Another blogger shared the following articles about Blackwater and their involvement in Guam and Shariki, a tiny village in Japan that hosts a missile defense radar facility. She points out:
• In 2006, Blackwater’s aviation division won a $91 million contract for air charter work in Guam, a contract the Navy had set aside for small businesses. Two losing bidders challenged the award, saying Blackwater had more than 1,500 employees, the threshold for an aviation contract. An administrative judge ruled for Blackwater, saying the company’s 1,000-plus guards working overseas did not count as employees…
• Blackwater teamed up with the Chenega, an Alaskan Native American tribe of 69 people, to guard a missile defense installation in northern Japan. As a native-owned company, Chenega can win special no-bid contracts because of rules crafted by Alaska’s powerful U.S. Sen. Ted Stevens.
• And this is from Wikipedia: In Asia, Blackwater has contracts in Japan guarding AN/TPY-2 radar systems.
More: A U.S. military mobile BMD radar (AN/TPY-2, i.e., “X-Band Radar”) was deployed in June 2006 to the. ASDF Shariki Sub-base in Aomori Prefecture, Japan. A new detachment, consisting of a small team of military service members and contractors who will operate and maintain the Forward Based X-Band Radar Transportable (FBX-T) system, was honored during an activation ceremony 26 September 2006 at Camp Shariki in Aomori Pref., hosted by Brig. Gen. John E. Seward, commanding general of 94th Army Air and Missile Defense Command of the U.S. Army Pacific Command. The FBX-T radar is designed to provide early detection and tracking of ballistic missile threats while providing a key element to the layered defense strategy. The radar is a defensive system with no offensive capability and will fall under the command and control of the 94th AAMDC, which is based at Fort Shafter, Hi. The command officially joined USARPAC in Oct. 2005.
I found the information fascinating that Blackwater was teaming with Chenega, an Alaska Native Corporation that has “Special 8A” status to get no-bid, unlimited contracts from the federal government. This arrangement is ripe for corruption. The federal government has issued scathing reports on the abuses of the Special 8A status whereby, native corporations get the sole source contract as a front for a larger military contractor.
Native Hawaiian Organizations also get special 8A status for military contracts thanks to Senator Inouye. However, since Native Hawaiians are not listed as a federally recognized tribe, every year Senator Inouye must add Native Hawaiians into the existing statutes via provisions of defense spending bills. The so-called Akaka Bill to list Native Hawaiians as a native tribe under the U.S. government would solidify Native Hawaiian access to these special 8A contracts. Some of the leading proponents of the Akaka Bill are already getting the no-bid contracts for defense projects. The passage of the Akaka Bill will further militarize Hawai’i by co-opting Native Hawaiians into the military industrial complex.
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http://www.tradingmarkets.com/.site/news/Stock%20News/1575255/
Blackwater’s Aggressive, Entrepreneurial Culture Keeps its Business Growing
By McClatchy-Tribune News Service
May 17, 2008
Blackwater was all over the news last fall, and the news wasn’t good. The North Carolina company created a diplomatic crisis when its guards killed 17 Iraqi civilians in a Baghdad square.
The Iraqi government promised to evict the company from Iraq. Blackwater’s reclusive owner, Erik Prince, was called to Congress to testify; and afterward, he began a PR blitz of the national media. He even appeared on “60 Minutes.”
Today, however, the trouble has subsided. Last month, the State Department renewed its contract with Blackwater to provide security in Iraq. It’s still in Afghanistan for the military. In the fall, Blackwater won a new contract, for $92 million, to fly soldiers and cargo around Pakistan and Afghanistan for the Army. And the company was one of five picked to support the Pentagon’s Counter Narcoterrorism Technology Program, a five-year contract worth up to $15 billion.
As the company grows, so do its headaches: a persistent congressional investigation, several high-profile lawsuits and a federal weapons investigation. Still, Blackwater is thriving because of its aggressive and entrepreneurial business culture and a strong network of Republican connections. The company has hired extensively from the top levels of the CIA, Defense Department and State Department, and named the former No. 2 official at the CIA to its Board of Advisors.
“Their connections certainly help a lot,” said Peter Singer, an expert on military contractors at the Brookings Institution. “But they may be a vulnerability in the future, if the regime changes in Washington.”
This is a company that barely existed at the start of the decade; Blackwater grew from $204,000 in federal contracts in 2000 to almost $600 million in 2006. Its rise is a case study in business timing and the power of financial and political capital to take advantage of a new market.
