It was first formed as a small government organization who would trigger seemingly random terrorist attacks against embassies, consuls and military installations in order to assess and train Navy SEALs and Marine Corps forces in defusing terrorist threats. They constantly sought to make their simulacra more realistic, and their simulations took a decidedly lethal turn with the passing of their leader, Colonel Jackson.
They began organizing terrorist attacks, and targeted diplomats and civilians alike. Their campaign resulted in thousands of deaths (although Vamp implies in his conversation with Raiden that it was the Patriots who were actually responsible for this).
The Patriots then initiated a campaign to eliminate the members of Dead Cell approximately six months before the Big Shell Incident, which was merely a piece of the greater S3 Plan. It is implied that the Patriots engineered events to manipulate Dead Cell into joining Solidus' Sons Of Liberty and hold the Big Shell hostage. Even their enlisting of Olga Gurlokovich and Revolver Ocelot's aid in securing the Big Shell and Arsenal Gear was part of the S3 Plan.
Role as prescribed by The Patriots
In actuality, the Big Shell Incident was a huge simulation conducted to gauge the feasibility of using years of VR training to create the perfect soldier. As such, events and people were manipulated into recreating what transpired at Shadow Moses: Raiden was led to believe that he was the newest FOXHOUND recruit, and Dead Cell was manipulated into being a FOXHOUND-esque special forces group that would be his adversaries.
They were chosen as they were extremely skilled soldiers who were grappling with amongst other things, issues like soldiers' disenfranchisement in the new century and their sanity (just like their predecessors). The Patriots played upon Dead Cell's emotional weaknesses in order to improve their standing as tormented villains. This was achieved in a number of ways. Fortune had a device planted on her that deflected bullets, making her believe she was immortal and unable to join her loved ones in death. Fatman's mentor, Peter Stillman, was brought to the Big Shell to exacerbate his unstable emotions and make him a more challenging foe for Raiden.
The entire team, save Vamp, was wiped out during the Big Shell Incident. This would arguably mean that Raiden successfully accomplished the S3 Plan's objectives; green-lighting the later proliferation of PMCs in Metal Gear Solid 4. However, Solid Snake's assistance and Raiden's mentally-suppressed years of combat experience as a child soldier can be considered variable 'wild-card' factors that introduced a profound unknown factor in the S3 Plan's equation, discounting its success (a point which Ocelot concedes).
- Dead Cell is based on the real-life U.S. Navy counter-terrorist unit called Red Cell. Dead Cell's storied history also somewhat resembles its real life counterpart: both Colonel Jackson and Red Cell founder Richard Marcinko were tried and convicted for misappropriating government funds (though Marcinko did not die in prison.)
- The Sons of Liberty (and their flag) is an obvious reference to the revolutionist group that shaped American history in the 18th century.