Privatized logistics support and the CF

Dave Perry, of Dalhousie's Centre for Foreign Policy Studies, the Canadian Naval Review, and the informative and under-appreciated online forum Broadsides, recently wrote a research paper on a topic not covered by a single other student of Canadian defence issues: the CF's reliance upon and utilization of private military firms (PMF's), or "contractors" as they're sometimes known. It's entitled "Contractors In Kandahar, Eh? Canada's 'Real' Commitment To Afghanistan," and it's worth a read if you're interested in how caps in personnel and budget numbers have necessitated the use of PMF's, while failing to anticipate some of the repercussions of that trend.

Perry traces the pedigree of the Canadian program back to the much-maligned American example, and details our brief history with contracted logistics support. He explores some of the concerns with the current arrangement, and makes recommendations to policy-makers on how to proceed in the immediate future.

I'm not going to address all of that, since most of my readers aren't interested in reading an academic follow-on to the paper, and I'm quite frankly not interested in taking the time to research and write one. Welcome to the world of unpaid, part-time punditry, folks.

But what I will do is point out some of the information I found most interesting, and the high-points of an e-mail conversation I had with Mr. Perry after sending him follow-on questions. If logistics bore you, you know where the scroll bar is. I'd suggest that since this issue has a noticeable effect on deployed operations, it would be worth a bit of a bore to learn something about it, though.

First of all, I noted with some interest that the trend towards having uniformed personnel focus specifically on the tasks only they can do continues to gain momentum. The intent in Canada is to "free up military personnel for employment where their military skills are most needed and allow more concentration on the preservation of support-to-war-fighting kills in our support forces." All well and good, that, except that the reality is the aforementioned intent is driven by budgetary and manning concerns, rather than by an inherent desire on the part of deployed military commanders to have more of their services delivered by the private sector rather than by soldier, sailors, and airmen in support roles. In the case of Canada's CANCAP logistics support program, necessity really was the mother of invention.

Secondly, the decision to utilize civilian contractors in both Kabul and Kandahar was "in an apparent contravention of the mandate that CANCAP was to be used in areas that were both stable and secure." Given that a contractor was likely injured in a rocket attack in 2003, this provision of the contract should receive some attention.

Thirdly, the uses to which PMF's have been put in deployed operations truly highlights the profundity of the challenges faced by a skeletal CF:

Thus, a decision was made to utilize a firm without previous experience with the CF, without knowing whether it was capable of performing adequately, and in one third the time required under the program, all in an area of questionable safety, because there was simply no other way for the military to arrive in time...It is perhaps little wonder then, that the commander of the initial Kabul deployment found that the program was “unable to fulfill many of DND’s requirements.”

Ready, fire, aim. Not the first time that's been heard, eh?

Fourthly, the Canadian Forces has devoted over 22% of the total cost of recent operations dating back to the Balkans towards private logistics, whereas the U.S. program represents less than 5% of their expenditures. Obviously we have some work to do on achieving efficiencies. Furthermore, the CANCAP program doesn't seem to have been compared by DND with any other support options in terms of costing. Given the fact that this is a $100 million per year program, or more, that makes absolutely no sense to me. That is to say, the annual budget of $40M has more than doubled to $100M, as far as I can tell, with no costing of alternatives. Of course, I'm talking about hypothetical alternatives for benchmarking purposes, since there's no immediately practical alternative to the current situation.

Perry's article was so broad, covering so much new ground, that I just threw questions at him as quickly as they popped into my head (his answers are in italics):

• Which is cheaper, CF or PMF? I suspect this answer differs in the long and short terms.
  
  As you guess, it depends on the short vs. long term, and the issue really invovles your second point. In the short term, the additional expense is roughly 10 times more to use private contractors, depending on a variety of circumstances, and as an official from CANOSCOM put it "in the short term, there is absolutely no business case to be made" for their use. However, the difference is in the long term costs associated with recruiting, training, deploying, CF members, and any and all pension, benefits, etc that go along with that. What you gain is the short term flexibility to surge, as needed, without any of the long term costs of actually upping the manning limits and increasing the support cohort. More money up front for ops costs, but none of the long term commitment. An interesting point though, is that the use of contractors actually shows up in Incremental mission costs, at its full value, whereas the basic salary of a CF support personnel would not. Not only is it more expensive in the short term, but all the money involved is captured in the incremental missions, so it appears to be even more expensive, compared to a military option.



