[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




 
                             BLACKWATER USA

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 2, 2007

                               __________

                           Serial No. 110-89

                               __________

Printed for the use of the Committee on Oversight and Government Reform


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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California               TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York             DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania      CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York         JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois             TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts       CHRIS CANNON, Utah
WM. LACY CLAY, Missouri              JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California          MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts      DARRELL E. ISSA, California
BRIAN HIGGINS, New York              KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky            LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of   VIRGINIA FOXX, North Carolina
    Columbia                         BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota            BILL SALI, Idaho
JIM COOPER, Tennessee                JIM JORDAN, Ohio
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
                  David Marin, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 2, 2007..................................     1
Statement of:
    Prince, Erik, chairman, the Prince Group, LLC and Blackwater 
      USA........................................................    23
    Satterfield, Ambassador David M., Senior Advisor to the 
      Secretary and Coordinator for IRAQ, U.S. Department of 
      State; Ambassador Richard J. Griffin, Assistant Secretary 
      of State, Bureau of Diplomatic Security, U.S. Department of 
      State; and William H. Moser, Deputy Assistant Secretary for 
      Logistics Management, U.S. Department of State.............   123
        Satterfield, Ambassador David M..........................   123
Letters, statements, etc., submitted for the record by:
    Davis, Hon. Tom, a Representative in Congress from the State 
      of Virginia, prepared statement of.........................    15
    Griffin, Ambassador Richard J., Assistant Secretary of State, 
      Bureau of Diplomatic Security, U.S. Department of State, 
      prepared statement of......................................   128
    Hodes, Hon. Paul W., a Representative in Congress from the 
      State of New Hampshire, information concerning pay.........   104
    Lynch, Hon. Stephen F., a Representative in Congress from the 
      State of Massachusetts, various e-mails....................   112
    Prince, Erik, chairman, the Prince Group, LLC and Blackwater 
      USA, prepared statement of.................................    25
    Sali, Hon. Bill, a Representative in Congress from the State 
      of Idaho, prepared statement of............................   166
    Satterfield, Ambassador David M., Senior Advisor to the 
      Secretary and Coordinator for IRAQ, U.S. Department of 
      State, prepared statement of...............................   125
    Watson, Hon. Diane E., a Representative in Congress from the 
      State of California, prepared statement of.................   162
    Waxman, Chairman Henry A., a Representative in Congress from 
      the State of California:
        Information concerning contracts.........................    70
        Prepared statement of....................................     5
        Majority staff memorandum................................    34


                             BLACKWATER USA

                              ----------                              


                        TUESDAY, OCTOBER 2, 2007

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:12 a.m., in 
room 2154, Rayburn House Office Building, Hon. Henry A. Waxman 
(chairman of the committee) presiding.
    Present: Representatives Waxman, Davis of Virginia, 
Maloney, Cummings, Kucinich, Davis of Illinois, Tierney, Clay, 
Watson, Lynch, Yarmuth, Braley, Norton, McCollum, Cooper, Van 
Hollen, Hodes, Murphy, Sarbanes, Welch, Burton, Shays, Mica, 
Platts, Duncan, Turner, Issa, Westmoreland, McHenry, Foxx, 
Bilbray, and Jordan.
    Also present: Representative Schakowsky.
    Staff present: Phil Schiliro, chief of staff; Phil Barnett, 
staff director and chief counsel; Kristen Amerling, general 
counsel; Karen Lightfoot, communications director and senior 
policy advisor; David Rapallo, chief investigative counsel; 
John Williams and Theo Chuang, deputy chief investigative 
counsels; Christopher Davis and Daniel Davis, professional 
staff members; Earley Green, chief clerk; Teresa Coufal, deputy 
clerk; Matt Siegler, special assistant; Caren Auchman, press 
assistant; Zhongrui J.R. Deng, chief information officer; 
Leneal Scott, information systems manager; Kerry Gutknecht, 
William Ragland, and Miriam Edelman, staff assistants; Russell 
Anello, counsel; David Marin, minority staff director; Larry 
Halloran, minority deputy staff director; Jennifer Safavian, 
minority chief counsel for oversight and investigations; Keith 
Ausbrook, minority general counsel; John Brosnan, minority 
senior procurement counsel; Steve Castor, A. Brooke Bennett, 
Ashley Callen, and Emile Monette, minority counsels; Allyson 
Blandford, minority professional staff member; Nick Palarino 
and Larry Brady; minority senior investigator and policy 
advisors; Patrick Lyden, minority parliamentarian and member 
services coordinator; Brian McNicoll, minority communications 
director; and Benjamin Chance, minority clerk.
    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 killed 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 killed 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 killed 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 killed 
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 killed in Fallujah and the families 
of the soldiers killed 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 assure 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.
    I want to recognize the ranking member, Mr. Davis.
    [The prepared statement of Chairman Henry A. Waxman 
follows:]

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[GRAPHIC] [TIFF OMITTED] T5219.008

