Chairman Lankford, Ranking Member Connolly, other Members of the Subcommittee,
Thank you for the opportunity to testify at this hearing.
I commend you for examining the issue of whether government contractors exploit workers overseas. It is unquestionably a problem. Though it has come up elewhere it has not yet received the sustained attention it merits. As the Commission on Wartime Contracting in Iraq and Afghanistan noted in its final report:
U.S. contingency contractors, opportunistic labor brokers, and international criminal organizations have taken advantage of the easy flow of people, money, goods, and services to capitalize on this source of revenue and profit. Their actions bring discredit to the United States and act as a barrier to building good diplomatic relations.1
The subject also means you have to look at the relationship between prime contractors and their subcontractors, which is another problem. It is often, to cite Winston Churchill, a riddle, wrapped in a mystery, inside an enigma.
I am pleased to be here to discuss the The Najlaa Episode Revisited report that I co-authored, which was published by the Project on Government Oversight this past June. I have a prepared statement which I ask be included in the hearing record in its entirety, along with the POGO report. In the interest of time I will just summarize some of the main points.
But first, let me outline where I stand on the ongoing debate over the outsourcing and privatization of functions that used to be considered inherently governmental. I am not an opponent of private military and security contractors. Nor am I am a fervent supporter. Over the years I have documented problems with the claims of both sides. Personally, I think most contractors, especially those operating in the field, are decent, honorably men and women, doing necessary, even vital work, under harsh and demanding conditions. Some of them, I believe, especially on the security side, are underpaid. But in the end I am simply an interested observer and chronicler, who, like the Mr. Spock character on the Star Trek television series, finds it a "fascinating" phenomenon worthy of continued study and analysis.
Speaking of science fiction we might note that the use of private actors in war and conflict is something that sc-fi writers have long written about, as in Gordon Dickinson's Dorsai novels.2 So, in one sense, the subject of today hearing is an example of life imitating fiction.
First, let me address why this is important. For years industry advocates have been claiming that thanks to private military contractors (PMC) U.S. military forces have the best supported, supplied military in any military operation in history. It is inarguably true that PMC are now so intertwined and critical that the U.S. military simply can't operate without them.
But that is not an unmitigated benefit. Many PMC have had problems implementing contracts. Some have committed outright fraud, thus wasting U.S. taxpayer's money, and indirectly, negatively affecting U.S. military operations.
While the seven plus years has seen increased attention paid to the oversight of and accountability of PMC most of that attention has been at the level of prime contractors. Only now is government beginning to turn to the issue of subcontractors. This attention is long overdue. As the Center for Public Integrity noted last year:
Subcontracting is among the most challenging parts of the U.S. government's widespread outsourcing of war-related tasks. It works like this: A government agency — most likely the Defense Department, State Department, or U.S. Agency for International Development — will award work to a "prime" contractor. That prime contractor, usually a large American company like Kellogg, Brown and Root (KBR) or DynCorp International, will often subcontract some or even a majority of its work to other companies, including foreign-owned firms. Those subcontractors sometimes then turn around and subcontract part of the work, and so on.
But in footing the bill for all this work by a network of companies, the U.S. government often doesn't know who it is ultimately paying. And that can lead to fraud, shoddy work, or even taxpayer funds ending up in the hands of enemy fighters.
Prosecutions often rely on whistleblowers inside a company to report suspected fraud. But whistleblower protections typically do not extend to subcontractors' employees. Furthermore, many foreign subcontractors do not feel the need to cooperate with U.S. law enforcement or auditors.3
Our report documented various violations of the law and irregularities with regard to third country nationals. Some may say that is unfortunate but since nobody was killed or wounded what is the big deal? The answer is two-fold.
First, as any competent military commander will tell you, wars not fought and won by machines and tools. They are fought and won by people. Given how tightly integrated private military contractors are with regular military forces treating people badly on the private side can adversely impact people on the public side.
