The DoD has explicitly stated that they aren't in the business of bailing out businesses. The M1/Chrysler evidence to the contrary...
The draft version of the quadrennial study, dated December 2009, expresses the Obama administration's intention to lean on 'market forces' in ensuring America's defense industry does not disappear. It also makes clear the administration is prepared to step in and save firms and sectors deemed critical to national security.
Sounds good, right?
Our engagement with industry does not mean the Department of Defense will underwrite sunset industries nor prop up poor business models," according to the review. "It does mean the Department will create an environment in which our industries, a source of our nation's strength, can thrive and compete in the global marketplace.
"Whenever possible and appropriate, the department will rely on market forces to create, shape, and sustain industrial and technological capabilities, but we must be prepared to intervene when absolutely necessary to create and/or sustain competition, innovation, and essential industrial capabilities," according to the draft QDR, which was obtained by Defense News.
Yow.
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That surge in Afghanistan? Yeah, the contractors are multiplying faster than the troops. Maybe NATO can hire out their defense, eh?
The military is increasingly relying on private security contractors as President Obama ramps up the war in Afghanistan, with contractors now making up as much as 30% of the armed force in the country, a just-released congressional report shows.
In the period roughly tracking with President Obama’s first nine months in office, the number of Defense Department armed security contractors soared 236% — from 3,184 to 10,712 between December 2008 to September 2009. The number roughly doubled between June and September 2009 alone.
The new Congressional Research Service report also calculates that contractors in Afghanistan make up between 22% and 30% of the armed U.S. force in Afghanistan.
The news of the surge in private security contractors comes as the total number of contractors — including those who do construction, cook meals, etc — is also soaring, with over 100,000 already in Afghanistan.
It’s worth noting two points here to clarify the role and makeup of the contractor army: first, 90% of the DOD private security contractors in Afghanistan are Afghan nationals, according to the report. Second, contractors are barred by DOD regulations from taking part in “offensive” operations. However, the numbers in this report refers to armed contractors who may well be taking part in combat.
“Many analysts believe that armed security contractors are taking part in combat operations, arguing in part that international law makes no distinction between the offensive or defensive nature of participation in combat,” the report notes.
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And some of the contractors joining the fray aren't exactly the lads you want your daughter to bring home to meet the folks.
A British private security firm, Sabre International, is sponsoring the employment of Sierra Leoneans for security jobs in Iraq. According to its own website, the company holds multiple aviation security contracts for three airports in Iraq (Baghdad International Airport, Mosul Airport, and Najaf International Airport).
Having undergone two weeks of preparation training, 400 to 1,000 Sierra Leoneans have already been sent to Iraq (and possibly Afghanistan) with a waiting list of over 10,000 who are interested in participating in the program. According to reports, the West African workers will receive $250 a month, $200 of which will be directly deposited into a bank account in Freetown. Compare this to the per capita Gross National Income in Sierra Leone in 2008, which was $320 a year. (Meanwhile, Sierra Leone Members of Parliament are petitioning for monthly salaries of $4,000-$6,000!) It’s no wonder thousands of people have signed up for this program: they are receiving a little less than 10x the amount they would earn in their own country! (Sierra Leone currently ranks 201 out of 210 countries in terms of its GNI per capita). Their salaries will not be taxed and they will be given free accommodation, free medical facility, free transportation, and free insurance. While a fabulous salary in Sierra Leone, their U.S. citizen contractor counterparts are averaging $100,000 a year, possibly in similar roles. In this regard, Sabre might be saving a tidy sum.
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Update
The GAO is helping reclaim lost tax revenue from contractors that are 'offshored' through subsidiaries.
Executives from some of the biggest Defense contractors — including Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and KBR — told GAO that, before the law was passed, they hired U.S. citizens at their offshore subsidiaries as a way to lower their costs and remain competitive. The companies say they only use the offshore subsidiaries to hire employees to perform work overseas.
Overall, GAO said the law is accomplishing its intended effect: forcing offshore companies to share the tax burden for social security, Medicare and federal income tax payments. GAO recommended Congress expand the legislation to force contractors offshore to contribute to state unemployment insurance programs so workers can collect when they lose their jobs.
In 2009, one state, Texas, denied unemployment claims of 140 individuals employed by several of the contractors because they were employed by offshore subsidiaries that did not contribute to the state’s unemployment insurance programs. GAO chose Texas because several major contractors have corporate offices there.
By: Brant
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