07/06/2010 05:27 pm ET | Updated May 25, 2011

Inherent or Non-Inherent: That is the Question

I was out of town when the federal Commission on Wartime Contracting in Iraq and Afghanistan (CWC) held the first part of a two-day hearing on the proper role and oversight of security contractors supporting U.S. operations in Southwest Asia.

The first day was devoted to the subject "Are Private Security Contractors Performing Inherently Governmental Functions?." Those who follow the industry know that is one of the classic old time questions the industry gets. To put it in pop culture terms it is a golden oldie.

As I was not there I am just going to excerpt some portions that seem particularly relevant to me.

But before we do that let's just focus on some facts that came out of the hearing, such as the federal government relying on more than 40,000 private security contractors (PSCs) to support U.S. operations in Southwest Asia. They provide armed security for convoys, diplomatic and other personnel, and military bases and other facilities in Iraq and Afghanistan. During the first quarter of 2010, the Department of Defense had roughly 14,000 PSC personnel working under contract in Iraq. That number is nearly equal to the personnel strength of a World War II American infantry division.

The six-witness panel -- comprising of two think-tank officials, two academics, an industry-association official, and a consultant specializing in government acquisition issues -- examined the current system which governs PSCs and debated the appropriate line when a task must be solely performed by United States military or civilian employees.

The witnesses were Dr. Al Burman, president, Jefferson Solutions; Dr. Allison Stanger, professor and director of the Rohatyn Center for International Affairs, Middlebury College; Stan Soloway, president and CEO, Professional Services Council; Danielle Brian, executive director, Project on Government Oversight; Dr. Deborah Avant, professor of political science and international studies, and director of the Center for Research on International and Global Studies, University of California, Irvine; and Dr. John Nagl, president, Center for a New American Security.

In the clear as mud, let's think about what "inherently governmental" is, beginning in their joint opening statement CWC Co-Chairs Christopher Shays and Michael Thibault said:

The question here is whether they are performing inherently governmental functions that should not be contracted out in whole or in part, no matter what the demand or workload.
The answer to that question involves a mixture of law, policy, and prudence. The Federal Activities Inventory Reform Act of 1998 (the "FAIR Act") defines an inherently governmental function as one ""so intimately related to the public interest as to require performance by a federal government employee." The language in the FAIR Act closely parallels the Office of Management and Budget's Circular A-76, issued in 1966. The OMB definition uses "mandate" rather than "require," and "personnel" rather than "employee."

The principle laid down in the law and the OMB policy is nonetheless vague and open to subjective judgment. The 110th Congress addressed this problem by requiring OMB to develop a "single consistent definition" of inherently governmental function. The Bureau's Office of Federal Procurement Policy (OFPP) has taken comments on a policy letter to make that definition, and is expected to publish a final version by October this year.

The Office of Federal Procurement Policy draft released in March takes the FAIR Act definition as a starting point. It also proposes asking whether a function involves direct exercise of sovereign power, or whether contractor discretion could commit the government to a course of action. The OFPP also discusses functions that are "closely associated" with or "critical" for the success of governmental functions. The results of this filtering would determine whether a function must be performed by federal personnel, may be performed by contractors only under close government control, or may be routinely performed by contractors.

The Commission's interest in this policy evolution stems from its authorizing legislation. Congress instructed us to include in our final report recommendations for improving "the process for determining which functions are inherently governmental and which functions are appropriate for performance by contractors in a contingency operation (including during combat operations), especially whether providing security in an area of combat operations is inherently governmental."

This is a challenging, three-layer mandate. We are not simply looking at the general process for determining inherently governmental functions, but also at that process as applied to "contingency operations" that may include combat, and then at PSC use in areas of combat operations.
Our assignment takes us into fine distinctions. Hiring private guards for a U.S. supply depot may be entirely routine and uncontroversial in a stable, allied country. Is it still prudent during a contingency response to an insurgency, natural disaster, or terrorist attack, when command, control, and assured response are high-value attributes? Is it still prudent if the contingency makes it likely that the guards will be exposed to attack, and may be likely to use force, with all the diplomatic and public-opinion consequences that follow?

These questions are not abstract or academic. They involve real people who spill real blood. Whether they should be placed in life-or-death decision roles in foreign combat zones, and under what circumstances, is a serious question.

From Allison Stanger:

As I have argued elsewhere, it makes good sense for the government to harness the energy, efficiency, and bottom-up creativity of the private sector in as many ways as possible--up to the point where market imperatives begin to undermine the public interest.

