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Monday, August 26, 2013

Industry Talk: SOFREP Buys SpecialOperations.com

Filed under: Industry Talk — Tags: , , , — Matt @ 5:21 PM

This is some interesting news.  Apparently SpecialOperations.com was sold to SOFREP. Here is the quote from Soldier Systems.

Now, SOFREP plans to take SpecialOperations.com back to its roots and reinvigorate it as a SOF wiki that contains history, education and serves as a learning portal for worldwide SOF. If anyone can do it, it’s the staff at SOFREP.

I asked Brandon Webb if they were going to keep the forum and at this point he was unsure. Brandon updated me that SOCNET is a separate entity and will remain in place.

If you are not familiar with SpecialOperations.com, you should really check it out if you are interested in researching this industry or special operations. A big hat tip to Soldier Systems blog for the heads up on this.

The other really smart thing about this move is the URL of specialoperations.com has some incredible search value. Type ‘special operations’ into Google and it captures first page of search for those key words.

So will this will be a paid for subscription or a free service? According to SOFREP, it will continue to be free and open to the public as a special operations academic and historical resource. Congrats to SOFREP and good luck with revamping the site. –Matt

Edit: 08/27/2013 The owners of SOCNET forum have contacted me to say that their forum is a completely separate thing from specialoperations.com and that SOFREP does not own it.

 

 

 

Monday, March 25, 2013

Industry Talk: US Embassy In Iraq Reducing Staff From 10,500 To 5,500 By End Of Year

Filed under: Industry Talk,Iraq — Tags: , , , — Matt @ 10:01 AM

Wow, that is a pretty substantial cut in personnel. Although from the sounds of it, there will still be a significant security force to support the fewer than 1,000 diplomats that remain. Which makes sense, because the embassy is still a large area to cover down on, regardless of how many folks are in it.
If anything, the reduction in security folks would be WPS personnel who would normally provide PSD teams to go out into the countryside. But even that might not see too much of a reduction just because the diplomats that are left, still have to go outside the wire. I also wonder how many missions they were really doing ever since the troops pulled out and the threats not going away in Iraq? If anyone with an inside track on this would like to comment, feel free to do so below.
I also think it is telling that we have had this massive presence at the embassy in Iraq, and the return on investment has been so poor. Meaning recently, Secretary of State John Kerry visited Iraq and got into it with Iraq about their policy of supporting the Assad regime with cargo/weapons flights coming out of Iraq into Syria. Obviously this is a source of contention, and Iraq could care less what the west wants them to do. So much for having a thousands of diplomats and a $750 million dollar embassy? lol –Matt

 

Massive American Embassy in Baghdad cutting staff sharply decade after war in Iraq began
March 20, 2013
A decade after the start of the war in Iraq, the American diplomatic footprint here is shrinking fast.
As recently as a year ago, the immense U.S. Embassy in Baghdad and other sites around the country were staffed by more than 16,000 personnel. Today, that number has fallen to about 10,500, U.S. Ambassador Robert Stephen Beecroft said this week.
By the end of the year, Beecroft said he expects to have just 5,500 employees in Iraq. Most of them will be security personnel and other outside contractors assigned to support the fewer than 1,000 diplomats who remain. More cuts are expected beyond the end of the year.
“That number will continue to go down. . And they’ll go down largely on the contracting side,” Beecroft said in his residence on the heavily guarded compound on the banks of the Tigris River.
The sprawling, fortress-like U.S. Embassy officially opened in early 2009 at a cost of more than $730 million as the largest American mission in the world. But it has been under pressure to cut costs.
The downsizing in many ways reflects how sharply wartime assumptions about the extent of American influence in Iraq have shifted since construction on the Vatican City-sized compound began in 2005. Sweeping reconstruction and nation-building efforts championed early on are much less of a priority today, even as Iraq’s Shiite-led government forges stronger ties with neighboring Shiite powerhouse and U.S. foe Iran.
America still has influence here, with Iraq-based diplomats and officials in Washington in frequent contact with Iraqi political and military leaders. But Washington was unable to win Iraqi guarantees that would have allowed a continued military presence — something that deprived the U.S. of important leverage in Baghdad, former U.S. Secretary of Defense Leon Panetta recently told a government watchdog.

