George Friedman, at Stratfor, explains how (and why) military functions and support were privatized.
The important point is that the U.S. military went to war with the Army the country gave it. We recall no great objections to the downsizing of the military in the 1990s, and no criticisms of the concepts that lay behind the new force structure. The volunteer force, downsized because long-term conflicts were not going to occur, supported by the Reserve/Guard and backfilled by civilian contractors, was not a controversial issue. Only tiresome cranks made waves, challenging the idea that wars would be sparse and short. They objected to the redefinition of noncombat roles and said the downsized force would be insufficient for the 21st century.
Blackwater, KBR and all the rest are the direct result of the faulty geopolitical assumptions and the force structure decisions that followed. The primary responsibility rests with the American public, which made best-case assumptions in a worst-case world.
Read the whole thing.