[ Pobierz całość w formacie PDF ]
.After having held a support contract for a long time the contractor can claim ‘unique expertise’ which influences contract rebids (Singer 2003, 155).High transaction costs Closely connected to a lack of competition is the problem of high transaction costs for switching providers of military services from in-house to an external provider or from one external provider to another.Theoretically, the military could achieve savings by constantly switching to providers, which offer better value for money.For standardized goods and services and business relationships there are cost saving opportunities of watching the market and frequently switching providers, but even so, the costs of switching (transaction costs) need to be taken into account.Transaction costs can easily nullify potential advantages (Mowshowitz 2002, 110).Many military related services are not standardized and it is not easy to switch providers, especially if a lot of initial capital is needed for the provision of services.For example, once a company has been contracted to build and operate an expensive military training facility, it would be uneconomical to switch to another provider.Many military service contracts extend over ten or more years anyway, making switching providers very difficult and very expensive.Bad conduct of contractors The US military uses several regulations and contract vehicles that shall ensure that it gets a fair deal from its contractors.Unfortunately, there are many contracted companies which take advantage of poor oversight and unclear regulations.This ranges from bending some regulations to outright fraud.Pratap Chatterjee describes various methods companies like KBR employ todefraud the US military in Iraq.For example, orders are chopped into several orders so that they are below the $2,500 threshold for competitive bidding.When KBRwas contracted to provide such a simple thing as ice to the US forces in Iraq, the company set up a huge ice-producing plant, imported machinery for it from Texas,Implications147and employed 28 people for running the plant (Chatterjee 2004, 34).There are lots of stories of SUVs abandoned in Iraq because someone forgot a spare tire and also other forms of expensive waste, which is encouraged by cost-plus contracts (Hartung 2004).The rigging of tests for new weapons systems and all kinds of overcharging for not delivered or low quality goods and services has already been mentioned in this book on various occasions.The overall impression is that bad conduct of contractors is at least not unusual.The Elusive SavingsSome critics like John Tepperman claim that ‘virtually every time the Pentagon has bet on PMCs, it has failed to save the money it expected’.He adds ‘The Defense Science Board has predicted that the Pentagon would save $6 billion from outsourcing, but this figure later turned out to be 75 per cent too high’ (Tepperman 2002, 11).And Peter Singer sums up ‘All too often, it [the Pentagon] outsources first and never bothers to ask questions later’ (Singer 2005, 119).In principle, there are procedures in place, which shall ensure cost-savings.The Pentagon and also the British MoD use private-public competitions as aninstrument to determine which services are suitable for privatization and allow cost-savings and which are not.Military personnel ‘compete’ with private providers for certain functions and if the latter are cheaper and have an equal quality standard, the functions are outsourced.Ann Markusen has observed that initial estimates for cost-savings based on public-private competitions tend to be wrong, as they only‘assess the promise of savings rather than their achievement’ (Markusen 2001, 8).The reality is that companies perform best during the competitions.Once they have won the contract the performance drops significantly.She quotes a Center for Naval Analysis which says a ‘study of successive private contracts for maintenance of the Navy’s TA-4J trainers found that the contractors (Lockheed, Burnside OTT,Grumman, UNC) performed better than the Navy in-house team in almost everycase, but that for a period of around two years, contractors’ initial performance was worse than that of the in-house team’ (Markusen 2001, 8).Markusen’s conclusion is that only routine services, which can be easily monitored by the military, tend to be suitable for cost savings, while more complex activities such as weapons system maintenance tends to be ‘extremely expensive’ (Markusen 2001, 16).This is a paradoxical conclusion, as it recommends outsourcing only services which can be done by the armed forces anyway, while it remains unclear how the armed forces could retain or acquire the capability of performing more complex services such as the maintenance of new high-tech weapons.Military Privatization and SovereigntyThe most serious implications of military privatization relate to its weakening of the principles of democratic accountability and sovereignty.Arguably military privatization is different to the privatization of other public assets and services.Its long term consequence could be the re-emergence of medieval style private armies,148War as Businesswhich fight for anybody who can pay them.Military privatization could undermine the democratic control of forces, the nation state and even the international system as it exists since 1648.But how realistic is this scenario? This section discusses the political impact of military privatization with respect to the future of the state’s monopoly of force and democratic accountability.The Future of the Monopoly of ForceDifferent to other areas where privatization takes place such as healthcare, utilities, or public transportation, military privatization and the much more extensive role of private companies in activities relating to national and international security raises some serious questions in respect to the concept of sovereignty and the ability of states to control the use of force.Some writers already see the state wither away as a result of a broad privatization of security in which nonstate forces replace national armies as the dominant actors in warfare (e.g.van Creveld 1991, 196-197).National armed forces could be replaced by mercenary armies led by war entrepreneurs, who work in the best case for the international community as private peacekeepers or in the worst case for the highest bidder.Ultimately, corporations could control powerful military forces for attacking states or each other (Metz 2000, 21).But how realistic is such a scenario and on what kind of assumptions is it based?The definition of the state The argument of the decline of the nation state and the rise of private armies usually rests on a narrow Weberian definition of the state.Max Weber has defined the state through its monopoly on the legitimate use of physical force within a territory.According to Max Weber, it is the de facto monopoly of violence that constitutes the state’s legitimacy and therefore the state as such.Sovereignty means that a state can conduct its own domestic and foreign policies without outside interference.In other words, the sovereign state can determine its own fate.The guarantors of sovereignty are the armed forces which enable a state to defend itself against outside pressure and aggression.By transferring responsibilities with respect to internal and external security to the private sector the state would loose both its internal monopoly of force and its sovereignty regarding the use of force beyond its borders [ Pobierz całość w formacie PDF ]
