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BLACKWATER USA

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

OCTOBER 2, 2007

Serial No. 110–89

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

HENRY A. WAXMAN, California, Chairman

TOM LANTOS, California

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

JOHN A. YARMUTH, Kentucky

BRUCE L. BRALEY, Iowa

ELEANOR HOLMES NORTON, District of

Columbia

BETTY MCCOLLUM, Minnesota

JIM COOPER, Tennessee

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

JOHN P. SARBANES, Maryland

PETER WELCH, Vermont

TOM DAVIS, Virginia

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

BILL SALI, Idaho

JIM JORDAN, Ohio

PHIL SCHILIRO, Chief of Staff

PHIL BARNETT, Staff Director

EARLEY GREEN, Chief Clerk

DAVID MARIN, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on October 2, 2007 ............................................................................ 1

Statement of:

Prince, Erik, chairman, the Prince Group, LLC and Blackwater USA ....... 23

Satterfield, Ambassador David M., Senior Advisor to the Secretary and

Coordinator for IRAQ, U.S. Department of State; Ambassador Richard

J. Griffin, Assistant Secretary of State, Bureau of Diplomatic Security,

U.S. Department of State; and William H. Moser, Deputy Assistant

Secretary for Logistics Management, U.S. Department of State .............. 123

Satterfield, Ambassador David M. ........................................................... 123

Letters, statements, etc., submitted for the record by:

Davis, Hon. Tom, a Representative in Congress from the State of Virginia, prepared statement of ........................................................................ 15

Griffin, Ambassador Richard J., Assistant Secretary of State, Bureau

of Diplomatic Security, U.S. Department of State, prepared statement

of ..................................................................................................................... 128

Hodes, Hon. Paul W., a Representative in Congress from the State of

New Hampshire, information concerning pay ............................................ 104

Lynch, Hon. Stephen F., a Representative in Congress from the State

of Massachusetts, various e-mails ............................................................... 112

Prince, Erik, chairman, the Prince Group, LLC and Blackwater USA,

prepared statement of ................................................................................... 25

Sali, Hon. Bill, a Representative in Congress from the State of Idaho,

prepared statement of ................................................................................... 166

Satterfield, Ambassador David M., Senior Advisor to the Secretary and

Coordinator for IRAQ, U.S. Department of State, prepared statement

of ..................................................................................................................... 125

Watson, Hon. Diane E., a Representative in Congress from the State

of California, prepared statement of ........................................................... 162

Waxman, Chairman Henry A., a Representative in Congress from the

State of California:

Information concerning contracts ............................................................ 70

Prepared statement of ............................................................................... 5

Majority staff memorandum ..................................................................... 34

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BLACKWATER USA

TUESDAY, OCTOBER 2, 2007

HOUSE OF REPRESENTATIVES,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The committee met, pursuant to notice, at 10:12 a.m., in room

2154, Rayburn House Office Building, Hon. Henry A. Waxman

(chairman of the committee) presiding.

Present: Representatives Waxman, Davis of Virginia, Maloney,

Cummings, Kucinich, Davis of Illinois, Tierney, Clay, Watson,

Lynch, Yarmuth, Braley, Norton, McCollum, Cooper, Van Hollen,

Hodes, Murphy, Sarbanes, Welch, Burton, Shays, Mica, Platts,

Duncan, Turner, Issa, Westmoreland, McHenry, Foxx, Bilbray, and

Jordan.

Also present: Representative Schakowsky.

Staff present: Phil Schiliro, chief of staff; Phil Barnett, staff director and chief counsel; Kristen Amerling, general counsel; Karen

Lightfoot, communications director and senior policy advisor; David

Rapallo, chief investigative counsel; John Williams and Theo

Chuang, deputy chief investigative counsels; Christopher Davis and

Daniel Davis, professional staff members; Earley Green, chief clerk;

Teresa Coufal, deputy clerk; Matt Siegler, special assistant; Caren

Auchman, press assistant; Zhongrui J.R. Deng, chief information

officer; Leneal Scott, information systems manager; Kerry Gutknecht, William Ragland, and Miriam Edelman, staff assistants;

Russell Anello, counsel; David Marin, minority staff director; Larry

Halloran, minority deputy staff director; Jennifer Safavian, minority chief counsel for oversight and investigations; Keith Ausbrook,

minority general counsel; John Brosnan, minority senior procurement counsel; Steve Castor, A. Brooke Bennett, Ashley Callen, and

Emile Monette, minority counsels; Allyson Blandford, minority professional staff member; Nick Palarino and Larry Brady; minority

senior investigator and policy advisors; Patrick Lyden, minority

parliamentarian and member services coordinator; Brian McNicoll,

minority communications director; and Benjamin Chance, minority

clerk.

Chairman WAXMAN. The meeting of the committee will come to

order.

Over the past 25 years, a sophisticated campaign has been waged

to privatize Government services. The theory is that corporations

can deliver Government services better and at a lower cost than

the Government. Over the last 6 years, this theory has been put

into practice.

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The result is that privatization has exploded. For every taxpayer

dollar spent on Federal programs, over 40 cents now goes to private contractors. Our Government now outsources even the oversight of the outsourcing.

At home, core Government functions like tax collection and emergency response have been contracted out. Abroad, companies like

Halliburton and Blackwater have made millions performing tasks

that used to be done by our Nation’s military forces.

What has been missing is a serious evaluation of whether the

promises of privatizing are actually realized. Inside our Government, it has been an article of faith that outsourcing is best.

Today, we are going to examine the impact of privatization on

our military forces. We will focus on a specific example, the

outsourcing of military functions to Blackwater, a private military

contractor providing protective services to U.S. officials in Iraq.

We will seek to answer basic questions. Is Blackwater, a private

military contractor, helping or hurting our efforts in Iraq? Is the

Government doing enough to hold Blackwater accountable for alleged misconduct? What are the costs to the Federal taxpayers?

I want to thank Erik Prince, Blackwater’s founder and CEO, for

his cooperation in this hearing. As a general rule, children from

wealthy and politically connected families no longer serve in the

military. Mr. Prince is an exception. He enlisted in the Navy in

1992 and joined the Navy SEALs in 1993, where he served for 4

years.

We thank you for that service.

In 1997, he saw an opportunity to start his own company and

created Blackwater. He has said, ‘‘We are trying to do for the national security apparatus what FedEx did for the Postal Service.’’

There may be no Federal contractor in America that has grown

more rapidly than Blackwater over the last 7 years. In 2000,

Blackwater had just $204,000 in Government contracts. Since then,

it has received over $1 billion in Federal contracts. More than half

of these contracts were awarded without full and open competition.

Privatizing is working exceptionally well for Blackwater. The

question for this hearing is whether outsourcing to Blackwater is

a good deal for the American taxpayer, whether it is a good deal

for the military and whether it is serving our national interest in

Iraq.

The first part of that question is cost. We know that sergeants

in the military generally cost the Government between $50,000 to

$70,000 per year. We also know that a comparable position at

Blackwater costs the Federal Government over $400,000, six times

as much.

Defense Secretary Gates testified about this problem last week.

He said, Blackwater charges the Government so much that it can

lure highly trained soldiers out of our forces to work for them. He

is now taking the unprecedented step of considering whether to ask

our troops to sign a non-compete agreement to prevent the U.S.

military from becoming a taxpayer-funded training program for private contractors.

There are also serious questions about Blackwater’s performance.

The September 16th shooting that killed at least 11 Iraqis is just

the latest in a series of troubling Blackwater incidents.

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Earlier this year, our committee examined the company’s mistakes in Fallujah where four contractors were killed and their bodies burned. That incident triggered a major battle in the Iraq War.

New documents indicate that there have been a total of 195

shooting incidents involving Blackwater forces since 2005.

Blackwater’s contract says the company is hired to provide defensive services, but in most of these incidents it was Blackwater

forces who fired first. We have also learned that 122 Blackwater

employees, one seventh of the company’s current work force in

Iraq, have been terminated for improper conduct.

We have the best troops in the world. The men and women in

our Armed Forces are extraordinarily able and dedicated. Their pay

does not reflect their value, but they don’t complain. So I have a

high bar when I ask whether Blackwater and other private military contractors can meet the performance standards of our soldiers.

In recent days, military leaders have said that Blackwater’s

missteps in Iraq are going to hurt us badly. One senior U.S. military official said Blackwater’s actions are creating resentment

among Iraqis that ‘‘may be worse than Abu Ghraib.’’ If these observations are true, they mean that our reliance on a private military

contractor is backfiring.

The committee’s investigation raises as many questions about

the State Department’s oversight of Blackwater as it does about

Blackwater itself.

On December 24, 2006, a drunken Blackwater contractor shot

the guard of the Iraqi Vice President. This didn’t happen out on a

mission protecting diplomats. It occurred inside the protected

Green Zone.

If this had happened in the United States, the contractor would

have been arrested and a criminal investigation launched. If a

drunken U.S. soldier had killed an Iraqi guard, the soldier would

have faced a court martial, but all that has happened to the

Blackwater contractor is that he has lost his job.

The State Department advised Blackwater how much to pay the

family to make the problem go away and then allowed the contractor to leave Iraq just 36 hours after the shooting. Incredibly, internal emails document a debate over the size of the payment. The

charge d’affaires recommended a $250,000 payment, but this was

cut to $15,000 because the Diplomatic Security Service said Iraqis

would try to get themselves killed for such a large payout.

Well, it is hard to read these emails and not come to the conclusion that the State Department is acting as Blackwater’s enabler.

If Blackwater and other companies are really providing better

service at a lower cost, the experiment of privatizing is working.

But if the costs are higher and performance is worse, then I don’t

understand why we are doing this. It makes no sense to pay more

for less. We will examine this issue today and facts, not ideology,

need to guide us here.

Yesterday, the FBI announced that it launched a criminal investigation into Blackwater’s actions on September 16th. This morning, the Justice Department sent a letter to the committee asking

that in light of this development the committee not take testimony

at this time about the events of September 16th.

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Our precedent on this committee is that Congress has an independent right to this information but, in this case, Ranking Member Davis and I have conferred and we have agreed to postpone

any public discussion of this issue as we work with the Department

to obtain the information that the committee lacks. For the same

reason, at the request of the Justice Department, I will ask our

witness, Mr. Prince, and our State Department witnesses on the

second panel not to discuss the September 16th incident in this

public setting today.

The last point I want to make is directed to the families of the

Blackwater employees killed in Fallujah and the families of the soldiers killed in a tragic and unnecessary accident with Blackwater

Airline, some of whom are here today.

I know many of you believe that Blackwater has been unaccountable to anyone in our Government. I want you to know that

Blackwater will be accountable today.

We will be asking some tough questions about disturbing actions,

and I also want to assure Mr. Prince that we will be fair and we

will not tolerate any demonstrations or disturbances from anyone

attending this hearing.

Thank you, and I am looking forward to Mr. Prince’s testimony.

I want to recognize the ranking member, Mr. Davis.

[The prepared statement of Chairman Henry A. Waxman follows:]

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Mr. DAVIS OF VIRGINIA. Thank you, Mr. Waxman.

Security contractors have been working at U.S. diplomatic posts

for more than 20 years, but their extensive use in the midst of ongoing military conflict raises important new questions about the

ability of Government acquisition officials to manage and oversee

those contracts, the vetting and training of security personnel, and

how best to control and coordinate private security firms in a complex, highly dangerous battle space.

Contracts for the use of force in war also pose legitimate questions about the propriety of hiring private firms to perform such a

public, some would say inherently governmental, function. But

those complex questions won’t be addressed responsibly by fixating

on the operations of any one company nor are we likely to learn

much by focusing on one sensational incident still under investigation.

So we appreciate Chairman Waxman agreeing to add testimony

from State Department witnesses today. They will discuss overall

management of the competitively awarded worldwide personnel

protective services contract under which Blackwater and two other

firms provide security services in Iraq.

We take the chairman at his word, there will be additional hearings to examine the broader range of important oversight issues

implicated in the use of security contractors in hostile environments.

Contractor personnel working in support of diplomatic and military activities abroad have become an inescapable fact of modern

life. Today, they provide everything from logistics and engineering

services to food preparation, laundry, housing, construction and, of

course, security. They offer invaluable surge capacity and contingent capabilities Federal agencies can’t afford to keep in-house.

By some estimates, the number of private contractors now exceeds the total U.S. military personnel in Iraq, but the presence of

so many foreigners, particularly so many with guns, offends some

Iraqis and gives others a pretext to incite mistrust and violence. To

paraphrase the title of one recent study of the phenomena, Iraqis

fear they can’t live with private security contractors. U.S. personnel

believe they can’t live without them.

So it is critical the Departments of State and Defense get it right

when they contract for sensitive security services in someone else’s

sovereign territory.

However, you define success in Iraq, from stay the course to immediate withdrawal and every scenario in between, security contractors are going to play an integral part. The inevitable redeployment of U.S. military units out of the current urban battle space

will only increase the need for well trained and well managed private security forces to fill that vacuum and protect diplomatic and

reconstruction efforts.

As the lead editorial of this morning’s Washington Post concluded, it is foolish to propose the elimination of private security

firms in Iraq and Afghanistan, at least in the short term.

Contract documents and incident reports reviewed by the committee suggest the State Department is trying to get it right. There

is clear evidence of proactive management and oversight of security

contractors in Iraq.

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The State Department requires specific qualifications and rigorous ongoing training for all contract security personnel, including

extensive prior security experience and firearms proficiency. Those

hired must also undergo background investigations and qualify for

a security clearance, and the contract contains carefully crafted

comprehensive provisions on standards of conduct for security personnel, strict rules for the use of any type of force and extensive

reporting requirements when any incident occurs.

But State Department oversight of security contractors seems to

have some blind spots as well. There is little aggregate or comparative data on contractor performance, so it is impossible to know if

one company’s rate of weapon-related incidents is the product of a

dangerous cowboy culture or the predictable result of conducting

higher risk missions.

Incidents of erratic and dangerous behavior by security personnel

from all the companies involved, not just Blackwater, are handled

with little or no regard to Iraqi law. Usually, the bad actor is simply whisked out of the country, whether the offense is a civilian

casualty, negligent discharge of a weapon, alcohol or drug abuse,

or destruction of property. To date, there has not been a single successful prosecution of a security provider in Iraq for criminal misconduct.

Iraqis understandably resent our preaching about the rule of law

when so visible an element of the U.S. presence there appears to

be above the law. That is why the events of September 16th

sparked such an outcry by the Iraqi government which sees

unpunished assaults on civilians as a threat to national sovereignty.

The incident is also being used by those seeking to exploit accumulated resentments and draw attacks on private contractors, a

force even the Iraqi government concedes is still a vital layer of security.

Given that volatile environment, we should take care not to prejudge the ongoing investigations into events of that day.

Published eyewitness statements provide very contradictory accounts, but this much we know: Standard operating procedures for

personnel security details dictate getting protected persons in U.S.

vehicles away from an incident as quickly as possible. No one stays

to secure the scene or to help frightened civilians. That is not their

job.

So we may never know who or how many shot first. In the time

it takes to hide an AK–47, murderous insurgents and corrupt Iraqi

police can be transformed into martyred civilians.

We need to look at the proper role of security contractors in a

war zone, not through the clouded lens of one company or one certain incident but with a clear eye and objective view of what best

serves the interest of U.S. personnel in theater and U.S. taxpayers

at home.

I look forward to that discussion.

[The prepared statement of Hon. Tom Davis follows:]

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Chairman WAXMAN. Thank you very much, Mr. Davis.

While the rules do not provide opening statements for all Members at a hearing, Mr. Davis and I have consulted about this, and

I would like to ask unanimous consent that we have four Members

on each side designated by the chairman and the ranking member

to be permitted to give a 2-minute statement.

When we begin the questioning, we will begin with 10 minutes

controlled by the chairman and 10 minutes controlled by the ranking member.

I would further like to ask unanimous consent that Jan

Schakowsky, who is not a member of this committee, be permitted

to join us at this hearing today. Is there any objection to this unanimous consent request?

If not, that will be the order.

I would like to now call on for 2 minutes, it would be Mr. Tierney

for his statement.

Mr. TIERNEY. Thank you, Mr. Chairman.

Mr. Chairman, the fundamental question here ought to be

whether or not it makes sense to contract out in the first place. We

really need to evaluate our use of private military contractors to

determine what roles are appropriate or not for private firms and

what must be kept in control of those in uniform or those in public

service.

The all-voluntary professional force after the Vietnam War employed the so-called Abrams Doctrine. The idea was that we

wouldn’t go to war without the sufficient backing of the Nation.

Outsourcing has circumvented this doctrine. It allows the administration to almost double the force size without any political price

being paid. We have too few regular troops and if we admitted that

and tried to put in more, the administration would have to admit

it was wrong in the way it prosecuted this war originally. It would

have to recognize the impact on drawing forces out of Afghanistan.

If we call up even more National Guards or Reservists, then it

would cause even more of a protest among the people in this country that are already not sold on the Iraq venture. If we relied more

on our allies, they would have to share the power, share the decisionmaking and share the contract work. So private contractors

have allowed, essentially, this administration to add additional

forces without paying any political capital.

Very little conversation goes into the number of people dedicated

to their jobs in the private sector that are being killed or injured

on a regular basis. Figures by one account are some nine individuals a week losing their lives in the service of private contracting

that are not counted in the figures of casualties reported to the

American people.

Outsourcing, as you indicated, Mr. Chairman, seems to increase

the costs, not decrease the costs, and I hope we get into the numbers on that as the hearing goes on. It seems to be harming the

very counterinsurgency effort that General Petraeus seems to want

to implement, and we have far too few Government managers to

oversee the situation.

We need more accountability. We need to clarify and update our

laws. We need to restore the Government’s ability to manage any

such contracts. We need to punish corporations that commit fraud

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or undermine our security. Basically, we need to reconsider which

jobs should be private and which jobs should remain in the public

sector.

Thank you, Mr. Chairman.

Chairman WAXMAN. Thank you, Mr. Tierney.

The Chair would like to now recognize Mr. McHenry for 2 minutes.

Mr. MCHENRY. Thank you, Mr. Chairman.

While we are the investigative committee of Congress, I believe

it is irresponsible, when an ongoing investigation in the executive

branch is trying to establish the facts of the September 16th event,

that we call before this committee, contractors involved with that.

Establishing those facts are included in those two ongoing investigations, and I believe it is irresponsible for us to convict before

the executive branch has first established the facts of what did

occur with the Blackwater incident in Baghdad.

Blackwater has protected dozens, if not hundreds, of Members of

Congress including myself and members of this committee when

they travel to Afghanistan and Iraq. I, for one, am grateful for

their service. Not one single Member of Congress has been injured

nor killed under Blackwater protection, and for that I am grateful.

Let me be clear. We should not speculate on the actions of the

men on September 16th. Those facts are not yet established. We

need to get the facts on the record on these contradicting reports

that are coming from media sources.

Much is not clear. We have conflicting media reports written by

reporters who were not present for the events. We do not yet have

an authoritative report from the executive branch based on eyewitness accounts.

Today, we should be reviewing the rules of contracting, investigating whether companies are following the rules, the legal ramifications and whether the system of contracting should be modified

and improved. These are the issues that we should be dealing with

today.

Patience is a virtue when it comes to investigating something as

serious as the loss of human life. We all abhor the loss of any

human life. Justice must be served.

With thousands of soldiers, diplomats and contractors risking

their lives in such a dangerous region of the world, we should exercise patience in this process and allow the ongoing investigations

to come to a conclusion and establish clear facts before we complicate this process with a kneejerk congressional hearing. Let’s

deal in solid facts, not simply follow the front page stories and the

dictates of trial lawyers which this committee, it appears, has done

over the last 9 months.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. MCHENRY. Again, contracting is the liberal cause du jour,

and we should move past that and ensure we have proper Government service.

Thank you.

Chairman WAXMAN. Mrs. Maloney, you are recognized for 2 minutes.

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Mrs. MALONEY. Thank you, Chairman Waxman and Ranking

Member Davis for holding today’s hearing to examine the heavy reliance upon private security contractors in Iraq and Afghanistan.

There have been troubling reports about incidents involving

Blackwater where Iraqi civilians have been killed, and there have

been many, many troubling reports.

Today, we are basically going to examine the privatization of the

military. What are the costs and what are the consequences of

privatizing our military?

Blackwater guards are highly trained and, in some cases, have

been brave, yet they make six times more than our own military.

Coming from a military family where my father served in World

War II and my brother in Vietnam, I do not believe that the

Blackwater guards are any more brave or more committed or more

disciplined or more effective than the American Armed Services.

So our basic question—mine is today—is why are we using this

service, contracting out, privatizing our military to an organization

that has been aggressive and, I would say in some cases, reckless

in the handling of their duties?

There are many questions we have on accountability and basically why are we doing this. We were told that we were going to

contract out these security services to save the Government money,

but in fact it is costing significantly more to pay Blackwater than

it would for our own military to perform these duties, and their actions have really undermined our effectiveness in Iraq.

Thank you.

Chairman WAXMAN. Time has expired.

Mr. Burton, you are recognized for 2 minutes.

Mr. BURTON. Thank you, Mr. Chairman.

I have no objection to this kind of a hearing. What really concerns me is that there appears to be a rush to judgment, and I

don’t think that should happen. It is going to be thoroughly investigated in Iraq by Iraqis and American officials. Until we get that,

we won’t know exactly what happened or who might have made a

mistake or who might have done something they shouldn’t have

done.

While the hearing here is OK, I hope everybody, including the

media, will know that this is not the final report on this. There is

going to be a complete investigation.

I would like to give you a few facts. There have been 3,073 missions in the last 9 months over there by private contractors. There

were 77 involving them using weapons.

There have been 54,000 recorded attacks, 6,000 a month, and

there have been a lot of these contractors who have lost their lives.

Since 2004, there have been 42 security contractors killed and 76

have been wounded.

This is a time when we should reevaluate or evaluate the procedures that are being used over there. If we find, after the investigation, there have been errors in judgment or somebody made a

downright conscious mistake, then things need to be changed.

I would just like to say one more time, it is important to have

these hearings. Congress needs to know what went on over there,

but there should not be a rush to judgment.

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I would like to say one other thing. There has not been one Congressman or one public official that has been killed while under the

protection of these people, and that should account for something.

With that, Mr. Chairman, I yield back my time.

Chairman WAXMAN. The gentleman’s time has expired.

The Chair now recognizes Mr. Cummings.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

In light of the last statement that was just made, it is not about

Blackwater and what they did or they may have done some good

things. The question is whether there is accountability.

Blackwater, we have to question in this hearing whether it created a shadow military of mercenary forces that are not accountable to the U.S. Government or to anyone else. Blackwater appears

to have fostered a culture of shoot first and sometimes kill and

then ask the questions. Blackwater has been involved in at least

195 escalation of force incidents since 2005, an average of 1.4

shooting incidents per week.

We must seriously reassess whether these practices are undermining our ability to accomplish our mission in Iraq.

We must also reassess how Blackwater not only affects our mission in Iraq but also how it may negatively affect our foreign relations efforts in the Middle East. These same neighboring states

that we need to utilize as vehicles to spur multilateral and bilateral support as to create a political reconciliation in Iraq.

This is about accountability, and I am going to be very interested

to hear what Mr. Prince has to say about that accountability.

With that, Mr. Chairman, I yield back.

Chairman WAXMAN. The gentleman yields back his time.

The Chair recognizes Mr. Issa for 2 minutes.

Mr. ISSA. Thank you, Mr. Chairman.

I think it has been made incredibly clear by the previous statements on the Democrat side that this is not about Blackwater

when they talk about being paid six times as much, when they talk

about the President shouldn’t have gone into this war, when they

talk about, they talk about.

What we are hearing today is, in fact, a repeat of the

MoveOn.org attack on General Petraeus’ patriotism. What we are

seeing is that except for the 79 Members who voted against denouncing MoveOn.org, 8 of whom are on the dais here today, what

we are seeing is what they couldn’t do to our men and women in

uniform, they will simply switch targets.

The bodies were not cold in Iraq before this became a story worth

going after here in committee.

The second panel today will include people from the State Department who will tell us about the command and control rules,

about whether or not Blackwater made mistakes, whether they did

their job and whether they are going to be continued as a contractor. That is appropriate.

I am not here to defend Blackwater, but I am here to defend

General Petraeus and the men and women in uniform who do their

job, who were first denounced by MoveOn.org, then not denounced

by Members of Congress, many of whom are on the dais today,

speaking as though they don’t support attacking in every possible

way the administration’s war in Iraq.

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We are going to get to the bottom of what happened on September 16th, but quite frankly when we are done with that, we are

still going to have the same problem with all due respect to the

Members on the other side of the aisle. We do not want military

guarding State Department personnel. There is a long tradition, in

fact, of very limited military guarding of even our embassies, a limited amount of Marines.

The fact is the State Department has a surge responsibility in

Iraq and Afghanistan. They are meeting it with private contractors.

When that ends, do we really want to have 1,500 Special Ops people working for the State Department in career positions?

I look forward to the debate on that and not on whether this war

was ill-founded which has been the Democrats’ mantra.

Chairman WAXMAN. The gentleman’s time has expired.

The Chair would now turn to Mr. Kucinich for 2 minutes.

Mr. KUCINICH. Mr. Chairman, a British polling agency has determined that more than one million Iraqi citizens have died as a result of the Iraq War. Opinion Research Business found that the

death rate rose to almost one in two households in Baghdad have

lost a family member since the invasion began in 2003. This report

confirms the results of a survey released last fall by Lancet, the

prestigious medical magazine which gave a conservative estimate

of 650,000 innocent civilian deaths.

Now this great human tragedy is taking place in many forms. In

today’s hearing. We are investigating Blackwater’s outrageous behavior that has killed countless innocent Iraqis, and I am deeply

concerned that the Department of State appears to have attempted

to cover up Blackwater’s killings rather than seek appropriate remedies.

What are the implications of killing an innocent Iraqi? What is

this Government’s position on killing of innocent Iraqis by a U.S.

citizen?

If war is privatized and private contractors have a vested interest in keeping the war going, the longer the war goes on, the more

money they make. Eighty-four percent of the shooting incidents involving Blackwater are where they fired first, and Blackwater did

not remain at the scene. So Blackwater’s shoot first and don’t ask

questions later approach undermines the U.S.’ position and jeopardizes the safety of our soldiers.

How much more do we need to know to conclude that the war

against Iraq has been a disaster for the Iraqi people and for the

people of this country as well?

I yield back.

Chairman WAXMAN. The gentleman yields back his time.

All opening statements have been concluded.

Oh, excuse me, there is one more, Mr. Mica for 2 minutes.

Mr. MICA. Thank you.

Well, let me try to frame the context of this hearing. I have been

on the committee for some 15 years. From the outset, the Democrat

side on the majority have tried to discredit the President. In fact,

I have a quote from a press release from Chairman Waxman, January 10th: As part of President Bush’s revised strategy appears for

Iraq, he appears likely to propose giving large sums of taxpayer

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dollars to decrepit and possibly corrupt state-owned Iraqi companies.

So we started first in these hearings to try to discredit the President. We have tried to discredit the Ambassador. We have tried to

discredit the Secretary of Defense. We did a great job in trying to

discredit the military here, and then we worked on the Iraqi government.

Now we are down to some of the contractors. So this is the hearing to discredit them.

Probably one of the reasons why there is some bad news for the

other side today. It is on page 15. It is a 48 percent drop in deaths

in Iraq in 1 month. They want that good news to get out, but on

the front page, you want the other killings by Blackwater, the contractors we are going after today.

Now if they are really intent on going after the contractors, and

I don’t know what happened on the 16th. I don’t know what happened in other incidents.

But if they are really intent on going after criminal misconduct,

then we have a letter from the Department of Justice. We have

some words about not interfering in this process, but we are interfering with both a Department of State investigation and a criminal misconduct investigation, potentially criminal charges.

Let me quote from some of the words: This presents serious challenges for any potential criminal prosecution, and then they cite

case law.

So my concern, if we really want to do this, we should not be

holding this hearing. Therefore, I move that the committee do now

adjourn.

Chairman WAXMAN. The motion is before us to adjourn.

All those in favor of the motion, say aye.

[Chorus of ayes.]

Chairman WAXMAN. Opposed, no.

[Chorus of noes.]

Chairman WAXMAN. The noes have it and the motion is defeated.

We have a witness now, and I would like to call forward Erik

Prince who is the head of the Prince Group, LLC and Blackwater

USA.

Mr. Prince, please come forward.

Mr. Prince, it is the practice of this committee that all witnesses

take an oath before they testify, if you will please raise your right

hand.

[Witness sworn.]

Chairman WAXMAN. The record will indicate that the witness answered in the affirmative.

I do want to say, Mr. Prince, that there have been press reports

over the past 2 weeks regarding the recent incident on September

16th, and there have been conflicting accounts of what actually

happened on the ground.

I know that you had prepared to address this incident today as

did our other witnesses and no doubt our Members did too. So I

just want to note that for the record that the request to refrain

from public comment came from the Justice Department, not Mr.

Prince and not from anyone else, and I want to thank him for complying with that Justice Department request.

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I know you had been prepared to talk about it, but we would ask

you please not to go into that incident.

Mr. PRINCE. Yes, sir, I would be more than happy to.

Chairman WAXMAN. Before you begin, just push the button the

mic.

Mr. PRINCE. Is that better?

Chairman WAXMAN. Yes. OK, please proceed however you see fit.

STATEMENT OF ERIK PRINCE, CHAIRMAN, THE PRINCE

GROUP, LLC AND BLACKWATER USA

Mr. PRINCE. Chairman Waxman, Congressman Davis, members

of the committee, my name is Erik Prince, and I am the chairman

and CEO of the Prince Group and Blackwater USA.

Blackwater is a team of dedicated professionals who provide

training to America’s military and law enforcement communities

and risk their lives to protect Americans in harm’s way overseas.

Under the direction and oversight of the U.S. Government,

Blackwater provides an opportunity for military and law enforcement veterans with a record of honorable service to continue their

support to the United States.

Words alone cannot express the respect I have for these brave

men and women who volunteer to defend U.S. personnel, facilities

and diplomatic missions. I am proud to be here to represent them

today.

After almost 5 years in active service as a U.S. Navy SEAL, I

founded Blackwater in 1997. I wanted to offer the military and law

enforcement communities assistance by providing expert instruction and world-class training venues. Ten years later, Blackwater

trains approximately 500 members of the U.S. military and law enforcement agencies every day.

After 9/11, when the United States began its stabilization efforts

in Afghanistan and then Iraq, the U.S. Government called upon

Blackwater to fill the need for protective services in hostile areas.

Blackwater responded immediately. We are extremely proud of answering that call and supporting our country.

Blackwater personnel supporting our country’s overseas missions

are all military and law enforcement veterans, many of whom have

recent military deployments. No individual protected by

Blackwater has ever been killed or seriously injured. There is no

better evidence of the skill and dedication of these men.

At the same time, 30 brave men have made the ultimate sacrifice

while working for Blackwater and its affiliates. Numerous others

have been wounded and permanently maimed. The entire

Blackwater family mourns the loss of these brave lives. Our

thoughts and our prayers are with their families.

The areas of Iraq in which we operate are particularly dangerous

and challenging. Blackwater personnel are subject to regular attacks by terrorists and other nefarious forces within Iraq. We are

the targets of the same ruthless enemies that have killed more

than 3,800 American military personnel and thousands of innocent

Iraqis.

Any incident where Americans are attacked serves as a reminder

of the hostile environment in which our professionals work to keep

American officials and dignitaries safe, including visiting Members

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of Congress. In doing so, more American service members are

available to fight the enemy.

Blackwater shares the committee’s interest in ensuring the accountability and oversight of contract personnel supporting U.S. operations. The company and its personnel are already accountable

under and subject to numerous statutes, treaties and regulations of

the United States. Blackwater looks forward to working with Congress and the executive branch to ensure that any necessary improvements to these laws and policies are implemented.

The Worldwide Personal Protection Services Contract, which has

been provided to this committee, was competitively awarded and

details almost every aspect of operations and contractor performance including the hiring, vetting guidelines, background checks,

screening, training standards, rules of force and conduct standards.

In Iraq, Blackwater reports to the embassy’s regional security officer or RSO. All Blackwater movements and operations are directed by the RSO. In conjunction with internal company procedures and controls, the RSO ensures that Blackwater complies with

all relevant contractual terms and conditions as well as any applicable laws and regulations.

We have approximately 1,000 professionals serving today in Iraq

as part of our Nation’s total force. Blackwater does not engage in

offensive or military missions but performs only defensive security

functions.

