Outsourcing Patriotism: Privatization Goes to War

Substituting new forms of collaboration and management for hierarchical, bureaucratic chains of command cannot and should not mean abandoning traditional commitments to the public values of liberty, equality, and fairness. Public actors have an obligation to meet the standards for government behavior that grow out of those values and are incorporated in public law. As Donald Kettl has observed, the government ?is not just another principal dealing with another agent.? Nowhere can this be seen more clearly than in the ongoing scandal over the abuse of prison inmates in Iraq.


                               Outsourcing Patriotism: Privatization, Sovereignty and War

Sheila S. Kennedy
  School of Public and Environmental Affairs
Indiana University Purdue University, Indianapolis

                                                                        and

Laura S. Jensen
Department of Political Science
                   University of Massachusetts, Amherst

         Over the past half-century, America has fundamentally changed its approach to governing. Where public functions originally were performed primarily by state actors, and later delegated to closely related agents of the state, discretion over the day-to-day operation of public programs now routinely rests not with the responsible government agencies, but with a host of nongovernmental, “third-party” surrogates or “proxies,” that provide services under the aegis of loans, loan guarantees, grants, contracts, vouchers and other new tools of public action.[i] This exercise of core governmental authority by non- and quasi-governmental entitities is perhaps the most distinctive feature of America’s “new governance” (Salamon 2002, 1-2; Kettl 1998, 1993).              Many observers applaud this delegation of authority. They have great faith in the entrepreneurial talents of the private sector, and expect public problem solving to be enhanced by public-private partnerships. That private exercise of governmental authority may be at odds with long-standing theories of public administration is not troubling, they suggest, for in the increasingly interdependent world of implementation networks, “no entity, including the state, is in a position to enforce its will on others” (Salamon 2002, 15). Salamon argues for a new management paradigm that “makes collaboration and negotiation legitimate components of public administrative routine rather than regrettable departures from expected practice” (2002, 15).
         Whatever the merits of this technocratic analysis, we argue that it fails to take into account those legal restrictions on the use and reach of public authority that have long been considered fundamental to sovereign legitimacy and the United States’ political and constitutional order.
          Explicit legal standards of right and wrong are a defining feature of American government (Frederickson 1993, 248; see also Rohr 1998). Substituting new forms of collaboration and management for hierarchical, bureaucratic chains of command cannot and should not mean abandoning traditional commitments to the public values of liberty, equality, and fairness. Public actors have an obligation to meet the standards for government behavior that grow out of those values and are incorporated in public law. As Donald Kettl has observed (1993, 40), the government “is not just another principal dealing with another agent.”
         Nowhere can this be seen more clearly than in the ongoing scandal over the abuse of prison inmates in Iraq. Before four contractors were killed in Falluja at the end of March 2004, few Americans realized how significant contracted agents had become to the U.S. efforts in that country, and indeed, in U.S. military operations around the world. The April 2004 release of graphic photographs showing the sexual abuse of Iraqi prisoners incarcerated in the Abu Ghraib jail outside of Baghdad (a facility notorious for torture and execution under Saddam Hussein) has turned the expanding and largely unregulated role played by private contractors overseas into front-page news (Borger 2004; Miller and Miller 2004). The U.S. government relies upon private contractors in Iraq not only for such support tasks as mail delivery and foreign language interpretation, but also for intelligence gathering, security services, and the conduct of prison interrogations. As outrage over the events at Abu Ghraib escalates, questions of accountability are being raised in the United States and abroad. Who, precisely, is responsible for what happened? U.S. President George W. Bush? High-level Pentagon officials? The military personnel charged with running the prison? Or the nominally private employees still involved in operations at Abu Ghraib, who work for contracting U.S. firms CACI International and Titan Corporation? (Brinkley and Glanz 2004a, 2004b).[ii]
         In our view, the incidents at Abu Ghraib and elsewhere demonstrate that the central challenge to the new governance goes to the very meaning of sovereignty. The challenge is not simply to enhance flexibility, encourage innovation and improve performance, but to do so while ensuring legal and constitutional control of, and accountability for, public action.  
         Constitutional accountability requires that we be able to determine when government has acted—and that determination is highly problematic for privatized relationships.  American law makes the existence of “state action” a condition of accountability: if the state has not acted, the Bill of Rights is not implicated.  In this, the U.S. differs from many, if not most, other countries. Those who drafted our constituent documents viewed liberty primarily in the negative; that is, liberty was defined as freedom from government interference. The Bill of Rights, unlike the Universal Declaration of Human Rights and unlike the constitutions of many other countries, secures “rights” not through mandating goods or services that government must provide (e.g., education, health, housing) but by limiting actions that government may take. Rights in the American legal system are thus not generalized entitlements; for example, citizens do not have a “right” to free speech or due process against all comers, be they public or private. Instead, we have a right not to have our expressive freedoms infringed by agencies of the state. We have a right to due process of law whenever government takes action to deprive us of a recognized liberty or property interest.
         In such a system, the ability to identify government action is critical.           Citizens expect that certain standards will apply to public programs and those who manage them. But we must demonstrate that actions are public before we may ask courts to restrain them. If we don’t know what actions we may properly attribute to government, our constitutional rights and freedoms are jeopardized. On the other hand, there is an important difference between government procurement and the “third-party” government at issue. If the law sweeps too broadly, subjecting every government vendor to constitutional constraints, the concept of a “private” realm is eviscerated (Minow 2002), and the attributes of private and nonprofit intermediaries that make public-private partnerships cost-effective are eliminated.  
            As Kennedy (2001) has noted, the growth of “third-party government,” where more and more services are provided by and paid for by government but delivered by contractors, raises a host of questions: are partnerships with businesses and nonprofit organizations creating a new definition of government?  Is ‘privatization’ extending, rather than shrinking, the state? Does the substitution of an independent contractor for an employee equate to a reduction in the scope of government, as proponents believe?  Or does the substitution operate instead to shift the locus but not the scope of government activity (Kettl 1993; Smith and Lipsky 1993), and thereby blur the boundaries between public and private, making it ever more difficult to decide where “public” stops and “private” begins? If we are altering traditional definitions of public and private by virtue of these new ‘governance’ relationships, what is the effect of that alteration on a constitutional system that depends upon the distinction as a fundamental safeguard of private rights? If the constitutional system is being altered, what are the implications for public management, government accountability and state legitimacy? And even more fundamentally, as more and more public functions are outsourced and marketized, are we inadvertently trading a polis, in which individual citizens owe each other certain public duties and in which there is a meaningful concept of public service, for a transactional state in which even our wars are fought not by citizen-soldiers, but by the low bidder?

                                     “State Action” and the Definition of the State

         Adherence to the standards established in public law is essentially what transforms governing from an exercise of raw power into a legitimate use of democratic authority. For government to be accountable,[iii] the limits imposed by public law must apply to all governmental action and be enforceable, whether the tasks of government are accomplished by actors who are officially public or nominally private. This poses major challenges in the United States’ increasingly mixed regime, because the jurisprudence intended to constrain government authority has not kept pace with the ways in which privatization initiatives have been refashioning the nature of the state and state action (Gilmour and Jensen 1998; Kennedy 2001; Barak-Erez 1995; Metzger 2003). We cannot understand why privatization is challenging our traditional understanding of constitutional accountability and the rule of law without at least a cursory understanding of the jurisprudence of state action and government accountability.
         The legal doctrine of “state action” was first defined by the U.S. Supreme Court shortly after the ratification of the Fourteenth Amendment, when the Court was called upon to define the extent to which that Amendment protected the privileges and immunities of citizenship against inappropriate action by state government. In Virginia v. Rives (1879, 318), the Court declared that the Fourteenth Amendment applied “to State action exclusively, and not to any action of private individuals,” adding that all state action counted, whether legislative, executive, or judicial. Shortly thereafter, in the 1883 Civil Rights Cases, the Court held that the Amendment’s prohibitions applied to “all State legislation, and State action of every kind,” including all “acts done under State authority” (11, 13). The “individual invasion of individual rights,” by contrast, was “not the subject-matter of the amendment” (11).
         This is a critical distinction. Over the past century, the Supreme Court has repeatedly held that an “essential dichotomy” exists between state action and private conduct (see, e.g., Shelley v. Kramer, 1948; Jackson v. Metropolitan Edison Co., 1978; National Collegiate Athletic Association v. Tarkanian, 1988). State action is subject to judicial scrutiny for conformance with the numerous Federal, state, and local rules that apply to government behavior, including the Bill of Rights and the Fourteenth Amendment; a host of general management statutes, such as the Administrative Procedure Act and the Freedom of Information Act; the terms of administrative regulations, executive orders, and budget circulars; anti-discrimination statutes, such as the Civil Rights Act of 1964 and the Americans with Disabilities Act; and importantly, at the state and local levels, Section 1983 of the Civil Rights Act of 1871. Private conduct, no matter how discriminatory, wrongful, or unfair, is not subject to scrutiny under these rules (though legal remedies may otherwise be available).
         However fundamental this dichotomy may be in principle, it has been difficult for the courts to define what, precisely, separates “public” from “private” conduct. A review of all relevant case law is outside the scope of this discussion, but a brief discussion will illustrate the contours of the problem. Consider, for example, two cases from the 1980s in which the Supreme Court reviewed the behavior of doctors treating dependent populations under government authority. In West v. Atkins (1988), an essentially unanimous Court decided that a private physician under contract to provide medical care to state prison inmates was a state actor.  In Blum v. Yaretsky (1982), however, a divided Court allowed the State of New York to reduce or eliminate the long-term care benefits of Medicaid patients upon the recommendation of nursing home personnel whose decisions were held to be “private” despite the fact that the nursing facilities received virtually all of their funding from the government and the benefit decisions in question were mandated under a state cost control policy.
         The Supreme Court reached similarly disparate conclusions in a set of decisions involving organizations governing the conduct of amateur athletics. In San Francisco Arts & Athletics, Inc. v. United States Olympic Committee (1987), a divided Court upheld the U.S. Olympic Committee’s decision to selectively ban a gay rights organization from using the word “Olympic” in the name of an event it sponsored. Despite USOC’s status as a corporation created by federal law and its extensive authority over international athletic competition, it was held not to be a state actor. The Court reached a similar result in a case in which the National Collegiate Athletic Association’s essential monopoly on rulemaking for college athletics forced a state university to impose disciplinary sanctions upon a tenured employee (NCAA v. Tarkanian, 1988). Recently, however, in Brentwood Academy v. Tennessee Secondary School Athletic Association (2001), a five-member majority found that the Tennessee nonprofit organization regulating high school interscholastic sports was a state actor, and could be held accountable for violations of the Fourteenth Amendment.
