'The most thoroughly vetted - and cleared - contractor in the war in Iraq'

"In nominations for the most thoroughly vetted - and cleared - contractor in the war in Iraq, who would have guessed it would turn out to be Blackwater?

"But that’s exactly what happened last Monday (December 8)," Patrick McGuigan writes in Tulsa Today. "After more than a year of gathering evidence and interviewing witnesses around the world, a grand jury found no evidence to indict Blackwater and, instead, indicted five of the contractors who were working for the company on September 16 when a shooting incident occurred in Nisour Square.

The editor adds, "no other company has been subjected to anywhere near the level of media scrutiny, Congressional hounding, or prolonged investigation that Blackwater has weathered.

"So after all the public condemnations and damning headlines just how bad is Blackwater? It turns out that there’s not a shred of evidence that the company has done anything wrong at all. In this instance, a few of its contractors appear to have been caught in a bad situation in Baghdad and innocent civilians were caught in the crossfire – it’s terrible but it’s war; our troops have been involved in similar situations countless times. And just how evil is Blackwater? So evil that every single person they’ve protected is alive and well because of that protection."

"Looking at the facts," McGuigan says, "it’s hard to come up with a company that has been more thoroughly vetted. Maybe, just maybe, they deserve a little credit for doing a good job."

(Photo: General David Petraeus in Baghdad with a Blackwater diplomatic security team who saved the life of Poland's ambassador to Iraq.)

US has Thrown DoD Contractors 'Under the Bus,' IPOA says

The United States government has thrown its contractors in Iraq "under the bus" by caving into Iraqi demands that they be subject to the country's dysfunctional and corrupt judicial system.

That's what the main trade association of security contractors, the International Peace Operations Association (IPOA), is saying about the new arrangement.

The main companies involved - Blackwater, Fluor Corp., KBR and DynCorp, wouldn't tell Bloomberg News what they think of the arrangement.

But IPOA President Doug Brooks says flat-out: "This agreement throws DoD contractors under the bus." And State Department contractors as well, one presumes.

Iraq's judicial and corrections systems are "way below" global standards, says Brooks.

According to Bloomberg, "The Defense Department and State Department briefed their private contractors today on a provision of the so-called status- of-forces accord that eliminates contractors' immunity from prosecution under Iraqi law. While the agreement applies to U.S. military operations, the State Department told its contractors today that Iraq will make them subject to the same rules.

"The provision is part of an agreement that would govern U.S. military operations in Iraq after a United Nations Security Council resolution expires on Dec. 31. About 28,000 of the 163,500 people employed as Pentagon contractors in Iraq are U.S. citizens," and about 1,000 or so reportedly work for Blackwater as personal security detail professionals.

The deal is likely to increase financial and political costs for the incoming Obama administration. "This is going to create costs for contractors because every contractor will need additional insurance coverage'' to protect against the risk of prosecutions, a Virginia lawyer who has represented US private security contractors in Iraq tells Bloomberg. "There's an increased likelihood of civil litigation costs for companies in the U.S. every time an investigation is opened in Iraq.'"

The Pentagon doesn't seem worried. "I would imagine that no matter what the legal protections are for contractors" serving in Iraq, Iraq "will remain a profitable enough business that you will see a number of contractors willing to do this," a Pentagon spokesman says.

That means that DoD will have to build untold millions of dollars a year into its contractor budgeting to cover the costs of defense against prosecution, and the huge costs of litigation and any payouts awarded by courts.

CBO Fingers Waxman As Source of False Information

Congressman Henry Waxman's office is the source of the false information about how much Blackwater security contractors in Iraq are paid. That's not simply this blogger's view - it's a statement in a new Congressional Budget Office (CBO) report on private contractors in Iraq. The Senate Budget Committee commissioned the report.

During October 2, 2007 hearings, the staff of House Oversight and Government Reform Committee Chairman Waxman prepared a memorandum to committee members, stating that Blackwater security personnel in Iraq were costing $455,000 per person per year, "over six times more than the cost of an equivalent US soldier." Blackwater CEO Erik Prince sharply disputed the figure, which several congressmen - including and especially Waxman - repeated during the hearing and in subsequent interviews with the media.

Waxman made the statements as part of a favor he did for a trial lawyer who stands to make millions by discrediting and suing Blackwater. The liberal website ProPublica.org says Waxman's strategy is to discredit the company to "make it ineligible for future federal contracts."

The New York Times, Washington Post and other news outlets uncritically repeated the misleading figures, adding to the falsehood by stating that the figure was what the individual contractors were being paid. This blog reported on the falsehood on the day of the hearing. nearly a year ago.