(more…)

Wednesday, December 19, 2012

Industry Talk: Afghanistan Seeks Taxes From Contractors To US

These guys kill me. What part of this bilateral agreement do the Afghans not understand? Here it is again, just to emphasize how stupid this is.

A 2003 bilateral agreement states the U.S. government, “its military and civilian personnel, contractors, and contractor personnel shall not be liable to pay any tax or similar fees assessed within Afghanistan.” A subsequent 2004 Military Technical Agreement also carved out a tax-free status for contractors to the U.S., a view that has been reinforced by U.S. officials in correspondence with Afghan officials.

Not only that, but because of this dumb APPF force, these companies are forced to used government security. I don’t know if the APPF was protecting Contrack International or not during this latest attack, but I do know that according to the business folks in that area, they have been screaming for more security in that area for awhile. It is a logistics hub, and attacks on such sites are part of the Taliban goal of inflicting economic damage.

We will see if the US can press back and protect these companies that are essential to the war effort. I think this quote says it all, if the US cannot square this away.

A person involved in logistics issues said the matter could come to a head if the Afghan government imposes fees or restrictions on cargo that slows the delivery of goods to forward operating bases, or FOBs.
“We’ve been told [by the coalition] to reduce stocks. So they’ll run out of fuel and they’ll go on MREs on some of these FOBs,” the person said, referring to the military’s packaged rations. “And little Johnny’s going to call Mom, and that’s now going to be all over the press.”

We will see how it goes? –Matt

 

 

Afghanistan Seeks Taxes From Contractors to U.S.
By NATHAN HODGE
Afghanistan has launched tax audits of major contractors to the U.S. military, government officials say, in a bid to shore up the country’s finances as the international military presence winds down and reconstruction funds dry up.
In particular, Kabul is focusing on the U.S. military’s main food supplier in Afghanistan, Supreme Foodservice GmbH, alleging that the company and similar logistics firms are abusing their status to illegally bring taxable goods into the country for resale.
Supreme says it isn’t engaging in any commercial activity in Afghanistan that should make it liable for taxes.
Kabul’s move potentially puts the Afghan government at odds with Washington, which has viewed, with limited caveats, materials imported to support the 66,000 U.S. forces here as exempt from taxation and customs fees. Since 2005, the Pentagon spent more than $7.9 billion on its food-supply contract with Supreme alone, awarding the company an additional $1.5 billion extension contract this past summer.

(more…)

Thursday, October 25, 2012

Industry Talk: As The Wars Wind Down, How Will The Industry Adapt?

The most vulnerable firms, many in industry say, may be those who have relied on ongoing U.S. military work that is now drying up as the Pentagon “Operational Contingency Allowance” – the additional funding earmarked for the wars – tapers off.
At its peak, the U.S. Commission on Wartime Contracting, a bipartisan legislative commission established to study wartime contracting in Iraq and Afghanistan, estimated there might have been as many as 260,000 contractors in the two countries...
“At the moment, everyone is looking for work that is not OCA-funded,” one industry executive told Reuters on condition of anonymity, saying he expected an era of mergers and even bankruptcies. “It’s going to be like when the tide goes out at the beach and you suddenly find out who has been naked.”

With this post I wanted to identify some trends in the industry that I am seeing as the wars wind down and budgets get tighter. I have posted a couple of articles below that will give you an idea as to what companies are doing and what their strategies are for survival or for growth.

What is interesting with DynCorp and EODT, is their focus on maintaining dominance as to what they are good at. DynCorp is all about aviation and EODT is all about mine clearing. Although both companies do other things in the industry, it is obvious in the posts below that they are taking actions in the market that position them as leaders in these niches.

