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Consequences of Pursuit of Profit: All Protected by DBA’s Exclusive Remedy at the expense of the US taxpayer

Posted by defensebaseactcomp on February 7, 2012

That dispute led to the under-equipment and under-preparation of the security team on which the four Blackwater employees died.   Their deaths led the military to launch an invasion of Fallujah.

So here it is: A contract dispute led to a major development in a major war of the United States – and that is Paul’s point.

David Isenberg at PMC Observer

Reduced to its essentials every argument and debate about the use of private military and security contractors comes down to two words; outsourcing and privatization. The argument is simply whether they are good and bad.
Personally I think that, like most other things, the answer is maybe. Hey, if you want absolutes take up physics.

But lately, partly I suppose, in response to the predictable quadrennial Republican party blather about the glories of the free market – cue the inevitable segue into why America needs a purported businessman like Mitt Romney to “fix America” – my repressed academic side has been pondering the pitfalls of privatizing the battlefield.

Before going any further let me acknowledge the contribution and sacrifice of PMSC personnel. To paraphrase Winston Churchill, never has so much depended on such an unacknowledged few.

That said, let’s turn to one of the iconic contractor moments of the U.S.involvement in Iraq; the killing of four Blackwater contractors in Fallujah in 2004.

Last year law professor Arthur J. Jacobson of Yeshiva University publishedan article in the  Cardozo Law Review.   The occasion was a symposium in honor of Paul R. Verkuil, who is on the Cardozolaw school faculty. Verkuil is author of the 2007 book Outsourcing Sovereignty: How Privatization of Government Functions Threatens Democracy And What We Can Do About It.

In his article, Outsourcing Incompetence: An Essay in Honor of Paul Verkuil Jacobson provides some detail regarding that tragic day that is not appreciated by the public.  I realize the following quote is long but it is necessary to appreciate the true impact of what happened.

The four Blackwater employees who were dismembered and mutilated in Fallujah, where they ended up while guarding a convoy, is a grim reminder of how the military must react to contractor actions. The Marines had to secure that city after that gruesome event, which was not in their plans beforehand.

Paul’s conclusion about the Fallujah incident is ineluctable. The Department of Defense, it appears, outsourced to Blackwater a task that it regarded as amenable to outsourcing, rather than as an inherent government function. Were the Department of Defense to offer a justification of this decision, they would argue that providing security to a supply convoy is akin to an ordinary civilian security operation – like night watchmen at a construction site or armed guards accompanying an armored car – and is thus distinguishable from combat, which, as most today would probably agree, is
an inherent government function.  But the reality of a theater in combat does not permit so fine a distinction to be drawn.  The Blackwater employees had necessarily to engage in combat, and their defeat drew the Marines into a combat operation they had neither desired nor planned. Contracting with Blackwater to provide security for convoys thus wound up diverting the United States military from operations they had in fact planned, and calling into question the competence of a military that could so unwittingly be the cause of its own distraction.

Paul’s Blackwater story is bad enough. The real story is worse. I asked Erik Wilson, a captain in the United States Marine Corps and a first-year law student at Cardozo, to look into the Fallujah incident a little more closely. Here is what he found.

The U.S. Army did not hire Blackwater directly. The prime contract, part of the Logistics Civilian Augmentation Program (LOGCAP), was between the Army and Halliburton. It was a contract to supply Camp Ridgeway, an Army base near Fallujah.

Halliburton then subcontracted the supply contract to KBR, and KBR subcontracted it to ESS. It was ESS that hired Blackwater to provide security for the convoys to Camp Ridgeway. Four subcontracts connect, or separate, Blackwater from the ultimate recipient of its services. That looks like an awfully long chain of subcontracts. But things were not so simple.

Let’s start with the top of the chain. It was actually KBR’s predecessor, Brown & Root, and not Halliburton, that had the first LOGCAP contract with the Army. This was back in the 1990s, at the beginning of the LOGCAP program. In 2002, Halliburton created KBR (merging two of its subsidiaries, Brown & Root and M.W. Kellogg), and replaced the former Brown & Root as the prime contractor. Halliburton was thus the prime contractor at the beginning of the Iraq war in 2003. The LOGCAP contract Halliburton signed at that point, known as LOGCAP III, was the second renegotiation of the initial LOGCAP contract between the Army and Brown & Root. Halliburton’s role under LOGCAP III was only to guarantee KBR’s services, and the Army and other federal auditing agencies dealt directly with KBR, not with Halliburton. Halliburton was involved in LOGCAP III only because it owned KBR. Thus, after Halliburton divested itself of KBR in 2007, KBR once again became the prime contractor in the LOGCAP IV contract, which is just now coming into
effect.

Now let us consider the bottom of the chain. ESS did not hire Blackwater directly. It hired Blackwater through a proxy company, Regency Hotel and Hospital Company of Kuwait. What happened was this: Regency and Blackwater had submitted a joint proposal to replace ESS’s existing private security contractor, Control Risks Group. Once Regency/Blackwater won the contract, they renegotiated it to make Regency ESS’s subcontractor and, in turn, make
Blackwater Regency’s subcontractor. Apparently Blackwater wanted this arrangement so it could get exclusive credit for the successful security operations.

The presence of Regency in the chain is important because a dispute erupted between Blackwater and Regency about the armoring of the vehicles to be used in protecting the convoys. According to Captain Wilson, Blackwater used its
subcontractor status to “blackmail” Regency, saying that Regency now had to provide weapons, armor, and other supplies, and that Blackwater would not supply them. The apparent aim of this strategy was to get Regency either to pay for Blackwater’s supplies or default on their contract, which Blackwater would try to take over at an increased profit once Regency was no longer in the way. Captain Wilson believes that Blackwater probably could not have gotten the security contract on its own and that it teamed with Regency for credibility, then tried to cut Regency out.

Partially as a result of this dispute between Regency and Blackwater over equipment funding, the Blackwater team was extremely underequipped and underprepared for the March 31, 2004, mission in which four Blackwater employees died.

I want to pause here in telling the story to make a comment. Outsourcing government tasks to a firm in the private economy subjects those tasks to the push and pull of the economy. I do not have the illusion, and neither does Paul, that elements of the bureaucracy are without their own motivations and distortions, but when you sign up with the private economy, you agree to participate in the private economy’s motivations and distortions. Let’s be blunt. There was a dispute between Regency and Blackwater over who would pay to armor the security for the convoys. That dispute led to the under-equipment and under-preparation of the security team on which the four Blackwater employees died. Their deaths led the military to launch an invasion of Fallujah. So here it is: A contract dispute led to a major development in a major war of the United States – and that is Paul’s point.

Please go to David’s blog and read the entire post

One Response to “Consequences of Pursuit of Profit: All Protected by DBA’s Exclusive Remedy at the expense of the US taxpayer”

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