         The lower federal courts have recently held prison contractors accountable as state actors, often noting that the power to deprive an individual of liberty is a quintessentially governmental power (Plain v. Flicker, 1986; Skelton v. Pri-Cor, Inc.,1991; Blumel v. Mylander,1996; Giron v. Corrections Corporation of America,1998).             Even so, the federal courts do not speak with one voice in their decisions concerning the use of delegated authority in situations where plaintiffs are captives of the state. For example, a U.S. District Court in Texas held a private residential youth treatment facility liable as a state actor for the wrongful death of a twelve-year-old boy in Lemoine v. New Horizons Ranch and Center, Inc. (1998), but the U.S. Court of Appeals reversed (1989). And in Wade v. Byles (1995), a U.S. District Court in Illinois held that contractors providing security at a public housing complex were not state actors, despite the fact that the security guards had the authority to carry guns, arrest people, and use deadly force. These cases are difficult—if not impossible—to reconcile.
         Indeed, state action jurisprudence has been termed a “conceptual disaster area” (Black, Jr., 1967, 95). As one commentator wryly noted, the Supreme Court’s “sifting” and “weighing” of the facts in state action cases differs from Justice Stewart’s famous “I know it when I see it” standard for identifying obscenity “mainly in the comparative precision of the latter” (Brest 1982, 1325). According to federal judge Henry J. Friendly (1982, 1291), what we know about the distinction between public and private action is more “because the Court has pricked out more reference points than because it has elaborated any satisfying theory.” The Court itself acknowledges that its state action decisions “have not been a model of consistency.”[iv] Complicating matters further, bona fide public employees are not always considered state actors even when they are discharging official duties. For example, a public defender is not a state actor when representing clients, despite her source of income and official position, because she acts as an adversary of the state (Polk County v. Dodson, 1982). “No one fact,” not even actual public employment status, “can function as a necessary condition across the board for finding state action” (Brentwood Academy v. Tennessee Secondary School Athletic Association, 2001).
         As Gillian Metzger has observed (2003, 1412), the Court sometimes has adopted a flexible, situational, pragmatic approach to state action, and at other times, has applied rigid, restrictive, and highly formalistic tests. The casualty has been legal predictability, long considered an essential element of fairness and legitimacy.
         Legal predictability is further undermined by the tendency of reviewing courts to apply different tests for the presence of state action depending upon the nature of the constitutional right allegedly infringed by the conduct, without articulating the basis for their use of different standards. In cases involving deprivations of First Amendment religious liberties, for example, the Supreme Court has historically been much more willing to find—or even assume—the presence of state action. In a sense, reliance upon Establishment Clause doctrine allows the judiciary to evade state action inquiry by recasting the issues in terms of government support of religion. However, the Establishment Clause cannot be violated by private action; a violation hinges upon the presence of state action, whether that requirement is articulated or not. If the liberties protected by establishment and equal protection doctrines are to be accorded greater importance than, say, due process guarantees, the courts arguably should say so explicitly, and just as explicitly justify such distinctions. But this has not occurred.
         The principle at stake is deceptively simple: when government acts, we should be able to hold government constitutionally, fiscally, and ethically accountable for the consequences of its action, and it should not matter whether that action is taken by a public employee or a contractor. If we cannot identify which actions are attributable to government, we cannot enforce that principle. Instead, we create areas of ambiguity within which illegal, unethical or unconstitutional behavior—real or perceived—can further erode the public’s trust in its governing institutions. That is what has happened in a number of American jurisdictions,[v] and it is arguably what is occurring in Iraq.

