Dogs Of Peace

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Dogs of Peace

U.S. GIs are finally in Liberia. In the next crisis, will private soldiers
replace them on the front lines?

By Eric Pape and Michael Meyer
NEWSWEEK INTERNATIONAL

Aug. 25-Sept. 1 issue ? Harrier jets screamed over-head. Cobra gunships armed
with rockets circled the city. Sea Knight helicopters lumbered through billowing
columns of yellow smoke marking the landing sites where U.S. Marines alighted
last week to seize control of war-torn Monrovia.

THEY WERE WELCOMED as heroes. Shouting crowds cheered and clasped the soldiers?
hands. Women sang gospel songs, grateful for a sign that the fighting that has
claimed more than 1,000 lives over the past two months might finally be over. An
orgy of looting ensued as hordes of hungry people broke into the port in search
of food and medicine after two months of near famine. But there was no denying
the upwelling of relief in Liberia?s beleaguered capital. ?Thank you, George
Bush,? people cried. ?Thank God, America.?
A happy ending? Perhaps. Optimists hailed the intervention as a victory for
international humanitarianism, even a model for the future. The reality is more
ambiguous. After all, the American force in Liberia numbers only 200. They join
fewer than 800 Nigerian peacekeepers, dispatched by the 15-member Union of West
African States early in August. It took months of dithering and diplomacy to put
together even this modest mission, in the face of unspeakable atrocities.
Overstretched in Afghanistan and Iraq, Washington made clear that its
participation was at best reluctant and would be neither large nor long-lasting.
There?s talk of sending U.N. peacekeepers in October. But if fighting erupts
anew, either in Monrovia or in the two thirds of the country controlled by the
rebels, those plans could fall apart. And what happens when, almost inevitably,
another humanitarian crisis erupts elsewhere in the world?
It all begs a question: is there not another way to deal with global human
calamities? Which brings up a seductive (and controversial) proposal from an
obscure British-American company called Northbridge Services Group. In June, as
Liberia was descending into anarchy, the firm offered to slip an elite brigade
of hired commandos into Monrovia to arrest the country?s president, Charles
Taylor, the man indicted by an international tribunal for war crimes in
neighboring Sierra Leone and widely considered responsible for the killing and
chaos that brought Liberia to its knees. No waiting for international
peacekeepers. No interminable diplomatic negotiations. No risk of dead American
or multinational soldiers. No more war in Liberia. Had the offer been accepted,
the company claimed in a statement, ?many innocent lives, lost by the failure of
the international community to act quickly, could have been saved.? And
Northbridge promised to do all this for a fee of $4 million.
Unsurprisingly, leaders in Whitehall and Foggy Bottom scoffed. The idea of
involving mercenaries?or ?private military companies,? as they?ve more recently
come to be called?in international crises has long been politically touchy.
Doubts about the company itself added to the skepticism. Just this April,
British Foreign Secretary Jack Straw castigated Northbridge after hearing
reports that it might fight alongside rebel armies in Cote d?Ivoire. Still,
Northbridge?s proposal may not be all that farfetched. Across the world, in
fact, the privatization of war?and peacekeeping?has already become an
established feature of geopolitical life.
Consider some numbers. Peter Singer of the Brookings Institution in Washington
estimates that, after the latest gulf war, there are five times as many military
contractors on the ground in Iraq as in 1991. Between 1994 and 2002 the U.S.
Department of Defense entered into more than 3,000 contracts with private
military companies for a total value of roughly $300 billion,, according to the
Center for Public Integrity, a journalism watch group in Washington, D.C.
Contractors are training security forces in Iraq, flying gunships in Colombia,
training civilian police in Bosnia and Kosovo and protecting Afghanistan?s
President Hamid Karzai.
In areas as varied as Croatia, Colombia and Sierra Leone, there have been
reports that they have even been drawn into combat. This is no longer
necessarily a bad thing, says Peter Takirambudde, Human Rights Watch?s executive
director for Africa. The old notion of the mercenary as a hired killer is
outdated. Properly managed and given a specific mandate by international
organizations or sovereign governments, Takirambudde believes, private armies
can be a useful tool in coping with the world?s humanitarian emergencies. ?It is
not a crazy idea,? he says. ?Times have changed.?
Hiring mercenaries for humanitarian purposes gained legitimacy over the past
decade. In the early 1990s Executive Outcomes, a classic South African mercenary
group, made a name for itself stepping into Angola?s decades-long civil war,
seizing lucrative diamond mines for the government. Then came 1994 and the
genocide in Rwanda. Executive Outcomes offered to deploy 1,500 soldiers to
create havens and stop the mayhem at a cost of $150 million over six months.
According to various reports, the plan was considered by the Clinton
administration but rejected. In the ensuing carnage, 800,000 Rwandans were
killed in little more than 100 days.
In 1995 Sierra Leone?s elected President Ahmad Tejan Kabbah hired Executive
Outcomes to defend his government against the brutal rebels of the Revolutionary
United Front. The company arrived with Russian helicopter gunships, artillery
and air-fuel explosives and within a year quelled the uprising and drove the
rebels out. Some humanitarian groups complained of ?collateral damage? wrought
by the company?s savage air attacks. But many in Sierra Leone, especially
ordinary people, regarded these soldiers of fortune as national heroes.
Since then, private military companies have taken on a growing array of
generally less visible?but no less comprehensive?roles. In Iraq, private
military companies from the United States guard sites vulnerable to guerrilla
sabotage. A number of companies have sent advisers to train the country?s new
security and police forces, and many more are on the way. In Colombia, the
Washington-based DynCorp is training Colombian forces on coca-leaf eradication
and its contractors are piloting planes that destroy coca fields. DynCorp also
trains civilian police in Bosnia and employed most of the American contingent
for the U.N. civilian mission in Kosovo. When it came time to replace Karzai?s
U.S. Special Forces bodyguards, whom did the U.S. State Department turn to?
DynCorp.
Many American experts see this trend toward ?privatization? as desirable, as
long as it does not involve actual combat and comes under the auspices of
legitimate international or national authority. Col. Thomas Dempsey, a U.S.
defense attache to Liberia in the late 1990s, argues that only a nation and its
leaders have the right to send its people to war. ?When I kill, it is because my
president told me to,? he says. If a contractor shoots someone, it?s for another
reason: ?to get paid.? But private military companies are correct in seeing an
opportunity. ?In Rwanda, the international community did not step up to the
plate,? he says. ?There are conflicts around the world that require external
intervention. Privatized intervention offers a tool to do that.?
Gen. Barry McCaffrey, a commander of U.S. forces in the first gulf war, makes a
related point. The United States, these days, simply does not have enough
personnel to perform all the tasks required of it. ?Our most precious asset is
people, and there are whole categories of things that lend themselves to being
outsourced,? he says. He dismisses outfits like Northbridge, likening hired
fighters to ?pirates? and Mafia hit men. But he agrees that it is almost
inevitable that the United States, as its military presence around the world
grows, will turn more and more to private companies in fulfilling its missions
abroad.
The idea is finding currency among foreign governments as well. In Britain, the
Foreign Office put out a green paper last year that was surprisingly neutral on
private military companies. Though stopping short of endorsing them, neither did
it ban them, as was sought by some members of Parliament. Instead, the document
listed a series of options including licensing responsible companies. ?Today?s
world is a far cry from the 1960s, when private military activity usually meant
mercenaries of the rather unsavory kind involved in postcolonial or neocolonial
conflicts,? wrote Foreign Secretary Jack Straw. ?The British government would
consider the selective use of private military companies but would not go
anywhere near a combat role,? says Mariyam Hasham, a researcher at the Royal
United Services Institute in London. Barring that, and assuming such companies
would not work against the government?s own goals, the sky is the limit.

