WHILE most Americans are aware of the controversy over the role of the private security company Blackwater in Iraq, probably few understand that armed contractors in Iraq are just the tip of an iceberg. Across the globe, in everything from diplomacy to development to intelligence, contractors are a major American presence, and only a small fraction of them carry weapons. American foreign policy, to a great extent, has been privatized.
The charts below, based on figures from the Federal Procurement Data System, tell the story. In 2005, federally financed contractors were working in every United Nations-recognized country except Bhutan, Nauru and San Marino.
It has become conventional wisdom to blame the Bush administration for the “hollowing out” of government, but this misses the mark. While contract spending has more than doubled since 2001, serious federal efforts to outsource began under President Bill Clinton.
Nor is contracting necessarily bad: United States money creates jobs for the local population, and humanitarian organizations like Save the Children, CARE and Catholic Relief Services have relied heavily on dollars from Washington. Outsourcing can play to America’s strengths, exploiting our capacity for innovation, flexibility and efficiency.
Yes, as we have seen in Iraq, hiring contractors can lead to severe problems with accountability and fraud. And while steps like making contractors liable for civil penalties may manage some symptoms, they will not cure the disease. We need to devise far better ways of overseeing contractors worldwide.
Some are tempted to turn back the clock and reassert traditional government authority, denouncing private-sector greed and the “coalition of the billing.” But that would be a terrible mistake, for outsourcing is in part a rational response to the new possibilities of the information age. The challenge will be to manage creative forms of collaboration between government and the private sector in ways that serve the public interest.