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In Iraq, a Private Realm Of Intelligence-Gathering
Firm Extends U.S. Government's Reach

By Steve Fainaru and Alec Klein
Washington Post Foreign Service
Sunday, July 1, 2007

BAGHDAD -- On the first floor of a tan building inside Baghdad's Green Zone, the full scope of Iraq's daily carnage is condensed into a 30-minute PowerPoint presentation.

Displayed on a 15-foot-wide screen, the report is the most current intelligence on significant enemy activity. Two men in khakis and tan polo shirts narrate from the back of the room. One morning recently, their report covered 168 incidents: rocket attacks in Tikrit, a cow-detonated bomb in Habbaniyah, seven bodies discovered floating in the Diyala River.

A quotation from Gen. David H. Petraeus, the top American commander in Iraq, concluded the briefing: "Hard is not hopeless."

The intelligence was compiled not by the U.S. military, as might be expected, but by a British security firm, Aegis Defence Services Ltd. The Reconstruction Operations Center is the hub of Aegis's sprawling presence in Iraq and the most visible example of how intelligence collection is now among the responsibilities handled by a network of private security companies that work in the shadows of the U.S. military.

Aegis won its three-year, $293 million U.S. Army contract in 2004. The company is led by Tim Spicer, a retired British lieutenant colonel who, before he founded Aegis, was hired in the 1990s to help put down a rebellion in Papua New Guinea and reinstall an elected government in Sierra Leone. Several British and American firms have bid on the contract's renewal, which is worth up to $475 million and would create a force of about 1,000 men to protect the U.S. Army Corps of Engineers on reconstruction projects. Protests have held up the award, which is expected soon.

The contract is the largest for private security work in Iraq. Tucked into the 774-page description is a little-known provision to outsource intelligence operations that, in an earlier time, might have been tightly controlled by the military or government agencies such as the CIA. The government continues to gather its own intelligence, but it also increasingly relies on private companies to collect sensitive information.

The deepening and largely hidden involvement of security companies in the war has drawn the attention of Congress, which is seeking to regulate the industry. The House intelligence committee stated in a recent report that it is "concerned that the Intelligence Community does not have a clear definition of what functions are 'inherently governmental' and, as a result, whether there are contractors performing inherently governmental functions."

"There is simply not the management and oversight in place to handle this properly, not only to get the best of the market but to ensure that everything is being done," said Peter W. Singer, a Brookings Institution senior fellow who wrote a book on private security and has been critical of the lack of government oversight. "It leaves a lot of legal questions that are open or dodged."

The government has outsourced a wide range of security functions to 20,000 to 30,000 contractors in Iraq; the exact number has not been disclosed. Contractors protect U.S. generals and key military installations and have served as prison guards and interrogators in facilities holding suspected insurgents, among other responsibilities.

Aegis's intelligence activities include battlefield threat assessments, the electronic tracking of thousands of private contractors on Iraq's dangerous roads, and community projects the company says are designed in part to win over "hearts and minds." The new contract calls for the hiring of a team of seasoned intelligence analysts with "NATO equivalent SECRET clearance." According to a summary of their responsibilities, the analysts are to conduct "analysis of foreign intelligence services, terrorist organizations, and their surrogates targetting DoD personnel, resources and facilities."

Much of this is already being done by Aegis. "We're more of an intel company," said Kristi Clemens, the company's Washington-based executive vice president. "We're not guns for hire."

Known internally as Project Matrix, Aegis's U.S. Army contract has multiple aims. The company, for example, runs more than a dozen Reconstruction Liaison Teams in which contractors armed with assault rifles and traveling in armored SUVs visit reconstruction projects to assess their progress and the levels of insurgent activity. "Their mission is to provide 'ground truth' to the Army Corps," Clemens said.

Aegis has also spent about $425,000 in company money and private donations on more than 100 small charity projects such as soccer fields and vaccination programs. The projects enable the company to build relationships in the communities in which it operates and gather information at the same time. "It's not intelligence as I understand it; it is understanding the water in which we swim," said David Cooper, who directs the program.

The company, for instance, spent $1,300 distributing tracksuits to girls' schools in an area of eastern Iraq where residents routinely pelted Aegis security teams with rocks, according to Justin Marozzi, Aegis's former director of civil affairs, who now is a London-based consultant. Through relationships forged on the project, the company learned of an insurgent cell that was working out of the governor's office, he said. The military "acted on" the tip, Marozzi said. He declined to elaborate.

Aegis recently launched a second charity to operate in Iraq and elsewhere called Hearts and Minds. The charity project "goes back to basic counterinsurgency doctrine," Clemens said. "You need local people on your side."

Aegis also provides on-demand "threat assessments for the people that travel the battlespace" throughout Iraq, said Robert Lewis, who directs Project Matrix as the company's chief of staff in Baghdad. One intelligence assessment, developed recently for the Army Corps of Engineers and provided independently to The Washington Post, included a detailed map of previous attacks and analyzed the intent and capabilities of Shiite militias and criminal gangs operating in Basra province. "There has been collusion with elements of the Basra" security forces, "which has increased the capability of the militias," concluded the report, which was compiled by Aegis's intelligence officer for the region.

Aegis declined to make its intelligence officials available for comment but said the information is unclassified and is gathered from a variety of open sources, including thousands of private security contractors who operate on Iraq's roads. Dashboard transponders enable Aegis to track dozens of private security companies that register with the Reconstruction Operations Center. The system helps to alert the military to armed contractors on the battlefield, preventing potential "friendly fire" incidents, and to mobilize an emergency response when contractors come under attack.

