The private military industry had steadily expanded since its origins at the end of the Cold War, but it has hit new heights in the last three years of the war on terrorism. Indeed, if any operation should have been a purely military one, many thought it would be the response of the United States to Sept. 11, 2001. The military enjoyed broad support with the American people, and the concerns about casualties that had limited military operations in the 1980s and 1990s were set aside.

From the beginning, however, private contractors played key roles in the war in Afghanistan. Their employees deployed with U.S. military forces on the ground (including serving in the CIA paramilitary units that were the first to hit the ground), maintained combat equipment, provided logistical support, and routinely flew on joint surveillance and targeting aircraft. Even the noted Global Hawk unmanned surveillance planes were operated by private employees. The private firms' role in the region continues today, with contractors now part of the CIA/military operation attempting to run down Osama bin Laden and his associates along the Pakistan-Afghanistan border.

In other anti-terrorism operations around the globe, PMFs have played similarly wide-ranging roles. The operations in the Philippines against Islamic guerrillas have DynCorp working on logistics, while other members of the firm are playing a more active role in anti-narcotics and counter-guerrilla operations in Colombia. When the United States deployed a military training contingent to the former Soviet republic of Georgia to help root out radical Muslim terrorists, the team was mostly made up of PMF employees. The Taliban and al-Qaida members unlucky enough to be caught can plan on spending their next years housed in a military prison at Guantánamo Bay, built not by U.S. soldiers but by the KBR division of Halliburton, and interrogated by private contractors from firms like Titan.

In fact, the PMF industry was one of the few whose economic outlook was improved rather than harmed by the 9/11 attacks. While the U.S. and global economy suffered from the shock, the prices of PMFs listed on stock exchanges jumped roughly 50 percent in value, with L-3's even doubling. A number of firms were launched in the aftermath of the attacks, hoping to tap the boom market. One example is Janusian, a British venture that seeks to provide protection and intelligence against terrorist attacks. "The war on terrorism is the full employment act for these guys," one Defense Department official commented. "A lot of people have said, Ding, ding, ding! Gravy train!"

But the Iraq War is where the history books will note that the industry took full flight. Iraq is not just the biggest U.S. military commitment in a generation but also the biggest marketplace in the short history of the privatized military industry. In Iraq, private actors play a pivotal role in great-power warfare to an extent not seen since the advent of the mass nation-state armies in the Napoleonic Age.

Before the war, private firms helped out with an array of tasks -- operating supply lines, running training exercises, and even assisting with the war gaming and battle planning in the Kuwaiti desert that later proved so successful. The huge U.S. Army complex at Camp Doha, where the invasion was launched, was built, operated and guarded by a vast private operation led by a consortium called Combat Support Associates. (While CSA was operating in Kuwait, firms in the consortium were registered as "100 percent Native American-owned" and thus could use Minority Business Enterprise certifications as a way to gain preference in the government acquisition process.) These roles were not without their risks. Even before the battle started, several private military personnel were killed or wounded in live-fire exercises and, in a taste of what was to come, two civilian technicians were murdered by terrorists in a drive-by shooting in Kuwait.

During the major combat operations phase of the Iraq War last spring, private military employees handled everything from feeding and housing U.S. troops to maintaining sophisticated weapons systems like the B-2 stealth bomber, F-117 stealth fighter, Global Hawk UAV, U-2 reconnaissance aircraft, M-1 Tank, Apache helicopter, and air defense systems on numerous Navy ships. While civilians had always accompanied U.S. forces on deployments, all the way back to the sutlers who sold shoes and other consumer wares at Valley Forge, never had the U.S. military been so reliant on outsiders to accomplish its mission. Indeed, the pre-invasion ratio of private contractors to U.S. military personnel in the Gulf was roughly 1 to 10 (10 times the ratio during the 1991 war). Our allies, including the British and Australians, also depended heavily on contracted support.

During the occupation of Iraq, the demand for private assistance skyrocketed, particularly as the rosy scenarios made by political appointees in the Pentagon before the war proved false. Presently, an estimated 15,000 or more private military contractors are on the ground in Iraq, working for tens of companies and their subcontractors, providing tasks that only soldiers once performed. The CPA estimates that after sovereignty is granted to a largely nonexistent Iraqi government at the end of June, these figures may rise to as high 30,000. Jobs such as guarding the Green Zone in Baghdad will be privatized as well. We don't know the exact figures, because the Bush administration maintains no formal tracking of the numbers. The very lack of any accounting illustrates the dire need for better oversight and accountability.

