US pays millions for cost overruns for security in Iraq

This is from the Washingtonpost.

Blair's support for Bush in Iraq may pay off for some UK security firms. The Iraq war has been a great boon for advocates of privatisation. Jobs that used to be performed by the military are now performed by private contractors even security jobs. The UK contractors will be able to fall back on the NHS in the UK if wounded but I wonder what happens with wounded US contractors? Hopefully, they have good health insurance included in their contracts.

U.S. Pays Millions In Cost Overruns For Security in Iraq

By Steve Fainaru
Washington Post Foreign Service
Sunday, August 12, 2007; A01



BAGHDAD -- The U.S. military has paid $548 million over the past three years to two British security firms that protect the U.S. Army Corps of Engineers on reconstruction projects, more than $200 million over the original budget, according to previously undisclosed data that show how the cost of private security in Iraq has mushroomed.

The two companies, Aegis Defence Services and Erinys Iraq, signed their original Defense Department contracts in May 2004. By July of this year, the contracts supported a private force that had grown to about 2,000 employees serving the Corps of Engineers. The force is about the size of three military battalions.

U.S. officials and company representatives attributed the overruns to the cost of protecting a largely civilian workforce amid an escalating insurgency, as Corps of Engineers commanders demanded more manpower and increasingly expensive armor to guard their field staff.

"To pay a man or a woman to come over here, put the vest on every day and escort military and civilians around the theater, knowing that people want to blow them up and kill them, you gotta pay to get that level of dedication," said Col. Douglas P. Gorgoni, senior finance officer for the Corps of Engineers in Iraq.

Months ago, the military recognized that the two overlapping contracts were costing millions of dollars in duplicate spending and sought to consolidate them. The result is still the single largest security contract in Iraq. The new contract will save $7 million a month, according to the Corps of Engineers, but will still be worth up to $475 million to the winning bidder.

The Army eliminated Erinys from the competition, but the company has held up the award by filing three separate protests against what it described as a "fundamentally flawed" procurement process. The protests have forced the military to extend Erinys's contract. The company has received $169.4 million since the beginning of that contract, $120 million more than originally budgeted.

"Quite frankly, they are very extensive, very lucrative contracts. Why would they not try to protest them?" Gorgoni said, adding that he could not comment on the merits of the protests. Aegis is a finalist for the new contract, according to sources familiar with the bidding process.

The private security industry has surged in Iraq because of troop shortages and growing violence. After the March 2003 invasion, hundreds of foreign and Iraqi companies, many of them new, signed contracts with the U.S. and British militaries, the State Department, the Iraqi government, media and humanitarian organizations and other private companies.

The size of this force and its cost have never been documented. The Pentagon has said that about 20,000 security contractors operate in Iraq, although some estimates are considerably higher. Private security contractors have been used in previous wars, but not on this scale, according to military experts. Several lawmakers have recently sought to regulate the private security industry and account for billions of dollars spent on outsourcing military and intelligence tasks that once were handled exclusively by the government.

Rep. Marcy Kaptur (D-Ohio), a member of the House Appropriations defense subcommittee who was briefed by Aegis and the Corps of Engineers during a February visit to Iraq, said lawmakers are only now realizing the scope of private security there. "We're in the wake of this speedboat. We can't even catch up to the contracts," said Kaptur, who opposes the use of private forces and initiated an audit of Aegis by the Special Inspector General for Iraq Reconstruction, the second the agency has conducted.

The payments to Aegis and Erinys "are immense and probably shocking to a lot of people, but they represent just two companies within one sector," said Peter W. Singer, a Brookings Institution senior fellow who wrote a book on private security and has advocated greater oversight of the industry. "We're talking tip-of-the-iceberg stuff here. That's pretty disturbing when you begin to extrapolate it out."

Company representatives said the contracts were expanded to confront the escalating insurgent threat. "We're fulfilling the need as directed by the client," said Kristi M. Clemens, Aegis's Washington-based executive vice president. She said costs rose in line with the Corps of Engineers' security demands, including a request for additional armored vehicles that cost roughly $150,000 and are manned by guards who earn $15,000 a month. "It's expensive to operate in a high-risk area," Clemens said.

The chairman of Erinys, Jonathan Garratt, wrote in an e-mail that "the Army has increased the volume of services in response to the security situation in Iraq" since the company was awarded its contract. "Erinys has provided the increased services as requested by the Army in properly-documented change orders," he wrote.

Aegis and Erinys work side-by-side in Baghdad's Green Zone. The Corps of Engineers is made up primarily of civilians and does not have enough resources to provide its own security, officials said. The military has said the use of private security forces ultimately saves money and frees up troops for more urgent tasks, such as fighting the insurgency.