Blackwater Lodge and Training Center was the brainchild of Al Clark, a Navy SEAL and instructor. Dissatisfied with the Navy’s rented training grounds, Clark told colleagues he would open his own when he left the service. Clark hooked up with Erik Prince, a young Navy SEAL who shared his interest in training. Clark didn’t know it at the time, but Prince was an heir to a billion-dollar auto-parts fortune.
When the two broke ground on Blackwater Lodge and Training Center in Currituck and Camden counties in northeast North Carolina in 1997, the timing was good. The military had closed and consolidated bases after the Cold War and neglected training facilities. Blackwater built the largest shooting facility in the country, with indoor ranges, mock urban landscapes, a 1,200-yard firing range, driving tracks and a lake for naval training. Blackwater boasted it could design any sort of training a client might want.
The location was excellent, within four hours of the Pentagon in Washington, and Fort Bragg and Camp Lejeune in North Carolina. The country’s biggest naval base in Norfolk, Va., was less than an hour away. Despite the steady stream of business, Blackwater wasn’t making money. Clark recalled how Prince summoned him to his office, on Christmas Eve 1999 and said, “I want this place profitable tomorrow.”
Clark said his relations with Prince went downhill when Prince complained that he was training the students so well that no one would come back for more training.
Clark left Blackwater in the summer of 2000. Business was growing steadily, Clark said, but the company wasn’t making a profit.
“There are two people who put Blackwater on the map,” Clark said _ “Al Clark and Osama bin Laden.”
After the attacks of Sept. 11, 2001, the demand for training from military and law enforcement filled Blackwater’s ranges and classrooms.
Blackwater’s most lucrative line of business wouldn’t be in the Eastern North Carolina town of Moyock, but overseas. It was the brainchild of a former CIA employee, Jamie Smith.
While working at Blackwater before Sept. 11, Smith had suggested that Blackwater go into the private security business, guarding businessmen or government officials. Prince was initially skeptical, but warmed to the idea after the attacks on New York City and the Pentagon.
Prince contacted Alvin “Buzzy” Krongard, the No. 2 official at the CIA. Krongard had known Prince since at least 1999, when Krongard’s son, a Navy SEAL, had trained at Blackwater, according to Al Clark. Krongard had visited Blackwater and shot at the firing ranges, Clark said. (In October, Krongard stepped down from Blackwater’s Board of Advisors because his brother, Howard Krongard, was the State Department inspector general responsible for investigating Blackwater. Howard Krongard later resigned.)
The CIA was stretched thin in the aftermath of Sept. 11 and the invasion of Afghanistan. Blackwater landed a sole-source, no-bid contract to provide security at CIA stations in Afghanistan.
When Blackwater won the contract, the company had no one to staff it. Smith advertised for security contractors in the Washington Post, according to author Robert Young Pelton. Smith led the security team when it arrived in the early spring of 2002.
The contract was not a big one; it called for 16 Blackwater security personnel, plus dozens of Afghan guards hired locally. But it was profitable, a Blackwater budget spreadsheet shows. Blackwater expected a 26 percent profit on the job.
Most important, the contract was a start, a foot in the door of what would expand into a billion-dollar industry once the U.S. invaded Iraq.
The invasion created a huge demand for private security in Iraq. Secretary of Defense Donald H. Rumsfeld sent about half the troops recommended by his Army chief of staff. There weren’t enough soldiers to secure the country, let alone protect U.S. diplomats and civilian workers.
In August 2003, Blackwater won a $27 million sole-source contract to guard Paul Bremer, the head of the Coalition Provisional Authority and probably the top assassination target of insurgents.
The contract called for helicopters to fly Bremer around Iraq. Blackwater was well positioned for that; the company had bought a Florida aviation company four months earlier.
Peter Singer, an expert on private military contractors, said this was typical of Blackwater’s business savvy.
“They are very good and very savvy at identifying market needs and pushing hard to enter into those markets, even before clients have recognized the need,” Singer said.
The private security business turned Blackwater into a heavyweight government contractor; the company went from $204,911 in government contracts in fiscal 2000 to $593 million in 2006, an average annual growth rate of 277 percent. Blackwater went from having 16 guards in Afghanistan to more than 850 personnel in Iraq.
By the end of 2006, Blackwater had received more than $1 billion in government contracts. That doesn’t include classified contracts, including providing security at CIA sites overseas.
