The United States has grappled with defining the appropriate limits of government contracting throughout its history. However, this problem is not exclusive to the United States. Nearly two thousand years earlier, the ancient Roman Republic struggled with the same problem. In Rome, the Republic’s inability to define the appropriate limits of government contracting burdened Rome’s procurement system with inefficiency, conflicts of interest, and unaccountability. To avoid repeating the mistakes of former empires, the United States should make a comprehensive policy decision to define the appropriate limits for government contracting. Using a comparative analysis of current trends in the American defense procurement system and the Roman publicani, ancient Roman government contractors, this Note argues that the United States is currently following the same trends that contributed to Rome’s decline. The United States still has time to redefine the limits of government contracting, but if it does not, history may repeat itself.
A global power is embattled with the financial stringencies of war. Numerous foreign wars have depleted the state’s finances and burdened supply chains. The state is left with a zero-sum choice: capitulate to the demands of a leading government contracting firm or lose its war of attrition. The influence that government contractors have on the outcome of war is a familiar problem. However, the situation described above is not from recent history. In fact, it is not even from this millennium. It is from the ancient Roman Republic in 215 B.C. The unsettling similarities between government contracting issues today and those over 2,000 years ago begs the question: how has government overreliance on contractors remained a constant throughout history?
As with many of Western civilization’s foundational principles, the United States’ modern system of government procurement traces its roots back to ancient Rome. The Roman publicani were ancient Roman government contractors who belonged to the Equites—an upper class of Roman citizens. The publicani fulfilled various economic functions of the state, such as collecting taxes, furnishing the Roman military with supplies, and constructing public buildings by bidding on contracts at auctions. Rome failed to appropriately define the limits of contracting—allowing the publicani to perform contracts fundamental to Rome’s sovereignty. As the profits of the publicani increased, their power and political influence grew, making the state more reliant on them—a trend increasingly seen in the United States’ procurement system. The publicani were so necessary to the administration of the Roman state that they carried out what would now be considered to be inherently governmental functions, such as tax collection.
Similar to ancient Rome, the United States struggles with defining the proper relationship between contractors and the government. The United States’ failure to appropriately define the limits of government contracting has similarly created overreliance on government contractors. The United States’ increasing reliance on a dwindling number of large government contractors allows the interests of large government contracting firms to influence defense policy and the disbursement of federal funds. For example, government contracting firms have been among the largest recipients of government assistance, receiving billions of dollars in federal stimulus payments following both the 2008 recession and the COVID-19 pandemic. More recently, as the United States’ economy is exhibiting recessionary behaviors, defense contractors have seen surges in their stock prices by up to forty percent due to the dramatic increase in NATO arms sales to Ukraine.
This Note argues that the United States must make a comprehensive policy decision about the limits of government contracting, or the United States risks becoming so reliant on contractors that it will contract out its sovereignty. By identifying historical trends, this Note highlights the potential consequences of not addressing this problem. Using a comparative analysis of the Roman publicani and modern trends in the United States’ defense procurement, this Note explores aspects of the Roman contracting system that contributed to the weakening of the Roman state that still exist in the United States’ procurement system. The United States should define the appropriate legal boundaries of government contracting to avoid following the mistakes of a former empire.
Section II of this Note provides background on the responsibilities of the publicani by focusing on their two main categories of contracts—ultro tributa, or military supply contracts, and tax farming contracts. This section shows that Rome’s inability to clearly define the appropriate limits of contracting allowed the publicani to amass extreme amounts of wealth. As the publicani became increasingly wealthy and politically influential, their actions introduced inefficiency, corruption, and conflicts of interest into the Roman procurement system.
Section III of this Note explains how the United States struggles to define the appropriate boundaries of government contracting by analyzing inherently governmental functions—functions so fundamental to a state’s sovereignty that they must be performed by the government. The United States has struggled with appropriately defining the boundaries of governmental power since its founding. However, the executive and judicial branches still have not adequately limited the roles of government contractors. If the United States cannot define functions that are intrinsically connected to its sovereignty, then the United States does not understand the appropriate relationship between government contractors and the government.
Section IV of this Note explores how the United States’ failure to define the legal boundaries of contracting has led to an overreliance on government contractors. Section V explores similarities between the United States’ relationship with government contractors and ancient Rome’s relationship with the publicani. Overreliance on government contractors has burdened both systems with inefficiency and conflicts of interest, and has restricted the government’s ability to hold government contractors accountable for misbehavior. Section VI explains that, given these similarities, the United States must reexamine the appropriate limits of government contracting, or its procurement system will continue to follow trends that led to Rome’s decline.
