Private Security Contractors in Iraq: Where are we going?"

I previously highlighted some notable excerpts from the first day of a recent two day set of hearings held by the Commission on Wartime Contracting in Iraq and Afghanistan. Now I would like to do the same with respect to the second day, held on June 21, which was titled "Private Security Contractors in Iraq: Where are we going?"

The CWC heard two panels of witnesses on America's use of private security contractors in Iraq. The first panel testified on roles, responsibilities, planning, and program management of PSCs, all in the context of the U.S. military drawdown in Iraq and the pending hand-off of security responsibilities there from the Department of Defense to the Department of State.

Witnesses for the first panel were Gary J. Motsek, Assistant Deputy Under Secretary of
Defense (Program Support), Department of Defense; Edward M. Harrington, Deputy Assistant Secretary of the Army (Procurement), Office of the Assistant Secretary of the Army (Acquisition, Logistics, and Technology); Charlene Lamb, Deputy Assistant Secretary for International Programs, Department of State; and David B. Blackshaw, Overseas Security Division Chief, Office of Security, U.S. Agency for International Development. In addition, Randy Streufert, Director, Overseas Security Division Chief, U.S. Agency for International Development, joined Mr. Blackshaw at the Commission's invitation after the start of the hearing and gave testimony on behalf of USAID.

Second-panel witnesses were executives of private security firms who spoke on oversight, responsibility and management, determination of inherently governmental functions, performance of armed PSCs, and identification and implementation of lessons learned. Witnesses for the second panel were Don Ryder, vice president, training/mentoring and security, DynCorp International; Kristi Clemens Rogers, president, Aegis LLC; Ignacio Balderas, director and CEO, Triple Canopy. (A fourth PSC executive, Jerry Torres, CEO, Torres Advanced Enterprise Solutions, had agreed to testify, but did not attend the hearing.)

From the joint opening statement of the CWC Co-Chairs:

There are about 19,000 PSC employees working in Iraq; about 14,000 of them are under Department of Defense contracts, and roughly 5,000 work for the Department of State and the U.S. Agency for International Development (USAID).

The massive drawdown of U.S. forces in Iraq aims at cutting our military presence to less than 50,000 by the end of August, and to zero by the end of 2011.

Most of the security duties currently executed by the U.S. military in Iraq and by DoD contractors are being handed off to the Department of State.

State will need more security contractors, many of them with special skills.

The drawdown and the security-function hand-off will put increased strain on our systems for planning, acquiring, overseeing, contract- and program-managing, and evaluating performance related to PSC work.

Let me give you some specifics to clarify the foundations and the implications of these
facts. Commissioner Green and I, accompanied by some Commission staff experts, were in Iraq last month to prepare for this hearing. We met with DoD, State, and USAID people involved in security issues. And we got out into the country, visiting four forward operating bases (FOBs). Our fact-finding visit confirmed what our research and our hearings have already documented: there are already weaknesses in America's use of PSCs, especially with respect to effective internal controls to ensure full and proper vetting of security contractors. The problems may get bigger and more costly in the months ahead. We saw significant problems at three of the four FOBs we visited. At one FOB, we found 17 Iraqis and more than 50 third-country nationals had been on guard duty protecting that U.S. base for about two weeks without proper vetting. At another, a contractor CEO intervened personally to try to get third-country nationals posted to guard duty before they were properly authorized. Fortunately, military officers turned him down. These lapses and others like them could, obviously, turn into very bad situations if unauthorized, unvetted PSCs turned out to be sympathetic to insurgents.
Such concerns will only grow, for at least four reasons:

1. The State Department lacks the personnel, equipment, experience, and training to take on some of the security functions that have been provided by DoD. These could include quick-reaction combat teams, route-clearance capabilities, recovery of wounded personnel and damaged vehicles, the counter-rocket and counter-battery teams that return hostile indirect fire within seconds, and the experts and vehicles that detect and dispose of improvised explosive devices, or IEDs.
2. The Iraqi government currently lacks many of these capabilities, as well as a robust and consistent system for monitoring and regulating PSC operations in the country.
3. While the military's planning for its part of the Iraq drawdown appears to be thorough and well executed, we have found plans for contractor management during and after the drawdown much less developed--and have made that concern known to the Executive Branch.
4. The dramatic expansion of State's security responsibilities in Iraq could lead to weakly managed contractors performing inherently governmental functions in a combat zone--a scenario with large downside risks on both policy and practical grounds, such as concerns for the safety of remaining government and contractor employees. These are huge challenges, driven by both the scale and the peculiarities of our engagement in Iraq. The United States has used PSCs in other areas such as the Balkans, but never on such a scale as in Iraq and Afghanistan. The exigencies of the Iraq drawdown and the Defense-to-State hand-off aggravate the problems already created by the scale of PSC use, including the loose PSC oversight practiced by USAID.

