Ka-Ching

08.03.15 1:00 AM ET

The Company Getting Rich Off the ISIS War

For the Middle East, the growth of the self-proclaimed Islamic State has been a catastrophe. For one American firm, it’s been a gold mine.

The war against ISIS isn’t going so great, with the self-appointed terror group standing up to a year of U.S. airstrikes in Syria and Iraq.

But that hasn’t kept defense contractors from doing rather well amidst the fighting. Lockheed Martin has received orders for thousands of more Hellfire missiles. AM General is busy supplying Iraq with 160 American-built Humvee vehicles, while General Dynamics is selling the country millions of dollars worth of tank ammunition.

SOS International, a family-owned business whose corporate headquarters are in New York City, is one of the biggest players on the ground in Iraq, employing the most Americans in the country after the U.S. Embassy. On the company’s board of advisors: former Deputy Defense Secretary Paul Wolfowitz—considered to be one of the architects of the invasion of Iraq—and Paul Butler, a former special assistant to Pentagon chief Donald Rumsfeld.

The company, which goes by “SOSi,” says on its website that the contracts it’s been awarded for work in Iraq in 2015 have a total value of more than $400 million. They include a $40 million contract to provide everything from meals to perimeter security to emergency fire and medical services at Iraq’s Besmaya Compound, one of the sites where U.S. troops are training Iraqi soldiers. The Army awarded SOSi a separate $100 million contract in late June for similar services at Camp Taji. The Pentagon expects that contract to last through June 2018.

A year after U.S. airstrikes began targeting the so-called Islamic State in Iraq, there are 3,500 U.S. troops deployed there, training and advising Iraqi troops. But a number that is not discussed is the growing number of contractors required to support these operations. According to the U.S. military, there are 6,300 contractors working in Iraq today, supporting U.S. operations. Separately, the State Department is seeking janitorial services, drivers, linguists, and security contractors to work at its Iraqi facilities.

While these numbers pale in comparison to the more than 163,000 working in Iraq at the peak of the Iraq War, they are steadily growing. And with the fight against ISIS expected to take several years, it also represents a growing opportunity for defense, security, and logistics contractors, especially as work in Afghanistan begins to dry up.

“It allows us to maintain the façade of no boots on the ground while at the same time growing our footprint,” said Laura Dickinson, a law professor at George Washington University whose recent work has focused on regulating private military contractors.

Today, Afghanistan still represents a booming business for civilian contractors. In the latest quarterly report from U.S. Central Command, which oversees military operations in the Middle East, there were 30,000 civilian contractors working in Afghanistan in April. But those numbers are steadily falling. For example, in April 2014, there were more than 60,000 contractors working there.

Meanwhile, from supporting weapons sales to the Iraqi government to providing base security, contractor work in Iraq is on the rise.

SOSi is also providing a handful of high-level advisers to work with the Iraqi Ministry of Defense and the Iraqi Kurdish regional government. In late June, the company won a $700,000 contract to provide a small group of security assistance mentors and advisers for one year. The contract could be extended for an additional four years for a total of $3.7 million.

The requirements for the job are posted on SOSi’s career site, and include “one year or more of experience working with Iraqi [Ministry of Defense] officials.”

One of the job’s duties is to “prepare and deliver briefings to senior military officials on the status of the Iraqi staff, systems, programs and transition progress.”

The company will provide one adviser to the Iraqi Kurdish regional government, and five to the Iraqi government in Baghdad, according to Frank Helmick, a retired lieutenant general who served three tours of duty in Iraq between 2003 and 2011 and is now vice president for Mission Solutions at SOSi.

“These positions are very important. They are not just translators,” Helmick said. “They are advising at the levels where decisions are made.”

For the most part, they are Iraqi-Americans with security clearances, he said.

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During his second tour in Iraq between 2008 and 2009, Helmick was in charge of all the manning, training, and equipping of the Iraqi security forces, so today’s mission is a familiar one.