The publicani were ancient Roman government contractors. Publicani, derived from the Latin word publicum, means “all that belongs to the state.” The publicani performed a variety of contracts integral to the Roman state, such as constructing public buildings, supplying the Roman military, and collecting taxes from the Roman provinces. As the publicani became increasingly wealthy, they began to exert direct influence over the Roman Senate, which introduced inefficiency and corruption into the Roman procurement system. The following two subsections analyze two categories of contracts performed by the publicani—ultro tributa, or military supply contracts, and tax farming contracts. These subsections highlight the harmful consequences ancient Rome faced by becoming too dependent on private contractors.
The publicani performed a variety of contracts for the Roman state, but began to amass increasing amounts of wealth as Rome’s continued expansion demanded more supplies for the Roman military. The earliest evidence of the publicani performing contracts for the Roman state was the construction of temples in 493 B.C. As Rome evolved from its agrarian roots to a global empire, the publicani began performing contracts for the increasingly prominent Roman military. As far back as 390 B.C., the publicani bid on contracts for feeding the sacred geese of the capital. The sacred geese of the capitol were an important military symbol because they were said to have raised the alarm when the Gauls invaded Rome in 390 B.C.
The military supply contracts awarded to the publicani mirror those awarded to defense contractors in the modern American defense procurement system. Contractors like Boeing, Lockheed Martin, and Raytheon regularly receive billion-dollar contracts to supply the United States military. In Rome, these contracts were called ultro tributa. A military supply contract was a simple transaction where the state would pay the publicani upfront, and they would deliver supplies such as grain or weaponry to the Roman legions—a unit of the Roman military.
As the Roman military demanded more supplies to support its war efforts, the publicani used ultro tributa to secure personal benefits. The earliest surviving account of a military supply contract is from 215 B.C., during the Second Punic War. With Hannibal’s Italian campaign raging across the country and depleting Rome’s finances, the Senate arranged for nineteen publicani to provide much needed military supplies on credit. For their services, the publicani demanded exemption from military service and insurance on the ships on which they would deliver the supplies. Given the government’s financial hardships, the Praetor was forced to accept these terms. It is difficult to overstate the significance of this concession. Exemption from military service was traditionally reserved for Senators and Priests—members of the highest echelons of the Roman social hierarchy. In performance of the contract, two of the publicani, Marcus Postumius and Titus Pomponius, committed insurance fraud by putting supplies on ships bound to sink and by making up “imaginary shipwrecks” altogether. Even after their fraud was discovered, the Senate was reluctant to prosecute the publicani because they did not want to offend the suppliers on whom their war effort depended.
Rome’s overreliance on the publicani allowed private contractors to exploit the Roman state at a time of crisis. The extent of this overreliance was a function of Rome’s failure to understand the appropriate limits of contracting—a dangerous trend that mirrors current developments in the United States’ procurement system. By failing to limit the responsibilities of government contractors, Rome fostered a system of dependence that restricted its ability to adequately hold the publicani accountable. When a government cannot appropriately hold contractors accountable, instances of fraud and inefficiency subvert the sovereignty and internal capacity of the state.
Ernst Badian, author of one of the authoritative works on the publicani, argues that the fraud from the Second Punic War in 215 B.C. was an exceptional occurrence given the lack of other recorded instances of military supply contracts being mishandled. While this may be true, the perceived frequency of fraud is not as important as the fact that the Roman state fostered a system of dependence on the publicani. A procurement system that fails to adequately prevent private contractors from performing sovereign powers exposes the state to exploitation. While necessary to sustain Rome’s obsession with warfare, this system allowed contractors to indirectly control the Roman state—a proposition Badian himself agrees with.
As Rome became involved in military conflicts on several frontiers, the task of supplying the Roman military became a Herculean enterprise vital to the Empire’s continued expansion. The importance of sustaining Rome’s military elevated the publicani to a newfound position of wealth and influence. This is similar to the American experience—as the United States has expanded its influence across the globe, its military spending has skyrocketed. In fiscal year (FY) 2022, the United States government awarded $136 billion to defense contractors for the procurement of weapons systems. This massive amount of money has allowed defense contracting firms to exert influence over the United States government through lobbying and campaign contributions. In 2020 alone, the five biggest defense contractors spent a combined $60 million to influence United States policy through their lobbying efforts.
Although the United States’ reluctance to prosecute government contracting firms has not reached Rome’s leniency towards the publicani, there are similarities. From 1983 to 1990, twenty-five of the top one hundred largest defense contractors were found guilty of fraud, yet none of them was banned from government contracting. It is difficult for the United States to debar these large contracting firms because they employ thousands of Americans and their weapons systems are integral to the United States’ national defense. In addition, the consolidation of large defense contracting firms has made it even more difficult for the United States to adequately deter contractor misconduct. Consolidation among defense contractors can prevent adequate deterrence because the enormous scale and set-up costs for certain federal projects restricts the field of contractors available to effectively perform large contracts. For example, BAE Systems paid $400 million dollars in criminal fines after admitting to making false statements regarding its compliance with the Foreign Corrupt Practices Act (FCPA). However, due to BAE’s “indispensable partnership with American agencies as the fifth largest provider of defense materials to the United States Government” the company received at least 13,000 contracts totaling $6 billion a year after admitting to FCPA violations.
