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More Contractors in Iraq

by David Isenberg

This article appeared on United Press International on August 22, 2008.

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U.S. reliance on private contractors in Iraq is even greater than previously thought, according to a study released last week by the Congressional Budget Office.

The findings of the report, titled "Contractors Support of U.S. Operations in Iraq," which covers 2003-2007, include:

• The CBO estimates that as of early 2008, at least 190,000 contractor personnel, including subcontractors, were working on U.S.-funded contracts in the Iraqi theater. Just fewer than 40 percent of them are citizens of the country where the work is being performed (primarily Iraq); about 20 percent are U.S. citizens.
• U.S. agencies awarded $85 billion in contracts for work to be principally performed in the Iraqi theater, accounting for almost 20 percent of funding for operations in Iraq. More than 70 percent of those awards were for contracts performed in Iraq itself.
• In-theater support for operations in Iraq occurred in multiple countries, including $63 billion of obligations for contracts principally performed in Iraq, $14 billion for contracts principally performed in Kuwait, and $8 billion for contracts principally performed in other nearby countries. New obligations for contracts performed in the Iraqi theater have totaled about $17 billion to $21 billion annually since 2004.
• The Department of Defense awarded contracts totaling $76 billion. The U.S. Agency for International Development and the Department of State obligated roughly $5 billion and $4 billion, respectively.
• Most contract obligations over the 2003-2007 period were for logistics support, construction, petroleum products or food. The contract for the Army's Logistics Civil Augmentation Program, known as LOGCAP, is the largest one in the Iraqi theater, with obligations totaling $22 billion.

Notably, by the report's own admission, it does not capture the total share of U.S. spending on Iraq that goes to contractors. This is because it did not include any contracts performed in countries outside the Iraqi theater, so it excluded contracts for weapons manufactured and maintained outside Iraq and its immediate neighbors. It also neglects contracts in the classified intelligence budget of which contractors claim a significant portion, as Tim Shorrock documented in his book "Spies for Hire" published earlier this year. And its estimate totals only values of contracts stored in the Federal Procurement Database System, which has been criticized for inaccuracies, given that it doesn't include money lost to contract fraud.

But it is still clear that by historical standards, the reliance on contractors has never been greater. While the United States has used contractors during other conflicts, it doesn't come close to what is happening now. The ratio of about one contractor employee for every member of the U.S. armed forces in the Iraqi theater is at least 2.5 times higher than during any other major U.S. conflict. While it is roughly comparable with the ratio during operations in the Balkans in the 1990s, the U.S. had only one-twentieth the number of troops there that it now has in Iraq.

As CBO Director Peter Orszag said at an Aug. 12 news conference, "It is … exceptional, the degree to which the military is currently relying on such contractors."

Of course, the above numbers refer to the total of all contractors, including all the unarmed logistics and reconstruction workers. But what about private security contractors?

The CBO found that total spending by the U.S. government and other prime contractors for security provided by contractors in Iraq from 2003 to 2007 was between $6 billion and $10 billion. Between $3 billion and $4 billion of that spending was for obligations made directly by the U.S. government for private security services in Iraq; U.S.-funded contractors spent $3 billion to $6 billion for subcontractors to provide security during the same period. The government's obligations for those services have amounted to roughly between $500 million and $1.2 billion annually since 2005.

USAID and the departments of Defense and State have awarded all of the U.S. government contracts for security services in Iraq.

As of early 2008, approximately 25,000 to 30,000 employees of private security contractors were operating in Iraq. Approximately 30 percent to 40 percent of those personnel work directly for the U.S. government as prime contractors. The remainder work for the Iraqi government, other countries or other companies.

According to data from U.S. Central Command, about three-quarters, or only 5,466, of the 7,300 private security contractor personnel working for the Defense Department in Iraq carry weapons. A similar proportion of armed personnel probably holds for all other private security contractors in Iraq. If so, that works out to another 17,000 armed security contractors. Thus the total number of armed contractors is about 22,500. That is a lot of shooters, but it is hardly the private army commonly reported in the press.

But the most significant finding in the report was that the costs of a private security contract are comparable with those of a U.S. military unit performing similar functions.

To appreciate the significance of this, one has to understand that for many years supporters and skeptics of private military contractors have been arguing over the cost-effectiveness issue.

Supporters routinely argue the private sector is inherently more cost-effective than the public sector. Detractors argue the contractors get paid far more than their government counterparts, which lowers morale and contributes to people leaving the military. But there has never been any hard data to back it up — until now.

The finding is not pure joy for contractors. It says that security contractors were comparable, not cheaper. But their advantage is that during peacetime, a private security contract would not have to be renewed, whereas the military unit would remain in the force structure.

Thus, this conclusion undoubtedly will be used by contractors in the future to bolster the case for using them.