And then there was this interesting addendum. To paraphrase the old saying, evidently, when the going gets tough for PSC CEOs the CEO gets "nervous."

At this point, I must insert a late-breaking addendum to my opening statement.
In preparation for our hearing, Commission staff offered to meet with all witnesses and/or their key staff. Mr. Torres, CEO of Torres Advanced Enterprise Solutions, or Torres AES, confirmed on June 7 -- two weeks ago -- that he would be testifying today. Our staff meeting with him was scheduled for last Tuesday. But late last Monday, Mr. Torres's assistant cancelled that pre-hearing meeting. And last Wednesday -- five days ago -- Mr. Torres told us that Torres AES was a small company and was "probably not needed on the panel." He also stated that he has Army Reserve duty this week,
and "might not be able to reschedule or get out of it." That is the last the Commission has heard from Mr. Torres. However, last Friday, Mr. Torres' lawyer informed us that Mr. Torres "had reserve duty, had key staff out of the country, and was "nervous about appearing."

Mr. Torres ought to be nervous. This Commission was going to ask him, under oath, why his firm agreed in January to assume private security responsibilities at FOB Shield with several hundred guards that had not been properly vetted and approved. A U.S. Army Contracting Officer representative (COR) correctly prohibited those Torres AES guards from assuming their duties.
Rather, the incumbent contractor was quickly hired for $1.5 million to remain on post for 16 added days, and hundreds of Torres AES employees were placed in stand-down status. This Commission was also going to ask Mr. Torres why he personally flew to Iraq, to FOB Shield, and strongly suggested to the COR that Torres AES be allowed to post the unapproved guards, guards that would protect American troops, and then to "catch-up the approval process."
I personally asked the COR if Mr. Torres, after he flew from the states to FOB Shield, had tried to intimidate the COR into allowing unauthorized employees to post to guard duty. The COR told me that "intimidate" was too strong a word, but that Mr. Torres essentially said that this was all about paperwork and wasn't a big deal.
The Commission can now report that this same company, Torres AES was awarded the next four lowest-priced, technically acceptable (LPTA) contracts to
protect American troops at four additional bases.
This raises an interesting question:
What is "technically acceptable"? During our trip, we raised that question and the issue of past performance during a meeting with the Commander, Joint Contracting Command-Iraq and Afghanistan (JCC-I/A). Specifically, we asked, how did Torres AES arriving and attempting to post several hundred unauthorized guards impact the awards of four additional security contracts?
We were told -- and I was there -- that these were competitive LPTA task orders, and that past performance was not considered by JCC-I/A during award of new, competitive task orders.
After an extended discussion, the Commander, JCC-I/A acknowledged that past performance should likely be considered on competitive task orders, and that she would, "look into this." In my view, this is a major "miss" on the part of JCC-I/A.
So now, less than three business days after Mr. Torres decided he was "nervous," about testifying (with the testimony being under oath), we have a major issue that
needs to be addressed, and our primary witness had hunkered-down in the rocks.
The issue today becomes, What does it take for government contracting leaders to say that an LPTA contractor is not performing adequately, and that their past performance dictates that a contractor is not technically acceptable?
We do know that trying to post hundreds of unapproved guards to protect American lives had no consequence in this case. Today we will further explore where contractual accountability and performance have consequences. What does it take for poor contractual performance to result in contract termination or non-award of future contracts?

From Gary Mostek:

Contractors employed to perform security functions for the DoD are only a fraction of the total private security sector - public, private, and international - in the USCENTCOM Area of Responsibility. This is one of the reasons that OSD is supporting the initiative of the Swiss Government to move beyond the Montreux Document and implement an industry-led, government supported, international accountability regime that will apply to all PSCs in all operational environments. 8Although our existing polices and acquisition language are adequate, an industry generated standard, recognized by the U.S. Government and other States contracting with PSCs, and incorporated into contracting tools, will be an important step towards ensuring that the operations of all PSCs in a contingency environment are consistent with U.S. national policy and support the long term stability of the region in which they operate, and that PSCs under contract with other States operate in a similar manner. The first step in this effort is to produce a universal standard of conduct (Standard) broadly endorsed by the PSC industry. A draft of this Standard has been developed and is being refined by a working group drawn from the U.S., UK, and Swiss Governments, with equal participation from the PSC industry and NGOs active in human rights law and the law of armed conflict. The aim of the working group is to finalize the Standard and the principles for the accountability mechanism for PSCs later this year.