France, by contrast, has taken a tougher stand, passing the Participation in
Mercenary Activity Act on April 3, effectively broadening a ban on individual
mercenaries to include corporations. Africa is in ?turmoil? partly because of
the actions of private military companies, French Defense Minister Michele
Alliot-Marie told the Senate before the vote. That said, France retains its
famous (some would say infamous) Foreign Legion, a quasi-private military
organization active most recently in Cote d?Ivoire.
Inevitably, controversy over the use of private military companies will grow,
and not only because they are being used more and more. The line between combat,
on the one hand, and advising or logistical support on the other is inherently
fuzzy. Indeed, there are instances where the line has already been crossed,
apparently with the knowledge or even encouragement of the governments involved.
According to some press reports, for instance, contractors from Military
Professional Resources Inc. in Virginia helped plan Croatia?s Operation Storm,
an offensive supported by the United States against the Bosnian-Serb Army that
turned the tide in the Balkan war and set the stage for the Dayton peace
accords. The company vociferously denied the accusations. In 1998 International
Charter Inc. of Oregon flew transport helicopters in Liberia and Sierra Leone to
back up Nigerian peacekeepers. When fired upon, they fired back, according to
the Center for Public Integrity, which claims that ICI received a letter from
the U.S. ambassador in Sierra Leone authorizing them to do so.
In some cases, regular troops can be less professional than the retired special
ops soldiers staffing companies like Northbridge. West African peacekeeping
forces from Togo and Nigeria, notes Human Rights Watch?s Takirambudde, come from
militaries with a track record of rights abuses. That can have consequences
worse than ineffectiveness. Last week in Liberia, soldiers from the staff of
Nigeria?s commanding officer were seen loading looted food and consumer goods
into a truck?spoils, they unabashedly admitted, for the general.
Liberia may thus become a test case?not so much for humanitarian
interventionism, but for the degree to which the international community turns
to the private sector for help. Clearly, enormous amounts of international aid
will be required to feed and stabilize the country. The U.N. special envoy to
Liberia, Jacques Klein, an American career diplomat, has called for a ?massive
airlift? and a troop presence close to the 17,500 sent to Sierra Leone during
its civil war?a de facto U.N. trusteeship. ?If you?re going to do anything in
Liberia,? he told reporters after the U.S. Marines went in, ?you have to control
the whole country, including its borders.? All this would take at least two
years, he added, and would include recruiting a team of international civil
servants to re-create the country?s key ministries, form a caretaker government
and create a professional Liberian army.
Hundreds of foreign cops would help train an entirely new police force. Young
fighters on both the rebel and government sides would have to be demilitarized
and educated. In short, an entire society must be rebuilt, and a new generation
of private soldiers will no doubt find some role in the reconstruction.

