Imagine a real life version of the Jerry Maguire movie. In this reality, the private military contracting community is played by Cuba Gooding and the Pentagon is played by Tom Cruise. As Cuba dances around the kitchen he shouts, increasingly loudly, "Show me the MONEY." What does Tom do? Why, he delivers the money, of course.
Okay, a little over the top perhaps; after all, we know the Pentagon can't dance. Still this scenario nicely encapsulates the finding of a recent report by the Center for Strategic and International Studies.
The report, Defense Contract Trends: U.S. Department of Defense Contract Spending and the Supporting Industrial Base, released May 6, confirms why so many private military and security contracting companies (PMSC) are out lusting after, oops, I mean competing for, federal contracts. Because that, as bank robber Willy Sutton famously said, is where the money is.
Remember that PMSC firms, unlike the military-industrial complex of the past, are generally providing services, not hardware. Yes, there are exceptions, of course but they are small scale; they are not building fighter jets or aircraft carriers.
And providing services will definitely make a CEO smile. The report notes at the outset, "In DoD contracting overall, services grew at a much faster pace in the past 20 years than did products and R&D, and were it not for combat operations in Iraq and Afghanistan would possibly have continued to receive the lion's share of DoD contract awards."
How fast did spending on contracting grow? The report found that between 2001 and 2010, dollars obligated by the DOD to contract awards more than doubled, and contract spending far outpaced growth in other DOD outlays.
Yes, but how much is that in actual dollars? The report says that in FY 1990 it was $49 billion. In FY 2010 it was $161 billion, or just over 40 percent of all contract spending -- the other two categories being products and R&D.
While people still debate whether military outsourcing is more efficient and effective than keeping it in-house, the report makes it clear that if the goal is to allow private sector companies to make huge profits it is unquestionably a success:
Drawing down military and civilian personnel after the Cold War necessitated an increase in outsourcing to continue providing many services, while spending on products decreased with the numbers of active-duty military. The relative shares of product and services spending converged in 1998 and 1999, with the former decreasing and the latter increasing. After this point, products edged up over services, and the gap widened with the initiation of Operation Iraqi Freedom (OIF) in 2003. The relative shares of services and products appeared to begin converging again after 2008, as absolute spending levels declined sharply for products while spending on services remained relatively stable.
The period covered in the report was from 1990 to 2010. As one might expect, given the wars in Afghanistan and Iraq, the Army and "other DoD" (primarily DLA) shares of total contracting grew while the Navy and Air Force shares declined. More recently, with U.S. forces set to withdraw from Iraq, the Army's contract spending started to decrease in 2008 while the Navy's spending also shrunk and continued its long decline after a short period of stagnation. The share of Air Force contract spending in the last few years declined to the lowest of all DOD components.
Things were particularly sweet for Army contractors; think KBR LOGCAP awards for example. According to the report:
Army contract spending has skyrocketed over the past decade. During the 1990s, the Army accounted for only 23 to 25 percent of total DOD contract spending. Beginning in FY 2002, this share started to grow rapidly, reaching 40 percent of total DOD contract spending by 2008. Growth in Army contract spending averaged over 11.5 percent per year since 1999. This rapid growth is almost entirely attributable to Army operations in Afghanistan and Iraq.
From the viewpoint of getting the best bang for the buck the report actually had something positive to say about the state of competition in the Pentagon.
Overall, the majority of DOD contract dollars were awarded on an increasingly competitive basis towards the end of the period analyzed, and dollars awarded competitively rose faster than those awarded without competition. The share of contract dollars awarded using fixed price contracts also grew, at a faster rate than cost-based contract awards. Up through 2009, there was a disturbing and sudden rise in "combination" contracts, which obfuscated the total distribution of cost and price-based contracts, but contract spending allocated to this category seems to have all but disappeared in 2010.The report noted important trends regarding contract competition: The first is a decrease since 2008 in the number of unlabeled contracts, which indicates that more care is taken in entering data on competitiveness. The second is an increase in fixed-price contracting that is faster than cost-based contracting, including time and materials, which is in line with the 2009 Presidential Memo calling for more use of fixed-price contracting across government.
Of course, it is the Pentagon so it can't all be sweetness and light. Thus, "In another trend viewed with concern in light of recent efficiency-promoting directives within DOD, the spending on indefinite delivery vehicles rose sharply in the past several years while definitive contracts and purchase orders stagnated and even declined in 2010."
