No Comment, Six Questions — April 22, 2011, 12:49 pm

One Nation Under Contract: Six Questions for Allison Stanger

Under Ronald Reagan and each of the presidents who followed him, America went on a privatization rampage. At some point, the privatization turned increasingly to core governmental functions: railroads and post offices were followed by a privatization of military security functions and even foreign policy. In One Nation Under Contract, Middlebury College professor Allison Stanger takes a close look at the outsourcing of national security and foreign policy functions in the last decade. I put six questions to Stanger about her new book:

1. You track the growing dependence of the federal government on contractors–from a little more than $200 billion in 2000 to about $440 billion in 2007. What shifts in policy account for this explosive growth in the use of contractors?


The main factor was the privatization of war. Iraq and Afghanistan are America’s first contractors’ wars, with contractors often outnumbering uniformed personnel on the ground in both conflicts. This development is new and unprecedented. At the height of the Vietnam War, contractors represented just 14 percent of the American presence on the ground. Without contractors, we would need a draft to wage these two wars, and with a draft, we would obviously have a very different political situation.

While wartime contracting and successive supplemental appropriations have fueled these dramatic trends, this is not a partisan issue. Democrats and Republicans alike embraced outsourcing the work of government to the private sector whenever possible, both as a perceived cost-savings measure and as a mechanism for getting things done more efficiently. But the unprecedented explosion of contracting—to use Defense Secretary Gates’s language, “willy-nilly” contracting—to wage war in Iraq and Afghanistan was a tale of unprecedented waste, fraud, and abuse (PDF). Taxpayer money obviously cannot be well spent when government is not following the money.

2. Your numbers end during the Bush years–can you carry them forward to the Obama Administration? What difference has Barack Obama made to this process?

There were over 300 reported cases of contracting mistakes or abuses in Iraq from 2003 through 2007. In January 2008, Stuart W. Bowen Jr., special inspector general for Iraq reconstruction, and William M. Solis, director of defense capabilities and management for the Government Accountability Office, testified to Congress that they knew of not a single instance of anyone being fired or denied promotion in connection with those cases. In a stunning confession, the Pentagon itself acknowledged that $8.2 billion of taxpayer money flowed through contracts into Iraq, some in stacks or pallets of cash, without appropriate recordkeeping or oversight. For example, $68.2 million went to the UK, $45.3 million to Poland and $21.3 million to Korea, yet Pentagon auditors were unable to determine why the payments were made. Government knows that something has gone wrong, but it is so short of hands on deck that it cannot do anything.
—From One Nation Under Contract: The Outsourcing of American Power and the Future of Foreign Policy
Reprinted by permission of Yale University Press © 2009 Allison Stanger

The trends mapped in the book have continued unabated under the Obama Administration, and in many ways our dependence on contractors has grown. When the State Department replaces the U.S. military in Iraq, they will be wholly reliant on contractors to pursue the mission. To make matters worse, Congress is currently poised to slash funding for open government initiatives from $35 million to $8 million on President Obama’s watch. If the proposed cuts go through, it would likely close the web site, that made my book possible (I used it to follow the money). The huge irony here is that as a senator Obama championed the legislation (the 2006 Federal Funding Transparency and Accountability Act, or FFATA) that brought into being and as a candidate promised a new era of openness in government.

I am a Vermont-based professor without a security clearance. One Nation Under Contract could not have been written without data, for example, showed that in 2000, the Department of Defense spent $133.2 billion on contracts and by 2008, that figure had grown to $391.9 billion, an almost three-fold increase. From 2000-2008, State Department spending on contracting increased by 431 percent. In that same period of time, contracting at USAID grew a whopping 690 percent.

As I have testified to Congress, has yet to make complete information on sub-contracts available to the public, something FFATA had required by January 1, 2009. Given Congressional investigations (PDF) that revealed how U.S. taxpayer money has been flowing through subcontracts into the pockets of the Taliban—we are ostensibly funding the enemy to fight them–the failure to meet FFATA’s sub-contracts deadline is hardly surprising. Without transparency in subcontracts, we are effectively pouring taxpayer money into a black hole in Afghanistan, with no real means of knowing how well that money is likely to be spent or even who is receiving it. Yet the degree of imperfect transparency that presently exists on is certainly better than having the website entirely shut down.

3. Has the growth in the number of contractors been associated with a growth in the number of people supervising and auditing contracts?

As outsourcing has exploded, the number of people supervising and auditing contracts has actually shrunk. This is because we are involved in a false debate about the size of government in this country today. Government today has never been bigger in terms of the amount of money it spends but it has never been smaller in terms of the number of government employees supervising that spending. For example, the size of the executive branch federal workforce in 2008 was the same as it was in 1963, yet the federal budget in that same time period, adjusted for inflation, more than tripled and the population has doubled. That enormous gap is, in part, filled by contractors.