With Tom Masland in Monrovia, Adam Piore in New York, Marie Valla in Paris and William Underhill in London

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Outsourcing War

An inside look at Brown & Root, the kingpin of America's new military-industrial
complex

Early on the morning of Aug. 5, a U.S. mail convoy pulled out of the airport in
Baghdad and headed north. A U.S. Army Humvee bristling with weaponry led the
way, followed by three heavily loaded trucks, each driven by a civilian employee
of Kellogg Brown & Root (KBR). A second military Humvee brought up the rear.
Near Tikrit, Saddam Hussein's hometown, a bomb detonated under one of the
trucks. The military police pried its driver, Fred Bryant Jr., from the wreckage
and raced him to a military field hospital. Bryant, 39, died en route, the first
KBR combat casualty since the Texas contractor was founded in 1919.

Bryant's death underscores the U.S. military's heavy reliance on private
military companies, or PMCs, to wage war in Iraq. By most estimates, civilian
contractors are handling as much as 20% to 30% of essential military support
services in Iraq. Scores of PMCs are active all across the country, but KBR in
particular has become indispensable to the global projection of American
military might in this unsettled age. "It is no exaggeration to say that
wherever the U.S. military goes, so goes Brown & Root," says P.W. Singer, a
Brookings Institution fellow and author of Corporate Warriors. Widely known as
Brown & Root, KBR is a unit of oil-services giant Halliburton Co. (HAL ) -- ****
Cheney's old company.

KBR and its rivals figure crucially in the increasingly clamorous debate over
the size and structure of America's armed forces. To save money, the U.S. has
pared its roster of active-duty troops by 32%, to 1.5 million, since 1991. But a
not-so-funny thing happened on the way to the post-Cold War new world order:
Terrorist networks proliferated, and long-suppressed ethnic conflicts broke out
all over the globe, prompting the U.S. to intervene militarily. The Pentagon was
able to maintain -- and perhaps even boost -- the potency of America's armed
forces by developing an awesome array of new high-tech weaponry and replacing
tens of thousands of soldiers with civilian PMC workers.

The Bush Administration was so confident of America's military superiority that
it went into Iraq with a much smaller, more nimble force than the huge
multinational coalition that was assembled to push Saddam out of Kuwait in 1990.
The swift defeat of the Iraqi army seemed to invalidate the Powell Doctrine,
which holds that the U.S. should fight only when it has an overwhelming
numerical edge. But occupying Iraq with 140,000 U.S. troops (plus 21,700 from
Britain and other countries) is proving another matter altogether, putting the
new contractor-dependent military to its most severe test to date.

