The American military has often relied upon contractors to support military operations. During the Revolutionary War, the Continental Army relied on contractors to provide such goods and services as transportation and engineering services, clothing, and weapons. Congress has generally accepted the concept of using unarmed contractors to carry out support functions in military operations. But for the Department of Defense (DOD), Afghanistan and Iraq present new challenges. The United States is relying heavily, apparently for the first time during combat or stability operations, on private firms to supply a wide variety of security services. Given current troop levels, PSCs are widely viewed as vital to U.S. efforts in the region. The U.S. government is just one of many entities—including foreign governments, international organizations, and private industry—that employ private security contractors in Afghanistan and Iraq. In recent years, many other nations and organizations, including the United Nations, have increasingly turned to private contractors to provide security, as well as a variety of other functions, in support of stabilization and reconstruction efforts. This increased reliance on contractors has fueled the growth of the private security industry worldwide. There is some debate as to what constitutes a private security contractor. Some commentators define private security as any activity that a company undertakes that is directly related to protecting a person, place, or thing. Others use a broader definition that includes such activities as providing intelligence analysis, operational coordination, and the training of military or law enforcement personnel. The National Defense Authorization Act for Fiscal Year 2008 ( P.L. 110-181 Sec. 864) defined private security functions as the guarding of personnel, facilities, or property, and any other activity for which contractors are required to be armed. Such a definition does not include unarmed personnel providing services directly related to security, such as coordinating the movements of PSCs throughout Afghanistan and Iraq. Many of the services provided by companies that consider themselves PSCs go beyond providing armed security. For the purposes of this report, the services provided by private security contractors can be divided into two major categories: armed services and unarmed services. Armed services include static (site) security—protecting fixed or static sites, such as housing areas, reconstruction work sites, or government buildings; convoy security—protecting convoys traveling through unsecured areas; security escorts—protecting individuals traveling in unsecured areas; and personal security details—providing full-time protective security to high-ranking individuals. For some PSCs, unarmed services represent more than 50% of their total revenue. Unarmed security services include operational coordination—establishing and managing command, control, and communications operations centers; intelligence analysis—gathering information and developing threat analysis; hostage negotiations; and security training—providing training to domestic or international security forces. How the term private security contractor is defined affects how one counts the number of contractors. For example, according to the Department of Defense (DOD), as of December 2009, there were 11,095 PSC employees in Iraq, of which 1,664 (15%) provided unarmed services. This figure does not include contractors, armed or unarmed, who trained security forces, analyzed intelligence, or conducted interrogations. In June 2010, DOD stopped providing data on armed versus unarmed personnel. As a result, PSC data in this report include both armed and unarmed PSC personnel (previous CRS reports distinguished between armed and unarmed personnel). Historically, the percentage of armed PSC personnel working for DOD was 90% or greater. Security contractors come from all over the world to work in Afghanistan and Iraq. Peter Singer of the Brookings Institution estimated that citizens of some 30 countries have worked as security contractors in Iraq. PSC employees are generally divided by nationality into three groups: 1. U.S. nationals, 2. Third-country nationals, and 3. Local nationals. U.S. and coalition nationals often have military or law enforcement experience and are generally the easiest to vet through a background check. Third-country nationals are generally cheaper than U.S. coalition contractors, even though some third-country nationals have extensive military training and experience. Local nationals are generally the least expensive to hire, in part because there are no large overhead costs related to transportation, housing, and sustenance. Using local nationals as security contractors can also provide a number of potential benefits, such as providing jobs, building relationships and developing contacts with the local population, and having a security force that has a better understanding of the region. However, local nationals are often more difficult to screen and can be more easily infiltrated by hostile forces. In Iraq, as of December 2010, there were 100 PSCs registered and licensed (or in the process of renewing their license) with the Ministry of Interior (72 Iraqi companies and 28 foreign companies). These PSCs employed more than 30,000 armed employees working for a variety of government and private sector clients. The number of Iraqi PSCs has increased over the past two years. According to some analysts, the primary