My understanding of the September 16th incident is that the Department of State and the FBI are conducting a full investigation,

but those results are not yet available. We at Blackwater welcome

the FBI review announced yesterday, and we will cooperate fully

and look forward to receiving their conclusions.

I just want to put some other things in perspective. A recent report from the Department of State stated that, in 2007, Blackwater

has conducted 1,873 security details for diplomatic business to the

Red Zone, areas outside the Green Zone in Iraq, and there have

been only 56 incidences in which weapons were discharged or less

than 3 percent of all movements.

In 2006, Blackwater conducted over 6,500 diplomatic movements

in the Red Zone. Weapons were discharged in less than 1 percent

of those missions.

To the extent there is any loss of innocent life ever, let me clear

that I consider that tragic. Every life, whether American or Iraqi,

is precious. I stress to the committee and to the American public,

however, that I believe we acted appropriately at all times.

I am prepared to answer your questions.

[The prepared statement of Mr. Prince follows:]

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Chairman WAXMAN. Thank you very much, Mr. Prince.

I am going to start off with the questions.

The issue before us that I see that is important to understand

is we have gone now in a major way to contract out what the Government and what the military ordinarily would do.

Your company started off at the beginning of 2001 with, I think, around over $200,000 in Government contracts. You now are making over $1 billion a year. That is quite a success. Even if I am

wrong on the exact numbers, it is quite a success.

Now we are paying a lot of money for privatized military to do

the work that our military people have done, and no one does this

work better than the U.S. military. They are a very able and brave

and courageous people that do a fantastic job for us.

So the question in my mind is are we paying more and getting

less?

In asking that question, I want to focus on a particular incident.

That incident received almost no public attention but involved the

tragic loss of three of our troops, and my staff has reviewed the

documents describing the incident. They prepared a memo which I

would like, without objection, to make part of the record.

[The information referred to follows:]

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Chairman WAXMAN. On November 27, 2004, there was a plane

run by Blackwater Aviation that crashed into a wall of a canyon

in the mountains of Afghanistan. This plane was carrying three

military personnel, three active duty U.S. personnel: Lieutenant

Colonel Michael McMahon, Chief Warrant Officer Travis Grogan,

and Specialist Harley Miller.

About 40 minutes after takeoff, Blackwater 61 crashed into the

wall of a canyon and all the occupants were killed. The crash was

investigated by a joint Army and Air Force taskforce and by the

National Transportation Safety Board.

The NTSB report found that Blackwater captain and first officer

behaved unprofessionally and were deliberately flying the nonstandard route low through the valley for fun. The report found

that the pilots were unfamiliar with the route, deviated almost immediately after takeoff and failed to maintain adequate terrain

clearance.

They also had a transcript of the cockpit voice recording, and on

this recording the flight crew joked with each other, saying, ‘‘You

are an X-wing fighter Star Wars man and you are,’’ expletive

‘‘right. This is fun.’’

The captain stated, ‘‘I swear to God they wouldn’t pay me if they

knew how much fun this was.’’

Mr. Prince, one allegation raised recently about Blackwater’s actions is that your contractors have acted irresponsibly. One senior

U.S. commander told the Washington Post ‘‘They often act like cowboys.’’

Let me ask you about that crash of Blackwater Flight 61. In this

case, did Blackwater’s pilots act responsibly or were they, in the

words of the U.S. commander, acting like cowboys?

Mr. PRINCE. I disagree with the assertion that they acted like

cowboys. We provide a very reliable, valuable service to the Air

Force and the Army in Afghanistan. Anytime you have an accident,

it is an accident. Something could have been done better.

It is not a Part 135 U.S. type flying operation. There are no flight

services. There are no flight routes. There are no nav aids. It is

truly rugged Alaska-style bush flying.

Chairman WAXMAN. Well, the investigators said from the National Transportation Safety Board that Blackwater Aviation violated its own policies by assigning two pilots without adequate flying experience in Afghanistan. According to the military report, it

was your policy, Blackwater policy, that required at least one of the

pilots to have flown in theater for at least a month, but neither

pilot had flown for that long and neither had flown the route they

were assigned that day.

This is clear in the cockpit voice recording. Right after takeoff,

the Blackwater captain said, ‘‘I hope I am going into the right valley.’’

The first one replied, ‘‘This one or that one?’’

The captain then apparently guessed which valley to fly, saying,

‘‘I am just going to go up this one.’’

The flight mechanic later observed, ‘‘We don’t normally go this

route.’’

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Why didn’t Blackwater follow its own policies and team two new

pilots with more experienced ones? Why did you have two inexperienced pilots together?

Mr. PRINCE. I am not qualified to speak to the experience level

of the pilots. I will tell you that we are operating under military

control. In fact, the aircraft was set to take off with two passengers

onboard, and they actually turned around for the lieutenant colonel

who I believe who boarded late.

There was also it violated. The military violated its policy by

loading both ammunition. That aircraft is also flying with a large

number of illumination mortar rounds, and they are not supposed

to mix pax and cargo. But, again, we followed our customer’s instructions.

Yes, accidents happened. We provided thousands and thousands

of flight hours of reliable service since then. Today still, we are flying more than 1,000 missions a month.

Chairman WAXMAN. But on that one, the investigators found

that Blackwater failed to follow standard precautions to track

flights, failed to file a flight plan, failed to maintain emergency

communications in case of an accident, and tragically these failures

may have cost the life of the crash’s sole survivor because one of

the military people that you were escorting or your flight was escorting evidently survived for at least 10 hours after the crash.

He suffered internal injuries, but he got out of the plane to urinate. He smoked a cigarette. He rolled out a sleeping bag. Nobody

came, and then he died of cold from inattention. There was no way,

as required, for anybody to know where that plane had landed even

though that is a requirement.

I have an email that I want to read to you. It was sent on November 10, 2004, 16 days before the crash. It is from Paul Hooper,

Blackwater Afghanistan site manager, and it was sent to John

Hite, vice president for operations for Blackwater Aviation.

In it, Mr. Hooper says, Blackwater knowingly hired pilots with

background and experience shortfalls.

Here is what he wrote: ‘‘By necessity, the initial group hired to

support the Afghanistan operation did not meet the criteria identified in email traffic and had some background and experience

shortfalls overlooked in favor of getting the requisite number of

personnel on board to startup the contract.’’

One of the great ironies of this accident is that while the aircraft

was being piloted by an inexperienced Blackwater pilot, a skilled

military pilot with an exemplary safety record, Lieutenant Colonel

Michael McMahon was on board the flight as a passenger.

This is what his widow wrote to me. She is Colonel Jeanette

McMahon, and she works at West Point.

She said, ‘‘Mike, like Mr. Prince, was a CEO of sorts in the military as an aviation commander and as such had amassed a great

safety record in his unit. It is ironic and unfortunate that he had

to be a passenger on this plane versus one of the people responsible

for its safe operation. Some would say it was simply a tragic accident . . . but this accident was due to the gross lack of judgment

in managing this company.’’

Mr. Prince, Colonel McMahon is asking why the taxpayers

should be paying your company millions to conduct military transVerDate 11-MAY-2000 12:10 Nov 12, 2008 Jkt 000000 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 C:\DOCS\45219.TXT KATIE PsN: KATIE
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port missions over dangerous terrain when the military’s own pilots

are better trained and a lot less expensive. How do you respond?

Mr. PRINCE. We were hired to fill that void because there is a

different—it is a different kind of airlift mission going in and out

of the very short strips in Afghanistan. You have high altitude,

short strips, unimproved runways, and you have transport aircraft

that are designed to support a large conventional battle.

We are doing small missions. The typical CASA payload maxes

out at 4,000 pounds. They can’t even hold that because of the short

altitude or the high altitude short strips, they have to go in and

out of, hauling mail, hauling parts.

We are filling that gap because these strips are too small for C–

17s. They are too small for C–130’s. They are going in and out of

places that the military can’t get to with existing aircraft they

have. That is why we are doing that mission.

Chairman WAXMAN. You are saying that the military could not

do this job?

Mr. PRINCE. They did not have the assets to do it in theater or

back in the United States, no, sir.

Chairman WAXMAN. They could have acquired those assets, however. Instead, they hired you.

Mr. PRINCE. I believe the Congress has seen fit to proceed with

some sort of aircraft acquisition program to fill that void going forward, but this is a temporary service to fill that gap.

Chairman WAXMAN. Well, we have been in Iraq for 5 years now.

The pilots of Blackwater 61 paid for their errors with their lives,

but I am wondering whether there was any corporate accountability for Blackwater. Were any sanctions placed on the company after

the investigative reports that were so critical of Blackwater were

released?

Mr. PRINCE. Anytime there is an accident, a company also should

be introspective and look back and see what can be done to make

sure that it doesn’t happen again.

Chairman WAXMAN. Aside from your introspection, were you ever

penalized in any way? Were you ever fined or suspended or reprimanded or placed on probation?

Mr. PRINCE. I believe the Air Force investigated the incident, and

they found that it was. It was pilot error. It was not due to corporate error that caused the mistake or that crashed the aircraft.

Chairman WAXMAN. My time is up, but the corporation hired inexperienced pilots. They sent them on a route they didn’t know

about. They didn’t even follow your own rules. It seems to me that

it is more than pilot error. There ought to be corporate responsibility, and Blackwater was the corporation involved.

Aside from your introspection, you have just been awarded a new

contract for almost $92 million. I want to see whether you are getting a stick as well as all these carrots.

Mr. Davis, your turn.

Mr. DAVIS OF VIRGINIA. Thank you, Mr. Chairman.

Let me just say I think if there is a question if they should be

in or out, if the private companies are doing work of the Army, that

really ought to be addressed by the Defense Department and State

Department.

Mr. ISSA. Mr. Chairman.

54

Mr. Ranking Member, would you yield for a question?

Mr. DAVIS OF VIRGINIA. I would.

Mr. ISSA. Since I wasn’t here during the Clinton administration,

did Mr. Waxman and this committee investigate Secretary Brown’s

crash in which he was killed?

That was a military flight, C–130, I believe. Was that investigated?

Mr. DAVIS OF VIRGINIA. I wasn’t here. I was not here at that

point, but I understand the question.

Mr. ISSA. So crashes happen bad weather and in combat.

Chairman WAXMAN. Will the gentleman yield to me?

That crash was investigated, and the gentleman would be able

to get the report of that investigation.

Mr. DAVIS OF VIRGINIA. Let me yield 5 minutes to the gentleman

from North Carolina.

Mr. MCHENRY. I thank the ranking member for yielding.

Mr. Prince, can you describe to the committee the nature of your

contract, who your client is in Iraq?

Mr. PRINCE. In Iraq, we work for the Department of State.

Mr. MCHENRY. What is the service you provide for the Department of State?

Mr. PRINCE. We operate under the Worldwide Personal Protective Services Contract, and we are charged with protecting diplomats, reconstruction officials and visiting CODELs, Members of

Congress and their staffs.

Mr. MCHENRY. In this calendar year, how many missions have

you had in Iraq?

Mr. PRINCE. 1,873.

Mr. MCHENRY. How many incidents occurred during those 1,873

movements?

Mr. PRINCE. Only 56 incidents.

Mr. MCHENRY. A movement is, for instance, a Member of Congress lands at the airstrip. They are transported to the embassy.

That is one movement.

Mr. PRINCE. Yes, sir.

Mr. MCHENRY. All right, and 56 incidents out of 1,873 movements in a war zone, is that correct?

Mr. PRINCE. Resulted in a discharge of one of our guys’ weapons.

Mr. MCHENRY. Those 56 incidents, does that mean that they shot

at someone? Describe what an incident is.

Mr. PRINCE. Yes. We don’t even record all the times that our

guys receive fire. The vehicles get shot at on a daily basis, multiple

times a day. So that is not something we even record.

In this case, an incident is a defensive measure. You are responding to an IED attack followed by small arms fire.

Most of the attacks we get in Iraq are complex, meaning it is not

just one bad thing; it is a host of bad things. Car bomb followed

by small arms attack. RPGs followed by sniper fire.

An incident occurs typically when our men fear for their life.

They are not able to extract themselves from the situation. They

have to use sufficient defensive fire to off the X, to get off that

place where the bad guys have tried to kill Americans that day.

Mr. MCHENRY. So in 1,873 missions, 56 incidents occurred which

means potentially the Blackwater individual, the former soldier in

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most cases, discharges a weapon. Perhaps in the air, is that a possibility?

Mr. PRINCE. It is not likely into the air. It is either going to be

directed at someone that is shooting at us or another real problem.

You know the recent Washington Post series on IEDs in Iraq,

81,000 IED attacks.

The bad guys have figured out how to make a precision weapon.

You take a car. You pack it with explosives, and you put a suicidal

person in there that wants to drive into the back of a convoy and

blow themselves up.

Mr. MCHENRY. An additional question here, those 56 incidents

pretty much all involved returning fire. A caravan is being shot at,

for instance, and you would return fire or a potential car bomb is

coming at you and you are returning.

Mr. PRINCE. A potential car bomb, yes. Defensive fire or potential

car bombs going, potentially coming near you, you have to warn

them off.

There is a whole series in the use of force continuum that our

guys are briefed and they abide by. They are briefed on it through

their training back here in the United States.

Every time they leave the wire, every time they launch on that

mission, before they go in the morning, they get the mission brief

on what they are going to do, who they are protecting, where they

are going, the intelligence, what to be on the lookout for, where

have there been particularly bad areas in the city and the use of

force continuum, those rules of engagement.

Mr. MCHENRY. The use of force continuum, is that dictated by

the Department of State?

Mr. PRINCE. Yes.

Mr. MCHENRY. You use their rules of engagement, the commonly

used term?

Mr. PRINCE. Yes, sir.

Mr. MCHENRY. That is similar to the Department of Defense

rules of engagement.

Mr. PRINCE. Yes, they are essentially the same.

Mr. MCHENRY. OK. So you had 1,800.

Mr. PRINCE. Sorry, Department of Defense rules for contractors.

We do not have the same as a U.S. soldier at all.

Mr. MCHENRY. OK. In the report that I have, in 2006, you had

6,254 missions and 38 incidents.

Mr. PRINCE. Yes, sir.

Mr. MCHENRY. Which means one of the contractors, one of the

former soldiers, who is now in State Department Protective Service, they returned fire. So that would be less than 1 percent of missions involved returning fire.

The question here, how long has Blackwater been involved in

Iraq? How long have you had this contract in Iraq?

Mr. PRINCE. We started there first working for DOD under the

CPA, and then I believe in 2005 it transitioned from CPA over to

Department of State.

Mr. MCHENRY. How many individuals under your protective

service have been injured or killed?

Mr. PRINCE. Twenty-seven dead and hundreds wounded.

Mr. MCHENRY. How many individuals?

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Mr. PRINCE. Oh, under our care?

Mr. MCHENRY. Under your care that you are protecting.

Mr. PRINCE. Zero.

Mr. MCHENRY. Zero?

Mr. PRINCE. Zero, sir.

Mr. MCHENRY. Zero individuals that Blackwater has protected

have been killed in a Blackwater transport.

Mr. PRINCE. That is correct.

Mr. MCHENRY. Zero?

Mr. PRINCE. Zero.

Mr. MCHENRY. That is, I think, the operable number here. Your

client is the State Department. The State Department has a contract with you to provide protective service for their visitors, for instance, CODELs, Ambassadors and runs the gamut, and you have

had zero individuals under your care and protection killed.

Mr. PRINCE. Correct.

Mr. MCHENRY. I think that is a very important number that we

need to discuss here, Mr. Chairman, and that should be a testament to the service that these former veterans, these veterans that

are currently working for Blackwater.

Chairman WAXMAN. The 5 minutes that was yielded to you is

over.

Mr. MCHENRY. I am happy to yield back to the ranking member.

Mr. DAVIS OF VIRGINIA. Mr. Prince, let me just continue with

that. Are there any other security firms in Iraq that provide the

services that involve as much danger as your escort services that

your company provides in Baghdad?

Mr. PRINCE. Sir, we certainly have a high profile mission. We

protect the U.S. Ambassador. We protect all the diplomats in the

greater Baghdad area which is the hottest part of the country by

far.

Mr. DAVIS OF VIRGINIA. How is your firm paid under the current

task order contract for security details? Is it by the mission, by the

hour or some other method?

How do you bill the Government?

Mr. PRINCE. It is generally billed on a per man day for every day

that the operator is in the country.

Mr. DAVIS OF VIRGINIA. Is it a cost plus fee or is it just like a

time and materials?

Mr. PRINCE. It is blended. Most of it is firm fixed price. There

are a few things that are directly cost reimbursable like insurance.

Mr. DAVIS OF VIRGINIA. Does the contract provide for monetary

penalties for any performance difficulties like shooting incidents

that were reported to have occurred and the like?

Mr. PRINCE. Yes, there are sorts of penalty clauses, if we don’t

have it fully manned, if they are not happy with the leadership. We

are very responsive. If there is someone that doesn’t agree or is not

operating within the standards of the Department of State, they

have two decisions, window or aisle.

Mr. DAVIS OF VIRGINIA. Do you work just for the Department of

State or do you work for the Defense Department as well?

Mr. PRINCE. In Iraq, we essentially work for the Department of

State. There are one or two folks here or there in a consultant type

position but nothing, nothing significant, nothing armed.

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Mr. DAVIS OF VIRGINIA. It is important for the committee to understand there are two different contracting entities that are contracting in Iraq, and you work for State.

Do you think the contract provisions and the State Department

contract management personnel provide sufficient guidance for the

use of force under the contract?

Mr. PRINCE. Yes, sir. We have seen the full gamut of contracting

and contract management in the stabilization section or stabilization phase of the Iraq War, and there is a whole host of differences

in oversight.

I will tell you the State Department is the highest. They are the

GE-like buyers, the most sophisticated oversight standards that we

have to comply with on the front end for our personnel and management in the field.

Mr. DAVIS OF VIRGINIA. When your teams are operating on the

ground in Baghdad, what entity has the authority to control your

activities? Is it the State Department or is it the military commander who is responsible for the battle space?

Mr. PRINCE. We work for the RSO, the regional security officer.

He is the chief security official for the State Department in Iraq.

Mr. DAVIS OF VIRGINIA. So it is the State Department ultimately

for whom you are contracting.

Mr. PRINCE. Yes.

Mr. DAVIS OF VIRGINIA. Can you describe the process that is followed under the contract when a shooting incident occurs?

Have you dismissed any employees for shooting incidents under

your security contracts in Iraq and what happens to dismissed employees? Are they sent out of Iraq?

Mr. PRINCE. OK, let me answer the last one first.

If there is any sort of discipline problem, whether it is bad attitude, a dirty weapon, riding someone’s bike that is not his, we fire

them. We hold ourselves internally accountable, very high. We fire

them. We can fine them, but we can’t do anything else.

So if there is any incidents where we believe wrongdoing is done,

we present that incident, any incident, any time a weapon is discharged, there is an incident report given to the RSO.

Mr. DAVIS OF VIRGINIA. Any idea how many employees you have

fired over the time?

Mr. PRINCE. I think in the committee’s report, they said 122 or

something over.

Mr. DAVIS OF VIRGINIA. So you have taken action when it has

come to your attention.

Mr. PRINCE. Say again, sir.

Mr. DAVIS OF VIRGINIA. So you have taken action when it has

come to your attention.

Mr. PRINCE. It generally comes to our attention first. We as a

company, we fire them. We send the termination notice to the

State Department as to why we fired someone.

Mr. DAVIS OF VIRGINIA. Thank you.

Chairman WAXMAN. The gentleman’s time has expired.

Mrs. Maloney for 5 minutes.

Mrs. MALONEY. Thank you, Mr. Chairman.

I would like to ask you, Mr. Prince, about one of these employees

whom you fired, and this was an employee who got drunk on

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Christmas Eve of 2006. According to documents that we got yesterday from the State Department, this particular man, while he was

drunk, shot and killed the guard to the Iraqi Vice President, obviously causing great tensions between the Iraqi government and the

U.S. military.

I would like to ask you about his firing. You fired this individual

for handling a weapon and for being intoxicated, is that right?

Mr. PRINCE. The men operate with a clear policy. If there is to

be any alcohol consumed, it is 8 hours between any time of consumption of alcohol.

Mrs. MALONEY. Was he fired or not?

Mr. PRINCE. Excuse me?

Mrs. MALONEY. Was he fired?

Mr. PRINCE. Oh, yes, ma’am, he was fired.

Mrs. MALONEY. Have any charges been brought against him in

the Iraqi justice system?

Mr. PRINCE. I don’t believe in the Iraqi justice system. I do believe. I know we referred it over to the——

Mrs. MALONEY. Justice Department, they told us they are still

looking at it 9 months later.

Have any charges been brought against him in the U.S. military

justice system?

Mr. PRINCE. I don’t know.

Mrs. MALONEY. Have any charges been brought against him in

the U.S. civilian justice system?

Mr. PRINCE. Well, that would be handled by the Justice Department, ma’am. That is for them to answer, not me.

Mrs. MALONEY. Other than firing him, has there been any sanction against him about any Government authority?

You mentioned you fined people for bad behavior. Was he fined

for killing the Iraqi guard?

Mr. PRINCE. Yes, he was.

Mrs. MALONEY. How much was he fined?

Mr. PRINCE. Multiple thousands of dollars, I don’t know the exact

number. I will have to get you that answer.

Mrs. MALONEY. OK.

Mr. PRINCE. Look, I am not going to make any apologies for what

he did. He clearly violated our policies.

Mrs. MALONEY. OK. All right. Every American believes he violated policies. If he lived in America, he would have been arrested,

and he would be facing criminal charges. If he was a member of

our military, he would be under a court martial. But it appears to

me that Blackwater has special rules. That is one of the reasons

of this hearing.

Now, within 36 hours of the shooting, he was flown out of Iraq.

Did Blackwater arrange for this contractor to leave Iraq less than

2 hours after the shooting?

Mr. PRINCE. I do not believe we arranged for him to leave after

2 hours after the shooting. He was arrested.

Mrs. MALONEY. OK, what about 2 days? It was 2 days after the

shooting.

Did Blackwater arrange for him to leave the country?

Mr. PRINCE. That could easily be.

Mrs. MALONEY. OK.

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Mr. PRINCE. IZ Police arrested him. There was evidence gathered. There was information turned over to the Justice Department

office in Baghdad. We fired him. He certainly didn’t have a job with

us.

Mrs. MALONEY. Well, in America, if you committed a crime, you

don’t pack them up and ship them out of the country in 2 days.

If you are really concerned about accountability, which you testified in your testimony, you would have gone in and done a thorough investigation. Because this shooting took place within the

Green Zone, this was a controllable situation. You could have gone

in and done forensics and all the things that they do, but the response was to pack him and have him leave the country within 2

days.

I would like to ask you, how do you justify sending him away

from Iraq when any investigation would have only just begun?

Mr. PRINCE. Again, he was fired. The Justice Department was investigating. In Baghdad, there is a Justice Department office there.

He didn’t have a job with us anymore. We as a private company

cannot detain him. We can fire, we can fine, but we can’t do anything else. The State Department——

Mrs. MALONEY. What evidence do you have that the Justice Department was investigating him at that time?

Mr. PRINCE. From talking to my program management people in

the country, they said it is in the hands of the IZ Police, which is

Air Force, arrested him. They took him in for questioning. It was

handled by the Justice Department.

He was fired by us. The State Department ordered.

Mrs. MALONEY. Well, it has been 10 months, and the Justice Department has not done anything to him. Again, I repeat, if he was

a U.S. citizen or in America, he would have been arrested immediately. He would have faced criminal charges.

We know about the chain of command in the military. They are

court-martialed immediately.

But if you work for Blackwater, you get packed up and you leave

within 2 days and you face a $1,000 fine.

So I am concerned about accountability and really the unfairness

of this, and I am concerned about how Blackwater—if I could just

say, Mr. Chairman—your actions may be undermining our mission

in Iraq and really hurting the relationship and trust between the

Iraqi people and the American military.

Chairman WAXMAN. The gentlelady’s time has expired.

Mr. Burton.

Mr. BURTON. Can you tell us, Mr. Prince, how many people witnessed the incident she just referred to?

Mr. PRINCE. I don’t believe anyone did, sir.

Mr. BURTON. So the only people who were involved was the man

who was shot and your employee?

Mr. PRINCE. Yes, sir.

Mr. BURTON. Can you, in some detail, go into the rules of engagement?

I have talked to some of the people at State Department about

this, and I have talked to people within your organization. As I understand it, on the back of every one of your vehicles, in both AraVerDate 11-MAY-2000 12:10 Nov 12, 2008 Jkt 000000 PO 00000 Frm 00063 Fmt 6633 Sfmt 6633 C:\DOCS\45219.TXT KATIE PsN: KATIE
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bic and English, there is a warning to not get 100 meters of that

vehicle, is that correct?

Mr. PRINCE. Yes, that is right, sir.

Mr. BURTON. If somebody is coming at your vehicle at a high rate

of speed, do your employees have any actions that they should take

especially if it might be a car bomb or something like that?

Mr. PRINCE. Yes, sir. There are generally lights and sirens on the

vehicles, air horn. The personnel, whose security sector is facing

back toward that oncoming threat, will be giving hand signals, audible yelling, stop, qif, Arabic for stop.

There is a pin flare, which is a signaling device kind of like a

bottle rocket. It is the device used for a pilot to signal his whereabouts on the ground to be rescued, but it is a bright incendiary

device that flies by the vehicle or it hits the vehicle. It is not lethal

at all, but definitely you know something is happening.

Water bottles are sometimes thrown at vehicles to warn them off.

If you have to go beyond that, they take shots into the radiator.

You hear that hitting the car. It disables the car. Definitely, you

know something is happening.

If they go beyond that, they spider the windshield. You put a

round through the center of the windshield away from the occupants so that the safety glass in the windshield makes it difficult

to see through.

Only after that do they actually direct any shots toward the driver. So there is a whole use of force continuum.

Mr. BURTON. The questions that I have heard today from the

other side indicate that there ought to be perfection in your organization. Now you are a Navy SEAL, and you served in the military.

Do you believe that any kind of military operation of this type or

any type can be absolutely perfect all the time?

Mr. PRINCE. I am afraid not, sir. We strive for perfection. We try

to drive toward the highest standards, but the fog of war and accidents and the bad guys just have to get lucky once.

Mr. BURTON. I think it is very important that everybody who is

involved in this hearing today understand that you have high public officials, Congressman and others, whom you have to protect,

and you have indicated that nobody has been killed or hurt under

your protection. Yet, you are going through all kinds of zones

where there are car bombs going off, small arms fire, cars coming

at you at high rates of speed.

Can you explain to me why in the world there wouldn’t be some

precautions taken when those sorts of things take place?

Mr. PRINCE. Again, the bad guys have figured out killing Americans is big media, I think. They are trying to drive us out. They

try to drive to the heart of American resolve and will to stay there.

So we have to provide that protective screen. We only play defense, and our job is to get those reconstruction officials, those people that are trying to weave the fabric of Iraq back together, to get

them away from that X, the place where the bad guys, the terrorists, have decided to kill them that day.

Mr. BURTON. One of the Members on the other side indicated

that when there is a firefight or when there is a car bomb going

off or something, there is an attack on your convoy, that you don’t

stay there.

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Can you explain to me what would happen if you stayed there

when you were under attack?

Mr. PRINCE. Again, there would be a lot more firefight. There

would be a lot more shooting.

Our job is to get them off the X. The X is what we refer to in

our business about the preplanned ambush site where bad guys

have planned to kill you. So our job is to get them away from that

X, to get them to a safe place. So we can’t stay and secure the terrorist crime scene investigation.

Mr. BURTON. You are in a war zone.

Mr. PRINCE. Yes, sir.

Mr. BURTON. So, the instructions, I want to get this straight. If

your people come under fire or there is a car bomb or RPG fired

at them, they are supposed to turn around under some rules and

get out of there to protect the people that they are guarding.

Mr. PRINCE. Yes, sir, defensive fire, sufficient force to extricate

ourselves from that dangerous situation. We are not there to

achieve firepower dominance or to drive the insurgents back. We

are there to get our package away from danger.

Mr. BURTON. Thank you.

Chairman WAXMAN. The gentleman’s time has expired.

The Chair now recognizes Mr. Cummings for 5 minutes.

Mr. CUMMINGS. Mr. Prince, you are a very impressive witness.

I just want to ask you a few questions that cause me some concern

that seems to go counter to some of the things that you have said.

I am wondering whether Blackwater is actually helping our military or hurting them. Frankly, I am concerned that the ordinary

Iraqi may not be able to distinguish military actions from contractor actions. They view them all as American actions.

Now I want to go back to this incident that we have been talking

about for the last few minutes, the 2006 Christmas Eve incident

where the drunken Blackwater official shot and killed a guard of

the Iraqi Vice President, which is basically like killing a Secret

Service person guarding our Vice President.

When this incident first happened, an Arab television station ran

an incorrect story, saying that a ‘‘drunken U.S. soldier’’ killed the

Iraqi Vice President’s guard.

Were you aware of this incorrect press report?

Mr. PRINCE. No, sir, I was not.

Mr. CUMMINGS. Of course, you can see how a media report like

that makes it more likely that Iraqis will blame the U.S. military

rather than Blackwater for the killing of the Iraqi Vice President’s

guard. Again, what if it were our Vice President?

Did Blackwater take any steps to inform the press that it was

actually a Blackwater employee who killed the Vice President’s

guard?

Mr. PRINCE. By contract, we are not allowed to engage with the

press.

Mr. CUMMINGS. All right, and why is that?

Mr. PRINCE. That is part of the stipulations in the WPPS contract.

Mr. CUMMINGS. After this report aired, an official who works for

you—and this is what really concerns me and I just want to know

your reaction to this—at Blackwater sent an email.

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This is an employee of yours sent an email internally to some of

his colleagues. He did not suggest contacting the station, I guess,

for the reason you just said. He didn’t suggest putting out a press

release, and he didn’t suggest correcting the false story in any way.

Instead, this is what the email said: ‘‘At least the ID of the shooter will take the heat off of us,’’ meaning Blackwater.

In other words, he was saying: Wow, everyone thinks it was the

military and not Blackwater. What great news for us. What a silver lining.

Mr. Prince, you said in your testimony that Blackwater is extremely proud of answering the call and supporting our country.

Did anyone in your organization ever raise any concerns that a

lying, a false story to continue might lead to retaliation or insurgent activity against our troops?

Mr. PRINCE. I don’t believe that false story lasted in the media

for more than a few hours, sir.

Mr. CUMMINGS. But the fact still remains that it was a false

story, and we are trying to be supportive of the Iraqi government,

trying to get this reconciliation, trying to make sure that they, as

President Bush says, that they stand up so that we can stand

down.

But, at the same time, when these stories are put out—I think

you would agree—that the Iraqi people then say, well, wait a

minute, the United States is supposed to be supporting our Government.

President Bush talks about how we have gone over to export democracy. Here is the very symbol. The Vice President of a country,

killed by a drunken Blackwater employee.

The question is then what lies in the mind of the Iraqi? What

lies in the minds of those people who may have wanted to cooperate with our security over there?

Then they say, well, wait a minute, if they, U.S. soldiers, but

really Blackwater is doing this to the very Government that we are

supposed to be supporting. Then what does that say and why

should we support the United States? Fair question?

Mr. PRINCE. Yes, sir. Look, I am not going to make any apologies

for the——

Mr. CUMMINGS. I am not asking you to make any apologies. You

are the president of this company, is that right?

Mr. PRINCE. The CEO.

Mr. CUMMINGS. CEO, well, you are the top guy. You are one of

the top guys, is that right?

Mr. PRINCE. Pretty much, yes, sir.

Mr. CUMMINGS. All right. So I am just asking you a question

about what your policies are. That is all.

Mr. PRINCE. We have clear policies. Whether the guy was involved in a shooting that night or not, the fact that he violated the

alcohol policy with firearms would have gotten him fired on the

spot. That is why we fire people. We hold them independently accountable.

The guy slipped away from the party. He was by himself. I am

confident that if he had been with another guy from Blackwater,

the other guy would have stopped him and said, enough. You know.

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Mr. CUMMINGS. So contrary to what Mr. Burton said, this was

after hours in the Green Zone, wasn’t it? This wasn’t some mission,

was it?

Mr. PRINCE. Correct.

Mr. CUMMINGS. Right.

Mr. PRINCE. He was on his own time. It was a Christmas Eve

party.

Mr. CUMMINGS. Do you understand what I mean? I have heard

not a lot of complimentary things about what you all are doing. I

am sure you are doing a great job, but it is not about what you

do well. It is a question of when things go wrong, where is the accountability?