From Charlene Lamb:

Currently, DS utilizes the services of approximately 2,700 PSC personnel in Iraq, comprised of roughly 900 movement security personnel under the Worldwide Personal Protective Security II (WPPS II), and an additional 1,800 guards providing perimeter security to Embassy Baghdad and related facilities in the International Zone. In contrast, DS currently employs 1,800 Special Agents (direct-hire Government employees) to meet its global responsibilities.

From Donald J. Ryder:

Every day we serve alongside U.S. military personnel and government civilians. It is dangerous work and sadly 68 of our employees have paid the ultimate sacrifice while supporting U.S. contingency operations. Just two weeks ago, an American CIVPOL advisor and a Nepalese guard working at the Kandahar Regional Training Center for the Afghan National Police were killed in an attack on the facility. A vehicle bomb was used to breach the perimeter security and unfortunately an insurgent was able to detonate a suicide vest inside. We have an obligation to those individuals and their families.

To support those seriously injured and the families of those killed, DynCorp International originally created the Civilian Police Employee Assistance Program. The program has since been expanded, now called "DI Cares," to cover all of the DynCorp International family of employees. We believe that our employee assistance program represents the gold standard of employee support for other companies to emulate, and recommend that the government mandate and fund this program for all contractors supporting U.S. national security and foreign policy objectives in hostile environments. We have made this recommendation consistently throughout our opportunities to testify. The death of yet
another employee only further solidifies our resolve that this is the right thing to do.

From Ignacio Balderas:

Despite the important role private security contractors play in supporting the missions of both the Department of Defense and Department of State, for many years we have seen
sweeping, unsupported arguments made against the use of private security contractors. And we have seen each of these arguments, in turn, found to be either false or exaggerated. For example, there were arguments that private security contractors were "stealing" personnel from the U.S. military and thereby depleting our armed forces. When the GAO examined this claim in 2005, however, it concluded that personnel were not leaving military service at any greater rate due to private security contractor hiring.

There were arguments that it would take fewer military personnel to accomplish tasks performed by private security contractors. However, in testimony before Congress, the Department of Defense has noted that, in fact, it would take three military personnel to occupy one deployed position due to training and military leave requirements, to say nothing of the military "tooth-to-tail" costs and requirements needed to support deployed individuals.

There were arguments that contractors were paid exorbitant sums that greatly outweighed their military counterparts. However, these comparisons typically were not apples-to-apples comparisons and failed to account for the non-cash compensation and benefits enjoyed by members of the military.

In truth, a 2008 Department of Defense compensation review established that military personnel actually do as well as, or better than, their contractor counterparts.

Finally, there were arguments that private security contractors cost more than it would cost to utilize government personnel. A 2008 Congressional Budget Office analysis and a comprehensive 2010 GAO report both discredited this argument, and in fact established that private security contractors can and do save the U.S. Government money, in some cases hundreds of millions of dollars on a single contract. For example, our work for the Department of State protecting the U.S. Embassy in Baghdad was estimated by the GAO to save over $785 million every year, a savings of nearly $4 billion over the life of that contract.

I would like to address one of the items the Commission has been specifically tasked by Congress to examine - namely, whether providing security in an area of combat operations is inherently governmental. The operating theory behind such a question appears to be that any use of force, even in defense of persons or property, that occurs in an area of combat operations presents a risk of being indistinguishable from offensive operations conducted by the U.S. military.
As a former member of the military and as someone responsible for all operations of a private security contractor, I respectfully disagree with that theory. When you look at the work performed by private security contractors, it is not of the type that should be classified as inherently governmental. In fact, there is a long history of allowing such work to be performed by private entities, even when the work is being performed for the U.S. Government. For example, the Department of State has for many decades used private firms to provide security at various embassies around the world, regardless of where the embassy is located and whether the host nation is friend or foe. For many years, the Office of Management and Budget listed "guard and protective services" as an example of commercial activities that may be performed by private entities under contract to the U.S. Government.

As recently as 2006, the GAO found that private security services, even when performed in Iraq, do not violate Department of Defense requirements relating to use of force, and they are not in violation of Federal laws regarding the use of mercenaries or quasi-military forces for hire. The GAO instead stated that the services are of a type "often performed in the private sector, such as bank guards or armed escorts for valuable cargo, as opposed to combat operations reserved solely for the performance of the armed forces."