The CIA contracts are lucrative, according to a document Blackwater filed in a federal lawsuit.
Blackwater had a contract since 2003 to protect a CIA site in Pakistan, the document said. “The profit potential is high (25%+ margin),” because of the classified nature of the budgets, and the knowledge gained from past performance on existing contracts.
During congressional testimony in October, Erik Prince said that Blackwater made a 10 percent profit on his State Department contracts, but he declined to elaborate or discuss the company’s annual profits. He also declined to comment for this report. But there is a healthy markup for the company’s services: Blackwater bills the State Department $1,221 for a security guard earning $500 a day.
For all the controversy, Blackwater has an unblemished record on its main task in Iraq: None of the diplomats in the company’s care have been killed or wounded. Undersecretary of State Patrick Kennedy recently told The New York Times that the diplomats could not function in Iraq without Blackwater: “If the contractors were removed, we would have to leave Iraq.”
A company that has banked more than $1 billion in federal payments since Sept. 11, 2001, doesn’t sound like a small business, but Blackwater says it is.
For a company providing security services, the threshold for a small business is $17 million in annual revenue. Blackwater passed that threshold in 2003, yet continued to list itself as a small business.
In 2006, Blackwater’s aviation division won a $91 million contract for air charter work in Guam, a contract the Navy had set aside for small businesses. Two losing bidders challenged the award, saying Blackwater had more than 1,500 employees, the threshold for an aviation contract. An administrative judge ruled for Blackwater, saying the company’s 1,000-plus guards working overseas did not count as employees.
Blackwater’s contention that its guards are not employees has generated a lot of controversy.
Last year, an Internal Revenue Service hearing officer ruled that a Blackwater security guard was an employee, not an independent contractor. U.S. Rep. Henry Waxman has asked the IRS to investigate whether the company used the independent contractor designation to avoid paying federal taxes. Blackwater disputes Waxman’s complaint. If that ruling were applied to Blackwater’s entire work force, the company could be on the hook for $50 million in unpaid Medicare and Social Security taxes that companies must pay for their workers.
Prince, Blackwater’s founder, is known for his libertarian views. He touts the virtues of the free market and entrepreneurs. But the company is not averse to exploiting contracting loopholes and government giveaways.
Blackwater teamed up with the Chenega, an Alaskan Native American tribe of 69 people, to guard a missile defense installation in northern Japan. As a native-owned company, Chenega can win special no-bid contracts because of rules crafted by Alaska’s powerful U.S. Sen. Ted Stevens.
But to fulfill the terms, Chenega needed a partner to supply the guards, so it turned to Blackwater. The contract was worth $5 million for Blackwater in 2006 and $6 million for the first half of 2007.
In North Carolina, the Department of Commerce approved a $120,000 grant for Blackwater to support the company’s production of its Grizzly armored vehicle. The department projected that Blackwater would file for $637,500 in tax credits for the same project.
Despite the phenomenal growth, Prince has been quietly looking for more investors. At the end of April, the giant hedge fund Cerberus said it had decided against investing as much as $200 million in Blackwater. After news broke of Cerberus’ interest, Blackwater President Gary Jackson sent an e-mail message saying the company was anticipating even more growth, the Wall Street Journal reported.
“The company has “had two successive quarters of unprecedented growth,” Jackson wrote, and is “exploring multiple avenues to finance our continued expansion.”
© 2008, The News & Observer (Raleigh, N.C.).
External link: http://www.tradingmarkets.com/.site/news/Stock%20News/1575255/
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http://www.stripes.com/article.asp?section=104&article=49341
Tiny base assimilates into Japanese town
To allay locals’ health fears, housing built close to radar
SHARIKI, Japan
In Shariki, selecting the right place for American workers’ housing involved more than worrying about a daily commute.
For the 100 or so government contractors and two U.S. Army soldiers now living in and around the tiny Japanese village near the Sea of Japan, setting up a homestead also sent a message about their mission, according to the company commander at Shariki Communications Site.
“There were some people that told us, if you build that housing (elsewhere), it will be a public relations disaster,” said Capt. Will Hunter, whose unit in Shariki is attached to the 94th Army Air and Missile Defense Command in Hawaii. “It implies that you don’t think it’s safe to live around the radar.”
