Some Highlights From This Interview

[Contracting] has been a growing business throughout the '90s. Why? Why deployment of private security companies over the last 15 years, say?

I can't really answer to the period through the '90s, but I suspect that there's a demand. And then [in that] business climate, people will respond to meet that demand.

And the role in Iraq?

Security. Three types of security primarily, and it's all defensive-related. They protect people, they protect facilities, and they protect convoys. And you might say a convoy is sort of a mobile facility. All those are strictly defensive. When we talk about private security companies, we don't include the people who were conducting interrogations at the prisons or things like that. The definition by example in the private security companies is strictly those three primary areas. There are small residual areas, training and so on, that may be conducted in certain areas, but those are the big three. ...

Any idea what kind of money we're talking about in terms of the amount of contracts being signed?

No, I don't know really, because those contracts come in several different areas. One of them, they're contracts of the U.S. government or the coalition entity. In the U.S. government you can break that down into both State and Defense. You have contracts with other governments that are not the U.S. government. You also have contracts with civilian entities. If XYZ company comes in and plans to do something there, they may want to have private security. They probably do need to have a private security company right now, if for nothing else than the criminal element. All of these people have different contracts.

Contracts are, as you know, company proprietary information. They don't want to give out the amount of business that they do, because it may provide a competitive edge to someone else. So no, we don't discuss that actually, and I can't really categorize it.

The supplemental, when that was passed, $18.7 billion, which after various taxes turned out to be about $12 billion plus or minus, originally had programmed, I think, about 10 percent as a ballpark figure what was going to be required for security. Now, I don't know if it was less than the 10 percent or more than the 10 percent, but it was somewhere there, which I think was an initial estimate 18, 20 months ago.

We've talked to people in the security business. They say this has been a tremendous boom. The demand has been huge.

Sure it has.

The questions that come up repeatedly, though, about the business is, who are these individuals accountable to? In the eyes of Iraqis, they represent the U.S. government. Many of them are on contracts with the U.S. government, but yet their interests do not always coincide, do they?

Well, I'm not entirely certain if I understand your question. But there's CPA Memorandum 17, which provides for the registration and [regulation] of private security companies. All the private security companies, in order to operate legally under CPA Memorandum 17, have to be in compliance with that process. The companies right now are in the process of registration on that. ...

And CPA Memorandum 17, which was not signed out until the day before CPA went away -- I think it was the 28th or 29th of June -- established a format, an architecture for these companies to register themselves with the Iraqi government. Now, a lot of people think that the day after CPA went away, there was a full-blown extant Iraqi government that was ready to step in and take over every responsibility. But in fact, it has been a growing process. You don't just, bam, have it. It's not a freeze-dried government.

And so we've worked with the Iraqi government to put into place the structure and the administrative devices in order to make this occur. And now that those are occurring, the private security companies are all registering in compliance of that. There's some two dozen that are registered right now, and I happen to know that there are another three dozen at least that are in the process of registration at this time.

So this would include any security company that had any kind of contract to do business in Iraq?

Absolutely.

So whether their contract is with a government, an Iraqi entity, a company based in Kuwait --

Right. Then, if they don't register in terms of that memorandum, CPA Memorandum 17, then they are extralegal. They'll be operating illegally. ...

What are the interests of the companies? It's a business. You're in business, right?

Yeah, sure you are.

[There's a] question as to whether or not those interests always coincide with the interests of, let's say, the U.S. government, U.S. policy in the area.

I think it does, because it contributes to the stability of Iraq, and in contributing to the stability of Iraq, we give the government of Iraq more opportunity to grow and take control of their own affairs, and the [end state] would be no private security companies in Iraq conducting business.

Here's an example given to me by a colonel, and that is that Blackwater, for instance, which had the contract to protect Ambassador [Paul L.] Bremer, they have an interest in doing that, in performing that and keeping him alive. But in doing so, running down the road, for instance, as he goes out to visit a facility, they can run any number of Iraqis off the road, and their interest is very narrow. It's simply in protecting that ambassador.

