Contingency contracting has been a growth industry for over two decades now and it appears that the expansion has finally come to a halt as American foreign policy shifts away from international interventions. The US military is in the midst of the most significant reduction in force and capabilities since World War II, so it is natural that the logistics contracting efforts shrink accordingly, except for a few special categories. These categories reflect the overall policy shift – as US forces reduce their ‘footprint’ and scope of operations, private military contractors may be assigned greater responsibilities to fill those gaps. So firms that specialize in private security, intelligence, and paramilitary training may continue to enjoy plenty of opportunities. But for most of the service providers and commodity suppliers, the diminishing market for supporting US and coalition forces abroad will spell a period of reduced opportunities and workforce restructuring. That being said, government contracting, especially in support of the US Department of Defense, is cyclical, so before too long, America and its citizens (including government contractors) will again be engaged in foreign entanglements. This article, and perhaps several more, is intended to prepare companies for that inevitability.
Military operations unfold in phases, so it makes sense that the logistics and contracting support of those operations will follow a similar trajectory. The first phase is the entrance into theater and establishment of initial positions. Most of the logistics support will be military equipment and personnel, as they occupy logistics bases, establish security and develop supply and support systems and routines. As soon as possible, the military operations will seek a decisive resolution. In the case of combat, this means a deliberate action intended to destroy the enemy’s capability to continue operations. In non-combat operations, such as peacekeeping or disaster relief, this will most likely consist of separating belligerents and disarming them, or ‘weathering the storm’ and posturing to begin recovery and relief efforts. In any case, the focus will be on the execution of operations, and support efforts will be geared towards that. The best example is the three-week ‘invasion’ of Iraq in 2003, when the US and coalition partners engaged and destroyed Iraqi Army units and captured Baghdad and other major cities. Logistics units trailed the combat forces and provided retail support, while contracted logistics remained in the theater staging areas and prepared to move into Iraq once hostilities ceased.
The third phase will be the resolution of decisive actions and the assumption of a stabilization role. This is where contracted logistics takes on a major role, as military logistics units have exhausted their supplies and capabilities, the day-to-day operations become routine, the military units establish fixed sites and secure routes, and stock levels begin to replenish as consumption levels off. In the Iraq example, this phase commenced when US forces consolidated in Baghdad and other major population centers, and combat activities ceased. Basically, bad guys stopped shooting at the invaders, and the invaders stopped seeking to engage targets, and instead adopted a wary but non-aggressive posture. In the first weeks, major logistics support companies under the Logistics Civil Augmentation Program (LOGCAP) contract began moving personnel, equipment and supplies into Iraq to establish pre-designated Forward Operating Bases (FOBs). Over time, the number of contractors, level of support, and sophistication of systems grows and expands until it reaches a stable condition, where the amount of work and the number of contracted personnel have normalized. The vast wealth and emphasis on comfort that typifies American forces vice their European or coalition counterparts usually result in a force ration approaching 1:1. In other words, for every US service member in theater, there is probably a like number of contractors. In the Iraq example, this phase lasted from June 2003 until about 2009, as the country stabilized, violence diminished, and US forces planned to withdraw and eventually depart (finally occurring in 2011).
The previous paragraph focused on service contractors, specifically those working for the prime or various subcontracted firms, performing under the omnibus LOGCAP contracts. Forces currently operating in Iraq and Afghanistan are supported by LOGCAP IV, the follow-on to the LOGCAP III contract that ran for all of Iraq and for Afghanistan until 2011-12, when it transitioned to the newer effort. At full capacity, these contracts involve billions of dollars, thousands of personnel, thousands of pieces of rolling stock, power generation equipment, and temporary structures, hundreds or at least dozens of sites, and a veritable army of military and civilian contracting officers, administrators, and quality assurance personnel. However, there is another aspect to contingency contracting that presents the bigger, more viable opportunity for the vast majority of service and commodity firms operating in the government market.
In this same third phase, opportunities abound for enterprising small businesses and independent contractors to earn government work. Aside from the LOGCAP-style life support contracts, the military units conducting the operations will be supported by Joint or Regional Contracting Centers (JCC or RCCs) that derive contracting authority from the designated executive agency holding acquisition authority for the operation. Current military doctrine describes this organization as a Joint Theater Support Contracting Command, which will be an ad hoc command established solely for the purpose of providing contingency contracting support to the forces in theater. This is where the military contingency contracting officers (CCOs) from the uniformed services will be assigned and working. They will have a wide variety of experience, qualifications, and warranted contracting authority, but their mission will be to procure the vast amount of supplies, services and minor construction (below $750,000 Military Construction threshold set by law) that the military units need. Whether it is printer cartridges, plywood, furniture, temporary billeting structures, gravel, concrete blast barriers, or whatever, these CCOs solicit, award, and administer the contracts that provide them to the US forces. In large operations like Iraq and Afghanistan at their peak, this effort involved more than a billion dollars per year, awarded to thousands of contractors and individual owner/operators.
In the final phase of the operation, operations wind down, major installations consolidate and close down, force levels decline according to a schedule, and an eventual transition of authority precedes the total withdrawal of forces. Similarly, the contracting effort de-escalates: contractor services wind down, numbers decrease, locations decrease, and lead times lengthen as the supply chain contracts. The complexity is as profound and challenging as in the initial phases, because the military planners need to integrate logistics weight, dimensions, and security calculations into their overall plan. The contractors must be in lockstep with the military, in order to meet contractual service requirements, but also to ensure they do not leave personnel or equipment behind after the military unit has departed. It is an intricate, exhausting effort that could cause the halt of military operations, include complex unit movement tables, if not done properly.
In conclusion, while the current operating environment appears to present a low-tide for military support contractors, the state of global affairs make it inevitable that in the not-too-distant future, American troops will again be called to serve in dangerous areas abroad, and their mission success will depend heavily on professional, dedicated support from the service industries. Effective companies and entrepreneurs would be wise to spend time planning for these eventualities, as they will present an opportunity for massive windfalls for the early arrivals and proven performers.