A Response to Simon Chesterman “We Can’t Spy….If We Can’t Buy!”

Martin Trybus is Professor of European Law and Policy and Director of the Institute of European Law at the BirminghamLawSchool of the University of Birmingham, UK. He is the author of European Defence Procurement Law and European Union Law and Defence Integration and co-edited European Security Law with Nigel White

Chesterman (see here) deals with an interesting aspect of federal US American public procurement law. While touching on certain foreign relations dimensions of the topic, the thought-provoking article discusses domestic rather than international law. However, since the federal intelligence budget of the United States is most probably the largest in the world and privatisation in this area is unlikely to be more advanced in any other country, large parts of his analysis are relevant and important for the rest of the world. Other countries toying with the idea of privatisation of their intelligence services can learn from Washington’s experience accumulated during the last eight years.

The primary objective of public procurement is for the government to acquire whatever goods, works, and services it needs to operate from the private sector. This primary objective is certainly a legitimate motivation for the privatisation of some intelligence services when government agencies are lacking the personnel, know-how, and equipment to provide them. Nevertheless, as most concisely explained by Steve Schooner in “Desiderata: Objectives for a System of Government Contract Law”, (2002) 11 Public Procurement Law Review 99-102, there are a number of other important objectives to be served by public procurement. In any national context the procurement of defence and intelligence supplies and services has to operate within a triangle of three objectives: (1) national security, (2) value for money, and (3) democracy and the rule of law. National security is the objective of the defence and intelligence efforts of any country. Procurement policy and law must ensure that this basic objective is not compromised. The notion of ‘value for money’ requires the procurement process to ensure that the government purchases goods and services under the economically most advantageous terms, most notably at the lowest possible prices without compromising quality and other economic considerations. There is a connection between national security and value for money since the earlier is affected when the security budget is depleted through inefficient procurement and necessary services cannot be provided as a result. Democracy and the rule of law form the basis of a country such as the United States. Not even the national security objective can be allowed to compromise these most basic principles on which any democracy is built. A balance needs to be struck between the three corners of this triangle.

The most striking point highlighted in Chesterman’s article is that the privatisation of intelligence services in the United Sates appears to compromise all three objectives. First, democracy and the rule of law are compromised. Escaping parliamentary and judicial scrutiny are important reasons for privatisation in the first place. Second, value for money is compromised since the private sector operates at higher costs and the necessity of security clearances limits competition to an extent undermining the economic rationale for privatisation in this sector dominated by national security and secrecy concerns. Finally, national security is compromised by the higher costs for intelligence on the one hand and intelligence and know-how being transferred outside the intelligence agencies on the other hand. The public interest enshrined in the three objectives of the triangle does not appear to be served by the current state of privatisation of intelligence services in the United States. It is rather the private interests of the companies providing intelligence services that dominate. The question is: what public interest is served?

The crucial concept of public procurement law discussed in this article is that of ‘inherently governmental’ functions that should not be delegated to private actors. Not only in the United States this or similar concepts represent the borderline between government functions that can be privatised and those which cannot. The definition of what is ‘inherently governmental’ depends to a large extent on the political context. In the United Kingdom, for example, the privatisation of prison services and even military installation has been a regular occurrence through the Private Finance Initiative and Public Private Partnerships. In contrast, many countries in mainland Europe consider these services to be ‘inherently governmental’ and therefore unsuitable for privatisation. It is the opinion of this author that there are intelligence services that are not inherently governmental and hence can be privatised. However, the majority of these services are inherently governmental since they are carried out to serve the public interest and give those who provide them special powers over their own citizens and those of other countries. Event the narrowest of definitions of the notion ‘inherently governmental’ should for example include the interrogation of suspects. If this is not included then the notion is en empty shell and cannot be what the legislator intended. The percentage of 70 per cent of the intelligence budget being spent on the private providers indicates that the borderline set by the concept of ‘inherently governmental’ is not always respected.     

Last week we witnessed the inauguration of a new US President. The administration during which most of the developments discussed by Chesterman occurred is over. In his first executive order as president, Barak Obama already started to limit the phenomenon of the ‘revolving door’. A day after the inauguration the new President announced:      

“We need to close the revolving door that lets lobbyists come into government freely and lets them use their time in public service as a way to promote their own interests over the interests of the American people when they leave.”     

Financial Times, 21 January 2009 (http://www.ft.com/cms/s/0/0f9de7b2-e7f1-11dd-b2a5-0000779fd2ac.html?nclick_check=1)

While admittedly this new policy is directed at lobbyist it can be interpreted as setting the tone for officials of the intelligence agencies transferring to private intelligence companies. This could lead to a ban on public servants in federal intelligence agencies from working for private intelligence companies. The new US President intends a “clean break from business as usual” (Financial Times, ibid.). It remains to be seen but seems likely that this will also break with the practices of privatization of intelligence so skillfully discussed by Simon Chesterman in this article. His analysis might well prove to be useful for the new administration in assessing the kind of business they want to break from.