    Mr. Davis of Virginia. Thank you, Mr. Waxman.
    Security contractors have been working at U.S. diplomatic 
posts for more than 20 years, but their extensive use in the 
midst of ongoing military conflict raises important new 
questions about the ability of Government acquisition officials 
to manage and oversee those contracts, the vetting and training 
of security personnel, and how best to control and coordinate 
private security firms in a complex, highly dangerous battle 
space.
    Contracts for the use of force in war also pose legitimate 
questions about the propriety of hiring private firms to 
perform such a public, some would say inherently governmental, 
function. But those complex questions won't be addressed 
responsibly by fixating on the operations of any one company 
nor are we likely to learn much by focusing on one sensational 
incident still under investigation.
    So we appreciate Chairman Waxman agreeing to add testimony 
from State Department witnesses today. They will discuss 
overall management of the competitively awarded worldwide 
personnel protective services contract under which Blackwater 
and two other firms provide security services in Iraq.
    We take the chairman at his word, there will be additional 
hearings to examine the broader range of important oversight 
issues implicated in the use of security contractors in hostile 
environments.
    Contractor personnel working in support of diplomatic and 
military activities abroad have become an inescapable fact of 
modern life. Today, they provide everything from logistics and 
engineering services to food preparation, laundry, housing, 
construction and, of course, security. They offer invaluable 
surge capacity and contingent capabilities Federal agencies 
can't afford to keep in-house.
    By some estimates, the number of private contractors now 
exceeds the total U.S. military personnel in Iraq, but the 
presence of so many foreigners, particularly so many with guns, 
offends some Iraqis and gives others a pretext to incite 
mistrust and violence. To paraphrase the title of one recent 
study of the phenomena, Iraqis fear they can't live with 
private security contractors. U.S. personnel believe they can't 
live without them.
    So it is critical the Departments of State and Defense get 
it right when they contract for sensitive security services in 
someone else's sovereign territory.
    However, you define success in Iraq, from stay the course 
to immediate withdrawal and every scenario in between, security 
contractors are going to play an integral part. The inevitable 
redeployment of U.S. military units out of the current urban 
battle space will only increase the need for well trained and 
well managed private security forces to fill that vacuum and 
protect diplomatic and reconstruction efforts.
    As the lead editorial of this morning's Washington Post 
concluded, it is foolish to propose the elimination of private 
security firms in Iraq and Afghanistan, at least in the short 
term.
    Contract documents and incident reports reviewed by the 
committee suggest the State Department is trying to get it 
right. There is clear evidence of proactive management and 
oversight of security contractors in Iraq.
    The State Department requires specific qualifications and 
rigorous ongoing training for all contract security personnel, 
including extensive prior security experience and firearms 
proficiency. Those hired must also undergo background 
investigations and qualify for a security clearance, and the 
contract contains carefully crafted comprehensive provisions on 
standards of conduct for security personnel, strict rules for 
the use of any type of force and extensive reporting 
requirements when any incident occurs.
    But State Department oversight of security contractors 
seems to have some blind spots as well. There is little 
aggregate or comparative data on contractor performance, so it 
is impossible to know if one company's rate of weapon-related 
incidents is the product of a dangerous cowboy culture or the 
predictable result of conducting higher risk missions.
    Incidents of erratic and dangerous behavior by security 
personnel from all the companies involved, not just Blackwater, 
are handled with little or no regard to Iraqi law. Usually, the 
bad actor is simply whisked out of the country, whether the 
offense is a civilian casualty, negligent discharge of a 
weapon, alcohol or drug abuse, or destruction of property. To 
date, there has not been a single successful prosecution of a 
security provider in Iraq for criminal misconduct.
    Iraqis understandably resent our preaching about the rule 
of law when so visible an element of the U.S. presence there 
appears to be above the law. That is why the events of 
September 16th sparked such an outcry by the Iraqi government 
which sees unpunished assaults on civilians as a threat to 
national sovereignty.
    The incident is also being used by those seeking to exploit 
accumulated resentments and draw attacks on private 
contractors, a force even the Iraqi government concedes is 
still a vital layer of security.
    Given that volatile environment, we should take care not to 
prejudge the ongoing investigations into events of that day.
    Published eyewitness statements provide very contradictory 
accounts, but this much we know: Standard operating procedures 
for personnel security details dictate getting protected 
persons in U.S. vehicles away from an incident as quickly as 
possible. No one stays to secure the scene or to help 
frightened civilians. That is not their job.
    So we may never know who or how many shot first. In the 
time it takes to hide an AK-47, murderous insurgents and 
corrupt Iraqi police can be transformed into martyred 
civilians.
    We need to look at the proper role of security contractors 
in a war zone, not through the clouded lens of one company or 
one certain incident but with a clear eye and objective view of 
what best serves the interest of U.S. personnel in theater and 
U.S. taxpayers at home.
    I look forward to that discussion.
    [The prepared statement of Hon. Tom Davis follows:]