Second, there is a cost when contractors are improperly used and treated and I'm not talking about money. Although it is not widely recognized the use of private contractors among the complex of national defense, security and foreign policy departments and agencies is wo widespread and so wide in scope that their impact can be strategic, as opposed to the merely operational and tactical. If you think I am exaggerating consider the recent news that the United States will be withdrawing all its military forces from Iraq by the end of the year. This was not done because the Obama administration wanted to do so. It was done because it could not work out a deal regarding immunity for U.S. military forces. But given the events of September 16, 2007 at Nisoor Square in Baghdad when Blackwater security contractors shot and killed 17 Iraqi civilians,4 no Iraqi government was ever going to be able to grant an immunity deal. Now, like it or not, that is strategic impact.
In other words, there is a reputational cost when contractors do bad things or are treated badly. As retired Marine Corps Colonel T.X. Hammes wrote:
To start, three inherent characteristics of contractors create problems for the government. First, the government does not control the quality of the personnel that the contractor hires. Second, unless it provides a government officer or noncommissioned officer for each construction project, convoy, personal security detail, or facilities-protection unit, the government does not control, or even know about, their daily interactions with the local population. Finally, the population holds the government responsible for everything that the contractors do or fail to do. Since insurgency is essentially a competition for legitimacy between the government and insurgents, this factor elevates the issue of quality and tactical control to the strategic level.
Since the government neither recruits nor trains individual armed contractors, it essentially has to trust the contractor to provide quality personnel. In this case, the subcontractor took shortcuts despite the obvious risk to the personnel manning the recruiting stations. Even if the government hires enough contracting officers, how can it determine the combat qualifications of individuals and teams of armed personnel? The U.S. military dedicates large facilities, major exercises, expensive simulations, and combat-experienced staffs to determine if U.S. units are properly trained. Contractors do not. We need to acknowledge that contracting officers have no truly effective control over the quality of the personnel the contractors hire. Te quality control problems are greatly exacerbated when the contractor uses subcontractors to provide services. These personnel are at least one layer removed from the contracting officer and thus subject to even less scrutiny.5
Although he is referring to security contractors in the above quote his point applies equally well to the unarmed, food service workers we wrote about in our report.
I'd also note that shabby recruiting and labor practices aren't just a problem for logistics workers. As I wrote in my book Shadow Force:
Triple Canopy recruited men from El Salvador to be guards, paying them a minimum of U.S. $1,700 a month. The problem is that not everyone recruited had a military or even security background. One person recruited in El Salvador used to be a mason's assistant.
In September 2006 it was reported that about three dozen former Colombian soldiers were engaged in a pay dispute with Blackwater USA, saying their salaries for security work in Iraq turned out to be one-quarter what they had been promised by recruiters in Bogota. The Colombians alleged that recruiters had promised them salaries of $4,000 a month. They said it was only when they were given their contracts barely hours before leaving Bogota that they learned they would be paid $34 a day,or about $1,000 a month.6
Third, while industry officials and advocates often say that they welcome regulation, it often comes with the caveat that it should not be intrusive or burdensome. They note that they already comply with all existing national and international laws and regulations and best practices.
While it is true that government regulation could unnecessarily interfere with the proper functioning of the private sector it is equally true that the unconstrained activities of the marketplace, especially in the chaos of battlefields and warzones, is a surefire recipie for problems. In truth, the free market and regulation can go together. As professor of economics Lester C. Thurow wrote in his 1996 book The Future of Capitalism, "History also teaches us that the survival-of-the-fittest versions of capitalism do not work. The free market economies that existed in the 1920s imploded during the Great Depression and had to be reconstructed by government, Maybe survival-of-the-fittest capitalism can be made to work, but no one has yet done so."7
Fourth, contractor advocates also point to their own efforts to ensure ethical conduct, notably through company, trade association, or international codes of conducts. While this is commendable and even necessary it is hardly sufficient. Some codes have mechanisms, at least theoretically, for ensuring effective oversight. For example, the International Code of Conduct for Private Security Service Providers8 has a section
a) Establish objective and measurable standards for providing Security Services based upon this Code, with the objective of realizing common and internationally-recognized operational and business practice standards; and
b) Establish external independent mechanisms for effective governance and oversight, which will include Certification of Signatory Companies' compliance with the Code's principles and the standards derived from the Code, beginning with adequate policies and procedures, Auditing and Monitoring of their work in the field, including Reporting, and execution of a mechanism to address alleged violations of the Code's principles or the standards derived from the Code.
