Addicted to Contractors

Bring up the wars in Iraq and Afghanistan, and one of the first things bound to come up is contractors — companies such as Blackwater/Xe, DynCorp, and ArmorGroup. But what most Americans do not realize is that they’ve only seen the tip of the iceberg. The United States has become addicted to contractors — and it’s an unsustainable habit.

In 2009, contractors accounted for 48 percent of the Defense Department’s workforce in Iraq and 57 percent in Afghanistan, according to the Congressional Research Service. The State Department and U.S. Agency for International Development (USAID) use them extensively as well. Compare that with the height of the Vietnam War, when contractors accounted for 13 percent of the U.S. presence on the ground; today, contractors in Iraq and Afghanistan outnumber American men and women in uniform.

In addition to providing security, contractors feed, clothe, and house U.S. troops; they train army and police units, spearhead development projects, and even oversee other contractors and subcontractors. Without contractors, the United States would undoubtedly need a draft to ramp up its troop presence in Afghanistan.

Waging war through contractors also means a lot of waste. Money must change hands multiple times in a foreign country — a standing invitation for corruption. The contracting apparatus spawns a web of complex financial transactions that the U.S. Congress cannot effectively oversee. Funding it is equally problematic; Washington continues to finance the struggle against terrorism through supplemental appropriations as though they were emergency operations. As the Special Inspector General for Iraq Reconstruction (SIGIR) has painstakingly documented, throwing taxpayer money at a problem in this fashion has led to astonishing waste, fraud, and abuse. Unless something changes, Afghanistan will be no different.

But perhaps most alarmingly, Washington’s addiction to outsourcing has rendered much of its war-fighting wholly opaque. Despite having spearheaded the Federal Funding Transparency and Accountability Act (FFATA) as a senator, Obama is now leading a war in Afghanistan whose funding is effectively a black hole. The website USAspending.gov, created by FFATA, provided data for the analysis below. Yet information on subcontracts, the vehicle for operationalizing most contractor spending, was supposed to be made available to the public by January 2009. Nearly a year later, it remains shrouded in secrecy (the site is still “under development“).

This means that taxpayers have little information about whom their government is paying to carry out the counterinsurgency campaign in Afghanistan. Thanks to USAspending.gov, we can at least follow the money flowing through prime contracts and grants for the main government agencies involved in the reconstruction of Iraq and Afghanistan. Here’s a taste of how bad it has gotten:

In 2008, 82 percent of the Defense Department’s budget went out the door in contracts and grants. About 83 percent of the State Department’s requested budget did the same. At USAID, contracts and grants represented 96 percent of the net cost of operations. The high percentages in part reflect the financing of “contractors’ wars” through supplemental funding legislation.

The steep rise in contracts and grants as a percentage of budgets from 2003 to 2008 reflects the full costs of fighting two contractors’ wars simultaneously. Foreign policy has been effectively privatized.

This graph shows the ratio of federal money to federal employees, a figure that has grown dramatically over the last 50 years as spending has far outstripped human capacity to oversee it. Far from easing that burden on federal employees, contractors make the work of oversight even trickier in some respects. The U.S. federal government had the same number of full-time employees in 2008 as it did in 1963, yet the federal budget has more than tripled in real terms since then. The gap in service delivery is, in part, filled by contractors. But each federal employee is consequently responsible for the oversight of three times the taxpayer money that they would have been a half-century ago. The U.S. government today is but a shadow of its former self, with “big government” defining only the spending.

Methodology

All data on contracts and grants come from USAspending.gov (access dates: Sept. 24, 2009, for Defense and State Department data, and Oct. 1, 2009, for USAID). Although the site does not indicate such, USAspending.gov is a live data stream, and numbers can change from month to month for fiscal years that have long closed out. Yes, this is problematic for the cause of transparency.

Defense Department: Budget figures are from the Government Printing Office online at www.gpoaccess.gov. These figures are from the Defense Department’s discretionary budget authority and do not include emergency funding requests, discretionary outlays, or mandatory outlays.

State Department: Budget figures were taken from the State Department budget online at http://www.state.gov/s/d/rm/rls/bib/.

USAID: Budget figures were taken from USAID Performance and Accountability Reports, online at http://www.usaid.gov/policy/afr08/. The figure used is “Net Costs of Operations” listed under the Statement of Net Cost.

Data on federal employees were taken from historical tables in the president’s budget, online at http://www.whitehouse.gov/omb/budget/Historicals/ (see tables 17.1 and 17.2). Calculation of total federal employees was by end-of-fiscal-year count from 1945 to 2005; 2008 data was counted by number of full-time equivalents.