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Reason Foundation

Rebuilding Iraq

Privatization and the role of contract services

Adrian Moore
April 17, 2003

Fighting the war in Iraq has entailed an unprecedented use of private contractors in military operations. Several recent articles examine how this is both reshaping military operations and raising new challenges.

The key issue is that while using contractors allows our military unprecedented flexibility and greater and more focused capabilities, many have wondered if the systems were in place to manage the contractor workforce and make sure the contractors did not impede military operations. Though so far as the fighting has unfolded there have been no stories of such problems.

Now, rebuilding Iraq is going to be a major undertaking, dwarfing that in Afghanistan and the Balkans. And, as it has been throughout the modern era, private contractors will do the heavy lifting on rebuilding infrastructure and re-establishing basic services.

That is already raising a lot of questions. Who will pay for the rebuilding? It looks like a lot of the burden will be paid for with Iraq's own oil, at least initially, but how much is the US going to pay for rebuilding after already paying for the war?

A lot of people are also worried about favoritism and other problems in the contracting process, worries that are a more urgent version of worries that are often raised about privatization. A big issue is that most of the potential contractors are big contributors to the Administration. That can be a problem in a contracting process, but I suggest two answers.

First, giving money is not per se a problem. Just about everyone who gets money from the government lobbies for it in some way, from contractors to public employee unions. What is the alternative to avoid this? No one has suggested any competent companies that don't lobby. Really, the issue is more prosaic, and is that contracts need to be issued in a transparent process that lets the public see that the best companies are being picked for the job.

Second, the same principle applies to the contracts themselves. The various federal agencies involved need to be sure they are not writing blank checks, but that they are getting what they are paying for and demanding proven results for at a competitive price. It will be important to focus on real needs and priorities and spend the money wisely.

It is interesting to me that in the very articles that raise myriad concerns about private firms profiting from the rebuilding of Iraq repeatedly highlight how vital their role is. The private sector is the only realistic means to rebuild Iraq.

The debate is really only beginning. Is this a role the US should play? Is it a chance to see how US private industry can help the government establish a more developed and market-based economy in Iraq? What do you think the opportunity or risk is?

I think there is an opportunity here to use smart contracting in the rebuilding as a catalyst to creating infrastructure and services built on property rights that, combined with a rule of law, will lay the foundation for Iraq to find its own democracy and prosperity.

Adrian Moore is Vice President of Reason Foundation.


Adrian Moore is Vice President, Policy


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