If they do, then they are underestimating the total value of service contracts due to categorization issues.
The Top 20 DOD Contractors for Services in 2009 were:
(Contract value in 2010 in millions of dollars)
Total for Top 57,890
Total for Services 162,460
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I'm not sure what "private police" are, but private detectives have been around for over a century. Perhaps you mean non-uniformed police? They are still public employees. Similarly, volunteer fire departments are older than the country. Private pensions? Likewise an old affair.
Private prisons are a newer invention, but are mostly brought on by the greatly growing expense of prisons. In California, for instance, prison guards make enormous salaries (most well over $100k) and have cushy retirement packages (they also accept a smaller percentage of applicants than Harvard). With such a system, it's pretty easy to understand how a "private" prison winds up being a bargain.
I haven't heard of banks collecting property taxes, though I have heard of them paying them (via escrow accounts). And I have no clue about national parks - last I heard, the park rangers were still on the job.
It seems like your post is mostly a mistunderstanding or exaggeration .
War was not expensive enough to fight (we spent 109% of our GDP in WWII) now we have the new and improved private war contractor. The players are the same ones they’ve been paying for decades of “cold war†profiteering but now they can profiteer while fighting and supply the great “war on terrorism†the “Never Ending War†(the war for tax dollars and watch civil rights evaporate).
This is TV entertainment, as the “Never Ending War†and the “Nothing†of capitalism smothers the land taking over all government functions. Watching from the safety of bank owned homes, a media controlled by profits spoons out the pabulum, all we have to do is pay. No mobilization of the population, no interruptions of daily lives and the profits never stop flowing. Mercenary wars fought with no vested interest except money. Isn’t that just the perfect war?
1) What can and should be contracted? What criteria should be used?
2) How best to ensure value and minimize risk to the nation and tax payer?
What to Contract:
Non-combat support services such as : meal provision, mail delivery, construction, communications infrastructure, weapons design and production, etc.
What not to contract:
Any combat and security related:
- Anyone carrying a weapon and expected to use it must be regular military/government and subject to all military/legal rules of conduct and behavior.
They are acting and possibly killing in the name if the government and people, so they must be fully accountable.
-Allow limited term military enlistments for mercs.
That would make them real soldiers with enhanced pay depending on skills and experience.
This would eliminate the middle man and save money.
Ensuring Value:
1) Require competitive bidding for all contracts wherever possible.
2) Contracts to be awarded based on :
- TCO (Total Cost of Ownership), not just purchase price.
This includes cost/benefit risk of the entire contract life-cycle.
- Vendor history and past performance (meeting budgets and schedules, law breaking, experience, quality, staff management, etc) to be considered.
3) Overturn "Citizens United" and minimize corporate political influence.
Require full public disclosure on all political donations over $5K.
4) NO hiring involved gov workers within 2 years of contract/employment end.
Includes ALL agencies, departments and military. END the "revolving door".
Except for civic duty, criminal law, and the threat of imprisonment and/or fines, you're correct. Of course, those are the same things that compel members of our armed services not to send sensative information to enemies, so I can't quite see your point.
Finally, companies that leaked info would be killing the golden goose. If you don't believe the above penalties are enough to disuade companies from treason, perhaps their desire for continued profits will.
For the life of me, I can't see any way in which rising costs would not the federal government's fault. If I work for the federal government and my costs grow, it doesn't matter whether they grow because I hire federal employees on the GS scale or because I hire contractors outside the government. If I work for the government, that means I am responsible and that I should take responsibility for my decisions and their cost to the taxpayer. The government agencies (e.g., cabinet offices like the DoD, DoS, DOE, etc.) must maintain responsibility for their costs, and no amount of evasion on their part can direct blame elsewhere. The core function of federal officials is the responsibility to execute a defined mission and be held responsible (for better or for worse) for the results. That responsibility can't be outsourced.
So much "government" work has been contracted out, then subcontracted out, it's hard to tell where the government ends and the private sector begins AND vice versa.
Top that off with "regulators" not doing oversight and you've got trillions going out the door to unaccountable parties. As a matter of fact, they take the government money then complain about regulations and oversight.
Such is the greed of countrymen.
