This is truly a distressing story. The issue is not that private companies are never going to be a cog in the war machine. That is nothing new. The issue is that the military needs to be responsible for those things which are truly mission critical. And, when private companies are involved there needs to be oversight and enforcement. There should never be a situation, especially on the battlefield, when there is a tension between "the military notion of completing a mission irrespective of cost" and the goal of private companies to earn a profit. If they can't do the necessary job then they shouldn't be doing it. It's that simple.
I watched a bit of the recent Washington Monthly panel. During it Paul Glastris mentioned how he had previously been far more supportive of federal privatization initiatives than he was. The reason is that he's seen how it simply ends up duplicating, at the federal level, the patronage/machine politics that we see at state and local levels. I don't know why this was a surprise.