Modern PMCs trace their origins back to a group of ex-SAS British veterans in 1965 who, under the leadership of the founder of the SAS, Sir David Stirling and John Woodhouse, founded WatchGuard International (formerly with offices in Sloane Street before moving to South Audley Street in Mayfair) as a private company that could be contracted out for security and military purposes.
The company's first assignment was to go to Yemen to report on the state of the royalist forces when a cease-fire was declared. At the same time Stirling was cultivating his contacts in the Iranian government and exploring the chances of obtaining work in Africa. The company eventually operated in Zambia and in Sierra Leone, providing training teams and advising on security matters. Stirling also organised deals to sell British weapons and military personnel to other countries for various privatised foreign policy operations. Contracts were mainly with the Gulf States and involved weapons supply and training. The company was also linked with a failed attempt to overthrow Colonel Muammar Gaddafi from power in Libya in 1971. Woodhouse resigned as Director of Operations after a series of disagreements and Stirling himself ceased to take an active part in 1972.
Stirling also founded KAS International (aka KAS Enterprises) and was involved in a collaboration with the WWF to forcibly reduce the illegal poaching and smuggling of elephant tusks in various countries of Southern Africa. Other groups formed by ex-SAS servicemen were established in the 1970s and 80s, including Control Risks Group and Defence Systems, providing military consultation and training.
Dramatic growth in the number and size of PMCs occurred at the end of the Cold War, as Western governments increasingly began to rely on their services to bolster falling conventional military budgets. Some of the larger corporations are: Vinnell and Military Professional Resources Inc. in the United States; G4S and Keeni-Meeny Services in the United Kingdom; Lordan-Levdan in Israel and Executive Outcomes in South Africa.
The exodus of over 6 million military personnel from Western militaries in the 1990s expanded the recruiting pool for PMCs.
Some commentators have argued that there was an exodus from many special operations forces across the globe towards these private military corporations. Units that were allegedly severely affected included the British Special Air Service, the US Special Operations Forces and the Canadian Joint Task Force 2. Finding work in the industry is not difficult for most former soldiers as their personal network of fellow and ex-soldiers is enough to keep them informed of available contracts.
In 1985, Logistics Civil Augmentation Program (LOGCAP) was established in the United States, primarily to preplan for contingencies and to leverage the existing civilian resources. However, it was three years later before it was first used. In support of a United States Third Army mission, the United States Army Corps of Engineers (USACE) used LOGCAP to contract for the construction and maintenance of two petroleum pipelines systems in Southwest Asia.
Later, USACE awarded the first contract under LOGCAP to Brown and Root Services (now KBR) in August 1992 as a cost-plus-award-fee contract, which was used in December that year to support the United Nations forces in Somalia.
Some contractors have served in advisory roles, that help train local militaries to fight more effectively, instead of intervening directly. Much of the peacekeeper training Western governments have provided to African militaries was done by private firms, and with the increasing absence of Western military support to international peace operations, the private sector was commonly utilized to provide services to peace and stability operations from Haiti to Darfur.
The Center for Public Integrity reported that since 1994, the Defense Department entered into 3,601 contracts worth $300 billion with 12 U.S. based various PMCs within the United States, specifically during the initial response after Hurricane Katrina in New Orleans.
Domestic operations are generally under the auspice of state or federal agencies such as the Department of Energy or the Department of Homeland Security rather than the Department of Defense. Driven by increasingly greater fears of domestic terror attacks and civil unrest and disruption in the wake of disasters, more conventional security companies are moving into operations arenas that would fall within the definition of a PMC. The United States State Department also employs several companies to provide support in danger zones that would be difficult for conventional U.S. forces.
PMCs in Iraq
In August 2003 Close Protection operatives from a United Kingdom based security and intelligence company International Intelligence Limited rescued six British lawyers from a hostile crowd in Baghdad, extracting them to a neutral hotel, in a pro bono action despite those solicitors not being clients of the firm.
In December 2006, there were estimated to be at least 100,000 contractors working directly for the United States Department of Defense in Iraq which was a tenfold increase in the use of private contractors for military operations since the Persian Gulf War, just over a decade earlier. The prevalence of PMCs led to the foundation of trade group the Private Security Company Association of Iraq. In Iraq, the issue of accountability, especially in the case of contractors carrying weapons, was a sensitive one. Iraqi laws do not hold over contractors.