We have reached such a tipping point in Iraq and Afghanistan. As many witnesses before me have testified, Iraq and Afghanistan are our first two contractors' wars. Even at the height of the Vietnam War, contractors comprised just 14% of the American presence on the ground in Southeast Asia. Today, contractors outnumber uniformed personnel on the ground in both Iraq and Afghanistan, and in the simplest of terms, armed security contractors enable us to wage two wars simultaneously while avoiding the necessity of a draft.

Are armed security contractors currently performing inherently governmental functions in these conflict zones? While there is a general consensus that there are activities so intrinsic to the nature of government that they should not be contracted out, there is little agreement on what those activities are. Both OMB and Congress have repeatedly focused attention on the topic of inherently governmental functions, but to date have refrained from providing specific guidelines as to what particular activities must never be outsourced. Restricting the focus to those contractors able to deploy lethal force makes it easier to render a judgment. A leading advocate of minimal government, Milton Friedman, maintained, "The basic functions of government are to defend the nation against foreign enemies, to prevent coercion of some individuals by others within the country, to provide a means of deciding on our rules, and to adjudicate disputes."

Using Friedman's minimalist definition, the use of contractors in the realms of security and justice demand the strictest scrutiny. Even under this leanest of definitions, moving security contractors are performing inherently governmental functions, since they are actively involved in defending the nation against foreign enemies.

Later on in her statement Stanger gives this summary of the problems she sees with using PSCs.

Lest I be misunderstood, I must emphasize that the current use of armed security contractors is wholly well-intentioned, a matter of necessity rather than choice. The State Department and Department of Defense continue to utilize them, despite all the negative press, because an all-volunteer force leaves us severely understaffed for meeting US objectives in Iraq and Afghanistan simultaneously. State and DOD should therefore not be blamed for their reliance on armed contractors; with an all-volunteer force and an under-resourced civilian capability, they are doing the best job with the resources currently available of delivering what Congress and the President have explicitly and implicitly asked them to do. But understanding how we arrived at our present predicament renders our current practices neither desirable nor sustainable. Our short-sighted and growing reliance on armed contractors in Iraq and Afghanistan compromises long term US interests in at least six different ways.

First, the practice blurs the line between the legitimate and illegitimate use of force, which is just what our enemies want. Al Qaeda's operatives have no country and are private actors waging war on the United States. Terrorists may receive funding from states, but they are by definition non-state actors. If the United States can legitimately rely on non-state actors wielding weapons to protect our interests, why can't Al Qaeda or the Taliban, especially when contractor misdeeds appear to go completely unpunished?

Second, our dependence on armed contractors in war zones is wholly at odds with our stated intention to build state capacity in Iraq and Afghanistan, so that the Afghan and Iraqi governments might one day be capable of independently providing security for their own citizens. The argument that security provided by the state is preferable to that provided by a collection of warlords is difficult to maintain when the United States itself lacks the capacity to wage war without reliance on private militias. The Afghan First strategy aims to hire local nationals to provide private security, and it has been wildly successful; at least 90% of private security contractors in Afghanistan today are Afghans.

But in empowering these local privateers, we are in turn empowering regional
warlords--precisely the opposite of building up Afghanistan's capacity to secure its own territory without massive infusions of US taxpayer money.

Since guns for hire never pledge enduring allegiance to a particular country, our rented allies today may very well become our enemies tomorrow. The local militias whose creation we have encouraged will also be a destabilizing future presence for the security of the AfPak region.

Third, the extensive use of privateers overseas has had disastrous consequences for government accountability and transparency. The Commission is well acquainted with the enormous waste, fraud, and abuse that have resulted when US taxpayer money must change hands multiple times in a war zone. Further, local security contractors in Afghanistan are hired through sub-contracts, and information on sub-contracts is currently entirely unavailable to the public. The site on, President Obama's "Google for Government," was supposed to go live over a year ago, but it remains "under construction." Thus, we are effectively pouring taxpayer money into a black hole in Afghanistan, with no real means of knowing how well that money is likely to be spent or even who is receiving it.

Fourth, the United States has no interest in seeing Afghans or Iraqis imitate our practices, let alone other foreign governments. The market for force is currently dominated by US and UK firms who often hire third party or local nationals, or sub-contract to local firms. But if it's profitable, why shouldn't other countries want in the game? Medieval Europe featured extensive use of local armies and mercenaries for security, but it was hardly the most desirable set of arrangements for liberty, equality, and prosperity. Medieval Europe on a global scale would not be a world order that served American interests or values.

