PENTAGON REPEATING CONTRACTOR MISTAKES

"From the abuses at Abu Ghraib prison to the mutilation of American civilians at Falluja, many of the worst moments of the Iraqi occupation have involved private military contractors 'outsourced' by the Pentagon," writes Defense Tech pal Peter Singer in a must-read Times op-ed. "Yet despite the problems and the widespread accusations of overbilling, it appears the civilian leadership at the Pentagon has learned absolutely nothing from the whole experience."

Last month the Pentagon awarded a $293 million contract for coordination of security support to a British firm called Aegis Defense Services. The huge contract has two aspects: Aegis will be the coordination and management hub for the more than 50 other private security companies in Iraq, and it will provide its own force of up to 75 "close protection teams," each made up of eight armed civilians who are to protect staff members of the United States Project Management Office.The contract is a case study in what not to do. To begin with, a core problem of the military outsourcing experience has been the lack of coordination, oversight and management from the government side. So outsourcing that very problem to another private company has a logic that would do only Kafka proud. In addition, it moves these companies further outside the bounds of public oversight.Moreover, with the handover of Iraqi sovereignty in just weeks, why is the Pentagon, rather than the Iraqis themselves, making this decision? Indeed, it seems contrary to the overall American strategic goal of handing over the responsibilities for security to the Iraqis as a prelude to getting out of the business ourselves.The contract also repeats the "cost plus" arrangement that has proved problematic in the past. In effect, this deal rewards companies with higher profits the more they spend, and thus is ripe for abuse and inefficiency (as we have seen with the accusations of overbilling that have swirled around Halliburton). It has no parallel in the best practices of the business world, for the very reason that it runs counter to everything Adam Smith wrote about free markets.
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