But most codes do not. Perhaps some day day they will. But for now they are more likely to operate on the Joe Isuzu model, i.e., just trust us. My view is that we should, to cite the words of President Ronald Reagan, trust, but verify.9
A 2008 paper10 by the Geneva Center for the Democratic Control of Armed Forces, which examined the mission statements and web sites of 235 private military contractors, found that a mere 72 of them — less than a third — profess their compliance with normative and ethical values. Only nine companies — less than 4 percent — expressly advocate the recognition of human rights, and one dozen — or just about 5 percent — acknowledge the necessity of their activities being regulated.
Only 44 companies, or fewer than one in five, were prepared to formulate their adherence to values in a code of conduct or in terms of internally binding principles.
While I am not opposed to codes of conduct, per se, I believe that in order to make it really work some other things need to go along with it.11 It is necessary to remember that the groups which have promulgated codes of conduct are not regulatory agencies and do not exercise regulatory functions. Thus, they have no power to ensure proper conduct. A company may very well decide that violating a code's provision is just another cost of business and a worthwhile one at that.
As Amnesty International USA noted in an analysis of a past version of the International Peace Operations Association Code of Conduct (renamed the International Stability Operations Association): one of the larger PMSC trade associations.
If the IPOA code is to evolve into more than a set of aspirational standards, there must be some means of independent, preferably third-party, oversight to regularly assess member companies on their efforts to implement the Code and to remediate instances of non-compliance. Companies should also have internal systems in place to monitor their in-house efforts to put Code standards into practice. Creating mechanisms for personnel to internally report suspected breaches of the Code is a positive step, but cannot substitute for regularized and comprehensive systems for measuring compliance with standards.12
A paper published in September 201013 examined the regulation of private warfare through the framework of Global Administrative Law (GAL). Note that GAL is actually sympathetic to industry efforts. But consider, for example, what the author writes about the Code of Conduct of IPOA.
Through IPOA's complaint mechanism, companies as well as individuals may submit a complaint to the association for alleged violations of the association's code of conduct. This complaint, which may remain anonymous if appropriately specified, must be filed in a set form to the Chief Liaison Officer of the Standards Committee, "who is an employee of IPOA and is not affiliated with any company." Of course IPOA may not consider complaints against companies that are not members of the association. When responding to a complaint, IPOA Standards Committee follows a Standards Compliance and Oversight Procedure. The Standards Compliance and Oversight Procedure provides that the monitoring/sanctioning will take place in four steps: (1) an administrative panel will look at the complaint and decide whether it is worthy of review; (2) a review panel will hear the complaint which will determine whether a violation of IPOA's code of conduct has occurred; (3) a compliance panel will suggest and impose remedies and monitor the compliance of the company subject of the complaint; and (4) a disciplinary panel which will provide a final ruling on expulsion. As "IPOA is not a law enforcement or judicial organization," it "will not attempt to prove the guilt or innocence of a member company in a criminal or civil legal case."
Although a unique three-level enforcement mechanism is contemplated, the only sanction envisaged by the association itself is the expulsion of noncompliant members. Expulsion alone sidesteps true accountability. While the model of industry-led accountability is attractive at the procedural level — it avoids the need for new monitoring/enforcement bodies; cost is borne by individual companies which ought to punish 'bad actors'; and there are no guarantees of non-repetition — it fails on the substantive level. It would be preferable for IPOA to play a role in reporting violations of international humanitarian and human rights law to relevant authorities, rather than leaving it to the companies. In any event, the expulsion of non-compliant members remains too limited a sanction.
In addition to being disorderly and thus difficult to track, self-regulation often lacks the teeth necessary to attain its full potential. What is lacking, in other words, are the monitoring and — even more so — the sanctioning mechanisms needed to ensure compliance with the standards elaborated voluntarily by and within the industry. ...
