Money for Nothing?

Contractor Support from an Economic Perspective

Authored by: Eugenio Cusumano

The Routledge Research Companion to Security Outsourcing in the Twenty-first Century

Print publication date:  June  2016
Online publication date:  June  2016

Print ISBN: 9781472426833
eBook ISBN: 9781315613376
Adobe ISBN: 9781317042228


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Since the beginning of the 1980s, the privatisation of a number of activities previously performed by government bureaucracies has gained momentum as a way to reduce the size, cut the costs and increase the effectiveness of the state machinery. Outsourcing has also become increasingly widespread within foreign policy bureaucracies and military organisations. Both the effectiveness and the economic efficiency of outsourcing security and military support, however, remain disputed. Advocates of privatisation have defended contractor support as a way to reduce personnel costs and create leaner, more efficient and more effective armed forces (Kinsey and Patterson 2012, Carafano 2008, Cohen 2000). Critics, by contrast, have highlighted that contractor support does not only suffer from problematic political, strategic, legal and ethical implications, but it also fails to produce meaningful cost savings (Leander 2013, Stanger 2011, Avant 2005). Insufficient competition, transaction costs and a host of negative externalities may even make the resort to contractors more expensive than having certain tasks performed in-house by uniformed personnel.

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