Since June of 2004, the Bush administration has paid the Blackwater security firm at least $320 million for “diplomatic security” services worldwide, The Nation reports. More striking, the State Department — who oversees the contract — can’t explain why they’ve paid the company $100 million more than they contracted for.
The company was supposedly providing increased security for “post-war stabilization efforts” in Bosnia, Afghanistan and Iraq, and for State Department personnel throughout the Middle East. According to a State Department document quoted by the magazine, the U.S. government “is unable to provide protective services on a long-term basis from its pool of special agents, thus, outside contractual support is required.”
Blackwater won the contract, which was originally valued at $230 million over five years. The cost has since exploded, however, and the State Department is unable to explain why. An audit acquired by the Nation reveals that the Blackwater firm was apparently accounting for its profit as an expense — an unusual trick that, if logically possible, would bankrupt a company while making it wildly rich:
A heavily redacted 2005 government audit of Blackwater’s WPPS contract proposal, obtained by The Nation, reveals that Blackwater included profit in its overhead and its total costs, which would result “not only in a duplication of profit but a pyramiding of profit since in effect Blackwater is applying profit to profit.” The audit also found that the company tried to inflate its profits by representing different Blackwater divisions as wholly separate companies.
Not a bad trick for a company that only had a quarter million dolllars in government contracts in 2000. Wonder how long they can get away with stuff like that.