Critics of the Bush Administration argue that it will require a force of 300,000
to 500,000 soldiers to pacify Iraq. But even if the U.S. wanted to substantially
boost troop levels, it's not clear where reinforcements would come from. About
50% of the Army's active-duty troops are on foreign soil already, and in many
key military specialities, the deployment percentage is much higher. For
example, 90% of all American military police are already on active duty. With
U.S. troops tied down in terrorist-hunting and peacekeeping missions from the
Philippines to Liberia to Uzbekistan, America's downsized armed forces are
stretched thin -- perilously so, say many experts.

The era of military shrinkage clearly has ended, yet the Bush Administration is
resisting calls to begin expanding the Army again. Instead, Defense Secretary
Donald H. Rumsfeld is weighing a series of measures designed to increase the
potency of America's armed forces without incurring the expense -- financial and
political -- of putting more Americans in uniform. In essence, Rumsfeld wants
the Pentagon to make more effective use of existing resources. Above all, that
means substituting even more civilians for troops and leaning even more heavily
on PMCs. There are "something in the neighborhood of 300,000 men and women in
uniform doing jobs that aren't for men and women in uniform," Rumsfeld said
during Senate testimony in July.

No company is better positioned to take over those jobs than KBR. Over the past
decade, the company has housed, fed, and maintained American fighting forces in
some of the most geographically remote and politically dangerous regions on
earth. It has proven itself capable of efficiently mobilizing its own vast army
of engineers, cooks, and logistics experts, often on short notice. Even rival
PMCs generally praise it as an adept and reliable operator. "They have a good
performance record," says Albert J. Konvicka, president of AECOM Government
Services Inc., a Fort Worth-based PMC. "They can react very quickly to
situations. I respect them as a competitor."

But outsourcing is no panacea for America's overextended military. Brown & Root
and most other PMCs work strictly in a supporting role. Their employees maintain
America's high-tech weapons and train soldiers how to use them but depend
heavily on their military customers for protection in combat zones. If security
breaks down, as it often has in Iraq, the PMC support system is liable to
malfunction, too. Lieutenant General Charles S. Mahan Jr., the Army's top
logistics officer, recently complained that so many civilian contractors had
refused to deploy to particularly dangerous parts of Iraq that soldiers had to
go without fresh food, showers, and toilets for months. Even mail delivery fell
weeks behind, Mahan complained in a July 31 interview with Newhouse News
Service. "We thought we could depend on industry to perform these kind of
functions," Mahan said. But it got "harder and harder to get [them] to go in
harm's way."

General Mahan didn't knock Brown & Root by name. He didn't have to; the company
is by far the biggest services contractor in Iraq, with more than 2,500
employees in Central Asia and the Middle East as a whole. U.S. Civil
Administrator L. Paul Bremer III and the 1,000-person Office of Reconstruction &
Humanitarian Assistance depend on the company for food and shelter, as do at
least 100,000 of the U.S. troops stationed in Iraq. In addition, the U.S. Army
Corps of Engineers turned to KBR and KBR alone to help repair damaged oil wells
and pipelines and get Iraqi crude -- the key source of reconstruction revenue --
flowing again to export markets.

For its work in support of the invasions of Iraq and Afghanistan, KBR has billed
the U.S. government about $950 million for work completed under contracts capped
at $8.2 billion. At the same time, KBR is in line to earn tens of millions of
dollars more to maintain the archipelago of U.S. military bases that now arcs
from the Balkans south to the Horn of Africa and east to Afghanistan and
Kyrgyzstan. Closer to home, KBR built the detention camps in Guantanamo Bay,
Cuba, that house Taliban and al Qaeda prisoners. All in all, no corporation has
played as central a role in America's global anti-terrorism campaign -- or
profited as handsomely from it -- as KBR.