In addition to military supply contracts, the publicani also received numerous tax farming contracts from the Roman state. Tax farming is a system where the state auctions the right to collect taxes to private parties. Tax farming contracts quickly became the most important contracts performed by the publicani as successive Roman conquests expanded its territorial boundaries and eligible tax base. The privatization of tax collection first started in the second century B.C., when Gaius Gracchus auctioned the right to collect taxes from Asia. The publicani bid at auctions offered by censors, Roman magistrates tasked with tendering projects financed by the state, for the right to collect taxes for performance periods of five years. The publicani were required to pay a portion of the contract price up front and internalize the risk of the contract. Therefore, their profits were the amount of taxes that they collected in excess of the price of the contract. Since the publicani had to finance part of these massive contracts at the outset, they formed societas publicanorum—an early form of a corporation. This allowed them to aggregate their individual assets and make successful bids. Tax-farming contracts were extremely profitable and elevated the publicani to a position of extreme wealth. The increasing wealth of the publicani allowed them to yield unmeasured power over their respective tax base and the Roman state as a whole.
Although the publicani served an important function by alleviating the administrative burden associated with collecting taxes, the incentives created by tax-farming contracts made these contracts vulnerable to exploitation. Since the profits of the publicani were determined by the amount of taxes they collected above the amount they paid for the contract, the publicani were incentivized to extract as much money from the taxpayers as possible. While in a different context, this arrangement is similar to the incentives offered to modern contractors through “cost-plus” contracts. In these contracts, contractors are reimbursed for the costs of the work that they perform, regardless of efficiency, which can promote wasteful spending. A former Halliburton employee claimed that when the company supplied the United States with weapons during the Iraq war, it made “no effort to find low-price vendors because of its cost-plus arrangement with the federal government.”
Eventually, the publicani resorted to violence to extract more taxes than were legally required to be paid by residents of the Roman provinces. This abusive dynamic prompted the Roman historian Titus Livius (Livy) to state that “where there was a contractor, there either the ownership by the state lapsed, or no freedom was left to the allied people.” The most egregious example of abuse arises from a story about Nicomedes III of Bithynia. When the Senate called on him to contribute forces to Rome’s war effort against the Germans in 104 B.C., he responded that “he had not enough manpower left: most of his subjects had been sold off into slavery by the publicani!” The exploits of the publicani were not limited to the common provincial taxpayer. Once the Senatorial elite noticed the exorbitant profits tax-farming produced, they sought to profit from the efforts of the publicani bybecoming shareholders in the various societas publicanorum. Cicero, Roman senator and later consul, admitted in a letter that he “indulg[ed], compliment[ed], and honour[ed]” the publicani to benefit from their increasing wealth. As the interests of the Senate and the publicani further aligned, appeasement turned into outright control. Cicero once complained:
If we oppose them, we shall alienate from ourselves and from the Republic an order which has done us most excellent service, and which has been brought into sympathy with the Republic by our means; if, on the other hand, we comply with them in every case, we shall allow the complete ruin of those whose interests, to say nothing of their preservation, we are bound to consult.
The Roman Senate’s alignment of interests with the publicani is like a conflict of interest that the United States’ numerous conflict-of-interest laws are designed to prevent. These laws prohibit public officials from benefiting from their official acts. However, defense contractors spend massive amounts of money on lobbying and campaign contributions to influence politicians. The alignment of interests between defense contractors and modern-day politicians has created multiple ethical concerns that mirror the actions of Roman senators and the publicani. A 2021 report found that over fifteen politicians seated on committees that control U.S. military policy have financial interests in defense contracting corporations that amount to nearly $1 million. Last year, the House Armed Services Committee approved a bipartisan amendment to the National Defense Authorization Act (NDAA), which allocated more than $30 billion to the defense budget. Several committee members who voted in favor of the amendment had financial ties to companies in the defense industry.
During Rome’s transition from Republic to Principate, it became increasingly clear that the abuse and corruption produced by tax-farming contracts had reached an unsustainable level. Rome’s first emperor, Caesar Augustus, put an end to the practice of tax farming by transitioning to a system of direct taxation consisting of fixed property taxes and poll taxes. Although it was impossible to ensure that every person’s income was taxed under this system, additional income was now reinvested in local communities instead of being extorted by the publicani. Even with a decrease in the tax base, this system rid the empire of the inefficient exploitation of the publicani and ushered in a period of economic development.