Above and beyond the predictable waste that occurs when sunlight is hard to come by, there is a larger issue at stake here. It is undemocratic when Congress passes laws to strengthen oversight and accountability and then effectively guts them by failing to appropriate the funds to fulfill the spirit and letter of the legislation. This is not only true for FFATA and transparency. It also holds for the more important aspects of the July 2010 Dodd-Frank Wall Street Financial Reform and Consumer Protection Act, especially the call for a Consumer Financial Protection Bureau. Ordinary Americans lose out when this pattern obtains.

4. Has outsourcing a growing part of the defense budget to private contractors actually saved the taxpayers any money?

Since contractors’ war was something brand new, there were no existing systems in place for overseeing how the money was spent. America’s mission in Iraq was ambitious and exceeded the capacity of our all-volunteer force to execute alone. So we effectively threw money via contracts at the problem. The waste has been unprecedented. For example, the Pentagon has acknowledged that billions of dollars of taxpayer money flowed through contracts into Iraq, some in stacks or pallets of cash, without appropriate record-keeping or oversight. In Afghanistan, taxpayer money has flowed into the pockets of the Taliban through subcontractors. Without a change, there is nothing to prevent the same thing happening in Iraq after U.S. military forces leave.

A big part of the reason that this is happening is that so much of the spending is shrouded in secrecy. There are actually laws on the books that say you are required to provide this information to the public, but no one is demanding they be upheld, and that’s what we need to do. The bipartisan Commission on Wartime Contracting issued an interim report (PDF) on February 24, 2011, basically saying all the things I said on the Daily Show last month—that wartime contracting in Iraq and Afghanistan is a tale of unprecedented waste, fraud, and abuse and demands public scrutiny. But the media didn’t even cover it, largely because they were focused entirely on Charlie Sheen at the time. So it’s not that the information isn’t out there, but we need to pay closer attention to it. When people start paying closer attention, that’s when you’ll see changes take place.

5. How has Congress managed to deal with oversight when almost 40 cents out of every discretionary budget dollar goes to a contractor?

Money’s conquest of American politics has therefore rendered impotent the well-worn prescriptions of the left and the right, which now deliver only scapegoats rather than solutions. That is because the terms of political engagement have shifted dramatically over the past two decades. In the twentieth century, big government was by definition bureaucratic government. Today, government can be “big” in terms of spending while handing all its work over to contractors. In the twentieth century, business and government were adversaries. Today, the wall between the two that may have once existed has become a revolving door and both share common interests. Neither liberal nor conservative visions of good government can be realized so long as government itself is for sale.
—From One Nation Under Contract: The Outsourcing of American Power and the Future of Foreign Policy
Reprinted by permission of Yale University Press © 2009 Allison Stanger

The short answer is they haven’t. Much of the work of government is in private hands, overseen by a corporation’s bottom line rather than by the elected representatives of the American people. The problem is larger than our foreign policy institutions. Across the board, government has been slowly hollowed out. When government is dependent on the private sector to do its daily work, the line between business and government is blurred, and there is nothing to push back against the interests of big money. And yet there’s a big difference between why the private sector exists and why government exists. Government exists to uphold the common good. As Congressman Barney Frank has put it, “government is just the name we choose for the things we do together.” The private sector exists to make money—and we want them to be making money and creating jobs. We just don’t want to confuse business with government. We can’t depend on business to keep us safe. A big problem in this country today is that no one is articulating the case for those things that only government can do well. That we have become one nation under contract is thus an underappreciated aspect of Washington’s dysfunction.

6. You talk about an “iron triangle” that connects Congress, lobbyists, and government agencies that issue contracts. How do you think America can break this up?


The only way to break this vicious cycle is for Americans to stand up and insist on their right to see how government is spending taxpayer money, especially when it is mandated by law. They can start by demanding that the Obama Administration uphold its commitment to open government rather than letting open government die on President Obama’s watch. At present, transparency advocates and Republican Chair of the House Oversight and Government Reform Committee Darrell Issa are the only voices publicly calling for keeping alive. The White House has to date been silent.

Writing in Federalist No. 10, founder James Madison saw what he called the “mischief of factions” being neutralized as the plethora of special interests in vast colonial America cancelled one another out through both federalism and representative government. In twenty-first century America, however, government by contract instead encourages inside-the-beltway special interests to coalesce and carry the day. Defunding transparency will give elites a blank check they should not be given. Rather than sweeping FFATA under the rug, the Obama Administration should instead insist that both its spirit and letter be fully upheld. Self-government cannot function when the American people are not allowed to see how their government works.

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