Well, they operate within certain defined rules for how they protect that ambassador, and the situation you bring up, obviously, is a hypothetical. I don't know the colonel that you talked about, and I don't know if he is referencing a specific incident or some dream that he's had at some point in time.

No, he's referring to a specific incident in which he felt that the security companies had a kind of laserlike focus on their mission to the exclusion of all else and to the detriment of the perception of the U.S. in the region. He felt that those contractors were creating insurgencies and went about their business.

Well, that may be his feelings. I think they're doing the mission that they're being contracted to do. And if the U.S. government felt that they were not doing the right mission, then the U.S. government would have that discussion with their employee, whether it be that company or another company.

Is there active debate within the business as to what jobs are appropriate and which jobs are not appropriate? There is a debate within the military as to how much should be outsourced -- how many military functions, security functions should be outsourced.

Yeah. I think that's a healthy debate to have. We should have these kinds of discussions, and it's hard to have that kind of discussion when you're right in the process of trying to conduct the operations that are advanced by it. [I'd] suspect that Carlisle Barracks and [Naval Station,] Newport, [R.I.,] and Naval War College and the other military colleges are going to have a great deal of discussion over this over the next five, 10 years as we try and come to terms with how much we should outsource; how much we should keep internal; what are exact rules; how we establish, reinforce, define the lines of communication, command control and so on.

Right now you've got private security companies who have been asked to do certain missions, and they're going to do those to the best of their ability within the framework in which they're provided. They operate under clearly defined rules for use of force, and they're highly professional people.

When you got there in February of '04, how did the situation differ then from what it's become, vis-à-vis the private security companies?

Well, February '04, we're not even a year into the effort at that point of trying to stabilize Iraq and bring freedom to the Iraqi people. And the private security companies were out there doing a lot of work on a very rapid turnaround. There wasn't a great deal of bureaucracy at that point. [It was,] "Let's try and get the job done." There is a sense of urgency involved.

And so private security companies were out conducting a lot of different operations, but what we've been able to do since then is develop a greater understanding of who the companies are, what they're doing, share information and resources together -- and, as I'm fond of quoting Benjamin Franklin, if we don't hang together, assuredly we'll all hang separately -- and work together on items of common interest, mutual interests and concern for the betterment of the whole, whether it be between the private security companies or the private security companies and U.S. government, the private security companies and the Iraqi government.

In February of '04 you come and you organize a Private Security [Company] Working Group. What problems are you addressing?

Well, there are a number of different issues at that point in time. The first is looming on the horizon, but what I began almost immediately with is starting initial drafts of CPA Memorandum 17, which at that point had no term applied to it except the rule for registration and venue of private security companies. We knew that this needed to be done.

There are some existing regulations that CPA had put out, governing the kind of weapons they could use and so on and so forth. But there are no overarching instructions saying if you're a private security company, these are things that you need to do in order to work in Iraq. And we knew that this was necessary, because as we got ready to transition to the Iraqi government, we wanted to have foundation documents in place that the Iraqi government could take and build up upon. And so I started working on that.

We also recognized that it was difficult to bring weapons into the country. For private security companies, in order to do the job that they need to do, they need to be able to have the weapons to protect themselves. It's a long, involved process involving export licenses if you want to bring the weapons from the U.S. and so on and so forth. And so we needed something called end-user certificates. ... We needed something within the CPA to sign these end-user certificates. After we determined that this needed to be done, I wound up doing that very thing.

But part of that point was, who does this? We don't know. And there was a lot of finger-pointing back and forth while we tried to work it out. ... So I put a weapons license program in place. Private security companies -- who are you, how many are there, how do we get together -- we had to define who the people were; we had to determine who the points of contact were. So we started a process to determine all that kind of information. So those were the key things I had worked on at that point. ...

[Editor's Note: Read an April 2004 memo, in which Peter gives guidance to companies on importing weapons into Iraq.]