Mr. PRINCE. And, sir, we fired him. We fined him. But we, as a

private organization, can’t do any more. We can’t flog him. We can’t

incarcerate him. That is up to the Justice Department. We are not

empowered to enforce U.S. law.

Mr. CUMMINGS. Do you think more should be done?

Mr. PRINCE. I would be happy to see further investigation and

prosecution by the Justice Department, yes, sir.

Mr. CUMMINGS. Thank you.

Chairman WAXMAN. I am going to call Mr. Mica next.

How much did you fine him?

Mr. PRINCE. Multiple thousands of dollars, sir. I don’t know the

exact number, but whatever we had left due him in pay, I believe

we withheld and plus his plane ticket.

Chairman WAXMAN. Thank you.

Mr. Mica.

Mr. MICA. Thank you.

Mr. Prince, in your testimony earlier, you said, ‘‘Killing Americans, I guess, in Iraq is big media.’’

You said that?

Mr. PRINCE. Yes, sir.

Mr. MICA. Did you have any idea that wounding American contractors in a congressional hearing would be this big media?

Mr. PRINCE. More than I bargained for, sir, yes.

Mr. MICA. I described you are here because you are sort of in the

chain of command to be attacked next by some folks who want to

discredit what you are doing. I might say that I don’t know if there

were criminal acts committed, and there will probably be ways in

which we can go after folks. One of those would be to have the Department of Justice pursue the case. Would that be the normal procedure?

Mr. PRINCE. Yes, sir. We welcome it. We encourage it. We want

that accountability. We hold ourselves internally accountable, but

you know we put 1,000 guys out in the field. Humans make mistakes and they do stupid things sometimes. We try to catch those

as much as we can, but if they go over the line.

Mr. MICA. Well, they criticized you. I guess we could start with

the pilots and the NTSB investigation. They should go back and

look at the Comair crash in Kentucky with the accounts of the pilots which was a distraction and led to the crash according to their

findings. I have chaired the Aviation Subcommittee and followed

that very closely.

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Basically, as Al Gore would put it, there is no controlling authority for airspace in Afghanistan.

Mr. PRINCE. There is no FAA in Afghanistan.

Mr. MICA. Then you were criticized, too. You left the pilot. I

guess he survived but was not found. Is that it?

Mr. PRINCE. No. There were two of the DOD personnel in back

survived the crash.

Mr. MICA. Survived, OK. Well, two survived and weren’t found,

and I guess they perished.

Mr. PRINCE. They perished before they were found.

Mr. MICA. I guess in the United States, like we have an experienced pilot like Fossett. He is lost. Have we found him yet?

Mr. PRINCE. No, sir.

Mr. MICA. OK, but this is in the terrain.

Mr. PRINCE. Terrain very similar to what is in Nevada.

Mr. MICA. I just want to try to put things in perspective.

There is also some argument that you cost the Government too

much and that you are getting paid too much and maybe this is

something that the military should be doing. Could you respond to

that?

Mr. PRINCE. Yes, sir. I think there are three arguments for or

against privatization. There is reliability, there is accountability,

and there is cost.

Accountability issues can be handled by exercising MEJA. Congress expanded MEJA at the end of 2004 to any DOD contingency

operation, I believe. So any time a U.S. contractor is abroad, they

can be brought up on charges on behalf of the U.S. Government.

They can be brought up on charges back here in the States.

There is reliability. That comes down to, I think, individual vendor reliability. How well does that company execute? Are they complete, correct and on time?

And then there is cost. The American automotive industry, any

manufacturer in America has to deal with that cost issue all the

time, whether they should make something. It is that make versus

buy argument.

I greatly encourage Congress to do some true activity-based cost

studies. What do some of these basic Government functions really

cost? Because I don’t believe it is as simple as saying, well, this

sergeant costs us this much because that sergeant doesn’t show up

there naked and untrained. There are a whole bunch of other costs

that go into it.

So, figure out if the Army does the job, how many of those people

leave the wire every day? What is their tooth to tail ratio? How

many people are operators versus how many people are support

people? That all drives into what your total cost is.

Now American industry got pushed by the Japanese car makers

and you know by foreign competitors because you have to focus on

cost and being efficient in delivering a good or a product or a service at a better competitive price.

Mr. MICA. Finally, you were criticized for not detaining someone

who committed a criminal act. Now if an employee commits a

criminal act in the United States, and you fire him, are you responsible in the United States for detaining him and handling?

65

Mr. PRINCE. Well, that would be a crime that we committed then

because we are not allowed to detain.

Mr. MICA. You are not allowed to detain?

Mr. PRINCE. No, sir.

Mr. MICA. OK. So, in that situation, you were criticized for providing someone transport back. Was it to the United States?

Mr. PRINCE. It was.

Mr. MICA. Or wherever.

Mr. PRINCE. We acquired an airline ticket for him back to the

States. That is all by direction of the State Department.

Chairman WAXMAN. The gentleman’s time has expired.

Now the Chair recognizes Mr. Kucinich.

Mr. KUCINICH. Thank you very much, Mr. Chairman.

In my opening remarks, I pointed out that if war is privatized,

private contractors have a vested interest in keeping the war going.

The longer the war goes on, the more money they make.

I want to, for my time here, explore the questions regarding how

Blackwater got its contracts.

Mr. Prince, your company has undergone a staggering growth

just over the past few years. The committee’s attention can be directed to the chart. In 2000, your company was bringing in only

about $200,000 in Government contracts but since then, according

to the committee, you have skyrocketed to something in the nature

of $1 billion in Government contracts.

The real increase in Blackwater’s contracts began with the Iraq

War. In fact, if you look at the chart, you can see how from 2004

on, the amount of taxpayer dollars Blackwater was awarded by the

administration began to go through the roof from about $48 million

in 2004 to $350 million in 2005 to over $500 million last year.

This is really an unprecedented rate of increase, and I want to

understand how this happened, Mr. Prince.

We have been informed that one of your first contracts in Iraq

was for the Coalition Provisional Authority. Ambassador Paul

Bremer awarded you a contract to protect officials and dignitaries.

That was at the end of 2003, toward the end of 2003. It may have

been in August. Is that right, sir?

Mr. PRINCE. I believe it happened right after the U.N. facility in

Baghdad was blown up by a large truck bomb. Yes, sir, they then

feared for the U.S. officials.

Mr. KUCINICH. Now that contract was no-bid, is that right, sir?

Mr. PRINCE. It was off the GSA schedule.

Mr. KUCINICH. Can you tell us how you got this no-bid contract?

Mr. PRINCE. Off the GSA schedule is considered a bid contract,

sir. The GSA schedule is a pre-bid program kind of like catalogue

of services that you put out, like buying something from the Sears

catalog.

Mr. KUCINICH. Did you talk to anyone in the White House about

the contract?

Mr. PRINCE. No, sir.

Mr. KUCINICH. Did you talk to anyone in the Congress about the

contract?

Mr. PRINCE. No, sir.

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Mr. KUCINICH. Did anyone, to your knowledge, connected with

Blackwater talk to anyone in either the White House or the Congress about the contract?

Mr. PRINCE. Not to my knowledge, no.

Mr. KUCINICH. Did anyone in the DeVos Family talk to anyone

in the White House or the Congress about the contract?

Mr. PRINCE. No.

Mr. KUCINICH. As a taxpayer, do you think it is proper that no

other companies were allowed to bid?

Mr. PRINCE. That, I am not aware of, sir. It is a requirement,

Government officials had. They came to us, asked if it could be fulfilled. I don’t know what other companies they went to as well. I

am not aware of that.

Mr. KUCINICH. In 2004, the State Department awarded

Blackwater a $332 million task order under its diplomatic protection contract. Are you familiar with that?

Mr. PRINCE. I am familiar about the amount. I know that we

transitioned over to working for the State Department from the

CPA. I am not sure exactly when that happened.

Mr. KUCINICH. Thank you, sir.

According to the Federal Contracting Data base, you didn’t have

to compete for that one either, is that correct?

Mr. PRINCE. Again, I believe they continued that off the GSA

schedule which is an approved contracting pre-bid method.

Mr. KUCINICH. Who at the State Department were you dealing

with in order to get this contract?

Mr. PRINCE. I don’t know. I presume it was under the diplomat.

Mr. KUCINICH. Excuse me?

Mr. PRINCE. It was under the Diplomatic Security Service. That

is the folks at State we were working for.

Mr. KUCINICH. Now SIGIR reported that this was a no-bid contract. Was SIGIR incorrect? It was a no-bid contract or not?

Mr. PRINCE. I am not sure how they are defining bid or no-bid.

In my understanding, they used, we used pricing off the GSA

schedule, and I believe that is considered, regarded as a biddable

contract.

Chairman WAXMAN. Will the gentleman yield to me?

Mr. KUCINICH. I yield to the Chair.

Chairman WAXMAN. It is on the GSA schedule. Did they come to

you to put your offer of services on the GSA schedule? Did you go

to them? How did that get on the GSA schedule?

Mr. PRINCE. Oh, most companies in our kind of work have a GSA

schedule. We have a GSA schedule for target systems. We have a

GSA schedule for——

Chairman WAXMAN. So you offered services and you are on the

list of services that they can purchase?

Mr. PRINCE. Yes, sir.

Chairman WAXMAN. You don’t know if anybody was on the list

for these kinds of services?

Mr. PRINCE. Oh, I am sure there are lots of companies that are.

Chairman WAXMAN. For some of the services.

Did you go to anyone else or did anyone else from the Government go to you to ask you to do the work?

Mr. PRINCE. I don’t know, sir.

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Chairman WAXMAN. Did they ask you to see if you could put together this operation and then they put you on the schedule?

Mr. PRINCE. I would say we were present in the country already.

We already had significant presence with the CPA under a bid contract. I believe that contract was called Security Services Iraq. So

we had a large presence of static guards and PSD kind of work for

them.

So I think they probably just wanted to transition from DOD

work to Department of State work.

Chairman WAXMAN. Thank you.

Mr. Shays.

Mr. SHAYS. Thank you, Mr. Chairman.

Mr. Chairman, I didn’t make an opening statement. I was chairman of the National Security Subcommittee and ranking member,

and so I have a keen interest in this issue, but other Members had

important statements to make. So, first, I would like to make an

observation.

I want to align myself with the statement of Tom Davis, my

ranking member now. I thought it adequately and perfectly expresses my view.

I want to thank both the chairman and Mr. Davis for honoring

U.S. Department of Justice’s request not to discuss an incident we

don’t have enough facts to discuss, and we will deal with that later.

I think that is responsible.

I think this hearing, the way we are dealing with it, is a very

important effort, given what we are doing.

Now, saying that, during the Vietnam War, I was a conscientious

objector. I was a Peace Corps volunteer, so I try to be very careful

when I evaluate the performance of men and women under fire.

Frankly, many of those behind you at this desk are exactly that.

We are behind a desk, never been shot at, never tried to understand what it is like to be under fire.

Blackwater, I want to say, has a reputation of being a bit of a

cowboy, but I know we absolutely need protective security contractors. The role of security contractors is much different than the role

of the military.

But I also want to say that I feel that the State Department

could do a better job of enforcing and holding contractors accountable, and I think they are going to make a point that they are willing to have this reviewed by an outside party and then have us

look at it.

Now, saying that, I also want to say the number of times that

you all have to protect Members of Congress is infinitesimal compared to all the civilians you have to protect.

One of the outrages, in my judgment, is that there haven’t been

more Members who have gone there and, frankly, that some Members who have never been there are passing judgment on what we

are doing there. They are behind a desk with no sense of what is

happening there.

I am in awe of what your men and women and they have been

mostly men, have done to protect our civilians. I am absolutely in

awe of it. You know you can’t be perfect, but in one way you have

been perfect if this is true.

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Tell me, from June 2004 to the end of that year, how many missions you protected or let me say it this way, if you don’t know how

many missions you protected, how many people you protected were

wounded or killed in 2004?

Mr. PRINCE. No, sir, we have never had anyone seriously injured.

Mr. SHAYS. I am going to do year by year. Did you have anyone

wounded or killed in 2004?

Mr. PRINCE. No, sir.

Mr. SHAYS. Did you have anybody wounded or killed in 2005?

Mr. PRINCE. No, sir.

Mr. SHAYS. These are the people you are trying to protect.

Mr. PRINCE. I mean wounded, yeah. A big IED ruptured an eardrum. That is the most serious level there.

Mr. SHAYS. Did you have anyone wounded or killed in 2006?

Mr. PRINCE. People that we were protecting?

Mr. SHAYS. Yes.

Mr. PRINCE. No.

Mr. SHAYS. Did you have anyone who was wounded or killed in

2007 that you were to protect?

Mr. PRINCE. No, sir.

Mr. SHAYS. That is a perfect record, and you don’t get any credit

for it for some reason.

Now, were any of your people killed in 2004, trying to protect the

civilians?

Mr. PRINCE. Yes, sir.

Mr. SHAYS. Were any of your people killed in 2005, trying to protect civilians?

Mr. PRINCE. Yes, sir.

Mr. SHAYS. Were any of your people killed in 2006, trying to protect civilians?

Mr. PRINCE. Yes, sir.

Mr. SHAYS. Were any of your people killed by trying to protect

the civilians in 2007?

Mr. PRINCE. Yes, sir.

Mr. SHAYS. Every year, you have had men who have risked their

lives and who have been killed, fulfilling their mission, and they

have succeeded 100 percent, and I just want to be on record as

thanking you for an amazing job that you do.

I have been to Iraq 18 times. I have been outside the umbrella

four times. It is one dangerous place. I have seen films where vehicles come up to our troops or to our security people, and they are

blown up in it.

You have done an amazing task, and there is a huge difference

from being a police officer or protective and being the military, a

totally different role.

I have had no one in the military say to me, I want to guard all

these civilians. The last thing you want is to have humvees and

Army take civilians who are meeting other civilians like our State

Department with that kind of precedent, and the military would

not do it. They are not going to be in a Suburban. They are going

to be in what their protocol requires.

The protocol is totally different. We need security people who do

their job.

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Thank you for doing a perfect job in protecting the people you are

required to protect.

I yield back.

Mr. PRINCE. Thank you, sir. It is an honor to do the work.

Chairman WAXMAN. The gentleman’s time has expired.

Before I recognize Mr. Davis, I want to put in the record, a statement from the Special Inspector General in Iraq from July 2004,

that indicates that the security guards and two helicopters for

Bremer, sole source directed; the security for inner ring Republican

Presidential compound, Al Rashid Hotel, sole source; the security

for Al-Rashid Hotel, sole source to Blackwater.

Mr. SHAYS. I reserve my right to object. Would the gentleman

say was that under Bremer or after Bremer?

Chairman WAXMAN. This is in 2004. It would have been Bremer.

Mr. SHAYS. So it was under Bremer, not since we transferred

power to the Iraqis.

Chairman WAXMAN. I don’t know the answer to that. This document only refers to the period of time.

Mr. SHAYS. Under Mr. Bremer. I don’t object.

[The information referred to follows:]

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71

Mr. RYAN. Mr. Chairman, may I have minute, please? May I

have a minute, please? One minute, please?

Chairman WAXMAN. Yes.

Mr. PRINCE. Thank you, sir.

Chairman WAXMAN. Thank you.

Mr. Davis.

Mr. DAVIS OF ILLINOIS. Thank you, Mr. Chairman.

Mr. Prince, throughout your testimony and in other comments

attributed to you, you have praised the Blackwater personnel on

the ground in Iraq, but mistakes do, in fact, happen. You do admit

that Blackwater personnel have shot and killed innocent civilians,

don’t you?

Mr. PRINCE. No, sir. I disagree with that.

I think there have been times when guys are using defensive

force to protect themselves, to protect the package they are trying

to get away from danger. There could be ricochets. There are traffic

accidents. Yes. This is war.

You know since 2005, we have conducted in excess of 16,000 missions in Iraq and 195 incidences with weapons discharged. In that

time, did a ricochet hurt or kill an innocent person? That is entirely possible.

Again, we do not have the luxury of staying behind to do that

terrorist crime scene investigation to figure out what happened.

Mr. DAVIS OF ILLINOIS. Well, according to a document we obtained from the State Department on June 25, 2005, Blackwater

guards shot and killed an innocent man who was standing by the

side of the street. His death left six children alone with no one to

provide them support.

Are you familiar with this incident?

Mr. PRINCE. I am somewhat familiar with that incident.

I believe what happened, it was a car bomb or a potential car

bomb had rapidly approached our convoy. I believe our guys shot

rounds at the car, not at the driver, to warn them off. One of those

rounds, as I understand, penetrated through the far side of the car,

ricocheted and injured that innocent or killed that innocent man.

Mr. DAVIS OF ILLINOIS. Well, again, according to the State Department document, this was a case, ‘‘involving the PSD personnel

who failed to report the shooting, covered it up and subsequently

were removed from Al-Hillah.’’

The State Department described the death as ‘‘the random death

of an innocent Iraqi.’’

Do you know why Blackwater officials failed to report this shooting and later tried to cover it up?

Mr. PRINCE. I can clarify that fully, sir. Thanks for asking that

question.

There was no cover-up because our people reported it to the

State Department. They did look into the shooting and the justification of it, and it was deemed to be an appropriate use of force.

The man was fired because he had tried to cover it up. He panicked

and had asked the other team members to cover it up and to not

report it.

We discovered that through our, I mean our policy worked. We

reported the incident to the State Department, and that is why you

folks have it in the committee because we fired the guy. He was

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terminated not for an inappropriate shooting but for not following

the reporting procedure.

Mr. DAVIS OF ILLINOIS. Well, was there any reason this report

was not provided to the committee?

Mr. PRINCE. I don’t know, sir. I will have to. I will look into that

and get back to you.

Mr. DAVIS OF ILLINOIS. Well, the same document states that the

State Department contacted Blackwater headquarters to encourage

you to offer this man’s family, compensation. After this shooting of

an innocent man and after the attempted cover-up, Blackwater

paid $5,000 to the family.

Is that not correct?

Mr. PRINCE. I believe that was paid through the State Department. That is similar to what DOD does, what the Army does if

there is an accidental death from whether it is an aerial bomb, a

tank backs over somebody’s car or injures someone. There is compensation paid to try to make amends, but that was done through

the State Department.

That was not paid to try to hush it up or cover it up. That is

part of the regular course of action. There was no cover-up because

our guys reported the incident, and the company fired him for not

reporting the incident.

Mr. DAVIS OF ILLINOIS. Can you tell me how it was determined that this man’s life was worth $5,000?

Mr. PRINCE. We don’t determine that value, sir. That is kind of

an Iraqi-wide policy. We don’t make that one.

Mr. DAVIS OF ILLINOIS. Do you know how many payments

Blackwater has made to compensate innocent Iraqis or their families for deaths or injuries caused by Blackwater personnel?

Mr. PRINCE. I do not know that, sir.

Mr. DAVIS OF ILLINOIS. Do you know what the total value of

those payments might be?

Mr. PRINCE. No, sir.

Mr. DAVIS OF ILLINOIS. Could you supply the committee with

that information?

Mr. PRINCE. Yes, sir. I will make sure we get it back to you.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Mr. Chairman, what I am concerned about is the lack of accountability. If one of our soldiers shoots an innocent Iraqi, he or she can

face a military court martial. But when a Blackwater guard does

this, the State Department helps arrange a payout to make the

problem go away. This seems to be a double standard, and it is

causing all kinds of problems in Iraq.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. Platts.

Mr. PLATTS. Thank you, Mr. Chairman. I appreciate your holding

this hearing.

Mr. Prince, I appreciate your testimony and want to thank you

personally for your 5 years of service to our Nation as a Navy

SEAL and also, having been to Iraq five times, for the dedication

of your colleagues for delegations I have been part of and certainly

many others as well. We are grateful for their courageous service.

Your contract, and it has been discussed already, is under the

Worldwide Personal Protective Services Contract. My understandVerDate 11-MAY-2000 12:10 Nov 12, 2008 Jkt 000000 PO 00000 Frm 00076 Fmt 6633 Sfmt 6633 C:\DOCS\45219.TXT KATIE PsN: KATIE
73

ing is under that contract, there are specific terms of conduct including rules of engagement with the use of force. Is that correct?

Mr. PRINCE. Yes, sir, that is correct.

Mr. PLATTS. You testified about, as an example of the seriousness

with which your company takes the conduct of your employees, of

122 individuals that have been fired for misconduct. Are you able

to give us what number of those were related to violations regarding use of force rules of engagement, specifically?

Mr. PRINCE. I believe the committee report listed it. Don’t quote

me on it. I think it says in the committee report around 10 or 15.

I am not sure. It is in the committee report.

Mr. PLATTS. You accept that information as accurate?

Mr. PRINCE. That is a weapons violation. That could mean a

dirty gun or possession of some unauthorized firearm. We have

very clear rules. We are only issued. The Government issues us our

weapons, even down to scopes. We are specified as to which optical

device we can put on the weapon. Some guys get fired because they

put, they like an aimpoint instead of an ACOG.

Mr. PLATTS. Of those 10 to 15, they may not all be related to use

of force, misuse of force.

Mr. PRINCE. Yes, sir, correct.

Mr. PLATTS. A number of times you were asked about in addition

to firing and fining and removing the person from your employment and from Iraq, about what criminal actions you took, and you

appropriately stated you are not a law enforcement entity. You are

a private company.

That being said, though, is it accurate to say that where there

is a criminal investigation by the Department of Justice of Department of State pursuing, that you provide any information that your

company has about misconduct?

Mr. PRINCE. Yes, we fully cooperate in the Christmas Eve incident and any other ones that State Department or Justice Department wants to look at.

Mr. PLATTS. Thank you, Mr. Chairman. That is all of my questions.

Again, my thanks to Mr. Prince and his colleagues for their service.

Chairman WAXMAN. Would the gentleman yield some of his time

to me?

Mr. PLATTS. Yes, Mr. Chairman.

Chairman WAXMAN. Thank you.

The point I want to ask you, Mr. Prince, is we appreciate what

you have done, but it looks like a lot of people in the U.S. military

don’t appreciate it. One man, an Army colonel, Teddy Spain, said,

‘‘I personally was concerned about any of the civilians running

around on the battlefield during my time there. My main concern

is with their lack of accountability when things went wrong.’’

Another senior U.S. military official said, ‘‘We had guys who saw

the aftermath,’’ meaning the aftermath of your activities there. ‘‘It

was very bad. This is going to hurt us badly.’’

Then we had Secretary of Defense Robert Gates: ‘‘These incidents

may be uncommon. We don’t know how common they are, but let’s

assume that they are uncommon. I believe that they still have disproportionate impact on the Iraqi people. We have people who are

74

conducting themselves in a way that makes them an asset in this

war, not a liability.’’

You are not answerable to the U.S. military, are you?

You report to the State Department? You are under contract

with State, isn’t that right?

Mr. PRINCE. In Iraq, we report to the State Department, but if

I could just add.

Chairman WAXMAN. So your people are under the same rules as

the U.S. military.

Mr. PRINCE. We operate under defensive rules of engagement.

Mr. DAVIS OF VIRGINIA. Will the gentleman yield?

Mr. PLATTS. Actually, Mr. Chairman, if I could reclaim my time

in responding.

Mr. Prince, you provided the committee a detailed list of the regulations, treaties, laws that you operate under, is that correct?

Mr. PRINCE. Yes, sir.

Mr. PLATTS. That includes items that relate to both Department

of State and Department of Defense?

Mr. PRINCE. It includes laws like MEJA, the UCMJ, all of which

we can be held accountable. Our people can be held accountable for

while operating overseas.

Let me just ask, answer, Mr. Chairman, about whether we are

adding value to the military or not.

I have to say my proudest professional moment was about a year

and a half ago. I spoke at the National War College. After my

speech, a colonel, a full bird colonel, came up to me afterwards. He

said, I just came back from brigade command in Baghdad, and he

had 4,000 or 5,000 guys working for him.

He said, as his guys were driving around the city, on the top of

their dashboards of their humvees were the Blackwater call signs

and the frequencies because his soldiers knew that if they got in

trouble, the Blackwater guys would come for them. They would

come to their aid and assist them, med evac them and help them

out of a tough spot.

So if that is the reputation we have, I——

Chairman WAXMAN. The Brigadier General Karl Horst said,

‘‘These guys run loose in this country and do stupid stuff.’’

Mr. PLATTS. Mr. Chairman.

Chairman WAXMAN. ‘‘There is no authority over them, so you

can’t come down on them when they escalate force.’’

Mr. PLATTS. Mr. Chairman.

Chairman WAXMAN. ‘‘They shoot people, and someone else has to

deal with the aftermath. It happens all over the place.’’

Security contractors in Iraq are under scrutiny after shootings.

What do you say?

Mr. PRINCE. Sir, I can also tell you there is 170-some security

companies operating through Iraq. We get painted with a very

broad brush of a lot of the stuff they do.

On almost weekly basis, we get a contact from someone in DOD,

some talk somewhere that says, oh, three Blackwater guys were

just taken hostage here. Four guys were killed there. Oh, you were

involved in a shooting over here.

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When we fully investigate, we didn’t have any teams of guys

within 100 miles of that location, but if a private security contractor did it, it often gets attributed to us.

Chairman WAXMAN. Regardless of what private security contractor does it, it is a problem for the United States.

Mr. Platts, you were kind enough to yield me time. Without objection, I would like to give to you another 30 seconds.

Mr. PLATTS. If you could, I was going to yield to the ranking

member. Thank you, Mr. Chairman.

Mr. DAVIS OF VIRGINIA. I appreciate your questions, but let me

just say, Mr. Chairman, for the sake of argument, you are right.

If we are paying too much and getting too little, what is the answer? More troops in Iraq? Less safe troops? Less safe diplomats

or less safe Members?

I mean this is the tradeoff. This is what we are trying to explore

here. They are contractors.

At the end of the day, we have to look to the Government who

is contracting this out, putting down the rules of engagement, and

they will be on our next panel. He is just performing his contract

at this point, and I think we have questions that we can ask the

State Department.

But the alternatives, none of them are attractive when you are

in a war zone.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. Tierney.

Mr. TIERNEY. Thank you, Mr. Chairman.

Mr. RYAN. Mr. Chairman, may I have 1 minute, please? We do

not need to leave. One minute, please.

Chairman WAXMAN. Yes, go ahead.

Mr. RYAN. Thank you.

Chairman WAXMAN. Without objection, I would like to ask that

Mr. Davis and I, during this moment, have a minute each because

I would like to say something that doesn’t involve a question and

you might want to respond to it.

The point I want to make, you raise that very essential question,

what do we do if we don’t have enough troops there?

Well, I think we have to look at the fact that this isn’t a short

term war. We have been there 5 years. It looks like we may be

there another 10 years. Even General Shinseki said we need more

troops.

At some point, you have to make a decision in this battlefield,

in this war. If we don’t have enough troops to do the job, then we

should get more troops. But if we are going to go on the cheap to

get private contractors, we are not on the cheap at all. It is costing

us more money, and I believe it is costing us problems, causing us

problems with the Iraqi people.

Let’s let the military replan this. It seems to me we have had

bad decisions from this administration too much of the time in handling this whole war, planning for it adequately and staffing it adequately with the U.S. military. They are the ones that ought to be

doing this job.

Mr. Davis.

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Mr. DAVIS OF VIRGINIA. Mr. Chairman, I understand, but let me

just say troops that are there are not paid to protect civilians. That

is not what military troops are trained for.

I went through officer basic course in Georgia at Fort Benning.

I went through basic training at Fort Ord. That is not what troops

are trained for when they go out into the battle zone.

This is a unique responsibility. It is through the State Department, not the Department of Defense. As we will hear from the

next panel, our troops are not, at this point, being trained to do

this kind of work. This is a different kind of process.

Now if we want to train them to do that, we can do that, but that

hasn’t been the history throughout the last 50 years of the military

that I am aware of. So we then have to decide from a cost-benefit

perspective.

I think this is an important conversation to have, but to date

that is not the contractors’ fault. I think our argument would be

with the State Department.

Chairman WAXMAN. I want to yield to Mr. Tierney, but

Blackwater and the private military recruit from our military. So

these people are trained to the job that Blackwater and other private military people are asking them to do. So why can’t the military do it?

I think they could do it if we had enough military personnel.

Mr. DAVIS OF VIRGINIA. Sir, I would like Mr. Prince to respond,

but I am sure they retrain them. They don’t just take raw recruits

out. Could I just ask him to respond?

Mr. PRINCE. Yes, sir. There was an earlier allegation about companies like us raiding the ranks of the Special Operations community for this kind of work, and the GAO report found that, yes, they

are getting out and working for companies like us, but they are not

getting out at any higher rate than they ever did before.

So, they are, instead of becoming a financial analyst or an accountant or some other kind of businessmen, they come to work for

companies like Blackwater, but they are not getting out at any rate

higher than they ever did before.

If I could just correct two slight errors I made. We did not have

any fatalities of Blackwater personnel in 2006.

One of the contracts I testified to as being under the GSA schedule was, in fact, sole source. We will get you the very detailed information as to which contracts were GSA and which were sole

source. I am not qualified to answer that right now.

Chairman WAXMAN. Thank you. We will receive any documents

you have.

Mr. DAVIS OF VIRGINIA. Mr. Chairman, if I could just have a

minute. I think that one of the things we want to get to in this and

later hearings is if the mission is going to be 4 or 5 or 6 years, do

you want to change the mission of the military, but that is not the

contractors’ fault. Our argument there is with the Defense Department and the State Department.

Mr. PRINCE. I strongly encourage the Congress to sponsor true

activity-based cost studies. What does it cost the Air Force to move

a pound of cargo in a war zone? What does it cost to put a brigade

in the field or train it and to equip it? All these basic functions,

even what is the hourly cost of aircraft doing refueling?

77

Chairman WAXMAN. We are going to have you answer some more

questions, I am sure, along those lines.

Mr. Tierney, it is your turn.

Mr. TIERNEY. Are you certain, Mr. Chairman?

Thank you.

Mr. Prince, thank you for being here today. We have been discussing a little bit here about the goal of this particular venture

here. I think that General Petraeus has been pretty clear that he

would like to change it from the type of war it has been to one

where he wants to defeat insurgents, and that entails, in significant part, winning the hearts and minds.

So I want to read to you this quote: ‘‘Counterinsurgents that use

excessive force to limit short term risk alienate the local populace.

They deprive themselves of support or tolerance of the people. This

situation is what insurgents want. It increases the threat they

pose.’’

Do you know who made that statement?

Mr. PRINCE. Do I know who made that statement?

Mr. TIERNEY. Yes.

Mr. PRINCE. No, sir.

Mr. TIERNEY. That was General Petraeus. You know he was the

one who wrote the official counterinsurgency manual.

It does appear from some of the evidence here, though, that

Blackwater and other companies, sometimes at least, conduct their

missions in ways that lead exactly in the opposite direction that

General Petraeus wants to go, but that doesn’t mean you are not

fulfilling your contractual obligations.

In a recent report, there was a quote from Ann Exline Starr who

is a former Coalition Provisional Authority Advisor. She talks

about the fact that the private mission is different from the overall

public operation. ‘‘Those, for example, doing escort duty are going

to be judged by their bosses solely on whether they get their client

from point A to point B, not whether they win Iraqi hearts and

minds along the way.’’

She goes on to talk about the fact that soldiers, when they escorted her because they are able to escort people in training for

that, often times also interacted with the Iraqi community and did

things to ingratiate themselves to the Iraqis.

The contractors, by contrast, focused only on the contract. She

said what they told her was our mission is to protect the principal

at all cost. If that means pissing off the Iraqis, too bad, her language, not mine.

Another counterinsurgency expert is Army Colonel Peter

Mansoor. Earlier this year, he made a statement about private

military contractors, and he said, ‘‘If they push traffic off the roads

or if they shoot up a car that looks suspicious, they may be operating within their contract, but it is to the detriment of the mission

which is to bring people over to our side.’’

So when we look at Blackwater’s own records that show that you

regularly move traffic off the roads and you shoot up cars in over

160 incidents of firing on suspicious cars, we can see, I think, why

the tactics you use in carrying out your contract might mitigate

against what we are trying to do in the insurgency.

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Retired Army officer, actually, he is a conservative analyst now,

Ralph Peters. He was more blunt about it. He said, ‘‘Armed contractors do harm COIN, counterinsurgency efforts. Just ask the

troops in Iraq.’’

