U.S. Pays Steep Price for Private Security in Iraq
By Walter Pincus
Monday, October 1, 2007; Page A17
It costs the U.S. government a lot more to hire contract employees as security guards in Iraq than to use American troops.
It comes down to the simple business equation of every transaction requiring a profit.
The contract that Blackwater Security Consulting signed in March 2004 with Regency Hotel and Hospital of Kuwait for a 34-person security team offers a view into the private-security business world. The contract was made public last week by the House Oversight and Government Reform Committee majority staff as part of its report on Blackwater's actions related to an incident in Fallujah on March 31, 2004, when four members of the company's security team were killed in an ambush.
Understanding the contract's details requires some background: Regency was a subcontractor to another company, ESS Support Services Worldwide, of Cyprus, that was providing food and catering supplies to U.S. armed forces in Fallujah and other cities in Iraq. And ESS was a subcontractor to KBR, a subsidiary of Halliburton, which had the prime contract with the Defense Department.
So, Blackwater was a subcontractor to Regency, which was a subcontractor to ESS, which was a subcontractor to Halliburton's KBR subsidiary, the prime contractor for the Pentagon -- and each company along the way was in business to make a profit.
Under the contract, Regency was to pay Blackwater $11,082,326 for one year, with a second year option, to put together a 34-person team that would provide security services for the "movement of ESS's staff, management and workforce throughout Kuwait and Iraq and across country borders including the borders of Iraq, Kuwait, Turkey and Jordan."
Blackwater's personnel were to do more than just convoy security. They were also to run command centers in Kuwait and Iraq 24 hours a day, seven days a week, that were to control all ESS security operations; prepare risk assessments; develop security procedures; train ESS personnel in security; and even vet other Iraqi security forces hired by Regency.
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http://www.washingtonpost.com/wp-dyn/content/article/2007/09/30/AR2007093001352.html