At that point, they were presumably getting their weapons in without regulations?

It was ad hoc.

Some of them were buying them on the black market, I've heard.

Yeah, there's certainly some of that. It's fair to say that because it had become so difficult to obtain weapons from legal processes and there were long delays involved that a number of private security companies took the steps that they needed to take in order to get the tools that they needed in order to do the job that was required.

There was also concern about a kind of lack of coordination with military commanders in various zones of the country.

You have competing interests involved, and one of them is that militaries always want to have greater and greater control over things that are going on. Private security companies did not have a mechanism, at least initially, to have that kind of control. Who do you talk to? Where are the phone numbers? How do you contact someone? Communications in Iraq are difficult.

That there were concerns about this kind of coordination was natural, but it was also in large part due to the ambiguous nature of the environment, units moving in and moving out. Who do you contact? How do you get in contact with that person? No stable communications system, no countrywide cellular network, which we still don't have today. So yeah, there were probably some challenges in that regard.

What were the primary issues when you pulled together the working group? ...

End-user certificates was number one; weapons licenses were number two; [the] CPA memorandum governing the registration and vetting was probably number three. Below that, we had no way to share information on lessons learned, route studies, things like that, information about the ambient environment. A private security company would work, would develop information about its operating area, and it would stay right with that private security company. So we took steps to share that information between companies to a greater extent, as best we're able.

And how many companies, then, participated in this process?

Oh, dozens. I don't know. We started off, and there was just a handful of people. And then as word spread that there was actually an office that was concerned with their welfare, their care and feeding, more companies came into it, and so between those meetings and opportunities to meet in a relaxed social environment -- when you don't know someone at the other side of the table, you tend not to trust them. Trust is built through communications. So one of the biggest things we worked on was trying to build communication not only between the companies, but from the companies into other parts of what was going on there.

But they were all competitors at the same time.

Well, they're competitors [to] some extent, but what we realized early on, and while there might be tactile competition for contracts, [is] that the demand for private security companies' effort was so great in Iraq that strategically there was no competition. If you wanted a contract, you were going to get a contract.

But were you concerned about wage inflation?

I was concerned about wage inflation. Market forces have tended to take care of that. Look, you hear a lot about how these people are being very highly paid, but I suggest to you that their pay is not that high compared with civilians in any capacity who are over in Iraq right now receiving a premium. Does a private security company operator get more pay in Iraq for doing a job that he might be doing in the U.S? ... The missions exist in the U.S., but the ambient environment is much less threatening, and consequently, the person is going to receive a lower level of pay. If you hire an IT guy in the U.S., they're pretty expensive if you [get] someone to pull fiber into your studio or something like that. Now, imagine hiring that guy [having] to pull fiber in Iraq, where you have mortars going off and things like that. He is going to get a premium. And so there's a premium being paid to private security company operators in Iraq, but I don't think it's out of line across the board with what you see premiums being paid to other disciplines.

Contracts were early set up at one wage rate, and then as pressure built for more people to come into Iraq -- and this might be 18 months ago or more -- they were offering more money, so you saw a skipping going back and forth. But as things have tended to settle down, wage rates have flattened a little bit, and I think you're seeing salary levels fairly consistent across companies throughout Iraq.

But you were concerned about wage inflation early on, that it might have an adverse impact on reconstruction or take money away from reconstruction?

Well, it certainly could take more money away from reconstruction, but I was more concerned about the impact it would have on people skipping from one company to another as they try and chase $10 or $50 or $100 more a day for the work that they're doing. And that kind of turmoil within your force can't be good, because you're trying to establish and maintain stable, mature organizations, and if you get people jumping from here to there to somewhere else, it creates just more difficulties at the end of the day.

You saw that happening?

Oh, it's certainly happening to some extent. ...

[But] you saw generally, across the board, a very high quality of employee?

Yeah, I think so. It's in the companies' best interest to hire high-quality employees.

But as the demand was so great and so many people were hired, did it have an effect on the quality of the people being hired?