Aegis signed its original contract in May 2004 with the Iraq Project and Contracting Office, a Defense Department agency created to manage reconstruction projects. The initial contract was for $92.3 million, according to Aegis and the Corps of Engineers, and included options for two additional years that raised the total to $293 million. Because of the additional workload and extensions, the military has paid Aegis $378.5 million, or $85.5 million more than originally budgeted.

In October 2006, according to the Corps of Engineers, the project office was folded into the Gulf Region Division of the Corps of Engineers, which had an existing security contract with Erinys also dating to May 2004. That contract was initially worth $15.2 million in the first year and included options for two additional years that raised the total to nearly $49 million, according to Erinys. Through July, the military had paid Erinys $169.4 million, or $120 million more than originally budgeted.

"The disbursements are larger than the base contracts because over time the security mission requirements expanded and the contract has spanned a total of three-plus years," Gorgoni said. "Both contracts were correctly written in such a manner to allow rapid expansion to meet the insurgent threat."

The merger left the Corps of Engineers with two private security firms. Erinys continues to provide personal protection for several Corps officials involved in reconstruction. Aegis runs security details for other Corps personnel and operates more than a dozen reconstruction liaison teams, in which guards armed with assault rifles assess rebuilding projects throughout the country. Aegis also operates the Reconstruction Operations Center, an information hub in the Green Zone that provides intelligence and tracks the movements of security details across Iraq.

Corps of Engineers officials said both companies have been essential to the reconstruction effort. "Without private security, our mission would be much more difficult and would require coalition forces to be diverted from their assigned combat missions," said Col. Robert Walton, who oversees security operations for the Corps in Iraq.

The military has paid more than $150 million to both companies -- $106.8 million to Aegis and $48.3 million to Erinys -- since the merger, according to the Corps of Engineers. Together, the contracts have a monthly "burn rate" of $18 million. By consolidating, military planners have calculated, the cost could be reduced to $11 million a month.

"Right now, you have two human resources offices, one for Aegis and one for Erinys. It's in the government's best interests that we have one," Gorgoni said. "They have two sets of logistics offices. Each has overhead and administration and management. We're economizing that into one."

Contractor's Casualties in Iraq War

Privatizing the war makes for even more profit making possibilities. It seems that the Iraqi government has little or no control over private security firms. From this article it seems that many do not even bother to get a licence from the Iraqi government. They are exempted from Iraqi law for any misdemeanors it seems. Casualties are not closely monitored and will not be counted in the grim statistics of US and allied losses in Iraq.


Iraq Contractors Face Growing Parallel War
As Security Work Increases, So Do Casualties

By Steve Fainaru
Washington Post Foreign Service
Saturday, June 16, 2007; A01



BAGHDAD -- Private security companies, funded by billions of dollars in U.S. military and State Department contracts, are fighting insurgents on a widening scale in Iraq, enduring daily attacks, returning fire and taking hundreds of casualties that have been underreported and sometimes concealed, according to U.S. and Iraqi officials and company representatives.

While the military has built up troops in an ongoing campaign to secure Baghdad, the security companies, out of public view, have been engaged in a parallel surge, boosting manpower, adding expensive armor and stepping up evasive action as attacks increase, the officials and company representatives said. One in seven supply convoys protected by private forces has come under attack this year, according to previously unreleased statistics; one security company reported nearly 300 "hostile actions" in the first four months.

The majority of the more than 100 security companies operate outside of Iraqi law, in part because of bureaucratic delays and corruption in the Iraqi government licensing process, according to U.S. officials. Blackwater USA, a prominent North Carolina firm that protects U.S. Ambassador Ryan C. Crocker, and several other companies have not applied, U.S. and Iraqi officials said. Blackwater said that it obtained a one-year license in 2005 but that shifting Iraqi government policy has impeded its attempts to renew.

The security industry's enormous growth has been facilitated by the U.S. military, which uses the 20,000 to 30,000 contractors to offset chronic troop shortages. Armed contractors protect all convoys transporting reconstruction materiel, including vehicles, weapons and ammunition for the Iraqi army and police. They guard key U.S. military installations and provide personal security for at least three commanding generals, including Air Force Maj. Gen. Darryl A. Scott, who oversees U.S. military contracting in Iraq and Afghanistan.

"I'm kind of practicing what I preach here," Scott said in an interview on the use of private security forces for such tasks. "I'm a two-star general, but I'm not the most important guy in the multinational force. If it's a lower-priority mission and it's within the capabilities of private security, this is an appropriate risk trade-off."

