Waxman's Opening Statement = Private Security Contracting in Iraq and Afghanistan

Defense and Security

Hearing on Private Security Contracting in Iraq and Afghanistan


Chairman Waxman's Opening Statement

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 can.

Over the last six years, this theory has been put into practice. 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 billions performing tasks that used to be done by our nation’s military forces.

What’s been missing is a serious evaluation of whether the promises of privatizing are actually realized. Inside our government, it has become 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? And what are the costs to the federal taxpayer?

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 four years. We thank you for that service.

In 1997, he saw an opportunity to start his own company and created Blackwater. As he has said, “We’re 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 seven 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 American taxpayers, the military, and 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 “non-compete” agreements 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 16 shooting that killed at least 11 Iraqis is just the latest in a series of troubling Blackwater incidents. 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 workforce 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 doesn’t 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 private military contractors 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 face 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 e-mails document a debate over the size of the payment. The Charge d’Affairs recommended $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.

It is hard to read these e-mails 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 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 16. 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 16. 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 the Committee seeks. 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 16 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 Airlines, 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 tough questions about disturbing actions. But 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’m looking forward to Mr. Prince’s testimony.