The company's high-profile success in winning contracts, coupled with its
intimate ties to the White House, has aroused suspicions that it is a
beneficiary of political favoritism. Although Cheney no longer owns stock in
Halliburton, he was its chairman and CEO for five years and either hired or
promoted many of the executives now running Halliburton and KBR. At the
insistence of two powerful House Democrats, Henry A. Waxman of California and
John D. Dingell of Michigan, the General Accounting Office, the investigative
arm of the U.S. Congress, is looking into the issue of whether KBR has received
special treatment in the awarding of Defense Dept. contracts over the past two
years.

David J. Lesar, Halliburton's current chairman and CEO, is exasperated by the
controversy swirling around his company. "Despite some of the media scrutiny
you've seen, within the organization we are very, very proud of what we do to
support the military and, I think, save the U.S. taxpayer some money," says
Lesar, who insists that all of KBR's dealings with the Pentagon have been at
arm's length.

Robert "Randy" Harl, KBR's president and CEO, insists that General Mahan's
complaints do not apply to KBR. The company "has met every commitment we have
made to the military," Harl says. "Our company has no higher priority than to
support our military on the ground." Mahan was unavailable to discuss his
criticisms of civilian contractors with BusinessWeek; the 57-year-old three-star
general retired from military service shortly after making his comments. A
Pentagon spokesman declined to comment.

Mahan's departure will do nothing to quell the debate over the military's rising
dependence on Brown & Root and other PMCs. There is general agreement that it
makes sense to shift troops out of jobs that contractors can handle at least as
well -- and probably at less cost -- and let them concentrate on purely military
tasks. "The cost-savings argument for outsourcing is not nearly as compelling as
the potential improvement from quality of service or flexibility," says Steven
L. Schooner, co-director of government-procurement law at George Washington
University Law School.

The outsourcing trend also is being driven by the accelerating sophistication of
military software and hardware. The high-tech weapon systems used to such
devastating effect in Afghanistan and Iraq are so complex that combat units in
the field have no choice but to depend on expert civilians to maintain and, in
some cases, operate them. The F-117 stealth fighter, M1A1 tank, Patriot missile,
and Global Hawk unmanned drone are all heavily contractor-dependent.

Skeptics, who include many members of the military Establishment, warn that the
growing PMC presence on the battlefield exposes America's armed forces to
potentially catastrophic risk. As civilians, contract employees are not subject
to military command and discipline. Workers who refuse an assignment can be
fired by their employers but not tossed into the brig. The Pentagon's only
recourse is to sue -- no comfort at all to a commander in the field who has been
left in the lurch by vanished contractors. A PMC's ultimate duty is not to its
military customers but to its shareholders. "Contractor loyalty to the almighty
dollar, as opposed to support for/of the front-line soldier, remains [a] serious
question," warned a U.S. Army War College paper last year.

Although the ultimate interests of the military and the PMCs diverge, their
routine dealings are defined by cooperation, not conflict. The emergence of a
robust private military industry has set the revolving door between the Pentagon
and private industry spinning faster than ever. From top to bottom, the typical
PMC is heavily staffed by ex-military officers. "Roger that," replies Billy J.
Gray, a well-traveled KBR manager now stationed at Camp Bondsteel in Kosovo,
when asked if he is ex-Army. Like many of his colleagues, Gray gets a bigger
paycheck from KBR than he did in his Army days, and he still gets his military
pension, which, for a veteran with 20 years' service, amounts to 50% of his old
salary.

Military Professional Resources Inc. (LLL ), an Alexandria (Va.) military
consulting firm, boasts of having "more generals per square foot than the
Pentagon." But no PMC has forged a more intimate connection with America's
warfighters than Brown & Root, whose forté is building and maintaining military
bases in dangerous places. At locations such as Camp Bondsteel and Camp Arifjan
in Kuwait, KBR employees literally live with the soldiers -- albeit within a
separate compound on the base -- thereby alleviating the privations while
sharing many of the dangers of military life. Says GWU's Schooner: "Brown & Root
has won the hearts, minds, and stomachs of everybody in the military."

Unlike soldiers, however, KBR employees have the option of quitting at any time.
"I've raised my hand before and said, 'Guys, I'm burned out,"' says Gray, an
engineer who oversees vehicle maintenance and electric-power generation at
Bondsteel. Gray, who has worked for KBR for a decade, has taken three home
leaves over the years. He just returned to work in April after a nine-month
break. "I called up and said, 'Hey, I'm deployable again,"' he says.

The Defense Dept. is the private military industry's biggest customer, but
hardly the only buyer in what is a truly global market. Great Britain and other
established military powers have embraced military outsourcing to varying
degrees, while numerous Third World countries have hired PMCs to train their
armies and in some cases -- Sierra Leone, Angola, the Congo -- to literally
fight their battles.

Brown & Root ranks among the five top defense contractors in the United Kingdom.
Since 1997, KBR has owned a 51% stake in the Davenport Royal Docks, a former
government facility where the company and its two English partners maintain the
Trident fleet of nuclear submarines. In late July, the Ministry of Defense named
a consortium led by Brown & Root as the preferred bidder for a 4 billion-pound,
30-year contract to upgrade British Army garrisons housing a total of 18,000
soldiers and civilians.

Everyone agrees that the global PMC business is booming, but no one knows
exactly how big it is. A two-year study completed in 2002 by the International
Consortium of Investigative Journalists identified 90 PMCs operating in 110
countries. U.S. companies dominate, but sizable PMCs operate out of Britain,
South Africa, Russia, Israel, and elsewhere. Many PMCs are privately owned, and
even the ones that are part of publicly held corporations, such as KBR, tend to
provide minimal financial detail. Much of the work PMCs perform is classified
"secret" by their government clients. But for many of them, reclusiveness also
is a public-relations strategy. The private military industry has an image
problem reducible to a single, rather dirty word: mercenary.

The tradition of hired foreign guns is older than the gun, dating to ancient
times. The Geneva Conventions of 1949 criminalized the mercenary trade, driving
it underground. Mercenaries are still very much with us -- especially in Africa
-- but they tend to operate in small, ragtag units of limited effectiveness. In
short, they cannot begin to compete with PMCs, which have legitimized the
military-services business by reorganizing it into corporate form. Scrupulously
avoiding the shadowy, freebooting margins of the business, KBR acts only as a
working partner of the armed forces of the U.S. and its allies, never as their
proxy. In addition, the company shuns all assignments that require carrying
weapons, including sentry duty at military bases, a PMC staple.

Brown & Root's military-contracting operation is an extension of the company's
original business: engineering and construction. During World War II, Brown &
Root landed its first military contracts and eventually built hundreds of ships
for the U.S. Navy. Its employees accompanied U.S. troops to Korea and Vietnam,
building bases, roads, harbors, and so on. In 1963, Brown & Root sold out to
oil-services giant Halliburton (becoming Kellogg Brown & Root with the addition
of oil-pipe fabricator M.W. Kellogg in 199 . Taking its cues from Halliburton,
KBR emphasized energy projects, exiting the military business altogether after
the U.S. withdrew from Vietnam in 1973.

Desperate for new sources of revenue during the cataclysmic oil-industry
contraction of the mid-1980s, KBR tiptoed back into military contracting in 1987
-- this time to stay. "We see it as a very nice adjunct to the rest of the
business," says Halliburton CEO Lesar. "It requires many of the same
capabilities that we must have to execute our basic strategy, which is serving
our oil-and-gas customers: good engineering, good logistics, the ability to get
people on the ground fast, the ability to handle enormous amounts of data."

Military contracting now accounts for only about 20% of KBR's revenues -- which
is unfortunate for shareholders, since this business is the best thing the
beleaguered unit has going for it. Over the past 12 months, KBR has incurred
operating losses of $675 million on revenues of $6.1 billion. The company is so
weighed down by asbestos-related liabilities incurred by its construction
business that it plans to file for Chapter 11 bankruptcy this fall to settle
pending personal-injury claims. KBR's government-contracting unit will not be
included in the Chapter 11 filing.

In this year's second quarter, KBR earned $17 million on the $292 million in
revenue produced by its work in Iraq, a paltry margin of 5.8%. On the other
hand, the military business is reliably profitable and far less capital-intensive
than either oil services or construction because the government owns virtually
all the fixed assets. Under the "cost-reimbursable" contracts common in military
logistics, KBR passes along 100% of its costs to the customer and is assured of
a 1% profit. In addition, the company can earn an "award fee" of 1% to 8% of
total expenditures depending on how well it performs.

