Post-war reconstruction will continue to create lucrative business
opportunities for contractors for years to come, concludes a study by
the Industrial College of the Armed Forces.
Firms that provide “reconstruction and vital infrastructure” services
include primarily engineering and construction companies that compete
for aid-sponsored reconstruction contracts such as rebuilding roads,
reconnecting power and water supplies, and managing projects.
The industry is “robust and prosperous with intense competition among
service providers,” said the study, which was written by a group of
military officers and government civilian officials. Since the end of
the Cold War, the United States has on average engaged in post-conflict
rebuilding operations every 18 months, they point out. The demands on
the nation to “respond to the needs of failing states, countries
emerging from conflict, or regions recovering from natural disasters
are likely to continue,” the study said.
In 2004, 151 companies doing reconstruction work in Iraq and
Afghanistan received contracts during a two-year period that generated
combined revenue of almost $52 billion. This marked a six-fold increase
over the 2002-2003 period, in which only 72 companies were involved in
contracts in Iraq and Afghanistan, with combined revenue of more than
$8 billion.
The top four companies involved in reconstruction work in Iraq and
Afghanistan from 2002 to 2004 — Halliburton, Parsons Corp., Fluor Corp.
and Washington Group International — received a combined total of more
than $23 billon in contracts.
The 21st century will see increased demands placed on industry, the
study predicts. The most marked security phenomenon since the end of
the Cold War has been the proliferation of armed conflict within
states. The United Nations International Committee on Intervention and
State Sovereignty forecasts that the number of intra-state conflicts
and natural disasters experienced in the 1990s and in recent years will
increase in the coming decades. “It will take decades to complete
reconstruction requirements in developing countries,” the report said.
Despite the considerable challenges that reconstruction firms face,
such as unstable political systems, corruption and lack of security,
the industry is expected to thrive, especially given the increased U.S.
government and military support to post-war stabilization. According to
Department of Defense directive 3000.05 — dated November 2005 —
“Stability operations are a core U.S. military mission … that shall be
given priority comparable to combat operations.”
The study suggested that the domestic and global benefits of post-war
reconstruction outweigh the challenges and risks. “Reconstruction and
economic development are often better investments of national resources
than military action,” the report said.
The industry “significantly contributes to today’s national security
environment and its industrial base,” the study noted. “The industry
supports implementation of our nation’s national security strategy and
promotes domestic and global partnerships.”
The ICAF study group recommended that the U.S. government establish
“realistic performance metrics relevant to local reconstruction efforts
to determine success.” It also suggested that the United States should
focus on improving interagency collaboration and coordination,
particularly between the Defense and State Departments.
The government also should develop a process to incorporate
private-sector “best practices” into the complex planning and execution
of reconstruction tasks, the study said.
Other recommendations offered include the need to reduce congressional
earmarks that attempt to conduct foreign policy through appropriations
and to improve “strategic communications” to enhance the U.S. image
around the world.
Those interested in the subject of post-war reconstruction and
stabilization should note that the National Defense Industrial
Association is conducting a symposium this month titled, “Stability,
Security, Transition, and Reconstruction Operations.” It will take
place Sept. 3-4, at The Ritz-Carlton, Pentagon City, Arlington, Va.
Additional information is available on the website www.ndia.org/8420.
Alan L. Gropman is a distinguished professor of national security
policy at the Industrial College of the Armed Forces, National Defense
University. The views expressed in this article are those of the author
or industry study group and do not reflect the official policy or
position of the National Defense University, the Defense Department or
the U.S. government.
This article has been derived from an ICAF student/faculty industry
report. To download a PDF copy of the study, click
here.
Previously published ICAF studies can be found in “Archives.” Every
issue of National Defense in 2008 featured an ICAF study. The studies
are posted each month under the subhead “Industry Study.”