If you look at any industry, they're going to have a bell curve, and at the very top end of that bell curve, you're going to have some people that are extraordinarily talented; then you're going to have a group in the middle that are doing all right; and then you're going to have some people on the bottom end.

But in the case of Iraq, we had tremendous demand, and the question is whether or not we used up the expertise that was available in the supply chain.

There's still expertise that's out there. Have we used up a large part of it? I'm sure we have. Is it a finite number? Yes. What that finite number is, I can't tell you offhand. As much expertise as we have in Iraq and Afghanistan right now, is that still outside waiting to come in at some point? Maybe not. But there might be some fraction of that. Is that 50 percent left? I don't know. People roll in and roll out. You don't have operators who are doing this for three years back to back. They go out and they'll do a year, they'll do a year and a half, maybe they'll do two years, and then they'll want to take a break. They need some downtime before they go back in. It's a rhythm.

What was Tier Bubba?

Tier Bubba. It was a word I used to use in that we have lots of operators that have come in from your top, elite units and your very good conventional units, Tier One and Tier Two. And one of the things through the registration and vetting of private security companies we've worked hard to eliminate is the influence of Tier Bubba coming in -- three Bubbas from Boston who decide that they want to turn up in Iraq and conduct a private security company because "Hey, this looks like fun." And private security companies are reflective on that because they know that those guys can have a bad reflection on the entire industry. Three Bubbas from Boston can hurt. One "Oh gosh" will ruin 1,000 "Attaboys," and so we want to keep those people from diluting and polluting the reputation of the legitimate and the highly professional private security companies that are out there right now.

So you were concerned about this kind of Tier Bubba influence?

Gosh, yeah. There's always going to be a small percentage of people who don't do a good job in any industry. If I find that there's a journalist who plagiarizes or makes up stories, does that mean that everyone who works for that newspaper is bad? No, but that doesn't take away the fact that that person's there. If I find that there's an academic who claims that he's something that he is not, does that mean that every academic is bad? No, I don't think so. And [by] the same token, I may find and we may find a Tier Bubba guy or two or a half a dozen, but does that reflect on the other 25,000? Hopefully not. Because some people in uniform operate badly in Abu Ghraib doesn't mean that the entire military operates badly.

It is unfortunate reality that everyone is not perfect, but it's the truth. And we do have problems with situations like that, and we respond to it, whether it happens to be in uniform, whether it happens to be in academia, whether it happens to be in the journalism field, in media, or if it happens to be in the private security company industry.

That brings us to the issue of accountability, because in the case of the private security companies, there have been many questions about who they are accountable to. In the military, you can be court-martialed if you misbehave. There have been no similar reprimands that I'm aware of of private security contractors. ... Was there ever a time when a private security contractor was reprimanded?

Well, there may have been, but that typically would be between the contracts officer who hired that private security company and the private security company. I'm not aware of any incidents offhand.

But you were coordinating. You would have been in a position to know.

I'm not aware of any incidents offhand. Someone could bring up something to me or something like that, but we'd have to look at it.

But that's the issue. In the military we've had serious incidents occur in Abu Ghraib, for instance, and there were court-martials.

Right.

Are we assuming that there's been no misbehavior on the part of any of the private security contractors?

Well, I think that if there has been misbehavior on the part of private security company contractors, it is resolved between the private security company and the person who's contracted them. There's CPA [Memorandum] 17, which provides the mechanism for the proper discipline and the proper status of forces, if you will, status of contractors, status of everyone who's not Iraqi who's inside Iraq doing work as part of this effort, their legal status while they're there.

Do you know of any example where that mechanism has been applied?

Offhand I can't think of one. I don't know. It doesn't mean that hasn't happened. But again, those are contractual areas which I normally don't get into. If a company has something that's happened bad, it normally would probably not be the entire company. It would be one or two employees that may be involved in some sort of incident. In that case, the company is going to take proper action as deemed appropriate between the contracts officer, who is the person who's hired that company, and they will resolve that. Does that mean that that employee leaves the country? Yes. Is there some sort of fines involved? Yes. Secretary [of Defense Donald] Rumsfeld addressed this in a memorandum to Representative [Ike] Skelton [D-Mo.] last year where he talked about the mechanisms that were involved.