                                                The Privatization of War
         In December of 2003, The Guardian published an investigative report that began “Private corporations have penetrated western warfare so deeply that they are now the second biggest contributor to coalition forces in Iraq after the Pentagon.” The report documented 10,000 private military contractors then on the ground, and noted that the proportion of private contractors had grown markedly since the first Gulf War in 1991, when there were approximately 100 servicemen and women for each privately contracted participant. By 2003, the proportion was ten to one, and the U.S. Army was estimating that nearly a third of the budget earmarked that year for the wider Iraqi campaign, or $30 billion dollars, went to private companies. “It is a trend that has been growing worldwide since the end of the cold war, a booming business which entails replacing soldiers wherever possible with highly paid civilians and hired guns not subject to standard military procedures.” (2003)
         While some observers have charged that many of the contractors are indistinguishable from mercenaries (USA Today 2004) whose use is banned by the Geneva conventions, no challenge to the use of contractors has yet been made on that basis.[vi] But criticism of the practice is mounting on other grounds; as the Guardian reports, the “booming private sector” has soaked up much of the expertise that became available as armies downsized after the end of the Cold War. The emergence of this robust market in turn has enabled “the Americans, in particular, to wage wars by proxy and without the kind of congressional and media oversight to which conventional deployments are subject.”   
         Prior to the scandal over prisoner abuse in Iraq, most criticism of contracting was focused upon real or perceived financial improprieties, and the public management challenges posed by p[vii]rivatization that have been a staple of academic public administration discourse generally. The Center for Public Integrity issued one such study in October, 2003, in which connections between government decision-makers and successful bidders were explored at some length.  The Center noted that more than 70 companies and individuals had at that point won up to $8 billion in contracts for the postwar rebuilding of Iraq, and that those companies had donated more money to the presidential campaigns of George W. Bush “than to any other politician over the last dozen years.” The study found that nearly 60% of the contractors had employees or board members who either served in or had close ties to the executive branch for Republican or Democratic administrations, for members of Congress from both parties, or at the highest levels of the military. The report was highly critical of management and oversight of the reconstruction effort, documenting contradictory statements and incomplete records, and suggesting that the government departments involved often did not know what contracts they had, with whom, or for how much. The report focused on other troubling elements of the extensive and growing reliance on contractors: the close ties among the most successful bidders, the absence of meaningful oversight, and the award of huge, “no bid” or “closed bid” contracts. Similar concerns have been raised by others, from the Arms Trade Resource Center of the World Policy Institute (http://www.worldpolicy.org/projects/arms/updates/081203.html) to CNN (April 2, 2004). But financial mismanagement and improprieties, while destructive of trust in government and the political structure, are only one aspect of the problem.    

