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Contractor Sued for Charges to Army

From the Associated Press yesterday,

The federal government is suing KBR Inc., the largest military contractor in Iraq, over what prosecutors say were improper charges to the Army for private security services. The lawsuit, filed in federal court in Washington, charges that KBR knew it could not bill the government for private armed security for the company and 33 of its subcontractors, but did so anyway.

This is an old issue that was long buried and ignored: that some, if not much, of the money spent on private security in Iraq was illegal. The reality of security contractors, despite the claims of so many that they are inherently outside the law, is they have always been potentially liable if the client, in this case the US Government, chose to make them so. Ultimately, their impact on the struggle in Iraq was significant. For all the talk on the importance of rebuilding and the invocation of the Marshall Plan, it would have been hard to come up with better methods of so-called ‘development’ to alienate the people more.

See also:

Review of the Blackwater Lawsuit

The Nation has a good article on the Blackwater lawsuit that is slowly working its way through the court system. In Blood Is Thicker Than Blackwater, Jeremy Scahill describes actions by a company that is the worst fear by many opposing privatization (did someone mention CusterBattles?).

When firms act like this, as Blackwater is alleged to have done, it not only taints the industry but also the United States. As an interview in the movie Shadow Company demonstrates, Stephen "Scott" Helvenston, Mike Teague, Jerko Zovko and Wesley
Batalona were attacked not because they were contractors or because they might have been military, but because they were thought to be CIA by the locals. While Americans tend to see contractors as independent operators, others see them as extensions, or a part of, the US Government (USG). The thousand or so deaths in Fallujah that were a direct result of the alleged failure of Blackwater to protect its men and the international coverage had tremendous impact on the image of the United States. Blackwater didn’t take the hit and in fact may have gained value from it (this is not to suggest it was intentional or even desired publicity). For the United States, this is image management and public diplomacy by proxy without recourse or management.

Below are some the highlights from the article.

According
to former Blackwater officials, Blackwater, Regency and ESS were
engaged in a classic war-profiteering scheme. Blackwater was paying its
men $600 a day but billing Regency $815, according to the Raleigh News
and Observer. "In addition," the paper reports, "Blackwater billed
Regency separately for all its overhead and costs in Iraq." Regency
would then bill ESS an unknown amount for these services. Kathy Potter
told the News and Observer that Regency would "quote ESS a price, say
$1,500 per man per day, and then tell Blackwater that it had quoted ESS
$1,200." ESS then contracted with Halliburton subsidiary KBR, which in
turn billed the government an unknown amount of money for the same
security services, according to the paper. KBR/Halliburton refuses to
discuss the matter and will not confirm any relationship with ESS.

All this was shady enough–but the real danger for Helvenston and the others lay in Blackwater’s decision to cut corners to make even more money. The original contract between Blackwater/Regency and ESS, obtained by The Nation, recognized that "the current threat in the Iraqi theater of operations" would remain "consistent and dangerous," and called for a minimum of three men in each vehicle on security missions
"with a minimum of two armored vehicles to support ESS movements." [Emphasis added.]

But on March 12, 2004, Blackwater and Regency signed a subcontract, which specified security provisions identical to the original except for one word: "armored." Blackwater deleted it from the contract.

"When they took that word ‘armored’ out, Blackwater was able to save $1.5 million in not buying armored vehicles, which they could then put in their pocket," says attorney Miles. "These men were told that they’d be operating in armored vehicles. Had they been, I sincerely believe that they’d be alive today. They were killed by insurgents literally walking up and shooting them  with small-arms fire. This was not a roadside bomb, it was not any other explosive device. It was merely small-arms fire, which could have been repelled by armored vehicles."

On March 30, 2004, Helvenston, Teague, Zovko and Batalona left Baghdad on the ESS security mission. The suit alleges that there were six guards available that day, but McQuown intervened and ordered only the four to be sent. The other two were kept behind at Blackwater’s Baghdad facility to perform clerical duties. A Blackwater official later boasted, the suit says, that they saved two lives by not sending all six men….

The four men were, in fact, working under contracts guaranteeing that they would travel with a six-person team.

…they
charge that Blackwater knowingly refused to provide guaranteed
safeguards, among them: They would have armored vehicles; there would be
three men in each vehicle–a driver, a navigator and a rear gunner; and
the rear gunner would be armed with a heavy automatic weapon, such as a
"SAW Mach 46," which can fire up to 850 rounds per minute, allowing the
gunner to fight off any attacks from the rear. "None of that was true,"
says attorney Callahan. Instead, each vehicle had only two men and far
less powerful "Mach 4" guns, which they had not even had a chance to
test out. "Without the big gun, without the third man, without the
armored vehicle, they were sitting ducks," says Callahan.