Although over two thousand years have passed since the publicani facilitated Rome’s dependency on government contracting, the United States faces the same problem. In the Federalist Papers, the Framers of the Constitution debated which functions should be performed by the federal government. More than 200 years later, these debates continue. The exact reasons for why the United States has struggled with defining the legal boundaries of contractors is beyond the scope of this Note. However, by blurring distinctions between contractors and government actors, the United States has created a procurement system that has failed to prevent contractors from encroaching on its sovereignty—similar to Rome’s experience with the publicani. The extent of this misunderstanding is best exemplified by an analysis of the United States’ issues with defining inherently governmental functions. If a sovereign cannot define functions that only it should perform, then it does not understand the appropriate boundaries of government contracting.
The changing definitions of inherently governmental functions demonstrates the United States’ difficulties with articulating the proper limits of government contracting. When clear limits regarding what can and cannot be contracted out are not defined, contractors can increasingly perform functions that should be reserved for the state. As was the Roman experience with the publicani, an absence of clear limits can foster a system of dependency which can produce inefficiency and corruption.
Subsection A provides a brief overview of the origins of the United States grappling with the benefits and drawbacks of government contracting. Subsection B examines the changing definition of inherently governmental functions to show how the Executive has, and continues, to struggle with adequately defining functions prohibited from being contracted out. Subsection C shows how the Executive’s inability to define the appropriate boundaries of government contracting has bled into the judicial sphere and further complicated attempts at resolving the problem.
The Federal Acquisition Regulation (FAR) 7.503(a) restricts the government from contracting out the performance of inherently governmental functions. An inherently governmental function is a function so intrinsically linked to the public welfare that it must be performed by the government. The policy rationale for deeming certain functions inherently governmental is simple: contractors are profit-driven corporations that seek to maximize their margins, and, for certain functions, the government’s interest in safeguarding public welfare is more important than striving for efficiency. Although these aims are not always mutually exclusive, certain fundamental functions must exclude private sector involvement to guard against abuse and delegations of sovereignty. FAR 7.503(c) provides a non-exhaustive list of twenty functions that the United States government believes that only it can perform to protect the United States populace, such as collecting taxes and commanding military forces.
Although debates over the proper limits of government authority have existed since the United States’ founding, the problem of excluding private sector involvement in fundamental acts of governance was first recognized by the Supreme Court in the 1930s. In A.L.A. Schechter Poultry Corp. v. United States, the Supreme Court struck down legislation for being unconstitutional because it would have ultimately allowed private organizations to legislate rules for their respective industries. These rules would be binding and allow private organizations to legislate in place of the government—a function that is inherently governmental. Similarly, in Carter v. Carter Coal Co., the Supreme Court held legislation unconstitutional because it would have allowed the maximum working hours to be determined by private actors instead of Congress. While A.L.A. Schechter and Carter Coal are normally cited for their labor law implications, broadly speaking, they dealt with the issue of contracting out inherently governmental functions.
A few years after the Court began to grapple with the issue of impermissible outsourcing of government functions to the private sector, the United States shifted its procurement system to rely more heavily on government contractors. During World War II, the government mobilized the private sector to assist in its war effort after realizing “[p]rivate industry was more agile, often had better resources, and could assume more risks than the federal government.” This sentiment allowed government contracts to become a “permanent fixture in post war America.” Eventually, this growing sentiment was formalized into policy in 1966 with the issuance of the Office of Management and Budget’s (OMB) Circular A-76. OMB Circular A-76 defines inherently governmental functions and outlines a process to determine when it is appropriate for the federal government to contract with private companies for the performance of federal government functions.
Circular A-76 has gone through many revisions. Regardless of version, the Executive Branch has been unable to adequately define “inherently governmental functions.” The current form of Circular A-76 provides that, “whenever possible, and to achieve greater efficiency and productivity, the federal government should conduct competitions between public agencies and the private sector to determine who should perform the work.” In its original 1966 form, the OMB Circular A-76 was a policy directive stating that the government would contract out “commercial activities” to private-sector companies. Unlike an inherently governmental function, a commercial activity is open to competition and “provides a product or service that could be obtained from a commercial source.”
Circular A-76’s definition of an “inherently governmental function” was revised numerous times over the years, starting in 1979. The 1979 version of Circular A-76 changed the focus from commercial activities to inherently governmental functions, which were defined as functions that must be performed by the government “due to a special relationship in executing governmental responsibilities.” A subsequent revision in 1983 of Circular A-76 defined an “inherently governmental function” as “a function which is so intimately related to the public interest” that its performance should be exclusively undertaken by the government. Additionally, these functions “include those activities which require either the exercise of discretion in applying Government authority or the use of value judgment in making decisions for the Government.” Although this revision represented only a minor alteration in language, it shifted the focus from exercising actions for the government to actions affecting the public. Even after the 1983 revision, agency heads and contractors complained that the program was difficult to implement because of the confusion surrounding the ambiguous definition of a “governmental function.”