         In June of 2003, Peter Singer, a security analyst at the Brookings Institution, published “Corporate Warriors: The Rise of the Privatized Military Industry,” in which he explored the role and consequences of warfare by proxy. According to Singer, governments sometimes use these corporate war-making agencies (many of which are bought and sold by Fortune 500 companies) as a means of saving money, and sometimes as a way to use “low profile” forces to solve “awkward, potentially embarrassing” situations. According to Singer, there are three categories of private military contractors:   

·        Provider firms offering direct, tactical assistance. This can be anything from training programs to staff services to front-line combat.

·        Consulting firms drawing primarily upon retired senior officers who then sell their strategic and administrative expertise back to the military on a contract basis.
·        Support firms providing logistic and maintenance services.
Singer and others raise a number of legal, policy and management concerns growing out of this vastly expanded use of private companies. Will the ties of such organizations to their countries of origin weaken as markets become more globalized and cosmopolitan? Will states lose control of military policy to companies responsible primarily to their clients and shareholders (an increasing percentage of whom are citizens of other nations)? What will be the effect on foreign policy decision-making when a declaration of war entails “hiring” soldiers rather than deploying young citizens? Will companies pursuing profits lobby successfully for military “solutions” to global conflicts? Can we craft mechanisms to control the behavior of “private” combatants who are not members of our Armed Forces? In a caution that appears prescient in light of the revelations from Abu Ghraib, Singer warns that the moralities of business firms cannot be expected to accommodate such “niceties” as the laws of war. As the Guardian report concluded,
“There are other formidable problems surfacing in what is uncharted territory—issues of loyalty, accountability, ideology, and national interest. By definition, a private military company is in Iraq or Bosnia not to pursue U.S., U.N. or EU policy, but to make money.

The growing clout of the military services corporations raises questions about an insidious, longer-term impact on governments’ planning, strategy and decision-making.”
            Singer argues that, for the first time in the history of the modern nation-state, governments are surrendering one of the essential and defining attributes of statehood, their monopoly on the legitimate use of force. If our legal system is increasingly unable to answer the question “when has government acted?” what will happen when we no longer know what a government looks like?
            In the wake of the Iraq prison scandals, policymakers are confronting a host of unanswered questions. What laws apply to the behavior of contract soldiers? Military law has not historically had jurisdiction, a problem that Congress began to address with passage of the Military Extraterritorial Jurisdiction Act of 2000. The adequacy of that legislation remains uncertain, and its application lies within the discretion of the Department of Defense. Case law offers no clear answer; in some instances, courts have held that the applicable law is that of the country in which the behavior occurred, but at the time of these particular acts, Iraq had neither a legal system nor a government in place, and was not even a sovereign nation.  Lawyers for soldiers accused in the scandal immediately raised the contractor issue as a defense, alleging that the role of private companies had created an environment in which abuses were inevitable. They will almost certainly raise equal protection arguments if soldiers who participated in the torture are punished and contractors who participated are not.   
           