    [GRAPHIC] [TIFF OMITTED] T5219.009
    
    [GRAPHIC] [TIFF OMITTED] T5219.010
    
    Chairman Waxman. Thank you very much, Mr. Davis.
    While the rules do not provide opening statements for all 
Members at a hearing, Mr. Davis and I have consulted about 
this, and I would like to ask unanimous consent that we have 
four Members on each side designated by the chairman and the 
ranking member to be permitted to give a 2-minute statement.
    When we begin the questioning, we will begin with 10 
minutes controlled by the chairman and 10 minutes controlled by 
the ranking member.
    I would further like to ask unanimous consent that Jan 
Schakowsky, who is not a member of this committee, be permitted 
to join us at this hearing today. Is there any objection to 
this unanimous consent request?
    If not, that will be the order.
    I would like to now call on for 2 minutes, it would be Mr. 
Tierney for his statement.
    Mr. Tierney. Thank you, Mr. Chairman.
    Mr. Chairman, the fundamental question here ought to be 
whether or not it makes sense to contract out in the first 
place. We really need to evaluate our use of private military 
contractors to determine what roles are appropriate or not for 
private firms and what must be kept in control of those in 
uniform or those in public service.
    The all-voluntary professional force after the Vietnam War 
employed the so-called Abrams Doctrine. The idea was that we 
wouldn't go to war without the sufficient backing of the 
Nation.
    Outsourcing has circumvented this doctrine. It allows the 
administration to almost double the force size without any 
political price being paid. We have too few regular troops and 
if we admitted that and tried to put in more, the 
administration would have to admit it was wrong in the way it 
prosecuted this war originally. It would have to recognize the 
impact on drawing forces out of Afghanistan.
    If we call up even more National Guards or Reservists, then 
it would cause even more of a protest among the people in this 
country that are already not sold on the Iraq venture. If we 
relied more on our allies, they would have to share the power, 
share the decisionmaking and share the contract work. So 
private contractors have allowed, essentially, this 
administration to add additional forces without paying any 
political capital.
    Very little conversation goes into the number of people 
dedicated to their jobs in the private sector that are being 
killed or injured on a regular basis. Figures by one account 
are some nine individuals a week losing their lives in the 
service of private contracting that are not counted in the 
figures of casualties reported to the American people.
    Outsourcing, as you indicated, Mr. Chairman, seems to 
increase the costs, not decrease the costs, and I hope we get 
into the numbers on that as the hearing goes on. It seems to be 
harming the very counterinsurgency effort that General Petraeus 
seems to want to implement, and we have far too few Government 
managers to oversee the situation.
    We need more accountability. We need to clarify and update 
our laws. We need to restore the Government's ability to manage 
any such contracts. We need to punish corporations that commit 
fraud or undermine our security. Basically, we need to 
reconsider which jobs should be private and which jobs should 
remain in the public sector.
    Thank you, Mr. Chairman.
    Chairman Waxman. Thank you, Mr. Tierney.
    The Chair would like to now recognize Mr. McHenry for 2 
minutes.
    Mr. McHenry. Thank you, Mr. Chairman.
    While we are the investigative committee of Congress, I 
believe it is irresponsible, when an ongoing investigation in 
the executive branch is trying to establish the facts of the 
September 16th event, that we call before this committee, 
contractors involved with that. Establishing those facts are 
included in those two ongoing investigations, and I believe it 
is irresponsible for us to convict before the executive branch 
has first established the facts of what did occur with the 
Blackwater incident in Baghdad.
    Blackwater has protected dozens, if not hundreds, of 
Members of Congress including myself and members of this 
committee when they travel to Afghanistan and Iraq. I, for one, 
am grateful for their service. Not one single Member of 
Congress has been injured nor killed under Blackwater 
protection, and for that I am grateful.
    Let me be clear. We should not speculate on the actions of 
the men on September 16th. Those facts are not yet established. 
We need to get the facts on the record on these contradicting 
reports that are coming from media sources.
    Much is not clear. We have conflicting media reports 
written by reporters who were not present for the events. We do 
not yet have an authoritative report from the executive branch 
based on eyewitness accounts.
    Today, we should be reviewing the rules of contracting, 
investigating whether companies are following the rules, the 
legal ramifications and whether the system of contracting 
should be modified and improved. These are the issues that we 
should be dealing with today.
    Patience is a virtue when it comes to investigating 
something as serious as the loss of human life. We all abhor 
the loss of any human life. Justice must be served.
    With thousands of soldiers, diplomats and contractors 
risking their lives in such a dangerous region of the world, we 
should exercise patience in this process and allow the ongoing 
investigations to come to a conclusion and establish clear 
facts before we complicate this process with a kneejerk 
congressional hearing. Let's deal in solid facts, not simply 
follow the front page stories and the dictates of trial lawyers 
which this committee, it appears, has done over the last 9 
months.
    Chairman Waxman. The gentleman's time has expired.
    Mr. McHenry. Again, contracting is the liberal cause du 
jour, and we should move past that and ensure we have proper 
Government service.
    Thank you.
    Chairman Waxman. Mrs. Maloney, you are recognized for 2 
minutes.
    Mrs. Maloney. Thank you, Chairman Waxman and Ranking Member 
Davis for holding today's hearing to examine the heavy reliance 
upon private security contractors in Iraq and Afghanistan.
    There have been troubling reports about incidents involving 
Blackwater where Iraqi civilians have been killed, and there 
have been many, many troubling reports.
    Today, we are basically going to examine the privatization 
of the military. What are the costs and what are the 
consequences of privatizing our military?
    Blackwater guards are highly trained and, in some cases, 
have been brave, yet they make six times more than our own 
military. Coming from a military family where my father served 
in World War II and my brother in Vietnam, I do not believe 
that the Blackwater guards are any more brave or more committed 
or more disciplined or more effective than the American Armed 
Services.
    So our basic question--mine is today--is why are we using 
this service, contracting out, privatizing our military to an 
organization that has been aggressive and, I would say in some 
cases, reckless in the handling of their duties?
    There are many questions we have on accountability and 
basically why are we doing this. We were told that we were 
going to contract out these security services to save the 
Government money, but in fact it is costing significantly more 
to pay Blackwater than it would for our own military to perform 
these duties, and their actions have really undermined our 
effectiveness in Iraq.
    Thank you.
    Chairman Waxman. Time has expired.
    Mr. Burton, you are recognized for 2 minutes.
    Mr. Burton. Thank you, Mr. Chairman.
    I have no objection to this kind of a hearing. What really 
concerns me is that there appears to be a rush to judgment, and 
I don't think that should happen. It is going to be thoroughly 
investigated in Iraq by Iraqis and American officials. Until we 
get that, we won't know exactly what happened or who might have 
made a mistake or who might have done something they shouldn't 
have done.
    While the hearing here is OK, I hope everybody, including 
the media, will know that this is not the final report on this. 
There is going to be a complete investigation.
    I would like to give you a few facts. There have been 3,073 
missions in the last 9 months over there by private 
contractors. There were 77 involving them using weapons.
    There have been 54,000 recorded attacks, 6,000 a month, and 
there have been a lot of these contractors who have lost their 
lives. Since 2004, there have been 42 security contractors 
killed and 76 have been wounded.
    This is a time when we should reevaluate or evaluate the 
procedures that are being used over there. If we find, after 
the investigation, there have been errors in judgment or 
somebody made a downright conscious mistake, then things need 
to be changed.
    I would just like to say one more time, it is important to 
have these hearings. Congress needs to know what went on over 
there, but there should not be a rush to judgment.
    I would like to say one other thing. There has not been one 
Congressman or one public official that has been killed while 