Fifth, our dependence on armed contractors ultimately undercuts troop morale by sending mixed signals to our citizens in uniform, who often perform the same jobs for a fraction of the pay. Government's embrace of armed contractors in war zones erodes the virtue of fighting for one's country, undermining the important value of disinterested public service. It also doesn't help that the burden of sacrifice is currently unfairly distributed and hence undemocratic. How many US households earning in excess of $250,000 a year have a son or daughter in uniform? What does it say about American values, when we actively uphold a system in which a privateer can make double or triple the money selling his labor to the highest bidder?

Finally, and perhaps most importantly, our dependence on armed security contractors has fueled an overly ambitious international agenda. Without privateers, we would need a draft to wage war in Iraq and Afghanistan, which would transform the politics of both conflicts. Avoiding a draft might sound like a plus, but surely war should ultimately be a matter of national sacrifice and honor, not profits and consumption. We degrade ourselves and strengthen our enemies by treating lethal force as something to be casually bought and sold.

From Stan Soloway:

We must also remember that the unprecedented presence of private security personnel in Iraq and Afghanistan was not the result of any political ideology or policy. Rather, it is the direct result of the nature of the missions being performed, the situational environment, and the human capital assets available and needed to execute those missions.

The Iraq and Afghanistan missions are unprecedented by any measure. Even today, the U.S. Government is simultaneously executing three missions: (1) active warfare and peacemaking; (2) physical reconstruction; and (3) economic and other development. Historically, those missions have been approached sequentially; in the Iraq theater of operations, the leadership made the decision to move quickly and aggressively with the reconstruction and development missions even before security reached the levels normally achieved prior to launching those latter two missions. Right or wrong, that decision immediately created the largest private security requirement demand we have ever seen.

There was, and today still is, no realistic way for the U.S. or coalition forces to provide the necessary levels of force protection for the thousands of projects and tens of thousands of American, Iraqi, and third country personnel performing the reconstruction and development missions. In fact, the Federal Acquisition Regulation (FAR) explicitly provides that contractors performing contracts outside the U.S. other than in direct support of the U.S. military are required to provide their own security.

Moreover, and equally importantly, particularly in the international development community, there has long been deep concern about the implications of having active duty military provide security during development program execution. As such, around the world, U.S. government-funded development projects and programs--whether under contract, grant or other financial arrangement--provide their own security through contracts with experienced security firms rather than rely on the military.

Therefore, while it is easy to assume that the enormous private security presence in the warzone resulted from some intentional policy of ―privatizing war,‖ in truth it resulted directly from the nature and scope of the multiple missions being undertaken. Whether that was the correct decision is for others to decide. But given that decision, it was and remains wholly impractical and impossible for the U.S. troops or coalition forces to meet the security demand.

Private Security is NOT Per Se ―Inherently Governmental

This leads me to address the principal question of this hearing--are security contractors performing inherently governmental functions? Since the term ―private security encompasses so many different functions, the simple answer is no. There is nothing inherently governmental about providing security, even in a warzone. The question comes down to the nature of the specific work being performed. To my knowledge, no private security personnel have been involved in offensive military operations--which would clearly only be appropriate for performance by U.S. military forces. However, at home and abroad, it is not at all uncommon to have armed security protecting governmental and non-governmental assets. By definition, if a security officer is armed, there is the recognition that he or she may at some point be required to use lethal force to respond to a threat and the FAR rules I mentioned earlier clearly address and provide for this potential. Thus, it would be inappropriate to define all such security work as inherently governmental.

From Danielle Brian:

As we have examined this question, it has become clear to POGO that the answer is yes,
PSCs are performing inherently governmental functions. A number of jobs that are not necessarily inherently governmental in general become so when they are conducted in a combat zone. Any operations that are critical to the success of the U.S. government's mission in a combat zone must be controlled by government personnel. In addition, in those areas that have not been brought under the rule of law, it is an inherently governmental function to provide security so that the government's missions can be successful.

Why does this matter? The use of private contractors for security in a combat zone poses unique risks. One is the inherent tension between the effective performance of a mission and the financial interests of the contractor. As the Center for a New American Security put it, "The very existence of private contractors inserts a profit motive onto the battlefield; their primary responsibility is not the national interest but rather fulfilling the terms of their contracts."

In fact, making a profit and serving the national interest are sometimes in direct conflict:
while cutting costs is good for the bottom line, it can undermine security.

We saw evidence of this phenomenon in the ArmorGroup North America contract where, for example, in order to save money the company hired Gurkhas who did not meet language proficiency contract requirements--and therefore could not adequately communicate with the English-speaking guards.

