Chairman Waxman. The meeting of the committee will come to
order.
Over the past 25 years, a sophisticated campaign has been
waged to privatize Government services. The theory is that
corporations can deliver Government services better and at a
lower cost than the Government. Over the last 6 years, this
theory has been put into practice.
The result is that privatization has exploded. For every
taxpayer dollar spent on Federal programs, over 40 cents now
goes to private contractors. Our Government now outsources even
the oversight of the outsourcing.
At home, core Government functions like tax collection and
emergency response have been contracted out. Abroad, companies
like Halliburton and Blackwater have made millions performing
tasks that used to be done by our Nation's military forces.
What has been missing is a serious evaluation of whether
the promises of privatizing are actually realized. Inside our
Government, it has been an article of faith that outsourcing is
best.
Today, we are going to examine the impact of privatization
on our military forces. We will focus on a specific example,
the outsourcing of military functions to Blackwater, a private
military contractor providing protective services to U.S.
officials in Iraq.
We will seek to answer basic questions. Is Blackwater, a
private military contractor, helping or hurting our efforts in
Iraq? Is the Government doing enough to hold Blackwater
accountable for alleged misconduct? What are the costs to the
Federal taxpayers?
I want to thank Erik Prince, Blackwater's founder and CEO,
for his cooperation in this hearing. As a general rule,
children from wealthy and politically connected families no
longer serve in the military. Mr. Prince is an exception. He
enlisted in the Navy in 1992 and joined the Navy SEALs in 1993,
where he served for 4 years.
We thank you for that service.
In 1997, he saw an opportunity to start his own company and
created Blackwater. He has said, ``We are trying to do for the
national security apparatus what FedEx did for the Postal
Service.''
There may be no Federal contractor in America that has
grown more rapidly than Blackwater over the last 7 years. In
2000, Blackwater had just $204,000 in Government contracts.
Since then, it has received over $1 billion in Federal
contracts. More than half of these contracts were awarded
without full and open competition.
Privatizing is working exceptionally well for Blackwater.
The question for this hearing is whether outsourcing to
Blackwater is a good deal for the American taxpayer, whether it
is a good deal for the military and whether it is serving our
national interest in Iraq.
The first part of that question is cost. We know that
sergeants in the military generally cost the Government between
$50,000 to $70,000 per year. We also know that a comparable
position at Blackwater costs the Federal Government over
$400,000, six times as much.
Defense Secretary Gates testified about this problem last
week. He said, Blackwater charges the Government so much that
it can lure highly trained soldiers out of our forces to work
for them. He is now taking the unprecedented step of
considering whether to ask our troops to sign a non-compete
agreement to prevent the U.S. military from becoming a
taxpayer-funded training program for private contractors.
There are also serious questions about Blackwater's
performance. The September 16th shooting that k**ed at least
11 Iraqis is just the latest in a series of troubling
Blackwater incidents.
Earlier this year, our committee examined the company's
mistakes in Fallujah where four contractors were k**ed and
their bodies burned. That incident triggered a major battle in
the Iraq War.
New documents indicate that there have been a total of 195
shooting incidents involving Blackwater forces since 2005.
Blackwater's contract says the company is hired to provide
defensive services, but in most of these incidents it was
Blackwater forces who fired first. We have also learned that
122 Blackwater employees, one seventh of the company's current
work force in Iraq, have been terminated for improper conduct.
We have the best troops in the world. The men and women in
our Armed Forces are extraordinarily able and dedicated. Their
pay does not reflect their value, but they don't complain. So I
have a high bar when I ask whether Blackwater and other private
military contractors can meet the performance standards of our
soldiers.
In recent days, military leaders have said that
Blackwater's missteps in Iraq are going to hurt us badly. One
senior U.S. military official said Blackwater's actions are
creating resentment among Iraqis that ``may be worse than Abu
Ghraib.'' If these observations are true, they mean that our
reliance on a private military contractor is backfiring.
The committee's investigation raises as many questions
about the State Department's oversight of Blackwater as it does
about Blackwater itself.
On December 24, 2006, a drunken Blackwater contractor shot
the guard of the Iraqi Vice President. This didn't happen out
on a mission protecting diplomats. It occurred inside the
protected Green Zone.
If this had happened in the United States, the contractor
would have been arrested and a criminal investigation launched.
If a drunken U.S. soldier had k**ed an Iraqi guard, the
soldier would have faced a court martial, but all that has
happened to the Blackwater contractor is that he has lost his
job.
The State Department advised Blackwater how much to pay the
family to make the problem go away and then allowed the
contractor to leave Iraq just 36 hours after the shooting.
Incredibly, internal emails document a debate over the size of
the payment. The charge d'affaires recommended a $250,000
payment, but this was cut to $15,000 because the Diplomatic
Security Service said Iraqis would try to get themselves k**ed
for such a large payout.
Well, it is hard to read these emails and not come to the
conclusion that the State Department is acting as Blackwater's
enabler.
If Blackwater and other companies are really providing
better service at a lower cost, the experiment of privatizing
is working. But if the costs are higher and performance is
worse, then I don't understand why we are doing this. It makes
no sense to pay more for less. We will examine this issue today
and facts, not ideology, need to guide us here.
Yesterday, the FBI announced that it launched a criminal
investigation into Blackwater's actions on September 16th. This
morning, the Justice Department sent a letter to the committee
asking that in light of this development the committee not take
testimony at this time about the events of September 16th.
Our precedent on this committee is that Congress has an
independent right to this information but, in this case,
Ranking Member Davis and I have conferred and we have agreed to
postpone any public discussion of this issue as we work with
the Department to obtain the information that the committee
lacks. For the same reason, at the request of the Justice
Department, I will ask our witness, Mr. Prince, and our State
Department witnesses on the second panel not to discuss the
September 16th incident in this public setting today.
The last point I want to make is directed to the families
of the Blackwater employees k**ed in Fallujah and the families
of the soldiers k**ed in a tragic and unnecessary accident
with Blackwater Airline, some of whom are here today.
I know many of you believe that Blackwater has been
unaccountable to anyone in our Government. I want you to know
that Blackwater will be accountable today.
We will be asking some tough questions about disturbing
actions, and I also want to a**ure Mr. Prince that we will be
fair and we will not tolerate any demonstrations or
disturbances from anyone attending this hearing.
Thank you, and I am looking forward to Mr. Prince's
testimony.