under the protection of these people, and that should account 
for something.
    With that, Mr. Chairman, I yield back my time.
    Chairman Waxman. The gentleman's time has expired.
    The Chair now recognizes Mr. Cummings.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    In light of the last statement that was just made, it is 
not about Blackwater and what they did or they may have done 
some good things. The question is whether there is 
accountability.
    Blackwater, we have to question in this hearing whether it 
created a shadow military of mercenary forces that are not 
accountable to the U.S. Government or to anyone else. 
Blackwater appears to have fostered a culture of shoot first 
and sometimes kill and then ask the questions. Blackwater has 
been involved in at least 195 escalation of force incidents 
since 2005, an average of 1.4 shooting incidents per week.
    We must seriously reassess whether these practices are 
undermining our ability to accomplish our mission in Iraq.
    We must also reassess how Blackwater not only affects our 
mission in Iraq but also how it may negatively affect our 
foreign relations efforts in the Middle East. These same 
neighboring states that we need to utilize as vehicles to spur 
multilateral and bilateral support as to create a political 
reconciliation in Iraq.
    This is about accountability, and I am going to be very 
interested to hear what Mr. Prince has to say about that 
accountability.
    With that, Mr. Chairman, I yield back.
    Chairman Waxman. The gentleman yields back his time.
    The Chair recognizes Mr. Issa for 2 minutes.
    Mr. Issa. Thank you, Mr. Chairman.
    I think it has been made incredibly clear by the previous 
statements on the Democrat side that this is not about 
Blackwater when they talk about being paid six times as much, 
when they talk about the President shouldn't have gone into 
this war, when they talk about, they talk about.
    What we are hearing today is, in fact, a repeat of the 
MoveOn.org attack on General Petraeus' patriotism. What we are 
seeing is that except for the 79 Members who voted against 
denouncing MoveOn.org, 8 of whom are on the dais here today, 
what we are seeing is what they couldn't do to our men and 
women in uniform, they will simply switch targets.
    The bodies were not cold in Iraq before this became a story 
worth going after here in committee.
    The second panel today will include people from the State 
Department who will tell us about the command and control 
rules, about whether or not Blackwater made mistakes, whether 
they did their job and whether they are going to be continued 
as a contractor. That is appropriate.
    I am not here to defend Blackwater, but I am here to defend 
General Petraeus and the men and women in uniform who do their 
job, who were first denounced by MoveOn.org, then not denounced 
by Members of Congress, many of whom are on the dais today, 
speaking as though they don't support attacking in every 
possible way the administration's war in Iraq.
    We are going to get to the bottom of what happened on 
September 16th, but quite frankly when we are done with that, 
we are still going to have the same problem with all due 
respect to the Members on the other side of the aisle. We do 
not want military guarding State Department personnel. There is 
a long tradition, in fact, of very limited military guarding of 
even our embassies, a limited amount of Marines.
    The fact is the State Department has a surge responsibility 
in Iraq and Afghanistan. They are meeting it with private 
contractors. When that ends, do we really want to have 1,500 
Special Ops people working for the State Department in career 
positions?
    I look forward to the debate on that and not on whether 
this war was ill-founded which has been the Democrats' mantra.
    Chairman Waxman. The gentleman's time has expired.
    The Chair would now turn to Mr. Kucinich for 2 minutes.
    Mr. Kucinich. Mr. Chairman, a British polling agency has 
determined that more than one million Iraqi citizens have died 
as a result of the Iraq War. Opinion Research Business found 
that the death rate rose to almost one in two households in 
Baghdad have lost a family member since the invasion began in 
2003. This report confirms the results of a survey released 
last fall by Lancet, the prestigious medical magazine which 
gave a conservative estimate of 650,000 innocent civilian 
deaths.
    Now this great human tragedy is taking place in many forms. 
In today's hearing. We are investigating Blackwater's 
outrageous behavior that has killed countless innocent Iraqis, 
and I am deeply concerned that the Department of State appears 
to have attempted to cover up Blackwater's killings rather than 
seek appropriate remedies.
    What are the implications of killing an innocent Iraqi? 
What is this Government's position on killing of innocent 
Iraqis by a U.S. citizen?
    If war is privatized and private contractors have a vested 
interest in keeping the war going, the longer the war goes on, 
the more money they make. Eighty-four percent of the shooting 
incidents involving Blackwater are where they fired first, and 
Blackwater did not remain at the scene. So Blackwater's shoot 
first and don't ask questions later approach undermines the 
U.S.' position and jeopardizes the safety of our soldiers.
    How much more do we need to know to conclude that the war 
against Iraq has been a disaster for the Iraqi people and for 
the people of this country as well?
    I yield back.
    Chairman Waxman. The gentleman yields back his time.
    All opening statements have been concluded.
    Oh, excuse me, there is one more, Mr. Mica for 2 minutes.
    Mr. Mica. Thank you.
    Well, let me try to frame the context of this hearing. I 
have been on the committee for some 15 years. From the outset, 
the Democrat side on the majority have tried to discredit the 
President. In fact, I have a quote from a press release from 
Chairman Waxman, January 10th: As part of President Bush's 
revised strategy appears for Iraq, he appears likely to propose 
giving large sums of taxpayer dollars to decrepit and possibly 
corrupt state-owned Iraqi companies.
    So we started first in these hearings to try to discredit 
the President. We have tried to discredit the Ambassador. We 
have tried to discredit the Secretary of Defense. We did a 
great job in trying to discredit the military here, and then we 
worked on the Iraqi government.
    Now we are down to some of the contractors. So this is the 
hearing to discredit them.
    Probably one of the reasons why there is some bad news for 
the other side today. It is on page 15. It is a 48 percent drop 
in deaths in Iraq in 1 month. They want that good news to get 
out, but on the front page, you want the other killings by 
Blackwater, the contractors we are going after today.
    Now if they are really intent on going after the 
contractors, and I don't know what happened on the 16th. I 
don't know what happened in other incidents.
    But if they are really intent on going after criminal 
misconduct, then we have a letter from the Department of 
Justice. We have some words about not interfering in this 
process, but we are interfering with both a Department of State 
investigation and a criminal misconduct investigation, 
potentially criminal charges.
    Let me quote from some of the words: This presents serious 
challenges for any potential criminal prosecution, and then 
they cite case law.
    So my concern, if we really want to do this, we should not 
be holding this hearing. Therefore, I move that the committee 
do now adjourn.
    Chairman Waxman. The motion is before us to adjourn.
    All those in favor of the motion, say aye.
    [Chorus of ayes.]
    Chairman Waxman. Opposed, no.
    [Chorus of noes.]
    Chairman Waxman. The noes have it and the motion is 
defeated.
    We have a witness now, and I would like to call forward 
Erik Prince who is the head of the Prince Group, LLC and 
Blackwater USA.
    Mr. Prince, please come forward.
    Mr. Prince, it is the practice of this committee that all 
witnesses take an oath before they testify, if you will please 
raise your right hand.
    [Witness sworn.]
    Chairman Waxman. The record will indicate that the witness 
answered in the affirmative.
    I do want to say, Mr. Prince, that there have been press 
reports over the past 2 weeks regarding the recent incident on 
September 16th, and there have been conflicting accounts of 
what actually happened on the ground.
    I know that you had prepared to address this incident today 
as did our other witnesses and no doubt our Members did too. So 
I just want to note that for the record that the request to 
refrain from public comment came from the Justice Department, 
not Mr. Prince and not from anyone else, and I want to thank 
him for complying with that Justice Department request.
    I know you had been prepared to talk about it, but we would 
ask you please not to go into that incident.
    Mr. Prince. Yes, sir, I would be more than happy to.
    Chairman Waxman. Before you begin, just push the button the 
mic.
    Mr. Prince. Is that better?
    Chairman Waxman. Yes. OK, please proceed however you see 
fit.

