Privatizing National Defense: Utilizing Market Forces

Privatizing National Defense: Utilizing Market Forces

Abstract

During wartime less U.S. citizens voluntarily join the armed forces than the armed forces need to operate. In the past the Department of National Defense has held a mandatory draft, forcing able bodied citizens to fight. Recently, The Department of National Defense has been trying a new solution, hiring privatized units during times of war. In this paper we describe that evaluate the possibilities that the Department of National Defense has in order to fix the shortage of military units. Our Client, the United States National Department of Defense has been having budget problems and is very bottom oriented. We recommend that they use American forces during peacetime and a combination of American and privatized forces during wartime. We suggest that they privatize as much production, storage, and transport as possible through FGC’s.

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Paper Outline

1. Introduction

2. Background

3. Description/ Evaluation of Alternatives

3.1 No Change

3.2 Private Military Contractors

3.3 Increase Government Spending

3.4 Federal Government Corporations

3.5 Conscription

4. Selection of Preferred Method/ Implementation

5. Conclusion

References

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1. Introduction

The mission of the Department of National Defense is to protect the United States and its people while promoting peace. The Department of National Defenses’ other operations are manpower, defense, support and supplies, planning, technology enhancement, and engineering. During times of peace the United States’ obligations are its bases, a small standing army, protecting the borders and coasts, and maintaining peace. During wartime the United States Military is obligated to protect the country and its interests.

National Defense is a public good. In general it is non-exclusive and until recently it had minimal competition. Though, National Defense is not a pure public good. For example shippers benefit more from the coast guard than others, and certain ports, dominated by certain shippers will require more Coast Guard ships to protect them.

Because of the nature of the military the amount of units needed varies greatly, especially during times of war. Generally, during times of war less Americans are willing to join the armed forces than are needed to fulfill obligations. As a result, the United States military is forced to look to other options in order to have enough manpower to continue wartime operations.

Our client, the federal government of the United States, and specifically the Department of National Defense, has requested that we evaluate all of their contracting options for national defense. Since September 11th, the government has been receiving criticism that they are overspending in an unnecessary war. The government still believes that this war is necessary, but they would like to minimize their costs and the deaths to American Soldiers.

In this paper we present the current state of the United States Military and predict what will happen if nothing is changed. We then describe the four other major options that face the United States Military. Finally, we describe our own preferred alternative, an original mix of public-private partnerships.

2. Background

Privatization of National Defense has existed for centuries in the form of mercenaries. It was not until the last couple hundred years that privatized armed forces has become a thriving business. The United States first used privatized military following the Cold War. At that point the ratio of private forces to public forces was about 1 to 100. During the Gulf War in 1991 the ratio of private contractors to public soldiers was 1 to 50. In the conflict in Bosnia in 1996 the ratio was 1 to 10. Today there are 20,000 private contractors in Iraq, a ratio of 1:8. The government has also begun to privatize the production and distribution of war supplies because private companies can provide these goods and services