We have had complaints from military leaders over and over

again that the ways that some contractors operate in Iraq are causing danger and anger against the U.S. forces. Let me give you one

example. For most of 2005, the Army’s Third Infantry Division was

in charge of security in Baghdad.

Here is what the deputy commander of this division, Brigadier

General Karl Horst, said about Blackwater and other private military contractors: ‘‘These guys run loose in this country and do stupid stuff. There is no authority over them, so you can’t come down

on them when they escalate force. They shoot people, and someone

else has to deal with the aftermath. It happens all over the place.’’

Are you familiar with General Horst, sir?

Mr. PRINCE. No, sir. I have never met him.

Mr. TIERNEY. Well, here is what Colonel Hammes said when he

was an officer in Iraq. He said, ‘‘The problem is in protecting the

principal, they had to be very aggressive and each time they went

out, they had to offend locals, forcing them to the side of the road,

being overpowering and intimidating, at times running vehicles off

the road, making enemies each time they went out.’’

So they were actually getting our contract exactly as we asked

them to, at the same time hurting our counterinsurgency effort.

This goes on again back to Colonel Peter Mansoor who said, ‘‘I

would much rather see basically all armed entities in a

counterinsurgency operation fall under the military chain of command.’’

The CENTCOM Commander, Admiral James Fallon, who we all

know now for his current work, his quote is: ‘‘My instinct is that

it is easier and better if they were in uniform and working for me.’’

Can you see and appreciate, Mr. Prince, why there might be

some contradiction between what we are asking your organization

and others like it to do under the contract as opposed to what we

are trying to do as a military force in counterinsurgency?

Mr. PRINCE. Sir, I understand the challenges that the military

faces there.

Like I said before, there is 170 some companies doing business

in Iraq. Most of those security contractors are DOD. I think the

DOD officers would even complain about their lack of reach over

their own DOD Corps of Engineers, MNSTC-I type contractors.

Second, we know we are part of the total force in trying to get

the mission accomplished. Of the 16,000 missions our guys have

done, only 195 resulted in any kind of discharge of a weapon. That

is less than 1 percent. So we strive for perfection, but we don’t get

to choose when the bad guys attack us.

You know the bad guys have figured out. The terrorists have figured out how to make a precision weapon with a car loaded with

explosives with a suicidal driver.

Mr. TIERNEY. Just to interrupt you for a second, you are not asserting that every time that you take affirmative action it was

somebody firing at you first. You do acknowledge that, on some occasions at least, it was a preventive act on your part of your people.

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Mr. PRINCE. Yes, sir, but this is what happens when our guys are

not able to prevent a suicide car bomb. This happened. This blew

up three Blackwater personnel and one State Department security

officer up in Mosul.

It tossed a 9,000 pound armored Suburban 50 feet into the side

of a building, followed by a whole bunch of small arms fire from

the rooftops, a very serious ambush, killed four Americans that

fast.

Mr. TIERNEY. My question was that you are not disputing the

fact that on some occasions when your people might be afraid that

something like that is going to happen, that they may fire first, ask

questions later.

Mr. PRINCE. Sir, like I said the bad guys have made a precision

weapon. The Air Force has a system called a DIRCM, Directional

Infrared Countermeasures. It is used to break the lock of an incoming surface to air missile. It shines a laser in the seeker head. The

missile breaks lock, and it veers away.

We have to go through a use of force continuum to try to break

the lock of this potential deadly suicide weapon: hand and arm signals, sirens, signs at the back of the vehicles, water bottles, pen

flares, shots to the radiator, shots to the windshield before we even

go to a lethal force option.

So our guys do go through it, but they——

Mr. TIERNEY. Well, some of the evidence indicates that——

Chairman WAXMAN. The gentleman’s time has expired.

Mr. TIERNEY. Mr. Waxman, I would like to just finish up my

thought if I might. I think there has been fairly good estimation

on the part of the committee here.

Chairman WAXMAN. If you can do it in seconds rather than minutes.

Mr. TIERNEY. Thank you.

The point being made is that there are instances—you are not

denying—when people shoot first on that.

When you multiply that by the number of times it happens and

the number of people and Iraqis, that are implicated in those situations, the number of people that they tell, it goes against our

counterinsurgency effort and it goes to the issue of whether or not

we ought to have military personnel doing the job, whether this is

an inherently Government function that we ought to have done on

the public side of it as opposed to having contractors who, by what

we are seeing here today, really don’t have much accountability

being exercised over them by either the State Department or the

Department of Defense.

I yield back, Mr. Chairman.

Chairman WAXMAN. The gentleman yields back the rest of his

time.

The Chair now recognizes Mr. Duncan.

Mr. DUNCAN. Thank you, Mr. Chairman.

Mr. BURTON. Excuse me, Mr. Chairman.

Mr. Prince, did you want to respond to what was said?

Chairman WAXMAN. That wasn’t a question. That was a statement by the Member.

Mr. BURTON. Well, I know, but when an allegation.

Chairman WAXMAN. Mr. Duncan is recognized.

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Mr. BURTON. Mr. Chairman, when an allegation is made.

Chairman WAXMAN. Mr. Duncan is recognized. You are using his

time.

Mr. PRINCE. I will get it, Mr. Burton. It is all right.

Mr. DUNCAN. Thank you, Mr. Chairman.

The Washington Post reported yesterday. It said Army General

David H. Petraeus, the top U.S. Commander in Baghdad, overseeing more than 160,000 troops, makes roughly $180,000 a year

or some $493 a day. That comes out to less than half the fee

charged by Blackwater for its senior manager of a 34-man security

team.

Our committee memorandum says using Blackwater instead of

U.S. troops to protect embassy officials is expensive. That is putting it lightly. Blackwater charges the Government $1,222 per day

for the services of a private military contractor. This is equivalent

to $445,000 per year, over six times more than the cost of an equivalent U.S. soldier.

This war has produced some of the most lavish, most fiscally excessive and most exorbitantly profitable contracts in the history of

the world. It seems to me that fiscal conservatives should feel no

obligation to defend this type of contracting. In fact, it seems to me

that fiscal conservatives should be the ones most horrified by this.

I notice in the table that Blackwater’s contracting has gone from

$25 million in 2003, $48 million in 2004, to $593 million in 2006.

If we are going to be there another 10 years, as some have said,

I surely hope that we are not going to continue to see these types

of ridiculously excessive increases in the contracts that are being

handed out.

I also notice that Blackwater is a subsidiary of the Prince Group,

of Prince Group Holdings and that another one of the holdings of

that firm is Presidential Airways, an aviation company that has

held a contract with the U.S. Air Force Air Mobility Command.

Mr. Prince, can you tell me what percentage of Prince Group

Holdings comes from Federal contracts of all or any types?

Mr. PRINCE. Could you say the question again, sir? I didn’t quite

hear you.

Mr. DUNCAN. Can you tell me? I don’t know all the companies

that are in your Prince Group Holdings. Apparently, there is a

Presidential Airways. I don’t know how many other companies

there are.

What I am wondering about is how much of Prince Group Holdings comes from Federal contracts of any and all types?

Mr. PRINCE. Most of Prince Group Holdings comes from Federal

contracts, but if I could just come back and answer your statement

about prices that we charge, that $1,222.

Mr. DUNCAN. When you say most, does that mean 100 percent?

Mr. PRINCE. No.

Mr. DUNCAN. Rough guess, what percentage?

Mr. PRINCE. Rough guess, 90 percent.

Mr. DUNCAN. Do you still have a contract with Presidential Airways with Air Force Mobility Command?

Mr. PRINCE. Yes, sir.

Mr. DUNCAN. Rough guess, how much is that contract each year?

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Mr. PRINCE. I don’t know what the exact number is, sir. It is for

eight aircraft right now. I don’t know what they price out at.

Mr. DUNCAN. What other companies are in Prince Group Holdings?

Mr. PRINCE. There is a long list. I have a manufacturing business

that has nothing to do with Federal stuff, and we make pieces and

parts for automotive, appliance, industrial, power. We compete

with the likes of the Japanese and Koreans and European companies every day.

Mr. DUNCAN. All right.

Mr. PRINCE. But if I could just answer the question about how much we charge, those are competitively bid prices. The $1,222

cited in the report is not accurate.

You also, the committee should have received this. I don’t know

if you have seen that. It lays out base year bill rates for an average

security guy. Base year is $981, not $1,222, and our profit on that,

projected to be 10.4 percent, nothing higher.

And on top of that, I can tell you we have three helicopters that

have been shot down this year, a Little Bird and two Bell 412s.

Those are company helicopters, and when they go down that comes

out of our hide. We have to self-insure on those.

So the risks we take, the financial risks, whenever an aircraft is

doing a mission for the State Department or responding to some

med evac need, above and beyond the statement of our contract,

trying to pull a U.S. soldier out of bad, wounded situation, we take

that risk as a company, and our guys do themselves at great personal peril.

So it is not just about the money. We are a business. We try to

be efficient and excellent and deliver a good service.

We are happy to have that argument, sir, not the argument, the

discussion. Sponsor an activity-based cost study. What would it

cost the Diplomatic Security Service to bring all those folks in

house as staff?

Look at it. We are happy to have that argument. If the Government doesn’t want us to do this, we will go do something else, but

there is plenty of case to be made and plenty of spreadsheets to be

analyzed.

Chairman WAXMAN. The gentleman’s time has expired.

The Chair now recognizes Mr. Clay.

Mr. CLAY. Thank you, Mr. Chairman.

Mr. Prince, I am truly disturbed by reports of Blackwater contractors wreaking havoc on innocent Iraqi citizens. I am equally

troubled that taxpayers have been taken for a ride by paying six

times the cost of a U.S. soldier for Blackwater contractors.

Now, Mr. Prince, you have argued that Blackwater provides a

cost-effective service to the U.S. Government in part because by

hiring private contractors the Government can avoid paying carrying costs such as training, salaries and benefits.

Yet, in your written testimony, you state that Blackwater personnel are all military veterans and law enforcement veterans, many

of whom had recent military deployments. Since so many of your

employees have recently left Government service, doesn’t that

mean they have received years of specialized training at the expense of the Federal Government?

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Mr. PRINCE. People serve the U.S. Government for different periods of time, and that is a choice they make and have been making

since the United States has had a standing military. They serve for

4 years. They serve for six. They serve for 20 or 30.

Mr. CLAY. So the U.S. taxpayers are paying for that training.

Mr. PRINCE. They are paying for that anyway. We provide a vehicle, a mechanism for the U.S. Government to utilize that sunk cost

that they have put into the training for these people. We reorganize it and package in a way to fill these gaps that the U.S. Government has in these kinds of contingency operations.

To stand up a 1,000-man or actually you need a 3,000-man, at

least, military police brigade to do this kind of work because for

every person that is deployed, they are going to have two more

back stateside, one in training and one in standdown.

So you spin that meter, and the costs get big very quickly. So we

are just reorganizing those skills that the Government has already

paid for and putting them back to work.

Mr. CLAY. Last week, Defense Secretary Robert Gates expressed

concern that Blackwater and other private military contractors are

actually poaching the military’s ranks, luring service members

away with much higher salaries.

When Secretary Gates testified before the Senate Appropriations

Committee, he said he asked Pentagon officials to work on drafting

non-compete clauses in order to put some limits on the ability of

these contractors to lure highly trained soldiers out of our forces

to go and work for them.

How do you feel about non-compete clauses, Mr. Prince?

Mr. PRINCE. I think that would be fine, but the fact is everyone

that joins the military doesn’t necessarily serve 20 years. So, at

some point, they are going to get out after four, six, eight, whatever

that period of time is, whatever they decide because we don’t have

a draft. We have a voluntary service.

I think it would be upsetting to a lot of soldiers if they didn’t

have the ability to go use the skills that they have accumulated in

the military to go work in the private sector because you could

make the same case about aviation mechanics, jet engine mechanics, guys that work on a reactor on a submarine. All those skills

have direct correlation to the private sector. I don’t think putting

in non-competes for them would do well to draw guys into the military in the front side either.

Again, the GAO study found that the Special Operations community, yes, folks are getting out and they go to MBA school. They

become some other private sector job. Yes, a lot of them come to

work for companies like us but not at any higher rate than they

ever did before.

Mr. CLAY. Well, I mean if the Pentagon adopts the non-compete

clause, it certainly indicates to me that the Secretary is really concerned about you all poaching on our service personnel, and that

is what it indicates to me.

Let me also say to the viewers of C–SPAN today. This Congress,

some in this Congress and the administration seem to be steeped

in hypocrisy as far as taking these frequent flies to the Green Zone

in Baghdad. When you look, they are some of the same ones who

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would never lift a rifle to defend this country in Vietnam but yet

ridicule and criticize those who have not traveled to Baghdad.

I just want the American public to be aware that some in here

are steeped in hypocrisy.

I yield back my time, Mr. Chairman.

Chairman WAXMAN. The gentleman’s time has concluded.

The gentleman from Idaho, Mr. Simpson.

Mr. TURNER. Thank you, Mr. Chairman.

I come from Ohio, and Ohio is known frequently as the Heartland, and in the Heartland there are a few things that are easy

that are not so easy in Washington, DC. Even in Hollywood, some

of these things are easy, and those are the issues of who is on our

team and who is on their team.

Today, I am a little saddened by this hearing because I am absolutely a supporter of congressional oversight and believe this committee has incredible functions that we have to do. Our witness

today even talked about being a contractor, the questions that we

should be asking of reliability, accountability, cost. A lot of the information we have before us is about dollars, rules of engagement

and the like.

But what unfortunately dissolves into our team versus their

team, by any account, by Hollywood’s account, by the performance

account, Blackwater is our team. They are our team working in the

trenches and in a war zone.

I haven’t heard many questions on this committee about the

rules of engagement or the limits on the work of Al-Qaeda or the

insurgents. In fact, I don’t recall one hearing in this committee

where there has been indignation or troubling responses as a result

of the senseless and heartless killings of Al-Qaeda and the insurgents, but I hear today huge concerns over what we must exert as

oversight on Blackwater. I think it crosses the line between our

team and their team.

Blackwater has questions to answer, and I believe that they are

prepared to do that and today have come forward to do those

things, but we should not go to the extent of undermining

Blackwater’s ability to perform as our team.

The Washington Post today, in its editorial in reviewing how this

issue has come to light, stated, ‘‘Congressional Democrats despise

the firm because it symbolizes the private contracting of military

missions that many oppose in principle.’’

This is the Washington Post saying that the congressional Democrats are despising this firm because of its engagement in military

missions that they oppose.

The Washington Post goes on to say, ‘‘At the same time, it is foolish’’—that is a pretty strong word for the Washington Post.

‘‘At the same time, it is foolish to propose the elimination of private security firms in Iraq and Afghanistan, at least in the short

term.’’

I would hope as we continue our important functions of oversight

that we don’t undermine our team.

Now, Mr. Chairman, you made a comment that I have to respond

to in your opening statement. It is written in your opening statement, and it says, ‘‘As a general rule, children from wealthy and

politically connected families no longer serve in the military.’’

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Mr. Chairman, that is an attack on our team. I can tell you that

Duncan Hunter, former chairman of the Armed Services Committee, currently ranking member, whose son served in Iraq, would

disagree with you. Joe Wilson with the Armed Services Committee,

whose son served, would disagree with you.

I can tell you that the DOD in its report on social representation

in the U.S. military services and the GAO in their September 22,

2005 report would disagree with you.

Quoting from the DOD report, it says, ‘‘Our Population Representation Report shows both a diversity and quality of the total force.

Men and women of various racial and ethnic groups, of divergent

backgrounds, from every State in our country serve as active and

selective reserve, enlisted members and officers of the Army, Navy

and Marine Corps and Air Force and Coast Guard.

‘‘One particular note, the mean cognitive ability and educational

levels of these Soldiers, Sailors, Marines, Airmen and Coast

Guardsmen are above the average of comparatively aged U.S. citizens.’’

The GAO, in their report, similarly confirms that between 1974

and 2000, the force became older and better educated.

So I would hope that the comments by the chairman are not interpreted as what I heard them as, as diminishing the abilities and

the backgrounds of those who serve in our military.

Mr. Prince, my question for you, you are free of some of the limiting acquisition rules that our military is subject to. A general has

a different ability to be able to acquire something as you do corporately.

Could you give us some insight as to how our acquisition rules

inhibit our military in performing some of the things that you do

and ways in which we can change those acquisition rules to deliver

to them the things that they need?

Mr. PRINCE. Thanks for that question.

I would say we find that the requirements process for the military constantly looks for the 120 percent solution, and it overspecs

the electronic capability. I mean there is an enormous amount of

extra stuff and capability put on a vehicle that might not be necessary to just fulfill that job.

I mean if you are going to, you could almost buy vehicles just

planned on for Iraq right now, almost off the shelf, without having

to plan about net-centric warfare and all the other bells and whistles that sometimes the DOD wants to put on things. So we buy

to solve the situation at hand.

Chairman WAXMAN. The gentleman’s time has expired.

I want to apologize to the gentleman for indicating that he is

from a different State than Ohio. He is a proud Ohioan, and I certainly want to agree with him. I hope nobody misinterprets my

comments.

I would like to now call on Ms. Watson.

Ms. WATSON. Then I want an apology for the reference to Hollywood. That is the area that I represent here.

I heard the Chair apologize. I just had to tail-in on that one.

I want to commend Mr. Prince for his duties, for his skill and

for his heading up Blackwater.

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However, when I hear that one of the patron saints of some people, Rush Limbaugh, called our soldiers, who have been critical of

the experience in Iraq, phony soldiers, I am offended and you

should be offended too.

There was a sign over there earlier, Mr. Chair, the General

Petraeus satire, and I had sent a message that it should be taken

down because it was insulting to people.

I think that people that call our soldiers, who speak from experience, phony, ought to be made to apologize.

Mr. ISSA. Would the gentlelady from Hollywood yield for a question?

Ms. WATSON. No, I will not yield because I have just a little time.

Let me say this. I am really concerned when it comes to

privatizing the various struggles that we are having in a war zone.

I am looking at a book here that says Blackwater: The Rise of

the World’s Most Powerful Mercenary Army. That is really disturbing to me because I feel that every young man and woman or every

man and woman in the military ought to be paid for their service,

and I think you are making a good argument for the amount of

money that you have been paid, your organization.

I think my question is do you feel that we ought to continue on

with privatizing the kinds of duties that our military should be

trained to execute?

Mr. PRINCE. Ma’am, the U.S. military is the finest, most powerful

military in the world, bar none.

Ms. WATSON. Absolutely, and they should be paid accordingly.

Mr. PRINCE. It is designed for large-scale conventional operations, what they did to Saddam in 1991 and then again in 2003.

Ms. WATSON. Well, then there is something wrong with the design, and that is my point. I think you responded, and I hear you

clearly. You are providing a service, and I commend you.

Let me just continue on.

You are providing a service, and those little voids, Mr. Chairman

and committee members, ought to be filled by the young, the people

who volunteer. We have no draft. These are volunteers.

Why should they put their lives on the line for this country and

not be compensated, so their families back at home don’t have to

go on welfare and are living in housing that is substandard?

I am just infuriated, not with you, but with the fact that our

State Department and our Department of Defense cannot see their

way. They talk about we don’t have the money, saving money. This

war is costing $1 trillion.

You have been paid over $1 billion and will continue to be paid

so that you can buy the helicopters that are shot down.

And so, my question to you, are we going to have to continue to

privatize because we are not training to do what you do and would

it not be better to hire you to train our military to do the kind of

guarding of VIP personnel?

Whenever there is a CODEL, you have to guard them. When people from the State Department come, you have to guard them because we say that our military is not prepared and not trained to

do that.

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Mr. PRINCE. Well, ma’am, I am happy to say that we do a significant amount of training for the U.S. military every day at our couple of facilities we have around the country.

Ms. WATSON. But you are saying that you fill in a specialty area.

Mr. PRINCE. It is a specialty gap, high-end personal security.

Ms. WATSON. My question that I throw out to all of us is why

can’t we train these people who are willing, who have courage to

go into the military, but then we have to bring on a private firm

to do the job they should be trained to do and pay them three or

four times more than we pay those who choose to serve their country by fighting in theater?

Mr. PRINCE. The military could do that, but the U.S. military

can’t be all things to all people all the time.

Ms. WATSON. Why not?

Chairman WAXMAN. The gentlelady’s time has expired.

Mr. PRINCE. The tyranny of shortage of time and distance. I

mean you can’t have an anti-air missile guy also be doing PSD missions and knowing how to be an aviation mechanic. It is too broad

of a base of skill requirement.

Ms. WATSON. We need more people.

Chairman WAXMAN. Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman.

Mr. RYAN. Mr. Chairman, may I have 1 minute?

Chairman WAXMAN. Thank you.

Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman.

Boy, there are so many inaccuracies, so little time. Perhaps let’s

start with something from the gentlelady from Hollywood. Isn’t it

true that, in fact, the military’s mission has historically not been

to guard either VIPs or the State Department as a whole?

Mr. PRINCE. Correct, yes, sir.

Mr. ISSA. Isn’t it true that, in fact, your organization works

under the regional security officer for Baghdad?

Mr. PRINCE. Yes, sir.

Mr. ISSA. Isn’t it true that contractors have been used directly

and indirectly, in other words, non-Federal employees in places

Beirut, Afghanistan, Bosnia, under the Clinton administration, routinely?

Isn’t there a historic time in which we used non-career RSOs or

foreign service officers for these jobs?

Mr. PRINCE. Since the founding of the republic.

Mr. ISSA. OK, so, we are not talking about the military here at

all including, with all due respect, to Secretary Gates. Somebody,

if the State Department recruited for the positions you are presently providing, they would be in all likelihood recruiting either

current or prior military, wouldn’t they?

Mr. PRINCE. Yes, sir.

Mr. ISSA. Is it reasonable for the State Department to own attack

helicopters or Bell helicopters that are weaponized?

Mr. PRINCE. Well, that is up to them, and our helicopters aren’t

weaponized.

Mr. ISSA. Let’s look at it another way. Outside of the two theaters, Afghanistan and Iraq, do you know of any place in which the

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State Department owns or directly controls weapons, gunships, if

you will, to protect convoys?

Mr. PRINCE. They do some crop eradication, some cocaine eradication work in Colombia. That is the only place I know.

Mr. ISSA. OK. So this is an unusual mission and one that begs

for not creating a career position for foreign service helicopter pilot.

There would only be about two or three places they would ever be,

isn’t that true?

Mr. PRINCE. Well, actually, those are all flown by contractors as

well, sir, down in Colombia.

Mr. ISSA. I am very well aware of that, and that is the point, I

guess. We are having a hearing that is supposed to not be about

your company and supposed to not be about one incident on September 16th. It is supposed to be about cost effectiveness of contractors, isn’t it?

Mr. PRINCE. Yes, sir.

Mr. ISSA. I wish we were bringing in facts and figures about let’s

say $600 billion of DOD contracts or DOD costs into one million

soldiers so that we could go, well, isn’t that about $600,000 for

every soldier?

Isn’t, in fact, the cost of the Department of Defense, the military

far greater than what we pay our men and women in uniform at

the time that they are in combat?

Mr. PRINCE. I don’t know what those numbers are, sir, but that

would be a great, fully burdened cost study that Congress could

sponsor. They don’t have to do the whole thing, just take some key

nodes and really study it.

Mr. ISSA. Well, and hopefully, we will. Hopefully, we will get to

serious discussion on these issues because I think looking at the

costs-benefits should always be done. For permanent requirements,

I don’t want to use contractors if, in fact, Federal employees would

be more appropriate.

I will mention one thing. If you are feeling a little pressure

today, if it is a little tough, just be glad you don’t make a diabetes

drug.

Mr. PRINCE. To where, sir?

Mr. ISSA. Be glad you don’t make a diabetes drug. Compared to

what we did to the Avandia makers, GlaxoSmithKline, you are getting off easy. Trust me. They had their product destroyed by juryrigged testimony and studies that were essentially co-opted in advance.

But let’s just go to one area that I think hasn’t been discussed

and others might not discuss it. Is your sister’s name, Betsy

DeVos?

Mr. PRINCE. DeVos.

Mr. ISSA. Yes. Is that your sister?

Mr. PRINCE. It is.

Mr. ISSA. Was she a former Michigan Republican Party Chairwoman?

Mr. PRINCE. Yes, she was.

Mr. ISSA. Was she a pioneer for Bush?

Mr. PRINCE. I don’t know. Could be.

Mr. ISSA. Was she a large contributor to President Bush?

Mr. PRINCE. They probably were.

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Mr. ISSA. And raised a lot of money for President Bush?

Mr. PRINCE. Could be.

Mr. ISSA. Went to the Republican conventions in 2000 and 2004?

Mr. PRINCE. I would imagine they did, yes.

Mr. ISSA. Isn’t it true that your family, at least that part of the

family, are very well known Republicans?

Mr. PRINCE. Yes.

Mr. ISSA. Wouldn’t it be fair to say that your company is easily

identified as a Republican-leaning company and, in fact, the

Amway Co. somewhat so because of family members there?

You don’t have to speculate overly, but isn’t that generally something you understand?

Mr. PRINCE. Blackwater is not a partisan company. We haven’t

done any, you know. We execute the mission given us, whether it

is training Navy Sailors or protecting State Department personnel.

Yes, I have given individual political contributions. I have done

that since college, and I did it when I was an active duty member

of the Armed Services, and I will probably continue doing that forward. I don’t give that. I didn’t give up that right when I became

a defense contractor.

Mr. ISSA. Right.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. ISSA. Mr. Chairman, just to finish like we did on the other

side of the aisle, I think you are exactly right, that in fact being

identified as partisan Republican, in fact your company appears to

have done what all companies do which is in fact to operate, to do

the job they are doing in a non-partisan way.

I would hope that this committee and the public take note that

labeling some company as Republican-oriented because of family

members is inappropriate, and I would hope that we not do it

again.

I yield back.

Chairman WAXMAN. Well, the only one who has done it is you.

[Laughter.]

Mr. ISSA. Mr. Chairman, I think it has been made. I think the

report made it very clear.

Chairman WAXMAN. Maybe that is why all the Republicans are

defending the company.

Well, Mr. Yarmuth, it is your time.

Mr. YARMUTH. Thank you, Mr. Chairman.

Mr. Prince, welcome. Thank you for your testimony.

Mr. PRINCE. Thank you, sir.

Mr. YARMUTH. I want to focus on the whole issue of cost and

profitability, and I want to clarify something. You talked at one

point about the fact that what you are essentially doing is bidding

for people who would otherwise be able to make as much money

as you would be paying them in the private sector.

First of all, some of that defies imagination because we are talking about essentially $400,000 to $500,000 worth of cost per individual per year to the Government which would put that individual

or that job category in the highest 1 percent of income earners in

the country.

So my question to you would be, and this is not in any way to

impugn or to minimize the value of Navy SEALs, but outside of a

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military setting, where could a Navy SEAL, for those talents, make

$400,000 to $500,000 if it weren’t for a Government contract?

Mr. PRINCE. I don’t know of any of our people that have made $400,000 to $500,000 working as a contractor. They are not getting

paid that much.

They get paid for every day they are in the hot zone. So it is very

much like a professional mariner’s existence. They go to sea. They

get paid every day they are in the hot zone. They day they leave,

their pay goes to zero. Average pay, hypothetically, around $500 a day. We don’t pay the $1,000 a day. That is a huge misperception. It is a flat-out

error in the media.

So if you take $15,000 a month and they work for 6 months, it is $90,000.

Mr. YARMUTH. But that is not the cost of that job to the American taxpayer.

Mr. PRINCE. Yes, sir, but they are not showing up at the job

naked. They need uniforms, equipment, body armor, boots, everything you wear from head to toe, their training, their travel, their

insurance, sometimes their food.

I mean there are very, very sophisticated price models that we

bid competitively for, hundreds and hundreds of line items. Believe

me, our folks earn a lot of electrons putting those price models together because you really got to know what you are doing on the

front end. But, again, it is a competitively bid product.

Mr. YARMUTH. Well, I appreciate that, and I want to pursue that

a second, but I do have in front of me an invoice from Blackwater

to the Department of State in which one of the items is invoice

quantity, 3,450 units each at a cost of $1,221.62. That is your invoice.

Mr. PRINCE. I am not sure what that invoice is. Could I see that,

sir?

Mr. YARMUTH. I would be happy to submit that for the record.

We dealt several months ago with a situation in which I don’t believe your company was a subcontractor for the State Department

or a contractor. You were a subcontractor. I am talking about the

incident in Fallujah where four of your employees were ambushed

and killed, and we had testimony from two of their wives and two

of their mothers several months ago.

In the course of that testimony, it was we were told that they had actually contracted, each of them, at a rate of $600 a day. That

is what they were to be paid. By the time it got to the American

taxpayer, it was around $1,100 a day. You were the third subcontractor under a contract given to KBR, as I recall, Halliburton,

then a Halliburton subsidiary. And we asked the question of all of

those subcontractors, did anybody add value up the ladder for that

additional $500 based on—and we asked, did they provide any special equipment, any special services, whatever. And the answer was

no.

So in that case, that is not your profit, but it appeared to us that

by and large that additional $500 that the American taxpayer paid

for that one person was largely profit to three different corporations. Now, can you shed any light on that situation? And I don’t

believe, that was, I think, a Defense Department contract and KBR

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was just delivering supplies to troops and you were guarding the

convoys.

Mr. PRINCE. That could easily be. I am not completely familiar

with the contracting and subcontracting arrangement that you are

speaking of. But I can tell you, with our work with the State Department, we are direct to the State Department and there is no

other intermediary adding cost or not adding value.

Mr. YARMUTH. One other question I want to ask. You made the

comparison, again, about that we have to bid for these people. But

isn’t there a significant distinction, I understand if we, the military

trains a pilot and then the pilot goes out and is bid for by commercial aircraft and so forth, that is the private sector bidding. But in

this situation, the American taxpayers are bidding against themselves. Because we trained Navy SEALs, Navy SEALs then go into

your employ, then the Navy has to bid, as I understand, in one report, $100,000 to get them back.

But we are bidding against ourselves, aren’t we? We are not bidding against another external competitor.

Mr. PRINCE. The nature of the demand of this, especially a group

of Blackwater, even before 9/11, it grew after the Cole was blown

up, that Navy ship. Now, in a post-9/11 world, you have a lot of

different demands for those kinds of skill sets that are in much

higher demand than they were in the late 1990’s. So that is the

changing nature of the market.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. McHenry. Oh, I am sorry. Mr. Westmoreland.

Mr. WESTMORELAND. Thank you, Mr. Chairman.

Just to clarify a little bit about who is calling who a Republican

company, I want to read from a December 13, 2006 letter from Callahan and Blaine to Ms. Pelosi, Mr. Waxman, Senator Dorgan, Senator Reid, Representative Chris Van Hollen: ‘‘Nonetheless, as

American citizens, we hereby petition to you to initiate support and

continue the congressional investigations into war profiteering and

specifically Blackwater’s conduct. Now that there has been a shift

in power in Congress, we are hopeful that your investigation, as

well as the investigations by Senator Dorgan and Senator Waxman, will be taken seriously by these extremely Republican companies such as Blackwater, who have been uncooperative to date and

that these investigations will be fruitful and meaningful.’’

And Mr. Prince, you may recognize that name, because I believe

they also are the attorneys for some people who are suing you.

Mr. Prince, first of all, let me give you a little background, probably, as to why you are here. There is a party in Congress that

does not like companies who show a profit. If you are wealthy, they

figure you should have paid more taxes or that you are a crooked

businessman. They do not understand someone who is an entrepreneur and offers a valuable service that is above its competitors

and that is based at a competitive price.

They want to fight a war with no casualties. They exploit our

children, whether it is with a plan that will socialize medicine in

this country or the horrible situation when innocent children are

victims of an act of war. They often have hearings such as this to

bias lawsuits that their crony lawyer friends may be handling.

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There is no cost too high for them for citizens to pay, citizens of

this country, whether it is the price of personal integrity or more

of their wealth, as long as it moves forward with the ultimate goal

of distribution of wealth of the successful for the takers of this

world.

They love to have their cake and eat it too, though. For instance,

they think the Iraqi government is corrupt and inept, but yet they

question you about taking one of your former employees out of the

country with the government’s permission. Another example, they

say the military should be doing your job, yet they don’t want additional troops sent to the theater.

One more example, Mr. Prince, is they complain about what our

military personnel make, and then they complain about what you

pay the same people that they complained about making so little.

So you can see that there is some confusion.

I also want to point out to you that 9 of the 22 Members on this

panel that voted voted that they agreed with MoveOn.org’s attack

on General Petraeus.