                                                           Conclusion

         There is nothing inherently wrong with governments’ search for increased efficiency and cost effectiveness in the performance of public functions. Indeed, the use of mercenaries is nothing new, although elements of contemporary warfare suggest the emergence of concerns about their use that previous regimes did not confront. The problem is that we have embraced government-by-proxy without first addressing two important questions:
·  Can we achieve efficiencies in service provision without sacrificing the democratic norms of equity, accountability, and due process that are fundamental to our political order and constitutional culture?
·  Are there some tasks which ought not be privatized, some areas so critical to our sense of our collective identity that they must be provided by citizens pursuing their civic duty rather than by businesses pursuing profit?  If so, what are those tasks, and what makes them different?
         Answers to these questions are beyond the scope of this article, but we can report that scholars are actively puzzling over ways to overcome the privatization-legal accountability impasse. Noting that an agency relationship is created whenever the government authorizes a private entity to act on its behalf, Sheila Kennedy (2001) has suggested that the laws of agency and partnership should apply, either directly or by analogy, and either prospectively (in contract negotiations) or retrospectively (in judicial review). Under the laws of agency, when government cloaks a contractor with real or apparent authority to act on its behalf, the ensuing action is deemed governmental. Widely utilized jury instructions, for example, define an “agent” as “a person who at a given time is authorized to act for or in place of another person,” and specify that the conduct of the agent need not be expressly authorized by the principal for it to be “within the scope” of the agent’s authority. If the conduct is “incidental to, customarily connected with, or reasonably necessary for” the performance of an authorized act, it has occurred within the scope of authority and, if wrongful, can give rise to liability.
         In a similar vein, Gillian Metzger (2003, 1456) urges us to rethink state action in private delegation terms. Under such an approach, the key question would not be whether private entities wield government power, but rather, whether grants of government power to nominally private entities are adequately structured to preserve legal accountability. As in Kennedy’s formulation, the central criterion for singling out particular private delegations for enhanced judicial scrutiny would be whether they authorize private entities to act on the government’s behalf—that is, whether they meet the legal requirements of agency.
         Finally, a more holistic approach has been proposed by Jody Freeman (2003), who joins Kennedy in suggesting that privatization-cum-contracting may be “governmentalizing” the private sphere; that is, rather than reducing the scope of the state, contracting may be expanding government’s reach into realms traditionally thought private. Her point is not that we should use public law to force time-consuming and expensive standards and processes upon private entities (which contribute to some of the very problems of governance that efficiency-minded privatization advocates seek to solve). Rather, she argues, we might more creatively use vehicles such as conditional government spending, regulation, tort liability, and contract negotiation to motivate private actors to commit themselves to democratic norms of accountability, due process, and equality. Ellen Dannin has made similar suggestions (Dannin, 2001).
         As Freeman has observed (2003, 1329-30), and as the events in Iraq and elsewhere have demonstrated, citizens may be complacent when the privatized arrangements of the new governance run smoothly, but they are less so when things go awry. Citizens expect government to ensure accountability for action taken on behalf of the public, no matter who the state’s agents might be. As privatization initiatives have begun to affect vital and politically contentious public goods, services, and activities, the public has appeared increasingly inclined to demand greater accountability from, and increased governmental supervision of, contractors. As one example, the private management of U.S. prisons, discussed above, has resulted in a steady stream of litigation in the federal courts, as well as a deluge of scholarly commentary. Reactions to voucher programs and the private management of public elementary and secondary schools have also generated a flood of studies, academic and popular commentary, and litigation. Citizen outrage over perceived abuses by Health Maintenance Organizations (HMOs) has led to litigation and state and federal reform legislation (Freeman 2003, 1330). Most recently, the behavior of the public and private agents charged with conducting the “war on terrorism” has come under fire. Although it remains to be seen whether, and to what extent, private contractors employed at the Abu Ghraib prison will be held to account for the abuses that took place there, there can be no doubt that members of the media, government officials, and citizens alike are outraged by the inhumane conduct that was enabled by and committed under the authority of the United States.
         The rise of the “new governance” has not lessened concern over how state power is exercised, but it has reduced the visibility of that exercise. As Kennedy (2001) has noted
“[B]y ‘reinventing’ government, by sharing ‘governance’ responsibilities with third parties and their subcontractors, we have created a mutant that is neither public nor private. The courts have encountered those mutations much as the blind men encountered the elephant: one finding a snake, one a wall, one a tree trunk.  Unless we can come to grips with the whole animal, protean and evolving as it is, and refashion both our jurisprudence and our public management theory to safeguard the distinction between public and private action—unless we can find a way to protect constitutional liberties without allowing ‘governance’ to engulf truly private enterprises—constitutional accountability will be relegated to a quaint and dusty corner of public management history.”     