Another problem is that the laws in place do not adequately hold accountable all contractors that violate rules and endanger security in combat zones, particularly contractors for the State Department and CIA. Private employers such as security firms cannot ensure a binding chain of command that provides adequate discipline.

Last year at the U.S. Naval Academy 2009 McCain Conference, there was a seminar on "Ethics and Military Contractors: Examining the Public-Private Partnership" which looked at the question of whether security in a combat zone is an inherently governmental function. According to the Executive Summary of the conference, "contractors should not be deployed as security guards, sentries, or even prison guards within combat areas. [Armed Private Security Contractors] should be restricted to appropriate support functions and those geographic areas where the rule of law prevails. In irregular warfare...environments, where civilian cooperation is crucial, this restriction is both ethically and strategically necessary."

Even the National Association of Security Companies recently wrote to the Office of
Management and Budget (OMB), "Perhaps insourcing or much greater contractor scrutiny may be needed for security provided in combat and combat support roles and in situations where combat could evolve...."

From Deborah Avant:

The most fundamental way in which private security activities may encroach on what is inherently governmental is through the exercise of deadly force - widely presumed to be a fundamental function of governments and specifically mentioned in the 1998 FAIR Act definition, among others. All armed private security personnel could affect the lives of the persons around which they work. Whether or not this effect is likely to be significant depends on at least three risk factors.

* First is the threat environment. A more permissive environment where private security contractors are likely to function to deter common criminals, such as when they are guarding an embassy in a settled country, is much less risky than when contractors function in an active insurgency like in Afghanistan.
* Second is the particular job. Guarding a warehouse is less risky than convoy security or personal security details. Jobs that require moving from one place to another increase both contact with others and the potential for threat.
* Third is the level of command and control over private security contractors. The reason why a government employee is preferable to a private contractor in carrying out tasks intimately related to the public interest is because federal employees, particularly members of the US military, operate under the clear control of the federal government and have well designed systems of accountability. Though control of private contractors is never as great as command and control over US forces, different regulations can yield more or less control. Also important for the level of control are the skills, training and background of the personnel who perform private security jobs.

These risk factors also interact. Even static guards may come under attack (and use force) if they are guarding important material or situated in a dangerous area. Protecting a convoy is more likely to require the use of force when it travels through a dangerous stretch of road than when it is traveling through a settled area. Poor command and control and/or guards with little training exacerbate the risk posed by the threat environment and the particular job while stronger command and control and/or better training can, to some extent, mitigate these risks. Risk to US Mission/Policy

Private security may also encroach on inherently governmental work if what contractors do or how they do it can undermine the functioning of the military and/or the overall policy or mission of the US government.

Some jobs are simply more critical to the core function of the military (i.e., its ability to fight) than others. A convoy carrying fuel, weapons or other important supplies to a military unit in the field is more critical than protection of the contents of a particular warehouse. Reliable protection that accords access to supply in the field is critical because of its relationship to the ability of military units to fight.

In a counterinsurgency environment, though, the way private security contractors carry out their jobs is also critical to the success of the overall mission.

This is true for supply convoys, but particularly for personal security details that frequently operate in highly populated areas. If they deliver supplies or people safely but in a way that is disrespectful to or abusive of civilians, they may allow the US military or diplomatic team to function but at the same time undermine popular support for the US (or the host government) and thus frustrate the chances for ultimate success. There were countless complaints from both Iraqis and US military personnel about poor behavior on the part of personal security details in Iraq between 2004 and 2007. Military personnel complained specifically about how this behavior undermined the counterinsurgency effort. The Nisour Square incident in 2007 provided a dramatic example of this issue.

Finally, there is the relationship between private security companies and other violent forces in the country - including the host government but also militia forces and even insurgents. Relationships between private security companies and forces that are (or become) parallel forces, in competition with government forces, have been a common phenomenon over the course of the post-Cold War era and have often undermined efforts to build effective governance. In Iraq there was much speculation about the relationship between personnel that worked for the Facilities Protection Force and various militias connected with the insurgency in 2004. In Afghanistan, the US has relied much more on indigenous personnel and companies for its security.

There are allegations that some of these companies are paying off the Taliban to ensure safe passage for convoys.

Using private security contractors in a way that provides a platform for funneling US dollars to those working against US goals poses a significant risk to the overall US mission in Afghanistan.

The three risk factors listed above: threat environment, nature of the job, and degree of command and control still affect the degree to which using private security could matter.

