For Security in Iraq, a Turn to British Know-How
With U.S. Contract Up for Grabs, Congresswoman Requests Audit of Major Bidder

By Alec Klein
Washington Post Staff Writer
Friday, August 24, 2007; D01

In the 1990s, there was the dot-com boom. Now, there's the Iraq bubble.

That's what British security contractors have come to call the business opportunity in the Middle East. The British may have lost their empire but they have quietly established a major presence in the distant outpost of Iraq, securing lucrative contracts to safeguard not just British interests but the U.S. military. And a private British firm may be poised to land the largest U.S. security contract in Iraq.

About 15 British security contractors have set up shop in Iraq in the aftermath of the U.S.-led invasion. Of the estimated 20,000 private security employees operating in Iraq today, about 4,000 come from Britain, according to the British Association of Private Security Companies, an industry trade group established last year to accommodate the burgeoning international security business concentrated in London.

More than half of the bidders and the two top contenders for the new U.S. contract, worth up to $475 million, are British firms, said sources who declined to be identified because of the confidential nature of the bidding process. The result: Policymakers in Washington have begun to question why the military, using U.S. taxpayers' money, has been delegating the task of protecting the lives of American commanders, troops and civilians in Iraq in large part to other nations' private companies.

Concerns have centered largely on the British firm Aegis Defence Services, a front-runner for the new contract, which is to provide intelligence services to the U.S. Army and protect the Army Corps of Engineers on reconstruction work in Iraq. Aegis is headed by a retired British military officer, Tim Spicer, who, after being hired to defeat insurgents in unstable countries, once wrote that his kind were "directly descended from the classic mercenary companies of antiquity."

Just don't call him a mercenary now. His current company is in the business of "security and risk management," and it comes with all the accouterments of a mundane accounting firm: press releases, lobbyists and diversified products, like a specialty in "Business continuity, crisis management and contingency planning." A major difference from the Fortune 500: The Aegis chief executive is handy with a Glock pistol, and employees in Iraq carry AK-47s.

Rep. Marcy Kaptur (D-Ohio), a member of the House Appropriations defense subcommittee, has requested that the Special Inspector General for Iraq Reconstruction audit Aegis. "It's a foreign contractor, that's number one," she said. She also questioned Spicer's past, in which he operated private military forces in such exotic locales as Papua New Guinea and Sierra Leone. "Spicer is such a swashbuckling guy for a mercenary," Kaptur said.

Aegis holds what until now has been the biggest U.S. security contract in Iraq, a $293 million, three-year deal that it won in 2004 . The inspector general criticized some of Aegis's operations in Iraq in a 2005 audit, finding for instance that the firm had not adequately vetted Iraqi employees to ensure they didn't pose a threat. The inspector general has granted the congresswoman's request to reexamine the British firm.

Aegis said it has addressed all of the concerns raised two years ago by the inspector general, and the firm touts its work there on behalf of the U.S. government. "None of our clients have been killed in over 3 million miles traveled" throughout Iraq, said Kristi M. Clemens, Aegis's executive vice president.

ArmorGroup International, a British firm with a major presence in Iraq, is considered the other top strong contender to win the U.S. security contract, sources said. A third British company, Erinys International, has presented an aggressive court challenge to win the contract after the U.S. military rejected its bid. Control Risks, yet another British security company, confirmed that the Americans rejected its joint bid with other firms.

British security contractors aren't only catering to American and British governments in Iraq. They have also cultivated commercial clients, including energy, engineering, investments and consulting firms. Work is so fruitful there that private security contractors are probably the largest British export to Iraq, according to the Economist magazine.

About 30 British private security companies operate in hot spots worldwide, including Afghanistan, though they haven't made many inroads in treacherous sectors of the Latin America market -- yet. "British companies are trying to break in, particularly in Colombia," said Sabrina Schulz, director of policy and research at the British trade group.

Why is the field crowded with so many British companies? "They've been doing security for a while," said Doug Brooks, president of the International Peace Operations Association, a District trade group. Brooks may be understating the case. British experience in security dates back centuries, when the empire operated in far-flung locales.

The rise of international terrorism in the 1970s offered a ready opportunity for the British to capitalize on that long experience. Business executives and wealthy families increasingly found themselves targets of kidnappers. In 1975, the London insurance broker Hogg Robinson created a subsidiary called Control Risks, which offered advice to clients on how to negotiate with kidnappers. Some of its experts were recruited from Britain's elite SAS military officer corps. The consulting business took off. "Wherever a kidnapping took place, it was covered," said Simon Adamsdale, a co-founder of Control Risks, which became a separate company in the early 1980s.

In 2003, Control Risks began offering armed services when it won a contract in Iraq to provide security on behalf of the British government. Control Risks has also done work for American commercial interests in Iraq, and it has about 300 employees there.

The other long-established private security firm in the industry is ArmorGroup, which was founded in 1981 as Defence Systems Ltd. It, too, opened shop in London with experts who had served as SAS officers, and its security services initially focused on countering kidnappings.

The firm found a trove of clients in the gas and mineral extraction business, who often worked in remote terrain. Defence Systems trained private security teams, and the use of force was rare; brandishing a shotgun often sufficed. "Nothing more serious than bird scaring," said Christopher Beese, ArmorGroup's chief administrative officer who has been with the firm for 18 years. ArmorGroup has about 1,300 employees in Iraq, and a major client is the U.S. government, for which it provides convoy security.

Several British security firms say they are better suited for the job in Iraq than the Americans are. Jonathan Garratt, who served as a British platoon commander in Northern Ireland and co-founded Erinys in 2001, said that the British tend to maintain a low profile while American contractors in Iraq have a more overt presence, often marked by employees sporting goatees, wrap-around sunglasses and bandannas. "We prefer people to dress smartly," he said. His employees in Iraq wear beige trousers and blue polo shirts (along with black body armor).

British forces during the conflict in Bosnia in the early 1990s used to call Americans "Ninja Turtles," said Peter W. Singer of the Brookings Institution, the author of a book on the private military industry. That's because U.S. troops often wouldn't venture off base without an elaborate shell of military garb -- helmets, flak vests, ammunition. The British, by comparison, frequently went out in little more protection than soft hats. Beese, of ArmorGroup, said the British are merely "good at sitting down in the sand with a cup of tea and talking things over."

Perhaps ArmorGroup's biggest competitor is Aegis, which has about 1,200 employees in Iraq. The firm was co-founded in 2002 by Spicer, who retired as a lieutenant colonel before venturing into private military services.

Spicer declined to comment for this article. But his autobiography, "An Unorthodox Soldier," offers a glimpse into why outsiders may have gained traction in winning major U.S. security contracts. "As for the USA," he wrote, "politicians there are hampered by what I have come to think of as the CNN factor -- a deep-rooted concern about the reaction of the domestic voter." He cited the gruesome example of butchered bodies of U.S. troops being dragged through the streets of Mogadishu, Somalia, in 1993 caught on prime-time television. The American outcry, he noted, led to the military's withdrawal and created an opportunity for outside firms like his predecessor company, Sandline International, to step in. "[S]omeone," he said, "has to do it."

Staff researcher Richard Drezen contributed to this report.