The bulk of KBR's military business has come in through a single, infinitely
expandable contract called the Logistics Civil Augmentation Program, or LOGCAP
for short. When Brown & Root won the first LOGCAP contract in 1992 over three
other bidders, no one imagined that it would burgeon into what the Contract
Services Assn. calls "the mother of all service contracts." For a fee of $3.9
million, LOGCAP I required KBR to develop contingency plans for deploying U.S.
forces to 13 different parts of the world. But LOGCAP was more than brainwork:
The company had to be ready, on short notice, to transport a fighting force of
up to 50,000 troops to any location in the world and to supply them with food
and other essentials for as long as six months.

Brown & Root was called into combat for the first time in late 1992,
accompanying U.S. forces into Somalia in support of a U.N.-sponsored
intervention. Soon, KBR was Somalia's largest employer, with 2,500 locals on the
payroll. The Army paid the company $110 million for Somalia and $141 million to
assist 18,000 troops sent into Haiti on another U.N. mission in 1994. But it
wasn't until the U.S. led NATO forces into Bosnia in 1995 that KBR -- and the
entire private military industry -- came of age.

Limited by Presidential order to calling up no more than 4,300 reservists, the
Army turned to Brown & Root and scores of other contractors. During one of the
harshest Balkan winters on record, KBR joined with military engineers to create
34 bases from former U.N. camps, abandoned factories, ruined buildings, and open
fields. The company supplied most of the building materials needed because it
was able to make deliveries faster than the Army could, according to a GAO
report. The 16,200 soldiers who filled the camps depended almost entirely on KBR
for food and other necessities.

KBR's LOGCAP agreement expired in 1997, and the U.S. Army Material Command
awarded a new five-year contract to rival Dyncorp (CSC ) "Losing that was quite
a blow," Harl concedes. "We turned in a proposal that was not fully responsive
to what [the AMC] was looking for." The Army softened the blow considerably by
carving out the Balkans under a separate contract given to Brown & Root. The
company continued to operate in Bosnia -- and moved south into Kosovo with the
Army when war erupted there in 1999. In short order, KBR built three more large
bases and scores of peripheral outposts.

Through 2002, the Army has paid KBR about $2.5 billion for its work in the
Balkans. Neither the company nor the Army will disclose how much of this is
profit. An Army spokeswoman says that on average, KBR has received about 90% of
the maximum fee award of 8% to 9%. This works out to a profit of about $200
million. In recent years, the U.S. has sharply reduced its troop levels in the
Balkans and closed most of its bases. KBR continues to run the bases that remain
and is projected to receive $367 million more in payments this year and next,
when its contract expires.

The Army's spending in Bosnia repeatedly exceeded projections, attracting
intensive scrutiny in Washington. However, in 1997, a Logistics Management
Institute study found that it would have taken 8,918 troops and $638 million to
do what KBR's 6,766 employees had done for $462 million. "When compared with the
costs of using an equivalent military force," the study concluded, "the use of
LOGCAP contractors is economical."

The big savings is in labor costs. A PMC does not have to pay the cost of
training and deploying a soldier. It also can subcontract out to local workers --
"host country nationals" in the parlance of the trade -- at much lower rates
than U.S. government scale. For example, in the Balkans, KBR paid carpenters,
electricians, and plumbers $15.80 an hour on average, compared with the $24.38
government rate. The wage gap was largest for basic laborers: $1.12 an hour, vs.
$15.99.

Still, the GAO, which twice investigated LOGCAP spending in the Balkans, chided
the Army for the laxity of its oversight of contractors' cost-plus spending.
"Army and other [Defense Dept.] officials have typically accepted [KBR's]
judgment and not questioned the level of services being provided," the GAO noted
in a 2000 report entitled Army Should Do More to Control Contract Cost in the
Balkans. The agency gave KBR high marks, the report continued, but noted that
military officials often were unable "to explain the frequency of services being
provided, such as...cleaning latrines three times a day."

In 2001, KBR outbid Dyncorp and another company to win back the LOGCAP contract,
now extended to a duration of 10 years. Under LOGCAP, KBR has received
assignments potentially worth as much as $183 million to support the hunt for al
Qaeda and other terrorist operatives in Afghanistan and neighboring countries.
The company maintains the two biggest bases in Afghanistan -- at Bagram and
Kandahar -- and Camp Stronghold Freedom in Uzbekistan. Meanwhile, Operation
Iraqi Freedom has sent $1 billion more in LOGCAP business KBR's way to date, and
new work orders still are being issued at the rate of a half-dozen per month.

