State Department pays private contractors $4 billion a year
NY Times
October 24, 2007

WASHINGTON, Oct. 19 — Over the past four years, the amount of money the State Department pays to private security and law enforcement contractors has soared to nearly $4 billion a year from $1 billion, administration officials said Tuesday, but they said that the department had added few new officials to oversee the contracts.

It was the first time that the administration had outlined the ballooning scope of the contracts, and it provided a new indication of how the State Department's efforts to monitor private companies had not kept pace. Auditors and outside exerts say the results have been vast cost overruns, poor contract performance and, in some cases, violence that has so far gone unpunished.

A vast majority of the money goes to companies like DynCorp International and Blackwater USA to protect diplomats overseas, train foreign police forces and assist in drug eradication programs. There are only 17 contract compliance officers at the State Department's management bureau overseeing spending of the billions of dollars on these programs, officials said.

Two new reports have delivered harsh judgments about the State Department's handling of the contracts, including the protective services contract that employs Blackwater guards whose involvement in a Sept. 16 shooting in Baghdad has raised questions about their role in guarding American diplomats in Iraq.

In a report made public on Tuesday, a review panel found that there were too few American officials in Iraq to enforce the rules that apply to Blackwater and other security contractors. It also found that the conduct of the contractors had undermined the broader mission of ending the insurgency and establishing a democratic government in Iraq.

Ms. Rice approved a number of the review panel's recommendations intended to strengthen oversight of the security contractors, including a revision of the rules for the use of deadly force to bring them more in line with the military's rules of engagement, and creation of review panels to investigate every incident involving the injury or killing of a civilian. The panels could refer possible instances of wrongdoing to the Justice Department. The contractors would also undergo more rigorous training in Iraqi culture and language.

The other report was an audit of the State Department's oversight of DynCorp, released Tuesday, which found that records tracking hundreds of millions of dollars paid to the company were in "disarray."

Interviews with administration officials, auditors and outside experts show that the use of contractors has grown far beyond what department officials imagined when they first outsourced critical security functions in 1994 and hired private security guards to protect American diplomats in Haiti, which was thrown into turmoil by civil strife.

Today, the Bureau of Diplomatic Security, the small State Department office that oversees the private security contractors in Iraq and elsewhere, is overwhelmed by its responsibilities to supervise the contractors, according to former employees, members of Congress and outside experts. They say the office has grown too reliant on, and too close to, the 1,200 private soldiers who now guard American officials overseas.

"They simply didn't have enough eyes and ears watching what was going on," said Peter W. Singer, an expert on security contactors at the Brookings Institution. "Secondly, they seemed to show no interest in using the sanctions they had."

Another State Department office, the Bureau of International Narcotics and Law Enforcement Affairs, has issued more than $2.2 billion in contracts for police training and drug eradication in Iraq, Afghanistan, Latin America and elsewhere, according to State Department records. Ninety-four percent of that money has gone to DynCorp.

State Department officials say they have tried to increase competition, but few companies are able to operate in war zones. "The lack of competition does concern us a great deal," said a senior State Department official who spoke on the condition of anonymity. "We want as many companies as possible."

State Department contracting officials complain that they do not have nearly enough people to properly oversee the more than 2,500 contractors now under their informal command around the world. And a proposal to charge contractors a fee to pay for additional government compliance officers has stalled in the State Department bureaucracy.

The ballooning budget for outside contracts at the State Department is emblematic of a broader trend, contracting experts say.

The Bush administration has doubled the amount of government money going to all types of contractors to $400 billion, creating a new and thriving class of post-9/11 corporations carrying out delicate work for the government. But the number of government employees issuing, managing and auditing contracts has barely grown.

"That's a criticism that's true of not just State but of almost every agency," said Jody Freeman, an expert on administrative law at Harvard Law School.

On the eve of the 1994 American invasion of Haiti, the State Department's law enforcement bureau received an urgent request. The department needed 45 American police officers to help secure the nation.

Officials in the small bureau contacted DynCorp, a Texas aviation services company with a $30 million bureau contract to operate counternarcotics flights in Latin America. Impressed with its aviation work, a selection committee awarded DynCorp a small contract.

State Department officials viewed it as an interim measure. DynCorp viewed it as an opportunity. "We always saw it as a growth area because of the conflicts in the world," said Steve Cannon, a former DynCorp executive.

Later that year, DynCorp won a contract from the diplomatic security office to guard American diplomats in Haiti. Over the next several years, the two small State Department offices issued more than $250 million in police training and diplomatic security contracts to DynCorp for work in Haiti, Bosnia and Kosovo.

After the 2001 American invasion of Afghanistan, contracts grew again, eventually bringing the company $400 million a year. The law enforcement office had DynCorp dispatch dozens, then hundreds, of police trainers to Afghanistan. The diplomatic security office had DynCorp send employees to guard the Afghan president, Hamid Karzai.

Former State Department officials and Afghan officials said the DynCorp guards were far too aggressive in their tactics, and their conduct alienated Afghan and European officials, as well as Afghan citizens. Gregory Lagana, a DynCorp spokesman, said the company agreed there was a problem and replaced the guards. "The demeanor, the swagger, was wrong," he said. "We put a stop to that."

State Department officials said DynCorp had performed well over all, and won most contracts through competitive bidding.

The 2003 invasion of Iraq opened new opportunities in the burgeoning world of government security. Blackwater got a toehold with a $27 million no-bid contract to guard L. Paul Bremer III, the administrator of the American occupation in Baghdad. A year later, the State Department expanded that contract to $100 million. Blackwater now employs 845 of the more than 1,100 private security contractors at work in Iraq and holds a contract worth $1.2 billion.

Assistant Secretary of State Richard J. Griffin, who oversees the Bureau of Diplomatic Security, told Congress this month that his office had 36 agents overseeing the guards.

Congressional investigators say the security bureau has sought to minimize episodes like the shootings of civilians.

"We are all better off getting this case — and any similar cases — behind us quickly," one State Department security official in Iraq wrote to another, after Blackwater guards killed a father of six in Hilla in 2005, according to an internal State Department memo turned over to Congress. He recommended paying the man's family $5,000.

The State Department took no action against Blackwater for the killing. Blackwater declined to comment for this article. The company has denied any wrongdoing and said that its techniques have resulted in no diplomats, visiting members of Congress or other American dignitaries being killed or seriously hurt in thousands of escort missions since 2005. Twenty-seven Blackwater employees have died in Iraq.

DynCorp's work and the department's oversight of the company have been questioned also. In interviews in Iraq and Afghanistan, local police officials said DynCorp's trainers were costly and in some cases poorly qualified. The trainers are mostly retired civilian police officers from the United States who are paid up to $134,000 in Iraq and $118,000 in Afghanistan for a year of service.

State Department and DynCorp officials said all of the trainers were carefully screened and well qualified. Department officials also said they had added some two dozen staffers to oversee DynCorp over the past year.

American military officials in Iraq and Afghanistan said the quality of trainers was mixed as well. Jonathan Shiroma, a captain in the California National Guard who worked with DynCorp trainers in Iraq from 2005 to 2006, said some were "outstanding," while others preferred to remain on base.

DynCorp and Blackwater, meanwhile, continue to win contracts.

The State Department has said it will continue to rely on contractors because, for now at least, it has no choice. It cannot quickly hire the bodyguards and trainers it would need to replace the contractors, and the military does not have the trained personnel to take over the job.

John M. Broder reported from Washington, and David Rohde from Washington, Baghdad and Kabul, Afghanistan. Paul von Zielbauer contributed reporting from Baghdad.

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