• If the driving force behind using PMFs is preservation of scarce military resources for the narrowest military purposes, would it not make sense to simply have a higher maximum manning limit and staff the positions with the more flexible uniformed personnel?
  
  Of course. However, we all know, this isn't really an option. the recruiting now is, rightly or wrongly, being driven by combat arms needs for Afghanistan, and as the appetite suppressant has demonstrated, even that is challenging in the extreme. An interesting point that I encountered after writing that article, was that CANOSCOM views the contracting today as a direct result of ASD measures in the 1990s. When the Finance budget slashers came looking to cut budgets, DND heavily chopped the support trades because they felt they could get away with it by outsourcing base logistics in Canada. The crunch of that is being felt today by a support capability that is currently too small to support the CF without contracting. Another point on this issue, that came out of a RAND report on outsourcing in the US, is that no matter how many more troops are added, the military will most likely never go back, unless directed, to increasing its support functions. If it has the option of adding more people, the military will add them to the areas that can't be supplemented with contractors, rather than address shortfalls in logisticians.



• Why the reliance on a single all-encompassing contract? Why not customize as the unique needs of each mission become apparent?
  
  This is really interesting. In short, it was done because the CANCAP program was modeled very closely on the LOGCAP program, and at that time, conventional wisdom suggested that dealing with an overall, single point of contact as the program's contract integrator made the most sense. Work with one person you become familiar with, because at all costs you want reliability with you are deploying, along with the ease of dealing with one company. Effectively, the contract is customized for each mission, because the military can pick and choose which services it wants provided, to what standard, etc, according to specific task orders for each mission, within the greater program structure.
  
  However, you might have read that the US Army recently, under their newest outsourcing venture, LOGCAP IV, went to three competing companies, including KBR and DYNCORP, the two that previously held exclusive contracts under previous incarnations of the program. Each is basically able to bid against the other for a specific task order, but so far as I understand it, they are approved prime contractors, that can provide specific services. The idea being of course, that with competition, they can keep the Iraq-like cost overruns, overbilling, etc. down. I've heard that the idea of giving the new contract to 2 corporations is being considered for Canada, as is restructuring the program to include a domestic component, specifically for Arctic operations. Having just returned from there, I can tell you that it's just as expeditionary as Afghanistan, so this makes a lot of sense to me. The program managers, however, are awaiting the release (if it comes) of the Canada First Strategy, so the program will be in accordance with political direction.



• Does the use of contractors not cannibalize the already strained support classifications in the CF, by giving private firms incentive to recruit the best and brightest uniformed personnel?
  
  This depends on who you ask. The companies say that they don't directly target serving members and no one retires to work for them that wasn't already planning on doing it anyway, but it frequently pops up in discussion about the dangers of using contracted logistics. There hasn't been as much discussion of this lately as there was a few years ago amongst the talk about JTF2 quitting for private companies (apparently this was resolved with a combination of the retention bonuses, and a saturation in the marketplace).

Perry goes on to make a telling comment:

I think, personally, the most important issue at stake here, is that the decision to go down the contracting route, given the challenges/dangers exposed by contracting in Iraq, is that this needs to be done with our eyes open, recognizing the risks.
If you look at the American position, they literally can't deploy anywhere without a legion of contractors, full stop. They haven't looked at a cost comparison, because the chances of actually replacing these personnel with uniforms is virtually zero, so why bother? [Babbler's highlight]

I sincerely hope that this issue is being properly thought through, with all risks being considered before a decision to deploy the CANCAP program is made, but as various instances in Afghanistan make apparent, it seems that the personnel situation is driving the decision making process, and evolving the program in mid course.
If a new program evaluates the options and risks, and decides to specifically allow deployment to dangerous theatres, and I can't imagine that it won't be, there will at least be a reference point, and policy direction.

The defining advantage of PMF's is the ability of a cost-conscious military to "surge" without incurring the permanent and ongoing costs of increased military manning in a time of spiking op tempo. Of course, that's the rationale for having a Reserve Force as well, something that I believe has been missed in all this evaluation and the rush to "civilianize" the more mundane support functions. The obvious downside, though, is that military personnel are more utilitarian than civilians on a deployed operation: in the final analysis, you can hand them a rifle and order them to man a post. Try doing that with your civilian cooks.

I will be watching further developments on this topic, one of ever-expanding significance, with interest. And I think congratulations are in order to Dave Perry for opening this can of worms for study. It's one hell of an issue, and without academic, bureaucratic, and soldierly review, it's not likely to be handled in the best way possible.