The CBO report, issued last month, points directly to the source of the falsehood. In footnote 22 of page 14 of the report, the CBO said that the critics' "figures appear to come from a memorandum to members of the House Committee on Oversight and Government Reform, Additional Information About Blackwater USA (October 1, 2007), http://oversight.house.gov/documents/20071001121609.pdf."

"Those figures, however, are not appropriate for comparing the cost-effectiveness of contracting the security function or performing it using military personnel," according to the CBO. The $455,000 a year figure comes from a daily billing rate of $1,222 a day. "The figure of $1,222 a day represents the contractor's billing rate, not the amount paid to the contractor's employees. The billing rate is greater than the employee's pay because it includes the contractor's indirect costs, overhead, and profit," the CBO said. This cannot be compared to what a U.S. soldier costs the taxpayer because of many other costs involved.

The CBO backs up Prince's contention at the 2007 hearing that the costs include equipping and supplying the security personnel, and paying for equipment damaged or destroyed by insurgents or the US military. That equipment includes several helicopters the company lost to hostile fire. It is not possible to insure helicopters in war zones; Blackwater pays for the losses out of its profit and overhead.

It is rare for the CBO - an independent, nonpartisan auxiliary of Congress - to point to congressmen or congressional staff as the sources of misleading information, so the observation in the report is particularly important.

CNBC Interviews Blackwater CEO

Blackwater CEO Erik Prince was the guest on CNBC's major morning financial talk show Squawk Box. Among the points Prince raised in the interview, prompted by the three co-hosts:

On commitment: "Our guys take tremendous risks. Many have paid the ultimate price. Many have given parts of themselves in the process."

On business expansion: "We’re certainly not focusing as much on security going forward because we take a lot less grief. … It hammers our ability to raise capital. Our training site is growing like crazy, our aviation is growing a lot."

On whether an Obama administration would affect Blackwater's security contracting in Iraq: "All of it is competitively bid. Whoever takes over in January, the US government unfortunately is not going to be born again hard fast innovative and efficient. Someone’s going to do the work. The private sector’s going of be a part of it."

On profitability: "The margins aren’t nearly as good as you think. Law firms, PR firms and accounting firms have much better margins than we do." (Hmm - that raises the question: Is the taxpayer getting a good value in services performed by law firms and accounting firms under federal contract? A Congressional Budget Office study might be revealing.)

MidEast Times Explains Economics of Contracting

When Blackwater recently announced that it was pulling back from the personal protection business, many people were (wrongly) surprised. What else do contractors do, they wonder, if not pull triggers? Well, it turns out there's a great deal more to contracting. The Middle East Times explains:

It has long been a myth, albeit a popular one, that the majority of private military contractors are gun shooters. In fact, the reverse is true, as has been pointed out, largely in vain, by trade groups such as the Professional Services Council and the International Peace Operations Association.

According to estimates from the IPOA, the total value of what it calls the global peace and stability operations industry is about $20 billion for all companies providing services in the field. Of that number, private security contractors make up only about 5 percent to 10 percent, or a maximum of $2 billion annually. The normal peacetime number would be closer to 5 percent for PSCs, but Iraq has driven it up.

Moreover, contrary to popular perception, the Middle East Times reports that security does not pay better than other forms of contracting:

To understand the difference, one has only to follow the money. For example, compare two major contracts in Iraq, the World Wide Personal Protective Services and the Logistics Civil Augmentation Program. The current WPPS contract, the second, was awarded in July 2005. The State Department utilizes it as an umbrella contract under which it issues task orders to the three contracting companies -- Blackwater USA, DynCorp and Triple Canopy. The bulk of the personnel come from Blackwater. The contract has a ceiling of $1.2 billion per contractor over five years -- one base year and four option years. That works out to $240 million per contractor per year.

LOGCAP, an Army program first established in 1985, is an initiative for the use of civilian contractors in wartime and other contingencies. It includes all pre-planned logistics and engineering/construction-oriented contingency contracts. It does everything from fixing trucks to warehousing ammunition to doing the laundry, running mess halls and building whole bases abroad. When the Army announced the awarding of the fourth and latest LOGCAP contract back in April to DynCorp International LLC; Fluor Intercontinental Inc.; and Kellogg, Brown and Root Services, the total annual maximum value was $15 billion and the lifetime maximum value was $150 billion. That works out to $5 billion per contractor per year.

You don't need a Ph.D. to figure out which is the market segment with the greatest profit-making opportunities.

The Truth About Contractor Profits

The Federal Times has brought some interesting statistics to light. Conventional wisdom has it that private contractors in Iraq are bleeding the American taxpayer dry and making money hand over fist in the process. But in fact, the numbers tell a different story:

Sixty-nine percent of government contractors generated profit rates of less than 10 percent from their government business and 7 percent generated no profits at all.

