000 or 60,000 all together. But mostly I think people miss the fact that it's almost entirely Iraqi.

What is the IPOA?

The International Peace Operations Association. We're a nonprofit, nongovernmental, nonpartisan association of service companies dedicated to improving peacekeeping, peace enforcement, humanitarian rescue and stability operations worldwide. ...

Somebody's going to say, though, what's the difference between the guys that you represent and --

Rogue mercenaries?

Well, not a rogue -- just a mercenary.

Well, an individual can change their name, identity; they can work anywhere, do anything. It may or may not be legal, but for an individual, it's very hard to control them, whereas a company has to operate legally, or there's different ways you can attack it -- financially, legally, whatever.

So with companies, it's much easier to make sure that the sort of military operations they're doing are within bounds. Every U.S. company has numerous regulations that they have to follow: ITAR, the International Traffic in Arms Regulations; FAR, the Federal Acquisition [Regulations]; and DFAR, the Defense [Federal Acquisition Regulations] Supplement. There's all these sorts of regulations. They're not necessarily designed for this industry, so we're seeing a lot of conflicts that need to be sorted out. But they do have a lot of regulations they have to follow. And with companies, they do have to follow it if they want these contracts.

But if the definition of a mercenary is somebody who does military operations for profit --

Then you've just defined every army in the entire world. If somebody joins the U.S. military, certainly patriotism is going to be a big part of it, but so is the fact that they can support themselves by joining the military. So is the fact that they're getting the GI Bill, that they're getting their college education; they're getting all these other sorts of things. Getting paid to do military operations is nothing new. It's quite normal in military. What's unusual, I think, for some people is the fact that the private sector does the same thing.

And you've said that contractors are needed because the military is stretched thin?

The military is trying to do a lot of things at once. And as I say, it's the most capable organization in the world; it's not a cost-effective organization. If you want to take over a country, they're wonderful. They're very good at that. You can probably do it cheaper, but they're the guys that we go to. ...

I've talked to some generals who say this has been a miscalculation; that when Secretary of Defense Dick Cheney saw the end of the Cold War, he and his boss, President George H.W. Bush, concluded that there should be a peace dividend, and they began to shrink the military, not realizing the needs that were coming, that the military was going to be --

You're advocating for a larger military?

Some people think that we should have a larger military and that the private military contractors are filling a hole that should be properly done by the military.

Fair enough. That's a decision that policymakers have to make. Private sector shouldn't be making that decision. The private sector answers demands; it doesn't make policy. And that's the way it should be. ...

Is there an increasing role in the future as you see it for private military companies?

Well, there is. We have three categories of military service companies: the support companies, the private security companies, and the private military companies. I think what you're going to see, the private security companies will go up and down. It's going to be sort of the most jagged chart in terms of when there's demand for security, it goes way up, but then it will drop way down to pre-Iraq War levels.

And so for the support companies, I think we're seeing an increase in their use as well, but it's a much more steady increase. Yes, there's a blip with Iraq, but it's going to go back down somewhat -- a little bit higher, I think, than prewar levels. And it will keep going up because there's a need for these companies to support peace operations. And U.N. is spending, I think, $4 billion a year now on peacekeeping, and a lot of that is going to support companies that support U.N. operations.

The private military companies I think will also see an increase. GPOI, the Global Peace Operations Initiative, the idea of training militaries around the world to do peacekeeping operations, I think they're going to look to the private sector to do a lot of that.

What is the initiative?

The GPOI is the Global Peace Operations Initiative, and it's a U.S. initiative to train up militaries around the world from developing countries so that they can do peacekeeping operations better.

And these contracts often fall to the private military companies.

When the U.S. is paying for them, absolutely, yeah, which will use former U.S. military people anyway.

Why not have the military do that?

Well, the military could if they had the people to do it. But every time, for example, let's say you're doing a training program in a francophone state, and you want French-speaking trainers. Now, the U.S. military can go and start pulling out qualified people from all their different units, put together enough trainers to actually do the mission, and that's fine. But if you keep doing that, you start sapping the military strength because you can't just keep doing that. The military doesn't like pulling out executive officers of some unit or whatever to go and do this. It's fine for a few months, but then they want their guys back to do their jobs.

