Are Government Contractors Exploiting Workers Overseas?

The following is an excerpt from the congressional testimony I gave yesterday. You can find the entire testimony on my blog (free registration required).

Testimony of David Isenberg
Publisher, PMSC Observer and Author, Shadow Force: Private Security Contractors in Iraq, before the House Committee on Oversight and Government Reform, Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform, on
"Are government contractors exploiting workers overseas? Examining enforcement of the Trafficking Victims Protection Act"

November 2, 2011

Chairman Lankford, Ranking Member Connolly, other Members of the Subcommittee,

Thank you for the opportunity to testify at this hearing.

I commend you for examining the issue of whether government contractors exploit workers overseas. It is unquestionably a problem. Though it has come up elewhere it has not yet received the sustained attention it merits. As the Commission on Wartime Contracting in Iraq and Afghanistan noted in its final report:

U.S. contingency contractors, opportunistic labor brokers, and international criminal organizations have taken advantage of the easy flow of people, money, goods, and services to capitalize on this source of revenue and profit. Their actions bring discredit to the United States and act as a barrier to building good diplomatic relations.

The subject also means you have to look at the relationship between prime contractors and their subcontractors, which is another problem. It is often, to cite Winston Churchill, a riddle, wrapped in a mystery, inside an enigma.

I am pleased to be here to discuss the The Najlaa Episode Revisited report that I co-authored, which was published by the Project on Government Oversight this past June. I have a prepared statement which I ask be included in the hearing record in its entirety, along with the POGO report. In the interest of time I will just summarize some of the main points.

But first, let me outline where I stand on the ongoing debate over the outsourcing and privatization of functions that used to be considered inherently governmental. I am not an opponent of private military and security contractors. Nor am I am a fervent supporter. Over the years I have documented problems with the claims of both sides. Personally, I think most contractors, especially those operating in the field, are decent, honorably men and women, doing necessary, even vital work, under harsh and demanding conditions. Some of them, I believe, especially on the security side, are underpaid. But in the end I am simply an interested observer and chronicler, who, like the Mr. Spock character on the Star Trek television series, finds it a "fascinating" phenomenon worthy of continued study and analysis.

Speaking of science fiction we might note that the use of private actors in war and conflict is something that sc-fi writers have long written about, as in Gordon Dickinson's Dorsai novels. So, in one sense, the subject of today's hearing is an example of life imitating fiction.

First, let me address why this is important. For years industry advocates have been claiming that thanks to private military contractors (PMC) U.S. military forces have the best supported, supplied military in any military operation in history. It is inarguably true that PMC are now so intertwined and critical that the U.S. military simply can't operate without them.

But that is not an unmitigated benefit. Many PMC have had problems implementing contracts. Some have committed outright fraud, thus wasting U.S. taxpayer's money, and indirectly, negatively affecting U.S. military operations.

While the seven plus years has seen increased attention paid to the oversight of and accountability of PMC most of that attention has been at the level of prime contractors. Only now is government beginning to turn to the issue of subcontractors. This attention is long overdue. As the Center for Public Integrity noted last year:

Subcontracting is among the most challenging parts of the U.S. government's widespread outsourcing of war-related tasks. It works like this: A government agency -- most likely the Defense Department, State Department, or U.S. Agency for International Development -- will award work to a "prime" contractor. That prime contractor, usually a large American company like Kellogg, Brown and Root (KBR) or DynCorp International, will often subcontract some or even a majority of its work to other companies, including foreign-owned firms. Those subcontractors sometimes then turn around and subcontract part of the work, and so on... But in footing the bill for all this work by a network of companies, the U.S. government often doesn't know who it is ultimately paying. And that can lead to fraud, shoddy work, or even taxpayer funds ending up in the hands of enemy fighters... Prosecutions often rely on whistleblowers inside a company to report suspected fraud. But whistleblower protections typically do not extend to subcontractors' employees. Furthermore, many foreign subcontractors do not feel the need to cooperate with U.S. law enforcement or auditors.

Our report documented various violations of the law and irregularities with regard to third country nationals. Some may say that is unfortunate but since nobody was killed or wounded what is the big deal? The answer is two-fold.

First, as any competent military commander will tell you, wars are not fought and won by machines and tools. They are fought and won by people. Given how tightly integrated private military contractors are with regular military forces treating people badly on the private side can adversely impact people on the public side.

Second, there is a cost when contractors are improperly used and treated and I'm not talking about money. Although it is not widely recognized the use of private contractors among the complex of national defense, security and foreign policy departments and agencies is so widespread and so wide in scope that their impact can be strategic, as opposed to the merely operational and tactical. If you think I am exaggerating consider the recent news that the United States will be withdrawing all its military forces from Iraq by the end of the year. This was not done because the Obama administration wanted to do so. It was done because it could not work out a deal regarding immunity for U.S. military forces. But given the events of September 16, 2007 at Nisour Square in Baghdad when Blackwater security contractors shot and killed 17 Iraqi civilians, no Iraqi government was ever going to be able to grant an immunity deal. Now, like it or not, that is strategic impact.

In other words, there is a reputational cost when contractors do bad things or are treated badly. As retired Marine Corps Colonel T.X. Hammes wrote:

To start, three inherent characteristics of contractors create problems for the government. First, the government does not control the quality of the personnel that the contractor hires. Second, unless it provides a government officer or noncommissioned officer for each construction project, convoy, personal security detail, or facilities-protection unit, the government does not control, or even know about, their daily interactions with the local population. Finally, the population holds the government responsible for everything that the contractors do or fail to do. Since insurgency is essentially a competition for legitimacy between the government and insurgents, this factor elevates the issue of quality and tactical control to the strategic level... Since the government neither recruits nor trains individual armed contractors, it essentially has to trust the contractor to provide quality personnel. In this case, the subcontractor took shortcuts despite the obvious risk to the personnel manning the recruiting stations. Even if the government hires enough contracting officers, how can it determine the combat qualifications of individuals and teams of armed personnel? The U.S. military dedicates large facilities, major exercises, expensive simulations, and combat-experienced staffs to determine if U.S. units are properly trained. Contractors do not. We need to acknowledge that contracting officers have no truly effective control over the quality of the personnel the contractors hire. The quality control problems are greatly exacerbated when the contractor uses subcontractors to provide services. These personnel are at least one layer removed from the contracting officer and thus subject to even less scrutiny.