So who's in charge?

Government is outsourcing a variety of important tasks to private contractors, who operate with little oversight

By Mickey Edwards
October 25, 2009

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Clark Ervin, former inspector general of the Department of Homeland Security, has a long list of weaknesses in the systems and procedures we have established to keep ourselves safe. One of them is the extent to which we have turned over to private contractors essential responsibilities best left in the hands of government personnel, including members of the military.

While newspaper readers may have been shocked at reports - and pictures - of security guards at the US Embassy in Kabul engaged in wild, and lewd, partying, Ervin focuses on a less titillating but more disturbing element of that incredible scene: While the guards were partying, they weren’t guarding.

So how big a problem is it? According to Allison Stanger, “big’’ would be a massive understatement. In her new book, “One Nation Under Contract,’’ Stanger, director of the Rohatyn Center for International Affairs at Middlebury College, documents in stunning detail the extent to which the United States has turned much of its most important work over to private contractors whose motivation is profit and level of public accountability near zero.

By August 2008, Stanger writes, the United States had spent more than $100 billion on contractors in Iraq alone. How could it cost so much? “In Iraq in 2007, more than 180,000 government contractors were on the ground, compared to 160,000 US soldiers. And this figure does not include the large array of subcontractors who also were given a piece of the action.’’

What is it that costs so much? Here is one particularly damning paragraph in a book that is full of them.

“For-profit foreign aid,’’ Stanger says, “is now a booming business, with billions of US government dollars flowing into sketchy projects.’’ She points to a 2005 congressional study that found that of 286 schools that were to be rebuilt by a private contractor with funds from the US Agency for International Development, “only 8 had been completed and . . . only 15 of 253 planned health clinics were operational.’’ With as many as five subcontractors on each job, “each charging a substantial fee’’ a school that could be built by Iraqis for $50,000 costs the American taxpayers five times that much.

Private contractors, it seems, do everything. And not just in Iraq or Afghanistan. Stanger has taken a hard look at the whole scope of government outsourcing. “Lockheed Martin . . . gets more federal money each year than the Departments of Justice or Energy. Lockheed Martin sorts your mail, tallies up your taxes, cuts social security checks, counts people for the US census, runs space flights, and monitors air traffic.’’ In fact, “in this new world,’’ she writes, “the private sector increasingly handles the everyday business of governing.’’

Despite all this, Stanger does not view this pattern with alarm, or at least not only with alarm. There’s plenty of scandal, and she calls it such, plenty of concern about cost, lack of accountability, fiscal irresponsibility. But she also sees contracting out as a wave of the future, in large part probably because the elimination of the draft makes unavailable the large numbers of uniformed personnel to drive trucks, peel potatoes, build buildings, or do the laundry. Her concern is not with the idea of farming-out but with the mismanagement of it, the lack of transparency, the lack of effective monitoring and evaluating. She is not antibusiness or antiprofit but notes what happens when the business becomes a part of what she calls a “shadow government’’: “Business has a bottom line, so when a business outsources irresponsibly, people get fired or the company goes out of business - except when they are the beneficiaries of a government handout.’’

Stanger even worries about the political costs of contracting out. When companies do the work in a war zone and government is freed from the need to reinstitute a draft, citizens don’t face head-on the enormous costs of war that might otherwise feed public discontent and bring conflicts to a close.

In many ways, the real strength of this superb book is not what it reveals, as stunning as that may be, but how well she assimilates the changed circumstances of modern-day governance and simply addresses what now must be done. “The privatization of American power,’’ she writes, “blurs the formerly clear divisions between the public and private sectors. . . . In the past the operative assumption was that the government made policy and told the private sector how to implement it. Within government, some groups devised policy (the ‘what’) and others dealt with the politics of securing policy aims (the ‘how’). Neither firewall is holding up well.’’ And since it isn’t, Stanger outlines new approaches, “a postindustrial foreign policy,’’ a “laissez-faire homeland security’’ model, new means of dealing with foreign aid, how to properly go about the privatization of defense work.

Stanger deserves a gold medal for this book because much of what she has uncovered, and had to think about, was pretty well buried; behind each unveiling is a lot of hard digging. But we’re the better off for it because she has given us a lot to think about.

Mickey Edwards, a former Republican congressman, is now a vice president of The Aspen Institute. He is the author of “Reclaiming Conservatism.’’

ONE NATION UNDER CONTRACT: The Outsourcing of American Power and the Future of Foreign Policy
By Allison Stanger
Yale University, 256 pp., illustrated, $26

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