If they go to the private sector, you get former military guys. And the private sector can go to the Rolodex and say, "OK, who do we have that has these skills that are required for this contract that speak French?" Boom.

The issue that people watching will have with this is, where's the accountability in this situation? And as I understand it, that's one of the purposes of your organization. But I think a lot of people are uncomfortable with the idea that you're going to have private groups going out [and] that it's unclear to whom they're accountable.

I think it's very clear [that] if the U.S. government hires a company, they are very accountable.

Yes, but they're removed from direct chain of command.

You can pull the plug pretty easy on these companies, and they have pulled the plug when companies have screwed up. You stop paying them; they go home. They don't have a choice. They're a for-profit entity.

The U.S. military also has ITAR, the International Traffic in Arms Regulations. If a company wants to do a contract like this abroad, they go to the State Department. They say, "This is what we want to do abroad," and they itemize it. The State Department takes that contract, passes it out to different organizations -- Department of Commerce, Human Rights Desk offices, whoever. All those people comment, and then the State Department office gives a thumbs-up or thumbs-down, or says, "You can do it, but with these modifications." And that contract gets reviewed during the course of the contract. And at any point the U.S. government could pull the contract and say, "No, deal's off."

But it's essentially trusting the marketplace to police itself.

No. What's the marketplace have to do with that? Essentially the government says if they don't want to do it, it's not going to happen, whether the marketplace says there's a market for it or not.

Right, but after an abuse has occurred.

Oh, yeah. Well, if there are abuses, then that has to be addressed. We have MEJA, the Military Extraterritorial Jurisdiction Act, which addresses a lot of the stuff. And this industry has been supporting this very strongly. The idea that when a contractor is working on a U.S. government contract, they can be held liable under federal law, it makes a lot of sense. Contractors love it because the government has to be comfortable using these guys, has to be comfortable that they can hold people accountable for these [abuses].

What I mean by allowing the market to play is that you're putting companies in competition with one another, and the good ones will rise, and the other ones will be weeded out, but it's after abuses have occurred.

Oh, not necessarily.

Well, it's after one or two or three companies have been fired or discontinued or sued.

You don't think it's possible that the first company hired through appropriate contracting process can actually do a good job?

It's potentially possible.

I think it happens most of the time. And I think any time you have a large operation with a lot of employees -- and this doesn't matter whether you're a McDonald's or Blackwater -- you're going to have individuals that are going to screw up or that are going to do things that are wrong. The companies have to react appropriately to that. They have to get them out of the country where the operation's going on, and there has to be some decisions whether they should be tried or something. [It] shouldn't be the companies when it comes to legal issues; it should be a federal thing. ...

Let's talk about Iraq a little bit. You've said that the Pentagon and State Department guidelines governing the operation of contractors in Iraq are loose.

... I think what we're seeing now is there are a lot of contradictory laws and regulations that need to be fixed. There's overlapping oversight. So essentially, there's maybe five congressional committees that can overlook contractor operations. From our perspective, from an IPOA perspective I mean, we're very keen to see good contractor oversight, contract officers over in the field looking over these operations, making sure things are being done appropriately.

One of the complaints we're getting from our members, and we consider ourselves [one of the] high-end companies, is that when they do a good job or better job than one of the rival companies, there's no [contracting officer to] note that that's taking place.

Now, let's be clear: Most of this was right at the beginning of the conflict in 2003. Nowadays you have far more contracting officers over there, and almost as many auditors, interestingly, as contracting officers in Iraq right now. And you have to do that to make sure that these contracts are being followed.

We'd also like to see contracting officers as a part of the military hierarchy. One of the issues has been when you're in an insurgency or a conflict situation, contracts need to change pretty quickly. And every time you change a contract, you need to get a new task order to do it. The military can't just write new task orders. It has to go to a contracting officer, an official person to do that sort of thing. And that was a problem at the beginning of the war when there's no contracting officers there, when you have to go back to officials in the U.S. to get signatures and so on.

It's also complicated by the fact that some of these security contracts are subcontracts of subcontracts of subcontracts.