1--> $49B in FY1990 is equivalent to $81B in FY2010 dollars (using the CPI inflation), so the growth is about 100%, not quadruple the amount as you might be led to believe by the magnitude of dollar values.
2--> Many of the jobs being done by those contractors aren't as amazing as they may seem. Plenty of work that would otherwise be done by highly-paid government (Pentagon) employees is instead done by contractors at a lower cost. I work with many such employees - think of them as a group of long-term temp employees. The government needs people to fill those jobs, and is getting them at a discount.
3--> The military has need of services that didn't exist 20 years ago. For instance, the Navy and Marine Corp Intranet delivers internet and intranet services to DoN employees and contractors across the globe. It doesn't make a lot of sense for the military to invest in those kinds of capabilities directly when telecommunications companies have the resources at hand and continue to innovate to support consumer industry. That's right, for decades, the internet has been relying off the military for development, and now the military is taking advantage of industry!
So despite what Mr. Isenberg says, this is hardly some evil plague. If you want less military, get congress to curtail big projects or inefficiencies - don't attack contracting in instances where it is sensical.
What about the hundreds of jobs contracted out of the Washington Navy Yard that would otherwise go to military officers or GS-12s or higher?
Maybe my several hundred outweight your three. That's one facility.
Why do we just glaze over when this topic comes up?
"A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction..."
"This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence — economic, political, even spiritual — is felt in every city, every statehouse, every office of the federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals so that security and liberty may prosper together."
He knew. He warned us. Or rather, he tried.
He plainly warned us here that "an alert and knowledgeable citizenry" would have to "compel" the emerging military apparatchik to do the citizenry's bidding rather than its own. He warned that we must "take nothing for granted" in -compelling- "the huge industrial and military machinery of defense" with the "peaceful methods and goals" that would be the only way to achieve "security and liberty" and "prosperity."
Right now, all 312 million of us can look at the status-quo and acknowledge that we have neither security, nor liberty, nor prosperity.
We can also plainly see the "untoward influence" that has indeed been "acquired." In fact, we cannot deny it. War proliferates: Iran, Iraq, Libya, and more. There's not a square foot of earth, not a gallon of ocean, not a breath of air and sky, not an inch of reachable space, that is not in some United States Military Command. Every one of those places has another Bad Person in it, just waiting to do Bad Things. It isn't "a question of balance," because there is no balance.
Our sick must die in poverty along with their families. Our bridges must collapse from neglect. Our leaders must move from the top 2% to the top 0.5% of the income food-chain. All sacrificed upon this wretched, bloody altar.
"Forbid it, almighty God."
Further, spending on national defense is roughly equivalent to what it was then on a constant-dollar per-capita basis. It has shrunk in terms of percentage of GDP.
I fail to see the connection.
These are for-profit businesses that generate zero revenue, the only thing "private' about them is they can do any damn thing they want with the people's money with zero oversight.
Thanks, Congress. Thanks, Obama.
I've seen first hand what federal dollars buy and what it doesn't. Yes, it pays for weapons systems, information systems, and indeed, support personnell in theater and those who work at these defense industry contarctors.
But, Mr. Eisenberg, you only reported on what journalists put out every year or two. A list of the Who's Who in Government Contracting. It is seemingly apparent you have'nt done the math on exactly what the government gets for its investment. In other words, what is the real breakdown of what is bought and sold? How much for a gallon of diesel? What amount for R&D for a weapon system that doesn't even work or even for one that does? How about the labor cosyt of cobtract workers in an active theater? Costs added by value addition, per say?
Maybe you should speak with some ex Raytheon, KBR, Lockheed-Martin etc etc employees and find out just how much waste is going to these guys.
The bottom line is this - there will always be government contractors and always will journalists tell us how much they are being paid. Problem? We never find out what we are buying.
A younger brother who was a helicopter pilot in Viet Nam, was assigned to Ft Rucker, where new pilots are trained. The Army phased out the military officers and hired a private contractor to train the pilots. My brother retired from the military and was quickly hired by the company to do the same job, but wearing civvies instead of a uniform.
In today's military, technology is the focus and soldiers wearing uniforms are technical specialists and it is waste of resources to have them peeling potatoes.
Contractor paymentsa are into the many billions, and since this info is Super Top Secret, no one really knows how much!