When governments outsource patriotism, it is not only accountability that is jeopardized. The war in Iraq may signal the introduction of an era in which the concept of sovereignty itself loses clarity. 
  
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San Francisco Arts & Athletics, Inc. v. United States Olympic Committee, 483 U.S. 522 (1987).
Shelley v. Kramer, 334 U.S. 1 (1948).
Skelton v. Pri-Cor, Inc., 963 F.2d 100 (1991); cert. denied, 503 U.S. 989 (1992).
Virginia v. Rives, 100 U.S. 13 (1879).
Wade v. Byles, 886 F. Supp. 654 (N.D. Ill. 1995); affirmed, 83 F.3d 902 (1996); cert. denied,
         519 U.S. 935 (1996).
West v. Atkins, 487 U.S. 42 (1988).


[i] To the extent that it implies a reduction in the scope or size of the state, the term “privatization” is an inapt descriptor of this mode of operation. The visibility of the state has diminished, but its scope has grown significantly at all levels, and its nature has been transformed by this increased reliance upon market actors and mechanisms.

[ii] According to Brinkley and Glanz (2004a), CACI had roughly 9,400 employees in 2003 and revenues of $843 million, some 92% of which came from contracts with the Department of Defense and other Federal agencies. Titan has about 12,000 employees and earns approximately $2 billion per year, largely via contracts with Federal defense and intelligence agencies. The companies claim that their contracts are classified. One of their employees stands accused of raping a young male inmate at Abu Ghraib but has not been charged, apparently because military law has no jurisdiction over him. Former CIA agent Robert Bair calls the free-ranging roles of the CACI and Titan employees at the Iraq facility insane. “These are rank amateurs and there is no legally binding law on these guys as far as I c[an] tell. Why did they let them in the prison?” (Borger 2004).

[iii] Our focus in this chapter is on legal accountability, or the means of ensuring that action taken by, or on behalf of, the state comports with the standards set for government behavior in public law. There are, of course, other forms of accountability, including political or electoral accountability; bureaucratic and professional accountability; and marketplace accountability. See Gilmour and Jensen 1998; Cooper 1995; Romzek and Dubnick 1987; Posner, 2002.

[iv] Justice Scalia writing for the majority in Lebron v. National Railroad Passenger Corporation (1995, 378), citing Edmonson v. Leesville Concrete Co., (1991, 632), Justice O’Connor dissenting.

[v] For a discussion of several examples, see Ellen Dannin, “To Market, To Market: Caveat Emptor” in To Market, To Market: Reinventing Indianapolis, Ingrid Ritchie and Sheila Suess Kennedy, eds. 2001. University Press of America, Inc.

[vi] The Reader’s Companion to Military History defines a “true mercenary” as a paid specialist in warfare, and notes that mercenaries have played key roles throughout history; without them, “Carthage could never have challenged Rome, and Greek mercenaries were a crucial factor in the spread of Hellenistic civilization.” During medieval times, mercenaries were everywhere in Europe. Historians generally date today’s negative view of mercenaries, and the decline in their use, to the rise of the modern concept of national sovereignty, which was thought to require suppression of non-state military activity. Recognizing the elusiveness of the distinction between contemporary “contractors” and traditional mercenaries,  Nikolas K. Gvosdev, fellow for strategic studies with the Nixon Center in Washington, D.C., has written “If governments are going to use mercenaries, they should deputize them so that they are held to the same rules as uniformed soldiers…[and]..must be prepared to hold them accountable in courts of law for their actions.”  Assuming the contractors being used in Iraq are not “true” mercenaries, their employment could fall under the 1989 UN Convention on Mercenaries; however, the United States is not a signatory to that Convention. 

