09/12/2012 02:47 pm ET Updated Nov 12, 2012

What Would Al Say? Putting the Federalist Back in Federal Contracting

In a previous post I discussed an article dealing with how the country's founders felt about the use of mercenaries, certainly a precursor, if not direct ancestor of today's private military and security contractors. Continuing on with that theme today I'd like to discuss another paper that deals with what the founders considered necessary for good governance and the challenge that PMSC utilization poses to that.

But first, let's take a short detour into U.S. constitutional history. Those who remember their History 101 course may recall the Federalist Papers, the series of 85 articles or essays promoting the ratification of the United States Constitution, written by Alexander Hamilton, James Madison, and John Jay.

Before you start yawning and asking what do 200-plus-year-old essays have to do with today, just remember that federal judges, when interpreting the Constitution, frequently use the Federalist Papers as a contemporary account of the intentions of the framers and ratifiers. By 2000, The Federalist had been quoted 291 times in Supreme Court decisions.

"Federalist No. 70" is by Alexander Hamilton and the seventieth of the Federalist Papers. It was published on March 15, 1788. Its title is, "The Executive Department Further Considered", and it is the fourth in a series of 11 essays discussing the powers and limitations of the Executive branch.

According to Wikipedia

The essay deals with the question of a plural executive. Hamilton argues that a plural executive, having more than one president, "tends to conceal faults, and destroy responsibility", and states that a singular president would better be suited to wield the full potential of his power in a quick and efficient way, without falling into endless squabbling and dispute with other executives with the same power.

Hamilton's core argument is that "presidents will rise above factions through their power to assemble a government composed of highly motivated, accountable officers."

Speeding forward in time a couple of centuries and change brings us to Janine R. Wedel, a university professor in the School of Public Policy at George Mason University and authors of the 2009 book Shadow Elite: How the World's New Power Brokers Undermine Democracy, Government, and the Free Market. She writes extensively about the privatization of public and foreign policy, corruption and the state.

She wrote an article, "Federalist No. 70: Where Does the Public Service Begin and End?"published last December in Public Administration Review journal. She minces no words:

Without revolution, public debate, or even much public awareness, a giant workforce has invaded Washington, D.C. -- one that can undermine the public and national interest from the inside. This workforce consists of government contractors, specifically those who perform "inherently governmental" functions that the government deems so integral to its work that only federal employees should carry them out. Today, many federal government functions are conducted, and many public priorities and decisions are driven, by private companies and players instead of government agencies and officials who are duty bound to answer to citizens and sworn to uphold the national interest.

Today, many federal government functions are conducted, and many public priorities and decisions are driven, by private companies and players instead of government agencies and officials who are duty bound to answer to citizens and sworn to uphold the national interest.

Wedel believes that the considerable contracting out of government functions is counter to the vision espoused by founding statesmen such as James Madison who argued for a forceful case for the separation and distribution of government powers. She argues that contracting out creates the conditions for the intertwining of state and private power and the concentration of power in just a few hands -- about which Madison warned.

What is her evidence? Consider a few of her examples:

Run intelligence operations: Contractors from private security companies have been hired to help track and kill suspected militants in Afghanistan and Pakistan.

Control crucial databases: In a mega-contract awarded by the DHS in 2004, Accenture LLP was granted up to $10 billion to supervise and enlarge a mammoth U.S. government project to track citizens of foreign countries as they enter and exit the United States.

Choose other contractors: The Pentagon has employed contractors to counsel it on selecting other contractors. The General Services Administration enlisted CACI, a company based in Arlington, Virginia--some of whose employees were among those allegedly involved in the Abu Ghraib prisoner abuse scandal in Iraq, according to U.S. Department of the Army--to help the government suspend and debar other contractors.(CACI itself later became the subject of possible suspension or debarment from federal contracts.

Oversee other contractors: The DHS is among the federal agencies that have hired contractors to select and supervise other contractors. Some of these contractors set policy and business goals and plan reorganizations. And, in the National Clandestine Service, an integral part of the Central Intelligence Agency (CIA), contractors are sometimes in charge of other contractors.

Draft official documents: Contractors have prepared congressional testimony for the secretary of energy. Web sites of contractors working for the Department of Defense also have posted announcements of job openings for analysts to perform functions such as preparing the defense budget. One contractor boasted of having written the U.S. Army's Field Manual on "Contractors on the Battlefield".

In short, the outsourcing of many inherently governmental functions is now routine. The government is "utterly dependent on private contractors to carry out many such functions." The obvious problem is that "contractors' imperatives are not necessarily the same as the government's imperatives. Contractor companies are responsible for making a profit for their shareholders; government is supposedly answerable to the public in a democracy."

Amid this environment, which is complicated by mixed motives, contractors are positioned to influence policy to their liking on even the most sensitive, mission-critical government functions, such as fighting wars, guarding against terrorism, and shaping economic policy. Government investigators looking into intelligence, defense, homeland security, energy, and other arenas have raised questions about who drives policy -- government or contractors -- and whether government has the information, expertise, institutional memory, and personnel to manage contractors -- or is it the other way around?

How did this gargantuan, yet largely shadow army of contractors develop? Ironically, it is in no small measure due to the American tradition to fume about the growth of "big government." This resulted in:

the "shadow government" of companies, consulting firms, nonprofits, think tanks, and other nongovernmental entities that contract with the government to do so much of its work.

In other words, contactors enable government to look smaller, not be smaller. But in reality their numbers are anything but small.

Government scholar Paul C. Light has compiled the most reliable figures on contractors. The number of contract workers -- compared with civil servants, uniformed military personnel, and postal service employees -- increased steadily over the last two decades. In 1990, roughly three out of every five employees in the total federal labor force worked indirectly for government -- in jobs created by contracts and grants, as opposed to jobs performed by civil servants, uniformed military personnel, and postal service workers. By 2002, two out of every three employees in the federal labor force worked indirectly for government, and, by 2008, the number was three out of four.

In the DHS -- the mega-bureaucracy established in 2003 through the merger of 180,000 employees and 22 agencies, the creation of which entailed the largest reorganization of the federal government in more than half a century -- contractors are more numerous than federal employees. The DHS estimates that it employs 188,000 workers, compared with 200,000 contractors assesses that the number of contractors is likely much higher.

In some arenas of government, contractors virtually are the government. The DHS, which includes the Customs Service, Coast Guard, and Transportation Security Administration, has relied substantially on contractors to fill new security needs and shore up gaps. In nine cases examined by the GAO, "decisions to contract for... services were largely driven by the need for staff and expertise to get DHS programs and operations up and running quickly."

What this leads to is a Swiss cheese government; one where control and accountability is full of holes.

In theory, contracts and contractors are overseen by government employees who would guard against abuse. But that has become less and less true as the capacity of government oversight has diminished--a lessening that seems to flow directly from the need to maintain the façade of small government.

The result:

Swiss-cheese government lends itself to the kind of concentration of powers that Madison warned about. Over the past decade and a half, new institutional forms of governing have gathered force as contractors perform inherently governmental functions beyond the capacity of government to manage them; as government and contractor officials interact (or do not) in the course of projects; as chains of command among contractors and the agencies they supposedly work for have become ever more convoluted; and as contractors standing in for government are not subject to the same rules that apply to government officials.