Why Outsourcing Military Operations is Bunk

September 19, 2003

Comment: #495

Discussion Threads - Comment #s: 169 & 493, 490, 487, 481

Attached References:

[Ref.1] David Morse, "Rumsfeld's McArmy goes to war: The Pentagon's new public-private military was supposed to be a lean, mean fighting machine. It isn't working." Salon.com [Opinion], September 18, 2003


The policy to outsource tasks traditionally done by the uniformed military has been going on for at least 20 years. It is based on the ideological belief that the theoretical efficiency of market capitalism can be transferred to the military. This is bunk.

Like it or not, the military is not a capitalist enterprise. Turning it into a corporatist institution may be good porkbarrel politics, but it degrades the effectiveness as well as the honor of the military profession.

The theoretical efficiency of market capitalism is premised on the necessary assumption that a market exists to impartially adjudicate decisions of many small buyers and sellers. Implicit in this theory is assumption is that no single buyer or seller is large enough to shape the market through his or her decision making activities. Implicit also in this theory is the premise that decision-making information is freely and equally available to all the competitive players in the market.

Neither of these necessary assumptions is remotely met in a military outsourcing transaction. [see threads 1-4]

The military is the sole consumer, and as the sole consumer, it has the power to hide, manipulate, or unequally distribute the decision-making information that goes to the individual sellers "competing" for its business. Moreover, because the single buyer is spending other people's money, the military also has the power to pass economic losses and inefficiencies onto others (taxpayers) while hiding or manipulating the information going to the people who are financing those losses.

Not surprisingly, private, profit-seeking enterprises that get hooked on the drug of the military "market," like makers of military aircraft, evolve patterns of political (as opposed to economic) behavior that are tuned to the peculiarities of this very peculiar market. These "competitive" business practices and the business ethics shaping them are aimed at influencing buyer decisions (e.g., lobbying congress, influence peddling in the Pentagon, revolving door hiring policies, funding friendly tax-exempt foundations to produce studies supporting their welfare, front loading, political engineering, etc, etc see Thread 1.)

Repeated failures of industrial conversion by the defense industry (Gumman's bus fiasco, for example) prove the extent to which that these peculiar business practices and ethics can not be transferred to the more competitive governing behavior in the larger economy.

It should not be surprising that this kind of market devolves instead into a corrupt political-economy (with a big "P" and a little "e") that privatizes benefits while socializing losses. It should not be surprising that the corrupt decision-making patterns evolved in this market thrive year after year because information about the economic consequences is hidden by an impenetrable blanket of unauditable accounting systems that would eventually blow private market decisions to smithereens, as was the case of Enron or the Savings and Loan debacle of the 1980s. [see Comment #169 and Threads 3 &4]

So, given the fact that the fundamental assumptions regarding efficiency in markets can never be met in outsourcing arrangements, it should not be surprising that outsource activities do not deliver their promised efficiencies.

Anyone who thinks that outsourcing is making the military is more efficient today than it was in the past ought to compare the fact that we are overstretched by maintaining 130,000 troops in Iraq [see Comments 493 and 481, especially Attachment 1 to #481], even though we are spending a larger defense budget (after removing the effects of inflation) today that we spent at the height of the Vietnam War, when

  • we had over 500,000 troops in Vietnam,

  • we had hundreds of thousands of other troops in Europe and Asia,

  • we maintained a troop rotation base in the continental United States capable of supporting these forward deployments, and

  • we maintained a huge nuclear deterrent force of missiles, submarines, and aircraft operating on a high-cost, wartime alert status to deter the Soviet superpower.

But the consequences of outsourcing military activities go well beyond the political-economic pathologies now degrading the military's economic efficiency.

Many of the tasks being outsourced can degrade the non-market, mission-oriented activities of the military by causing it to focus inward on force protection, rather than outward on defeating the enemy.