Let me ask you, Mr. Prince, well, let me say, some of

Blackwater’s critics have stated that the firing of personnel has

been surprisingly frequent. Have you or your managers ever fired

an employee for doing a good job?

Mr. PRINCE. Not that I know of.

Mr. WESTMORELAND. I don’t think anybody does, do they? So if

one of your employees was doing a bad job or not meeting your criteria, then those were some of the people that you got rid of, right?

Mr. PRINCE. If they don’t hold to the standard, they have one decision to make: window or aisle.

Mr. WESTMORELAND. And Mr. Prince, what kinds of professional

backgrounds do most of your security personnel have?

Mr. PRINCE. All of our personnel working on the WPPS-type contract come from the U.S. military or law enforcement community.

They have a number of years of experience doing that kind of work,

ranging from 5, 8 years up to 20 or 30 years of experience. They

are discharged honorably, most of them are decorated. They have

gotten out of the military to choose to take another career path. So

we give them the ability to use those skills back again working for

the U.S. Government.

And let me just say, we are not a partisan organization. That is

not on the interview form when you come to work for Blackwater,

what party you affiliate with at all. We affiliate with America. And

the idea that people call us mercenaries, we have Americans working for America, protecting Americans.

Mr. WESTMORELAND. And I think you do a very good job.

Mr. PRINCE. And the Oxford Dictionary defines a mercenary as

a professional soldier working for a foreign government. And Americans working for America is not it. Yet we have a handful of, we

call them third country national folks, folks from Latin America,

they guard some gates and they guard some camps. They don’t

leave that area, they are static guards. Our PSD guys are Americans working for America.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. Braley.

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Mr. BRALEY. Thank you, Mr. Chairman. Mr. Prince, my best

friend married Mary Lubbers, whose father and grandfather were

the presidents at Hope College.

Mr. PRINCE. Small world.

Mr. BRALEY. So I want to start by asking you about a statement

you made on page 3 of your written statement that you shared

with the committee, ‘‘The company and its personnel are already

accountable under and subject to numerous statutes, treaties and

regulations of the United States.’’ And then you went on and attached to your statement a list of existing laws, regulations and

treaties that apply to contractors and their personnel. Is that the

document that I am holding up that you attached?

Mr. PRINCE. Yes, sir.

Mr. BRALEY. Is it your testimony today, under oath, that all

Blackwater employees working in Iraq and Afghanistan are subject

to the Uniform Code of Military Justice, the Military Extra-Territorial Jurisdiction Act and the War Crimes Act?

Mr. PRINCE. It is my understanding that is the case, yes, sir.

Mr. BRALEY. All right, well, let’s look at this document, I want

to ask you about it. This document, the Uniform Code of Military

Justice, applies in the time of declared war. You would agree that

there has been no declared war in Iraq or Afghanistan?

Mr. PRINCE. No, but I believe it has been amended to include

contingency operations.

Mr. BRALEY. Is it your understanding that a contingency operation would apply to what is going on in Iraq and Afghanistan?

Mr. PRINCE. I am not a lawyer, but my layman’s understanding

is yes.

Mr. BRALEY. All right. And then it says to persons serving with

or accompanying an armed force in the field. Do you see that?

Mr. PRINCE. I don’t have it in front of me, but you are reading

from it.

Mr. BRALEY. Well, I am just reading from the document that you

provided to us.

Mr. PRINCE. Right.

Mr. BRALEY. If that is what the Uniform Code of Military Justice

provides, you would agree that based upon your own description of

the activities of your company, there are times when your employees are not serving with or accompanying armed forces in the field.

Mr. PRINCE. There are times when U.S. military units are actually embedded in our motorcades.

Mr. BRALEY. But to answer my question, there are times when

your employees are not serving with or accompanying armed forces

in the field, isn’t that correct?

Mr. PRINCE. Sir, I am not a lawyer. So I am not going to give

you that level of detail. If you want a clear written statement as

to the accompanying opinion, I am sure the State Department can

answer what their opinion is on that. But we have looked at it and

we feel comfortable that our guys could be brought under investigation with those ruling legal authorities over their heads.

Mr. BRALEY. Then let’s look at the Military Extra-Territorial Jurisdiction Act, Section 3261, Criminal Offenses Committed by Certain Members of the Armed Forces and by Persons Employed by or

Accompanied by the Armed Forces Outside the United States. You

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would agree that there are circumstances where your employees

would not meet that definition based upon their service in Iraq and

Afghanistan.

Mr. PRINCE. I believe that was changed yet again to include any

U.S.-funded contract.

Mr. BRALEY. Well, that is the definition that applies to U.S.-funded contracts from the statute.

Mr. PRINCE. Again, I am not a lawyer, sir. I am sorry.

Mr. BRALEY. Then let’s look at the War Crimes Act of 1996,

which applies if the perpetrator is a U.S. national or a member of

U.S. armed forces. You would agree based upon your testimony

today that there would be circumstances when some of your employees would not meet the definition of perpetrator to be covered

by the War Crimes Act.

Mr. PRINCE. Again, I am not sure, sir.

Mr. BRALEY. Well, you testified that you hire some third country

nationals. They would not be U.S. nationals, would they?

Mr. PRINCE. That is correct.

Mr. BRALEY. And they would not be members of the U.S. armed

forces.

Mr. PRINCE. But they are serving in a U.S. DOD contingency operation.

Mr. BRALEY. Then let’s talk about these payments that have

been made as a result of deaths that were related to the conduct

of Blackwater employees. One of the payments that we have been

provided information about was this $15,000 payment to the

guard’s family who was guarding Iraqi Vice President Mahdi. Are

you familiar with that payment?

Mr. PRINCE. Yes, sir.

Mr. BRALEY. Did you have any input into the determination of

the amount of that payment?

Mr. PRINCE. I discussed it with some State Department officials,

yes.

Mr. BRALEY. Did you feel that it was a satisfactory level of compensation for the loss of that individual?

Mr. PRINCE. I believe the cash that was paid was actually $20,000, not $15,000.

Mr. BRALEY. All right, $15,000 or $20,000. Based on the information that we have been provided, one of the things we know is that

Blackwater charges the Government $1,222 a day for the services

of some of its employees, is that correct?

Mr. PRINCE. I believe that number is lower. The chart that we

provided the committee shows a blended average significantly less

than that.

Mr. BRALEY. Assuming that figure is correct, if you take someone

your age in the United States and look at the U.S. life table, you

will find that somebody your age in this country has a life expectancy of 40 years. So if you were to take that rate of $1,222 a day,

multiply it times 365 days a year, multiply it by a 40 year life expectancy, you would get a total lifetime earnings payout of

$17,841,200. You would agree with me that pales in comparison to

a payment of either $15,000 or $20,000.

Chairman WAXMAN. The gentleman’s time has expired. You can

answer the question.

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Mr. PRINCE. Your calculations there don’t make any sense to me, because that charge, that $1,200 charge that you are talking about,

claiming that we charge the Government, that includes aviation

support. Some of those helicopters that got shot down, that comes

out of our hide. Gear, training, travel, all the rest. So I am not

quite sure how that math works out. But I would be happy to get

back to you if you have any written questions.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. McHenry.

Mr. MCHENRY. Thank you, Mr. Chairman.

I want to go through a few facts and make sure we have this on

the record. The gentleman is discussing cost, and I want to sort of

understand all the facts before we get to a conclusion here. You

were previously in the Navy SEALs. How long were you in the

military, sir?

Mr. PRINCE. In 1992 through the end of 1996.

Mr. MCHENRY. What is the average time, having been in the

SEALs, perhaps you would know this, what is the average time a

special forces operator is in the service?

Mr. PRINCE. Five or 6 years, up to 20. It really varies.

Mr. MCHENRY. But based on your experience?

Mr. PRINCE. Guys really make a decision point at about 12 years

whether they are going to stay for a career or get out. So I would

say 10 to 12 years.

Mr. MCHENRY. All right. Let’s say an operator retires from the

military, at which point a Navy SEAL, average Navy SEAL is

doing a much more, a much different operation, they are dealing

with explosives rather than defensive caravans and convoys. What

do you do with those individuals? Do you take Navy SEALs and

put them right in there, onto the streets? Is there training for

Blackwater?

Mr. PRINCE. The personnel that deploy for us, they go through,

obviously we have the resumes, we do a criminal background check

on them. When they have been accepted, when the resume has

been accepted by the customer, they come in for training, they go

through another 164 hours of training, embedding at Blackwater,

tactics, techniques, procedures, driving, firearms, defensive tactics.

They go through a full psychological evaluation, medical/dental

exam, physical tests, shooting tests. There is a very, very rigorous

pre-deployment program they all have to do.

Mr. BRALEY. A significant amount of expense?

Mr. PRINCE. Yes. And that is all baked into that daily cost.

Mr. BRALEY. Just for the record, when was Blackwater formed?

Mr. PRINCE. In 1997.

Mr. BRALEY. At what point did you receive your first Government

contract?

Mr. PRINCE. For the first number of years, our customers were

individual SEAL platoons or a Marine recon platoon or an A team.

It was down to the individual team sergeant or warrant officer paying with a credit card. Our first big Government contract that we

won competitively was the Navy force protection contract that they

started off after the Cole was blown up. We had a $11⁄2 billion ship

blown up by two guys in a Zodiac.

Mr. BRALEY. What year was that?

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Mr. PRINCE. We started that in 2001.

Mr. BRALEY. OK. Who is your client in Iraq?

Mr. PRINCE. Department of State.

Mr. BRALEY. OK. How many competitors do you have within this

contract?

Mr. PRINCE. There are two others. There was a big competition

before then to be down-selected for the WPPS contract.

Mr. BRALEY. How is that contract awarded?

Mr. PRINCE. It is awarded competitively. You go through an enormous proposal process, they come and inspect your facilities, your

training standards, the resumes of each of your personnel. They

even have to accept and inspect the resumes of the instructors you

are going to have. And they come and audit the program on an almost weekly basis.

Mr. BRALEY. So let’s go forward. There are roughly 1,000

Blackwater contractors, operators, these former veterans that you

now have trained that are out securing embassy staff and a number of civilians in Iraq. Let’s say it is 1,000, just for our purposes

here. Roughly how much administrative staff do you have associated with those 1,000 individuals?

Mr. PRINCE. We run that whole program, instructors, program

management people, that sort of thing, with less than 50 people.

Mr. BRALEY. With less than 50 people?

Mr. PRINCE. Yes, sir.

Mr. BRALEY. So roughly it is 1,000 to 50, is the ratio from operators in the field to administrative staff?

Mr. PRINCE. Yes, sir.

Mr. BRALEY. All right. Now, there is this notion, we are not the

Armed Services Committee here, but there is this notion of tooth

to tail ratio, which means how many operators do you have in the

field and the expense of them, how much administration function

do you have. In active duty military, based on your recollection,

what is that rough estimate?

Mr. PRINCE. What is the DOD’s tooth to tail ratio?

Mr. BRALEY. Yes.

Mr. PRINCE. I have seen as high as 8 to 1 or even 12 to 1. One

tooth, 8 to 10, 12 tails.

Mr. BRALEY. So one individual in the field, 12 individuals outside

of operating. So the ratio, when these people on the committee talk

about the expense of having that one operator in the field, it is far

less for an individual contractor, when you are a private security

contractor like you are in Iraq, it is far more efficient for the total

program to have a contractor, because their tooth to tail ratio is far

better than what it is in the active duty military.

Therefore, the cost of that one operator in the field for all the

support services they have associated with them is far less for a

company like Blackwater than it is for the active duty military.

And can you, and my time is up, but if you can actually discuss

this with the committee and maybe in a minute or so explain the

expense of the overall operations.

Chairman WAXMAN. The gentleman’s time is up, but Mr. Prince,

you may go ahead and answer.

Mr. PRINCE. I would just encourage the committee, and would be

happy to make some suggestions on areas where you could do a

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true activity-based cost study, what does it cost the U.S. Government to do X, Y, Z functions in the field, and do an accurate drilldown. Because unless you know what something costs, everything

before that or after that is hyperbole.

Mr. BRALEY. Is it your contention that it is far cheaper——

Chairman WAXMAN. The gentleman’s time really has expired.

Mr. BRALEY [continuing]. For you to operate in the field? I just

want him to answer this question, if I could, Mr. Chairman. Is it

your contention that it is much cheaper to the taxpayers for your

activities as a contractor with the Department of State than it

would be for active duty military to do the very same task because

of that tooth to tail ratio?

Mr. PRINCE. Yes, and because it is tough for the military to be

all things to all people all the time. If they are going to have air

defense artillerymen, all the other conventional warfare specifications they have to have, it is tough for them to do all things all

the time.

Chairman WAXMAN. If you have some kind of document that

backs up your statement, we certainly would like to see it, and we

would like to ask you to provide it to our committee.

Mr. PRINCE. Yes, sir.

Chairman WAXMAN. Thank you.

Ms. McCollum.

Ms. MCCOLLUM OF MINNESOTA. Thank you, Mr. Chair. Mr.

McHenry and I had the opportunity to go to Afghanistan together,

where in fact the military did provide, when we went out on visits,

did provide our security. I also had the opportunity of being in

Iraq, where we had a private security detail take us from point to

point. And I just, there has been some discussion about who is

more caring about getting on the ground and seeing what is going

on, and I just wanted people to know for the record here that I

have been both places and under both circumstances.

I would like to followup a little more on what Mr. Braley was

talking about. You provided this chart on contractor accountability.

And you have made the statement that the DOD can bring charges

against your contractors. Can the Department of State bring

charges against your contractors?

Mr. PRINCE. I believe that would be done by the Justice Department. They do the prosecuting of those laws.

Ms. MCCOLLUM OF MINNESOTA. Under the CPA Order 17, contractors have immunity from the Iraqi legal system, is that correct?

Mr. PRINCE. That is my understanding, yes.

Ms. MCCOLLUM OF MINNESOTA. So if a Blackwater contractor

would commit, as what an investigation might determine would be

murder, on their own time, it was a Christmas Eve holiday that

you were describing, or Christmas holiday, do you believe the Iraqi

government would not be able to charge that individual with a

crime, even on their own time?

Mr. PRINCE. That is my understanding, yes.

Ms. MCCOLLUM OF MINNESOTA. Do you believe that immunity

should be repealed, if something happens when someone is ‘‘off

duty’’ and an Iraqi is murdered?

Mr. PRINCE. I believe U.S. laws should be enforced, and you can

have that justice system back here in America work.

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Ms. MCCOLLUM OF MINNESOTA. So you believe that the immunity under CPA Order 17 should stand?

Mr. PRINCE. I believe so. I am not sure any foreigner would get

a fair trial in Iraq right now. I think they would at least get a fair

trial here in the United States.

Ms. MCCOLLUM OF MINNESOTA. Your charts indicate that contractors are accountable under the Uniform Code of Military Justice. Your contractors work for the Department of State. Is the Department of State accountable under the Uniform Code of Military

Justice?

Mr. PRINCE. I will not be presumptuous to answer for the Department of State, ma’am.

Ms. MCCOLLUM OF MINNESOTA. Well, you have provided this.

You told Mr. Braley that all your employees are under this chart.

So then you are saying that——

Mr. PRINCE. Well, ultimately that is for the Justice Department

to decide which avenue of jurisdiction they have.

Ms. MCCOLLUM OF MINNESOTA. So this is just what you feel that

people might be held under accountability with your contract? This

is just a feeling you have? You don’t know any of that for a fact,

do you?

Mr. PRINCE. I have legal opinions that I respect, put that together and they gave their opinions that those were laws that

State Department contractors, DOD contractors, contractors for the

U.S. Government could be held accountable under.

Ms. MCCOLLUM OF MINNESOTA. So whether it is a feeling or an

opinion, you cannot state for a fact, for a fact, that any of your contractors that have a State Department contract can be held accountable under the Uniform Code of Military Justice?

Mr. PRINCE. That is correct, ma’am, because that is for the Justice Department to decide.

Ms. MCCOLLUM OF MINNESOTA. I think that is important to clear

that up. Do you operate in a military capacity or a civilian capacity?

Mr. PRINCE. Civilian capacity.

Ms. MCCOLLUM OF MINNESOTA. So now you are saying that

civilians——

Mr. PRINCE. Our men are not serving members of the U.S. military.

Ms. MCCOLLUM OF MINNESOTA. So you are saying that civilians

can be held accountable to the Uniform Code of Military Justice in

your opinion?

Mr. PRINCE. And I believe that is why they extended that, not

just to wars that were declared but also to contingency operations

as well.

Ms. MCCOLLUM OF MINNESOTA. To your knowledge, have there

been any military courts or civilian courts that have held any of

the contractors who have been charged or been accused of a crime

in Iraq?

Mr. PRINCE. It is my understanding there is a conviction of a contractor that was working for the CIA that was convicted in North

Carolina for actions in Afghanistan.

Chairman WAXMAN. The gentlelady’s time is expired.

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Ms. MCCOLLUM OF MINNESOTA. Thank you, Mr. Chairman.

Thank you for answering my questions. I appreciate it.

Chairman WAXMAN. Mr. Jordan.

Mr. JORDAN. Thank you, Mr. Chairman.

Mr. Prince, I too want to thank you for your service to our country and for the good work that your company has been doing in

Iraq and Afghanistan.

I just want to pick up on a couple of things that the Congressman from North Carolina had talked about, just some general

questions. I know you have been sitting there for 3 hours. Just a

few questions, then I am going to yield some time to the gentleman

from California.

How many employees, you mentioned before a little bit earlier,

1,000 in the field, 50 administrative, but does that represent the

entire work force at Blackwater?

Mr. PRINCE. We have about 550 full-time folks in the United

States, 1,000, 1,100 or so in Iraq, and then hundreds more in little

pockets around the world. The next greatest concentration would

obviously be Afghanistan, there are about 300, 400 there.

Mr. JORDAN. So a couple of thousand?

Mr. PRINCE. More or less, yes, sir.

Mr. JORDAN. And you mentioned the extensive training, some of

the special operations individuals who come to work for you after

they leave military service and the training they undergo, I believe

you said earlier that there was a study done that shows there is

no higher exit rate, or quicker exit rate, we will say, because of

your company versus what typically happens. Is that true?

Mr. PRINCE. Right. It was a GAO study and it was not just directed at us, it was directed at the private security industry.

Mr. JORDAN. And real quickly, in your testimony, your opening

paragraph, you talk about you provide training to America’s military and law enforcement communities who then risk their lives to

protect Americans in harm’s way overseas. So are there several

types of contracts that your company does? You do training contract with the Government, protective contracts, or do you do one

contract per year? Tell me how those work.

Mr. PRINCE. We have a number of different contracts. We never

started this operation to be a security provider. We started as a

training facility. The SEAL teams, special forces, Marine recon,

SWAT teams, those were our customers for the first few years. The

Navy came after the Cole was blown up. We have trained well over

100,000 sailors since then on how to protect their ships.

Through one of our affiliates, we do aviation support in Afghanistan.

Mr. JORDAN. Mr. Prince, how many contracts would you have

right now with the Federal Government? Any idea?

Mr. PRINCE. More than 50.

Mr. JORDAN. OK.

Mr. PRINCE. Some are very small, some are very big.

Mr. JORDAN. Again, I want to thank you for your service. And

Mr. Chairman, if I could yield to the gentleman from California.

Mr. ISSA. I thank the gentleman.

I just wanted to point something out, Mr. Prince. Did you see the

memorandum dated October 1st, that is yesterday, that is entitled

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Additional Information about Blackwater USA? It comes out of Mr.

Waxman’s office, it is 15 pages.

Mr. PRINCE. I did see that, yes.

Mr. ISSA. OK. Did you note that on page 5, Mr. Waxman and/

or his staff said the following: ‘‘Blackwater is owned by Erik Prince.

Mr. Prince is a former Navy SEAL who owns the company through

a holding company.’’ After that, it begins to talk about the White

House, your father, your father-in-law, your sister, etc., and basically talks about everything I asked you, the Michigan Republican

party, the donations.

So Mr. Chairman, hopefully you will appreciate that it was your

staff that created everything that I brought up, and you put it out

in writing 1 day before this hearing. My question to you, Mr.

Prince, is have you ever seen a bio about your life that starts off,

you were a Navy SEAL and then goes on to everything your sister

did on behalf of the Michigan party and your Republican credentials? Is this the first time you have seen a bio like this?

Mr. PRINCE. I love my sister very much, but it is not often our

bios get printed together. [Laughter.]

Mr. ISSA. And you know, it is interesting, because I am noticing

that for this committee, a donor search done on September 29th,

at opensecrets.org, was done to find out how much money you gave

to who. Did you know that?

Mr. PRINCE. I did not know that.

Mr. ISSA. Do you think that is really germane to today, or do you

think that attempts to paint you as a Republican supporter?

Mr. PRINCE. I don’t think it is germane to today. I think we do

good work and I am mighty proud of the folks we have doing the

work.

Mr. ISSA. OK, I heard a rumor that your company or someone in

your company had given to the Green Party. Do you know about

that?

Mr. PRINCE. It could have been.

Mr. ISSA. OK. I just wanted to know that there were people on

both the far left and the far right relative to the chairman who

may have benefited by your company.

But Mr. Chairman, I would ask that page 5 of your memo be considered as what I called it, an attempt to pain this gentleman and

his company through Republican eyes to a Democrat base for political purposes. And I stand by my statement, Mr. Chairman, and

yield back to the gentleman from Ohio.

Mr. DAVIS OF VIRGINIA. Could I just ask one clarification, Mr.

Chairman?

Chairman WAXMAN. Yes.

Mr. DAVIS OF VIRGINIA. Your first contract, Mr. Prince, Government contract, was in 1997, wasn’t it?

Mr. PRINCE. Yes. Well, no, our first customer, we started the

business in 1997, first customer was January 1998.

Mr. DAVIS OF VIRGINIA. First Federal customer——

Mr. PRINCE. That was the SEAL team.

Mr. DAVIS OF VIRGINIA [continuing]. That was under the Clinton

administration?

Mr. PRINCE. Yes, sir.

Mr. DAVIS OF VIRGINIA. Thank you.

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Chairman WAXMAN. The gentleman’s time has expired.

I would like to now recognize Mr. Cooper.

Mr. COOPER. Thank you, Mr. Chairman.

Mr. Prince, in the charter or by-laws of your corporation, either

the holding company or Blackwater, does it say explicitly that it

will only work for the United States of America or its entities?

Mr. PRINCE. No, it doesn’t. If I could clarify, anything we do for

any foreign government, any training, of anything from law enforcement training to any kind of aviation training, tactical flying,

any of that stuff, all of that is licensed back through the State Department, another part of the State Department.

Mr. COOPER. But you are the owner of the company, the CEO.

If limitations like this are not in the charter and by-laws, isn’t

there a risk that should something happen to you that different

management, in order to maximize profits, might seek contracts

from any number of other foreign countries, like of Vladmir Putin

offered a lot of money, why would you want to turn that down as

a business entity?

Mr. PRINCE. Because we would be violating Federal law and the

whole place could be shut down very, very quickly.

Mr. COOPER. But you are assuming a State Department license

would apply.

Mr. PRINCE. Oh, it does.

Mr. COOPER. You are a regular, private company. You can——

Mr. PRINCE. No, sir, I am sorry. We have to have a license to

train——

Mr. COOPER. I am not talking about training other people’s private police. Say you took some of your former people who were

former Navy SEALs, special forces, whatever, and they were working for hire, what prevents you in your current company charter or

by-laws, prevents you from hiring out those people to foreign governments?

Mr. PRINCE. U.S. Federal law does.

Mr. COOPER. Which law?

Mr. PRINCE. Defense Trade Controls Act. Any training, any security services, any export of any weapons, any equipment you would

use to do that job requires a license. And on top of that, this idea

that we have this private army in the wings is just not accurate.

The people we employ are former U.S. military and law enforcement people, people who have sworn the oath to support and defend the Constitution against all enemies, foreign and domestic.

They bleed red, white and blue. So the idea that they are going to

suddenly switch after having served honorably for the U.S. military

and go play for the other team, it is not likely.

Mr. COOPER. But these are independent contractors or employees, they are supposed to do what they are told. And is your omission of this key bit of information from the charter or by-laws only

due to the fact that it would be redundant? If it is assumed, why

don’t you go ahead and put it in the charter and by-laws that these

people, this company will only work for the United States of America and its entities? Why wouldn’t that be a nice addition to the

charter and by-laws?

Mr. PRINCE. That wouldn’t make any sense, because we have

NATO allies helping in Afghanistan, helping the U.S. mission

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there. And there might be opportunities for us to support, provide

them with training or aviation support or logistics or construction,

a lot of other things that allies need, especially as the United

States is trying to build capacity around the world. There are a lot

of countries that need help building out their police departments,

giving them more counter-terrorism capability.

Mr. COOPER. Twenty-six NATO allies. So you could work for any

of them?

Mr. PRINCE. Twenty-six NATO allies, but more and more, the

United States is doing FID missions, foreign internal defense. We

have done a number of successful programs for them working with

the U.S. Government, where they hire us, we go in and we build

that capacity and train them and provide the equipment, all of

which is licensed by the State Department. When we apply for that

license, it goes to the State Department and they farm it out to the

relevant part of the DOD to control and authorize that licensing.

What is the curriculum going to be, what tactics, even down to

which individual in which country is going to be trained, so they

can do a check on them. So that is all controlled by the U.S. Government already, sir.

Mr. COOPER. On your Web site, it says that you were contracted

to enhance the Azerbaijan Naval Sea Commandos Maritime Interdiction capability. Is Azerbaijan a member of NATO?

Mr. PRINCE. No, but that was paid for by the U.S. Government.

Mr. COOPER. Well, let me ask another question.

Mr. PRINCE. It was part of their regional engagement policy. I

don’t make that policy, sir.

Mr. COOPER. Wouldn’t it be nice to put in your charter and bylaws that you only work for United States or U.S.-approved entities? Why would that be harmful to your company?

Mr. PRINCE. We would be happy to do that. But it is absolutely

redundant, because we can’t work for someone that is not U.S.-approved.

Mr. COOPER. Redundancy is a small objection to making sure

that you are a loyal U.S. company.

Let me ask another question. What if a large company inside the

United States of America wanted to hire your company for services,

say, to break a strike or for other purposes like that? Is that allowed under your charter and by-laws?

Mr. PRINCE. That is not something we have even explored.

Mr. COOPER. But it would be permissible under your current

company charter? It is a new line of business possibly?

Mr. PRINCE. No.

Mr. COOPER. It might be very profitable?

Mr. PRINCE. It is not something we are looking at, not part of

our strategic plan at all, sir.

Mr. COOPER. I know, but you are a mortal human being. Your

company would allow it, according to its current charter and bylaws?

Mr. PRINCE. Well, I have five boys I am raising, so one of them

perhaps will take over some day.

Mr. COOPER. Why not put it in the charter and by-laws? Thank

you, Mr. Chairman. I see that my time is expired.

Chairman WAXMAN. Mr. Cooper, your time is expired.

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Mr. Hodes.

Mr. HODES. Thank you, Mr. Chairman.

Mr. Prince, thank you for being with us today.

Mr. PRINCE. Thanks for having me sir. I am glad I could come

here and correct some facts.

Mr. HODES. There has been some discussion from the other side

of the aisle about whether or not these hearings are partisan. Do

you agree that it is not a partisan issue to examine whether or not

the use of private contractors, including Blackwater, is advantageous to American taxpayers?

Mr. PRINCE. It is certainly part of the Congress to make sure the

money is spent well that taxpayers pay.

Mr. HODES. And do you also agree that it is not a partisan issue

to inquire whether failures to hold Blackwater personnel accountable for misconduct undermine our efforts in Iraq?

Mr. PRINCE. It is a fair enough thing to look into.

Mr. HODES. Earlier today you were asked what action

Blackwater took to penalize an employee who while drunk, shot

and killed and Iraqi security guard for the Iraqi vice president on

Christmas Eve of 2006. Do you recall those questions?

Mr. PRINCE. Yes, sir.

Mr. HODES. And you responded that Blackwater fired and fined

the employee, but you are not sure of the amount of the fine. Do

you recall that?

Mr. PRINCE. Yes, sir.

Mr. HODES. Blackwater, at the committee’s request, provided the

committee an internal Blackwater e-mail that appears to reflect a

discussion of what Blackwater did to this employee. It is dated

Monday, January 8, 2007, approximately 2 weeks after the incident

in question. And it says, ‘‘Regarding termination, he has forfeited

the following compensation that he would have otherwise been authorized: return airfare, $1,630; completion bonus, $7,067; 4th of

July bonus, $3,000 and a Christmas bonus of $3,000.’’ Now, it appears to me that the so-called fine consisted of taking away the

contractor’s bonuses and making him pay his own way home. Is

that accurate?

Mr. PRINCE. And any forthcoming compensation that he had. I

don’t know when the guy’s contract would have ended, but yes, we

took away whatever else we could.

Mr. HODES. How long had he worked for your company?

Mr. PRINCE. I have no idea.

Mr. HODES. Do you know what he had been paid during the time

of his employment up to the time he shot and killed the Iraqi

guard?

Mr. PRINCE. I have no idea, sir.

Mr. HODES. Do you have any idea what your profit on that employee had been up until the time of this incident?

Mr. PRINCE. Probably in keeping with the 10, 101⁄2 percent indicated on our chart.

Mr. HODES. Would you have records that would show us what

you had paid him up until that time and from which we could find

out what profit you had made?

Mr. PRINCE. I am sure we could dig through that and find it, yes,

sir.

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Mr. HODES. And would you be willing to provide that to us?

Mr. PRINCE. I will get my people right on it.

Mr. HODES. I am asking for it now, so I would like to have that

sent. Thank you very much.

Chairman WAXMAN. Without objection, the document you used

for your questioning will be made part of the record.

Mr. HODES. Thank you.

[The information referred to follows:]

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Mr. HODES. Mr. Prince, you also said that Blackwater is extremely scrupulous in enforcing your standards. And you have told

us that you did basically all you could to this employee and that

the rest was up to the Department of Justice. What you did was

you took away his bonuses, July 4th, completion bonus, Christmas

bonus, he paid his own way home and he couldn’t work for you any

more.

Mr. PRINCE. And made sure his clearance was canceled as well.

Mr. HODES. Is that your idea, Mr. Prince, of corporate accountability?

Mr. PRINCE. Could you say the question again, sir, please?

Mr. HODES. Is that your idea, Mr. Prince, of corporate accountability?

Mr. PRINCE. This employee, I can’t make any apologies for what

he did. He clearly violated the rules that he knew. We give each

of our guys an independent contractor handbook. It is all the dos

and don’ts of what they are expected to do and not do.

Beyond firing him for breaking the rules, withholding any funds

we can, we can’t flog him, we can’t incarcerate him, we can’t do

anything beyond that. That is the sole reservation of the U.S. Justice Department.

Mr. HODES. The Justice Department has not acted against this

individual?

Mr. PRINCE. I believe their investigation is ongoing.

Mr. HODES. They haven’t done anything so far, right?

Mr. PRINCE. We are not privy to that information, sir.

Mr. HODES. This was a potential murder, was it not?

Mr. PRINCE. It was a guy that put himself in a bad situation.

Mr. HODES. Would you agree with me that this was potentially

a murder, sir?

Mr. PRINCE. Beyond watching detective shows on TV, sir, I am

not a lawyer, so I can’t determine whether it would be a manslaughter, a negligent homicide, I don’t know. I don’t know how to

nuance that. But I do know he broke our rules, he put himself in

a bad situation and something very tragic happened.

Chairman WAXMAN. Thank you, Mr. Hodes.

Mr. Sarbanes.

Mr. SARBANES. Thank you, Mr. Chairman.

Actually, I want to followup on that line of questioning a little

bit more. I think you said that when people violate the rules in a

significant way, they have one decision left to make, which is aisle

or window, right?

Mr. PRINCE. Because they are fired.

Mr. SARBANES. They are on their way out, they have one decision, and that is whether to sit on the aisle or sit by the window.

And then the other consequence that Mr. Hodes spoke to was the

financial penalty that they would experience. But it just seems like

a few thousand dollars, particularly against a pretty lucrative contract that they would have had. And it strikes me that if that is

the only deterrent that is at work in terms of people performing at

a high level, that is not much. In other words, you can say, well,

let me get in here, let me make a good living here. And if I screw

up, and if I screw up in a terrible way, as this one incident illustrates, then the worst that is going to happen to me is I am going

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to have to choose between an aisle seat or a window seat and

maybe give up a bonus and my last paycheck, I mean, that is essentially the consequence that they face, isn’t that right?