…Without a detailed map, they took the
most direct route, through the center of Falluja. According to Callahan,
there was a safer alternative route that went around the city, which the
men were unaware of because of Blackwater’s failure to conduct a "risk
assessment" before the trip, as mandated by the contract…

Attorney Marc Miles says that shortly after the suit was filed, he asked the court in North Carolina for an "expedited order" to depose John Potter. The deposition was set for January 28, 2005, and Miles was to fly to Alaska, where the Potters were living. But three days before the deposition, Miles says, "Blackwater hired Potter up, flew him to
Washington where it’s my understanding he met with Blackwater representatives and their lawyers. [Blackwater] then flew him to Jordan for ultimate deployment in the Middle East," Miles says. "Obviously they concealed a material witness by hiring him and sending him out of the country."…Blackwater subsequently attempted to have Potter’s deposition order dissolved, but a federal court said no….

Blackwater has not offered a rebuttal to the specific allegations made by the families, except to deny in general that they are valid. It has fought to have the case dismissed on grounds that because Blackwater is servicing US armed forces it cannot be sued for workers’ deaths or injuries and that all liability lies with the government. In its motion
to dismiss the case in federal court, Blackwater argues that the families of the four men killed in Falluja are entitled only to government insurance payments. That’s why the company moved swiftly to apply for benefits for the families under the Defense Base Act.

"What Blackwater is
trying to do is to sweep all of their wrongful conduct into the Defense
Base Act," says Miles. "What they’re trying to do is to say, ‘Look–we
can do anything we want and not be held accountable. We can send
our men out to die so that we can pad our bottom line, and if anybody
comes back at us, we have insurance.’ It’s essentially insurance to
kill."

In the end, Scahill notes President Bush mocks the question of private security companies. It is incredible, but unfortunately not surprising, that the President does not have an answer on how such a large number of people (to call them a group would imply some sort of larger unity) that has direct impact on our public diplomacy and foreign policy is regulated or controlled.

Update: Blackwater Air goes lighter than Air

Artist rendering of the Blackwater Blimp
Blackwater USA
is a prominent, and possibly cutting edge, private military contractor. The only private firm with air resources (side note, they’ve taken casualties… one was shot down last April with fatalities) will expand into remotely piloted craft:

Blackwater Airship’s initial focus will be the development and deployment of small remotely piloted airship vehicles (RPAVs) that can operate from 5,000 – 15,000 feet, move and hover, and stay aloft for up to four days. The airships will be equipped with state-of-the-art surveillance and detection equipment that can detect, record, and communicate in real time to friendly forces the movement and activities of terrorists.

Gary Jackson, president of Blackwater USA said, "This project is in keeping with Blackwater’s support of peace and security throughout the world."

Follow-on phases of the project will include larger airships that will carry tons of payload in support of remote humanitarian and peacekeeping missions. Blackwater, who is already involved in stability operations throughout the world, continues to innovate in support of peace and security, and freedom and democracy everywhere.

Personnel provider expanding into vehicles, blimps:

The Moyock -based company has established a subsidiary, Blackwater
Airships, to market a blimp that can hover over dangerous areas and detect trouble ahead. Together with an armored vehicle called the “Grizzly,” the company is expanding beyond its usual stock and trade of personnel and tactical gear.

The belief that private enterprise can provide services quicker and at lower cost than public enterprises is rooted in the American corporate experience. In the distant past, private armories and outfitters developed independent armies for hire by the Crown because of insufficient funds to maintain a standing army or navy (most recently in the American experience consider Jefferson gutting the US Navy when he came into office forcing a greater reliance on American privateers during the War of 1812). In the modern economy, it may be that on its face private providers can deliver at lower cost, but this may not be a true net cost savings. when the entire package is factored in.

Consider the value of military procurement when the two options are private firms or public agencies and the private pitch is high efficiency at a lower face value than public agencies. Not included in this first level of analysis is the loyalty and trust of the public agency, for example the US Marine Corps and soldiers on kitchen duty. Additionally, dollar for dollar comparisons oversimplify long-term costs of private markets which fail to be perfectly competitive with hidden and substantial transactional costs. Hidden costs of the private-public partnership include higher finance costs (the government can always can borrow money at lower rates), vendor incentives to skimp on quality or adhere to the letter of the contract not the spirit, future public costs to return outsourced skills in-house, and transactional costs of writing, enforcing, and monitoring contracts. Most important is a lack of committed loyalty to the project or consequences of under-performing. Further, the private business may seek contractually-allowed alternatives when uncertainty is likely in any war situation when other outcomes are desired by the client. This, along with unpredictability of warfare, results in expensive cost-plus contracts.

