Private Security Companies
201. From the beginning of operations in March 2003,
the security environment in Iraq has presented grave risks for
humanitarian workers, contractors and their local associates.
As of 31 December 2004, 232 civilians working on US contracts
in Iraq had been killed, according to the United States Department
of Labor. The exacting security environment has also prevented
contractors performing their daily work and completing projects
on time. The Project and Contracting Office reported that in central
Iraq, 16.5 per cent of their construction projects were delayed
for more than two weeks; in northern Iraq, 14.8 per cent of reconstruction
projects were delayed. Attacks on sites, employees, and convoys
related to reconstruction projects are and remain frequent. Mr
Jim Drummond told us about the difficult circumstances in which
DFID staff have to work in Iraq:
Over the last six months we have had quite tight
restrictions on numbers because of the security situation and
the difficulty of people moving around.
this is a very difficult operating environment.
Even in the south we had periods in April and May  where
our staff could not travel and were locked down in the consulate.
We had the same again in August and parts of September ,
a lock-down in the consulate and DFID staff could not get out.
202. Far more than in previous conflicts, FCO and
DFID and even MoD have therefore relied on private security companies
for the security of their personnel, and materiel. The work of
private security contractors, many of whom are ex-soldiers, has
been material to the conduct of the Government's activities in
Iraq. Even though the outsourcing of protective services to private
security companies is not new, the scale of their involvement
in Iraq is unprecedented.
It is estimated that more than 60 security companies with over
20,000 personnel are engaged in Iraq.
As many commentators have noted, the numbers of private security
companies dwarfs the current military contribution of any contributing
nation to MNF-I except the United States. In a number of reported
cases, these companies have become involved in combat, prompting
concerns about the lack of distinction between professional troops
and private commandos.
203. With this reliance has come a significant bill.
As at December 2004 DFID had disbursed £249 million on humanitarian
and reconstruction work in Iraq: £186 million through multilateral
agencies, NGOs and the Red Cross; and £63 million bilaterally.
Of this bilateral disbursement, £17 million had been spent
on security (armed protection, armoured vehicles, hostile environment
and first aid training, and the posting of security managers)
and on security for DFID's own staff and offices in Baghdad and
Basra. The UK has also funded security for a number of local politicians.
204. The extensive presence of private security companies
has raised a number of issues. It is not clear how private security
companies are controlled or held accountable for violations of
law. The more unscrupulous private security companies may take
advantage of this vacuum and engage in illegal or other inappropriate
activities and there have been a number of reports of private
security company personnel violating human rights. As the Foreign
Affairs Committee wrote in July 2004: "The US has made use
of a number of private security firms and private contractors
are now known to have supervised interrogations at the Abu Ghraib
prison in Baghdad".
In Christopher Langton's words: private security companies "have
the disadvantage of lacking in accountability".
Above all, because of the lack of regulation, in Iraq the many
respectable and professional companies have not always been clearly
differentiated from the inexperienced, uncontrolled companies.
Chief Constable Paul Kernaghan put it aptly when he told us that
the industry "ranges from what we call blue chip to frankly
And the activities of some companies have garnered negative publicity
for the entire sector.
The important distinction between companies which offer legitimate
security services and those which are prepared to engage in paramilitary,
mercenary activities is not always well-understood by commentators.
Too often the headline grabbing antics of the latter are used
to attack the often essential work of the former.
205. On 12th February 2002 in response to a recommendation
from the Foreign Affairs Committee the Government issued a Green
Paper Private Military Companies: Options for Regulation,
which considered various options for regulation, their advantages
and disadvantages, but ultimately did not propose any policy.
The Green Paper examines the following policy options: (1) a national
and international ban on mercenary activity, (2) national licensing
of private military companies and exports and (3) the self-regulation
of the industry. 
206. Mr Pattison brought us up to speed with subsequent
There is certainly thinking going on. As you
said, a few years ago, the Government produced a Green Paper and
we followed that up with consultations with interested parties
including representatives of a number of companies in this sector
and, as a result of that, what we are now trying to do is to look
quite carefully at what proposals for regulation might be brought
207. He explained that the question of defining private
military companies was difficult: "We all know the difference
between a private military company and private security company
when we see it but actually trying to define it for the purposes
of legislation is rather difficult".
The FCO, he told us, was currently examining two broad options.
One option would be to license companies. The second option would
be to focus on the licensing of contracts, which, Mr Pattison
told us, were "similar to the procedures we have for the
licensing of defence exports". 
208. In their memorandum to us, the FCO explained
that "a senior FCO official, in close consultation with his
colleagues from other Government Departments, has been conducting
a review of policy options for the regulation of Private Military
Companies". The review, is expected to be finalised in by
209. As a result of the lack of regulation, the UK
has to resort to tightly drafted and negotiated contracts to ensure
that the private security companies that MoD, DFID or the FCO
employs follow appropriate standards. Mr Pattison explained: "What
we have done with Armour Group is actually draw up an extremely
detailed contract with them which covers a very wide area of issues
including the sort of people they recruit, their answerability".
210. But while such contracts are better than nothing,
they do give rise to a number of problems as the National Audit
Office (NAO) has identified.
Complex contracts require close monitoring and may involve frequent
payments in the course of a year. As such, they may be labour-intensive,
risk-prone and possibly cost inefficient. They are not an effective
or appropriate substitute for proper regulation.
211. It is now three years since the Government
published its Green Paper on Private Military Companies. We recommend
the Government urgently brings forward proposals for the regulation
of the overseas activities of private security and military companies.
We do not believe that the current reliance on contracts is sufficient.
We are well aware of the complexities involved in a licensing
regime for individual contracts not least from our experience
of the export control regime. We suggest that the FCO should enter
into discussions with the Security Industry Authority to find
ways in which its offices could be used. Once a mechanism has
been established to regulate these companies, Parliament should
consider how best it could undertake the necessary oversight.