The military plans to outsource at least $1.5 billion in security operations this year, including the three largest security contracts in Iraq: a "theaterwide" contract to protect U.S. bases that is worth up to $480 million, according to Scott; a contract for up to $475 million to provide intelligence for the Army and personal security for the U.S. Army Corps of Engineers; and a contract for up to $450 million to protect reconstruction convoys. The Army has also tested a plan to use private security on military convoys for the first time, a shift that would significantly increase the presence of armed contractors on Iraq's dangerous roads.

"The whole face of private security changed with Iraq, and it will never go back to how it was," said Leon Sharon, a retired Special Operations officer who commands 500 private Kurdish guards at an immense warehouse transit point for weapons, ammunition and other materiel on the outskirts of Baghdad.

U.S. officials and security company representatives emphasized that contractors are strictly limited to defensive operations. But company representatives in the field said insurgents rarely distinguish between the military and private forces, drawing the contractors into a bloody and escalating campaign.

The U.S. military has never released complete statistics on contractor casualties or the number of attacks on privately guarded convoys. The military deleted casualty figures from reports issued by the Reconstruction Logistics Directorate of the Corps of Engineers, according to Victoria Wayne, who served as deputy director for logistics until 2006 and spent 2 1/2 years in Iraq.

Wayne described security contractors as "the unsung heroes of the war." She said she believed the military wanted to hide information showing that private guards were fighting and dying in large numbers because it would be perceived as bad news.

"It was like there was a major war being fought out there, but we were the only ones who knew about it," Wayne said.

After a year of protests by Wayne and logistics director Jack Holly, a retired Marine colonel, the casualty figures were included. In an operational overview updated last month, the logistics directorate reported that 132 security contractors and truck drivers had been killed and 416 wounded since fall 2004. Four security contractors and a truck driver remained missing, and 208 vehicles were destroyed. Only convoys registered with the logistics directorate are counted in the statistics, and the total number of casualties is believed to be higher.

"When you see the number of my people who have been killed, the American public should recognize that every one of them represents an American soldier or Marine or sailor who didn't have to go in harm's way," Holly said in an interview.

According to the logistics directorate, attacks against registered supply convoys rose from 5.4 percent in 2005, to 9.1 percent in 2006, to 14.7 percent through May 10. The directorate has tracked 12,860 convoys, a fraction of the total number of private supply convoys on Iraqi roads.

"The military are very conscious that we're in their battle space," said Cameron Simpson, country operations manager for ArmorGroup International, a British firm that protects 32 percent of all nonmilitary supply convoys in Iraq. "We would never launch into an offensive operation, but when you're co-located, you're all one team, really."

ArmorGroup, which started in Iraq with 20 employees and a handful of SUVs, has grown to a force of 1,200 -- the equivalent of nearly two battalions -- with 240 armored trucks; nearly half of the publicly traded company's $273.5 million in revenue last year came from Iraq. Globally, ArmorGroup employs 9,000 people in 38 countries.

The company, with headquarters at a complex of sandstone villas near Baghdad's Green Zone, is acquiring a fleet of $200,000 tactical armored vehicles equipped with two gun hatches and able to withstand armor-piercing bullets and some of the largest roadside bombs.

The U.S. Labor Department reported that ArmorGroup has lost 26 employees in Iraq, based on insurance claims. Sources close to the company said the figure is nearly 30. Only three countries in the 25-nation coalition -- the United States, Britain and Italy -- have sustained more combat-related deaths.

A Turning Point

In spring 2004, Holly built the logistics network for Iraq's reconstruction from scratch. The network delivered 31,100 vehicles, 451,000 weapons and 410 million rounds of ammunition to the new Iraqi security forces, and items as varied as computers, baby incubators, school desks and mattresses for every Iraqi government ministry. The network came to rival the military's own logistics operation.

Holly also discovered he was at the center of an undeclared war.

He assembled a small private army to protect materiel as it flowed from border crossings and a southern port at Umm Qasr to the 650,000-square-foot warehouse complex at Abu Ghraib and on to its final destination.

"The only way anything gets to you here is if somebody bets their life on its delivery," said Holly, a burly civilian with a trimmed gray beard who strikes a commanding presence even in khakis, multicolored checked shirts and tennis shoes. "That's the fundamental issue: Nothing moves anywhere in Iraq without betting your life."

The most dangerous link in Holly's supply chain is shipping. It requires the slow-moving convoys to navigate Iraq's dangerous roads. Holly erected a ground-traffic control center in a low-slung trailer near his office in Baghdad's Green Zone. The security companies monitor their convoys in air-conditioned silence, which is shattered by a jarring klaxon each time a contractor pushes a dashboard "panic button," signaling a possible attack.