Indeed, government contracts are hardly considered a guaranteed cash stream:

Most contractors said they view government contracting as a greater business risk than most commercial ventures.

Just further evidence that maybe these guys risk their lives because they're patriots, not money-grubbers.

Former private contractor in Iraq takes on media distortions

A former private security contractor (PSC) who served in Iraq challenges media distortions about Blackwater and other companies who protect American facilities, convoys, diplomats, and visiting VIPs.

PSC veteran Mark R. Taylor writes that accusers of Blackwater in Congress and the media are more interested in politicizing the war effort and pushing their own agendas than they are in finding the truth.

"Where are the stories of the majority of circumstances, the many successes of Blackwater and how many lives were saved because of them?" Taylor asks. "The stories are in the same place as the successes of KBR, buried by the media and told only by handful with a mission to tell the truth about our role in the Middle East. The attacks on the military by government officials and the media created a backlash that sent the same scurrying for a new scapegoat, the American contractor. With no regard for our families, our children and our lives, they continue to denigrate our mission in the hopes of creating a true quagmire for George W. Bush, or of engineering a Democrat victory in ‘08.

"There is a mutual respect among the military and contractors that is not recognized by the dignitaries who rely on Blackwater to keep them alive. I recall that, while in Iraq, a delegation of American dignitaries arrived at Camp Victory, visiting Black Jack DEFAC. It was only Senator Barbara Boxer, D-CA, who even bothered to take the time to visit with us, at least to show some concern and support. Why didn’t the others visit us? Were they repulsed at our arrival - dirty and sweaty from a two day mission, driving across Iraq to deliver mail to our troops - or were they made uncomfortable merely by our presence? Or were they disinterested?

"While they returned to their clean, uparmored air conditioned bus, heading for the next photo op, we returned to our dusty unarmored trucks to continue our missions and face the enemy.

"We worked, we fought, we cried, we bled. And in some cases, we died beside our military counterparts who are our friends. A majority of us eventually returned home to our jobs and our families, our contributions rarely noted, but even today, it pains us to see our brothers and sisters attacked in the media while they fight a ruthless, bloodthirsty enemy overseas."

'It's open season on security contractors'

IraqSlogger.com has a great review of the Human Rights First report on private security contractors.

Written by Robert Y. Pelton, the commentary says, "the report doesn' t really cover new ground but it makes the same points made by many others that a) there are more contractors now than at any other time in recent military conflict, b) they are being protected by official and unofficial methods to avoid prosecution or liability, and c) security contractors have joined the ranks of baby seal bashers, Salvation Army bucket thieves, celebrity paparazzi and Nigerian 401 spammers as the profession most hated by the media."

All in all a fine and funny critique, with comments on the larger issues at hand. "While the media and the Left focus on pointing out the obvious, that security contractors were designed to be a 'use once and throw away when done' solution to GWOT, they have become a critical part of both military and humanitarian operations," Pelton writes.

They ably serve but are treated like 'road kill'

Private contractors have served to help our armed forces since the American Revolution, but they have never received the recognition that uniformed soldiers receive - even when they are just as selfless and heroic.

Oliver North explains in his Townhall.com column: "Civilian contractors have served beside -- and been treated differently than -- the U.S. military since the American Revolution. From 1775 when he arrived in Boston to assume command of the Continental Army, Washington depended on civilian contractors to provide food, weapons, ammunition, transport, armories, engineering, construction, clothing and medical assistance for his troops. Though many of these civilians shared the same hardships and privations as the troops they supported, they were more often criticized than honored by our government.

"Modern warfare has made civilian contractors even more essential to our military -- and placed them at higher risk. Three weeks after Pearl Harbor, nearly 100 American civilian construction contractors were killed and wounded standing shoulder-to-shoulder with U.S. Marines and sailors defending Wake Island. When the tiny garrison was overwhelmed on Dec. 23, 1941, more than 1,000 contractors became prisoners of the Rising Sun and scores were subsequently worked to death and massacred by their captors. None of those who died received so much as a Purple Heart.

"By the time I arrived in Vietnam in 1968, tens of thousands of American civilians were backing our efforts on the battlefield. My tiny platoon outpost overlooking Khe Sanh had a half-dozen American civilians manning sophisticated communications and detection equipment. At Con Thien, our infantry battalion was supported by U.S. civilian "tech reps" who maintained and operated fire control radars, ran generators and repaired everything from sensors to heavy equipment. One of the most famous photographs of the Vietnam War's ignominious end was an American civilian contractor's UH-1 "Huey" helicopter evacuating desperate Vietnamese refugees from the top of 22 Gia Long Street, a half mile from the U.S. Embassy."

Click here for the full text.