Army disavows Blackwater work
The service says it didn't approve the N.C. military contractor's 2004 mission in Fallujah, Iraq, during which four men died
The world watched in horror when an Iraqi mob killed four Blackwater contractors guarding a convoy and dragged their mutilated bodies through the streets of Fallujah in March 2004.
On Thursday, the Army said that Blackwater was not authorized to guard convoys or carry weapons.
The revelation came at a congressional hearing that offered a window into the murky world of private contracting in Iraq. Representatives fumed about billions in misspent money, shoddy construction projects and the hiring of unqualified political operatives to rebuild Iraq.
One unsolved mystery at the hearing was whether Blackwater, based in Moyock in North Carolina's northeast corner, was ultimately working for U.S. taxpayers when its contractors were killed.
U.S. Rep. Chris Van Hollen held up a copy of Blackwater's contract, which said Blackwater was ultimately working for the Army's main contractor in Iraq, Kellogg Brown & Root, with two companies in between.
The Army and Kellogg Brown & Root denied in a letter that Blackwater had done any work for them.
"Clearly no one is minding the store, right from the top, no one is holding [Kellogg Brown & Root] responsible or any of its subcontractors," Van Hollen, a Maryland Democrat, said afterward. "It's mind-boggling the degree of incompetence."
Blackwater did not return phone calls or an e-mail message seeking comment. Neither did Kellogg Brown & Root, a subsidiary of Halliburton, which has been paid at least $16 billion to provide food, lodging and other support for troops, and $2.4 billion to work on Iraqi oil infrastructure.
The grotesque images from the 2004 massacre were broadcast around the world and triggered a new and deadlier phase of the war. Wesley Batalona, Scott Helvenston, Michael Teague and Jerry Zovko were ambushed on a crowded street as they guarded a convoy headed to pick up kitchen equipment for ESS, a food supplier to the military. A mob dragged their charred corpses through the streets and hung the remains of two men from a bridge over the Euphrates River. The families of the dead men are suing Blackwater for wrongful death.
The Pentagon ordered the Marines to invade Fallujah, then aborted the battle two weeks later with part of the city destroyed and hundreds, perhaps thousands, dead. Fallujah became safe for insurgents until the Marines seized the city in November 2004 and destroyed much of it in a battle.
The hearing Thursday of the House Government Reform Committee gave a raw look at a wide range of problems with private contractors in Iraq: a $75 million police academy in Baghdad where sewage oozes from the ceiling, and a multimillion-dollar contract to build 142 health clinics that resulted in only six being completed.
Committee members have tried to get answers on the Blackwater contract for almost two years, since The News & Observer detailed how multiple layers of contracts inflated war costs.
At the lowest level, Blackwater security guards were paid $600 a day. Blackwater added a 36 percent markup, plus overhead costs, and sent the bill to a Kuwaiti company that ordinarily runs hotels, according to the contract.
That company, Regency Hotel, tacked on its costs and a profit and sent an invoice to ESS. The food company added its costs and profit and sent its bill to Kellogg Brown & Root, which also added overhead and a profit and presented the final bill to the Pentagon.
In November 2004, Rep. Henry Waxman of California, the ranking Democrat on the committee, asked the Army for an accounting of the costs and copies of all contracts and invoices. The Army has not responded or provided documents, Van Hollen said.
At a hearing in June, Van Hollen pressed a Blackwater executive on whether the 36 percent markup included all of Blackwater's costs. Van Hollen specifically asked whether Blackwater billed separately for insurance, room and board, travel, weapons, ammunition, vehicles and office space, as The N&O; article reported.
Chris Taylor, a Blackwater vice president, testified that the 36 percent markup included all of Blackwater's costs.
Rep. Christopher Shays, a Connecticut Republican, interrupted, reminded Taylor he was under oath and ordered Blackwater to provide the documents to back up his testimony. Blackwater has provided no documents to the committee.
At the hearing Thursday, Van Hollen held up a copy of Blackwater's contract that showed the trail of subcontractors -- Blackwater, Regency, ESS -- leading to Kellogg Brown & Root. Did the Army contend that Blackwater provided no services to Kellogg Brown & Root?
Tina Ballard, an undersecretary of the Army, said that is correct.
"Was this contract authorized?" Van Hollen asked. "Did the American taxpayer pay [Kellogg Brown & Root] for those unauthorized contracts?"
Ballard promised that the Army would provide answers.
The United States Army has confirmed that private security guards of the North Carolina security services company Blackwater USA were employed in Iraq by military subcontractors, reversing earlier statements in which army officials denied knowledge of the contracts. 

Four security guards employed by Blackwater were killed by Iraqi militants in March 2004. Their families have sued the company, claiming the suit was the only way to disclose the events surrounding the deaths.

Locating the contract awarded to Blackwater has proved difficult -- the Pentagon has denied repeatedly that such a contract exists. The contract was extremely deeply nested beneath other contracts, obscuring its existence: KBR, a Halliburton subsidiary, has subcontracted to ESS Support Services Worldwide, which provides dining services. ESS hired Blackwater, but only indirectly, through a third company.

This was confirmed yesterday by Army secretary Francis Harvey, in a letter to Representatives Henry Waxman and Chris Val Hollen. This reverses earlier statements by Harvey, for example, in July he stated that KBR "has queried ESS and they are unaware of any services under the ... contract that were provided by Blackwater USA."

Van Hollen said, "This ongoing episode demonstrates the Pentagon's complete failure to safeguard taxpayer dollars."

The House Oversight and Government Reform Committee has scheduled a hearing on the Blackwater contract, to take place next Wednesday.