* Guarding a convoy carrying critical supplies to the field will always be more critical to the military's ability to function than guarding a warehouse but guarding the same convoy through a pacified area poses less risk than guarding it through a more dangerous area. For example, KBR had a good record of delivering supply in the (relatively) permissive environment in the Balkans.

At the beginning of the Iraq War, however, KBR had difficulties fielding the requisite personnel and these difficulties were specifically linked to an unexpectedly high level of danger.

* The potential for alienating civilians in a counterinsurgency environment is lower for static guards than for convoy security and personal security details that move around. This is by virtue of the fact that static guards are simply less likely to encounter as many civilians. By this rationale, the risk of alienating civilians is greatest for personal security details that not only move around but also tend to operate in more populated areas.
* More command and control can reduce the risk that private security will undermine policy. For instance, the reforms that followed the Nisour Square shootings in 2007 established a greater level of command and control, which reduced the incidence of private security contractor behavior that alienated civilians. It is important to note, however, that while ostensibly under the same US policy, some convoy and personal security details in Afghanistan have not shown the same level of improvement. This may be due to the different background and training of Afghan companies and personnel.

In sum, all armed personnel working for the United States abroad potentially encroach upon critical, close to governmental or inherently governmental simply by virtue of their ability to use deadly force. Those performing tasks critical to the mission of the US military or US policy also have the potential to trespass upon governmental roles.

Features of particular threat environments, particular jobs, and the level of control over private security contractors can elevate or lower the degree of risk. All of these features should be considered in determining whether a job is critical, close to governmental or inherently governmental. The more of these features that are present, the more likely the job is inherently governmental. Thus, when private security contractors are armed, perform tasks critical to the US mission, work in dangerous environments where the nature of the job increases the chance of interaction with private individuals, and operate under weak command and control, they are most likely to be in violation of the principles enshrined in the inherently governmental edict.

And finally John Nagl, who makes a point which has long been near and dear to me, namely, contractor use is a direct reflection of American geopolitical choices.

When our nation goes to war, contractors go with it. In both Iraq and Afghanistan today, there are more private contractors than U.S. troops on the ground.

This state of affairs is likely to endure. Now, and for the foreseeable future, the United States will be unable to engage in conflicts or reconstruction and stabilization operations of any significant size without private contractors. Changes in business practices, the provision of government services and the character of modern conflict, together with limits on the size of the American military, diplomatic and development corps, are driving the size and scope of expeditionary contracting to unprecedented proportions. Absent a significant reduction in America's international commitments and perceived global interests, the employment of private contractors in future American conflicts is here to stay.

The system within which this contracting takes place, however, has not caught up with the new reality. Billions of taxpayer dollars committed to contracts in Iraq and Afghanistan have been implemented with little oversight. Contracting companies themselves crave clearer guidelines.

The roles of contractors remain incompletely integrated into the conduct of American operations. And the legal framework within which contractors work remains cloudy.
There remains little consensus about which functions should be included under the "inherently governmental" rubric. This is perhaps most vividly demonstrated by Congress' inability to deem a substantial list of activities that fall into this category and by its decision to pass the responsibility for defining the term to the executive branch. It is important to note the implications of deeming a particular activity within or outside those bounds. Should a given function be deemed inherently governmental, it then becomes illegal for the government to ever contract it out - even in extremis. On the other hand, simply deeming a task to be not inherently governmental, and one that agencies could therefore contract out, in no way suggests that it is automatically good policy to do so.

For this reason, a better alternative is to focus on a "core competencies" approach.
While Congress should deem inherently governmental any acts it can agree should never be outsourced under any circumstances, a core competencies approach would apply to all of those activities that do not fall under that rubric. It would focus on those functions the government should develop, maintain and enforce, rather than trying to enumerate a list of specific activities for which it is impermissible, under law and in any circumstance, to ever contract out.

Thus, for example, the government could decide that interrogating enemy prisoners is a core competency that it wishes to maintain. As it ramps up its federal interrogation capacity, it would aim to avoid contracting out this function, but - and only in extremis - it would be permitted under law to hire private contractors to interrogate prisoners should the government workforce prove insufficient to carry out this vital task. By eschewing contracting in specific areas as a matter of policy, the federal government would leave the option legally open to afford itself the flexibility to employ contractors in times of crisis or other extreme circumstances. Moreover, the core competencies approach would give commanders and others in the field the access to surge capacity and swiftness often necessary in an unpredictable contingency environment, while moving the U. S. government away from dependence on certain forms of contractors as a more general principle.
It would also hold the promise of cutting through continued debates about what does or does not constitute an "inherently governmental" activity and instead concentrate on what the government should be doing and how it will ensure its competency to do it.