Mr. PRINCE. I would also add that we endeavor to get their security clearance pulled, canceled. And once that is done, they will

never work in a clearance capacity for the U.S. Government again,

or very, very unlikely.

Mr. SARBANES. OK. But you would agree that it is not, it doesn’t

have the same kind of deterrent effect that it would have if they

thought that they were going to be subject to prosecution, if there

was a clear set of rules in place, a clear context in which they could

be prosecuted, they could face something akin to a court martial,

or all the other kinds of measures that can occur if you are in a

traditional military setting? You would agree that provides an

extra level of deterrence?

Mr. WESTMORELAND. Mr. Chairman, I think the witness has already testified that he did everything that his company could to

this person——

Chairman WAXMAN. I’m sorry——

Mr. WESTMORELAND [continuing]. And that he is not the prosecutor.

Chairman WAXMAN [continuing]. You are not acting in accordance with the rules.

Mr. SARBANES. Well, I am actually, I am headed in the

direction——

Chairman WAXMAN. This is not a court case. The gentleman has

time and I am going to restore his time. He can ask whatever he

wants and to say whatever he wants. Some people on this committee have said completely outlandish things. Nothing we can do

about it. They have their right, including you. You read a whole

blasphemous statement about Democrats, but no one objected to

that.

So the gentleman is going to be recognized for an additional

minute.

Mr. SARBANES. In any event, would you agree that would provide

some extra deterrence, some extra reason for people to exercise

their conduct in a careful way?

Mr. PRINCE. We welcome that level of accountability. Most of our

people have already served in the U.S. military or they served in

a law enforcement capacity. They are used to that kind of accountability and transparency into what they are doing.

Mr. SARBANES. Well, I appreciate your saying that, because I——

Mr. PRINCE. We are not hiding anything.

Mr. SARBANES. Yes. I would like to leave aside the question of

whether you should be, Blackwater should be in this space that you

are in. I don’t know enough about the history of whether providing

the sort of protective services that you do is something that isn’t

done by the military traditionally, or is. So I am going to leave that

aside. I am also leaving aside the issue of the cost, which strikes

me as exorbitant, in terms of what the taxpayers are paying here.

You keep calling for, I think, an activity-based cost analysis or assessment, which I think we would be happy to get more information about. I have to believe there is a less expensive way, even to

hire private contractors like yourself.

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And so I am really left with the accountability issue as the one

that strikes me as front and center here. And as I have listened

to your testimony, in particular you are saying with respect to this

one person who was drunk and committed this homicide, I will

characterize it that way, I think you said you would be happy to

see that person prosecuted, something akin to that. And I would

like to enlist you as an advocate to strengthen whatever the rules

of engagement are, whatever the statutes are that are out there.

Mr. Braley took us through these various things and you indicated

that you weren’t sure whether each of those necessarily reached as

far as they could in providing that kind of penalty environment. I

would like you to speak to whether it would be a good thing to

make sure that it does.

Mr. PRINCE. I believe Congressman Price from North Carolina

has been pushing to amend some of that language. And we support

that fully.

Mr. SARBANES. Thank you.

Mr. COOPER [presiding]. The gentleman yields back his time.

The next questioner on the list from the chairman looks like Mr.

Welch.

Mr. WELCH. Thank you, Mr. Chairman.

Mr. Prince, thank you for coming. I want to ask a few questions

about the finances. My understanding is that Blackwater had contracts with the Federal Government in 2001 in the amount of

$736,000.

Mr. PRINCE. It could easily be, yes, sir.

Mr. WELCH. And in 2006, that number had exploded to $593 million.

Mr. RYAN. May I have just 1 minute, please?

Mr. PRINCE. I am not sure.

Mr. WELCH. Well, you don’t dispute it. This is what is in the report that was referred to earlier.

Mr. PRINCE. Well, some of the later years on that report aren’t

quite accurate. So I am not going to discount the whole thing.

Mr. WELCH. OK. According to the report, 51 percent of the

Blackwater contracts were no-bid contracts, $493 million that were

explicitly no competition, and $30 million were awards after limiting or excluding qualified bidders. Is this more or less correct? Any

reason to dispute it?

Mr. PRINCE. It could be, sir. I don’t know.

Mr. WELCH. All right. And since 2003, when the war began,

Blackwater contracts have exceeded $1 billion, correct?

Mr. PRINCE. I don’t know the answer, sir. If you have specific

questions on financials, we will get you the answers.

Mr. WELCH. Well, these are facts that are in the record. You can

check them out. But I will just advise you——

Mr. PRINCE. Well, there is some stuff in the committee’s report

that is not accurate. So I can’t agree to the entire committee report.

Mr. WELCH. Let me continue going through this. One of the concerns that has been expressed is that a sergeant who provides security services in a full military setting is paid $50,000, $60,000.

If it is an employee from Blackwater, the cost to the taxpayer is

about $445,000. Is that more or less correct?

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Mr. PRINCE. Could I have a copy of what you are reading from,

at least?

Mr. WELCH. Well, you have been asked about this by several

Members already. Let me just continue.

Let’s talk a little bit about training. You were a SEAL and

served with distinction, as I understand it, as a SEAL, correct?

Mr. PRINCE. Yes.

Mr. WELCH. And your training as a SEAL was beneficial to you

in the work that you are doing now as the head of this company?

Mr. PRINCE. It helped form me in my life, absolutely.

Mr. WELCH. And you had also I think indicated that Blackwater

hires our military veterans and law enforcement veterans, many of

whom have recent military deployments, correct? It makes sense to

do that?

Mr. PRINCE. Yes.

Mr. WELCH. So it is fair to say that Blackwater as a company

in recruiting personnel has benefited from the taxpayer-financed

training of people that Blackwater hires, correct?

Mr. PRINCE. We have people that have prior honorable military

service and provide them an opportunity to use those skills again

at their highest and best use.

Mr. WELCH. And it is fair to say that Blackwater contracts have

in fact surged since 2003 when the war began, correct?

Mr. PRINCE. The nature of the security environment around the

world has changed, yes.

Mr. WELCH. And it is true, or is it true that as reported by the

Center for Responsive Politics, you did make, as you have a right

to make, contributions of $225,000 to the, that include $160,000 to

the Republican National Committee and the National Republican

Campaign Committee?

Mr. PRINCE. I don’t know that sitting here right now. Again, I

can go back and dig through our contribution records to figure out

exactly what we gave in what period.

Mr. WELCH. Well, that is the report that we have been given.

And again, you have a right to do that. My concern is the nature

of the contracts.

Now, you are also aware that General Petraeus, who is in command of 160,000 troops, is paid by taxpayers $180,000 for the extraordinary responsibilities that he bears for our security in Iraq,

correct?

Mr. PRINCE. I don’t know what General Petraeus gets paid.

Mr. WELCH. Well, that is what it is. Blackwater has 861 or so

personnel, according to this report in 2006, in Iraq. Is that more

or less right?

Mr. PRINCE. It could be, yes, sir.

Mr. WELCH. All right. General Petraeus is paid $180,000 for supervising 160,000 troops. How much were you paid in 2006?

Mr. PRINCE. I’ll get back to you with that exact answer. I don’t

know.

Mr. WELCH. Well, you can give me an estimate.

Mr. PRINCE. More than $1 million.

Mr. WELCH. Well, as I remember, when my colleague, Mr.

Hunter, asked you about your contracts, you indicated 90 percent

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of your Blackwater contracts came from the Federal Government,

correct?

Mr. PRINCE. Yes.

Mr. WELCH. I.e., the taxpayer. And he asked you what your profit margin was, and my recollection of your testimony today was

about 10 percent?

Mr. PRINCE. That is what the report that we submitted to the

committee says, yes.

Mr. WELCH. So walk through the math with me. If Blackwater has had $1 billion in contracts since the war began in 2003, and

there is a 10 percent profit margin, that is $100 million in profit,

is it not?

Mr. PRINCE. This is representative of one of the WPPS contracts.

Some contracts we lose money on, some we lose all kinds of money

on. Some we make money on.

Mr. WELCH. Mr.——

Mr. PRINCE. Understand we have significant variables.

Mr. WELCH. You were asked a question and you gave an answer.

And the question was very simple. It is the kind of question that

a CEO pays real attention to: what is your profit margin. Your answer was, 10 percent. I am doing the math, $1 billion, 10 percent,

$100 million.

Mr. COOPER. The gentleman’s time is expired.

Mr. PRINCE. Some contracts we lose money on. Losing three helicopters this year is certainly beyond the scope of math.

Mr. COOPER. The next questioner is Mr. Murphy.

Mr. MURPHY. Thank you very much, Mr. Chairman.

Let me just followup on Mr. Welch’s question. Certainly, as a

CEO of a company, you can tell us what your profit has been in

the past several years as a company.

Mr. PRINCE. I can give approximate numbers, but we are a private company. And I am sure it is the Congress’s main interest in

maintaining healthy competition amongst Government vendors. So

we are a private company, and there is a key word there, private.

Mr. MURPHY. And so you will not disclose to us what the profit,

what the annual profit or——

Mr. PRINCE. No, that is not what I just said. We gave you an example of what the profitability of a WPPS contract looks like. But

I am not going to go into our full financials.

Mr. MURPHY. And I guess, I am a new Member of Congress, but

as a representative of my constituents that pay 90 percent of your

salary, pay 90 percent of the salaries of your employees, I think it

is a little difficult for us to fathom how that information isn’t relevant to this committee or this Congress.

Mr. RYAN. Mr. Chairman, may I have a minute with the witness,

please?

Mr. COOPER. Yes.

[Witness and counsel confer.]

Mr. PRINCE. I am sorry. Go ahead.

Mr. COOPER. Mr. Murphy has 4 minutes left. The hearing will resume.

Mr. MURPHY. Thank you, and I want to wrap up so Mr. Lynch

can ask some questions before we break. So let me ask the question

again after your consultation with your colleague. It is your posiVerDate 11-MAY-2000 12:10 Nov 12, 2008 Jkt 000000 PO 00000 Frm 00113 Fmt 6633 Sfmt 6633 C:\DOCS\45219.TXT KATIE PsN: KATIE
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tion that you don’t believe that it is in the best interests of your

company or this committee to have discussions with the U.S. Congress about the profit that you make off of U.S. Government contracts?

Mr. PRINCE. We can have that discussion, but I am not fully prepared, sitting here today, to answer each and every one of your

questions down to that level of detail.

Mr. MURPHY. I am not asking for a level of detail. I am asking

for an approximation of your annual profit, based on the fact that

you make 90 percent of your money from U.S. taxpayers.

Mr. PRINCE. Again, we will come back to you. If you have written

questions, we will give you written answers after the hearing is

done.

Mr. MURPHY. Because you testified today that you are not sure

of that number?

Mr. PRINCE. I am not sure of that number. How can I calculate

in depreciation on assets when our helicopters parked around near

the embassy in Baghdad get hit by rockets all the time, that they

get fragged, that three of them have been shot down? There is a

whole host of variability to our profitability, depending on when an

asset is expended or destroyed.

Mr. MURPHY. Mr. Prince, I am not a businessman. But I find it

pretty hard to believe that the CEO of a major company in this

country, whether it be privately financed or publicly financed, can’t

give an approximation of your annual profit on a year to year basis.

Mr. PRINCE. I think when the committee meets with any of my

finance folks, they will tell you I am not a financially driven guy.

Mr. MURPHY. Let me just ask one other quick question before I

yield back. You made a comment before that you had a handful of

third country nationals working for you. And not to disparage the

need to have third country nationals working for the company, but

I just want to get a better handle on what a handful has. The

memo that we have before us, and I understand you draw issue

with some of those numbers, so I want to get it straight, suggests

that of the 861 Blackwater personnel in Iraq today, 243 of them

are third country nationals. Does that sound right?

Mr. PRINCE. Your best bet is drawing off of page 1 of what we

submitted to the committee, where it says, ‘‘UCTCN or HCN.’’

Mr. MURPHY. What percentage of those serving in Iraq under

Blackwater are third country nationals? By your numbers. Because

by our numbers, it is just less than one third, which doesn’t sound

like a handful. That sounds like one third of all your personnel are

not U.S. citizens.

Mr. PRINCE. Well, I am looking at one here. It shows 576 United

States, 129 TCN and 16 locals.

Mr. MURPHY. So again——

Mr. PRINCE. So divide 129 by 576 and you get your percentage.

Mr. MURPHY. OK. Sounds like a little bit more than a handful,

but I appreciate your testimony and I yield back.

Mr. COOPER. The gentleman yields back his time. The next questioner is Mr. Lynch.

Mr. LYNCH. Thank you, Mr. Chairman. And I want to thank the

witness for his perseverance here today and for helping the committee with its work.

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We have heard a lot today about the loss of accountability when

an inherent Government function, in this case duties that are incidental to the prosecution of war, are subcontracted out to private

entities. And as Mr. Shays and Mr. Platts have mentioned earlier,

my Republican colleagues, I also have had an opportunity to view

first-hand on more than a few occasions the work of Blackwater

employees. I would guess that in the dozen or so occasions when

I have traveled with my colleagues to Iraq and Afghanistan, your

area of operations, principally, I would bet at least half of those

times, or at least a portion of time there, we have been protected

by Blackwater employees.

And based on my own personal experience, I have to say, from

personally what I have seen, and what I have experienced, those

people who were protecting us who were Blackwater employees did

a very, very good job. I have to give you credit for that. They are

brave employees, brave Americans in a very hostile environment.

I find myself right now with this committee having a difficult

time criticizing those employees, because I am in their debt. That

is a very hostile environment and they do a good job on our behalf.

Which brings me to my problem. If I have a problem criticizing

Blackwater and criticizing the employees and some of the times

that you have fouled up, what about the State Department? The

State Department employees, you protect them every single day.

You protect their physical well-being, you transport them, you escort them. And I am sure there is a heavy debt of gratitude on the

part of the State Department for your service.

And yet they are the very same people who are in our system responsible for holding you accountable in every respect with your

contract and the conduct of your employees. And I know from my

own experience, in the time there, that is an impossible conflict for

them to resolve.

I have here in my possession, I am going to ask that they be entered into the record in a minute, some internal e-mails from the

State Department. These documents that the committee has received raise questions again about the State Department’s oversight of Blackwater’s activities under the contract. Even in the

cases involving the death of Iraqis, it appears that the State Department’s primary response was to ask Blackwater to make monetary payments to—this is from the e-mails—‘‘to put these matters

behind us,’’ that is, the deaths of Iraqi civilians, ‘‘rather than to insist upon accountability or to investigate Blackwater personnel for

potential criminal liability.’’ The most serious consequence faced by

a Blackwater personnel for misconduct appears to be termination

of their employment.

Even though Secretary of State John Negroponte asserted that

every incidence in which Blackwater fires its weapons is ‘‘reviewed

by management officials to ensure the procedures were followed,’’

the documents that we have before the committee don’t indicate

that. I do have some e-mails, though. And this one is dated—I will

ask these to be entered into the record, Mr. Chairman.

Mr. COOPER. Without objection, so ordered.

[The information referred to follows:]

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Mr. LYNCH. This one is dated July 1, 2005 from RSO Al-Hillah.

This is a situation where Blackwater personnel fired and killed. It

says, ‘‘This morning, I met with the brothers of an adult Iraqi male

who was killed by a gunshot to the chest at the time and location

where the PSD, in this case, Blackwater team, fired shots in AlHillah on Saturday, June 25th of 2005.’’ The gentleman in question

was killed. And then it says, ‘‘Gentlemen, allow me to second the

comments on the need for Blackwater to provide funds ASAP. For

all the reasons enunciated in the past, we are better off getting this

case and any similar cases behind us quickly. Again, the Department of State needs to promptly approve and fund an expedited

means of handing these situations. Thanks.’’ And it mentions

$5,000 for the family there.

Again, another e-mail dated December 26, 2006. And it says, this

is again a situation where Blackwater personnel killed an individual civilian innocently, standing near an area where the convoy

was traveling, it criticizes the way the charge d’affaires was talking

about ‘‘some crazy sums. Originally she mentioned $250,000 and

later, $100,000. Of course, I think that a sum this high will set a

terrible precedent. This could cause incidents with people trying to

get killed by our guys to financially guarantee their families’ future.’’

Mr. COOPER. The gentleman’s time has expired.

Mr. LYNCH. I am going to wrap up here. And again, I am going

to ask these to be placed in the record.

Mr. COOPER. I am afraid——

Mr. LYNCH. The question is, based on that arrangement——

Mr. COOPER [continuing]. The gentleman’s time has expired.

Mr. LYNCH [continuing]. Does it not make sense that an independent inspector general, instead of the State Department inspector general, review these? I think it would help the credibility of

the company to have an independent inspector general reviewing

these cases instead of having the State Department basically make

you pay up $5,000 every time——

Mr. BURTON. Mr. Chairman, I have high regard for the gentleman from Massachusetts but has gone 2 or 3 minutes over his

time.

Mr. COOPER. The gentleman’s time has expired.

I need to ask the witness, we have two questioners remaining.

If you would like to take a break now, that would be fine. Or there

are about 10 minutes of questions remaining. It is your call.

Mr. PRINCE. If there are two questions left, I will take them and

let’s be done.

Mr. LYNCH. Mr. Chairman, do you want to give the witness a

chance to answer that last question?

Mr. COOPER. Well, the gentleman considerably exceeded his time

limit. We had actually given you considerably more than the 5-minutes due to a mistake in the clock. So I think we need to keep this

in regular order.

The gentlelady is recognized, Ms. Norton.

Ms. NORTON. Thank you, Mr. Chairman.

Mr. Prince, I want to be clear that however you serve your country, whether as a member of the armed forces or now as a contracVerDate 11-MAY-2000 12:10 Nov 12, 2008 Jkt 000000 PO 00000 Frm 00121 Fmt 6633 Sfmt 6633 C:\DOCS\45219.TXT KATIE PsN: KATIE
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tor in time of war, the American people are indebted to you. We

understand that the risk is the same.

I want to avoid confusing the higher purpose of the volunteer

army with what some nations, how some nations candidly operate.

However you define mercenary armies, some nations have long

used mercenary soldiers to deal in foreign countries with unpleasant tasks. The more dependent we become on contractors, the more

we risk falling right off the cliff into a mercenary army that is

nothing that you would have responsibility for.

But it must be said, people fight wars that, countries fight wars

where the people support them. And the people support them by

being willing to provide the troops to fight those wars. That is a

risk we have.

I want to ask you a question or two about your contract with the

State Department. Under this contract, you employ security personnel as independent contractors rather than as your own direct

employees, isn’t that right?

Mr. PRINCE. Yes, ma’am.

Ms. NORTON. You don’t have to provide employee benefits, such

as health or disability insurance, vacation or retirement and the

like as a result?

Mr. PRINCE. Each of the individuals that deploys for us has a

very robust insurance package that is with them every day they

are working for us.

Ms. NORTON. You also can avoid making Social Security contributions or withholding taxes, is that not true?

Mr. PRINCE. I am not sure on that.

Ms. NORTON. I believe that is true, sir.

By contrast, DynCorp and Triple Canopy and other security

firms that support the State Department treat their personnel as

employees entitled to these benefits. Why do you treat your personnel differently from these two companies?

Mr. PRINCE. I don’t know the differences in how they compensate

their people. I will tell you we have the highest retention in the

industry. We have guys that sign up for us at a very, very high

rate. So we don’t get losses. Men and women seem to feel very well

treated by us.

Ms. NORTON. Well, of course one of the differences is in the employee benefit package I have just named. Does Blackwater hire

personnel as independent contractors in order to avoid legal responsibility for the company?

Mr. PRINCE. No, it is actually really what the men that deploy

for us prefer. We find it is a model that works.

Ms. NORTON. Well, Mr. Chairman, it may in fact——

Mr. PRINCE. They like the flexibility of signing on for a certain

period of time and being able to schedule their off time around an

anniversary, a child’s birthday, being home for Christmas, etc. So

it gives them flexibility as to when they are going to deploy, when

they are going to go to work. Just like——

Ms. NORTON. Does it really give them more flexibility than the

other two companies who have them as employees? Those people

don’t have the same kind of flexibility? What kind of flexibility can

you have if you need your employees at a time of engagement, for

example?

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Mr. PRINCE. I don’t know, ma’am.

Ms. NORTON. Well, I think the fact is, when you need them, you

need them. You don’t say, you can go home for Christmas, sir.

Mr. Chairman, I think we should, I am very disturbed, very disturbed by this confusion, which amounts to legal confusion about

the responsibilities of contractors. I will concede the notion that

employees can choose whether they want to work for a company

that in fact requires them to save for their own benefits or not. My

confusion——

Mr. PRINCE. Ma’am, let me just add, we have a program that allows them, it is like an individual 401(k) plan. So they are able to,

while working for us, able to have a 401(k)-like program.

Ms. NORTON. I understand that. Probably the other employees,

excuse me, companies, that I mentioned probably also have 401(k)

programs. And again, my major concern is not what private employees decide to do.

Mr. Chairman, my concern is that these Blackwater contractors,

so far as I can see, operate under the direct command or are supervised by Prince, Mr. Prince and his company. They are, they operate under the law of the United States in some fashion. It is simply

unclear, after a full day’s hearings, whether these employees,

whether this company is subject to law in the way that the American people expect anybody in a field of combat to in fact be subject

to the law of some place. I believe we need an investigation, Mr.

Chairman, by the GAO to clarify what law if any such companies

and their employees, whether contract employees or not, should answer to.

Mr. PRINCE. If I could just answer, ma’am, I think the FBI investigation regarding the September 16th incident proves that there

is a measure that accountability is in place, that process is working. And as for us——

Chairman WAXMAN [presiding]. That remains to be seen.

Mr. PRINCE [continuing]. Working for us overseas, we provide the

trained person with the right equipment, the right training, the logistics to get them in and out of theater, when they get to Iraq or

to Afghanistan, they work for the State Department. We work

under that, the RSO’s operational control, they are not under our

operational control.

Chairman WAXMAN. Thank you, Ms. Norton.

Ms. Schakowsky.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. I really appreciate

your allowing me to participate in this hearing, and I thank the

committee for their indulgence.

I wanted to let everyone know that I am shortly going to be introducing legislation to carefully phaseout the use of private security contractors, for-profit companies that carry out sensitive missions that have repeatedly and dramatically affected our mission.

I want to recognize the mother of Jerry Zovko, who is here today.

Jerry was an Army Ranger before becoming a Blackwater employee. He died in Fallujah in an infamous mission, fraught with

mistakes on the part of his Blackwater supervisors. That was over

31⁄2 years ago, and led to the Battle of Fallujah during which many

of our U.S. forces lost their lives.

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As Mr. Davis, the ranking member, said, we need a conversation

in this Congress about that, and I am hoping that my legislation

will provide that.

Mr. Prince, in your testimony you stated Blackwater personnel

supporting our country’s overseas missions are all military and law

enforcement veterans. You did not state that they were all Americans, all American military and law enforcement veterans. Is it

true that Blackwater hires foreign security personnel?

Mr. PRINCE. One of your colleagues previously asked that question. Yes. Some of the camp guards, gate guards, static locations

are indeed third country national soldiers.

Ms. SCHAKOWSKY. And in 2004, Gary Jackson, the President of

Blackwater USA admitted that your company had hired former

commandoes from Chile to work in Iraq, many of which served

under General Augusto Pinochet, the former dictator of Chile. As

you must know, his forces perpetrated widespread human rights

abuses, including torture and murder of over 3,000 people. Did

Blackwater or any of its affiliated companies at that time, at any

time, use any Chilean contractors with ties to Pinochet?

Mr. PRINCE. Well, I can say Mr. Jackson did not admit to hiring

some commandoes. Yes, we did hire some Chileans. Any foreign national soldier that works for us now, for the State Department, has

to have a high public trust clearance. It is basically a security

clearance for a third country national soldier where you take their

name, it goes back through the U.S. embassy in that country and

their name is run, kind of like a national agency check here, which

is what someone does for a security clearance. That way we can ensure that they have no criminal record, ma’am.

Ms. SCHAKOWSKY. I understand that one of your business associates, Jose Miguel Passaro, was indicted in Chile for his role in supplying commandoes to serve Blackwater. Is that correct?

Mr. PRINCE. He was not an associate. He might have been a vendor to us.

Ms. SCHAKOWSKY. In your written statement today, you state

that Blackwater mandates that its security professionals have a security clearance of at least the secret level. Did any Chilean contractors who worked for Blackwater ever get a security clearance?

Mr. PRINCE. I believe what I said is for the WPPS contract, the

Americans working on that are doing the PSD mission are required

to have a secret clearance.

Ms. SCHAKOWSKY. Did any Chilean contractors get a security

clearance?

Mr. PRINCE. I don’t know, ma’am.

Ms. SCHAKOWSKY. Because if yes, they were provided with classified information, if no, then it is not true that all Blackwater personnel in Iraq have security clearances.

On your Web site, I don’t know if it is still there, there was a

recent one, there was a jobs fair advertised in Bucharest. And we

have heard allegations that Blackwater recruited Serbians and

former Yugoslavs with combat experience from the Balkan wars,

some linked to atrocities committed in Croatia and Kosovo and in

Bosnia and associates of Milosevic. I am wondering if you could

talk to me about that for a minute.

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Mr. PRINCE. To my knowledge, we have never employed anyone

out of those countries.

Ms. SCHAKOWSKY. Would you know?

Mr. PRINCE. There are some Romanians that were on a contract

that we took over from a previous vendor, competitor. But we

phased them out and we use guys out of Latin America now.

Ms. SCHAKOWSKY. Would you know if people have been associated with Pinochet or Milosevic before you hired them? Is this part

of your inquiry?

Mr. PRINCE. Again, for the State Department, for the static

guards that were utilized, third country national soldiers, a high

public trust clearance is required——

Ms. SCHAKOWSKY. I heard you say that.

Mr. PRINCE [continuing]. Where their name, their background,

their address, their date of birth, whatever information is available

on them, is run back through the equivalent country that they are

from, a national agency check, to ensure that they don’t have any

criminal record, human rights abuses, or any other bad marks

against their name.

Ms. SCHAKOWSKY. OK, well, we should check into that process.

But let me ask a question. You said that you as a company would

not work overseas in any way that is not associated, that the

United States does not approve. However, Chile has made a decision not to participate as part of a coalition member in this war.

They won’t send any troops. Do you have any qualms about hiring

people out of Chile to participate actively in this war?

Mr. PRINCE. We don’t hire anybody from Chile right now, to my

knowledge.

Ms. SCHAKOWSKY. Have you ever?

Mr. PRINCE. I previously just said that we had, previously. Yes.

Ms. SCHAKOWSKY. And so the answer is you don’t have any

qualms about doing that, based on the fact that Chile has made a

public policy decision not to participate?

Mr. PRINCE. I believe the persons of that country have a free

right to contract. I will give you an example. The Philippines

doesn’t allow their personnel to go to Iraq. So we don’t hire their

people to go to Iraq.

Ms. SCHAKOWSKY. OK, but you do hire Chileans. Thank you. I

appreciate it.

Chairman WAXMAN. Thank you very much, Mr. Schakowsky.

Mr. Prince, let me thank you very much. You have been very patient. You have been here a long time.

I do want to acknowledge the presence today of Rhonda Teague

and Kristal Batalona, the daughter and wife of Wesley Batalona.

Ms. Schakowsky acknowledged the mother of Jerry Zovko, who is

in the audience today. These are people from Fallujah. I am sorry

we didn’t get a chance to ask you more questions about Fallujah.

I might, with your permission, send you some questions and ask

you to respond for the record.

Because that was an example, we had a hearing on that issue,

and that was an example where one of the ways corporations could

make money is not to have fully trained personnel. I don’t know

if that was the case or not, but it certainly appeared to us that the

people were not given adequate protection and training for that

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Fallujah mission and it had an unprecedented consequence in the

battle of Fallujah that followed.

In closing, let me just say that we really have a remarkably unprecedented experiment going on in the United States today by

having private military contractors. It raises a lot of issues. It

raises issues about costs, it raises issues about whether it interferes with our military objectives. And I think this hearing and

with you and the next witnesses will help us continue to sort

through what that means for our Nation. We have never had anything of this magnitude before where we have turned so much of

our military activity over to private military that used to be, for the

most part, provided by the U.S. military itself.

I want to thank you. If Mr. Davis has any last comments, I will

recognize him.

Mr. DAVIS OF VIRGINIA. Mr. Prince, thank you very much. I think

you have—is there anything else you would like to add after all

this? Would you like to add anything you didn’t get to say?

Mr. PRINCE. Thanks for having me. I would invite some of the

leadership of the committee, if they would like, to come and visit

our operations. We would be happy to show you what we do.

Mr. DAVIS OF VIRGINIA. Fine. Let me just say, I think we do need

a dialog, and our next panel will tell us the State Department’s rationale and the large number of contractors and why they are utilizing that versus active duty. I think that will give more clarification to Members.

Thank you very much.

Mr. PRINCE. Thank you, sir.

Chairman WAXMAN. We will proceed to our next panel, but we

want to give Mr. Prince and his group an opportunity to leave.

The committee will now continue on and proceed to our second

panel. We have with us Ambassador David M. Satterfield, Special

Advisor and Coordinator for Iraq, U.S. Department of State; Ambassador Richard J. Griffin, Assistant Secretary, Bureau of Diplomatic Security and Director of the Office of Foreign Missions, U.S.

State Department; and Mr. William H. Moser, Deputy Assistant

Secretary for Logistics Management, U.S. Department of State.

I gather you are not taking your seats because you know you are

taking the oath. But it is the practice of this committee to swear

in all witnesses.

[Witnesses sworn.]

Chairman WAXMAN. The record will indicate that each of the witnesses answered in the affirmative.

Your prepared statements will be in the record in full. We would

like to recognize each of you for an oral statement for 5 minutes,

and then after that we will have questions that we will want to

pursue with you.

Ambassador Satterfield, if we might start with you.

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STATEMENTS OF AMBASSADOR DAVID M. SATTERFIELD, SENIOR ADVISOR TO THE SECRETARY AND COORDINATOR FOR

IRAQ, U.S. DEPARTMENT OF STATE; AMBASSADOR RICHARD

J. GRIFFIN, ASSISTANT SECRETARY OF STATE, BUREAU OF

DIPLOMATIC SECURITY, U.S. DEPARTMENT OF STATE; AND

WILLIAM H. MOSER, DEPUTY ASSISTANT SECRETARY FOR

LOGISTICS MANAGEMENT, U.S. DEPARTMENT OF STATE

STATEMENT OF AMBASSADOR DAVID M. SATTERFIELD

Ambassador SATTERFIELD. Thank you, Chairman Waxman,

Ranking Member Davis, members of the committee. Thank you for

inviting me here today and for the opportunity to speak to the vital

security that private security firms provide to our State Department personnel.

In Iraq, as in Jerusalem, Gaza and the West Bank, I have been

protected by Blackwater and other private security details. As you

know, Mr. Chairman, I was the Deputy Chief of Mission in Baghdad from the spring of 2005 until late summer of 2006. I witnessed

first-hand what Ambassador Crocker has rightly described as the

capability and courage of our protective details, as have many

Members of Congress, including some, Mr. Chairman, on this committee.

The contracting of security personnel for State Department officials is neither new nor unique to Iraq. For example, we have employed private protective security details, PSDs, in Haiti, Afghanistan, Bosnia, as well as Jerusalem, Gaza and the West Bank. We

do not bunker down in dangerous environments. But we do need,

and we do take prudent precautions to protect the safety and welfare of our personnel.

Iraq is a dangerous place. Yet I think we can all agree that our

diplomats and civilian personnel need to be able to operate alongside our military colleagues and to have the broadest possible freedom of movement throughout that country. We must be able to

interact with our Iraqi counterparts and with the Iraqi population.

Without protective security details, we would not be able to have

the interaction with Iraqi government officials, institutions and

other Iraqi citizens critical to our mission there.

The State Department uses multiple security specialists in Iraq.

Furthermore, it should be noted that the Department of State is

not the sole client of these security companies. The U.S. military,

Iraqi government officials, private Iraqi citizens, independent institutions and non-governmental organizations as well as journalists

all use private security firms, of which Blackwater is one of many.

A black Suburban does not equal Blackwater.

Insofar as the State Department’s security contractors in Iraq

are concerned, we demand high standards and professionalism.

Those standards include relevant prior experience, strict vetting,

specified pre-deployment training and in-country supervision and

oversight. As you know, many of the individuals serving are veterans who have performed honorably in America’s armed forces.

