The Corporate Preatorean Guard
The Praetorian Guard of Emperor Augustus
We have, in recent years, witnessed the rebirth of a new Praetorian Guard, this time wearing three-piece business suits and cloaking their questionable actions behind the corporate veil. Companies supplying military contractors are the third largest contributor to forces in Iraq, behind the U.S. and U.K; proof that private armies are big business.
Blackwater Mercs killed in Fallujah
as part of an intelligence psy-op
The most well-known of the bunch is privately held Blackwater USA, a secretive outfit run by a former Navy SEAL that hires commandos from as far away as Chile, Bosnia and the Philippines, to fight U.S. wars and protect U.S. diplomats. When four of its men lost their lives in an unusually savage attack in the Sunni stronghold of Fallujah three years ago, a spotlight was cast on the nasty business of private security forces. Since then, the attention has receded and the influence of the private merc companies has grown.
As the number of U.S. military personnel has fallen to around 1.5 million lately from around 3 million in 1970, the amount of money spent by the Pentagon on military operations has risen at a 6% annual rate from less than $50 billion to a bit more than $150 billion, adjusted for inflation. Much of the differential is being spent on outsourced services, and that is why independent personnel contractors -- a handful of which are publicly traded -- have become more important than ever.
Old School Contractor Lockheed Martin (LMT)
Old School Contractor General Dynamics (GD)
Among the private mercenary armies, the most notorious is DynCorp International, which has 14,000 people working in 35 countries. DynCorp has been around for five decades, starting as a U.S. Air Force logistics and mission support provider in California, and then progressing through a series of mergers into an international provider of defense and aerospace services. In 2003, the company was acquired by major Pentagon information technology provider Computer Services but then it was, in rapid succession, sold to defense-focused private equity firm Veritas Capital and then spun out as a separate company in an IPO last May.
DynCorp has recently entered into a joint venture in which it is the lead partner, winning a massive $4.6 billion contract to provide translation services in Iraq. Its new Global Linguistics Solutions division, in conjunction with privately held McNeil Technolgies, will be a major contributor to the company's 2008 earnings. The contract is renewable in 20 quarterly installments, and calls for DynCorp to provide 6,000 translations in Iraq and up to 1,000 additional U.S. citizens who speak various Arab and Persian dialects to the U.S. Army and other government agencies.
Other companies in the private, contract army include:
- Arotech (leading supplier of armor to Israeli Defense Forces)
- ManTech International (security services to the military in Iraq)
- KBR, Inc unit of Halliburton
- Blackwater USA (runs training camps at a 6,000 acre facility in North Carolina)