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.After having held a support contract for a long time the contractor can claim ‘unique expertise’ which influences contract rebids (Singer 2003, 155).High transaction costs Closely connected to a lack of competition is the problem of high transaction costs for switching providers of military services from in-house to an external provider or from one external provider to another.Theoretically, the military could achieve savings by constantly switching to providers, which offer better value for money.For standardized goods and services and business relationships there are cost saving opportunities of watching the market and frequently switching providers, but even so, the costs of switching (transaction costs) need to be taken into account.Transaction costs can easily nullify potential advantages (Mowshowitz 2002, 110).Many military related services are not standardized and it is not easy to switch providers, especially if a lot of initial capital is needed for the provision of services.For example, once a company has been contracted to build and operate an expensive military training facility, it would be uneconomical to switch to another provider.Many military service contracts extend over ten or more years anyway, making switching providers very difficult and very expensive.Bad conduct of contractors The US military uses several regulations and contract vehicles that shall ensure that it gets a fair deal from its contractors.Unfortunately, there are many contracted companies which take advantage of poor oversight and unclear regulations.This ranges from bending some regulations to outright fraud.Pratap Chatterjee describes various methods companies like KBR employ todefraud the US military in Iraq.For example, orders are chopped into several orders so that they are below the $2,500 threshold for competitive bidding.When KBRwas contracted to provide such a simple thing as ice to the US forces in Iraq, the company set up a huge ice-producing plant, imported machinery for it from Texas,Implications147and employed 28 people for running the plant (Chatterjee 2004, 34).There are lots of stories of SUVs abandoned in Iraq because someone forgot a spare tire and also other forms of expensive waste, which is encouraged by cost-plus contracts (Hartung 2004).The rigging of tests for new weapons systems and all kinds of overcharging for not delivered or low quality goods and services has already been mentioned in this book on various occasions.The overall impression is that bad conduct of contractors is at least not unusual.The Elusive SavingsSome critics like John Tepperman claim that ‘virtually every time the Pentagon has bet on PMCs, it has failed to save the money it expected’.He adds ‘The Defense Science Board has predicted that the Pentagon would save $6 billion from outsourcing, but this figure later turned out to be 75 per cent too high’ (Tepperman 2002, 11).And Peter Singer sums up ‘All too often, it [the Pentagon] outsources first and never bothers to ask questions later’ (Singer 2005, 119).In principle, there are procedures in place, which shall ensure cost-savings.The Pentagon and also the British MoD use private-public competitions as aninstrument to determine which services are suitable for privatization and allow cost-savings and which are not.Military personnel ‘compete’ with private providers for certain functions and if the latter are cheaper and have an equal quality standard, the functions are outsourced.Ann Markusen has observed that initial estimates for cost-savings based on public-private competitions tend to be wrong, as they only‘assess the promise of savings rather than their achievement’ (Markusen 2001, 8).The reality is that companies perform best during the competitions.Once they have won the contract the performance drops significantly.She quotes a Center for Naval Analysis which says a ‘study of successive private contracts for maintenance of the Navy’s TA-4J trainers found that the contractors (Lockheed, Burnside OTT,Grumman, UNC) performed better than the Navy in-house team in almost everycase, but that for a period of around two years, contractors’ initial performance was worse than that of the in-house team’ (Markusen 2001, 8).Markusen’s conclusion is that only routine services, which can be easily monitored by the military, tend to be suitable for cost savings, while more complex activities such as weapons system maintenance tends to be ‘extremely expensive’ (Markusen 2001, 16).This is a paradoxical conclusion, as it recommends outsourcing only services which can be done by the armed forces anyway, while it remains unclear how the armed forces could retain or acquire the capability of performing more complex services such as the maintenance of new high-tech weapons.Military Privatization and SovereigntyThe most serious implications of military privatization relate to its weakening of the principles of democratic accountability and sovereignty.Arguably military privatization is different to the privatization of other public assets and services.Its long term consequence could be the re-emergence of medieval style private armies,148War as Businesswhich fight for anybody who can pay them.Military privatization could undermine the democratic control of forces, the nation state and even the international system as it exists since 1648.But how realistic is this scenario? This section discusses the political impact of military privatization with respect to the future of the state’s monopoly of force and democratic accountability.The Future of the Monopoly of ForceDifferent to other areas where privatization takes place such as healthcare, utilities, or public transportation, military privatization and the much more extensive role of private companies in activities relating to national and international security raises some serious questions in respect to the concept of sovereignty and the ability of states to control the use of force.Some writers already see the state wither away as a result of a broad privatization of security in which nonstate forces replace national armies as the dominant actors in warfare (e.g.van Creveld 1991, 196-197).National armed forces could be replaced by mercenary armies led by war entrepreneurs, who work in the best case for the international community as private peacekeepers or in the worst case for the highest bidder.Ultimately, corporations could control powerful military forces for attacking states or each other (Metz 2000, 21).But how realistic is such a scenario and on what kind of assumptions is it based?The definition of the state The argument of the decline of the nation state and the rise of private armies usually rests on a narrow Weberian definition of the state.Max Weber has defined the state through its monopoly on the legitimate use of physical force within a territory.According to Max Weber, it is the de facto monopoly of violence that constitutes the state’s legitimacy and therefore the state as such.Sovereignty means that a state can conduct its own domestic and foreign policies without outside interference.In other words, the sovereign state can determine its own fate.The guarantors of sovereignty are the armed forces which enable a state to defend itself against outside pressure and aggression.By transferring responsibilities with respect to internal and external security to the private sector the state would loose both its internal monopoly of force and its sovereignty regarding the use of force beyond its borders [ Pobierz całość w formacie PDF ]