All Embassy Baghdad security contracts fall under the oversight

of the regional security office. Those contracts require high standards, covering areas ranging from conduct and demeanor to use of

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ten into the companies’ contracts. These policies, these standards

only allow for the use of force when absolutely necessary to address

imminent and grave danger against those under their protection,

themselves and others.

In those rare instances when security contractors must use force,

management officials at the embassy conduct a thorough review in

each and every instance to ensure that proper procedures were in

fact followed. In addition, we are in constant and regular contact

with our Iraqi counterparts about such instances. And the incident

of September 16th was no exception.

I want to underscore, Mr. Chairman, the seriousness with which

Secretary Rice and the Department of State view both the events

of September 16th and the overall operations of private security

contractors working for the Department of State in Iraq. At the direction of the Secretary, we are conducting three different reviews.

As I stated before, the embassy conducts regular reviews of every

security incident. We are conducting a thorough investigation into

and review of the facts surrounding the events of September 16th.

At the request of the Department of State, the Federal Bureau

of Investigation is sending a team to Iraq to assist on the ongoing

investigation into that incident allegedly involving Blackwater employees. The Secretary of State has made clear that she wishes to

have a probing, comprehensive, unvarnished examination of the

overall issue of security contractors working for her Department in

Iraq. And so we are working on two different fronts, Mr. Chairman.

Following direct communication between Secretary Rice and Prime

Minister Malaki, our embassy in Baghdad and the Prime Minister’s

office have established a joint government of Iraq and U.S. Government commission to examine issues of security and safety related

to U.S. Government-affiliated protective security detail operations.

This will also include review of the effect of CPA Order 17 on

such operations. This joint commission will make policy recommendations for resolving any problems it may uncover. Finally,

the Secretary has directed Ambassador Patrick Kennedy, a very

senior and extremely capable Department management officer, to

carry out a full and complete review of security practices for our

diplomats in Iraq. His review will address the question of how we

are providing security to our employees. It will take into account

all aspects of this protection, including the rules of engagement and

under what jurisdiction they should be covered. Ambassador Kennedy is now in Baghdad with some of his team.

In addition to Ambassador Kennedy, his team will ultimately include General George Joulwan, Ambassador Stapleton Roy and

Ambassador Eric Boswell, outsiders who will bring with them clear

eyes and an independent view of what needs to be done. This is an

extraordinarily well-qualified team and it has experience directly

relevant to this review.

We are fully committed to working with both our security specialists and the Iraqi government to ensure the safety of U.S. Government personnel. Both are and will be essential to our success.

With that, Mr. Chairman, Assistant Secretary Griffin, Deputy

Assistant Secretary Moser and I are happy to take your questions.

[The prepared statement of Ambassador Satterfield follows:]

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Chairman WAXMAN. Neither of you two have opening statements? You are just here to answer questions, is that correct?

Thank you.

Mr. Ambassador, when Mr. Prince was testifying here earlier

today, we asked him about that very disturbing incident on Christmas Eve, 2006. The basic facts of the incident are that a

Blackwater contractor shot and killed an Iraqi security guard

working for the Iraqi vice president. According to the documents

the committee received, Blackwater transported the shooter out of

Iraq within 36 hours of the killing, and it did so with the approval

of the Baghdad embassy’s regional security officer.

Why did the State Department facilitate the departure of the

Blackwater contractor suspected of murdering one of the Iraqi vice

president’s security guards?

Ambassador GRIFFIN. As you know, the incident that you described is presently in the Department of Justice for a prosecutive

review. I think that to pre-judge exactly what occurred that

evening as far as the facts of the case go would be inappropriate

for me at this time.

[The prepared statement of Ambassador Griffin follows:]

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Chairman WAXMAN. I am not asking about the facts of the case.

I am asking you about the State Department’s response. Why did

the State Department respond in this way?

Ambassador GRIFFIN. At the time of the incident, after a number

of interviews were conducted, there was no reason for him to stay

in Baghdad.

Chairman WAXMAN. Well, the committee had a briefing from Ambassador Kennedy last week, and he stated that the subjects of investigation should be kept in-country, because the investigators

may need access to them. In fact, when you think about this, this

is an obvious point. Why didn’t you follow the policy recommended

by Ambassador Kennedy?

Ambassador GRIFFIN. You can’t describe how a case should be

handled universally. Each case has to be judged on its own merits.

And Ambassador Kennedy may have had some other notion about

the proper way to proceed.

Chairman WAXMAN. Well, this is not an ordinary case. This is a

pretty extreme one. You have a private military contractor within

the Green Zone, which is an internationally protected area, shoot

and kill an Iraqi security guard. What we saw was that within 36

hours, he was ushered out of the country and the State Department helped that happen. In fact, the documents show that the primary response of the State Department was to ask Blackwater to

make a payment to the family in the hope that this would make

the problem go away. There is even a discussion among State Department officials about how large the payment should be. One official suggested $250,000, but this was reduced instead to just

$15,000.

Yesterday during the State Department’s daily press briefing, the

agency’s spokesman said, ‘‘We are scrupulous in terms of oversight

and scrutiny not only of Blackwater, but all of our contractors. I

would strongly dispute anyone’s assertion that the State Department does not exercise good and strong oversight in our efforts to

manage these contractors.’’ That was the statement made yesterday.

When I look at the State Department response to the Christmas

Eve shooting, I don’t see scrupulous oversight and scrutiny. I see

an effort to sweep the whole incident under the rug. How would

you respond to that?

Ambassador GRIFFIN. I would say that the area of what laws are

available for prosecution is very murky. I believe it is something

that the executive and legislative branches have been working on

to try and clarify. And I think that lack of clarity is part of the

problem.

Chairman WAXMAN. So you weren’t sure at the State Department whether this was a possible criminal violation, when a person

hired by a contractor of the United States shoots and kills an Iraqi

in the Green Zone? There is a question of whether this is criminal?

Is that why the State Department helped get him out of the country and gave Blackwater a suggestion of how much to pay to get

rid of the whole incident?

Ambassador GRIFFIN. That is your judgment that is what happened. I was not there. I think that is why the Department of JusVerDate 11-MAY-2000 12:10 Nov 12, 2008 Jkt 000000 PO 00000 Frm 00141 Fmt 6633 Sfmt 6633 C:\DOCS\45219.TXT KATIE PsN: KATIE
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tice is examining this case. And they are examining the potential

ways that it might be prosecuted.

Chairman WAXMAN. Well, it just seems to me common sense to

say that if there is an examination going on, and the man is not

there any longer, you can’t pursue some of those issues. And the

ones that pursue the investigation are the ones right there on the

ground. You don’t get the guy out of the country as fast as possible

and then say we did what we thought was a responsible thing to

do. Even the deputy director of the trade association representing

private security contractors sees a problem. He told the Washington Post, ‘‘Blackwater has a client who will support them no matter

what they do.’’

As I view the record, it shows that the State Department is acting as an enabler to Blackwater tactics. The company acts as if

they are untouchable for a simple reason: the State Department demands no accountability. They are not accountable to the military.

They are not accountable to the Iraqi criminal system. And the

State Department, who is the contractor, seems to have acted like

they are helping Blackwater get rid of the guy so that the whole

incident can go away.

Ambassador GRIFFIN. The incident was referred to the Department of Justice of our country for their prosecutive decision and

followup. They are the prosecutors. The State Department isn’t the

prosecutive department for the U.S. Government.

Chairman WAXMAN. Have the State Department people been

asked any questions by the Department of Justice about this issue?

Ambassador GRIFFIN. I am sure there has been conversation, but

I can’t——

Chairman WAXMAN. You should, but you don’t know?

Ambassador GRIFFIN. No, I can’t name when and where.

Chairman WAXMAN. The fact of the matter is, it seems strange

that if there is this kind of situation, there hasn’t been any action

by the Justice Department to date. This is almost, well, not quite

a year, but this is the fall, nine, 10 months later. I wonder what

really is going on.

Mr. Davis.

Mr. DAVIS OF VIRGINIA. Thank you. My good friend here said

that this was unprecedented in terms of the amount of security

going on over there, private security. I just wonder, Mr. Satterfield,

my understanding is the State Department has been contracting

for security services at diplomatic posts throughout the world for

decades. Is this unprecedented?

Ambassador SATTERFIELD. The scale of the operation in Iraq is

unprecedented. But the fact of contracting, both through direct

hire, and by use of private security contractors, such as

Blackwater, DynCorp, Triple Canopy and others, is certainly not

unprecedented. It is practiced at a number of posts in a number of

countries around the world.

Mr. DAVIS OF VIRGINIA. If you could go back 4 years, would you

have taken this in-house or would you stick to what we are doing

at this point in terms of contracting out?

Ambassador GRIFFIN. At the time that the decision was made to

use contractors, it was made because there was an immediate need

to provide security for U.S. Government employees working in a

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hostile environment, trying to assist the Iraqi people in standing

up various civilian agencies. Everyone knows that the military was

doing their function there. We were trying to stand up the civilian

side of the government, which was pretty much in shambles at that

time.

In order to fulfill that security mission, in order to be able to immediately deploy people in the near-term, contractors were used.

The fact is, if we were to attempt to recruit and train diplomatic

security agents for that mission, it would take anywhere from 18

months to 2 years to identify them, do all the backgrounds, do the

clearance work, 7 months of basic training, follow-on training for

high threat parts of the world.

Mr. DAVIS OF VIRGINIA. Also, when the mission winds down,

what do you do with them at that point, too?

Ambassador GRIFFIN. When the mission ends, you may have

more people than you have work for.

There are also specialists that are employed by the contractors,

people who have training in, helicopter pilots, people who are mechanics for armored vehicles, people who are armorers, people who

are medical technicians, etc., that are all part of the requirement

that you have when you are working in a combat zone. So for a

multitude of reasons, it made good sense to deploy people with the

expertise that is needed but for what was expected to be a short

to medium term duration.

Mr. DAVIS OF VIRGINIA. But it has been a longer term duration,

hasn’t it?

Ambassador GRIFFIN. It has been. But the fact is, we have used

contractors going back to 1994 for this protective security mission,

when they were first used in Haiti. So those previous contracts,

some have come and gone, so it does demonstrate that this is not

a career-type assignment for somebody.

Mr. DAVIS OF VIRGINIA. Is it cheaper to go outside, or would it

be cheaper to take them inside and basically start a bureaucracy

within the Government to handle these kinds of things?

Ambassador GRIFFIN. Mr. Moser can speak to all the contract

costs, but when you are looking at the cost of whether it is a contractor or a person in the military or a person in the State Department, you have to look at what we call the fully loaded costs, which

includes all of the expenses, which you are all very well aware of

from your dealing with the budget for all these years. The fact is

that the costs for a State Department special agent to be deployed

in a high threat area approaches $500,000.

Mr. DAVIS OF VIRGINIA. Mr. Moser, do you want to comment?

Mr. MOSER. Well, I will add one thing to that. We actually do

cost analyses in the acquisition activity. And I am very proud of

the cost analysis they do, because particularly, if we have a situation, our first contract to Blackwater was awarded in 2004. We did

not have competition, so we had to actually do extensive analysis

at that time to make sure that the costs were reasonable.

But to add to what Ambassador Griffin has said, I used to work

in an office called Global Support Services and Innovation. We

spent many, many months discussing how much it actually costs

to position an American overseas, an American diplomat like me,

or a DS agent. And their prices range from around $400,000 for a

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regular mission around the world to around $1 million for an

American diplomat positioned in Iraq.

So when we talk about using contract employees, I think that we

have to be very careful to consider what the fully loaded costs

would be of direct hires, and as you have already pointed out very

wisely, Congressman Davis, you do have to think about, do you

really need these people for a long term.

Mr. DAVIS OF VIRGINIA. So basically, when we start comparing

costs, I think earlier someone used the analogy of a sergeant being

$60,000 to $80,000 a year, and a contract employee being $400,000

a year, those aren’t fully loaded costs and it is not apples to apples.

Would that be your opinion?

Mr. MOSER. Well, I look at it this way. We have lots of employees

in Iraq and the missions around the world. Well, I actually, also

one of my duties is to run the transportation part of the State Department. And that is where we move people’s household effects

around the world. That activity alone is around $220 million a

year. That does not appear in that employee’s salary cost, that is

something that we do for each employee.

Mr. DAVIS OF VIRGINIA. So if you divided the number of employees by the $220 million, you would get a high number?

Mr. MOSER. That is right, and you can keep on adding these

costs. And as I said, in my previous assignment, we looked at this.

How do you amortize the building costs for over the years, like

what the rental price is?

Mr. DAVIS OF VIRGINIA. One of the things that Mr. Waxman and

myself and the committee ultimately want to understand is really

what are the costs. I don’t know if we can get GAO to look at that,

or how we compare apples to apples in an objective way. Because

everybody has their own numbers on this. And that is something

that would be helpful to you, I would think, as well.

Mr. MOSER. It is very helpful to me. And I will say that over the

years, I have actually discussed this topic with a number of employees at GAO. Because it is not an old topic, by any means.

Chairman WAXMAN. Thank you, Mr. Davis.

Mr. Tierney.

Mr. TIERNEY. Thank you, Mr. Chairman.

Mr. Moser, can you tell us whether or not the number of diplomatic security service agents has been reduced at the State Department since 2001?

Mr. MOSER. I think Ambassador Griffin is going to need to answer that question.

Mr. TIERNEY. Ambassador, can you answer that question?

Ambassador GRIFFIN. Current staffing is about 1,450, and it does

reflect an increase over the past 4 to 5 years. I have been on board

2 years, and I know one of those years we brought on 175 additional agents, and there were some brought on the year before. But

I could certainly give you the specifics for the record if you would

like to have that.

Mr. TIERNEY. Were any of those additional agents brought in

with respect to Iraq, or were they other places around the world?

Ambassador GRIFFIN. They are for various places around the

world. We have at the present time approximately 36 of our agents

in Iraq.

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Mr. TIERNEY. Now, I think we can all agree that Baghdad is not

just any other embassy right now, it is the largest post and it is

in a war zone. There are about 800 personnel, I think you said earlier, or told the committee earlier, that are involved in the private

security detail to protect embassy personnel in Iraq, would that be

accurate?

Ambassador GRIFFIN. There are 845 Blackwater personnel in

Baghdad and Al-Hillah, and the other two contractors have additional resources. So it is about 1,150 total.

Mr. TIERNEY. Are there any other embassies around the world

where the security details are that large?

Ambassador GRIFFIN. I don’t believe so.

Mr. TIERNEY. Now, just looking at some of the statistics here, we

have reports that say Blackwater engaged in shooting incidents on

195 occasions in less than 3 years. That is about 1.4 times per

week. Are there any other embassies around the world in which

the security details have been engaged in that many shootings in

the last 3 years?

Ambassador GRIFFIN. I would say that the environment in Iraq

is unique and that we are operating in a combat zone.

Mr. TIERNEY. So is that a no?

Ambassador GRIFFIN. As to whether anyone else has the same

level of——

Mr. TIERNEY. As to whether there is any other embassy around

the world where the security details have engaged in that many

shootings in the last 3 years?

Ambassador GRIFFIN. Not that I can think of.

Mr. TIERNEY. And when we look at the Blackwater reports, we

also show that Blackwater has caused at least 16 casualties and

significant property damage from fired weapons on over 160 occasions in the last 3 years. Are there any other embassies around the

world in which security details have caused that many casualties

or that much property damage in the same period of time?

Ambassador GRIFFIN. No, but there are no other embassies like

Baghdad.

Mr. TIERNEY. Well, I think we established that in my first question. I was fully in agreement with you that it was a unique situation.

Ambassador GRIFFIN. Thank you.

Mr. TIERNEY. So I think Blackwater thinks that all the shootings

were justified, and I think that raises another question. You told

us that there is a special use of force policy specific to the embassy

in Baghdad and that special policy would allow security forces to

do things that ordinarily they might not be able to do, such as

shooting at cars that get close to the motorcades.

Are there in fact special rules on the use of force that permit that

type of shooting in Baghdad?

Ambassador GRIFFIN. Yes, there are.

Mr. TIERNEY. OK. And is there any other place, other than perhaps Afghanistan, is there any other place where those special

rules are in effect?

Ambassador GRIFFIN. I can’t say, as I sit here. Each post in the

State Department operates under a chief of missions firearm policy.

In most of our posts, they are fairly similar. All of our agents operVerDate 11-MAY-2000 12:10 Nov 12, 2008 Jkt 000000 PO 00000 Frm 00145 Fmt 6633 Sfmt 6633 C:\DOCS\45219.TXT KATIE PsN: KATIE
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ate under the normal DOJ guidance for Federal law enforcement

personnel for deadly use of force.

Mr. TIERNEY. I guess my point on the special rules that apply to

Iraq is that when you have those special rules and the need for

those special rules, are you going to be able to shoot at cars that

get within a particular distance of a motorcade because you are

concerned about an IED attack? That happens over 160 times in

3 years? It appears to me that this might not be a mission for civilian law enforcement agents, like the diplomatic security or the contractors. It in fact might be a mission for the U.S. armed forces.

So the real question we are trying to get at here as a committee

is, whether or not the diplomatic security has enough agents may

be beside the point, the question may be whether or not this isn’t

a case where 800 troops or 845 troops actually should be taking

over that mission. And if we are fighting a war and we have two

different departments, State Department and the Defense Department, maybe they ought to get together and try to figure out when

and how they are going to perform that responsibility.

Let me just, in the time left to me, the brief time, just ask a

quick question here. On February 4, 2007, the Iraqi government alleged that on that day, Blackwater shot and killed Iraqi journalist

Hana al-Ameedi near the Iraqi Foreign Ministry. Is that true?

Ambassador GRIFFIN. I am aware that there were a number of

allegations made about shootings in the newspaper. If I may, I

would like to describe what happens when one of our PSD teams

is involved in a shooting incident, so we can have a clear understanding of how the procedures work.

Mr. TIERNEY. Could I ask you, in the course of doing that, if the

chairman is going to allow us to get into this, my way of approaching that, if you would be good enough to work with me on that is,

let us know which of the incidents the State Department has actually investigated, and then tell us whether or not you can provide

us with copies of that investigation and then after you have done

that, we will be happy to hear the way that you go about doing it.

Ambassador GRIFFIN. We will provide you copies of every investigation that has been done.

The standard procedure is, when one of our protective security

details is on a mission and a weapon is fired, as soon as they get

back to the international zone, the team that was involved in that

incident comes to the tactical operations center which is the hub

for DS operations. Members of the team are segregated, they are

interviewed by DS agents to report what had happened.

Within 24 hours they have to provide a written, sworn statement

as to what happened. The statements are reviewed to make sure

that the statements are consistent as to what occurred. They are

reviewed by management at the post and on a parallel track, on

a weekly basis, our people who manage our overseas protective operations have weekly meetings with our contractors. So at the same

time, they are also exchanging information about any incident that

might have occurred during the course of that week.

Chairman WAXMAN. Thank you, Mr. Tierney.

Mr. Burton.

Mr. BURTON. Thank you, Mr. Chairman.

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I will probably ask you some questions that we asked of the CEO

of Blackwater, because I would like to get a perspective of that

from the State Department.

First of all, would it be more effective if we used active Army

personnel to provide these services? Would it be more cost effective

or generally more effective?

Ambassador GRIFFIN. I think that the professional men and

women in the armed forces could do this mission, provided that

they were given the training that the professional security specialists have. It is not the normal military training that they receive

to go out and fight a war. When you are in a professional security

mission where your mission is to protect the person who is your

principal and you come under fire, your response is not to stay and

fight, your response is to get off the X.

Mr. BURTON. So the mission is more defensive than offensive?

Ambassador GRIFFIN. That is right.

Mr. BURTON. Several times it has been suggested that the Department’s contract with Blackwater and other firms was sole

source, a sole source contract. Was it awarded improperly or not?

Mr. MOSER. I think I need to take that question, Mr. Burton.

In 2004, as the U.S. Government made the transition from the

Coalition Provisional Authority to a U.S. embassy presence, we decided to do a sole source contract for Blackwater to provide the personal security services that Blackwater provides. That was the only

time that this contract has been sole sourced in the Department of

State. The reason we did that was for urgent, compelling reasons,

and essentially, there was a fully signed document by the proper

officials within the State Department that signed that justification.

We were under a very, very urgent situation to make that transition. We had to make an effective transition and provide the security services, so that the embassy could get up and running.

That document for urgent and compelling reasons was signed by

the procurement executive of the State Department, by the Department’s legal counsel for acquisition, and by all the necessary officials in both diplomatic security and in the acquisition activity. We

did not like doing a sole source award to Blackwater, and therefore,

at the close of 2004, we asked our OIG to get an audit of their price

proposal. And Mr. Waxman actually put the results of that audit

in his letter of yesterday. We were very glad to see that there, because that was an audit that the acquisition activity asked for.

The reason we asked for it is that sometimes we need an outside

audit to come in and take a look at a contractor to see if the rates

are correct. And the actual results of that audit, we were able to

take part of the Blackwater contract costs, which were, Blackwater

proposed around $140 million, and negotiate those down to $106

million. So we think that the audit was a very positive thing.

Then the next year, in 2005, this contract was incorporated into

the World-wide Protective Services Contract, and it was competitively bid and awarded.

Mr. BURTON. That was a very thorough answer.

In the opinion of the State Department, are the contractors out

of control, or are any of them untrained?

Mr. MOSER. Well, I know that by the terms of the contract, they

are very well trained. I will defer to my colleagues in diplomatic

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security to answer the question about out of control. I am, as part

of the contracting activity, I would not make that judgment. But

that is where we would rely on the advice of the programmatic people.

Mr. BURTON. Would one of you Ambassadors like to comment?

Ambassador GRIFFIN. Please, if I may, Mr. Burton. All of the

WPPS contractors who are employed under the terms of that contract must have at least 1 year of prior military experience, prior

law enforcement experiences. Very often the military experience is

special forces, the law enforcement experience is SWAT-type experience.

Upon being identified they have to successfully undergo a background check. They have to qualify for a secret clearance from our

Government. And they also have to go through a training course,

which has been prescribed by DS, of 164 hours in order to give

them specific training on the mission that they will be tasked to

do when they arrive in-country.

Mr. BURTON. I see my time has expired. I had some more questions, Mr. Chairman. Are we going to have a second round?

Chairman WAXMAN. I wasn’t planning on it. How many more do

you have?

Mr. BURTON. Just one or two more.

Chairman WAXMAN. Why don’t you see if you can do the one or

two more?

Mr. BURTON. Thank you, Mr. Chairman. I appreciate that.

Chairman WAXMAN. We will give you another minute.

Mr. BURTON. When your contractors fire first at a vehicle speeding toward a chief of mission motorcade, is that a violation of the

contract rules of engagement?

Ambassador GRIFFIN. Absolutely not.

Mr. BURTON. Tell me from your perspective what takes place,

what should take place? That will be my last question.

Ambassador GRIFFIN. The use of force policy, which is prescribed

in the chief of mission policy in Baghdad and our standard procedures for our high threat protection division, one does not have to

wait until the protectee or co-worker is physically harmed before

taking action.

We have an escalation of force policy in order to try and take a

number of steps, prior to having to go to the use of the firearms

that our people carry. On the back of all our motorcade vehicles in

Arabic and English there is a warning to stay back 100 meters.

These vehicles are operating with lights and sirens. If a vehicle approaches from the rear when everyone else has stopped or goes

around stopped vehicles and appears to be approaching our convoy,

hand signals will be given, verbal commands will be given in order

to get the attention of that driver, in order to get them to stop. If

they still haven’t gotten their attention, they will shoot a flare at

the vehicle, which also will get their attention but it won’t hurt

anybody. They will use a bright light to shine at the vehicle. If the

vehicle is still coming, they may even throw a bottle of water at

the vehicle.

Having all of those steps failed, they will put a round in the radiator of the vehicle or a couple of rounds to try and stop the vehicle.

If the vehicle continues to come, realizing the number of BB/IED

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attacks that occur in this environment, they are then authorized,

for their safety and the safety of the people they are protecting, to

shoot into the windshield in order to stop that vehicle.

Chairman WAXMAN. Thank you, Mr. Burton.

Ambassador GRIFFIN. It is the escalation of force policy, as we

call it.

Mr. BURTON. Thank you, Mr. Chairman.

Chairman WAXMAN. Ms. Watson.

Ms. WATSON. Thank you, Mr. Chairman.

The panel has spoken about how important private security contractors are for the State Department and how good they are at

their jobs. Ambassador Griffin, in your prepared testimony, you referred to private contractors as a skilled cadre of security professionals. And Ambassador Satterfield, you mentioned that you demand high standards and professionalism from these contractors.

In general, do you feel that private security companies do a good

job in carrying out their mission of protecting State Department

personnel?

Ambassador SATTERFIELD. Congresswoman, we do believe that

the overall mission of security contractors in Iraq is performed exceedingly well, with professionalism, with courage. The undertaking that the Secretary of State has made is to have a comprehensive review of all of those operations, to look at the mission, to look

at the resources brought to the mission, to look at all aspects of

procedures, rules of engagement, questions of jurisdiction and authority, to take a solid look at whether something better can be

done, whether there are issues that need to be addressed. Then we

are going to expose that to outsiders for independent review.

Ms. WATSON. Let me just cut you off. Are you doing that review

for all security or just for those in the theater in Iraq?

Ambassador SATTERFIELD. For all private security contractors operating in Iraq.

Ms. WATSON. OK. Now, you know I have been an ambassador.

I probably am the only one in Congress at the time, in the House,

that has been there. And I would insist that you do that. Because

I had an incident with a private contractor at my post where he

would knock trainees down and then kick them with the point of

his boot. I would have fired him, but the word back from the State

Department was that there was no one else to hire. So I would

hope that would be broad-based, the investigation, and not just

there.

One of the major reasons this committee has expressed some

skepticism about the use of Blackwater and other private security

contractors is because of the great respect we have for all the men

and women who wear the uniform in Iraq. And we trust the military to face our most pressing challenges and stand up to our

greatest threats. And yet for all your statements about the skill

and professionalism of these private contractors, and I am a witness, if you want to come and talk to me privately, I will tell you

about my experiences with these private contractors.

So many in the military have been very critical of private security contractors in Iraq, and especially Blackwater. Brigadier General Karl Horst said, ‘‘These guys run loose in this country and do

stupid stuff.’’ ‘‘There is not authority over them.’’ I was the authorVerDate 11-MAY-2000 12:10 Nov 12, 2008 Jkt 000000 PO 00000 Frm 00149 Fmt 6633 Sfmt 6633 C:\DOCS\45219.TXT KATIE PsN: KATIE
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ity over my security team when I was the Ambassador, and I reprimanded them for how they treated their trainees. ‘‘So there is not

authority over them so you can come down on them when they escalate force. They shoot people and someone else has to deal with

the aftermath. It happens all over the place.’’

An Army lieutenant colonel serving in Iraq said of Blackwater,

‘‘They are immature shooters and have very quick trigger fingers.

Their tendency is to shoot first and ask questions later. We are all

carrying their black eyes.’’

A senior U.S. commander serving in Iraq said, ‘‘Many of my

peers think Blackwater is oftentimes out of control. They often act

like cowboys over here.’’ Another U.S. military commander put it

bluntly: ‘‘Iraqis hate them. The troops don’t particular care for

them, and they tend to have a know-it-all attitude, which means

they rarely listen to anyone, even folks that patrol the grounds on

a daily basis.’’

And I can go on and on. But I would like you to address how we

can, if you will, be sure that our military has the training, you, the

State Department contract, and you go to private firms. If you see

areas of our training that are missing, would you make that recommendation to the Department of Defense?

Ambassador SATTERFIELD. Madam Congresswoman, there are

different missions in Iraq today. Certainly, the ones you raise are

ones that can be considered by the Department of Defense and by

the Joint Chiefs in terms of the mission to be assigned to U.S.

forces, whether in Iraq or elsewhere. I really can’t speak to that.

What I can speak to is the oversight and accountability which

the Department of State has and must exercise over those private

security contractors that work for us today in Iraq. That is a responsibility we take quite seriously. It is a responsibility that we

will be carrying out in terms of this overall review in a very comprehensive fashion and we will make the results of that available.

Ms. WATSON. OK, my time is up, and there is a call to go to the

floor. But I would just like to say in closing as I run out the door,

I think somebody from the State Department ought to come and

talk to me.

Chairman WAXMAN. Thank you, Ms. Watson.

Ambassador GRIFFIN. We will get on your schedule at your earliest convenience, and we look forward to talking to you.

Chairman WAXMAN. Mr. Shays.

Mr. SHAYS. Thank you.

Gentlemen, would you agree that there is a huge difference between an ambassador in a country where there is not a threat to

their lives and the challenge that Ambassador would have with a

contracting team that is to protect them and one in places like Jordan and other areas in the Middle East and particularly Iraq? Is

there not a big difference? In other words, don’t you have a lot

more contractors having to secure people in a nplace like Iraq versus what an Ambassador would have to protect his or her wellbeing?

Ambassador SATTERFIELD. Some of the personnel that we have

under contract——

Mr. SHAYS. I want you to move the mic closer, please.

Ambassador SATTERFIELD. I am sorry?

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Mr. SHAYS. Move the mic closer to you, please.

Ambassador SATTERFIELD. Some of the people at our posts

around the world are part of our local guard force. And those local

guards——

Mr. SHAYS. You are not answering the question. I asked is there

a difference.

Ambassador SATTERFIELD. There is a huge difference between

Baghdad——

Mr. SHAYS. Thank you, there is a huge difference.

Ambassador SATTERFIELD. My point is there are guards——

Mr. SHAYS. Case closed. Let me take the next question. I only

have 5 minutes. It’s an easy answer. There is a big difference. The

men and women who are being defended in Iraq by security people,

their lives are in danger every day. Now, Mr. Satterfield, isn’t it

true the Ambassador has responsibility in Iraq for those security

personnel?

Mr. MOSER. Indeed he does, Congressman.

Mr. SHAYS. Thank you. And does he exercise it?

Mr. MOSER. Yes, he does.

Mr. SHAYS. Thank you. Would you tell me, Mr. Satterfield, can

you describe the process that is followed by the Department—excuse me. Let me ask this question. If there were sufficient, I would

like to know if there were sufficient military personnel to provide

armed escorts for convoys in Baghdad and conduct protection,

would you still use contractors to provide such security?

Ambassador GRIFFIN. As I mentioned a minute ago, Mr. Shays,

if the outstanding young men and women of the military received

training in protective security operations, then they certainly

would be capable of performing——

Mr. SHAYS. That is not what I asked. I want to know if you have

a preference for using—and I am sorry, these are basically simple

questions. I want to know if your choices between people, outside

contractors, or would you like to use the resources of the military

to have to spend their time to protect State Department employees.

Do you want State Department employees to go around in

HumVees with lots of armored personnel, or would you prefer that

they go around the way they do in civilian clothes with people who

are securing them that aren’t in Army uniforms?

If you prefer the Army, tell me to do it.

Ambassador GRIFFIN. All I was saying is the Army would be capable of doing it if it was done in the manner which we prescribed,

which would not be HumVees, they would not be in uniforms. The

protective security personnel that we utilize are trained for that

specific mission.

Mr. SHAYS. If they were Army personnel, would they be under

your command and oversight? Or would they be under the command of the Army?

Ambassador GRIFFIN. If they were performing a protective mission of the Ambassador and other——

Mr. SHAYS. Do you command the Army or does the Army command the Army?

Ambassador GRIFFIN. The Army command the Army.

Mr. SHAYS. So the answer is, isn’t it, that they would be under

the command of the Army and not under your jurisdiction and

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oversight if they were in fact Army? I don’t want to put words in

your mouth?

Ambassador GRIFFIN. No, no. Well, I guess they would be.

Mr. SHAYS. I am just asking the question. Yes, sir.

Let me ask you this. Would it be a problem if in fact you had

no responsibility and they were to be answerable to the Army?

Generals and so on.

Ambassador GRIFFIN. I think that is a national policy consideration, as to the staffing levels of the Army to perform that mission.

Mr. SHAYS. Well, as a Peace Corps volunteer, and I will just

make this point, the last thing you want when you are going into

the community is to come in with a military force. What you want

is to have a low profile. You want a protocol that says you don’t

bring in tanks, you don’t bring in HumVees, you bring in a civilian

car, you want people dressed in civilian clothes for the most part,

not dressed in Army uniform.

Let me ask you in closing, Mr. Satterfield, when Mr. Bremer

went into places, wasn’t one of the criticisms that he was going in

with the Army, with a high profile of military personnel and having an Army footprint instead of having a civilian footprint?