The radar is the AN/TPY-2, which points high-powered radio waves westward toward mainland Asia to hunt for enemy missiles headed east toward America or its allies. The system is serious — it could burn a person standing in the wrong place at the wrong time, Hunter says.
That hasn’t happened, he says, and occasional testing by the Americans and Japanese has found the radar does not interfere with local cell phones or harm local farming. Still, showing is better than telling, and that means building a housing complex for the Americans only a five-minute drive from the site.
It’s an apt example of how community relations can take on special meaning when a seaside village of 5,500 Japanese residents finds itself hosting several dozen Americans.
Hunter, the first commander of the year-old unit, has spent much of the past year making and implementing decisions like housing location. He’s also become a local ambassador of sorts at festivals, parades, Japanese military ceremonies and even afternoon cookouts.
“I think that’s my bigger job,” he said when weighing building relationships with local residents against his other tasks, working with the contractors and ensuring security of the radar site.
First Sgt. Ben Williams, the only other soldier in the unit, has picked up the role as well. Williams has been in the Army 16 years, and this is his first assignment without soldiers to lead and with a foreign language to negotiate. “I’m still feeling this out,” he says.
On one of his first days in town, he, Hunter and about 20 other workers from base helped drag a 16-ton float for a festival in Goshogawara, the biggest city about 45 minutes from base. “I was drenched,” he said of the sweaty work on the humid summer night.
For Hunter, much of the community relations means establishing safety procedures and conveniences for the Americans. He has set up phone lists and emergency procedures with local police and other officials so languages won’t be barriers to a response to Americans in need.
He’s even collected menus from local restaurants and had them translated to make it easier for the Americans to dine out and for local businesses to attract more customers.
The local community has responded as well. Lt. Col. Masaru Ohta, the Japan Air Self Defense Force’s 21st Air Defense Missile Squadron commander, ensures Americans get invited to festivals and meetings. And the city of Tsugaru, which oversees the smaller community of Shariki, has built a police koban in the village.
“I choose to say this police box was built for us, not because of us,” Hunter says.
Vehicle accidents have been the one sore spot for Hunter. There have been quite a few since the Americans came to Shariki, where an average of 12 meters of snow falls each winter.
Most of the accidents involve simple mistakes, not paying attention or slipping on ice, Hunter says. Still, a couple of Japanese people have been injured and gomen money, traditional compensation and condolence money, has been paid.
“In all honesty, I have beat up the contractors a lot about making their people drive correctly,” Hunter says while driving on a narrow two-lane road through rice paddies. The highway connects Shariki and Goshogawara, the closest place to big-city life that includes karaoke parlors, a dance club and two malls.
It’s hard to have absolute control, however, over a workforce that reports to a private company rather than a company commander, he says.
The Americans work for Raytheon and Chenega Blackwater Solutions, who, respectively, run the missile radar and provide security at the base.
In the past year, a couple of workers were sent home as punishment. But Hunter has no direct control over their privilege to hold a license, as he does over soldiers.
At the Shariki police station, inspector Yoshifumi Nakagawa warmly welcomes Hunter and gives business cards printed in English and Japanese to the two members of his staff – Williams and translator Yuko Akita.
Nakagawa was happy to learn Hunter has an interpreter, his first even though the Army unit officially stood up on Sept. 26, 2006. Previously, the captain relied on a handful of the contractors who speak Japanese, or a few of Ohta’s command staff who speak English.
The police official and the translator exchange cell phone numbers, then Nakagawa praises Hunter for participating in a recent community walk. It’s a formal thank-you for two men who see each other regularly. Both take the same language exchange course on Fridays, and the group has dinner together once a month.
Ohta credits the Americans’ involvement in the community with appeasing some of the fears first raised when the radar was built. “Because they participate in local events,” he says through a translator, “now there are no objections.”
The objections haven’t quite gone away. A Japanese Ministry of Defense office, at Shariki city hall, is where the Defense Facilities Administration Bureau works as liaison between the community and the U.S. Army base, Hunter says. It’s also where locals can go with concerns about the radar site.
In the past year, complaints have fallen off so much that the office has reduced its hours twice.
A couple of months ago, Hunter met with the bureau to hear about any recent complaints. One resident said his pacemaker had acted oddly when he drove on Shariki’s main street. Another man said his radio transmitted only static at 5 a.m. on a recent day. Both men suspected the radar.
“Things like that still come up,” Hunter said. “I think for the most part, people understand the radar is not going to hurt them.”
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