Warfare Inc.
Today's private military companies, modern businesses run by professionals, are increasingly in demand as U.S. forces deploy to new locations and find outsourcing essential.
By Joshua Kurlantzick

The edifice housing the main office of DynCorp, an American multinational corporation with more than $1 billion in annual revenue, looks like any of the other buildings in a bland Washington, D.C., suburb burgeoning with company suites and shopping centers. DynCorp's headquarters sits amid a cluster of squat, glass-and-concrete office buildings, each occupied by information technology firms sporting names such as Cibrix and Integris.

DynCorp, however, is hardly another trendy high-tech company. The corporation is one of a growing number of private military companies (PMCs) - a term PMCs prefer to mercenaries - that provide training and resources for the Pentagon and for foreign armies and that sometimes even enter combat. Peter Singer, a military analyst at the Brookings Institution, a Washington, D.C., think tank, defines PMCs like DynCorp, Oregon-based International Charter Inc. (ICI), and Alexandria, Va.-based Military Professional Resources Inc. (MPRI) as "profit-driven organizations that trade in professional services intricately linked to warfare."

Analysts predict DynCorp, ICI, MPRI, and their peers will be in even greater demand in the coming years. Some rich nations are shying away from intervening in wars overseas, yet the number of intrastate conflicts is rising sharply. PMCs increasingly are called on to fulfill functions once handled by national armies and to enter conflict zones. While South African and British firms once dominated the PMC market, American companies are catching up. But U.S.-based PMCs also have become lightning rods for controversy as they have expanded their operations.

A PMC primer

Private militaries are not new. Roman emperors utilized massive contingents of mercenaries, and William the Conqueror employed hundreds of mercenaries during his invasion of Britain. Later, Renaissance city-states used private armies to protect themselves, and Britain's forces during the American Revolutionary War contained a large percentage of Hessian mercenaries.

By the end of the 19th century, national armies generally had replaced mercenaries, and many military leaders looked down on hired guns. Mercenaries further sullied their reputations by participating in a series of nasty African wars in the 1950s and 1960s. In this era, deranged, hard-drinking European guns-for-hire such as "Mad" Mike Hoare took part in bloody coups and countercoups in the Congo, Seychelles, and other African states. One infamous mercenary, Bob Denard, helped lead at least four coups in the tiny Comoros Islands and even made himself dictator of the country. Some of these mercenaries committed such atrocities that they became known in Africa as les affreux - the terrible ones.

The end of the Cold War created the conditions for a revival of private military firms. With the collapse of the Berlin Wall, the United States, Russia, and other powers downsized their militaries (America's armed forces have shrunk from roughly 2 million during the Gulf War to 1.4 million today), creating a massive pool of unemployed former servicemembers. For many of them, PMCs provide a good way to make a living. And well-trained former servicemembers can make a difference, especially today when the majority of wars are not interstate battles but conflicts within nations. According to David Isenberg, author of several studies of the military industry, because conflicts have become more localized, small forces can drastically change the course of a battle.

The end of the global superpower rivalry combined with the possibility for instant transmission of combat footage via satellite television have made big powers less willing to prop up weak states, engage in foreign combat deployments that have little ideological value, or become involved in civil wars abroad. Somalia is a case in point. After American forces suffered 18 fatalities during a 1993 battle in Mogadishu, President Clinton pulled U.S. forces out of the lawless African country. A year later, when genocide erupted in Rwanda, no foreign power intervened. Hundreds of thousands were killed.

A rising demand

In some cases, private firms have answered the call when the international community has been unwilling to deploy peacekeeping troops. Today's private providers are a far cry from the scruffy, often corrupt small bands of mercenaries that once fed off African conflicts. Like DynCorp, most PMCs now are large and structured like any other modern, registered corporation, with head offices, Web sites, executives in business suits, and even publicly held stock. Leaders of these private firms usually are former or retired military officers, and they call themselves "contractors" or "consultants" to banish the old mercenary image. Several of the firms have refused to work for dictators.

Though they share some general characteristics, modern PMCs are not all alike. Brookings' analyst Singer divides the companies into three groups: military provider firms, military consulting firms, and military support firms. Military provider firms offer battlefield training, and they will enter combat if necessary. Military consultants such as MPRI provide advice and training but do not normally engage in combat. Military support firms, such as Texas-based Brown & Root, specialize in logistics, transport, and technical services.