The private military industry currently finds itself between the first and the second stage of this evolution toward self-regulation: it has succeeded in elaborating standards that can be applied industry-wide, but has yet to create robust monitoring mechanisms capable of enforcing these standards. Sanctioning is still at an embryonic stage. Under the vast majority of voluntary regulatory schemes, noncompliant contractors face only the termination of their employment contracts. Non-compliant companies may, theoretically, face expulsion from important industry associations; but such instances have not been documented. Only in rare cases does the self-regulation contemplate any type of real and effective sanctions — let alone the involvement of police or other law-enforcement authorities.
Similarly, Ren'ee De Nevers, Assistant Professor in the Department of Public Administration of the Maxwell School at Syracuse University, wrote in a journal article that:
The private security industry lacks the incentive and capacity to adopt and implement effective self-regulation on its own. "Effective" or "obligatory" self-regulation includes both establishing industry standards for appropriate corporate behavior and creating mechanisms to ensure that companies comply with the standards they commit to by joining selfregulatory schemes. I use effective and obligatory to describe self-regulation that incorporates monitoring and sanctions to ensure compliance. To date, self-regulation by this industry has been both aspirational in character and lacking in oversight mechanisms. Absent external pressure from increased regulation or loss of contracts, private security companies are unlikely to take the steps needed to make industry self-regulation a useful complement to state and international regulation.14
Fifth, even if a company has high standards and devotes significant resources to trying to implement them, and we noted in our report that this was the case with respect to KBR, the implementation of standards becomes problematic when it comes to ensuring that a prime's subcontractors adhere to them.
For example, KBR has an extensive code of conduct,15 which has a section on health, safety, and environment. That section states, "The Company will comply with all applicable Laws and relevant industry standards of practice concerning protection of health and safety of its Employees in the work place and other persons affected by its business activities and the prevention of environmental pollution." If that section had been followed by KBR's subcontractor NICS the employees would never have been housed in the deplorable conditions found in their camp.
Najlaa International Catering Services (NICS)
In regard to the subject of today's hearing, the exploitation of overseas worker, Najlaa International Catering Services (NICS), the KBR subcontractor, was solicited by KBR in the spring of 2008 to provide a Request for Proposal (RFP) for approximately 32 Dining Facilities (DFAC) Services under LOGCAP (Logistics Civil Augmentation Program) III in the Iraq Theatre. Those RFPs are typically governed by the Federal Acquisition Regulations (FAR),16 Labor Practices and Scope of Work (SOW). NICS adopted illegal pricing strategies during its preparations of the bids which were in direct violation of the guidelines set forth by the RFP Documents and SOW; these specific strategies gave NICS questionable and unfair advantage over all other bidders for the same RFP.
Specifically, the pricing tactics and strategies were to waive the mobilization charge based on NICS's recruiting efforts where NICS contracted several specialized manpower suppliers from India, Sri Lanka, Nepal, Bangladesh, Dubai, Iraq and Kuwait to provide the labor force for the project. The agreement was for all agencies to charge the individual laborer a fee of approximately USD $2000 – 3000 to cover the costs of medical screening, airline travel costs from their home country to Baghdad and all entry visa fees for UAE and Iraq. NICS would, therefore, not incur any costs to mobilize its labor force; this is in direct violation of TIPS rules.
This was an example when KBR did not exercise proper oversight. KBR chose to close the chapter on this matter despite clear violations of the TIPS rules; evidence of the employment contracts language of the labor force was not inspected. Clearly, the contracts were executed between the employees and NICS. KBR in fact subcontracted with NICS and not its agents.
KBR headquarters in Houston, Texas were contacted by at least one U.S. government agency via e-mail and the e-mail communication was relayed to KBR's LOGCAP III Head Quarters at Victory Base Camp (VBC). KBR concealed those facts from the US Military which was fully aware of human tragedies taking place right outside VBC.
