Cost And Scope Of Iraq Contract Operations Escalates

PSC supporters routinely say that PSCs are more cost-effective than their public sector counterparts. They might be right, but how can one be sure if one doesn’t even know how many PSCs are under contract or what the total cost of their services is? — By David Isenberg

14 November, 2008 — Washington (UPI)
It is always difficult to write about private security contractors in Iraq because of the paucity of hard data. But we can now say that there are far more of them than we thought and that we are paying more for their services than previously known.

According to a recent government audit, first reported in The New York Times, at least 310 PSCs from around the world have received contracts from U.S. agencies to protect American and Iraqi officials, installations, convoys and other entities in Iraq since 2003, at a cost of about $6 billion.

The report, titled ‘Agencies Need Improved Financial Data Reporting for Private Security Contractors,’ was released in September by the Special Inspector General for Iraq Reconstruction.

The SIGIR report is far more important than generally realized, because it is only the first in a series of reviews to be completed by the office regarding contracting for private security services in Iraq. Thus we can look forward to a lot more hard data in the future, something that has been noticeably lacking up to now in the discussion about PSCs.

The SIGIR report found that the United States has spent about $6 billion on private security contractors and related services in Iraq, although the real tally remains unknown because the government has failed to adequately track security costs. Of that amount, about $4.8 billion was in obligations for direct contracts with the Defense and State departments and the United States Agency for International Development, while an additional $1.2 billion was in obligations for private security subcontractors to companies implementing reconstruction programs with U.S. government funds.

As of Sept. 26, 2008, SIGIR had identified 310 companies with direct contracts and subcontracts to provide security services to U.S. agencies, contractors supporting the military or organizations implementing reconstruction programs for these agencies since 2003.

But actually, about 77 of those companies accounted for almost 90 percent of the money — $5.3 billion of $6 billion. And the Top 10 companies accounted for about 75 percent. These were, from top to bottom, Blackwater, Aegis Defense, DynCorp, Triple Canopy, EOD Technology, Sabre International Security, SOC-SMG, Agility Logistics, Unity Resources Group and ArmorGroup.

What exactly are these companies doing for the Defense and State departments and USAID? They obligated these funds for several types of security services. Their largest costs were for multi-service contracts, which may include personal security details, static security and other services. DoD’s second-largest cost is for static security, about half of which is for protection of forward operating bases under a theater-wide internal security services contract. DoS primarily obligated funds through the Bureau of Diplomatic Security’s Worldwide Personal Protection Services contract and for security for an Iraqi police training program managed by the Bureau of International Narcotics and Law Enforcement Affairs. Most of USAID’s obligations for an identified service were for contracts with multiple services under subcontracts for organizations implementing USAID reconstruction programs through contracts and grants as USAID personnel have been protected under DoS’ Worldwide Personal Protection Services contract since 2005.

SIGIR also identified an additional 233 contractors with about $662 million in associated obligations for contracts to provide security services that could be for providing guards or escorts, but the descriptions of work were so general that they could be for other services, such as providing information technology security. Yet this is the best information available because agencies were not required to specifically identify and aggregate this data.

What this really says is that despite past efforts by the U.S. government to collect information on contractors via the Army Material Command Contractor Coordination Cell, the Civilian Tracking System and the Synchronized Predeployment and Operational Tracker, we still don’t know how many contractors work in Iraq.

It also means that the obligations identified from various government sources are understated. How understated?

There was no financial information on obligations for 191 companies identified in various databases as having contracts for some type of security services.

Financial data on subcontracts to prime contractors implementing reconstruction programs are limited. DoD, DoS and USAID are not required to routinely track these costs in general and do not do so for security costs. However, from various databases and other sources, SIGIR identified $1.2 billion in subcontract costs for security. This number is likely low, given the limited data available on subcontracts.

Why is this important? Consider the claims made by PSC supporters, who routinely say that PSCs are more cost-effective than their public sector counterparts. They might be right, but how can one be sure if one doesn’t even know how many PSCs are under contract or what the total cost of their services is? As the report notes: ‘At the beginning of reconstruction activities in 2003, the high costs associated with providing security for U.S. personnel in Iraq were not readily apparent. Further, because there was no requirement to track these costs, it was not completely clear for several years that security costs were consuming large portions of reconstruction budgets. However, it is now clear that these costs were extremely high.’

The report also confirms that business prospects for PSCs in Iraq, contrary to popular wisdom, are actually quite bright. It notes that to the extent U.S. forces are withdrawn, and assuming that significant civilian technical assistance missions remain, requirements for private security services for the State Department and USAID would likely increase to compensate for support previously provided by the military. PSC requirements could also increase because the recent reduction in violence enables more frequent personnel movements within Iraq but with private security contractor support still being needed for all trips outside U.S. secured areas.

(U.S. Navy veteran David Isenberg is a military affairs analyst. He is an adjunct scholar with the Cato Institute, a correspondent for Asia Times and the author of a forthcoming book, ‘Shadow Force: Private Security Contractors in Iraq.’ His ‘Dogs of War’ column, analyzing developments in the private security and military sector, appears every Friday.)

Source: Cost And Scope Of Iraq Contract Operations Escalates

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