         There is nothing inherently wrong with governments’ search for increased efficiency and cost effectiveness in the performance of public functions. Indeed, the use of mercenaries is nothing new, although elements of contemporary warfare suggest the emergence of concerns about their use that previous regimes did not confront. The problem is that we have embraced government-by-proxy without first addressing two important questions: ·  Can we achieve efficiencies in service provision without sacrificing the democratic norms of equity, accountability, and due process that are fundamental to our political order and constitutional culture?·  Are there some tasks which ought not be privatized, some areas so critical to our sense of our collective identity that they must be provided by citizens pursuing their civic duty rather than by businesses pursuing profit?  If so, what are those tasks, and what makes them different?         Answers to these questions are beyond the scope of this article, but we can report that scholars are actively puzzling over ways to overcome the privatization-legal accountability impasse. Noting that an agency relationship is created whenever the government authorizes a private entity to act on its behalf, Sheila Kennedy (2001) has suggested that the laws of agency and partnership should apply, either directly or by analogy, and either prospectively (in contract negotiations) or retrospectively (in judicial review). Under the laws of agency, when government cloaks a contractor with real or apparent authority to act on its behalf, the ensuing action is deemed governmental. Widely utilized jury instructions, for example, define an “agent” as “a person who at a given time is authorized to act for or in place of another person,” and specify that the conduct of the agent need not be expressly authorized by the principal for it to be “within the scope” of the agent’s authority. If the conduct is “incidental to, customarily connected with, or reasonably necessary for” the performance of an authorized act, it has occurred within the scope of authority and, if wrongful, can give rise to liability.         In a similar vein, Gillian Metzger (2003, 1456) urges us to rethink state action in private delegation terms. Under such an approach, the key question would not be whether private entities wield government power, but rather, whether grants of government power to nominally private entities are adequately structured to preserve legal accountability. As in Kennedy’s formulation, the central criterion for singling out particular private delegations for enhanced judicial scrutiny would be whether they authorize private entities to act on the government’s behalf—that is, whether they meet the legal requirements of agency.          Finally, a more holistic approach has been proposed by Jody Freeman (2003), who joins Kennedy in suggesting that privatization-cum-contracting may be “governmentalizing” the private sphere; that is, rather than reducing the scope of the state, contracting may be expanding government’s reach into realms traditionally thought private. Her point is not that we should use public law to force time-consuming and expensive standards and processes upon private entities (which contribute to some of the very problems of governance that efficiency-minded privatization advocates seek to solve). Rather, she argues, we might more creatively use vehicles such as conditional government spending, regulation, tort liability, and contract negotiation to motivate private actors to commit themselves to democratic norms of accountability, due process, and equality. Ellen Dannin has made similar suggestions (Dannin, 2001).         As Freeman has observed (2003, 1329-30), and as the events in Iraq and elsewhere have demonstrated, citizens may be complacent when the privatized arrangements of the new governance run smoothly, but they are less so when things go awry. Citizens expect government to ensure accountability for action taken on behalf of the public, no matter who the state’s agents might be. As privatization initiatives have begun to affect vital and politically contentious public goods, services, and activities, the public has appeared increasingly inclined to demand greater accountability from, and increased governmental supervision of, contractors. As one example, the private management of U.S. prisons, discussed above, has resulted in a steady stream of litigation in the federal courts, as well as a deluge of scholarly commentary. Reactions to voucher programs and the private management of public elementary and secondary schools have also generated a flood of studies, academic and popular commentary, and litigation. Citizen outrage over perceived abuses by Health Maintenance Organizations (HMOs) has led to litigation and state and federal reform legislation (Freeman 2003, 1330). Most recently, the behavior of the public and private agents charged with conducting the “war on terrorism” has come under fire. Although it remains to be seen whether, and to what extent, private contractors employed at the Abu Ghraib prison will be held to account for the abuses that took place there, there can be no doubt that members of the media, government officials, and citizens alike are outraged by the inhumane conduct that was enabled by and committed under the authority of the United States.          The rise of the “new governance” has not lessened concern over how state power is exercised, but it has reduced the visibility of that exercise. As Kennedy (2001) has noted“[B]y ‘reinventing’ government, by sharing ‘governance’ responsibilities with third parties and their subcontractors, we have created a mutant that is neither public nor private. The courts have encountered those mutations much as the blind men encountered the elephant: one finding a snake, one a wall, one a tree trunk.  Unless we can come to grips with the whole animal, protean and evolving as it is, and refashion both our jurisprudence and our public management theory to safeguard the distinction between public and private action—unless we can find a way to protect constitutional liberties without allowing ‘governance’ to engulf truly private enterprises—constitutional accountability will be relegated to a quaint and dusty corner of public management history.”