EODT merging with Sterling International, to form a new company called Sterling Global International is an example of the kind of mergers the top quote was referring too. What is interesting with this move is that for mine clearing operations in the worst parts of the world, you need all sorts of folks to make that happen. From the security to protect those mine clearing technicians to the logistics tail to support an operation. These are all things that EODT did in Iraq and Afghanistan, and by joining forces with SI, they are able to reach other markets. Here is a hint to what they are looking at.

The release said Sterling manages a $175 million weapons removal and abatement program for the State Department, and Kaye said that in comparison to EODT, the Virginia firm is more involved in the work of nonproliferation.
“While the activities that (EODT does) are nonproliferation, they’re much more in a mass-quantity stockpile reduction,” he said. “Sterling is on the forefront of … assisting countries with treaty compliance (and) establishing mine action centers.”
Kaye said Sterling has approximately 150 employees, and the new company will have about 3,500 employees.
After a round of layoffs earlier this year, EODT said it had 250 American employees and 3,000 foreign nationals.
Kaye said Sterling International’s program manager for conventional weapons destruction will remain in that position with the new company……The release said the combined companies will continue to serve existing customers, but will also expand into markets including energy exploration and development and judicial and criminal justice support.

So this new mega mine clearing company will continue to pursue munitions destruction and assist countries in compliance with treaties. I also imagine the Arab Spring is leaving a lot of unexploded munitions all over the place, which if investors want to do business in some of these places, someone needs to remove this dangerous trash of war.

But the big one that perked me up is the mention of energy exploration that was talked about in the next article. One company mentioned was Garda World and their work in Iraq.

Even with U.S. troops gone from Iraq and the number of government contractors down, some companies say they are finding strong demand from energy firms for protection, particularly around Basra in southern Iraq.
“We are as busy as ever and the need has never been greater,” said Pete Dordal, senior vice president at GardaWorld, a global risk management and security services firm. “I don’t want to say it’s a gold rush, but business is very good.”

A gold rush? Interesting, and I imagine that with unrest in the middle east, all energy companies are looking hard at their security and hardening up.  Iraq is just one example of the kind of risk that energy companies are willing to make when it comes to resource extraction in really bad places. Libya is another example, and capable PMSC’s that can protect these energy companies are essential. (11 plus years of war have definitely produced companies that are certainly capable of providing protection in war zones and third world countries)

Another area mentioned was maritime security and the demand for that. Although I am seeing that market getting extremely saturated with companies, all fighting over contracts. But it is an area to get into and I do not see piracy going away any time soon. An example of that is that piracy increased off the west coast of Africa.

The article made a mention of the whole private navies thing, and they are right. I have not seen this get off the ground yet. It’s close, and we will see if it ever sets sail.

One area of business that was brought up in the article was evacuation of clients from countries that have fallen due to the Arab Spring or other disasters. Check out the contract Control Risks had in Libya, and I imagine the company they did this for, paid a pretty penny.

Private security firms, insiders say, evacuated the vast majority of the thousands of foreign nationals plucked from Libya as its civil war erupted early last year. Most were contracted by other private firms, although governments also used them heavily. London-based Control Risks told Reuters last year that China hired it directly to fly hundreds of its nationals out by airliner.

Other areas mentioned or business that I think will add to the market is supporting UN missions like AMISOM, or supporting the post-reconstruction efforts in countries after wars or disasters. Yet again, thanks to the Arab Spring and the wars, and the destruction that has come out of that struggle, there are plenty of places requiring the services of capable companies.

The article ended with an excellent point by Edmond Mulet.

“In some places, contractors might be more effective than some of the troops from contributing nations,” said Edmond Mulet, U.N. Assistant Secretary General for Peacekeeping Operations.
“But the U.N. is simply the sum of its member states and some of them are opposed to the use of contractors in some roles,” he told the conference.