Over the next twenty years, the OMB revisited the concept of “inherently governmental functions” three times in a separate 1992 policy letter and their revisions of Circular A-76 in 1999 and 2003. The 1992 policy letter was in response to agencies’ long-held confusion about the ambiguous definition of an inherently governmental function. It sought to avoid the “unacceptable transfer of official responsibility to Government contractors.” The 1992 policy letter defined “inherently governmental functions” largely the same as the 1983 version of Circular A-76, but added that inherently governmental functions require exercising substantial discretion of governmental authority. Although this revision only added one word, the category of functions that require exercising substantial governmental authority is arguably much narrower than functions that require the exercise of governmental authority. The 1992 policy letter also established a totality of circumstances test to determine if a function was inherently governmental.
Under the 1999 revision, substantial discretion in applying government authority returned to simply discretion in applying government authority for the definition of an “inherently governmental function.” The 2003 revision of Circular A-76 maintained a similar definition of “inherently governmental functions” as previous revisions but removed any reference to value judgements and reverted to substantial discretion. In less than forty years, the basis for determining if something was an inherently governmental function changed from if it was a commercial activity; to if there was a special relationship in exercising governmental functions; to if it were intimately related to the public interest; to if the function required substantial discretion in applying government authority under the totality of circumstances; to if the function required discretion in applying government authority or the use of value judgements; to if the function was intimately related to public interest and required the exercise of substantial discretion but not value judgments.
Even after all of these changes, ambiguity remained. In a 2009 memorandum, President Obama called for a reexamination of the definition of “inherently governmental functions” to get rid of its long-standing ambiguities:
The line between inherently governmental activities that should not be outsourced and commercial activities that may be subject to private sector competition has been blurred and inadequately defined. As a result, contractors may be performing inherently governmental functions. Agencies and departments must operate under clear rules prescribing when outsourcing is and is not appropriate.
The 2009 memorandum set out to clarify when outsourcing was permissible because “[e]xcessive reliance” on contractors “creates a risk that taxpayer funds will be spent on contracts that are wasteful, inefficient, subject to misuse, or otherwise not well designed to serve the needs of the Federal Government or the interests of the American taxpayer.” In 2011, almost twenty years after issuing its first policy letter, OMB issued another policy letter addressing President Obama’s memorandum. It stated that inherently governmental functions are so “intimately related to the public interest as to mandate performance by Federal employees.” The culmination of nearly fifty years of policy revisions reverted the definition of an “inherently governmental function” to the ambiguous definition outlined in the 1983 version of Circular A-76.
Since 1966, the definition of “inherently governmental functions” has changed, expanded, contracted, and reverted. After several revisions of Circular A-76 and multiple policy directives, the United States government is still left with an ambiguous definition of “inherently governmental functions.” If the government cannot determine which functions are so fundamental to its existence that it must perform them, then it does not have a grasp on the appropriate roles of contractors. Misunderstanding the purpose of inherently governmental functions leads to confusion over what contracts can be given to contractors and what contracts must be performed in-house. This confusion has bled into the judicial branch which has made resolution of inherently governmental function issues inconsistent and unnecessarily complicated.
After grappling with this problem for nearly a century, courts still struggle to determine what constitutes an inherently governmental function. This issue persists, in part, because the courts do not have a common law definition of “inherently governmental functions.” Therefore, courts are forced to adopt the definition from the source of the authority that is the subject of the litigation. While the government has since adopted similar definitions of “inherently governmental functions” in the FAR and OMB Circular A-76, there are still noticeable differences that can receive incongruous judicial treatment. The FAR discusses functions that “approach being” inherently governmental functions. However, OMB’s latest policy letter refers to this type of function as a function that is “closely associated with the performance of inherently governmental functions.” Although these definitions are attempting to address the same issue, it is arguable that the class of functions that are approaching “inherently governmental” is smaller than the class of functions associated with the performance of inherently governmental functions. The Congressional Research Service explained the implications of this difference in a report issued after the Obama administration’s policy letter:
[S]erving as an interpreter during an interrogation of an enemy prisoner of war could potentially constitute a function approaching inherently governmental. It is less clear that transcribing a recording of that interrogation approaches being inherently governmental. However, transcription could potentially be a function closely associated with the performance of an inherently governmental function.
