How Blackwater fought two wars — and State Department red tape
This is an excerpt from Civilian Warriors: The Inside Story of Blackwater and the Unsung Heroes of the War on Terror, by Erik Prince, published this month by Portfolio.
On March 27, 2009, President Obama stood at a podium in Room 450 of the Dwight D. Eisenhower Executive Office Building in Washington. Over his right shoulder was Secretary of State Hillary Clinton; over his left, Defense Secretary Robert Gates. “Today, I am announcing a comprehensive new strategy for Afghanistan and Pakistan,” the president said.
In the eight years since the United States had invaded Afghanistan, stability there had moved at a glacial pace, to the extent it moved forward at all. Taliban suicide bombings continued seemingly at will in the fledgling democracy. Insurgent aggression had prevented enough voter registration that the country’s landmark presidential elections, scheduled for May 2009, had to be pushed back three months. The United States had just come off its deadliest year of the war there, with 155 service members killed in 2008. In 2009, it only got worse.
As part of that “new strategy,” the Obama administration pledged to push an additional twenty-one thousand troops into Afghanistan, following that later in the year with a pledge for another twelve thousand, ultimately more than doubling the Bush administration’s force in the failing war effort. But President Obama included an additional component that he said differentiated this approach from that of his predecessor: “This push must be joined by a dramatic increase in our civilian effort,” he said. “To advance security, opportunity, and justice — not just in Kabul, but from the bottom up in the provinces — we need agricultural specialists and educators, engineers and lawyers.” The “civilian surge,” as it came to be known, would send hundreds of people to the country under the State Department’s guidance — and someone had to keep them safe. As soon as I heard President Obama’s speech, I knew what that plan might mean for our newly rebranded firm, Xe, formerly Blackwater.
Since 2005, Blackwater had provided protection details for U. S. Ambassador to Afghanistan Karl Eikenberry, Embassy Kabul personnel, visiting diplomats and congressional delegations, and USAID under Task Order 4 of the Worldwide Personal Protective Services (WPPS) II initiative. We had conducted 2,730 protection missions across Afghanistan in 2008 alone, earning all of the $174 million State paid us for the work. “During the entire time USTC [U. S. Training Center] has operated in Afghanistan, no one under USTC’s protection has been injured or killed, and there have been no incidents involving the use of deadly force,” a 2009 performance audit by State’s inspector general found. “The representatives [protected by the contractors] reported that USTC employees are professional, make them feel secure, and are respectful to both officials under chief of mission authority and their Afghan counterparts.”
Facing a civilian surge that closely mirrored the security mess State had previously found in Iraq, the department, and its new secretary, Hillary Clinton, found the same solution: They awarded our U. S. Training Center an eighteen-month contract worth $120 million for static and protective security services at consulates being built in Herat and Mazar‑i‑Sharif. That served as a stopgap until State could complete its new global, third-generation WPPS contract in 2010. Bad press in Iraq be damned; State’s mission in Afghanistan needed the most capable private military contractors it could find, as soon as they could get there.
Expanding our existing work in the country to additional consulates made sense for everybody — except our detractors on Capitol Hill, including the Commission on Wartime Contracting in Iraq and Afghanistan. “Of course, the concern is whether in Afghanistan, where the mission is most critical right now, we might have in the future the same kind of incident that we saw in Iraq,” Clark Kent Ervin, a panel commissioner appointed by Democrat Nancy Pelosi, said during a hearing three days later. Charlene Lamb, State’s deputy assistant secretary for international programs, replied that “past performance played an incredible amount” in determining whether or not to award us that contract. She added: “In this case, with this specific award, Xe is the only company of our three under the WPPS II contract currently operating in Afghanistan. Their infrastructure is there already.”
My company again seemed to be finding its stride. With that contract locked down, our next piece of business with State generated even more headlines. In August 2010, the department leveled an enormous fine against my company: $42 million, for 288 instances of Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR) violations between 2003 and 2009. But not for any of the reasons the average person might expect.
ITAR and AECA work in concert to regulate the export of defense goods and services, as well as technical data — everything from training programs to guided missiles — to foreign entities. The enforcement of those laws falls under the purview of State, though bureaucratic machismo enters the picture when the Departments of Commerce and the Treasury throw their weight around on various items. Most commonly, that happens with gear classified as “dual use” or with goods having both a commercial and a military application.
Zip ties are a perfect example. The flimsy ones are useful for tying off trash bags (commercial use); heavy-duty ones can be used by law enforcement agents as impromptu handcuffs (military use). To send a box of plastic zip ties to our teams training Afghanistan’s new counternarcotics police, we had to submit a half-inch-thick application package to State for its sign-off on our exporting defense and training goods; then we had to resubmit the application to the Commerce Department because zip ties are a dual-use item. Failure to spend literally weeks securing both approvals made our exporting a box of those plastic strips a violation of ITAR, if something far less dramatic than what one might generally think of when it comes to international arms smuggling.
In 2009 alone, those three government export agencies processed 130,000 applications from U. S. companies, many of which were zip tie-style overlaps. The model was so onerous, in 2012 the U. S. government launched a wide-ranging Export Control Reform Initiative to create a single licensing agency that is “transparent, predictable, and timely,” according to the State Department. But it certainly wasn’t that way when we first ramped up Blackwater’s operations abroad and had to make sure our teams were equipped to do their jobs successfully.
I remember instances when approvals from one department would take six weeks, yet we were ordered to begin work overseas within thirty days. It left us in a precarious position with things like body armor, weapon optical sights, and other gear. And in those moments, we chose to move forward with the crucial missions in the field and provided our men and women with the weapons, protections, and other tools they needed to do their jobs and advance U. S. interests.
The majority of our violations, however, didn’t involve tangible materiel at all but rather came from our exporting intellectual property.
AECA and ITAR enforcers work hard to ensure that no bad actors receive the same valuable training as U. S. personnel and its allies. Blackwater ran afoul of those regulations by not securing timely approval for training even friendly foreign contingents, including military and law enforcement units from Canada, for example, and improperly providing background biographical information on some of the thousands of men and women abroad we had been approved to train each year. (Among the violations was training snipers from Taiwan’s National Security Bureau, which State concluded “had potential national security implications,” as well as training an Afghan border patrol official who happened to be a native of Iran.)
Further, we ran into intellectual property issues when we employed a pair of consultants from Volvo in Sweden for our Grizzly armored personnel carrier development program. We hadn’t secured the proper approvals first, and therefore were “providing [them] unauthorized access to ITAR-controlled technology,” according to the State Department.
The $42 million consent agreement we ultimately signed came after a three-year investigation into our work by agents from the Departments of Defense, Justice, State, Homeland Security, Treasury, and Commerce, as well as the FBI and the CIA’s inspector general’s office — and after a lengthy negotiation process on our end. At the time, ours was the highest ITAR settlement ever, eclipsing the $32 million settlement paid by Hughes Electronics Corporation and Boeing in 2003 for providing long-range rocket data and defense services to the Chinese government.
I was deeply offended by having to pay nearly 10 percent of our annual revenue in fines, particularly because, unlike selling secrets to the Chinese, State publicly acknowledged, “These violations did not involve sensitive technologies or cause a known harm to national security. The Department notes that many of the alleged ITAR violations occurred while Xe was providing services in support of U. S. Government programs and military operations abroad.” Two years later, in 2012, I was disgusted when United Technologies Corporation (UTC) resolved more than five hundred ITAR violations for delivering to Chinese authorities the extremely sensitive software allowing their military competitor to develop its first attack helicopter. UTC agreed to pay a $55 million settlement, or about 0.08 percent of its $64 billion annual revenue.
Blackwater had gotten hung up in the red tape, and then hung out to dry at the bargaining table. But we’d made sure to negotiate a few crucial things into that settlement, which I knew were vital to the company’s survival in the long run.
Since December 2008, the government had been denying most of our export applications, which had hobbled our ability to pursue contracts abroad. (No one will hire a contractor to do a job if it can’t actually get the tools to the job site.) With the settlement, those denials were lifted.
The agreement also ruled out criminal charges arising from any of those violations, which could have brought a suspension of our ability to work for the government, regardless of whether there was any validity to the charges. Any convictions on hypothetical charges could have meant a complete debarment from pursuing U. S. government contracts, and likely my company’s collapse.
So we paid off State and turned our attention to landing the next contract — which was right around the corner. Because even as it scolded us, the department never dared turn its back on us entirely. With the fine out of the way, we were awarded work under its third iteration of the WPPS contract the very next month.
From CIVILIAN WARRIORS by Erik Prince, Copyright © 2013, BW Productions, LLC. Reprinted by arrangement with Portfolio, a member of Penguin Group (USA) LLC, a Penguin Random House Company.
PHOTO: U.S. President Barack Obama delivers remarks in Washington announcing a comprehensive, new strategy for Afghanistan and Pakistan March 27, 2009. Standing behind are Secretary of U.S. State Hillary Clinton (L) and U.S. Secretary of Defense Robert Gates. REUTERS/Kevin Lamarque