Ambassador SATTERFIELD. Congressman, around the world,

whether it is at a critical threat post or a different threat level

post, we try to make our protective details, our presence, as low

profile as possible consistent with the protect mission, as unobtrusive as possible, and as consistent with the civilian setting in which

we operate as possible.

Mr. SHAYS. Thank you.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. Cooper.

Mr. COOPER. Thank you, Mr. Chairman.

I took my 88 year old mother to the movies the other day. We

saw a movie called No End In Sight. It is really more of a documentary than a movie. In the middle of it, they say that the following footage was filmed by a U.S. security contractor, and he or she

set the film footage to their own music. So it sounds like MTV,

driving rock music. But the video footage is truly startling. It is

shooting up cars, apparently on a street in Baghdad, killing civilians, to this driving rock music.

Is the State Department aware of this film or have you made inquiries as to which contractor, employee or independent contractor

shot this footage?

Ambassador GRIFFIN. No, I am not familiar with the footage.

Mr. COOPER. And you are not familiar with the fact that it is

being shown all over America?

Ambassador GRIFFIN. I am not familiar with the footage.

Mr. COOPER. Ambassador Satterfield, same answer?

Ambassador SATTERFIELD. I am aware of that footage. It is outrageous. The U.S. Government responded in just that fashion at

the time it was initially circulated, I believe that was some years

ago. It may be featured in a movie today, but the film footage is

not new. It does not reflect in any way the standards of conduct

that are prescribed by our regional security office on the operation

of any private security contractor operating in Iraq, not today and

not then.

149

Mr. COOPER. So you have not seen it, but you know it is not

true?

Ambassador GRIFFIN. I have seen that footage.

Mr. COOPER. Mr. Ambassador, you say in your testimony, in

those rare instances when security contractors must use force,

management officials at the embassy conduct a thorough review to

ensure that proper procedures were followed. Ambassador

Negroponte has tried something similar just days ago. The committee tried to find out about an incident that happened on November

28, 2005. That is when a Blackwater convoy deliberately smashed

into 18 different cars en route to and from the Ministry of Oil.

Blackwater’s own internal memo on the incident said that

Blackwater’s tactical commander on that mission ‘‘gave clear direction to the primary driver to conduct these acts of random negligence for no apparent reason.’’

We have the Blackwater memo right here, the Blackwater aviation team that was accompanying convoy pointed out the problems.

It also says that when Blackwater officials responsible were questioned about this incident, they gave statements, official statements, that your own employees said were ‘‘deemed to be invalid,

inaccurate and at best dishonest reporting.’’

So we have a problem here, and the State Department investigates problems. Well, when the committee asked the State Department about this incident, we got no response. So we don’t know

whether that means you investigated it and won’t tell us, or you

didn’t investigate it. Which is it?

Ambassador GRIFFIN. There were a number of incidents that the

committee requested reports on 6 days ago. I regret that we were

unable to pull all those reports together in time for the hearing. We

will certainly provide those reports for the record.

Mr. COOPER. We requested this in March of this year. So it has

been more like 6 months than 6 days. Are you saying that

Blackwater’s recordkeeping is better than yours?

Ambassador GRIFFIN. No, I am saying that there were a number

of other requests made 6 days ago, and I don’t have instant recall

of all of them. But we will certainly get a report to you about this

particular incident.

Mr. COOPER. Another question. Blackwater testified they hired

away a number of military personnel. And Secretary Gates is even

worried about that, and has talked about non-compete agreements.

How many diplomatic security folks have they hired away?

Ambassador GRIFFIN. I am not aware that they have hired any.

Mr. COOPER. Do you take that as an insult, they don’t covet your

employees?

Ambassador GRIFFIN. No.

Mr. COOPER. Do you take it as an insult that we have to have

extra help in so many places around the world, including Haiti?

Are you not training your folks up to that level?

Ambassador GRIFFIN. I take it as an indicator of the environment

that we are operating in a number of posts around the world.

Mr. COOPER. Have you requested the money or the training or

the resources to train your people up to the level that we need

them in Jerusalem and Port Au Prince and Kabul and Baghdad

and Basra and lots of places around the world?

150

Ambassador GRIFFIN. My people have the training necessary to

work in those areas, and they are working there. But we don’t have

the numbers of people that it would take to fully staff all of those

operations, and we don’t have all of the various areas of expertise,

as I mentioned, such as helicopter pilots and medics and armorers

and mechanics, etc.

Mr. COOPER. Have you asked for the additional resources so that

you could augment your forces to meet the mission in those areas?

Ambassador GRIFFIN. We have requested additional resources.

But again, the question includes whether or not you hire a fulltime Government employee who is an employee for 25 or 30 years

when the mission might only last 2 years. So certainly there is a

middle ground somewhere.

Mr. COOPER. So the State Department is saying we are exiting

from Iraq in 2 years?

Ambassador GRIFFIN. No. I am just saying that we have deployed

in other places, going back to 1994. And certainly at the beginning

of a mission, it is hard to predict exactly how long the operation

will go on. But that we have operated in a number of different

countries using these protective security specialists.

Chairman WAXMAN. The gentleman’s time has expired.

Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman.

I am going to continue along that line, because I think it is a

very good line of questioning, and I appreciate this part of the

hearing, because I think we are getting to some fundamental questions about, what we are supposed to be Oversight and Government Reform. And if at the end of this day the oversight doesn’t

lead to constructive dialog on reform, then we didn’t do our job.

When we look at nominally 1,000 security people related to the

State Department, 800, almost 900 in Iraq, if, hypothetically they

all were standard pays and training that you have somewhere else

in the world, how often would you have to be rotating these people

in? This is assuming that every one of those 900 or so positions

were standard security within the State Department security apparatus. What would that do to your rotating into Iraq? How often

would these people be going to Iraq?

Ambassador GRIFFIN. Presently, the rotation is 1 year.

Mr. ISSA. No, no, that is not what I am saying. What is the total

number of Government employee RSOs and below that you have at

your disposal worldwide, not including contractors?

Ambassador GRIFFIN. Our total staffing is roughly 1,450.

Mr. ISSA. OK. So every year, almost, figuring schooling and retirement, every year you would be rotating half your people in. You

have 1,400. If we added 1,000, then you would have 2,400 and you

would need 1,000 of them in Afghanistan and Iraq, is that right?

OK, so this is a surge of huge proportion, isn’t that right?

Ambassador GRIFFIN. Yes, it is.

Mr. ISSA. But let’s go to a couple other areas.

Ambassador Satterfield, you and I have known each other for a

few years, because of my travels to Lebanon while you were there.

You have been a specialist in the Middle East. When you were Ambassador in Lebanon, this is an area in which the State Department contracts itself for its employees, is that correct?

151

Ambassador SATTERFIELD. That is correct.

Mr. ISSA. OK. At the time that you were Ambassador in Lebanon, what was your amount of career foreign service personnel

that were security, your RSO and so on, versus the contracted personnel that were mostly Lebanese?

Ambassador SATTERFIELD. We had a team of approximately eight

RSOs. We had approximately 450 local guards who mainly performed static guard duties of mission. We had a team of about 75

bodyguards who had a specialty protective rule both at the compound and more importantly, outside the compound.

Mr. ISSA. And substantially, that is still what is going on at Embassy Beirut?

Ambassador SATTERFIELD. Those ratios have changed, Congressman, in terms of the number of local guards, the number of bodyguards and the number of RSOs. But the ratios in general are similar.

Mr. ISSA. So I am trying to understand, from a standpoint of how

you do business in a situation like Beirut, which since 1983 has

been unique, you have refined it. But for all practical purposes,

what you do is you use your career State Department people, many

of them at the pinnacle of their training and experience, to oversee

essentially 75 mostly national——

Ambassador SATTERFIELD. All national.

Mr. ISSA. All national trigger-pullers, to use a term that has been

used here today, and another 450 watchtower people. And that is

an efficient way to leverage your U.S. citizens relative to the total

exposure to the U.S. Government at Embassy Beirut.

Ambassador SATTERFIELD. In Beirut, we found it a highly effective way to run the operation.

Mr. ISSA. OK. So this is a model that would not be unreasonable

if we knew we were going to be doing the next 20 years in Iraq

at this level? Is that true, Ambassador Griffin?

Ambassador GRIFFIN. That is true. And the fact is that if you

look at all of our posts worldwide, we have in excess of 30,000 local

guard force employees that secure our embassy and consulate facilities overseas.

Mr. ISSA. OK, so I am going to ask you the question, this is the

reform question, again. Do you have or are you working out plans

for areas like Haiti, Bosnia, Afghanistan and Iraq to increase the

number of direct contract personnel, particularly indigenous, where

appropriate, in order to both increase the domestic participation

and reduce the reliance on out of country and comparatively expensive contract people?

Ambassador GRIFFIN. I think Mr. Moser can talk about the cycle

for our contracts and the fact that they are of a short term. We are

always looking for ways to improve the way we do business.

Mr. ISSA. I understand that you can terminate Blackwater at the

end of a year, any time you want. But I guess the question, because

this is a committee that should be looking at the long-term costs,

and I share with the chairman the fact that we shouldn’t be spending $200,000 forever if we could be spending in some cases a lesser

amount and getting as good or better service, whether or not that

is a career foreign service person or an indigenous person taking

the place.

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Mr. MOSER. Mr. Issa, I have been in the Foreign Service for a

number of years, too, and I have actually been, visited or actually

served in a couple of posts in the Middle East. I think my career

colleagues in diplomatic security would agree that our preference

is to always use local personnel for these services, if it is possible

to do so. It is not in the State Department’s interest to have expatriate contractors for these kinds of services. It is only something

we do in the most extreme circumstances. Just as you pointed out,

and in Mr. Satterfield’s experience in Beirut, that is closer to our

traditional model.

Chairman WAXMAN. Thank you very much, Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman.

Chairman WAXMAN. Mr. Lynch.

Mr. LYNCH. Thank you, Mr. Chairman. I want to thank the panelists for their testimony.

Ambassador Satterfield, in the testimony you prepared for today’s hearing, you wrote: ‘‘In those rare instances when security

contractors must use force, management officials at the embassy

conduct a thorough review to ensure that proper procedures were

followed.’’ I would like to ask you about the investigation conducted

by the State Department, and a couple of incidents we have looked

at. I might only get through one.

During our investigation, we found that on June 25, 2005, a

Blackwater operator shot and killed an innocent Iraqi bystander in

Al-Hillah. According to State Department e-mail, Blackwater personnel failed to report the shooting, they covered it up, and subsequently they were removed from Al-Hillah. The State Department

then in their e-mail asked Blackwater to pay $5,000 in compensation.

But we have no information showing that the State Department

ever conducted an investigation of that incident in Al-Hillah. Could

you tell me, was an investigation ever conducted?

Ambassador SATTERFIELD. Congressman, if you will, we will get

back to you with full details of that incident and the investigatory

followup.

Mr. LYNCH. You are kidding. This is a June 25, 2005 case.

Ambassador SATTERFIELD. Congressman, we will respond in detail on the questions you have posed.

Mr. LYNCH. But sir, you were the Deputy Chief of Mission at the

time. You don’t recall this?

Chairman WAXMAN. Congressman, I do not recall in the fashion

necessary to respond to your question in the detail it deserves.

Mr. LYNCH. I am just asking if there was an investigation. That

is not, OK, you have the shooting, you were there, do you remember if there was an investigation? That is not heavy on detail?

Ambassador SATTERFIELD. And Congressman, I would prefer to

respond to you in writing on this.

Mr. LYNCH. Are you refusing to answer?

Ambassador SATTERFIELD. No, Congressman, I want to give you

a full answer. I am not able to do that at this time.

Mr. LYNCH. I am just looking for a yes or no. Was there an investigation, yes, if there wasn’t an investigation, no?

Ambassador SATTERFIELD. I am not able to confirm the details of

what happened following that incident at the time.

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Mr. LYNCH. I am not looking for the details. I am just looking

for the fact of an investigation, did it occur or didn’t it occur?

Ambassador SATTERFIELD. Congressman, I will have to check on

that for you.

Mr. LYNCH. So you don’t know, you don’t remember if there was

an investigation?

Ambassador SATTERFIELD. I cannot recall.

Mr. LYNCH. OK.

Chairman WAXMAN. Will the gentleman yield to me?

Mr. LYNCH. I will yield to the gentleman.

Chairman WAXMAN. The committee asked for investigative reports and other documents relating to incidents involving allegations of Blackwater’s misconduct which would presumably include

shooting civilians and seeking to cover it up. But virtually none

were provided. That fact alone casts doubt on the sufficiency of any

State Department investigations into these incidents.

We have had a better response from Blackwater than we have

from the State Department on getting information. Does that bother you as much as it bothers me, or do you have to find out whether you feel that way or not?

Ambassador SATTERFIELD. No, Mr. Chairman. I——

Chairman WAXMAN. I can’t understand why we don’t get responses from the State Department.

Ambassador SATTERFIELD. We will be responding fully to all of

the requests made both at this hearing and by the committee.

Chairman WAXMAN. Well, some of these requests were made in

March, some were requested in June, we are already holding the

hearing. We made requests so that we could have them before the

hearing, not so that we could get them after the hearing.

I thank the gentleman for yielding.

Mr. LYNCH. With all due respect, reclaiming my time, sir.

Look, what I am getting at is this. The State Department works

hand in hand with Blackwater, from my own experience in Iraq,

in a fairly coordinated team approach in protecting State Department personnel. The closeness of that relationship between State

Department personnel, look, Blackwater is protecting these folks

every single day in a very hostile environment. Friendships develop. Reliance develops. It is just not possible, because of the conflict that is created, that the folks that are being protected, State

Department, are going to do an objective job in reviewing the conduct of the people who are protecting them.

And all I am suggesting is this, please, if you can answer this

question. Don’t you think it might provide a little separation and

a more objective assessment of Blackwater’s conduct if we had a

special inspector general reviewing those incidents, so that there be

a little space there, they wouldn’t be reviewing the conduct of people that protect them every day? If you would take a crack at an

answer on that one. Thank you.

Ambassador SATTERFIELD. Congressman, we do take the issue

you raised very seriously, about distance, transparency, objectivity

of review of incidents, as well as objectivity of review of rules of operation in general, conduct in general. We are looking at that right

now comprehensively.

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But to go back to your original question, do we believe it is possible to objectively oversee the operation of security personnel in

the field who protect us? Yes, we believe that is possible. It is executed every day around the world. There are dismissals from service made every day in response to incidents. This is done.

But we are looking at the overall picture in Iraq right now. And

we will consider what steps may be appropriate.

Mr. LYNCH. Here is my problem with that answer. The case

which I cited, there was a killing of an innocent Iraqi, the RSO in

question, I think, worked for you and Ambassador Griffin. They

were part of the review of the incident itself. So just from an objective standpoint, looking at the whole situation, there may have

been some complicity or some involvement, or, let’s call it negligence even on the part of that individual, and they are now reviewing the events in question.

So that is all. I would just like some good, hard objective review

of the conduct here that would not be tainted by these relationships. I yield back.

Chairman WAXMAN. Thank you. Blackwater and the private contractors have to be responsive to you. But you have to be responsive to us. We have the oversight jurisdiction and you have the

oversight jurisdiction over Blackwater. We want to know if you are

exercising that oversight responsibility.

Ms. Schakowsky.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman.

I would think that the State Department is very concerned on

whether or not these private contractors, security contractors, are

actually helping us achieve our mission, that is, whether they are

helping to win hearts and minds or exactly the opposite.

So what we are seeing is that this is a benign function, all these

various incidents. Are they making the job harder? For example,

after the Fallujah Four were humiliated and killed in Fallujah, we

had the Battle of Fallujah, where a number of our forces who participated, a large number, were killed there. The latest incident

that we had has enraged the Iraqis, but also shut down the Green

Zone essentially, so that our diplomats couldn’t leave for a certain

period of time.

I am just very concerned that all of these things have been virtually ignored, and in fact, when it comes to Blackwater, the position that seems to be taken with a number of different quotes of

e-mails and memos has been, let’s just pay people off and put this

incident behind us. I could go back and quote all these various

things, but I think you have probably been here and heard that.

I am concerned that you are allowing these private contractors

to hurt our mission in Iraq. And I would like a comment.

Ambassador GRIFFIN. If I may, David. Again, realizing the environment that we are operating in in Iraq, just this calendar year,

Blackwater has been involved in 3,073 missions, protective missions on behalf of the State Department. Let me correct myself.

There have been 3,073 country-wide missions by the——

Ms. SCHAKOWSKY. I heard all that. That is the Blackwater talking points. I have heard those.

Ambassador GRIFFIN. This is a DS talking point. The reality is,

this year, there have been 6,000 attacks per month going on in

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Iraq. That is the environment that they are trying to perform the

protective mission in, 6,000 attacks per month.

Ms. SCHAKOWSKY. And I am not questioning the level of violence

in Iraq. I am asking, and I will move on, I guess in some ways I

was commenting that these private security guards who, we are

unclear on what kind of oversight we can exert and what you can

exert, have been damaging our mission in Iraq.

So let me proceed to that. Under CPA, the Coalition Provisional

Authority Order 17, contractors have immunity from the Iraq legal

system. I heard you say, Ambassador Satterfield, that you were

going to review, this is 4 years later, the effectiveness of CPA

Order 17. Don’t you think there is prima facie evidence, since only

two contractors that I know of have been prosecuted in any way

that we are insufficiently providing oversight?

Ambassador SATTERFIELD. Congresswoman, CPA Order 17——

Ms. SCHAKOWSKY. Deals with Iraqi law.

Ambassador SATTERFIELD [continuing]. Which is part of Iraqi

law——

Ms. SCHAKOWSKY. Right.

Ambassador SATTERFIELD [continuing]. Provides immunities not

just for security contractors, but for our armed forces in Iraq, for

diplomatic personnel of all diplomatic and consular missions, not

just that of the United States, in Iraq and for contractors associated with them. It is a very broad mission.

Ms. SCHAKOWSKY. And does it still apply to everyone? They are

not subject to Iraqi law at all?

Ambassador SATTERFIELD. CPA Order 17 provides immunities for

those classes of individuals, military and civilian, diplomatic and

non-diplomatic, operating in Iraq today. But the question you raise,

Congresswoman, is broader than the operation of CPA Order 17,

and we recognize that.

Ms. SCHAKOWSKY. Correct.

Ambassador SATTERFIELD. It deals with issues of jurisdiction and

authority in U.S. domestic law, not just the operation of a piece of

Iraqi law that provides immunity to Iraqi prosecution.

Ms. SCHAKOWSKY. Right. And so is it your position that a

Blackwater contractor working for the State Department can be

court martialed in the military justice system?

Ambassador SATTERFIELD. The issue of jurisdiction and operation

of U.S. domestic law, the reach of U.S. domestic law, over individuals who are covered by the operation of CPA Order 17——

Ms. SCHAKOWSKY. No, no——

Ambassador SATTERFIELD [continuing]. In certain cases is a question being examined now.

Ms. SCHAKOWSKY. So almost 5 years later, we are now figuring

out who is subject to what laws?

Ambassador SATTERFIELD. This is a broader issue than Iraq,

CPA Order 17 or Blackwater. It is a global issue involving jurisdiction.

Ms. SCHAKOWSKY. Do you think it is a problem that almost 5

years into, or 41⁄2 years into the war, that only two of the God

knows how many people of the 160,000 we think are now serving

in terms of contractors have been formally charged with anything

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and prosecuted? Don’t you think that is prima facie evidence that

we are not doing enough?

Ambassador SATTERFIELD. No, Congresswoman, because that

would require an examination of whether in fact there was a body

of individuals for whom there was reason to believe prosecution

should be made. And I am not able to comment on that.

Ms. SCHAKOWSKY. So you would say that perhaps only two people

out of all those private contractors that have served should be

charged with anything?

Ambassador SATTERFIELD. Congresswoman, I am not able to

comment on culpability under U.S. law, existing or——

Ms. SCHAKOWSKY. I am asking you to comment on whether our

oversight structure is sufficient if that has been the outcome.

Ambassador SATTERFIELD. There are significant issues involving

the clarity and application of U.S. domestic law with respect to certain classes of individuals who operate in environments such as

Iraq, but not exclusively in Iraq.

Chairman WAXMAN. The gentlelady’s time has expired.

Mr. Cummings.

Mr. CUMMINGS. Thank you, Mr. Chairman.

Gentlemen, first of all, thank you for being with us. Blackwater

has had enormous growth in the size of its Federal contracts.

Would you agree, Mr. Satterfield?

Ambassador SATTERFIELD. [No audible response.]

Mr. CUMMINGS. Mr. Moser.

Mr. MOSER. I have been told that is true. I am really only concerned with the growth of its size with regard to the State Department. And that operation has grown some.

Mr. CUMMINGS. In 2000, the company had less than $1 million

in Federal contracts, but since then, the company has received over

$1 billion in Federal contracts. I consider that incredible growth for

any company.

The first State Department contract that Blackwater got was

awarded in June 2004, is that correct?

Mr. MOSER. Yes, that is correct.

Mr. CUMMINGS. It was a contract to provide security services to State Department officials in Iraq. And it was worth over $300 million, is that correct?

Mr. MOSER. Yes, that is correct.

Mr. CUMMINGS. What bothers me is that this contract, and I

know you talked about this a little bit earlier, Mr. Moser, but it

was a no-bid contract.

Mr. MOSER. Yes, it was a sole source award.

Mr. CUMMINGS. And according to the Federal procurement data

base, the contract was awarded as a sole source contract without

any competition on the basis of urgency, is that correct?

Mr. MOSER. On the basis of urgent and compelling, because we

were transitioning from the Coalition Provisional Authority to a

State Department entity, that is correct.

Mr. CUMMINGS. And how do we determine, let’s say we have 12

companies that can do the same thing. Do you just pick up the

phone and say, hey, guys, I think we want to give you this $300

million contract? What do you do? All things being equal, urgent

situation, how do you determine? Because, let me tell you someVerDate 11-MAY-2000 12:10 Nov 12, 2008 Jkt 000000 PO 00000 Frm 00160 Fmt 6633 Sfmt 6633 C:\DOCS\45219.TXT KATIE PsN: KATIE
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thing, if you choose Blackwater and I am Company X and I can do

the same thing, and you say, well, we gave it to Blackwater because of urgency, I want to know, well, hey, why wasn’t I in the

pool for the urgent group?

Mr. MOSER. Mr. Cummings, that is a very, very good question.

As the head of the acquisition activity, we are always concerned

about promoting competition. This one was done for urgent and

compelling reasons. It is something the acquisition activity does

very reluctantly. At the time when that was done, there was market research done. We examined the capabilities of four other firms

and made the determination whether they could take on this task

of providing these services.

Realizing that we had done a sole source contract, we worked

with our partners in diplomatic security and awarded on a competitive basis the worldwide protective services contract iteration two

in the next year, so that we only had a sole source award for that

1 year for urgent and compelling reasons. And as I said earlier in

my remarks, because we were very concerned about this contract,

we asked for an independent cost audit to be done on this. This is

something we take very seriously.

Mr. CUMMINGS. Yes, you say the audit was done when?

Mr. MOSER. The audit was done actually in January 2005. In

other words, of the current contract award. And we actually negotiated down the cost of that contract by about $25 million.

Mr. CUMMINGS. Let me make sure I am clear on this. Are you

trying to tell me that when you did this evaluation, you said there

were four other companies, are you trying to tell me that those four

other companies were not as qualified as this company?

Mr. MOSER. That is correct. Given the urgent and compelling circumstances, we did not feel that they could meet the Government’s

need at that time.

Mr. CUMMINGS. And were there any other companies that you

considered outside now of the total of five? In other words, you

have Blackwater, who got the contract, $300 million, and then we

have four other companies that weren’t apparently qualified. I

guess I am concerned about this qualified pool. I hear people talk

about pools and who is qualified. And I am trying to figure out who

is qualified and how are they qualified, because I can, I mean, I

can imagine there are a lot of people that feel like they have not

been treated right.

Mr. MOSER. And I agree with that, Mr. Cummings, and that is

the reason why we use the authority within the Federal Acquisition Regulations to use an urgent and compelling reason to award

a contract very sparingly. This is the reason why that when we did

this particular award, we had it reviewed by our procurement executive to make sure, and by our competition advocates, to make sure

that we were not unjustifiably taking this action. That is the reason why we were so anxious, 1 year later, to award this competitively.

Mr. CUMMINGS. It is my understanding that the previous year

they had a contract for $3 million and then, lo and behold, the next

year, $300 million. Boy, that sounds like the lottery.

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Mr. MOSER. I can understand that, too. But I really can’t speak

about any contract that was awarded by the Coalition Provisional

Authority.

Mr. CUMMINGS. But would you have looked at those contracts?

Would that have been a part of your consideration?

Mr. MOSER. Yes. We would have actually examined those for the

past performance criteria.

Mr. CUMMINGS. And who made the decision? Who made the final

decision to award it and who signed the contract?

Mr. MOSER. I would have to look. I can’t remember which one of

my contracting officer’s staff actually signed it. I would have to look

at that contract. But that contracting action has gone through and

we have actually given those documents to the committee. I see my

colleagues on the staff, they have received copies of those several

times.

Chairman WAXMAN. Did that go any higher than just your contracting officer? This is a pretty serious thing.

Mr. MOSER. Yes, as I said, it was signed by the procurement executive of the Department of State, which is not part of the acquisition activity. He is an independent entity. It was also signed by our

acquisitions attorney to make sure that it had full legal review.

Mr. SHAYS. Was this in 2004? Not 2007, not 2006?

Mr. MOSER. This was in 2004.

Mr. SHAYS. It was in 2004 under Mr. Bremer?

Mr. MOSER. No, actually 2004, as the embassy was stood up. In

other words, the 2003 award, I think it was 2003, and this is where

I am not really competent to speak, I think it was made under Mr.

Bremer. And I can’t really speak to that. I can only speak to the

contracts the State Department has awarded.

Chairman WAXMAN. May I ask this question of maybe the others,

maybe Ambassador Satterfield or Ambassador Griffin would know,

maybe you know, you told us who signed it, but who approved it?

How high up did it go in the State Department for approval? It is

a large contract.

Mr. MOSER. Oh, OK. The head of the acquisition activity signed

the sole source justification. That is the senior executive service officer. It was reviewed by the Deputy Assistant Secretary at the

time who I replaced.

Chairman WAXMAN. Deputy Assistant Secretary?

Mr. MOSER. Deputy Assistant Secretary, yes.

Chairman WAXMAN. Thank you.

Mr. CUMMINGS. I just have one other question, very briefly. Do

you look at a company’s capacity to perform a contract?

Mr. MOSER. Yes, we do.

Mr. CUMMINGS. And did you look at it in this instance?

Mr. MOSER. Yes, we did.

Mr. CUMMINGS. Did they have the resources to do this contract

at that time, or did they have to use the $300 million to ramp up

to doing it?

Mr. MOSER. No, in fact, Congressman Cummings, we actually always look at the capital requirements in the contract and then look

and see if the contractor, the offeror in this case, because he is not

really a contractor until he has gotten an award, if the offeror has

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the financial capacity in order to provide the resources that we are

going to need.

And this is a typical, this is very much a business analysis type

decision. Because what we are looking to make sure is that they

are going to be depending on the next paycheck to come so that

they can actually keep on going. We never want to put the U.S.

Government at risk in that kind of situation. Because in fact, our

biggest criterion at the end of the day is what risk is the Government at in terms of the financial arrangements in the contract.

Chairman WAXMAN. Thank you very much.

In conclusion—yes?

Mr. ISSA. We were going to alternate the time?

Chairman WAXMAN. We had Mr. Cummings take the questions.

Do you want to ask a question or two? Do you want a minute?

Mr. ISSA. I do. My understanding, Mr. Chairman, was——

Mr. SHAYS. Take a minute. He’s given you a minute. Just take

it.

Chairman WAXMAN. OK, your questions, in a minute.

Mr. ISSA. I will be brief.

Chairman WAXMAN. The gentleman is granted a minute.

Mr. ISSA. The recent report by Retired General Jim Jones and

Chief Ramsey appears to say in pretty much no uncertain terms

that there are roughly 300,000 police forces throughout Iraq, 85

percent of whom are Shia, who are constituted in large amounts by

people who are not working in the best interests of fairness and

justice in Iraq, and that they have been so infiltrated by people

who will in fact kill Sunis and do other things wrong that they

should be, for all practical purposes, torn down and started over

again.

In that environment, and this is for Ambassador Griffin, what

does that mean to anyone, DS or contractor, trying to protect your

people when Iraqi police forces appear to be coming on the scene?

Ambassador GRIFFIN. As you can well imagine, it is an extremely

difficult task, as is, and if you are not sure if the people who are

supposed to be supporting your mission are really with you or not,

it only makes it more complicated. We recently had an incident in

Baghdad in September where one of our convoys that was out to

do an advance for a chief of mission motorcade proceeded through

an intersection where the traffic was being held up by a police official in order to clear the way for our motorcade which was promptly hit by an EFP, an explosively formed penetrator.

Mr. ISSA. The worst of all.

Ambassador GRIFFIN. The worst of all. It resulted in three injured Blackwater employees who had to be Medivaced to the combat support hospital after the small arms fire ceased, because it

was a complex attack.

So it makes it extremely difficult. And it is part of this environment that I alluded to where you have 6,000 attacks a month and

you don’t always know who is with you and who is against you.

Chairman WAXMAN. Thank you——

Mr. ISSA. Final question——

Chairman WAXMAN. No, Mr. Issa——

Mr. ISSA. Mr. Chairman, the rules of the committee——

Chairman WAXMAN. Your time has expired.

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Mr. ISSA. Mr. Chairman, are we going to have regular order?

Chairman WAXMAN. Mr. Shays is recognized for any closing comment he wishes to make. Your time has expired. I am only going

by the rules.

Mr. ISSA. Mr. Chairman—would you yield for a final comment?

Mr. SHAYS. No.

Let me just thank you, Mr. Chairman, for holding this hearing

and making sure it didn’t focus on an incident we do not yet know

the facts on. I want to thank our first panel and also our second

and say, as I wrestle with this issue, it seems to me we are really

debating whether, one, we want contractors or we want the Army.

Or a second issue is, do we want the State Department to have its

own protective force that would be paid employees. I think these

are all issues that are valid and we need to have dialog on it.

I want to say to you again, Mr. Satterfield, when I have been in

Iraq, you have been at the forefront of tremendous sacrifice for our

country. Mr. Griffin, our paths didn’t really cross. But I just want

to say to you, Mr. Satterfield, thank you for your service in Iraq.

Again, Mr. Chairman, thank you.

Chairman WAXMAN. I just want to conclude by saying, it is interesting how, at the end of the hearing, we come to the recognition

on both sides of the aisle that this is a valid question and an important one, whether we should contract out these kinds of services

in Iraq or anywhere else. At the beginning of this hearing, all we

had from the other side of the aisle were complaints that we

shouldn’t even be holding this hearing.

Now, as far as the State Department is concerned, what we have

heard is that this was anticipated to be temporary. You need to

quickly put out a contract, because it was going to be a temporary

matter. Yet the embassy was being built for $600 million. This

doesn’t indicate to me that there was going to be a temporary presence in Iraq. It indicates to me that we were planning to be in Iraq

and may still be planning to be in Iraq for a very long period of

time.

I can’t understand why a security officer that is hired by

Blackwater should be paid two or three times what our commander

in Iraq is paid. It confuses me why we need Mr. Prince to figure

out to hire military veterans and give them the training to do the

job that the State Department could do with these military personnel. I just think no one cared about the money because Blackwater

was organized and you just paid them an aamount of money and

they did the job.

From my point of view as a chairman of an oversight committee,

and I want to work together with Democrats and Republicans, the

taxpayers are not getting their money’s worth, by all the billions

of dollars that have gone to Blackwater and these other private security contractors, when it could have been done a lot cheaper. And

we are not getting our money’s worth, when we have so many complaints about innocent people being shot, and it is unclear whether

they are actually being investigated by the State Department, because we haven’t had cooperation from the State Department to

even tell us if investigations have been done by them.

So if we are paying more and getting less than what we can get

from our military, I think that the American people are entitled to

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ask why, and I still am not satisfied after this whole long day of

hearings, that I have had a good answer to this question.

I thank the three of you very much for being here. We will continue to be in touch with you, because we think you owe us more

answers and we are going to continue to ask the questions until we

get those answers.

The committee stands adjourned.

[Whereupon, at 3:39 p.m., the committee was adjourned.]

[The prepared statements of Hon. Diane E. Watson and Hon. Bill

Sali, and additional information submitted for the hearing record

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