On May 8, 2005, after dropping off a load that included T-shirts, plastic whistles and 250,000 rounds of ammunition for Iraqi police, one of Holly's convoys was attacked. Of 20 security contractors and truck drivers, 13 were killed or listed as missing; five of the seven survivors were wounded. Insurgents booby-trapped four of the bodies. To eliminate the threat, a military recovery team fired a tank round into a pile of corpses, according to an after-action report.

The convoy had been protected by Hart Security, a British firm that used unarmored vehicles. Within a month, another Hart-led convoy was hit. The team leader informed the ground-control center by cellphone that he was running out of ammunition. He left the cellphone on as his convoy was overrun.

"We listened to the bad guys for almost an hour after they finished everybody off," Holly said.

The attacks represented a turning point in the private war.

Holly vowed he would never again use unarmored vehicles for convoy protection. He went to his primary shipper, Public Warehousing Co. of Kuwait, and ordered a change. PWC hired ArmorGroup, which had armed Ford F-350 pickups with steel-reinforced gun turrets and belt-fed machine guns.

Other companies followed suit, ramping up production of an array of armored and semi-armored trucks of various styles and colors, until Iraq's supply routes resembled the post-apocalyptic world of the "Mad Max" movies.

Privatization and Contract workers in Iraq War

If the US driver gets 2000 a week and the Filipino 500 for the same job the contractor saves 1500 a week by hiring the Filipino. It is not surprising that so many of the workers are non-US and from third world countries. The foreign workers are much more exploitable.



In privatized US war, foreigners do most of dying
23 May 2007 15:00:33 GMT
Source: Reuters



More By Bernd Debusmann, Special Correspondent

WASHINGTON, May 23 (Reuters) - The war in Iraq is killing nine civilian contractors a week on average, roughly three times the rate of last year, and U.S. government statistics show that non-Americans do most of the dying.

The contractors -- mostly Iraqis and nationals from more than 30 developing nations -- perform jobs from guarding senior U.S. officials to translating, cooking meals, driving trucks, cleaning toilets and servicing weapons systems and computers.

For every American civilian killed in Iraq in the first four months of this year, according to the statistics, four foreign contract workers died.

Official figures show that 916 civilian contractors died from the beginning of the U.S.-led war in March 2003 to April 2007 -- at a steadily accelerating pace.

Of those killed, 224 were U.S. citizens, according to a count provided by the Department of Labor to the Special Inspector General for Iraq Reconstruction (SIGIR).

In comparison, the U.S. military death toll stood at more than 3,400 by the end of April.

Rising contractor casualties reflect increased insurgent attacks on "soft targets" and the relentless growth of private security companies which now field close to 130,000 contractors who support 150,000 U.S. troops -- an unprecedented ratio in modern U.S. history.

"Contractors have provided the people, the capability and the capital equipment that has made reconstruction and indeed the entire war effort possible," said SIGIR assistant inspector general Joseph McDermott. "The reconstruction program in Iraq has been carried out literally under enemy fire."

Contractor deaths are recorded by the Department of Labor on the basis of claims filed under an insurance policy, the Defense Base Act, that all U.S. government contractors and subcontractors working outside the United States must take out for their civilian employees.

It was the first time that the Labor Department had broken out the number of Americans killed. In previous years, it said its database was not set up to track nationalities.

COMPLAINTS OVER PAY, CONDITIONS

No single government agency keeps track of how many nationalities work alongside the U.S. military but officials say the overwhelming majority are Iraqis and TCNs (third country nationals) from developing nations as far apart as Chile and Nepal, Colombia and India, Fiji and El Salvador.

Filipinos make up one of the largest single groups -- 7,000 by one count -- and have been among the most vocal in complaining over disparity of pay and of working conditions inferior to those of contractors from the United States and other Western countries.

Two years ago, hundreds of Filipinos staged a strike at a U.S. camp at Taji north of Baghdad.

Complaints about low pay -- in many cases a fraction of what U.S. and other Western contractors make -- and poor conditions have also come from Ugandans, Chileans and Colombians.

Private security companies place pay disparities in the context of skill levels, training and relative income levels in the United States and developing countries. They see the search for low-cost labor as standard business practice.

"There is globalization ... as the companies simply look for the most cost-effective way of doing things," said Doug Brooks, president of the International Peace Operations Association, a trade group for 35 private security companies.

"You are looking for people who can do the job wherever you can (find them) and you pay them quite well. So an American can expect to double their salary working in Iraq and an Indian or a Bangladeshi to get 10 times their national salary by going to Iraq."

That means a Filipino might drive a truck for $500 a week along the same route an American drives his truck for $2,000 a week. The risks are the same -- high and rising: attacks on convoys have increased sharply over the past few months.