Furthermore, if a federal court determines that a function is “inherently governmental” on constitutional grounds, this “would not necessarily preclude the executive branch from contracting out this function under the FAIR Act, OMB Circular A-76, the FAR, or OFPP Policy Letter 11-01.” In summation, the federal judiciary struggles with deciding whether a function is inherently governmental or is able to be contracted out, similar to the executive branch. This lack of understanding has produced a persistent sense of confusion when discussing the proper limits of government contracting. Offering a solution for issues with the government’s treatment of inherently governmental functions is beyond the scope of this Note. However, the government’s inability to determine if a function is intrinsically linked to its governing power encapsulates the bigger problem of the federal government not understanding the appropriate legal boundaries of government contractors. This lack of understanding has led to overreliance on government contractors.
Due in part to the confusion caused by the varying definitions of “inherently governmental functions,” the United States’ overreliance on government contractors has bled into its military operations. While the United States was at war in Afghanistan, the number of contractors increased from 2.8 million to 4.9 million. For certain phases of the war, more contractors served in Iraq and Afghanistan than the United States’ own military personnel. This trend continued and as recent as 2015 more than forty percent of the United States Government’s workforce, amounting to 3.7 million people, consisted of government contractors. It was not always like this. During the Gulf War, United States military personnel outnumbered contractors by a ratio of fifty-five to one. However, shortly after the invasion of Iraq, the number of government contractors quickly eclipsed the number of United States military personnel. The United States government’s reliance on contractors is so extensive that, not only does the government spend massive sums of money on contracts, but it also contracts out the monitoring of these contracts. A Government Accountability Office (GAO) report released shortly after the conclusion of the Iraq war found that the Department of Defense and Department of State entered into contracts “haphazardly without checking for potential conflicts of interest or ensuring adequate oversight.” If the government cannot provide clear direction on what contracts are prohibited from performance by the private sector, it is even less likely that a contractor overseeing the performance of contracts would recognize that an inherently governmental function is being impermissibly performed.
Several studies have highlighted the prevalence of private contractors performing functions that should be performed by the United States government. In a 2009 review by the GAO of contracts from the Department of Transportation, Department of Energy, and Environmental Protection Agency, the GAO found that 28 of the 108 randomly selected contracts required the performance of inherently governmental functions by a private contractor. If that ratio is representative, over 1.4 million contracts out of the 5.6 million contracts awarded in FY2021 contained the performance of inherently governmental functions by private contractors. A different study found more than 4,200 contractors who are performing inherently governmental functions or unauthorized services in the United States Army alone. These contracts can contain important governmental functions that can diminish the sovereignty of the United States if mismanaged by a private sector contractor.
By failing to limit the role of contractors, America’s procurement system shows signs of inefficiency, corruption, and unaccountability. The following three subsections will analyze several specific trends exhibited by the modern American procurement system and compare it to trends ushered in by the publicani. It is important to reiterate that contracting out certain functions is necessary to run the United States government. This Note is not proposing that the United States should perform all functions in-house—that would be logistically impossible and require a fortune equal to Augustus Caesar’s. However, becoming too dependent on government contractors can produce inefficiency, corruption, and unaccountability, which, in Rome’s experience with the publicani, contributed to the weakening of the Roman state.
In the Iraq and Afghanistan wars, the Department of Defense and the Department of State contracted with private military contractors (PMCs) to perform various security missions for U.S. diplomats and personnel. Since the conclusion of the war, reports have been released detailing instances of private contractors raiding villages and indiscriminately killing civilians. While the United States’ failure to pacify the region depended on a multiplicity of factors, horrific acts of violence by PMCs made the United States’ goal of peace demonstrably more difficult to achieve: soldiers must establish trust with the local population and show them that they are a better alternative than the current regime to successfully conduct counterinsurgency. It was nearly impossible to establish the requisite amount of trust when PMCs, acting under the guise of the United States military, committed heinous acts that turned the population against the United States.
Similarly, the publicani misbehaved under the guise of the Roman state in their capacity as tax collectors. By using violence to extort more taxes than were required under law, the publicani were viewed as excessively greedy, wicked actors, which garnered hostility towards Rome’s tax collection system. As discussed, the publicani focused their exploitation on the provincial taxpayers in Asia because it was Rome’s wealthiest province. Disdain for the Roman tax collectors prompted Mithridates VI of Pontus, a king in the northern mountains of Asia minor, to indiscriminately kill Romans in the region. The level of animosity was so high that, during the Mithridatic Wars, 80,000 to 150,000 Romans were slaughtered in a response to the actions of the publicani. Once Rome realized the rampant exploitation and mistrust within its tax collection system, it excluded the publicani from collecting taxes, ushering in a period of economic development.