Well, yes and no. But the rules generally apply to all contracts. If you are subcontracting on a U.S. government contract, a lot of the same rules apply, essentially. ...

But it becomes harder to enforce when you have layered contracts. Is that a fair statement?

That may be true. Yeah, I would say that's fair. ...

The lawsuit against Blackwater raises some serious questions about whether or not these contractors were provided the right equipment and whether or not they were provided the right amount of support.

Right. Let me say this. I think we do have to worry a little bit about Monday-morning quarterbacking. Essentially you have a lot of companies that moved very quickly into Iraq. They had a lot of problems with getting licenses. Interesting [that] this is part of the problem, I think.

On the one hand, you have the U.S. government contracting these companies to do very robust security work or whatever. On the other hand, they're not getting the licenses fast enough so they can take body armor into the theater. And in some cases, they're having to scrounge it and find their own body armor and things, and that was a problem.

And I think, at the same time, the people that do these contracts are all former military. They're very good at ad hoc. If there's a mission to be done, they'll do it. Does it mean they're going to wait until they have M1 tanks and helicopters overhead to do these missions? I don't think they can do that. They're going to do them anyway. ...

[The Blackwater incident] put security contractors on the map.

Right, especially because I think there was filming going on at the time. But remember, there's been more support contractors killed than security contractors. And, in fact, you'll see more attacks on the support units than you will on the security companies. One thing about armed security is that it works. There's a deterring factor. And Bremer came home [safe] to his family because he was protected by private security. It can be very, very effective and --

By Blackwater, in fact.

The people they used, that was, in fact, by Blackwater.

Which is a company with a good reputation all around.

It has a great reputation. ...

There's the issue of coordination with on-the-ground military commanders.

A lot of these issues that popped up in terms of contractor oversight coordination, things like that, were especially true right at the beginning when there was a lot of chaos going on and people were just getting in there and things were being sorted out. Most of those problems have been addressed.

But as late as April of last year --

Which was what, one year into the conflict?

-- still there were no regulations. There was a scramble at CPA [Coalition Provisional Authority] after the incident in Fallujah to come up with some kind of rules.

They actually had some rules. For example, there are rules of engagement for private security companies. ... There was a much more formal coordination system put in after the Fallujah incident. Before that, though, there were rules of engagement, which limits contractors to when they can use legal force, which essentially is protect themselves, … protect their contract, whatever is in their contract -- person, place or thing -- and to protect Iraqi civilians under mortal threat. And that's all they're allowed to use lethal force for.

In terms of coordination, what was the upshot of the incident in Fallujah?

The coordination was very much, at that time, I think it was on a very regional level. Each company kept in touch with the local military commander and would say, "We're going from here to here," or whatever. And it was a much more informal system than they have now. In many places it worked fine. But I think what was needed was some sort of national system for Iraq, and I think that's what they have at this point. ...

I just want to take up the criticism that I get by listening to some generals, some colonels that I've spoken with who feel that in a war zone, which is Iraq, missions such as trucking convoys, guarding of ambassadors, these are jobs that should fall to the U.S. military...

I think, first of all, we have to be clear that the military's very divided on this. In fact, I would say overwhelmingly the military supports the idea of contracting out these missions so that they don't have to split.

Well, they have no choice.

Well, no. I mean, they support it. You can say that, but I think they're split on that issue. And I think when you say, "Generals don't like this" -- well, some don't, but quite a few don't have a problem with this and see it as a way to enhance their mission. So I don't think you can just say the military doesn't like this idea.

That's fair enough.

And in fact, the military, the Pentagon's doing most of the contract people. [If] the generals didn't want to do it, I guarantee it wouldn't happen. ...

[Does Congress have a handle on this issue?]

I think Congress is pretty split on the whole issue. One of the problems of the whole industry is that it's become so politicized -- not the industry, but the idea of using the industry. You want to have rational regulations; you want to have good oversight of the companies. And we certainly support that, but what's been a problem is that it's become a political football. Everybody keeps bringing up Dick Cheney. Everybody keeps saying, "You know, these guys are mercenaries," or whatever, and you have to look. You're going to use private companies.