Once the media acquired all of these violations, NICS began to demobilize the labor force at its own costs by chartering flights out of Baghdad International Airport (BIAP) temp camps. Clearly, acting as the responsible sponsor (in total contradiction of claiming those responsibilities) fell on the shoulders of the agencies. The damage was done, the laborers spent months stranded and paid huge amounts of money out of their own pocket in hopes of earning money in Iraq. What they received was perhaps one month salary amounting in most cases to USD $300.
This is not to say that all of KBR's actions were bad. For example, a KBR Special Inspection done Nov. 11, 2008, after the riot, conducted at the NAJLAA temporary labor camp noted numerous deficiencies. Nine days later KBR notified NICS that KBR was formally rescinding the Notices of Award and subcontracts issued to NICS for DFAC Services. It also said:
KBR will report suspected Trafficking in Persons violations discovered at various labor camps to the appropriate authorities. The conditions these personnel are living in must be corrected at once. Food, water, medical care and basic hygiene are lacking at these camps.
On Dec. 1 KBR sent out a notice to all its subcontractors, including NICS, which, in part, said:
Recently, it has come to our attention that some KBR subcontractors and/or their agents may be utilizing temporary labor camps located around the Baghdad International Airport known as SATCO Hotel, Elite Camp, and First Kuwaiti Camp. An inspection conducted November 20, 2008 by KBR's Health/Safety/Environment (HSE), Security and Trafficking in Persons (TIPs) teams, revealed serious and deplorable conditions in the immediate area outside the SATCO Hotel and inside the Elite Camp and 1st Kuwaiti Camp. The conditions at these facilities could have a direct impact on the health and welfare of not only the personnel forced to stay there, but ultimately our client as well [emphasis added]. None of the aforementioned facilities comply with the KBR LOGCAP III Scope of Work for Temporary Labor Camps and their utilization by KBR subcontractors or their agents will not be tolerated under any circumstances.
Another letter, dated Dec. 2, 2008, sent to NICS said:
It appears that Najlaa International Catering Company (Najlaa) and/or their agent are still utilizing temporary labor camps located in the vicinity of the Baghdad International Airport known as SATCO, Elite Camp, and First Kuwaiti Camp. As you know, our inspection conducted 20 November 2008 by KBR's Health/Safety/Environment (HSE), Security and Trafficking in Persons (TIPs) teams, revealed serious and unacceptable conditions within these facilities. The conditions observed could have a direct impact on the health and welfare of not only the personnel housed in these areas, but ultimately our client as well.
The following day KBR sent Bill Baisey, the NICS CEO, emails detailing how they felt NICS poor performance was giving them a "black eye" with their primary client, the U.S. military.
Bill – appreciate your view, but it does not change the fact that the US Government is extremely upset at KBR right now and most of that frustration comes from Najlaa. Your man camp outside BIAP has become a corporate embarrassment that has the visibility of the US Ambassador to Iraq, the Army Leadership here at Victory Base and our Defense Contract Administrators.
One last point, Bill. The US Military has become increasingly less tolerant of subcontractors operating on their Coalition Bases. The recurring complaints by your employees across various sites about their conditions and the mounting issues at BIAP, could lead to a debarment of Najlaa from all MNF-I bases in Iraq. We do not want this to occur and would encourage you to take the immediate steps to correct the situation at BIAP within the next 24 hours by flying these personnel home, or taking up the UN offer to do so on your behalf.
Yet NICS continued business as usual and KBR allowed them to get away with such violations. It is quite possible these violations still occur while NICS continues to do business with KBR which reflects directly on the US government. If so, this is appalling. To find out KBR would only need need to conduct a simple audit to:
• Check the language of the employment contracts of NICS employees
• Interview NICS employees in theatre to verify what they paid to the employment agencies.
• Verify NICS procedure to dock each employee the cost to wire-transfer their monthly salaries to their home bank accounts.
However, we do not know whether KBR is doing that.
Several questions come to mind at this point in terms of what has taken place.
• Did KBR conduct a thorough bid evaluation on NICS? Were NICS prices within the natural competitive lines among all bidders? Were the highest and lowest bids ruled out?
• Did KBR inspect and verify the financial stability of NICS?
