01/07/2011 01:06 pm ET | Updated May 25, 2011

Outsourcing War and Peace: Part 1

It's a new year so it's time for a new book on private military contractors. Out later this month is Outsourcing War and Peace: Preserving Public Values in a World of Privatized Foreign Affairs by Laura A. Dickinson. She is a law professor at Arizona State University.

I'm in the process of writing a review and don't want to give anything away but there is a lot of useful information here. So with the permission of her publisher, Yale University Press, I am going to post three excerpts from the book. Here is the first part.

Privatization of Defense Department Operations

It was not until the presidency of Bill Clinton that privatization began to penetrate deeply into the corridors of the Pentagon and other foreign policy agencies. Through the reinventing government program of Vice President Al Gore, the Clinton administration accelerated the privatization pace across all governmental sectors. But what is significant for our purposes is that in this period the foreign policy sector was also part of the privatization trend.

At the DOD, Secretary William Cohen was a key figure. Caught between escalating price tags for weapons systems and political pressure to cut costs in the post-Cold War era without weakening the military's capabilities, Secretary Cohen turned to the private sector for advice. During the summer of 1997 he assembled a committee that included leading executives from private industry to offer their wisdom about the road ahead. Cohen then proceeded to pursue a reform path that aimed to modernize defense by embracing the rhetoric, practices, and methodologies of American businesses.39 This embrace is perhaps most apparent in his Defense Reform Initiative, which he launched in the fall of 1997 as an effort to "aggressively apply to the Department those business practices that American industry has successfully used to become leaner and more flexible in order to remain competitive." The four pillars of the initiative included the following practices: "(1) reengineer by adopting the best private sector business practices in defense support activities; (2) consolidate organizations to remove redundancy and move program management out of corporate headquarters and back to the field; (3) compete many more functions now being performed in-house, which will improve quality, cut costs, and make the Department more responsive; and (4) eliminate excess infrastructure." To further these goals, Secretary Cohen proposed reductions of 33 percent in the number of employees in the Office of the Secretary of Defense, 29 percent in the Joint Staff, 10 percent in military headquarters, 21 percent in defense agencies, and 36 percent in departmental field activities. He also sought to make at least thirty thousand DOD positions subject to competition with the private sector each year for five years, outsourcing those that the private sector could perform better--dwarfing any previous outsourcing efforts.

Thus, he sought to implement the troika of practices that had become the buzzwords of American industry in the 1980s and 1990s: downsize, compete, and outsource.

While Secretary Cohen cut many civilian employees, Pentagon officials downsized troops and closed military bases, replacing uniformed soldiers with contractors for certain support roles. In the words of one senior DOD official, "The peace dividend requirement forced us to downsize.
We had to reduce Army divisions from 18 to 10. But we didn't cut all types of troops proportionally. We didn't want to take the risk on the combat side. We took the risk on the support side. In 1991 we had 56 combat brigades. We cut the number down to 46. But if we had taken I down proportionally, we would have taken it down to 36." Thus, the Pentagon increasingly came to rely on contractors to supply food, build bases, deliver latrines, and perform other support roles.

Yet, at the same time, DOD cut its acquisitions staff by 38 percent. As a senior DOD official later noted, "Where we screwed up was not to cut the guys who buy the tanks and the big equipment; instead, we cut the guys who do nuts, bolts, supplies and so on--these were the guys who we were going to need as we turned more and more to service contractors. Thus, at the very moment that the military was turning increasingly to contractors to provide support services to troops, the Pentagon, under pressure from Congress, cut back severely on the acquisitions workforce that would become increasingly necessary to manage those contractors. Yet such cuts were politically much easier to make because, as Steven Schooner has argued, there is no natural political constituency for the acquisitions workforce.