Demand for PMCs is rising sharply. According to a study by Equitable Services, a company that analyzes the security industry, revenues from the global international security market will increase from $55.6 billion in 1990 to $202 billion in 2010. The Department of Defense (DoD) now reportedly has 700,000 full-time and part-time contractors on its payroll. Armor Holdings, a military security firm based in London and New York, has been listed as one of the 100 fastest-growing companies in the world by Forbes.

Several PMCs already have made a significant impact in trouble spots. In 1995, South African PMC Executive Outcomes (EO) helped Sierra Leone defeat a brutal rebel group known for massacring civilians. EO operatives trained government forces and sometimes fought in battles themselves. Some observers complained about Sierra Leone's use of mercenaries, while others welcomed the stability EO helped bring to the country.

American PMCs

EO and British firm Sandline International were the first of the new breed of PMCs to attract international attention. But in the past five years American competitors have become major players, especially because they enjoy close ties to the Pentagon. (It's no accident that most American PMCs establish offices in northern Virginia.)

"The American private military firms are poised to do huge business," says Christopher Hellman, senior analyst at the Center for Defense Information, a military research organization in Washington, D.C. "They have the connections, and the Pentagon has made it clear it wants to outsource operations."

DynCorp has won a DoD contract to train the Colombian military in coca eradication projects and a Department of State contract to police areas of Bosnia. MPRI, which has a database of 11,000 former officers on call, was hired to train the Croatian army in the mid-1990s. Shortly after MPRI began its work, the Croatians scored a series of stunning military victories over the larger Serbian army, which set the stage for peace talks. MPRI also has won a contract to handle the African Crisis Response Initiative, an American program designed to train African armies in peacekeeping. And MPRI has won a $100 million DoD contract to recruit young men and women for the U.S. military.

The Pentagon appears willing to rely even more heavily on private firms in the future. "It's politically unfeasible to increase the size of America's uniformed military, so the Pentagon is going to depend on private companies," predicts Deborah Avant, an associate professor of political science at George Washington University in Washington, D.C., who is writing a book on PMCs.

Indeed, after the Sept. 11 attack, a Pentagon review concluded that the next five years would place more demands on the U.S. military, as American forces deploy to new locations to battle terror and help with the reconstruction of Afghanistan. Consequently, the review noted, increased outsourcing would be essential. A private company already has taken responsibility for Afghan President Hamid Karzai's security, and the Pentagon has hired Brown & Root to handle day-to-day logistical operations at several U.S. military camps in Afghanistan. The Pentagon has suggested it initially will use American commandos to train a new Afghan army and then turn the job over to PMCs. Since the war in Afghanistan began, the stock prices of publicly traded PMCs have soared.

American PMCs have posted impressive revenue growth. DynCorp's second quarter 2002 revenues rose 25 percent year-on-year. At the same time, several well-known African PMCs have seen their revenues plummet in recent years, and EO has gone out of business.

PMC advantages

PMCs claim they offer several advantages to national governments. They argue outsourcing saves governments money, because the companies operate more efficiently, provide fewer benefits to their employees, do not have the pension liabilities of the U.S. armed forces, and more effectively utilize people's areas of expertise. "Uniformed U.S. soldiers don't want to be out there cooking food … so if a private company can do it, and do it cheaper, that's a gain," says Hellman.

"In the [early 1990s] U.N. operation in Cambodia, peacekeepers would run out of fuel and water," explains Singer. "In the current operation in East Timor, with private companies handling logistics, that just does not happen." Similarly, a 1998 operation in Sierra Leone run by ECOMOG, a West African military coalition, cost $1 million a day, 20 times the daily fee EO charged Sierra Leone in 1995. Doug Brooks, president of the International Peace Operations Association, an association of PMCs in Alexandria, Va., even claims that these private companies could resolve all of Africa's conflicts for $750 million in fees.

Private companies also are willing - for a price - to step into places shunned by national armies and multilateral coalitions. "Who else is going to do this peacekeeping?" asks Brooks. "If you rely on the [United Nations] or national governments, they don't do anything, or they're too slow, and in the meantime thousands of people are killed." Recognizing that private firms often are the only hope for war-torn nations, some U.N. officials and aid workers have given limited praise to the private soldiers, Brooks says. "A decade ago, most humanitarian workers were totally opposed to PMCs, but now they're at least lukewarm on using them," says Singer.

