Pop quiz: Which multi-billion dollar defense contractor is actually classified as a small business? Here’s a hint: It’s facing a war crimes inquiry and its got “Worldwide” in its name.
After prompting from Rep. Henry Waxman (D-CA), who chairs the House Oversight Committee, the inspector general from the Small Business Administration (SBA) concluded in a report released Monday that the security company Blackwater Worldwide may have gotten as much as 39 contracts by misleadingly claiming they are a small business.
Though Blackwater is highly involved in the minutia of everyday operations of its employees (scheduling, etc.) the company tried to claim that the people working security were merely independent contractors, which brought the supposed number of employees down to small business size.
Also questioned in the SBA inspector general’s report was revenue limitations. While Blackwater received 32 government contracts that had limited applicants to revenues of $6.5 million or less, the company has earned more than $1 billion in government contracts since 2002, mostly by providing security forces in Iraq and Afghanistan.
The report also hints at the possibility that the SBA was complicit in allowing Blackwater to remain classified as a small business. The report says that the SBA relied on Blackwater’s representation without checking for itself and “failed to consider Blackwater’s own contract with its security personnel, which states that Blackwater is an ‘employer.’”
Also, as Waxman points out in a memo on the subject to his fellow committee members, Blackwater wants to have it both ways. In a recent legal battle, a Blackwater lawyer argued the opposite of what they told the SBA so that the company could avoid paying damages:
“Blackwater’s claims also contradict the position its own lawyer, Fred F. Fielding, took in civil litigation before he became the White House Counsel to President Bush. After the estates of four security guards who died in Fallujah sued Blackwater for wrongful death, Mr. Fielding argued that the guards could not recover from Blackwater because they were ‘employees’ limited to recovering only workers’ compensation. In his legal brief, Mr. Fielding asserted that the company’s security guards were ‘employees as a matter of law’ and described this conclusion as ‘inescapable.’”
A charge of misrepresenting a company as a small business to obtain government contracts carries fines of up to $500,000 and 10 years in prison. The SBA has referred the matter to the two government organizations who awarded small business contracts to Blackwater: The Departments of Defense and Veterans Affairs.
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