But yet there's no transparency. If there have been any kinds of reprimands, we don't know about them, and we don't even know if there have been any.

Well, I think that's a question to address to the contracts officers. It's not something that normally falls under my purview.

But you would be in a position, I'm assuming, to know what's happening at least now in your member organizations or previously when you were representing the other side.

Is it the responsibility for every company to tell me if they're having a difficulty or not? No. Companies are very self-reliant, independent, and they're going to do the things that they need to do. This is a business matter. ...

I was speaking yesterday out at Quantico with Col. John Toolan, who was on duty after the four contractors were killed in Fallujah, and he ... [said security contractors] would cause incidents in his zone. He had no coordination with these guys. He didn't know when they were coming through his zone, and when they came through they fired wildly, and Iraqis in some cases were killed as a result. Now, I know [of] no reprimands for this kind of behavior.

Well, it's certainly a challenge. If someone gets run off the road, yeah -- I've been run off the road by both the military and by people who are in unmarked cars.

But what about the accountability issue? When they have weapons in these countries, they are seen as representatives of the U.S. government. They're under contract. They're under taxpayer dollars.

Not in all cases. I mean, you know, again --

In many cases.

In many cases they are, but in many cases they aren't. I think that the Iraqis and the Iraqi government views the private security companies as contributing to the overall security of Iraq, not diminishing the overall security of Iraq. We have frequent conversations with the Iraq Ministry of Interior. ...We understand what their issues and concerns are, and we reflect that back to the community, and there's opportunity for the Iraq Ministry of Interior to talk to the community about these kinds of issues. Certainly a stable, prosperous, secure environment is not going to have people carrying guns around all over the place, and we're moving toward that future, and I think the elections on the 30th of January [2005] have gone a long way to it. ...

You're talking about the incident in Fallujah which occurred well over a year ago. Certainly the colonel is right that there are concerns. I'd ask the colonel if that's what he still thinks is going on today. And I suggest that a lot of that kind of behavior has been reduced as the situation continues to stabilize. ...

When that incident in Fallujah happened, what was the impact of that incident on the industry?

Well, these men were doing a tough job in a dangerous environment, and we grieve for their loss as we do the loss of every soldier, sailor, airman, Marine that's operating in Iraq right now, and all the civilians that have gone over there, and a number of them have lost their lives or have been wounded in the process. I think industrywide we've looked at it. We tried to learn what lessons were available from that incident to make sure that it didn't happen to one of us, and then we move forward, because at the end of the day, we all have jobs to do.

What kind of discussion was stimulated by that incident?

Well, I think to the best that we're able to, we try to determine the circumstances of the incident. ... We discussed the incident. We try to figure out what may or may not have gone on. Everyone sort of internalized that, said, "All right, what can we learn from this?" And then they moved on. ...

I'll give you a hypothetical incident. You've got guards that are guarding some facility. They're there. There's a drive-by shooting; there's something like that. We say, "Well, what can we learn from that incident?" Well, we can learn that maybe the guard should be in a little concrete pillbox or something like that, or maybe he wasn't wearing his body armor. Or was there anything that could have been done to could have kept this incident from not occurring? Yes, no, maybe, all right? Well, next time, make sure your guards wear [their] body armor. Or next time let's put a barrier out here so we can see that car before it comes up for a drive-by shooting; we can examine it first. These are lessons learned. ...

So was there any action taken at CPA following that incident to get a grip on the situation and get a message to companies like Blackwater -- "Hey, if you're going to go into these zones, you've got to coordinate what you're doing with the local commander"?

Yeah, well, and the local commander said at that point, "Do not come into our area anymore without coordination." And that message was passed down, I seem to recall. And we were talking a year ago. Now, a lot of water has gone under the bridge since then. ...