• Why has the majority of KBR's LOGCAP III – Iraq senior management left since the TIPS violations that were uncovered in December 2008?
• Why was NICS awarded an extension of the first option year of the contract? Is it an extension for convenience?
• Is NICS in compliance with the basic SOW requirements today? Including sixty (60) days of on hand consumable supplies, issuance of six (6) uniforms per employees, provide approved Personal Protection Equipment (PPE) per employee as specified, provide one (1) week salary advance to the employees, pay salaries on time, provide proper safety shoes, etc.
Although I did not cover it in the POGO report there are two other aspects of NICS activities that merit mention.
First, my investigation documented that NICS had a confirmed chicken pox case and 37 of its employees were supposed to be quarantined. NICS disputed with GlobalMed, its KBR-approved medical service provider, that it was a chicken pox case. NICS began to release the employees from the quarantine tent and put them back to work at the dining facilities (DFAC). This so disturbed GlobalMed that it sent an email to KBR notifying it that it was terminating its contract with NICS, effective immediately. The reasons were twofold: lack of payment, and professional medical ethical concerns:
On November 10, 2008, I was asked via email by the same senior member of your management team to submit a fradulent medical report regarding the release of quarantined patients to your client KBR. This request for the fraudulent report was not entertained by GlobalMed. KBR did find out about the premature release and the NICS staff were returned to quarantine. These staff are still under quarantine as of this date. The early release of these staff, which was against out medical advice and done without our knowledge could possibly have caused a serious disease outbreak that could have had very negative impact to the health of all coalition forces.17
This was a clear violation of NICS's contract with KBR, as the KBR Statement of Work for the LOGCAP Task Order which NICS was working under states:
The contractor shall comply with all requirements of TB MED 530 requirements, including food safety, ensuring all employees have appropriate medical screening to document they are free from communicable diseases in accordance with MNC-I Surgeon's Memorandum requiring screening and maintenance of screening documentation and all employees have appropriate food sanitation training.
Second, another example of the opacity of subcontracting is that NICS contracted with Aram Media, a registered Iraqi company, to build at least one mancamp for Najlaa so they could meet the requirements of their new DFAC contracts. Najlaa was awarded so many DFAC contracts at one time they could not even build their own mancamps with their own manpower, so they subcontracted it to Aram, a minority owned Iraqi company. According to Aram, Najlaa still owes them $1.5 million for contracted services to build Najlaa mancamps so they could be in compliance with their KBR DFAC contracts.
In October 2009, in its effort to get paid for its work, Aram contacted KBR directly. Subsequently. after some email back and forth an Aram company official emailed Barbara Nelson, KBR subcontracts supervisor and explained the Najlaa issue again. Subsequently, the following exchange of emails took place:
Barbara: "I have been asked by Najlaa to refer you to them ... On contractual matters, especially regarding money issues this is best settled between Najlaa and yourselves".
Samir: "As per our previous communication, we followed your suggestion and contacted Najla Directly to collect the debt they owe us. We sent an e-mail to Houry and Bill Baeisi; neither one of them acknowledged the e-mail nor responded to our notice, knowing they received the e-mail. Please advise what is our next step in such a case? Is it the IG office and the Garrison Command our next option?".
Barbara : "I am sorry I cannot help you"
Samir: "We understand that this matter might be out of your hand, but can you please let us know who in your organization deals with such issues?"
Barbara Nelson: "No one that I am aware of"
From the perspective of U.S. taxpayers if Najlaa invoiced KBR for mobilization costs that they didn't actually incur because they didn't pay Aram Media for the mobilization work they did, and KBR in turn invoiced the DoD for those incurred costs, then that's fraud because no cost was incurred because Najlaa never paid Aram what it owed.
Aside from the mistreatment of workers one of the most depressing aspects of the whole affair was, for the most part, the lack or urgency by people in a position to do so to do anything about it. This applies to the U.S. government as well as KBR. For example, this past January 23, an agent of the Defense Criminal Investigative Service, Department of Defense-Office of the Inspector General contacted the person who had been courageous enough to reveals NICS misdeeds. That person had originally contacted USAID by letter on or about March 19, 2010. I can think of no reason it should take ten months to respond.