Outsourcing has provided a novel means to reduce some of the political costs of the war. Reserve call-ups are lessened and compromises with allies unnecessary. Any public dismay over casualties is also dampened. Unlike the formal reporting of U.S. military casualties, release of such information is at the discretion of each individual firm. Just as no one knows the exact number of private military contractor boots on the ground, so, too, does no one know the number of killed and wounded. From a survey of industry insiders as well as hometown press reports that sometimes announce the deaths, estimates are that between 30 and 50 private military contractors have been killed in the fighting in Iraq, with tens more killed in accidents. Assuming the rough ratio of killed versus wounded that has held among U.S. troop casualties (1 to 6), this means that upward of 200 to 300 private casualties have gone unreported on the public ledger. That is more than the entire 82nd Airborne Division lost in Iraq over the past year.

Private military firms carry out three crucial functions in Iraq: military support, military training and advice, and certain tactical military roles. It is important to note that official U.S. military doctrine has long held that "mission critical" roles must be kept inside the force. It has also held that civilians accompanying the force should not be put into roles where they must carry or use weapons, allowing the carry of sidearms (that is, pistols) only in the most extraordinary circumstances. But what used to be the exception is now the rule.

Military support firms help with logistics and engineering, as well as assisting with tasks such as tactical and non-tactical vehicle maintenance and repair. The major player in this sector has been Dick Cheney's former firm, Halliburton. Operating under the LOGCAP contract (Logistics Civilian Augmentation Program), Halliburton has done about $6 billion worth of business on Iraq contracts.

Many consider such tasks secondary and in line with the broader military outsourcing of such ancillary jobs as lawn mowing at bases. But they could not be more wrong when it comes to logistics. As official U.S. military doctrine states, "Since the dawn of military history, logistical capabilities have controlled the size, scope, pace, and effectiveness of military operations ... Logistical capabilities must be designed to survive and operate under attack; that is, they must be designed for combat effectiveness, not peacetime efficiency." Or, as Gen. Omar Bradley succinctly put it, "Amateurs talk about strategy; professionals talk about logistics."

Bradley's view was proved right in the days after the Fallujah attacks. In an e-mail obtained by Knight Ridder News, a senior U. S. official in Iraq warned his superiors at the Pentagon's program management office in Baghdad that Halliburton senior executives had said they were "considering withdrawing from the country" because of security concerns. The official noted that a cut in LOGCAP services by the firm would cause the "complete collapse of the support infrastructure" of the operation. Halliburton denied it was considering a withdrawal, while the CPA would not comment. Regardless, it underscored how vulnerable military officers felt the operation had become to outside corporate decision-makers.

As violence spread in the ensuing week, Halliburton and other military support firms put their employees on "lockdown," and operations were suspended in several key areas. After another fuel convoy was ambushed and seven contractors went missing (one, Thomas Hamill, a dairy farmer turned military convoy truck driver, is presently held captive, while four of the civilians have since been found dead), movement by the firms effectively ceased in large portions of Iraq, including the Kuwait-to-Baghdad supply run. As they lie outside the military code of justice, constitutionally, the military simply can not order these firms to take the risks and truck on as it could have done with military units in the past. Officers have begun to worry about what this will mean for critical fuel and supply stocks they depend on to carry out their missions.

While its scope was debatable, the process behind LOGCAP used to be fairly noncontroversial, as the original contract to provide field logistics support to the U.S. Army was competitively bid out. However, eyebrows began to rise when in the months just before the war, nonmilitary tasks such as oil-well fire fighting and then oil field repair and operation were noncompetitively added to the purview of military logistics. Thus, through LOGCAP, Halliburton cornered the logistics and oil services market and has so far gained a 62 percent jump in revenue.

While the defense has been made that Halliburton is the only firm capable of such a job, it is important to note that Halliburton often acts as a middle man, meaning the U.S. military outsources tasks to a firm that outsources them further. Indeed, those who have seen the recent Halliburton commercials on TV, showing proud American employees serving happy soldiers, would be confused by who actually works at the firm's kitchens, usually third-world nationals flown in from places like Bangladesh and the Philippines. The contractor-subcontractor relationship has not always been a smooth one, with U.S. forces at risk of the consequences. In February, several of the subcontractor firms publicly complained that they had not been paid by Halliburton, despite its huge revenue stream, and threatened to cut off food service to U.S. troops until they were.

