State Dept: We Used Blackwater Audit To Save Some Cash… Before Re-signing BlackwaterSo State wasn’t thrilled about issuing Blackwater a no-bid contract in 2004 to protect its diplomats in Iraq. It turns out, in State’s telling, that the audit conducted of the contract in January 2005 helped with one thing, at least: it pushed the cost of the contract down. However, State still re-upped with Blackwater later in 2005.
State Department logistics official William Moser explained in a House oversight committee hearing in October that State requested the audit because it feared Blackwater took advantage of the hectic circumstances under which the contract was issued. (State was rushing to set up its embassy, and so it hired Blackwater on a no-bid basis, since the company was already in Baghdad.) And, sure, it found massive problems. But on the bright side, Moser told an incredulous Rep. Elijah Cummings (D-MD) in that hearing, the audit allowed State to knock off $25 million from the contract!
CUMMINGS: So the audit is done when?
MOSER: The audit was done, actually, in January of 2005. In other words, with the current contract award. And we actually negotiated down the cost of that contract by about $25 million.
The exchange isn’t 100 percent clear, despite Cummings’ repeated attempts at clarification. But according to Cummings, and confirmed by Moser, the 2004 contract was worth $300 million. (That’s confusing to me: not only is the total redacted in the document released to me under FOIA, but a House oversight committee report found that Blackwater’s contracts were worth only $48 million in 2004. Maybe it’s wrong?) So figure that State saved a cool $25 million. But when? There are only two options: either the State Department renegotiated the 2004 contract, post-audit, and got a refund; or it scaled down Blackwater’s subsequent bid — on a competed contract issued in 2005 — by $25 million.
Either way, if State got Blackwater to knock off $25 million, then Blackwater still pocketed 90 percent of what it sought from State. And all that came after an audit pointed out serious flaws in how Blackwater billed the government. Clearly it pays to be caught bilking the State Department.
