Next Test for Blackwater
Wall Street Journal (2007-11-13) August Cole
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More Info: Blackwater
Can Firm Get New Pentagon Work After Iraq Incident?
By AUGUST COLE
November 13, 2007; Page A6
A Defense Department contract involving antidrug training missions may test the durability of the political controversy over Blackwater Worldwide's security work in Iraq.
The Moyock, N.C., company, which was involved in a September shooting in Baghdad that left 17 Iraqis dead, is one of five military contractors competing for as much as $15 billion over five years to help fight a narcotics trade that the government says finances terrorist groups.
Also competing for contracts from the Pentagon's Counter Narcoterrorism Technology Program Office are military-industry giants Raytheon Co., Lockheed Martin Corp. and Northrop Grumman Corp., as well as Arinc Inc., a smaller aerospace and technology contractor.
The contracts are expected to be awarded as the need arises, so the Pentagon's level of concern about employing Blackwater will likely be measured over time and by whether the company wins leading roles or is shut out.
Companies competing for the work might be called on to develop detection or surveillance technology; train U.S. and foreign forces; or provide logistics, communications and information-technology systems, among other areas.
Blackwater faces the question of whether it is too tainted to be tapped for such work, even though the contract doesn't involve the kind of security detail that it performs in Iraq. The Sept. 16 shooting in Baghdad strained relations between Washington and the Iraqi government, which alleged that the shooting was unnecessary.
The company, formerly known as Blackwater USA, maintains that its ability to win additional government business hasn't been affected by scrutiny from Congress, the State Department and the Justice Department. Blackwater spokeswoman Anne Tyrrell said customers have "confidence in our ability to perform in a capable and professional manner."
Peter Singer, a senior fellow at the Brookings Institution in Washington, said Blackwater's troubles are not a "death knell," for the company but said: "This extremely public kind of controversy certainly isn't of much help in winning contracts."
Last week, Sen. Bernie Sanders, a Vermont independent who caucuses with Democrats, and Democratic Rep. Jan Schakowsky of Illinois introduced the "Stop Outsourcing Security Act," which would halt the government's practice of using companies such as Blackwater to provide private security for U.S. diplomats in Iraq.
Rep. Henry Waxman of California, chairman of the House Oversight and Government Reform committee, continues to pursue inquiries into Blackwater's operations in Iraq and its business practices. The Federal Bureau of Investigation, which is probing the Sept. 16 shooting, is expected to report its findings in the coming weeks.
Tensions with Iraq over the U.S. employment of private contractors are likely to persist. Saturday, a Dyn Corp
International guard shot and killed an Iraqi taxi driver in Baghdad as a convoy passed a traffic jam. Iraq's Interior Ministry alleged that the shooting was unprovoked.
U.S. embassy spokesman Philip Reeker said Dyn Corp
is working with the Interior Ministry to investigate the shooting.
spokesman Greg Lagana said that the company is investigating. "We left the scene believing no one was injured," Mr. Lagana said.
Although the Pentagon's contracts represent a potential windfall to the companies, they likely wouldn't come close to providing Blackwater the same kind of cash flow that has come from the government's spending for security work in Iraq. Since 2001, closely held Blackwater is estimated to have been paid over $1 billion for its government services.
Instead of giving all of the business to a single firm, the Pentagon plans to award the antidrug work on a task-by-task basis, requiring Blackwater and its rivals to compete constantly.
In August, the Defense Department gave each of the five companies a $25,000 contract to look at intelligence, surveillance and reconnaissance missions in Saharan Africa. Four more contracts have since been awarded, but the government has classified the details.
For bigger companies such as Lockheed and Northrop, the value of the antidrug contracts are miniscule when compared with building fighter jets and naval ships. Yet, work such as this is increasingly important as they seek to expand into new markets that could grow over time.
For Blackwater, which started in 1997 as a small company that trained law-enforcement officers and others at its compound in North Carolina, such contracts are crucial to growth. Since 2001, Blackwater's roster of military veterans and former law enforcement officers has swelled to more than 40,000, and it has built a fleet of airplanes and helicopters larger than those of some of the countries where it does business. Blackwater hopes to sell its own surveillance airship and a custom-built armored vehicle for dangerous missions.
Under the Defense Department contract, Blackwater might end up as a subcontractor to a rival. Lockheed lists Blackwater as one of 37 companies it might use to supply nonsecurity services such as training personnel. Blackwater received $44 million in contracts from Lockheed between 2005 and 2007 for work as a subcontractor on antidrug training and border-related work in Afghanistan, according to the Defense Department.
Richard Douglas, deputy assistant defense secretary for counternarcotics, counterproliferation and global threats, said Blackwater's training of Afghan antidrug forces has made them more effective. "We've been very happy with the results of our association with them in Afghanistan," he said.
--Gina Chon in Baghdad contributed to this article.
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