U.S. Secretary of Defense Donald Rumsfeld justified the use of PMCs in Iraq on the basis that they were cost effective and useful on the ground. He also affirmed that they were not subject to the Uniform Code of Military Justice.
Two days before he left Iraq, L. Paul Bremer signed "Order 17" giving all Americans associated with the CPA and the American government immunity from Iraqi law. A July 2007 report from the American Congressional Research Service indicates that the Iraqi government still had no authority over private security firms contracted by the U.S. government.
However, in 2007, the Uniform Code of Military Justice was amended to allow for prosecution of military contractors who are deployed in a "declared war or a contingency operation."
PMCs supplied support to U.S. military bases throughout the Persian Gulf, from operating mess halls to providing security. They supplied armed guards at a U.S. Army base in Qatar, and they used live ammunition to train soldiers at Camp Doha in Kuwait. They maintained an array of weapons systems vital to the invasion of Iraq. They also provided bodyguards for VIPs, guard installations, and escort supply convoys from Kuwait. All these resources were called upon constantly.
- Employees of private military company CACI and Titan Corp. were involved in the Iraq Abu Ghraib prison scandal in 2003, and 2004. The U.S. Army "found that contractors were involved in 36 percent of the [Abu Ghraib] proven incidents and identified 6 employees as individually culpable", although none have faced prosecution unlike US military personnel.
- On March 31, 2004, four American private contractors belonging to the company Blackwater USA were killed by insurgents in Fallujah as they drove through the town. They were dragged from their car in one of the most violent attacks on U.S. contractors in the conflict. Following the attack, an angry mob mutilated and burned the bodies, dragging them through the streets before they were hung on a bridge. (See also: 31 March 2004 Fallujah ambush, Operation Vigilant Resolve)
- On March 28, 2005, 16 American contractors and three Iraqi aides from Zapata Engineering, under contract to the US Army Corps of Engineers to manage an ammunition storage depot, were detained following two incidents in which they allegedly fired upon U.S. Marine checkpoint. While later released, the contractors have levied complaints of mistreatment against the Marines who detained them.
- On June 5, 2005, Colonel Theodore S. Westhusing committed suicide, after writing a report exonerating US Investigations Services of allegations of fraud, waste and abuse he received in an anonymous letter in May.
- On October 27, 2005, a "trophy" video, complete with post-production Elvis Presley music, appearing to show private military contractors in Baghdad shooting Iraqi civilians sparked two investigations after it was posted on the Internet. The video has been linked unofficially to Aegis Defence Services. According to the posters, the man who is seen shooting vehicles on this video in Iraq was a South African employee of Aegis Victory team named Danny Heydenreycher. He served in the British military for six years. After the incident the regional director for Victory ROC tried to fire Heydenreycher, but the team threatened to resign if he did. Aegis, the U.S. Army, and the U.S. State Department each conducted a formal inquiry into the issue. The Army determined that there was no "probable cause to believe that a crime was committed."
- On September 17, 2007, the Iraqi government announced that it was revoking the license of the American security firm Blackwater USA over the firm's involvement in the deaths of seventeen Iraqis in a firefight that followed a car bomb explosion near a State Department motorcade. However, the company was allowed to continue to operate in Iraq until January 2009 when the U.S.–Iraq Status of Forces Agreement took effect. Blackwater was one of the most high-profile firms operating in Iraq, with around 1,000 employees as well as a fleet of helicopters in the country. In 2014, four Blackwater employees were tried and convicted in U.S. federal court over the incident; one of murder, and the other three of manslaughter and firearms charges.
- Sallyport Global-May 3, 2017 report of Sallyport Global conduct in Iraqi 
By the end of 2012, the number of contractors who had died in Iraq, Afghanistan and Kuwait had reached 3,000. Scholars have studied whether contractor deaths have an effect the public's "casualty sensitivity" when substituted for military fatalities. Casualty sensitivity refers to the inverse relationship between military deaths and public support for a sustained military engagement. Contractor deaths may account for nearly 30% of total US battlefield losses since the beginning of the wars in Iraq and Afghanistan.
Contractor fatalities by employer (2001–2011)
||Titan Corporation, MPRI
|The Supreme Group
||Supreme Food Services
|Service Employees International
||DynCorp Technical Services
||Aegis Defense Service, Mission Essential Personnel