Audit: Blackwater Owes Gov’t $55 Million, One Frialator

Investigators say the firm shorted State on guards and lost a federal-issue fryer.

Photoillustration by Steve Aquino.

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Blackwater may owe the government more than $55 million—and one restaurant-quality deep fat fryer.

According to a federal audit reviewing the private security firm’s work in Iraq, Blackwater failed to meet the terms of contracts worth more than $800 million. The audit, released on Monday, found that the company (which recently renamed itself Xe) regularly came up short on the staffing requirements outlined in two of its State Department task orders, issued under the multibillion dollar Worldwide Personal Protective Services (WPPS) contract. For instance, the audit notes, the firm didn’t supply enough personal security specialists for 16 of 19 months under a task order to provide guards in Baghdad and Ramadi—meaning that visiting dignitaries and other officials under the firm’s watch were potentially underprotected.

“The contract states that all positions must be filled 100 percent of the time and that Blackwater is to be assessed deductions when this level is not maintained,” the audit, a joint effort by the State Department’s Inspector General and the Special Inspector General for Iraq Reconstruction, notes. Though Blackwater’s “muster sheets”—schedules showing the number of personnel available for duty—”indicated that Blackwater did not provide the required manning for protection details in accordance with the contract terms,” the State Department failed to invoke a contract provision that would have penalized the company for failing to maintain the agreed upon staffing levels.

In the WPPS contract, the State Department pointed out that understaffing on high-threat protection contracts had proved a “major problem” in the past. And the agency included a clause in the contract to discourage this from happening again. “If manning falls below a minimum or the correct number of personnel are not deployed on time, a large reduction in the award price will be made in addition to not being able to invoice the hours/days not worked.” Government auditors determined that Blackwater should have been docked $55 million for its persistent manpower shortages. And the audit concluded “insufficient manning exposed the Department to unnecessary risk that could have been avoided by full staffing.”

Blackwater/Xe spokeswoman Anne Tyrrell says the company is still reviewing the audit, but disputed the allegation that the firm had not met its contractual obligations. “The government contracting officer determined that Blackwater was compliant with the terms and conditions of the contract at the time they were reviewing and therefore did not apply any deductions or penalties,” she says, adding that “Blackwater only billed for services provided.”

According to the audit, though, this is far from clear. Due to inadequate monitoring by the State Department’s diplomatic security division, “There is no assurance that personnel staffing data was accurate or complete and that correct labor rates were paid.” The audit recommends that the State Department seek a legal opinion on “whether charging deductions for past inadequate staffing would be appropriate”—and the agency has agreed to do so.

Blackwater was also called out for $127,364 in “unallowable travel costs” expensed by contractors assigned to Baghdad and Hillah. As of February, the State Department had been able to recoup $56,457, but $70,907 remained outstanding. “We have not been informed of what the report is referencing but would work with the Department of State to reach a resolution if it became necessary,” says Tyrrell. Given that Blackwater raked in over $1 billion before being booted from Iraq in May, these costs may appear somewhat trivial, but they represent the larger free-for-all in Iraq, when, after the invasion, contracts—along with duffle bags full of cash—were going out the door without proper oversight.

On other parts of the review, Blackwater fared well. Auditors found the firm’s equipment, along with the vetting and training procedures for its personnel, were well within the terms stated in its task orders. As for the manpower discrepancies, auditors lay blame primarily on the federal government’s contract management and accounting practices, which they found to be ill-suited to the task at hand. “Department officials in Iraq did not establish or perform measures to confirm the accuracy of labor costs used as the basis for contract billing. Monthly invoices from the contractor were paid without adequate review of support documentation.”

And, while the audit commends State Department officials for keeping tabs on the guns and vehicles the government provided to Blackwater, the same can’t be said of the agency’s monitoring of other federal property issued to the company: “…Department oversight of all other government-furnished property was inadequate, and contractor lists were incomplete and inaccurate and therefore unreliable.”

Due to this lax oversight, a handful of items—including binoculars, body armor, and walkie-talkies—have apparently gone MIA. Also unaccounted for: a Fagor brand deep fat fryer. “No word on the fryer yet,” says Tyrrell, who’s currently investigating its whereabouts.

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with The Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with The Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate