Posted on 10/29/2004 8:28:51 AM PDT by Dubya
RALEIGH - Jerry Zovko’s contract with Blackwater USA looked straightforward: He would earn $600 a day guarding convoys that carried food for U.S. troops in Iraq.
But that cost – $180,000 a year – was just the first installment of what taxpayers were asked to pay for Mr. Zovko’s work.
Blackwater, based in Moyock, N.C., and three other companies would add to the bill, and to their profits.
Several Blackwater contracts obtained by The News & Observer open a small window into the multibillion-dollar world of private military contractors in Iraq. The contracts show how costs can add up when the government uses private military contractors to perform tasks once handled by the Army.
Here’s how it worked in Mr. Zovko’s case: Blackwater added a 36 percent markup, plus its overhead costs, and sent the bill to a Kuwaiti company that ordinarily runs hotels. That company, Regency Hotel, tacked on its costs for buying vehicles and weapons and a profit and sent an invoice to a German food services company called ESS that cooked meals for the troops.
ESS added its costs and profit and sent its bill to Halliburton, which also added overhead and a profit and presented the final bill to the Pentagon.
It’s nearly impossible to say whether the cost for Mr. Zovko doubled, tripled or quadrupled. Congressional investigators and defense auditors have had to fight the primary contractor, Halliburton, for details of the spending. The companies say the subcontracts are confidential and won’t discuss them.
About 20,000 private security contractors are now in Iraq, escorting convoys, protecting diplomats, training the Iraqi army and maintaining weapons.
The bills for this work flow from the bottom up. They start with Blackwater’s $600-a-day guns for hire such as Mr. Zovko and his three comrades, who were killed escorting a convoy through Fallujah in March.
At the top is Houston-based Halliburton, which has an open-ended "cost-plus" contract to supply the U.S. military with food, laundry and other necessities. Cost-plus means the U.S. government pays Halliburton all its expenses – its costs – plus 2 percent profit on top.
So far the Army has committed $7.2 billion on this cost-plus contract to Halliburton, which has been criticized for its performance in Iraq. The company has drawn additional political fire because of its ties to Vice President Dick Cheney, a former Halliburton CEO.
Henry Bunting, a former Halliburton purchasing officer, said he heard a common refrain in 2003 in Kuwait from managers at KBR – also known as Kellogg Brown & Root – a division of Halliburton: "Don’t worry about price. It’s cost-plus."
"There is no question the taxpayer is getting screwed," said Mr. Bunting, who was an Army staff sergeant in Vietnam. "There is no incentive for KBR or their subs to try to reduce costs. No matter what it costs, KBR gets 100 percent back, plus overhead, plus their profit.
"The Army said it is satisfied with Halliburton’s performance.
"They are providing essential services to our troops every day," said Daniel Carlson, a spokesman for the Army Field Support Command, which oversees the contract. "All the reports from the field come back that they are providing the services adequately."
Even if the Pentagon could tally all the layers of profit and overhead, it would struggle to compare the cost of using contractors such as Mr. Zovko in Iraq against the cost of soldiers.
According to a Defense Department Web site, a soldier with Mr. Zovko’s experience and final rank (he was a sergeant) would receive about $38,000 a year. That figure would not reflect additional costs for things such as health and retirement benefits or combat pay.
The shift to private contractors often has been justified as cheaper and more efficient. But the real reason for the use of private contractors is to reduce the political costs of war, according to P.W. Singer, an expert on private contractors and the military at the Brookings Institution.
By using private contractors to do work soldiers once did, Mr. Singer said, the administration doesn’t have to call up more regular troops, or National Guard and reserves, or compromise with allies to get them to send more troops.
"We don’t need another division there – we’ve got 20,000 private military contractors," Mr. Singer said.
But Mr. Singer said it’s hard to see how five layers of profits and overhead could save money.
"A cost-plus structure is contrary to all the lessons of free-market economics," Mr. Singer said. "It is most ripe for abuse . . . and by layering it and layering it, you make it even worse."
The military takes care of their own. Contractors are often stuck with the dirty work and are frequently left to fend for themselves "cuz you make the big bucks". I believe that is how the Blackwater employees died, the military wouldn't make the escorts through Fallujah. Worse yet, when the situation turns the military leaves the contractors behind "cuz you make the big bucks". That's what happened to Thomas Hammil's convoy in April when 9 died. If the MPs in their armored HumVees had fought back they could have picked up some of the drivers from the disabled trucks. Instead the contractors were left to fend for themselves which meant only death or capture. Refresh my memory, did the destroyers flee when U-boats attacked Allied convoys?
Confident in your automobile? Good, because if you break down and they don't stop you're dead -or worse. Then there's General Order One which prohibits non-combatant contractors from carrying weapons. Fu#kin A! ...and they wonder why contractors are paid what they are?
Awe poor under paid contractors.
The vast majority of civvie contractors are clerks, mechanics, technicians, and logistics types. They make amazing salaries for doing the same job as an E-5 squad leader.
Hyperbole. There're several types of contractors and their pay vaires by qualification. You cite protective services salaries and equate the pay to clerks and mechanics. The non-clearance jobs are staffed by 3rd-worlders and they certainly don't make 6-figures. I know of no security clearance jobs over here which aren't looking for qualified new employees. My team has been at 60% staffing since I arrived in March. Many prospective hires have declined at the last minute or quit after a few weeks. Does the law of the marketplace not apply to Iraq? Why do you think they have to pay the high salaries in the first place? Even at the high pay people are quitting after one year or earlier.
An NO, your E-5 doesn't do the same job I do, not even 20 do; I know because I work with them. They do their work within an entire support structure whereas I do mine virtually ALONE. And do they cover 5 Iraqi provences and 10 bases? Maybe 600 of them do but ONE person? I maintain an operational network throughout 5 provences and 10 bases practically by myself whereas the military requires 600 people for 2 networks over the same area. Now you tell me that's not saving the government millions of dollars while keeping hundreds of Americans back home yet you'll piss-and-moan over salaries.
Some military might choose to come back to Iraq as contractors after their time but most I've spoken with choose not to.
I'm just speaking from my experience. I saw plenty of civies in the desert doing the same job as my supply sergeant. I wasn't speaking of you specifically, I have no idea what you do. Just from my experience, I saw throngs of civies doing company-supply-sergeant type work and getting big bucks for it.
if true,this should be criminal
Yes it should be and I agree with you 100%.
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