clients for non-Iraqi PSCs have shifted dramatically over the past two years from working for the U.S. government to working for private industry (such as international oil companies) and non-governmental organizations. In Afghanistan, there were recently 52 PSCs licensed to operate with some 30,000 registered security contractors. PSCs operating in Afghanistan are limited to 500 employees and can only exceed 500 with permission from the Cabinet. Because of the legal restrictions placed on security companies in Afghanistan, a number of PSCs have operated without a license or have exceeded the legal limit, including security contractors working for NATO and the U.S. government. Many analysts believe that regulations governing PSCs are only enforced in Kabul; outside Kabul there is limited government reach at present, and local governors, chiefs of police, and politicians run their own illegal PSCs. Estimates of the total number of security contractor personnel in Afghanistan, including those that are not licensed, are as high as 70,000. The majority of these PSCs do not work for the U.S. government. In recent months, the Karzai government has sought to decrease the number of PSCs. In the fall of 2010, the Afghan government disbanded some PSCs and allowed some licenses to expire. In March 2011, the Afghan government approved a negotiated agreement with the international community that calls for a twelve-month bridging strategy for reducing, but not eliminating, the use of PSCs by coalition forces, diplomatic entities, and international organizations. Pursuant to the agreement, PSCs will continue to operate for one year, while the capability and capacity of the Afghan Public Protection Force (APPF), a guard force run by the Afghan Ministry of the Interior, is developed. Congress has generally focused more on PSCs than other specific contracting issues, even though such contractors represent a minority of all DOD and Department of State contractors in Afghanistan and Iraq. Much of the attention given to PSCs is a result of numerous high-profile incidents in which security contractors were accused of shooting civilians in Afghanistan and Iraq, using excessive force, being insensitive to local customs or beliefs, or otherwise behaving in a manner that has raised concerns (see below " Can the Use of PSCs Undermine U.S. Efforts? "). Congress has also focused on whether DOD is effectively managing PSCs and whether improved oversight could have prevented or minimized the impact of these incidents. Hearings have been held in the Senate Committee on Armed Services, the Senate Committee on Homeland Security and Governmental Affairs, the House Oversight and Government Reform Committee, the House Committee on Armed Services, and the House Judiciary Committee . The National Security and Foreign Affairs Subcommittee of the House Committee on Oversight and Government Reform conducted a hearing, Investigation of Protection Payments for Safe Passage along the Afghan Supply Chain , which focused on armed private security contractors providing convoy security along the Afghan supply chain. More recently, a Senate Armed Services Committee report found evidence of U.S.-funded prime contractors supporting the Taliban and subcontracting to warlords. Congress has enacted legislation to address some of its concerns. In the FY2008 National Defense Authorization Act (NDAA), Congress required the Secretary of Defense, in coordination with the Secretary of State, to prescribe regulations and guidance relating to screening, equipping, and managing private security personnel in areas of combat operations. These regulations were to include tracking private security contractor (PSC) employees, authorizing and accounting for weapons used by PSCs, and reporting requirements whenever a security contractor discharges a weapon, kills or injures another person, or is killed or injured. Included in the FY2009 NDAA is a "Sense of the Congress" provision that private security contractors should not perform inherently governmental functions, such as security protection of resources in high-threat operational environments. The FY2011 NDAA contained three sections that deal specifically with PSCs. Section 831 revised the regulations prescribed in the FY2008 NDAA; Section 832 required these regulations to also be applied to "other significant military operations." Section 833 required the Secretary of Defense to determine whether the private sector developed a useful certification processes for determining if PSCs are adhering to industry standards, and if such a process exists, to incorporate the standards into DOD contracting procedures. Private security contractors can provide significant operational benefits to the U.S. government. Contractors can often be hired and deployed faster than a similarly skilled and sized military force. Because security contractors can be hired and fired quickly as needed, using contractors can allow federal agencies to adapt more easily to changing environments around the world. In contrast, adapting the military force structure or training significant numbers of Department of State civilian personnel can take months or years. Security contractors also serve as a force multiplier for the military, freeing up uniformed personnel to perform combat missions or providing the State Department with the necessary security capabilities when State's civilian security force is stretched thin. In some cases, security contractors may possess unique skills that the government workforce lacks.