 STATEMENT OF ERIK PRINCE, CHAIRMAN, THE PRINCE GROUP, LLC AND 
                         BLACKWATER USA

    Mr. Prince. Chairman Waxman, Congressman Davis, members of 
the committee, my name is Erik Prince, and I am the chairman 
and CEO of the Prince Group and Blackwater USA.
    Blackwater is a team of dedicated professionals who provide 
training to America's military and law enforcement communities 
and risk their lives to protect Americans in harm's way 
overseas. Under the direction and oversight of the U.S. 
Government, Blackwater provides an opportunity for military and 
law enforcement veterans with a record of honorable service to 
continue their support to the United States.
    Words alone cannot express the respect I have for these 
brave men and women who volunteer to defend U.S. personnel, 
facilities and diplomatic missions. I am proud to be here to 
represent them today.
    After almost 5 years in active service as a U.S. Navy SEAL, 
I founded Blackwater in 1997. I wanted to offer the military 
and law enforcement communities assistance by providing expert 
instruction and world-class training venues. Ten years later, 
Blackwater trains approximately 500 members of the U.S. 
military and law enforcement agencies every day.
    After 9/11, when the United States began its stabilization 
efforts in Afghanistan and then Iraq, the U.S. Government 
called upon Blackwater to fill the need for protective services 
in hostile areas. Blackwater responded immediately. We are 
extremely proud of answering that call and supporting our 
country.
    Blackwater personnel supporting our country's overseas 
missions are all military and law enforcement veterans, many of 
whom have recent military deployments. No individual protected 
by Blackwater has ever been killed or seriously injured. There 
is no better evidence of the skill and dedication of these men.
    At the same time, 30 brave men have made the ultimate 
sacrifice while working for Blackwater and its affiliates. 
Numerous others have been wounded and permanently maimed. The 
entire Blackwater family mourns the loss of these brave lives. 
Our thoughts and our prayers are with their families.
    The areas of Iraq in which we operate are particularly 
dangerous and challenging. Blackwater personnel are subject to 
regular attacks by terrorists and other nefarious forces within 
Iraq. We are the targets of the same ruthless enemies that have 
killed more than 3,800 American military personnel and 
thousands of innocent Iraqis.
    Any incident where Americans are attacked serves as a 
reminder of the hostile environment in which our professionals 
work to keep American officials and dignitaries safe, including 
visiting Members of Congress. In doing so, more American 
service members are available to fight the enemy.
    Blackwater shares the committee's interest in ensuring the 
accountability and oversight of contract personnel supporting 
U.S. operations. The company and its personnel are already 
accountable under and subject to numerous statutes, treaties 
and regulations of the United States. Blackwater looks forward 
to working with Congress and the executive branch to ensure 
that any necessary improvements to these laws and policies are 
implemented.
    The Worldwide Personal Protection Services Contract, which 
has been provided to this committee, was competitively awarded 
and details almost every aspect of operations and contractor 
performance including the hiring, vetting guidelines, 
background checks, screening, training standards, rules of 
force and conduct standards.
    In Iraq, Blackwater reports to the embassy's regional 
security officer or RSO. All Blackwater movements and 
operations are directed by the RSO. In conjunction with 
internal company procedures and controls, the RSO ensures that 
Blackwater complies with all relevant contractual terms and 
conditions as well as any applicable laws and regulations.
    We have approximately 1,000 professionals serving today in 
Iraq as part of our Nation's total force. Blackwater does not 
engage in offensive or military missions but performs only 
defensive security functions.
    My understanding of the September 16th incident is that the 
Department of State and the FBI are conducting a full 
investigation, but those results are not yet available. We at 
Blackwater welcome the FBI review announced yesterday, and we 
will cooperate fully and look forward to receiving their 
conclusions.
    I just want to put some other things in perspective. A 
recent report from the Department of State stated that, in 
2007, Blackwater has conducted 1,873 security details for 
diplomatic business to the Red Zone, areas outside the Green 
Zone in Iraq, and there have been only 56 incidences in which 
weapons were discharged or less than 3 percent of all 
movements.
    In 2006, Blackwater conducted over 6,500 diplomatic 
movements in the Red Zone. Weapons were discharged in less than 
1 percent of those missions.
    To the extent there is any loss of innocent life ever, let 
me clear that I consider that tragic. Every life, whether 
American or Iraqi, is precious. I stress to the committee and 
to the American public, however, that I believe we acted 
appropriately at all times.
    I am prepared to answer your questions.
    [The prepared statement of Mr. Prince follows:]

