Outsourcing Security: The Rise of
Private Military and Security
Companies
Nikolaos Tzifakis, Lecturer, Department
of Political Science and International
Relations, University of Peloponnese
Growth of Private Security Sector
• World Security Service Market:
• 2007: $138.6 billion
• 2009: $152.5 billion
• 2014: $218.4 billion
A very …diverse Sector
• Common tasks
• protection services of assets and/or people
• training, restructuring and modernising of armies and
police forces;
• collection and analysis of intelligence;
• security of military communications;
• operation of technologically advanced military systems;
• military transportation and protection of strategic targets;
• clearing of minefields;
• language interpretation and interrogation of prisoners;
• logistics
Typology of Private Military and Security
Companies
Private Security Companies
125 countries
657,000 employees
annual revenues:
2004 - £3 billion
2011 - £7.5 billion
51 countries
300,000 employees
2009-2010: acquisition
of 30 companies in
different countries
Private Military Companies
40 locations in the
United States and in
several countries
more generals than the
US army in its service
6,000 peacekeepers and
trainers to 11 countries
2010: $3.4 billion (32.2%
increase of annual
turnover)
Typical Contract Chain in Afghanistan, Iraq
• Prime Contractors
• US-based subcontractors
• Recruiting countries (e.g. India)
• Companies in the location of deployment
2008: 29 of the top defence contractors of the United States had at least 1,194
offshore subsidiaries.
Types of relationships between states and PMSCs
• Contracting States
• States of Operations
• Home States
• Third States
Driving forces behind the growth of the private security market
Enabling Conditions
• change in the global demand/supply of security forces
• military interventions in Afghanistan and Iraq
• transformation of the public police and the military in
many countries
Alleged advantages of private security industry
• Cutbacks to public expenditures
• Professionalism, experience, specialised expertise
• Innovative thought
• Adaptability to new threats
• Security gap
Private Security contractors in Iraq
Private Security contractors in Afghanistan
Security as a good
Types of goods
Non-excludable
Excludable
Non-rival
Public good
Club good
Rival
Common good
Private good
National security as a good
Public Providers
Private Providers
Security is a public good
Security is a public good
Sub-state or individual security as a good
Public Providers
Private Providers
Security is a common good
Security is a club good
Security is a private good
Security as a commodity: Political externalities
• It releases states from part of their
responsibility to protect their citizens
• Security is gradually depoliticised
• Strengthens the executive at the expense of
the legislative branch of government
• PMCs an important role over the
determination of security discourses and the
corresponding policies
• supply creates its own demand
• security is militarized
Contract management and cost efficiency
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No-bid contracts (60% of US DoD 2004)
Existence of monopolies (67% of non-competitive contracts)
‘Cost-plus’ contracts
Poor contract oversight
US in Iraq: 34,728 contracting actions = $35.9 billion (2003- June
2011)
1992-2006: dollar value of US army contracts increased 331% and
the number of army contract actions increased 654%
only 38% of the US Army contracting workforce deployed in theater
operations are certified for the positions held
2009: the US GAO reviewed 69 audits of the Defense Contract Audit
Agency and found that in 65 of them there were serious ‘deficiencies
that rendered them unreliable’
Outsourcing contract oversight or self-evaluation
No disruption in the supply of services
2004 KBR contract in Iraq, expenses of over $1 billion
Frauds, wastes, abuses, mismanagements
• the US DoD Inspector General: US paid $160 to $204
million more for the supply of fuel in Iraq.
• Supreme Foodservice charged the US with $454.9
million to airlift fresh fruit and vegetables in
Afghanistan (not required in the contract)
• Blackwater billed the US State Department with the
salary cost of a prostitute in Kabul
• Airscan utilized unencrypted commercial television
relays from 2001 to 2002 to transmit U.S. military
intelligence data in Kosovo
• ‘Federal Contractor Misconduct Database’ …893
instances of misconduct collectively amounting to
more than $40 billion
Illegitimate violence, human rights and impunity
From Blackwater to …Xe
In search of norms and regulations
• 1977 Additional Protocols to the Geneva Conventions
• International Convention against the Recruitment, Use,
Financing and Training of Mercenaries
• IHL: combatants and civilians
• Draft Articles on Responsibility of States for
Internationally Wrongful Acts
• Draft of a possible Convention on Private Military and
Security Companies
• Montreux Document
• International Code of Conduct for Private Security
Service Providers
Conclusions – Policy recommendations
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Prevent supply from determining its own demand;
launch competitive bids for every single contract;
refrain from awarding cost-plus contracts;
avoid outsourcing services to monopolies;
increasing the capacity and authority of oversight institutions;
evade transferring contract supervision to private agencies;
calculate the cost of contract management;
regulate the operation of PMSCs;
reverse the climate of general impunity;
explicitly stipulate the responsibility of prime contractors;
exclude from future contracts seriously misbehaving PMSCs.