The contractor story needs the scrutiny of the business press

We’re delighted at the volume and depth of coverage of government contracting lately, an area too long neglected by the private press army in Washington and the business press almost entirely.

The coverage was triggered by the events of September 16, when Blackwater USA employees fired on a Baghdad square, killing seventeen Iraqis and wounding twenty-four. The incident spurred appropriate coverage from political and war reporters.
Today’s news
says prosecutions may have been compromised because the guards were promised immunity of some sort by State Department officials investigating the incident.

But the incident in Iraq has also brought to prominence long-overdue money questions—about accountability and the use of contractors across the federal government. These are questions business reporters are better equipped to ask.

And they are, for now. And while no one is talking, at least someone’s asking.

Last week, government agencies released several reports on the accountability of contractors and the swelling amount of money the government shells out.

The New York Times covers contractors largely as a political story, but pulled back in last Wednesday’s front-page story to focus on the numbers and money behind the growth in the use of contractors.

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.

Our main beef is with the press’s disappointing reliance on anonymous sources for a subject that couldn’t be more public.

The Times story, for instance, offers few on-the-record quotes—from a Brookings Institution analyst, a law professor, a DynCorp spokesperson, a former executive. Otherwise the sources are administration officials, auditors, outside experts, former state department officials, former employees of contractors, and even members of Congress. None of whom are identified.

The best quote come at the end and is on-the-record: a Califoria National Guard captain, Jonathan Shiroma, tells the Times that while some Dyncorp trainers were ” ‘outstanding,’ ” others preferred to stay on the base.

We’re not sure what’s worse: reporters use of the unnamed sources or the fact that they need to use them.

Still, the story homes in on a previously obscure office that has emerged as a big source of the problem: the Bureau of Diplomatic Security.

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.


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.

Griffin abruptly resigned the same day this story appeared.

The Washington Post has been out in front on the contracting story both in terms of the volume and depth of its reporting.

Of particular interest was Robert O’Harrow Jr. and Dana Hedgpeth’s profile
of Erik Prince, who founded Blackwater, on the rise of his company. The article and a nearby slide show of photos accompanied by his voice includes interviews with Prince and a visit to the Blackwater Lodge and Training Center in Moyock, North Carolina.

Here Prince continues the PR counteroffensive he has been fighting in other publications as well:

`The idea we have a private army is ridiculous,’ [Prince] said, as a group of sheriff’s department deputies cleaned their weapons nearby. `This idea of a private mercenary army is nonsense. These guys have sworn the oath as military or law enforcement persons. These are guys who served voluntarily. They are all Americans, working for Americans, protecting Americans.’

O’Harrow’s blog, Government Inc., on the Washington Post Web site, has been pounding steadily on the government’s heavy reliance on contractors.

And Hedgpeth was right on the news that Representative Henry Waxman, chairman of the House Oversight and Government Reform Committee, believes Blackwater Security Consulting may be in some hot water on taxes for classifying as subcontractors workers who may in fact be employees.

[Waxman] said in a letter sent yesterday to the owner of Blackwater, Erik Prince, that panel staff members calculated that Blackwater may have avoided paying $31.8 million in Social Security, Medicare, federal income and unemployment taxes from May 2006 through March. In addition, Waxman said the company may owe another $18 million in taxes that it should have paid from April through September.

But it isn’t just Blackwater. In the past month, the Post also had a story on contracting gone wrong at Department of Health and Human Services. Renae Merle last Tuesday wrote about a Government Accountability Office report that revealed how the department wasted nearly $100 million worth of an anthrax vaccine.

The Post often does well by simply writing about government reports. There is nothing—nothing—wrong with this. We wish there were more of it.

Last week, there was news of a report, also released by the GAO, that the work of Homeland Security is carried out by layers of contractors. From the piece by Spencer S. Hsu:

At the Department of Homeland Security, contract employees help write job descriptions for new headquarters workers. Private contractors also sign letters that officially offer employment. And they meet new government hires on their first day on the job.

About the only thing they do not do, a critical new congressional audit concludes, is swear in DHS employees.

Across several of DHS’s most troubled projects, including delayed programs to replace the Coast Guard’s fleet and to issue secure credentials to port workers, contractors are so enmeshed in DHS’s work that they oversee other contractors. Some are assigned work that involves awarding future business, setting policy or drawing up plans and reorganizations, according to the Government Accountability Office, Congress’s audit arm.

These pieces on anthrax and homeland security contracting were little covered elsewhere.

That said, the author Naomi Klein delivered a thoughtful exploration of government contracting in an op-ed in last Saturday’s Los Angeles Times.

Her smart take may provide a framework to approach the coverage of government contracting in the final days of the Bush administration. After laying out dismal work by Boeing on a contract with the Department of Homeland Security to build the virtual fence along the U.S. borders with Canada and Mexico, Klein makes the point that the debacle points to more than faulty technology, but to the Bush administration’s radical vision of a hollowed-out government run everywhere possible by private contractors.

Such a “philosophy” explains statistics like this one: in 2003, the U.S. government handed out 3,512 contracts to companies to perform domestic security functions, from bomb detection to data mining. By August 2006, The Department of Homeland Security issued security-related contracts at a rate of 55,000 a year.

As President Bush’s former budget director, Mitch Daniels, put it: “The general idea — that the business of government is not to provide services but to make sure that they are provided — seems self-evident to me.”

Klein calls it government-as-ATM: contractors make deposits in the form of campaign contributions and withdraw massive contracts to perform core functions like securing borders and interrogating prisoners.

At this late hour in the Bush administration, no benefit of the doubt can be granted. This “philosophy” of government should be viewed as nothing more than an invitation to graft, dressed up with lipstick.

The business press has a lot to do these days, but government contracting should be a priority.

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Anna Bahney is a Fellow and staff writer for The Audit