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    Chairman Waxman. Thank you very much, Mr. Prince.
    I am going to start off with the questions.
    The issue before us that I see that is important to 
understand is we have gone now in a major way to contract out 
what the Government and what the military ordinarily would do.
    Your company started off at the beginning of 2001 with, I 
think, around over $200,000 in Government contracts. You now 
are making over $1 billion a year. That is quite a success. 
Even if I am wrong on the exact numbers, it is quite a success.
    Now we are paying a lot of money for privatized military to 
do the work that our military people have done, and no one does 
this work better than the U.S. military. They are a very able 
and brave and courageous people that do a fantastic job for us.
    So the question in my mind is are we paying more and 
getting less?
    In asking that question, I want to focus on a particular 
incident. That incident received almost no public attention but 
involved the tragic loss of three of our troops, and my staff 
has reviewed the documents describing the incident. They 
prepared a memo which I would like, without objection, to make 
part of the record.
    [The information referred to follows:]

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    Chairman Waxman. On November 27, 2004, there was a plane 
run by Blackwater Aviation that crashed into a wall of a canyon 
in the mountains of Afghanistan. This plane was carrying three 
military personnel, three active duty U.S. personnel: 
Lieutenant Colonel Michael McMahon, Chief Warrant Officer 
Travis Grogan, and Specialist Harley Miller.
    About 40 minutes after takeoff, Blackwater 61 crashed into 
the wall of a canyon and all the occupants were killed. The 
crash was investigated by a joint Army and Air Force taskforce 
and by the National Transportation Safety Board.
    The NTSB report found that Blackwater captain and first 
officer behaved unprofessionally and were deliberately flying 
the non-standard route low through the valley for fun. The 
report found that the pilots were unfamiliar with the route, 
deviated almost immediately after takeoff and failed to 
maintain adequate terrain clearance.
    They also had a transcript of the cockpit voice recording, 
and on this recording the flight crew joked with each other, 
saying, ``You are an X-wing fighter Star Wars man and you 
are,'' expletive ``right. This is fun.''
    The captain stated, ``I swear to God they wouldn't pay me 
if they knew how much fun this was.''
    Mr. Prince, one allegation raised recently about 
Blackwater's actions is that your contractors have acted 
irresponsibly. One senior U.S. commander told the Washington 
Post ``They often act like cowboys.''
    Let me ask you about that crash of Blackwater Flight 61. In 
this case, did Blackwater's pilots act responsibly or were 
they, in the words of the U.S. commander, acting like cowboys?
    Mr. Prince. I disagree with the assertion that they acted 
like cowboys. We provide a very reliable, valuable service to 
the Air Force and the Army in Afghanistan. Anytime you have an 
accident, it is an accident. Something could have been done 
better.
    It is not a Part 135 U.S. type flying operation. There are 
no flight services. There are no flight routes. There are no 
nav aids. It is truly rugged Alaska-style bush flying.
    Chairman Waxman. Well, the investigators said from the 
National Transportation Safety Board that Blackwater Aviation 
violated its own policies by assigning two pilots without 
adequate flying experience in Afghanistan. According to the 
military report, it was your policy, Blackwater policy, that 
required at least one of the pilots to have flown in theater 
for at least a month, but neither pilot had flown for that long 
and neither had flown the route they were assigned that day.
    This is clear in the cockpit voice recording. Right after 
takeoff, the Blackwater captain said, ``I hope I am going into 
the right valley.''
    The first one replied, ``This one or that one?''
    The captain then apparently guessed which valley to fly, 
saying, ``I am just going to go up this one.''
    The flight mechanic later observed, ``We don't normally go 
this route.''
    Why didn't Blackwater follow its own policies and team two 
new pilots with more experienced ones? Why did you have two 
inexperienced pilots together?
    Mr. Prince. I am not qualified to speak to the experience 
level of the pilots. I will tell you that we are operating 
under military control. In fact, the aircraft was set to take 
off with two passengers onboard, and they actually turned 
around for the lieutenant colonel who I believe who boarded 
late.
    There was also it violated. The military violated its 
policy by loading both ammunition. That aircraft is also flying 
with a large number of illumination mortar rounds, and they are 
not supposed to mix pax and cargo. But, again, we followed our 
customer's instructions.
    Yes, accidents happened. We provided thousands and 
thousands of flight hours of reliable service since then. Today 
still, we are flying more than 1,000 missions a month.
    Chairman Waxman. But on that one, the investigators found 
that Blackwater failed to follow standard precautions to track 
flights, failed to file a flight plan, failed to maintain 
emergency communications in case of an accident, and tragically 
these failures may have cost the life of the crash's sole 
survivor because one of the military people that you were 
escorting or your flight was escorting evidently survived for 
at least 10 hours after the crash.
    He suffered internal injuries, but he got out of the plane 
to urinate. He smoked a cigarette. He rolled out a sleeping 
bag. Nobody came, and then he died of cold from inattention. 
There was no way, as required, for anybody to know where that 
plane had landed even though that is a requirement.
    I have an email that I want to read to you. It was sent on 
November 10, 2004, 16 days before the crash. It is from Paul 
Hooper, Blackwater Afghanistan site manager, and it was sent to 
John Hite, vice president for operations for Blackwater 
Aviation.
    In it, Mr. Hooper says, Blackwater knowingly hired pilots 
with background and experience shortfalls.
    Here is what he wrote: ``By necessity, the initial group 
hired to support the Afghanistan operation did not meet the 
criteria identified in email traffic and had some background 
and experience shortfalls overlooked in favor of getting the 
requisite number of personnel on board to startup the 
contract.''
    One of the great ironies of this accident is that while the 
aircraft was being piloted by an inexperienced Blackwater 
pilot, a skilled military pilot with an exemplary safety 
record, Lieutenant Colonel Michael McMahon was on board the 
flight as a passenger.
    This is what his widow wrote to me. She is Colonel Jeanette 
McMahon, and she works at West Point.
    She said, ``Mike, like Mr. Prince, was a CEO of sorts in 
the military as an aviation commander and as such had amassed a 
great safety record in his unit. It is ironic and unfortunate 
that he had to be a passenger on this plane versus one of the 
people responsible for its safe operation. Some would say it 
was simply a tragic accident . . . but this accident was due to 
the gross lack of judgment in managing this company.''
    Mr. Prince, Colonel McMahon is asking why the taxpayers 
should be paying your company millions to conduct military 
transport missions over dangerous terrain when the military's 
own pilots are better trained and a lot less expensive. How do 
you respond?
    Mr. Prince. We were hired to fill that void because there 
is a different--it is a different kind of airlift mission going 
in and out of the very short strips in Afghanistan. You have 
high altitude, short strips, unimproved runways, and you have 
transport aircraft that are designed to support a large 
conventional battle.
    We are doing small missions. The typical CASA payload maxes 
out at 4,000 pounds. They can't even hold that because of the 
short altitude or the high altitude short strips, they have to 
go in and out of, hauling mail, hauling parts.
    We are filling that gap because these strips are too small 
for C-17s. They are too small for C-130's. They are going in 
and out of places that the military can't get to with existing 
aircraft they have. That is why we are doing that mission.
    Chairman Waxman. You are saying that the military could not 
do this job?
    Mr. Prince. They did not have the assets to do it in 
theater or back in the United States, no, sir.
    Chairman Waxman. They could have acquired those assets, 
however. Instead, they hired you.
    Mr. Prince. I believe the Congress has seen fit to proceed 
with some sort of aircraft acquisition program to fill that 
void going forward, but this is a temporary service to fill 
that gap.
    Chairman Waxman. Well, we have been in Iraq for 5 years 
now. The pilots of Blackwater 61 paid for their errors with 
their lives, but I am wondering whether there was any corporate 
accountability for Blackwater. Were any sanctions placed on the 
company after the investigative reports that were so critical 
of Blackwater were released?
    Mr. Prince. Anytime there is an accident, a company also 
should be introspective and look back and see what can be done 
to make sure that it doesn't happen again.
    Chairman Waxman. Aside from your introspection, were you 
ever penalized in any way? Were you ever fined or suspended or 
reprimanded or placed on probation?
    Mr. Prince. I believe the Air Force investigated the 
incident, and they found that it was. It was pilot error. It 
was not due to corporate error that caused the mistake or that 
crashed the aircraft.
    Chairman Waxman. My time is up, but the corporation hired 
inexperienced pilots. They sent them on a route they didn't 
know about. They didn't even follow your own rules. It seems to 
me that it is more than pilot error. There ought to be 
corporate responsibility, and Blackwater was the corporation 
involved.
    Aside from your introspection, you have just been awarded a 
new contract for almost $92 million. I want to see whether you 
are getting a stick as well as all these carrots.
    Mr. Davis, your turn.
    Mr. Davis of Virginia. Thank you, Mr. Chairman.
    Let me just say I think if there is a question if they 
should be in or out, if the private companies are doing work of 
the Army, that really ought to be addressed by the Defense 
