The New America Foundation, a nonpartisan public policy institute, suggested that while most security contractors have performed admirably in Iraq and Afghanistan, a few highly publicized incidents -- most notably the September 2007 shooting by Blackwater Worldwide guards in Baghdad's Nisoor Square, which left 17 civilians dead- -- might have made it impossible to win the hearts and minds of civilians.
"We recognize that this transition from private security personnel to government-employed security personnel will take time and cost money, both on the front end and particularly on the tail end, but it is essential to begin without delay," the report stated.
Security contractors still could play "inside the wire" roles such as conducting peacetime defensive operations and training, New America said.
Until such a transition is completed, the 2000 Military Extraterritorial Jurisdiction Act should be expanded to regulate the activities of private security guards, the report said. The House passed a bill to cover contractors under the extraterritorial jurisdiction law, but the legislation failed to gain traction in the Senate.
New America's suggestion, however, received stiff pushback from industry representatives, who said isolated episodes of misconduct by private guards should not precipitate a broad overcorrection that could create a new set of problems.
David Isenberg, a scholar at the Cato Institute and author of the weekly column Dogs of War, said "the outsourcing of our military capability left the station decades ago" and that to eliminate battlefield contractors, there are only two, arguably unappealing, options. "Either scale back the U.S.' geopolitical commitments or enlarge the size of the U.S. military … and to do that you would have to bring back the draft," he said.
Isenberg and others addressed the report's findings during a Friday morning panel discussion that focused on the evolving relationship between contractors and the military.
"We need a solution that systematically matches the problem," said Tara Lee, a partner in the law firm DLA Piper who has represented contractors in battlefield litigation, "and the solution needs to be management and oversight of the problem."
Panel members said that for many years the Bush administration and Congress abdicated their responsibilities by failing to provide adequate oversight and regulation of security contractors.
While more attention has been devoted to contractor oversight since Nisoor Square, the military has yet to begin the onerous cultural shift of integrating private security guards into its larger mission.
"The Pentagon today is completely reliant on contractors to complete their core mission," said Michael Cohen, a senior research fellow at New America Foundation and co-author of the report. "There has been no long-term planning and thinking."
An August Congressional Budget Office study found that roughly $1 out of every $5 the U.S. government has spent in Iraq has gone to contractors. The budget analysts said there is roughly one contractor on the ground in Iraq for every member of the military, although most are not American and only a fraction are private security contractors.
The New America report said the Defense Department should take a number of bold steps to better manage its contracting force.
The report called on the Pentagon to designate a high-ranking official in each branch of the military to review interaction with contractors; develop of a defined chain of command, from the secretary of Defense on down, for the management of contractors; boost the size and training of the acquisition workforce; and integrate contractor oversight and management into all military training programs.
"We need to think of contracting as another form of jointness," said Kevin Lanigan, director of the law and security program at the advocacy group Human Rights First, referring to the cooperation among the military services.
The panelists disagreed on one core recommendation in the report that stated the military should no longer rely on the government's decades-old and ill-defined "inherently governmental" statute for determining which tasks are appropriate for outsourcing to the private sector.
New America suggested Congress should permit agencies "to use broad discretionary leeway in determining where and how contractors should be used." Lawmakers could establish red-lined activities that must be kept in-house and could require the military to maintain a "resident capacity" for any outsourced function, the report said.
With some exceptions, the most useful criteria for determining which tasks are suited for contracting is mission capability, Lee said.
"Let's pick the best groups for the task," she said. "The best tasks that can be done by the military and the best tasks that can be done by contractors."