Other concerns in the military-support arena are overbilling and quality assurance. As anyone familiar with construction or home repair will attest, it is essential to have competition to determine the most efficient contractor at the best price; it is also essential to maintain oversight to prevent being bilked and getting shoddy work. In the military effort in Iraq, this basic function has largely been AWOL, mainly as a result of poor planning and the lack of military, as opposed to contractor, oversight funding. The contract management office in Baghdad, for example, originally had five personnel in charge of managing some $18 billion in contracting. It later added nine more, leaving a still-daunting ratio of about $1.3 billion in oversight per person, in the middle of probably the most confusing contract zone in history.

The result has been a series of snafus and suspected swindling, best captured by the weekly drumbeat of financial scandals that Rep. Henry Waxman, D-Calif., has unearthed about Halliburton contracts in Iraq. The allegations circling the firm ranged from charging for tens of thousands of meals never served to soldiers, to billing for inappropriate extras such as adding the firm's logo to hand towels. But Halliburton was far from the only firm about which these concerns were raised. An investigation by the Pentagon's inspector general report found Pentagon procurement rules have not been followed in 22 of 24 deals awarded by the Defense Contracting Command for services in Iraq. One of the perhaps amusing examples was the U.S. taxpayer's purchase of a Hummer H2 (the über-expensive SUV familiar from rap music videos) for a SAIC program manager, which included payment for the charter of a DC-10 cargo jet to fly it to Iraq.

Military consulting firms represent another market sector and carry out a number of military advisory and training services. The responsibility of creating the post-Saddam police, paramilitary forces and army has been outsourced to various firms. The importance of this work is without dispute. The U.S. plan for disengagement from Iraq is dependent on the formation of such local forces, and for decades they will be the operation's institutional legacy.

DynCorp, a multibillion-dollar government services firm based in Reston, Va., is the major player in the police training program. The contract was originally awarded for $50 million but could be worth as much as $800 million. While the firm relies on the federal government for about 96 percent of its business (it spends more than a million dollars a year on lobbying and has written another dozen checks to the RNC in the last few years), it has a decided public relations problem stemming from the sex-trade scandal in the Balkans. Under two separate contracts in Bosnia and Kosovo, a number of its employees were implicated in sex crimes and the black-market arms trade, including its Bosnia site manager, who videotaped himself raping two young women. Because of a gap in the law, none were ever criminally prosecuted, and the whistleblowers in the incident (as opposed to the perpetrators) later sued the firm after they were fired. The firm has since set up an in-house screening program, which it hopes will avoid such incidents in the future.

Erinys is in charge of the program for setting up a paramilitary guard force for Iraq's oil fields, obviously key to starting up the economy. Given that it did not exist before the war, Erinys surprised many established firms in the industry by winning the $39.2 million contract. Then, the firm raised eyebrows by importing many former South African soldiers and police who had worked for the old apartheid regime. However, the contract has gone well; since it took charge of operations, attacks on oil pipelines have declined. In little over four months Erinys trained, armed and deployed more than 9,000 Iraqi guards across the country. It plans to expand the force to nearly 15,000. Others credit not the raw numbers but the sensible payoff of local tribal leaders to protect the pipelines, much as what happened with the past regime.

Vinnell, MPRI and Nour USA have been engaged in training and equipping the new Iraq army, a task whose cost could reach as high as $2 billion. Vinnell, a subsidiary of Northrop Grumman, is notable for being the only firm targeted by al-Qaida twice, having offices bombed in Saudi Arabia in 1996 and 2003. MPRI is a firm of primarily former U.S. Army officers, all the way up to four-star generals. The company's major client is training for the U.S. Army, but it has also worked on contracts in Croatia, Bosnia, Nigeria and Afghanistan. Nour's contract became particularly controversial when allegations surfaced that the firm was linked with neoconservative darling Ahmed Chalabi, the Iraqi exile leader many blame for the faulty intelligence used to whip up war sentiment in the United States Despite having no operating history, the politically connected firm is alleged by its competitors to have beaten out more established firms by lowballing its contract by several hundred million dollars. The contract has since been suspended and is now being re-awarded, resulting in months of delay in the vital task of readying an Iraqi army. One U.S. Army contracting officer remarked to Jane's Defense Weekly, " I've been in Army contracting for 28 years and I've never heard of it happening like this."

Recent Stories