Department and State Department.
    Mr. Issa. Mr. Chairman.
    Mr. Ranking Member, would you yield for a question?
    Mr. Davis of Virginia. I would.
    Mr. Issa. Since I wasn't here during the Clinton 
administration, did Mr. Waxman and this committee investigate 
Secretary Brown's crash in which he was killed?
    That was a military flight, C-130, I believe. Was that 
investigated?
    Mr. Davis of Virginia. I wasn't here. I was not here at 
that point, but I understand the question.
    Mr. Issa. So crashes happen bad weather and in combat.
    Chairman Waxman. Will the gentleman yield to me?
    That crash was investigated, and the gentleman would be 
able to get the report of that investigation.
    Mr. Davis of Virginia. Let me yield 5 minutes to the 
gentleman from North Carolina.
    Mr. McHenry. I thank the ranking member for yielding.
    Mr. Prince, can you describe to the committee the nature of 
your contract, who your client is in Iraq?
    Mr. Prince. In Iraq, we work for the Department of State.
    Mr. McHenry. What is the service you provide for the 
Department of State?
    Mr. Prince. We operate under the Worldwide Personal 
Protective Services Contract, and we are charged with 
protecting diplomats, reconstruction officials and visiting 
CODELs, Members of Congress and their staffs.
    Mr. McHenry. In this calendar year, how many missions have 
you had in Iraq?
    Mr. Prince. 1,873.
    Mr. McHenry. How many incidents occurred during those 1,873 
movements?
    Mr. Prince. Only 56 incidents.
    Mr. McHenry. A movement is, for instance, a Member of 
Congress lands at the airstrip. They are transported to the 
embassy. That is one movement.
    Mr. Prince. Yes, sir.
    Mr. McHenry. All right, and 56 incidents out of 1,873 
movements in a war zone, is that correct?
    Mr. Prince. Resulted in a discharge of one of our guys' 
weapons.
    Mr. McHenry. Those 56 incidents, does that mean that they 
shot at someone? Describe what an incident is.
    Mr. Prince. Yes. We don't even record all the times that 
our guys receive fire. The vehicles get shot at on a daily 
basis, multiple times a day. So that is not something we even 
record.
    In this case, an incident is a defensive measure. You are 
responding to an IED attack followed by small arms fire.
    Most of the attacks we get in Iraq are complex, meaning it 
is not just one bad thing; it is a host of bad things. Car bomb 
followed by small arms attack. RPGs followed by sniper fire.
    An incident occurs typically when our men fear for their 
life. They are not able to extract themselves from the 
situation. They have to use sufficient defensive fire to off 
the X, to get off that place where the bad guys have tried to 
kill Americans that day.
    Mr. McHenry. So in 1,873 missions, 56 incidents occurred 
which means potentially the Blackwater individual, the former 
soldier in most cases, discharges a weapon. Perhaps in the air, 
is that a possibility?
    Mr. Prince. It is not likely into the air. It is either 
going to be directed at someone that is shooting at us or 
another real problem. You know the recent Washington Post 
series on IEDs in Iraq, 81,000 IED attacks.
    The bad guys have figured out how to make a precision 
weapon. You take a car. You pack it with explosives, and you 
put a suicidal person in there that wants to drive into the 
back of a convoy and blow themselves up.
    Mr. McHenry. An additional question here, those 56 
incidents pretty much all involved returning fire. A caravan is 
being shot at, for instance, and you would return fire or a 
potential car bomb is coming at you and you are returning.
    Mr. Prince. A potential car bomb, yes. Defensive fire or 
potential car bombs going, potentially coming near you, you 
have to warn them off.
    There is a whole series in the use of force continuum that 
our guys are briefed and they abide by. They are briefed on it 
through their training back here in the United States.
    Every time they leave the wire, every time they launch on 
that mission, before they go in the morning, they get the 
mission brief on what they are going to do, who they are 
protecting, where they are going, the intelligence, what to be 
on the lookout for, where have there been particularly bad 
areas in the city and the use of force continuum, those rules 
of engagement.
    Mr. McHenry. The use of force continuum, is that dictated 
by the Department of State?
    Mr. Prince. Yes.
    Mr. McHenry. You use their rules of engagement, the 
commonly used term?
    Mr. Prince. Yes, sir.
    Mr. McHenry. That is similar to the Department of Defense 
rules of engagement.
    Mr. Prince. Yes, they are essentially the same.
    Mr. McHenry. OK. So you had 1,800.
    Mr. Prince. Sorry, Department of Defense rules for 
contractors. We do not have the same as a U.S. soldier at all.
    Mr. McHenry. OK. In the report that I have, in 2006, you 
had 6,254 missions and 38 incidents.
    Mr. Prince. Yes, sir.
    Mr. McHenry. Which means one of the contractors, one of the 
former soldiers, who is now in State Department Protective 
Service, they returned fire. So that would be less than 1 
percent of missions involved returning fire.
    The question here, how long has Blackwater been involved in 
Iraq? How long have you had this contract in Iraq?
    Mr. Prince. We started there first working for DOD under 
the CPA, and then I believe in 2005 it transitioned from CPA 
over to Department of State.
    Mr. McHenry. How many individuals under your protective 
service have been injured or killed?
    Mr. Prince. Twenty-seven dead and hundreds wounded.
    Mr. McHenry. How many individuals?
    Mr. Prince. Oh, under our care?
    Mr. McHenry. Under your care that you are protecting.
    Mr. Prince. Zero.
    Mr. McHenry. Zero?
    Mr. Prince. Zero, sir.
    Mr. McHenry. Zero individuals that Blackwater has protected 
have been killed in a Blackwater transport.
    Mr. Prince. That is correct.
    Mr. McHenry. Zero?
    Mr. Prince. Zero.
    Mr. McHenry. That is, I think, the operable number here. 
Your client is the State Department. The State Department has a 
contract with you to provide protective service for their 
visitors, for instance, CODELs, Ambassadors and runs the gamut, 
and you have had zero individuals under your care and 
protection killed.
    Mr. Prince. Correct.
    Mr. McHenry. I think that is a very important number that 
we need to discuss here, Mr. Chairman, and that should be a 
testament to the service that these former veterans, these 
veterans that are currently working for Blackwater.
    Chairman Waxman. The 5 minutes that was yielded to you is 
over.
    Mr. McHenry. I am happy to yield back to the ranking 
member.
    Mr. Davis of Virginia. Mr. Prince, let me just continue 
with that. Are there any other security firms in Iraq that 
provide the services that involve as much danger as your escort 
services that your company provides in Baghdad?
    Mr. Prince. Sir, we certainly have a high profile mission. 
We protect the U.S. Ambassador. We protect all the diplomats in 
the greater Baghdad area which is the hottest part of the 
country by far.
    Mr. Davis of Virginia. How is your firm paid under the 
current task order contract for security details? Is it by the 
mission, by the hour or some other method?
    How do you bill the Government?
    Mr. Prince. It is generally billed on a per man day for 
every day that the operator is in the country.
    Mr. Davis of Virginia. Is it a cost plus fee or is it just 
like a time and materials?
    Mr. Prince. It is blended. Most of it is firm fixed price. 
There are a few things that are directly cost reimbursable like 
insurance.
    Mr. Davis of Virginia. Does the contract provide for 
monetary penalties for any performance difficulties like 
shooting incidents that were reported to have occurred and the 
like?
    Mr. Prince. Yes, there are sorts of penalty clauses, if we 
don't have it fully manned, if they are not happy with the 
leadership. We are very responsive. If there is someone that 
doesn't agree or is not operating within the standards of the 
Department of State, they have two decisions, window or aisle.
    Mr. Davis of Virginia. Do you work just for the Department 
of State or do you work for the Defense Department as well?
    Mr. Prince. In Iraq, we essentially work for the Department 
of State. There are one or two folks here or there in a 
consultant type position but nothing, nothing significant, 
nothing armed.
    Mr. Davis of Virginia. It is important for the committee to 
understand there are two different contracting entities that 
are contracting in Iraq, and you work for State.
    Do you think the contract provisions and the State 
Department contract management personnel provide sufficient 
guidance for the use of force under the contract?
    Mr. Prince. Yes, sir. We have seen the full gamut of 
contracting and contract management in the stabilization 
section or stabilization phase of the Iraq War, and there is a 
whole host of differences in oversight.
    I will tell you the State Department is the highest. They 
are the GE-like buyers, the most sophisticated oversight 
standards that we have to comply with on the front end for our 
personnel and management in the field.
    Mr. Davis of Virginia. When your teams are operating on the 
ground in Baghdad, what entity has the authority to control 
your activities? Is it the State Department or is it the 
military commander who is responsible for the battle space?
    Mr. Prince. We work for the RSO, the regional security 
officer. He is the chief security official for the State 
Department in Iraq.
    Mr. Davis of Virginia. So it is the State Department 
ultimately for whom you are contracting.
    Mr. Prince. Yes.
    Mr. Davis of Virginia. Can you describe the process that is 
followed under the contract when a shooting incident occurs?
    Have you dismissed any employees for shooting incidents 
under your security contracts in Iraq and what happens to 
dismissed employees? Are they sent out of Iraq?
    Mr. Prince. OK, let me answer the last one first.
    If there is any sort of discipline problem, whether it is 
bad attitude, a dirty weapon, riding someone's bike that is not 
his, we fire them. We hold ourselves internally accountable, 
very high. We fire them. We can fine them, but we can't do 
anything else.
    So if there is any incidents where we believe wrongdoing is 
done, we present that incident, any incident, any time a weapon 