Furthermore, overreliance on contractors has injected inefficiency into the United States’ procurement system. There have been numerous reports of weapons systems from large contracting firms being “overpriced, delivered behind schedule, and . . . fail[ing] to have the capabilities advertised.” TransDigm, a weapons systems parts manufacturer, was caught receiving profits of 9400% for the production of a singular half-inch metal pin. Another military contractor was criticized “for charging a 4436% markup on an engine part.” Retired executive vice president of Raytheon, Shay Assad, claimed that “[f]or many of these weapons that are being sent over to Ukraine right now there’s only one supplier. And the companies know it,” incentivizing them to engage in price-gouging and inefficient behavior. This is not to say that all government contractors are bad actors. In fact, most contractors are likely commited to their mission of assisting the United States government. However, when the United States fails to limit the role of contracting and hold contractors accountable for misbehavior, its procurement system suffers from increased inefficiency and unaccountability.
When the publicani were caught committing insurance fraud by making up imaginary shipwrecks, they, too, were behaving inefficiently to advance their own self-interests. Similar to the United States’ contractors, the publicani did not behave inefficiently to purposefully harm the Roman state. Instead, the incentives of a system without appropriate limits on contracting encourages contractors to extract profits however possible—even at the expense of the state. These similarities, albeit in different contexts, show that, when a government becomes overly dependent on government contractors, normally through misunderstanding the appropriate legal boundaries of contracting, such dependence can have a detrimental effect on the state’s sovereignty and internal capacity.
Additional issues with the United States procurement system include corruption and conflicts of interest between the government and private contractors. One of the most glaring instances of corruption arose from a contracting official in the United States Air Force. From 1993 to 2002, Darleen Druyun served as one of the Air Force’s main acquisition officials. During her time as the Air Force’s lead contractor, Druyun awarded a four billion dollar contract to upgrade Boeing’s C-130 aircraft, shared private bidding information of Boeing’s competitor to the company, and awarded Boeing $100 million in excess payments for the upgrade of NATO’s Airborne Warning And Control System aircraft. To compensate her for her preferential treatment of the company, Druyun secured employment for her daughter and son-in-law at Boeing and received a $250,000 yearly salary from the company while still working for the Air Force.
More recently, former President Donald Trump was scrutinized for conflicts of interest pertaining to the Trump International Hotel. Trump International’s previous location at the Old Post Office Building in Washington, D.C., was significant because its close proximity to the White House made it a prime destination for persons trying to influence the former President. Over the course of Trump’s presidency, public officials from a variety of foreign countries, including Malaysia, Saudi Arabia, Qatar, the United Arab Emirates, Turkey, and the People’s Republic of China, spent over $750,000 at the hotel during “sensitive times for those countries’ relations with the United States.”
In Rome, the procurement system was ripe with corruption. As the publicani amassed increasing amounts of wealth, corruption and conflicts of interest became commonplace. Senators and other high-ranking government officials became stakeholders in the various societas publicanorum to profit from the exorbitant contracts that they were tasked with auctioning off to the publicani. Cicero initially lauded praise on the publicani for their increasing wealth and status, but eventually came to regret the amount of influence that the Senate had ceded to the publicani. As the interests of the Roman Senate and the publicani further aligned, the interests of the publicani began to predominate over the interests of the Roman state. Eventually, the growing political influence of the publicani allowed them to steer Rome’s foreign policy. The publicani began to advocate for more territorial expansion not because it benefited the state, but because it preserved their lucrative ultro tributa.
When a procurement system involves this extent of dependency on government contractors, the government’s ability to adequately hold contractors accountable for misbehavior is restricted. Since 1990, the Project on Government Oversight has examined forty-three government contracting companies for misconduct. Sixteen out of the forty-three contractors have been convicted of twenty-eight criminal violations, but only one of the forty-three contractors faced disciplinary action. Other sources agree that it is difficult to hold contractors accountable because “officials rely on contractors to get work done and that dependence can interfere with oversight.” Among contractors, large contractors are less likely to be held accountable because they have more financial resources at their disposal, but also because the United States depends on these big firms to supply its armies abroad.
The exact same hesitancy to discipline suppliers for wrongdoing occurred in Rome. For example, after Marcus Postumius and Titus Pomponius committed insurance fraud by placing supplies on unseaworthy ships bound to sink, the Roman Senate initially refused to punish the two publicani. The Roman government was fearful of disrupting supply chains and losing the Second Punic War. While the United States has legal mechanisms in place to force performance by a government contractor in wartime, the United States’ overdependence on a dwindling number of contractors is susceptible to issues including supply chain issues, a cyberattack, or numerous other unforeseeable reasons that would impede performance. Therefore, although not as vulnerable as the Roman Republic, the United States’ overreliance on government contractors can still jeopardize the internal capacity of the state.