Remaining doubts

But not everyone is convinced using PMCs is a good idea. Some analysts worry that PMCs will collapse in the face of tough situations. "What would happen, asks Singer, if you were working in a well-paying job doing water purification in a hot spot and a missile were launched near your area? "You might quit," Singer suggests, "and the commanding army officer there cannot do anything, because you are not subject to military justice." One former U.S. Special Forces officer who now works with private security companies agrees. "The private firms hire some former American military attachés [who] have considerable field experience, but local hires they make often know little about operating in the field," he says.

Others argue that the PMCs are not only less committed but also less accountable and easier to use for operations the Pentagon may not want to acknowledge. "Who is watching what DynCorp does in Colombia or other places?" asks Sanho Tree, an expert on South America at the Institute for Policy Studies, a Washington, D.C., think tank. "Congress exercises much less oversight of the private contractors, unless something terrible happens, and the PMCs don't feel the same pressure to respect human rights." (Under current law, the Pentagon does not have to notify Congress of PMC contracts worth less than $50 million.)

Col. Bruce Grant, a strategist at the Army War College in Carlisle, Pa., agrees. Grant argues that privatization is "a way of going around Congress and not telling the public." Even U.S. officials have conceded as much. Former U.S. Ambassador to Colombia Myles Frechette has said "it's very handy to have an outfit [that is] not part of the U.S. armed forces, obviously. If someone gets killed or whatever, you can say it's not a member of the armed forces."

Indeed, few members of Congress paid much attention to PMCs until a recent series of disturbing incidents. In April 2001, PMCs working on a drug interdiction program allegedly mistakenly helped a Peruvian air force jet target a plane that actually was carrying American missionaries, two of whom were killed. In May of that year, The Washington Post reported that several individuals hired by DynCorp for monitoring duties in Bosnia were fired for sexual misconduct, including statutory rape and child prostitution. Around the same time, it was revealed that one of DynCorp's subcontractors in South America was the same company used by Oliver North to pass weapons secretly to Nicaraguan rebels in the 1980s.

In the wake of these problems, Rep. Janice Schakowsky (D-Ill.) argued that using PMCs was "a flawed and irresponsible policy." Schakowsky introduced a bill to end funding of PMCs, but the legislation has gone nowhere. "Once the furor over the Peruvian plane downing ended, there was no interest in Congress again," says political science professor Avant. For their part, many PMCs argue there is no need for legislation, because free market incentives will force the companies to regulate themselves: They would be unable to win contracts if their reputations became tarnished. However, a report released in May 2002 by the Project on Government Oversight, a research organization in Washington, D.C., revealed that although many of the Pentagon's largest contractors have repeatedly broken the law, their relationships with the government rarely have been affected as a result.

Avant also argues that PMCs sometimes do not provide the promised cost savings. "If there [were] true competition, there would be savings, but often the Pentagon just gives one PMC the contract without competition, so the price is high and mistakes are more likely," she says. Indeed, a recent General Accounting Office report showed that one military support operation outsourced to a PMC was budgeted originally at $191.6 million but wound up costing $461.5 million.

Others believe that PMCs achieve cost savings by doing a slapdash job, potentially compromising the security and viability of military operations. MPRI was hired to analyze Colombia's war against paramilitaries and drug runners but produced a report that, according to several analysts, was simply a rehash of old U.S. doctrines. Parts of the report allegedly emphasized that Colombia should improve the country's mail delivery to boost national quality of life. Other parts allegedly misspelled Colombia. Meanwhile, DynCorp reportedly tried to save money on a contract in Kosovo by providing unacceptable - unfit and overage - peacekeepers for the operation. The Brookings Institution's Singer even questions whether the number of military aircraft that have crashed in the Afghanistan theater is due to the planes being worked on by unqualified PMC hires.

Perhaps most important, active U.S. military officers have divided feelings about PMCs, especially those operating in battlefield areas. "Private firms are only going to succeed if they win the trust of uniformed military," says one former officer who has worked with PMCs. "They need that trust to operate and they need the pool of retired military as future employees." But many soldiers remain unsure about the PMCs. Indeed, the Pentagon debated allowing a private firm to manage rotc nationwide but decided not to outsource it after a furor of complaints from current soldiers. "The PMCs might promise them a job when they retire, so they like that," says Singer. "But some active soldiers remain convinced that private companies tarnish the American military's image."