I have the minutes from the meeting that took place on the 30th of March, and you begin in these minutes that you authored, "The Private Security Company Working Group began with a plea to quickly come together and shape the future of the private security industry in Iraq or have it shaped by others." What did you mean?

Well, just that. ... To a limited extent, you've got a bunch of companies are out there operating. You're trying to get the companies to operate at a high level of professionalism. You're trying to encourage them with an eye to the future that the situation is constantly evolving, that you have a regulation that is getting ready to be written and that the future is in their hands.

The future is in all of our hands. Every day we wake up, and we have an opportunity to be better people than we were the day before. So companies, every day, they have an opportunity to be a better company than they were the day before. And if they don't -- Benjamin Franklin said, insanity is doing the same thing over and over again and expecting a different result.

And when you look at antecedents to this industry you say, "Look, Iraq is a different case." We have serious issues on the line in Iraq. We've got to succeed in Iraq if we're going to succeed [in] the war on terrorism. This just isn't guarding, I don't know, a dormitory somewhere. There are serious significant issues involved here, and all your companies are in this together, ... so let's figure out where those items of common interest and concern that we can agree upon [are] and move forward, and let's move forward smartly and responsibly. ...

Aegis was given a contract to [coordinate between the private security companies]. ... Did you recommend that Aegis be brought in?

Not at all.

Against it?

Not at all. I was not for or against whatever company got the contract.

But weren't they duplicating the work you were doing in a way?

No, not at all.

What were they brought in to do as opposed to what you were already doing?

I think the terms of reference of that contract that the companies bid on is probably still out on the Web somewhere. I can't possibly tell you what all the variables were that were requirements of that contract, but in brief, that contract was to do a couple different things. One of them was to provide personal security detachments to move people around Iraq who are involved with supervising the reconstruction effort. You have program officers, contracts officers that are executing that $18.7 billion of the supplemental, and they have to go out and see that their money is being spent appropriately, and you have to provide security protection for them to go to those --

Like Blackwater provided for Bremer.

Sure. ... The second part of it was to provide a coordination and information center for the reconstruction effort, and particularly the private security companies, if they're involved in that.

How was that different than what you were already doing?

Oh, by many degrees different. This is a big, complicated country. Lots of stuff going on.

But you were, in a sense, doing that work already, as I understood it.

No. What I was doing wasn't even the froth on a cup of latte compared to the effort that they were undertaking. ... What I was using was paper clips and Scotch tape in order to try and create a short-term solution to a problem called information sharing and stuff like that, and coordination. But to compare that little bit with what eventually turned out to be the contract to provide security support services at PCO [Iraq Project and Contracting Office] is the difference between night and day in degree and scope and capability. ...

What mechanisms are in place for the business to police itself?

At the very basic, it's a bottom-line profit-loss statement. If they do bad work, they're going to be sanctioned. They're not going to get more business, and they'll go out of business.

That's it?

Well, there's also movements afoot I think, both at the core level in the U.K. as well as in the U.S., to try and develop some greater coherence. ...

And you're saying now that we're just beginning to get some coherence and coordination? Some people are going to say, "Isn't that a little bit too late?"

Some people may say that. Other people may say it's all in evolution. We don't know the problems we're going to face until we face them. ...

Were you in a position where you felt you needed to bring these companies to account, to demand more coordination, to demand more information sharing? If not, who is bringing this industry into any state of coherence and coordination? If it wasn't you, who was doing it?

I don't imagine anyone. It happens in lots of different ways. Communication flow, as you know, is not strict lines or -- [it's] informal communications, or it's opportunities for people to get together and discuss things. And it is an evolutionary process. ...

At the end of the day, they're still in competition with each other, so there are items that they can agree on of mutual interest and concern. But they're still, at the end of the day, competitors, and in being competitors, they naturally have areas where they're going to try and go head to head on. The areas that they can coordinate on, professionalism, [things] like that, I think you're seeing that happen. ...