A Sri Lankan company that supplied laborers to Najlaa told POGO it complained about Najlaa's abusive practices to both KBR and the U.S. government, but said that U.S. law enforcement agencies never followed up.
Despite the handwringing between the U.S. government and KBR and between KBR and Najlaa over the deplorable conditions of the laborers and subsequent media attention that came after the labor camp exploded in protest, the ultimate consequence for Najlaa was basically a slap on the wrist. Although KBR warned of the possibility it did not suffer a suspension of contract payments or lose award fees. It was not terminated for default. It was not disbarred.
As we noted in our report, KBR said to us that:
"Najlaa responded without delay to KBR's demand for corrective action, and the matter was resolved appropriately. KBR fully disclosed the incident to our U.S. government clients including all remedial actions taken by both KBR and Najlaa,"
However, KBR's statement that Najlaa "responded without delay" to KBR is not borne out by the numerous KBR emails to Najlaa that POGO has obtained, some of which are cited above.
POGO asked KBR about this inconsistency in a follow-up question. POGO gave KBR over two weeks to respond. KBR eventually did email a statement that said "Najlaa has been a supplier of ours since 2004, and when challenges have arisen in providing support to the military, we have brought them to their attention and worked with them to appropriately resolve." KBR also emailed that "We continue to work with Najlaa and other subcontractors today in providing much needed services to our troops."
If KBR continues to work with Najlaa despite Najlaa's well documented violations of the law what does that say about KBR's seriousness in ensuring proper oversight of and accountability towards its subcontractors?
The bottom line, as our report concluded, is this:
In the case of Najlaa, KBR says neither it nor the U.S. military is responsible. There is a litany of reasons to believe they do have responsibility: as recounted above, emails by its very own employees on the ground in Iraq to Najlaa suggest otherwise. The chain of contracting down the manpower suppliers is fueled by U.S. taxpayer dollars, billions of which KBR receives. Unrest by the labor force of a DOD subcontractor in a country with an ongoing major military operation can be detrimental to U.S. interests. It should be no wonder that elements of the U.S. military in Iraq were angered by the conditions of the Najlaa laborers, and KBR employees threatened to cut off Najlaa's subcontracts as a result. Ultimately, however, Najlaa did not lose its business with KBR or the U.S. government.
From an oversight perspective there are more effective measures that can be taken. Aside from the recommendations by such experts as Sam W. McCahon, which I know the committee is familiar with, and my report co-author Nick Schwellenbach, I would also commend some of the measures suggested by law professor Laura Dickinson, author of Outsourcing War and Peace: Preserving Public Values in a World of Privatized Foreign Affairs18. Recommendations that are particularly relevant include:
Enforcing Domestic Criminal Law
• Congress should eliminate current ambiguities by expanding the Military Extraterritorial Jurisdiction Act to apply to all contractors accused of committing federal crimes, no matter which government agency is the contracting party and no matter where in the world the criminal acts occurred.
• Congress should require the Department of Justice to establish a dedicated office for investigating and prosecuting criminal cases involving contractors abroad. This office should be required to report regularly on the status of contractor investigations and prosecutions.
• Congress should require the FBI to establish "theater investigative units" to deploy in theater to work in partnership with military investigators in cases involving allegations of serious abuses.
• The military should use its new authority to pursue criminal enforcement actions under the Uniform Code of Military Justice against contractors serving with or accompanying an armed force in the ﬁeld.
Enforcing Domestic Civil Law
• Courts should clarify that civil tort suits against contractors do not implicate the political question doctrine.
• Courts and/or Congress should clarify that the Federal Tort Claims Act does not immunize contractors from suit or preempt civil suits unless the contractors are operating within the military chain of command.
