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<p>Since the end of the Cold War, the Department of Defense has led unprecedented  efforts in outsourcing and privatization. Empirically, private firms offer efficiency  incentives and cost savings which are maximized in competitive markets. Recent  contingency operations have underscored the importance of contractors, as evidenced by  the number and magnitude of reconstruction contracts. In turn, utilizing private  contractors has raised questions regarding their true cost-effectiveness. This research  highlights the key features of the private military industry from an economic perspective.  After revisiting DoD's initial objectives for outsourcing many of their traditionally inhouse  roles, an assessment is made to whether current efforts are based primarily on  capability or financially-driven constraints. The economics of privatization are  subsequently explored, with particular emphasis on current contracting efforts. The  research will provide deeper insight to contract valuation, industry competitiveness, and  cost effectiveness arguments. Despite their current controversies, a case is made that  contractors are cost effective given their inherent flexibility. The argument becomes  stronger after considering the military's relevant alternatives to using private military  companies.
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<br>Subjects: History.; Outsourcing in the Department of Defense; Private Military Company; Contractors on the Battlefield</div>
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Harris, Neil J.</div>
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