During the elections, when Bush was taking on Kerry, and everybody was saying, "If Kerry wins, what's going to happen with industry?" -- well, nothing. Essentially the industry supports a military. ... It just doesn't really matter who's in charge; you're always going to have private companies supporting military operations, and the contracts will go up or they'll go down depending on the level of work that's available. If Ralph Nader had been elected, it wouldn't have made a difference. ...

But I think there's a criticism that I've heard that says that this administration is relying far too much on the marketplace when it comes to supplementing and supporting the military; that we've shrunk the military too far and that the private military contractor is filling jobs that are not appropriate for the private sector. What do you think?

It's up to the policymakers to decide and the DOD [Department of Defense] to decide how much they want to use the private sector. I think what we're seeing -- most of the criticism's about the private security companies. But [there are] armed private securities here in the U.S. It's in Europe; it's in Asia. It's everywhere. Now, the fact that there's an insurgency going on --

But in a war zone is the question. In a war zone.

It's a little bit more robust. You're using people who are a little bit more competent than before, but it's the same thing. The guy who's sitting at the gate of the factory is essentially a corporate cousin of the guy who's guarding a politician in Iraq. It's a lot higher risk perhaps, but it's the same essential job.

But the question is whether or not those are jobs that are jobs that are appropriate for the private sector.

Well, somebody has to draw the line, and I don't think the private sector should make that decision. The private sector answers the demand, OK? Somebody wants security contractors to protect politicians and so on. And I think they've been doing a great job on it, but should they decide whether that even should be done by the private sector? No.

But don't you in your organization advocate more use of --

Oh, absolutely. Yeah, yeah, because I think we've seen that they do a very good job.

So you take a position that it is a good thing to contract more services, more military services.

It makes sense. Ultimately, as I said, in any peace or stability operation, the more efficient it's run, the more people [will] be alive at the end of it. And I think what we've seen is the private sector could do quite a few of these jobs very efficiently and contribute quite positively to these operations. It may just make sense. ...

The interest of Blackwater is Blackwater is a company. ... [Private companies are] concerned about the bottom line.

They're concerned about doing their contracts properly, which ultimately gives them a bottom line, yes.

They're concerned about doing their contracts, but their contract, for instance, in protecting Bremer is protecting Bremer.

And they did a damn fine job of it, yeah.

It's not extending U.S. policy if they need to run people off the road.

I think their interests follow both those paths, right? If they're thwarting U.S. policy, are they going to get contracts in the future from the U.S. government? I don't think so. Essentially, whatever they're contracted to do, they're going to make damn sure that the government agrees with it.

They can get pretty rough in their treatment of the perimeter of Iraqis when they're going out on a mission protecting Bremer. They're going to be judged as to whether or not they protect Bremer. It doesn't matter how many Iraqis they run off the road.

This is a great point. And one of the issues has been sort of a hearts-and-mind issue. The fact that when you hire a private company for a specific task that can be very focused on the task, we would argue that the contract should include sort of the larger picture and say: "OK, you can do this. There are certain things that we don't want to see you doing, even if it increases the risk." ...

But you can create some hearts-and-minds problems. You can lose some hearts and minds.

Whoever was doing security would have the same issues. Whether it was a military or a private security company, you're still going to have those issues. I don't see how the military would do it differently is my point. ...

But the bottom line for that company that's protecting Bremer is to protect Bremer.

Right. But what's in the contract?

They're not going to get another contract if they go and they say, "Well, what we did in Iraq is for four months we protected Bremer, but then we lost him."

If the contract says, "We want you to take additional risks in order to serve the hearts-and-mind issue," then fine. Then the company just has to calculate that in when they figure the risk and the cost.

The contractor has to figure that in.

That's right, exactly. The company does, yeah.

But the U.S. government that's hiring them also has to calculate in that the interest of this company is not necessarily the same as the interest of the --

Well, I think the interests are the same. I think you're exaggerating that a little bit too much. Essentially Blackwater wants to see a win in Iraq the same as anybody. It looks good on their resume, essentially. If Iraq has a successful operation and they've done well there, then it's good for the military people. …