“I’ve been going back and forth to Iraq for the last two-plus years as a businessman, which is very, very different than going as a military guy, but a lot of the same people I worked with in uniform are still there today,” he said in an interview with The Daily Beast.

He acknowledged that contractors are playing a key supportive role in Iraq.

“Contractors thicken the U.S. presence,” Helmick said. “If soldiers are sent there to advise and train, they don’t have to send people to cook their food, wash their clothes or secure themselves. Contractors can do that. We allow the U.S. or coalition military to focus on their core competency.”

SOSi is not the only company that has been on contract to provide high-level advisers to the government in Iraq. ABM, also headquartered in New York, posted a job listing for a “Security Assistance Mentor and Advisor,” who would work directly with senior Iraqi counterterrorism officials.

The position entailed providing “direct assistance to the Prime Minister’s Counter Terrorism Advisor to lead and guide the development of institutional capabilities for the Iraqi Counter Terrorism Service in order to provide security and facilitate good governance,” according to the company’s job description, which has recently been taken down. A company spokesman said ABM is no longer on the contract.

But some other company will invariably fill the breach. From providing meals to strategic advice, contractors are built into today’s military operations to help defeat the Islamic State. The fact is, the U.S. can no longer go to war—or even on an advise and assist mission—without them.

“We’re resting a large part of the success of this mission on contractors,” said Sean McFate, a professor at the National Defense University and the author of The Modern Mercenary: Private Armies and What They Mean for World Order.

But the role of civilian contractors on the battlefield remains controversial, partly because waste, fraud, and abuse became rampant in Iraq and Afghanistan over the last decade. The Commission on Wartime Contracting, a bipartisan review board created by Congress in 2008, estimated that between $31 billion and $60 billion was lost to contract waste and fraud in Iraq and Afghanistan.

And security contractors continue to face particular scrutiny after a series of abuses over the last several years. Particularly damaging to the industry’s reputation was the 2007 Nisour Square shooting when guards working for Blackwater fatally shot 17 civilians.

Because of these scandals, there is now increased oversight of civilian contractors at the national and international level, said Dickinson. For example, the Pentagon has made numerous internal changes to improve the way contractors are vetted and used.

Helmick said he’s watched the contractor scene in Iraq change from when he first visited in 2003 to today. For example, he says, the ratio of contractors to U.S. service members is down to less than one to one, at least for SOSi. At the peak of the wars in Iraq and Afghanistan, contractors outnumbered U.S. troops. While SOSi may have lowered their ratio to remain competitive, based on the Pentagon’s own statistics, it appears contractors outnumber U.S. troops in Iraq today.

Today’s business environment is more competitive, Helmick said. “There are a lot of companies vying for this work.”

William Beaver, the editor-in-chief of DangerZoneJobs.com, said the market’s grown more competitive because there is a large pool of experienced contractors thanks to the last 14 years of war. There is also a large number of combat veterans who have left the military, but are looking for ways to work overseas again, he said.

This has led to a considerable drop in salaries, according to Beaver.

But one thing that hasn’t changed is the lack of transparency around these contracts. There is no central public database for finding out who’s doing this work, so it’s only possible to get a scattershot view, without much context, from searches on FedBizOps.com, the Pentagon’s daily contract announcements and various job boards.

For example, it is unclear whether any contractors are supporting the 935 U.S. and coalition military personnel as they vet and train moderate Syrian rebels.

What is known is that contractors are integral to the teams that operate surveillance drones and analyze the hours of video footage collected, providing the military with the information it needs to target Islamic State fighters on the battlefield in Syria and Iraq. While these contractors are not based overseas—and therefore not included in any official tallies—they are directly supporting the mission to defeat the Islamic State.

From the very beginning, U.S. military commanders have warned that the war against the Islamic State will be a long one. SOSi’s contract for services at Camp Taji may be due to expire in 2018, but it seems certain that it and companies like it will continue to find business as this fight rages on.