Ok, regardless of the perceived or real contract costs, there are other non-monetary value to PMCs. With the question of a PMC / PSC providing their own air support, the PSC becomes more capable of operating independently in a greater variety of operational environments with greater capabilities (intel, fire control, etc). Will a PSC acquire and operate their own (not on behalf of the USG) UAVs? UGVs? How do we, if we do, distinguish between Tim Spicer and Gary Jackson run operations? How about the other firms who operately quietly and under the radar? How are moral codes enforced?

Press release available here and WashingtonPost article here.

Edinburgh Risk & Route IRISH / BIAP Road, and

Risks to ‘public’ and private military personnel in Iraq is substantial. An unfortunate incident involving Edinburgh Risk & Security Management (ERSM) earlier this year underscores issues of any operating military force, public or private. On 20 Apr 2005, Edinburgh Risk contractors were ambushed on Route IRISH while supporting the Independent Election Commission of Iraq. This team was en route to pick up employees of the same firm from the airport when they were ambushed (i.e. a principal was not with them).

"On 20 April 2005 Edinburgh Risk personnel assigned to Operation APOLLO (support to the Independent Election Commission of Iraq) were engaged by enemy forces on Route IRISH (BIAP Road) during the execution of their duties" (from the official AAR).

This operation raised questions about tactics, training, equipment selection, and force sizing of private security companies operating in theatre. Worse, it highlights the independence of these companies that cannot rely on the integrated responses available to the US military teams.

Co-habitation on the battlefield threatens inadvertant blue on blue fighting, as this quote from the AAR of a team member atests:

After his second burst I removed my “Haji dress” because there was nothing between those U.S. Army .50 caliber heavy machine guns and us and I didn’t want them to look down the road at the gunfire and see all of us wearing local clothing to include Shemags and engage us. Besides my fear of being shot by the U.S. Military, after Johno began shooting, I assumed the cars near us knew we were Contractors anyway. Our “cover” if we ever had one was now non-existent.

Three files are available here:

  1. Video of BIAP / Route Irish encounter on 20 Apr 05
      Uncut original with ~3:30 of freeze frame (mpg, 180mb) via HTTP
      Reduced size file without ~3:30 of frozen footage (wmv, 14mb) via HTTP
  2. Official BIAP AAR (after-action report) (45.0K)
  3. AAR by James Yeager  (43.0K)

A review of the video and the AARs raises several important questions that are quite unlike those raised by AEGIS "trophy video", once posted at http://www.aegisIraq.co.uk (also now available here). Mainstream media questions about "undue" or "excessive force" or out of control "mercenaries" don’t come from the ERSM video. What has the above Route IRISH video does raise, mostly within the operator community, is questioning over equipment, instructions, and processes of these very companies. Keep in mind that most of the private security companies in operation in Iraq are unknown to the majority of people not paying close attention (also invisible to some who think they are paying attention) because of their clean records and because of their complete professionalism from top to bottom. This is not to suggest ERSM is less professional, but providing the operators with unarmored vehicles for travel along a route known to be dangerous does not seem right. This is not as bad as providing skateboard helmets (as reported by private security operators in Iraq, such as "one embassy detail that wears the Protec skateboarding helmets") but is irresponsible. Is it as bad as providing one less man on mission that deserves five instead of four or in unarmored vehicles when the site commander recommends armor?

James Yeager may be one of the poster children on the issue of liability of private security companies (Wesley Batalona, Scott Helvenston, Michael Teague and Jerry Zovko are other notable examples).

UK SAS-SBS poaching

This is not about the highly respected UK SAS-SBS soldiers poaching but of the poaching OF THEM by private security companies:

The SAS and SBS have fewer than 600 "shooters" between them and all have already served several times in Iraq and Afghanistan since the war on terror was launched in 2001.
Part-time volunteer reservists from 21 and 23 Territorial regiments of the SAS have also been called up to ease the strain.
Between 40 and 60 experienced regular troopers have abandoned their roles over the last year to earn up to �500 a day – about five or six times their army pay – as mercenaries with private security firms in Iraq.
A joint SAS-SBS detachment is based in Basra with a second contingent operating out of the US base at Balad north of Baghdad. They amount to about a third of the manpower of the UK’s special forces.