For companies to be marketable, they will have to continue to fight this poor image that the industry is painted with–thanks to the actions of the few. Things like the ISO standards or the ICoC are great for promoting the idea that the industry is trying to correct itself, but there is one thing missing in the industry that I have been hammering on since the beginning of this blog. Leadership.

I believe the secret sauce to the success for all companies, is a focus on fielding good sound leadership to support contracts. It is the leader that will ensure the contract is followed and that operations are sound. It is the leader that will work hard to take care of his people and prevent any actions that might embarrass the company or client. And it is the act of a smart company that supports or grows or hunts down outstanding leaders–and rewards these folks. Leadership, leadership, leadership, and I cannot say it enough.

Clients need good capable contracting leaders as well. Someone that actually cares about constructing a sound contract and cares more about best value and less about what is cheapest. You need a contracting officer who cares–who acts like they are constructing a contract for a doctor who would be assigned to their mother–or a body guard who would be assigned to their mother. Budget constraints will be difficult, but folks must have the courage to do what is right with this stuff.

So the final article is about Dyncorp’s Steven F. Gaffney and his thoughts on the future. I always like hearing what the leaders of companies say, and you can get a real feel sometimes as to what they are optimistic about or concerned about. Here are his thoughts on leadership and what is working in his company.

What have you been focusing on?
It really comes down to: Do you have the right people doing the right things? Are you organized the right way? And the business systems that you have in place — are they strong enough to support the pressures of the business? About 90 percent of our top three levels of leadership are either new to the company or they’re new in position. In two years, we’ve restructured twice around getting to the right market-focused, customer-focused type of organization. We stood up a new business development organization, and we were able to move our win rates from the low teens to close to 50 percent of everything that we bid.

This is very interesting, because he has identified a weakness of the company (I imagine it applies to other companies as well). 90 percent of your top three levels of leadership being new to the company or new in position is not something to cheer about. That is great that the company has re-organized and has achieved a higher ‘win’ rate for contracts, but how can these leaders possibly be effective in carrying out policy if they haven’t a clue about the company’s history or lacks any memory or experience working for the company?

I would also be curious as to why so many new leaders? Is that because of high attrition or is this because of expansion? That is great that the company is winning so many contracts, but if you do not have capable and experienced leaders to implement that stuff, the company is going to have problems.

The other part of interest was the future of the company as the wars wind down?

What’s your strategy as the wars in Iraq and Afghanistan wind down?
I joined the company knowing full well that the changes were going to happen in Iraq and Afghanistan. In fact, many of the programs that we have today — the goal is really to put yourself out of a job. In 2003, when we became one of the largest trainers of police in the Middle East, we knew that the goal was to train a country so that they could perform the function themselves. We’ve been thinking about this issue around what’s next for some time, and that’s why we’ve been working to rebalance our portfolio since I got here. Our aviation business, for instance — today it’s a third of our revenues and half of our earnings. That wasn’t the case two short years ago. A couple months ago, we made a small acquisition in the aviation business to fill a gap that we had, not for the business that we have today but to compete for business two years from now and also get us into the commercial space.

That’s their plan–to rally around aviation. Which is their ‘bread and butter’ and totally makes sense to me, but it would have been nice to hear the other areas of interest.

One area that was not talked about too much in all of these articles was the future of government service contracts as the war winds down. The US government still has a presence in places like Iraq and Afghanistan, and embassies and consulates there and around the world will still require armed security services and logistics. These contracts will continue to be highly competitive as the US continues to reduce involvement in those countries and the available re-construction/COIN related contracts decrease. Training gigs will still be present, but as budgets get tighter and involvement in those countries continues to be politically difficult, eventually that will go away. But we will see how it goes, and there will still be investments in those countries, and the US and it’s partners will still have interest there.