Therefore, the debate has, for many years, been decidedly in favor of such services not being inherently governmental. Moreover, even if you take the most restrictive view - namely, that sovereign nations have an absolute monopoly on the use of force within their borders - nearly all nations have established legal frameworks by which private persons or entities may be authorized to use limited force within the context of national laws. For example, a company in the United States providing security services must be licensed to provide those services consistent with applicable state and federal law. This same licensing requirement exists in the vast majority of nations around the world, including Iraq and Afghanistan. Any use of force by a licensed security provider will be judged according to local laws, such as the law of self-defense and defense of others. The use of force by licensed security providers is no more justified for a government client than for a private client. Stated differently, the ability to provide security services is already approved by the relevant host government and the ability to use force is already dictated by applicable host nation law. This creates accountability.

In addition, regardless of whether we believe security work should be classified as inherently governmental, the fact is that other nations may not want or will not permit armed U.S. government or military personnel to be present within their borders, or they will limit the number of personnel that may be present or the activities they may perform. The presence of military personnel within a foreign nation typically is governed by a Status of Forces Agreement (SOFA) or similar treaty or agreement. Those agreements often put limits on the number of personnel and their activities. This is currently the case in Iraq, where the U.S. military is drawing down according to a mutually-agreed-upon schedule. A shift of security from private entities to the U.S. military in all likelihood would not be possible under the U.S.-Iraq Security Agreement. Even if it was, it likely would shift the U.S. military mission away from more critical needs.

From the Q&A:

Mr Thibault: But I want to start off with Mr. Harrington and Mr. Motsek. To the addendum that we added with our disappointment related to Torres AES, what does it take to terminate a security contractor contract?

Or what does it take from a policy viewpoint, Mr. Motsek?

But I'll start with you, Mr. Harrington, from an execution viewpoint. You know, you
were formerly the commander of DCMA, Defense Contract Management Agency. So you're in a real good position, present and past. What does it take to terminate a contractor for--obviously, as I said, it didn't take trying to post a bunch of unapproved, unauthorized foreign guards. So can you talk to me a little bit about what is the policy and the execution guidance that you give to your field representatives?

HARRINGTON: Sure, yes, Chairman Thibault. Your point's well taken, sir. What does it take?
It takes a clear specific evaluation of a contractor that presents a capability that's not adequate, it takes the judgment of the contacting officer rep on the ground, observing that. It takes the contracting officer there, interacting with the contracting officer representative, to confirm that that contractor's actions or lack thereof are appropriate to not select that contractor over that function.
I will tell you that I'll research that further also, sir, to ensure that the guidance we have right now, I think, very much specifically focuses on documenting contractor performance is good or not good, adequate.

THIBAULT: Well, let me ask you to build on that Mr. Harrington. Do you agree that, if you have a contract, like the TWISS [Theatre Wide Internal Security Services] contract, that's a multi-award, and each task order is competitively awarded, that past performance might be a consideration?

HARRINGTON: Yes, sir, I do.

THIBAULT: OK, because it wasn't. You know, I was there. And the commander turned to this
contract after quite a--I would call it almost a testy discussion. She turned and said, "Well, OK. Fine, that's something we'll consider in the future or maybe we ought to consider it in the future." And that's not good enough.

Mr. Motsek, can you talk a little bit about the policy?

You know, sometimes it gets difficult to understand it. But I know you are the key
player on much of the policy direction and regulatory action associated with past performance, especially private security contracts. Can you elaborate a little bit?

MOTSEK: I think Mr. Harrington hit the nail on the head. It should be considered. There's no
doubt about it. You brought three issues in this discussion. Number one, the good news is there was a trained COR out there.

HARRINGTON: Absolutely.

MOTSEK: Who actually did his job properly. And I would hazard a guess that a year and a half ago or two years ago, we would not have had the same outcome as we had this time.
There are two challenges that we have with regards to this. One is an issue we've
already addressed earlier in hearings with the commission, and that is the ungodly churn that we have of contracting officers in the theater.
We are stocked today, as you know, for fundamentally in Iraq, the bulk of your
contracting officers are Air Force personnel because they were the only deployable personnel we had. And we're now just beginning to see the fruits of the Army's push, about two years ago, to rapidly increase their contracting-officers' capability, and in particular, some deployable capability.
So part of this--and it's not an excuse, it's a reality. When you have a contracting officer churning every four to six months, instead of spending a year, 18 months, two years on that job, we have this challenge. That is one of the fundamental lessons learned that we got from this operation. You can't have that churn and expect to have consistency.