Aegis operates five remote command centers on coalition bases throughout Iraq. Col. Timothy Clapp, who until recently oversaw the system for the military, said Aegis is integrated into the Army Corps of Engineers' intelligence and operations chains of command.

The military relies on private contractors to offset chronic troop shortages. "If we had a 2 million-man army, we wouldn't be having this conversation," said Ed Soyster, former director of the Defense Intelligence Agency.

But the scope of the contractors' responsibilities is sometimes unclear, particularly in the area of intelligence-gathering. Singer, of the Brookings Institution, said intelligence contracting is growing "in a major, major way" with little government oversight.

Paul Cox, press secretary for Rep. David E. Price (D-N.C.), asked: "Who's overseeing this, and has Congress been informed to the extent that contractors are involved in intelligence activities? . . . We at least need to get an accurate picture of what's being contracted." Price has requested a Government Accountability Office investigation of private security contractors in Iraq, including Aegis. Rep. Marcy Kaptur (D-Ohio), a member of the House Appropriations defense subcommittee, has requested an audit of Aegis by the special inspector general for Iraq reconstruction.

Clapp said the Army Corps of Engineers had a small role in running the Reconstruction Operations Center. He said it was difficult for the military to ensure that security companies follow regulations to report all shooting incidents through Aegis. "You have to take it with a grain of salt," he said. "Some of the companies clearly underreport."

In addition, Blackwater USA and DynCorp International, two of the largest security firms in Iraq and both American companies, refuse to participate in the Reconstruction Operations Center, essentially making their movements invisible to other private security firms. (Blackwater bid on the new contract, then filed a protest with the GAO when it was eliminated from the competition.) Blackwater said that its movements are tracked by the military under separate U.S. government contracts and that it thus does not need to participate. DynCorp said it also is monitored separately.

The idea for the center originated after four Blackwater employees were ambushed in the city of Fallujah in March 2004; their charred remains were strung from a bridge overlooking the Euphrates River. The U.S. military was unaware at the time that the security contractors were traveling in the area.

Jack Holly, a retired Marine colonel who heads the Army Corps of Engineers' logistics directorate, said the center was originally envisioned as "a fusion organization for all of the information gathered among the private security companies." The information would be useful to both the military and thousands of private security contractors who operate on Iraq's supply routes and face the same insurgent threats.

But Holly said the usefulness of the center has been limited because each time a company provides intelligence, it is classified secret by the military and not distributed. This has deterred the private security contractors from participating, since they don't benefit from intelligence collected by the center. "Our perception was that the military would have a huge repository of added intel, which they could then pass on," Holly said. "But they prevented anyone from wanting to participate, and so it's never happened."

Holly said the center has been reduced to "a great display board of tracking. It's like, 'Come watch the lights move.' "

Aegis's Lewis acknowledged, "We can't disseminate classified information, so that is problematic for us." He said he is not certain how the military uses the information compiled through the center. "All that stuff is shoveled to" the Army Corps of Engineers, he said. "It's literally: 'Here it is. Do what you can.' Whatever happens to it after that is their business."

Three years ago, Aegis was an unlikely choice to run the center. The company had been co-founded in 2002 by Spicer, who commanded the 1st Battalion Scots Guards, a British army unit, and served in Northern Ireland, the Falkland Islands, the Persian Gulf War and Bosnia. Spicer titled his autobiography "An Unorthodox Soldier."

Spicer's experiences in Papua New Guinea and Sierra Leone are documented in multiple accounts, including Spicer's autobiography and Aegis's Web site.

In 1997, the government of Papua New Guinea hired Spicer and his former private military company, Sandline International, for $36 million to train and equip forces to put down a rebel movement that had closed a major copper mine. Rather than quelling the rebellion, Sandline's presence sparked civil unrest; Spicer was briefly jailed on a weapons charge that was subsequently dropped. The prime minister of the government that hired him soon fell. Spicer said he was supporting a legitimately elected government.

The following year, Sandline was contacted by an international businessman, Rakesh Saxena, to reinstate the elected government of Sierra Leone, which Saxena hoped would grant him diamond and mineral concessions. The operation was successful, but allegations that Spicer violated a U.N. weapons embargo caused a scandal that came to be known in Britain as the "Sandline Affair." Spicer says he conducted the operation with the British government's knowledge.

"Tim Spicer is a mercenary," said Robert Young Pelton, an adventure writer whose book "Licensed to Kill" is about the private security industry. "Didn't anyone Google him?"

Spicer declined to be interviewed.

After winning the U.S. Army contract, Aegis almost immediately ran into problems. A special inspector audit found that the company failed to perform adequate background checks on some Iraqi employees. The company said it had just won the contract and immediately addressed the issue. Then, in October 2005, a video surfaced on the Internet, showing a security contractor allegedly employed by Aegis firing near civilian vehicles to the Elvis Presley song "Mystery Train." Aegis said that it investigated the incident and found that the video was posted by a disgruntled employee who was let go.

But criticism of the company has since subsided. Aegis said it has conducted more than 21,000 private security details without any casualties to Army Corps of Engineers personnel. Holly, who has been in Iraq for 3 1/2 years, said Aegis "came in and it was like: 'We're gonna do this. Were gonna do that. Don't tell us how to do this.' It was almost like they were saying: 'We're here, her majesty's representative. Screw you and the colonies.' It's hard to embrace that.

"But when we sit here today, and I look at how Aegis has matured and evolved as a company and as a private security organization, I'd say they are pretty damn good. They have created an architecture" of security and intelligence.

Klein reported from Washington. Staff researchers Julie Tate in Washington and Richard Drezen in New York contributed to this report.

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