Blackwater Oath: a pledge to the sovereign or a play to look more American?

A long time ago the prevailing military doctrine dictated a strong officer corps to lead men into battle. With the rise of nationalism, improvements in tactics and technology, and increasing institutionalization (or bureaucratization) of the state, new ways of
positioning the military within civil society appeared. Instrumental to this was an advanced officer corps reinforcing and promulgating the
hierarchy of the civil authority over the military through the
enshrinement of professionalism and ethics. Pledges to the state and/or nation and/or tribe were exceptionally important in the field of honorable men (and now women, of course).

Continue reading “Blackwater Oath: a pledge to the sovereign or a play to look more American?” »

USMC vs PMC

What happens when you put two military forces within close proximity with each other, do not integrate C2, or otherwise share IFF resources? Is it called friendly fire when a US military force fires upon a US corporate force?

The Marine Corps Times, Boston.com, and NPR have raised the profile of an incident last month where US Marines halted a private military force comprised of US and Iraqi citizens…

Marines with Regimental Combat Team 8 detained 19 civilian contract
workers in Fallujah, Iraq, in late May after the contractors were seen
firing from their vehicles on Marine positions and Iraqi vehicles,
according to a Corps press release.

The Marine Corps times is the only news outlet I reviewd that included
the reference the governing rule of law for private security forces, Memorandum 17 issued by the Coalition Provisional Authority in its last days (also stored here since the CPA website may be offline after 30 June 2005).

Private security companies in Iraq are regulated under Memorandum 17, a rule enacted
under the Coalition Provisional Authority that requires them to
register with the Iraqi Ministry of Interior and Ministry of Trade and
be free of a criminal record or terrorist ties. The memorandum also
spells out a “code of conduct” that stipulates that when contractors
use their weapons, they must “fire only aimed shots, fire with due
regard to innocent bystanders [and] immediately report [the] incident
and request assistance.”

The company involved, Zapata Engineering, put out a statement on 9 June 2005 disagreeing with the Marine’s account of being fired upon or witnessing Zapata’s men firing from their vehicles.

On Saturday, May 28, 2005, Zapata Engeineering employees were engaged in a routine convoy in Northern Iraq. Marine Corps personnel in a nearby outpost intercepted the convoy team. Citing
security concerns, the Marines escorted the convoy without incident to
Camp Fallujah for questioning. Convoy personnel cooperated fully with
the Marines’ requests. Prior to this date, we had safely completed
hundreds of similar convoy missions in Iraq.

The fact Zapata Engineering was engaged on a US Army Corps of Engineers contract is important in how this could play out. Memo 17 requires registration and provides certain limitations ("primary role of PMC is deterrence") and constraints ("liable under applicable criminal and civil codes") but enforcement requires the backing of the US government.

The UK House of Commons issued a report in 2002 identifying the US as having the most
extensive regulatory regime, partially as a result of attempts to control weapons
technology and partially as a result of the American legalist tradition. The International Traffic in Arms Regulations (ITAR) of 1986 has a significantly high threshold and limited functional oversight. A functioning bilateral Status of Forces agreement (CPA’s Order 91, also available here, is a related problem here)  would be indicative of a functioning government capable of upholding its contractual obligations.

The US Military Extraterritorial Jurisdiction Act (MEJA) of 2000, along with the Uniform Code of Military Justice (UCMJ), apply to persons who are employed by or accompanying the armed forces outside the
United States or who are members of the armed forces and subject to UCMJ and
who are not a national or resident of the nation in which the crime occurred.
The punishment for committing the new crime is that which would have been
imposed under federal law had the crime been committed in the United States. However, Zapata’s forces were not accompanying US armed forces and MEJA has no teeth and has never been used.

There is always the humanitarian law bucket. The Alien Tort Claims Act (ATCA) of 1789 and the Torture Victims Protection Act (TVPA) of 1991 rely heavily on expensive prosecutions within the US. Zapata, if they were to press charges, would likely not have the financial resources or the strong case.

The most likely resolution of this situation is the US government threatening (with the potential to follow through) to terminate the contract with Zapata.

This incident is clearly a harbinger of things to come. What happens when things go more wrong? See a detailed timeline of the Belarus mercenaries conducting (possibly) extracurricular services for the Ivory Coast / Cote d’Ivorie November 2004. The retaliation by the French was severe and then promptly silenced by the same. This was likely due to their desire to limit foreign interest in their (re)colonial intervention.