In late 2002, the Pentagon asked KBR to grapple with a question complicating
U.S. plans for invading Iraq: What to do if Saddam torches his own oil fields,
as he did Kuwait's during the last Gulf War? KBR drew up a classified
contingency plan to deal with this nightmare scenario. The work was done under
LOGCAP, but to help implement the plan, the Army Corps of Engineers signed KBR
to a separate contract capped at $7 billion. General Robert Flowers, the Corps'
commander, said the contract was awarded to KBR because the Army had complete
confidence in the company and there wasn't time to put it out to bid -- an
explanation that inflamed suspicions that the political fix was in.

Harl emphatically denies it. "Our people did a great job in securing that work,
and **** had nothing to do with it," Harl insists. Bill Allison of The Center
for Public Integrity, a Washington-based government watchdog group, argues that
Cheney does not have to actually pull strings to help his old company. "Cheney
knows how things work," Allison says. "There are a number of ways you can help
without actually being involved."

As it turned out, Saddam's forces set fire to only 9 of Iraq's 1,821 oil wells.
But in the months since the U.S. captured Baghdad, saboteurs have done heavy
damage to oil wells, pipelines, and other facilities throughout the country.
This massive repair job has fallen to Task Force RIO (Restore Iraqi Oil), which
consists of some 300 Brown & Rooters and a smaller Army Corps of Engineers
contingent. KBR has finished $705 million worth of this work to date. The money
will keep rolling in for another few months but likely will fall well short of
$7 billion -- a figure that presumed an oil-field conflagration of apocalyptic
scope. KBR's contract, which was always intended as a stopgap measure, will be
replaced at yearend by two new contracts, each potentially worth $500 million,
according to the Corps of Engineers. KBR is an odds-on bet to win one but not
both contracts, if only because a double victory likely would provoke Waxman and
Dingell to new heights of outrage.

Lesar expects KBR to remain an opportune political target for as long as Cheney
occupies the White House. "That's just part and parcel of living with who my
predecessor was," he says, adding that no amount of contention will dissuade KBR
from pursuing new military business. "If I believe there is a piece of work out
there that we have the capability to do," Lesar says, "I have an obligation to
my shareholders to go after it."

In coining the term "military-industrial complex" in his farewell address to the
nation in 1961, President Dwight D. Eisenhower -- retired five-star general and
war hero Eisenhower -- warned of the incestuous ties that had formed between the
Defense Dept. and the "permanent armaments industry" birthed by World War II.
Eisenhower worried that the Pentagon's pursuit of its bureaucratic imperatives
could combine with arms makers' pursuit of profit to thrust the U.S. into a war
the country did not need and perhaps could not win.

The big weapons manufacturers that alarmed Eisenhower have shrunk in number and
size since the Cold War ended. But the emergence of the private military company
has extended the relationship that so worried Eisenhower, pushing it beyond the
executive suite and factory floor onto the battlefield itself. The PMCs'
adaptability is politically as well as militarily useful to the government. Why
take the heat of calling up reservists when you can summon civilians-for-hire?
Why try to persuade Congress to sanction the use of U.S. troops in Colombia's
war on narco-guerrillas when you can send in contractors to spray coca fields
and train paramilitary groups -- as both the Clinton and Bush Administrations
have done?

The new military-industrial complex seems to pose at least as much danger to
itself as it does to society. Contractor no-shows in Iraq have jolted U.S.
military planners who expected a repeat of Brown & Root's yeomanlike performance
in the Balkans. Says Brooking Institution's Singer: "Now that the Army's eyes
have been opened up on this, they are thinking through other scenarios, with war
in Korea being not only the most likely but the most worrisome possibility."

If conditions in Iraq continue to deteriorate, plenty of other people will be
focused on whether the policy of replacing soldiers with private contractors,
even in support roles, can be taken too far. The ultimate fear, of course, is
that contractors under extreme duress will flee en masse, exposing U.S. soldiers
to catastrophic risk -- a disastrous outcome that not even Eisenhower foresaw.

By Anthony Bianco & Stephanie Anderson Forest
With Stan Crock in Washington and Thomas F. Armistead in Iraq

[2RHPZ]

Field Manual No. 3-100.21

Contractors on the Battlefield

http://www.adtdl.army.mil/cgi-bin/atdl.dll/fm/3-100.21/toc.htm