Pretty interesting stuff and we will see how it goes. If anyone has any other ideas or things that I have missed here, by all means please add to the post by commenting below. –Matt

 

Peruvian private security guard, Green Zone Iraq. -Artist Steve Mumford

 

EOD Technology merges with Sterling International
By Josh Flory
October 24, 2012
An East Tennessee defense contractor has joined forces with a Virginia firm.
Lenoir City-based EOD Technology announced Wednesday that it has merged with Reston, Va.-based Sterling International to form Sterling Global Operations.
The new company will be based in Lenoir City, and EODT CEO Matt Kaye will serve as president and CEO of the new venture.
Kaye said Wednesday that the combined companies form “the world’s preeminent conventional munitions disposal organization.”
Asked about the benefits of the deal to EODT, Kaye said that “it really diversifies our customer base. It strengthens our footprint around the world and provides us greater breadth and depth of resources.”
EODT got its start in 1987 as a company specializing in explosive ordnance disposal, and for years specialized in cleaning up contamination at former U.S. military sites. During the George W. Bush administration, EODT branched out into security operations and eventually became a major player in that market.
The company has also received some unwelcome scrutiny in connection with that work, though. In 2010, a U.S. Senate committee criticized EODT for its hiring practices in Afghanistan, and the following year it was revealed that the U.S. State Department had fired the company from a contract to guard the U.S. Embassy in Kabul.
EODT was raided by federal agents in 2010, although no charges have been filed in connection with that episode.
According to a news release, EODT’s employee stock ownership plan acquired Sterling International. Terms of the deal were not disclosed.
The release said Sterling manages a $175 million weapons removal and abatement program for the State Department, and Kaye said that in comparison to EODT, the Virginia firm is more involved in the work of nonproliferation.
“While the activities that (EODT does) are nonproliferation, they’re much more in a mass-quantity stockpile reduction,” he said. “Sterling is on the forefront of … assisting countries with treaty compliance (and) establishing mine action centers.”
Kaye said Sterling has approximately 150 employees, and the new company will have about 3,500 employees.
After a round of layoffs earlier this year, EODT said it had 250 American employees and 3,000 foreign nationals.
Kaye said Sterling International’s program manager for conventional weapons destruction will remain in that position with the new company.
Sterling’s website does not identify the company’s top executives, and Kaye declined to identify the founder or CEO of the company. “He’s asked not to be named,” Kaye said, adding that the individual would stay on as an executive adviser.
The release said the combined companies will continue to serve existing customers, but will also expand into markets including energy exploration and development and judicial and criminal justice support.
The new company will have annual revenues of $150 million.
Story here.
—————————————————————-
As Iraq, Afghan wars end, private security firms adapt
Sun, Oct 21 2012
By Peter Apps
On a rooftop terrace blocks from the White House, a collection of former soldiers and intelligence officers, executives and contractors drink to the international private security industry.
The past decade – particularly the U.S.-led wars in Iraq and Afghanistan – provided rich pickings for firms providing private armed guards, drivers and other services that would once have been performed by uniformed soldiers.
But as the conflicts that helped create the modern industry wind down, firms are having to adapt to survive. They must also, industry insiders say, work to banish the controversial image of mercenary “dogs of war” that bedevil many firms, particularly in Iraq.

(more…)

Tuesday, October 23, 2012

Surveys: Danger Zone Jobs–2012 State Of Overseas Contracting Industry Survey Results

Here are the results from our fourth annual State of Overseas Contracting Industry Survey. This year 857 people took the survey which consisted of 9 questions and a final option to offer advice to other contractors. I will be releasing the Advice from Contractors section a bit later after I have finished editing it.

William does a great job of putting together this survey every year and they are pretty interesting. Of course DZJ focuses on the entire industry of overseas contracting and not just the gun carrying security contractors. So if there are more contractors than military in places like Afghanistan, then this is a cool little snapshot of what this group looks like.

Probably the most interesting statistic to me was the graph that showed the amount of military veterans versus just civilians in this industry, and that civilians are the top. If you would like to see the other graphs, please go over to their website through the provided link and check it out. –Matt

Link to survey here.

 

 

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