Defining the Public-Private Partnership on Terror

The war on terrorism has reshaped the relationship between government and the private security industry


Industry advises government on how to reduce terror threats. Architecture, engineering and construction firms assist government agencies in designing more terrorism-resistant buildings, such as embassies. Firms produce bomb-resistant walls and bullet-proof glass that serve counterterror purposes.

Companies-individually and through associations and alliances-share information about industry vulnerabilities and threats with the public sector. In fall 2001, a Minnesota flight school notified law enforcement officials about the suspicious behavior of Zacarias Moussaoui. Financial institutions inform government officials about possible terrorism financing activities of clients and prospective customers.

The use of private-sector employees, such as security guards and bodyguards, to complement government security efforts is illustrative of how industry provides personnel that assist in the war on terrorism. Private contractors do foreign language translations, risk and vulnerability assessments, and terrorism-related data analysis. While using private contractors shifts some risks to industry, government interests may not always be served should a company fail to perform its duties as intended (or in-line with agreed-to budgets).

The private sector's control over substantial parts of critical infrastructure-from telecommunications to electricity grids-lessens government demands on securing that infrastructure. However, it does not alleviate public-sector concerns that industry will take its security responsibilities seriously.

Tensions in the Public-Private Partnership
The government-industry dynamic in the war on terror creates friction between the two spheres. The concurrent federalization and privatization of some direct and indirect counterterror activities-from federalization of airport screeners post 9/11 to privatization of some military/intelligence functions-creates some of the tension. There is also the issue of whether the private sector should carry out certain functions, no matter the possible cost savings. Other effects of the federalization-privatization dynamic include economic and political power shifts.

Post-9/11 laws radically affected how selected sectors (e.g., commercial airlines, import-exporters, and shippers) conducted portions of their operations (e.g., security and logistics). For instance, commercial airlines and import-exporters now must follow federal rules that affect the conduct of their businesses, and they are also often subject to new security fees and hidden costs.

Government places restrictions and greater oversight on business in order to reduce threats. For instance, new regulations place additional obligations on business to provide information on employees and customers who might be connected to terrorism. Some of these data-sharing activities can potentially expose firms to liability and disclosure of competitive information.

In the case of a national crisis, government may put pressure on companies to provide critical goods, such as pharmaceuticals, at lower prices. This was actually the case in fall 2001 when HHS obtained favorable prices on Cipro, an antibiotic used to counter anthrax-induced illness.

Even when industry can produce goods helpful in reducing terror risks, government obstacles may include lengthy regulatory procedures. In contrast, some companies offer products and services that are bogus or fail to meet government needs. For instance, a firm was accused of providing untrained bomb-sniffing dogs, making the canines useless in the tasks the government needed them to perform.

Private contractors may face lengthy and expensive cost overruns when working with government. As government counterterror responses are time-sensitive, industry delays are hurtful in multiple respects.

Another over-arching tension is whether government or industry should establish standards for industry security practices, and if so, whether such measures should be mandatory. Subsumed within this issue are matters relating to perceived vulnerability, possible countermeasures, timing of implementing security and costs thereof.