The industry might also try to create a code of standards for logistics contractors, as opposed to just a code of conduct. Currently there is no such thing as an ANSI (American National Standards Institute) standard for such workers. But it is worth noting that this past March the Defense Department awarded a contract to ASIS International to develop an ANSI standard that provides principles and requirements for a quality assurance management system for private sector security organizations to abide by and demonstrate accountability to internationally recognized norms of civil and human rights while providing quality assurance in the provision of their products and services.19
1 Transforming Wartime Contracting: Controlling costs, reducing risk, Final Report to Congress, August 2011, p. 92.
2 Dorsai, https://secure.wikimedia.org/wikipedia/en/wiki/Dorsai!
3 Nick Schwellenbach "The Struggle to Police Foreign Subcontractors in Iraq and Afghanistan Billions at Stake, but U.S. Investigators Stymied by Murky Rules, Enforcement Obstacles," August 29, 2010, Center for Public Integrity, http://www.publicintegrity.org/articles/entry/2368.
4 Blackwater Baghdad shootings, https://secure.wikimedia.org/wikipedia/en/wiki/Blackwater_Baghdad_shoot….
5Private Contractors in Conflict Zones: The Good, the Bad, and the Strategic Impact, Strategic Forum, Institute of National Strategic Studies, National Defense University, October 2010, http://www.ndu.edu/inss/docUploaded/SF%20260_final%20for%20Web.pdf.
6 David Isenberg, Shadow Force: Private Security Contractors in Iraq, (Westport, CT: Greenwood), 2009, p. 40.
7 Lester C. Thurow, The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's World, New York: Wiliam Morrow and Company, 1996, p. 250.
9 David Isenberg, "Dogs of War: Codes of conduct — trust but verify," January 16, 2009, United Press International, http://www.upi.com/Top_News/Special/2009/01/16/Dogs_of_War_Codes_of_con….
10 "Nils Rosemann, "Codes of Conduct: Tool for Self-Regulation for Private Military and Security Companies," Geneva Centre for the Democratic Control of Armed Forces (DCAF), 2008, https://docs.google.com/viewer?url=http://se2.dcaf.ch/serviceengine/Fil….
11 David Isenberg, "The Weaknesses of PMSC Self-Regulation," Huffington Post, February 8, 2011, http://www.huffingtonpost.com/david-isenberg/the-weaknesses-of-pmsc-se_…. For other useful analyses on codes of conduct and self-regulation issues see Karl Kruse, Globalization, Standards-Setting and National Security, Qualifying Paper III: Literature Review ,University of California, Irvine, email@example.com; Matthew Russell Lee , "UN Global Compact Allowed in Private Military Contractor G4S As "Not Illegal" - but is that true? & Is It the Right Standard?," http://www.innercitypress.com/ungc2g4s031911.html; and "Will Code of Conduct Clean Up Security Contracting Field?," October 27, 2010, http://www.ombwatch.org/node/11347.
12Analysis of IPOA Code of Conduct v. 12, July 2009 http://www.amnestyusa.org/our-work/issues/business-and-human-rights/pri….
13 Richemond-Barak, Daphné, Regulating War: A Taxonomy in Global Administrative Law (September 5, 2010). European Journal of International Law, http://ssrn.com/abstract=1723036.
14 Ren'ee De Nevers, "(Self) Regulating War?: Voluntary Regulation and the Private Security Industry," Security Studies, 18:479–516, 2009.
15 Index of Code of Business Conduct, http://www.kbr.com/About/Code-of-Business-Conduct/Index-of-COBC.
16 G&I General Conditions – (Services Performed outside of the U.S.) REV. 004, provision 27.
17 David Isenberg, "You Want Chicken Pox with That?," Huffington Post, August 8, 2011,http://www.huffingtonpost.com/david-isenberg/you-want-chicken-pox-with_….
18 Laura A. Dickinson, Outsourcing War and Peace: Preserving Public Values in a World of Privatized Foreign Affairs, Yale University Press, 2011, http://www.amazon.com/Outsourcing-War-Peace-Preserving-Privatized/dp/03….
19 "ASIS Awarded Department of Defense Contract to Develop Standard to Improve Performance and Accountability of Private Security Service Providers, Mar 16, 2011, http://www.marketwire.com/press-release/ASIS-Awarded-Department-Defense….