When the consolidation of large government contracting firms restricts available sources for procurement, the United States can become dependent on a few private corporations. This consolidation, in turn, limits the government’s ability to hold these contracting firms accountable for engaging in inefficient, monopolistic behavior, price-gouging, and corruption. This Note does not claim that large government contractors are particularly wicked actors, nor does it take the position that awarding contracts to contractors who have misbehaved is morally wrong. However, it does signal the similarities between the publicani and modern government contractors that, while potentially justified in the United States’ procurement system, contributed to the decline of the Roman Republic.
Although two thousand years separate the Roman Empire from the United States today, the similarities between the actions of the publicani and United States contractors are concerning. Both governments cultivated procurement systems that fostered dependency on government contractors because these governments failed to understand the appropriate legal boundaries of government contracting. In Rome, overreliance on the publicani elevated them to a position of extreme wealth, which allowed them to exert an immense amount of influence over the politics of the Roman Republic. After defeating Hannibal and emerging victorious from the Second Punic Wars, Rome faced no serious external threats for a century. For the publicani, this was not a welcome development. If Rome was not at war, the demand for ultro tributa contracts plummeted—eliminating one of the main streams of income for the publicani. In response, the publicani demanded foreign policy initiatives that would promote expansion and thus preserve their lucrative military supply contracts.
In the United States, overreliance on defense contractors has allowed large contracting firms to lobby for policies that protect their profits, which may not always be perfectly aligned with the best interests of the country. From 2001 to 2021, Congress allocated $2.02 trillion to the top five defense contractors to sustain the war effort in Afghanistan. To receive these massive contracts, the top five defense contractors spent over $1.1 billion on lobbying policymakers. Financially, this was a great investment for the defense contractors because, for every $1 they spent on lobbying, they received $1,813 from the Pentagon to perform their contracts. While the United States ultimately failed in its mission to install a friendly government during the Afghanistan war, many defense contractors were victorious by securing numerous lucrative defense contracts—a development that caused their stock price to increase tenfold over the course of the war. This Note emphatically disagrees with the claim that defense contractors solely lobby for defense contracts to prolong wars and, in turn, receive future contracts. However, when highly influential defense contracting firms operate in a profit-maximization procurement system that does not properly limit the role of contractors, they are incentivized to act in their own self-interest which is not always perfectly aligned with the interests of the state. The point of this comparison is not to vilify government contractors. As discussed, government contractors are integral to the country’s national defense, employ thousands of Americans, and are necessary to keep the government functioning. Instead, this comparison simply presents historical evidence that, when a state fails to properly limit its dependence on government contractors, opportunities may arise for the advancement of policies that are not in the best interests of the state.
In Rome, as discontent over foreign policy grew, the populares, a political party who shared in the publicani ambitions to propagate perpetual territorial expansion, instigated mob violence and began murdering political officials who disagreed with their policies. This open display of brutal political violence had never occurred in Rome and triggered one of the most chaotic periods of Roman history. The Republic suffered a period of three successive civil wars due to the actions of the populares. These actions eventually ended with the downfall of the Republic when Octavian, later named Augustus Caesar, was named Rome’s first emperor in 27 B.C.
While this Note does not suggest that America’s relationship with government contractors will manifest in a civil war, the history of the Roman Republic is a warning sign for the United States, which is already exhibiting many of the concerning trends ushered in by the publicani. The United States must reexamine its relationship with contractors and make comprehensive policy decisions about the legal boundaries of government contracting, or it risks becoming so dependent on contractors that they could influence national policy. Overall, issues with defining the appropriate roles of government contractors have existed for thousands of years. This problem is difficult, but the United States must attempt a complete reexamination of the roles of contractors in the government. For Rome, the involvement of the publicani led to the death of the Republic. For the United States, it is already exacerbating trends that diminish the internal capacity of the state and delegate sovereignty to private actors.
From the executive branch constantly changing its definition of “inherently governmental functions,” to the judicial branch’s inability to create a consistent approach to resolve such issues, the United States has demonstrated that it does not understand the appropriate legal boundaries of government contractors. This misunderstanding has created a system of overreliance on government contractors with thousands of contractors performing functions that are essential to the United States’ sovereignty. Dependency on government contractors is dangerous because private corporations have different incentives, mainly wealth maximization, than the government trying to maximize public welfare. The United States’ trend of overreliance on government contractors has resulted in inefficiency, corruption, and restricted the government’s ability to hold contractors accountable for misbehavior. Similarly, Rome did not understand the appropriate role of contractors because the publicani performed functions that were essential to Rome’s sovereignty. Rome’s overreliance on the publicani led to exploitation of the Roman population, diminished capacity of the state, and ushered in one of the most violent periods in Roman history. The United States must make a comprehensive policy decision about the boundaries of contracting. If the United States does not reexamine its relationship with government contractors, Winston Churchill’s immortal quote that “those that fail to learn from history are doomed to repeat it” may be vindicated before our eyes.
