Audit faults contract awards to security company Blackwater

Raleigh News & ObserverJuly 28, 2008 

Blackwater obtained dozens of small business contracts worth more than $110 million even though the private security company may have exceeded size limits for a small business, according to a federal audit released today.

The Inspector General of the Small Business Administration said Blackwater, based in Moyock, N.C., obtained 39 contracts set aside for small businesses from 2005 through 2007. Of these, 32 contracts worth $2.1 million were set aside for companies with annual revenues of $6.5 million or less.

Blackwater's revenues have exceeded $200 million each of those years, according to federal contracting data.

The Inspector General also found fault with the handling of aviation contracts worth $107 million that the Defense Department awarded Blackwater. The contract was set aside either for a company with less than $25.5 million in annual revenue, or a company with less than 1,500 employees.

The report said the company may have improperly classified Blackwater guards in Iraq and Afghanistan as independent contractors rather than employees.

The report also criticized the Small Business Administration for not examining Blackwater's contention that its security forces in Iraq and Afghanistan are not employees, but independent contractors.

The audit was requested in March by Rep. Henry Waxman, a California Democrat who chairs the House Committee on Oversight and Government Reform.

Blackwater spokeswoman Anne Tyrrell said the company had not yet seen the audit and could not comment.

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