Cooks, laundrymen, and supply specialists in the Army, for example, are supposed to know rudimentary battle tactics and how to use weapons, because in extremis, they will be ordered to fight as infantrymen, as they did in the Battle of the Bulge. Contractors, on the other hand, can not be legally ordered to fight. Moreover, any military training the civilian contractor personnel may have will be an accidental by-product of prior military experience. So, the combat effectiveness of military operations can be compromised in units with outsourced housekeeping tasks, because the tactical operations of the fighting soldiers might be distracted by the increased need to protect non-combatant contractors in the rear areas.

This kind of distracting focus inward on force protection is a particularly acute problem in a guerrilla war, like that evolving in Iraq [see Comment #490], because their are no front lines, and therefore, no rear areas. Everyone is at risk, as the bombing of the UN showed, which greatly complicates the force protection mission of the fighting soldiers. Making this complication worse by outsourcing defies military logic.

In conclusion, economic theory, practical experience, and plain common sense combine to suggest that ideology of outsourcing military tasks in the interests of improved economic efficiency and military effectiveness is a false economy that can increase costs while degrading the military's fighting capabilities.

This may already be happening in Iraq.

To see why, I urge the reader to read Reference 1 below. It was sent to me by a concerned active duty Army Lieutenant Colonel who told me, Reference 1 is "One of the best articles I've read in a while. I don't agree with every point, but believe he [the author] has it about 90% correct."


Chuck Spinney

"A popular government without popular information, or the means of acquiring it, is but a prologue to a farce or a tragedy, or perhaps both. Knowledge will forever govern ignorance, and a people who mean to be their own governors must arm themselves with the power which knowledge gives." - James Madison, from a letter to W. T. Barry, August 4, 1822

[Disclaimer: In accordance with 17 U.S.C. 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only.]

Reference 1

Rumsfeld's McArmy goes to war
The Pentagon's new public-private military was supposed to be a lean, mean fighting machine. It isn't working.

By David Morse
Salon.com [Opinion]
September 18, 2003

http://www.salon.com/opinion/feature/2003/09/18/mcarmy/index_np.html

War, in short, is being outsourced. And although highly profitable, it tends to reward companies that are not particularly competitive in the marketplace. Singer observes that Brown & Root received a $1 billion contract to augment U.S. forces in Kosovo, despite having allegedly failed to deliver, or severely overcharged, in four out of seven of its contractual obligations during the Balkans conflict.

What should not be overlooked is the new hybridized fighting machine itself -- which we might as well dub "McArmy," since it arguably embraces those principles set forth by George Ritzer in "The McDonaldization of Society."

The aim of McDonaldization, Ritzer said in a recent interview with Salon, is to create a highly controlled, hyper-rational distribution system that maximizes efficiency. The skills and the humanity of the employee are supplanted by technology and by a rigid script.

Privatization itself -- apart from McDonaldization -- has led to other problems. Many of the logistical components such as modular barracks, field kitchens, and mail delivery were outsourced to private contractors. The result? Months into the war, GIs were still camped out, still eating the loathed MREs, and are still without adequate water. Mail is backlogged for weeks.

"We thought we could depend on industry to perform these kinds of functions," Lt. Gen. Charles S. Mahan, the Army's logistical chief, told journalist David Wood in an interview for Newhouse Publications last summer.

Similarly stalled is the task of rebuilding Iraq's infrastructure -- outsourced to Halliburton, Bechtel, and other big contributors to the Bush campaign. Baghdad stays paralyzed, without reliable electricity. Even in Basra, where the Shiite clerics were most oppressed by Saddam Hussein, anger is growing against the occupiers. The desert is hot, the stench of sewage ubiquitous, potable water scarce.

In the final analysis, as McArmy demonstrates so poignantly in Iraq, the neoconservative ideology is the expression, not of "free market" capitalism, but of monopoly capitalism as practiced by subsidy-bloated companies like Halliburton and Bechtel, whose insider position allows them to dip into the pockets of American taxpayers.

About the writer
David Morse is a writer based in Storrs, Conn. He is the author of a novel, "The Iron Bridge" (Harcourt, 1998).