is discharged, there is an incident report given to the RSO.
    Mr. Davis of Virginia. Any idea how many employees you have 
fired over the time?
    Mr. Prince. I think in the committee's report, they said 
122 or something over.
    Mr. Davis of Virginia. So you have taken action when it has 
come to your attention.
    Mr. Prince. Say again, sir.
    Mr. Davis of Virginia. So you have taken action when it has 
come to your attention.
    Mr. Prince. It generally comes to our attention first. We 
as a company, we fire them. We send the termination notice to 
the State Department as to why we fired someone.
    Mr. Davis of Virginia. Thank you.
    Chairman Waxman. The gentleman's time has expired.
    Mrs. Maloney for 5 minutes.
    Mrs. Maloney. Thank you, Mr. Chairman.
    I would like to ask you, Mr. Prince, about one of these 
employees whom you fired, and this was an employee who got 
drunk on Christmas Eve of 2006. According to documents that we 
got yesterday from the State Department, this particular man, 
while he was drunk, shot and killed the guard to the Iraqi Vice 
President, obviously causing great tensions between the Iraqi 
government and the U.S. military.
    I would like to ask you about his firing. You fired this 
individual for handling a weapon and for being intoxicated, is 
that right?
    Mr. Prince. The men operate with a clear policy. If there 
is to be any alcohol consumed, it is 8 hours between any time 
of consumption of alcohol.
    Mrs. Maloney. Was he fired or not?
    Mr. Prince. Excuse me?
    Mrs. Maloney. Was he fired?
    Mr. Prince. Oh, yes, ma'am, he was fired.
    Mrs. Maloney. Have any charges been brought against him in 
the Iraqi justice system?
    Mr. Prince. I don't believe in the Iraqi justice system. I 
do believe. I know we referred it over to the----
    Mrs. Maloney. Justice Department, they told us they are 
still looking at it 9 months later.
    Have any charges been brought against him in the U.S. 
military justice system?
    Mr. Prince. I don't know.
    Mrs. Maloney. Have any charges been brought against him in 
the U.S. civilian justice system?
    Mr. Prince. Well, that would be handled by the Justice 
Department, ma'am. That is for them to answer, not me.
    Mrs. Maloney. Other than firing him, has there been any 
sanction against him about any Government authority?
    You mentioned you fined people for bad behavior. Was he 
fined for killing the Iraqi guard?
    Mr. Prince. Yes, he was.
    Mrs. Maloney. How much was he fined?
    Mr. Prince. Multiple thousands of dollars, I don't know the 
exact number. I will have to get you that answer.
    Mrs. Maloney. OK.
    Mr. Prince. Look, I am not going to make any apologies for 
what he did. He clearly violated our policies.
    Mrs. Maloney. OK. All right. Every American believes he 
violated policies. If he lived in America, he would have been 
arrested, and he would be facing criminal charges. If he was a 
member of our military, he would be under a court martial. But 
it appears to me that Blackwater has special rules. That is one 
of the reasons of this hearing.
    Now, within 36 hours of the shooting, he was flown out of 
Iraq. Did Blackwater arrange for this contractor to leave Iraq 
less than 2 hours after the shooting?
    Mr. Prince. I do not believe we arranged for him to leave 
after 2 hours after the shooting. He was arrested.
    Mrs. Maloney. OK, what about 2 days? It was 2 days after 
the shooting.
    Did Blackwater arrange for him to leave the country?
    Mr. Prince. That could easily be.
    Mrs. Maloney. OK.
    Mr. Prince. IZ Police arrested him. There was evidence 
gathered. There was information turned over to the Justice 
Department office in Baghdad. We fired him. He certainly didn't 
have a job with us.
    Mrs. Maloney. Well, in America, if you committed a crime, 
you don't pack them up and ship them out of the country in 2 
days.
    If you are really concerned about accountability, which you 
testified in your testimony, you would have gone in and done a 
thorough investigation. Because this shooting took place within 
the Green Zone, this was a controllable situation. You could 
have gone in and done forensics and all the things that they 
do, but the response was to pack him and have him leave the 
country within 2 days.
    I would like to ask you, how do you justify sending him 
away from Iraq when any investigation would have only just 
begun?
    Mr. Prince. Again, he was fired. The Justice Department was 
investigating. In Baghdad, there is a Justice Department office 
there.
    He didn't have a job with us anymore. We as a private 
company cannot detain him. We can fire, we can fine, but we 
can't do anything else. The State Department----
    Mrs. Maloney. What evidence do you have that the Justice 
Department was investigating him at that time?
    Mr. Prince. From talking to my program management people in 
the country, they said it is in the hands of the IZ Police, 
which is Air Force, arrested him. They took him in for 
questioning. It was handled by the Justice Department.
    He was fired by us. The State Department ordered.
    Mrs. Maloney. Well, it has been 10 months, and the Justice 
Department has not done anything to him. Again, I repeat, if he 
was a U.S. citizen or in America, he would have been arrested 
immediately. He would have faced criminal charges.
    We know about the chain of command in the military. They 
are court-martialed immediately.
    But if you work for Blackwater, you get packed up and you 
leave within 2 days and you face a $1,000 fine.
    So I am concerned about accountability and really the 
unfairness of this, and I am concerned about how Blackwater--if 
I could just say, Mr. Chairman--your actions may be undermining 
our mission in Iraq and really hurting the relationship and 
trust between the Iraqi people and the American military.
    Chairman Waxman. The gentlelady's time has expired.
    Mr. Burton.
    Mr. Burton. Can you tell us, Mr. Prince, how many people 
witnessed the incident she just referred to?
    Mr. Prince. I don't believe anyone did, sir.
    Mr. Burton. So the only people who were involved was the 
man who was shot and your employee?
    Mr. Prince. Yes, sir.
    Mr. Burton. Can you, in some detail, go into the rules of 
engagement?
    I have talked to some of the people at State Department 
about this, and I have talked to people within your 
organization. As I understand it, on the back of every one of 
your vehicles, in both Arabic and English, there is a warning 
to not get 100 meters of that vehicle, is that correct?
    Mr. Prince. Yes, that is right, sir.
    Mr. Burton. If somebody is coming at your vehicle at a high 
rate of speed, do your employees have any actions that they 
should take especially if it might be a car bomb or something 
like that?
    Mr. Prince. Yes, sir. There are generally lights and sirens 
on the vehicles, air horn. The personnel, whose security sector 
is facing back toward that oncoming threat, will be giving hand 
signals, audible yelling, stop, qif, Arabic for stop.
    There is a pin flare, which is a signaling device kind of 
like a bottle rocket. It is the device used for a pilot to 
signal his whereabouts on the ground to be rescued, but it is a 
bright incendiary device that flies by the vehicle or it hits 
the vehicle. It is not lethal at all, but definitely you know 
something is happening.
    Water bottles are sometimes thrown at vehicles to warn them 
off.
    If you have to go beyond that, they take shots into the 
radiator. You hear that hitting the car. It disables the car. 
Definitely, you know something is happening.
    If they go beyond that, they spider the windshield. You put 
a round through the center of the windshield away from the 
occupants so that the safety glass in the windshield makes it 
difficult to see through.
    Only after that do they actually direct any shots toward 
the driver. So there is a whole use of force continuum.
    Mr. Burton. The questions that I have heard today from the 
other side indicate that there ought to be perfection in your 
organization. Now you are a Navy SEAL, and you served in the 
military. Do you believe that any kind of military operation of 
this type or any type can be absolutely perfect all the time?
    Mr. Prince. I am afraid not, sir. We strive for perfection. 
We try to drive toward the highest standards, but the fog of 
war and accidents and the bad guys just have to get lucky once.
    Mr. Burton. I think it is very important that everybody who 
is involved in this hearing today understand that you have high 
public officials, Congressman and others, whom you have to 
protect, and you have indicated that nobody has been killed or 
hurt under your protection. Yet, you are going through all 
kinds of zones where there are car bombs going off, small arms 
fire, cars coming at you at high rates of speed.
    Can you explain to me why in the world there wouldn't be 
some precautions taken when those sorts of things take place?
    Mr. Prince. Again, the bad guys have figured out killing 
Americans is big media, I think. They are trying to drive us 
out. They try to drive to the heart of American resolve and 
will to stay there.
    So we have to provide that protective screen. We only play 
defense, and our job is to get those reconstruction officials, 
those people that are trying to weave the fabric of Iraq back 
together, to get them away from that X, the place where the bad 
guys, the terrorists, have decided to kill them that day.
    Mr. Burton. One of the Members on the other side indicated 
that when there is a firefight or when there is a car bomb 
going off or something, there is an attack on your convoy, that 
you don't stay there.
    Can you explain to me what would happen if you stayed there 
when you were under attack?
    Mr. Prince. Again, there would be a lot more firefight. 
There would be a lot more shooting.
    Our job is to get them off the X. The X is what we refer to 
in our business about the preplanned ambush site where bad guys 
have planned to kill you. So our job is to get them away from 
that X, to get them to a safe place. So we can't stay and 
secure the terrorist crime scene investigation.
    Mr. Burton. You are in a war zone.
    Mr. Prince. Yes, sir.
    Mr. Burton. So, the instructions, I want to get this 
straight. If your people come under fire or there is a car bomb 
or RPG fired at them, they are supposed to turn around under 
some rules and get out of there to protect the people that they 
are guarding.
    Mr. Prince. Yes, sir, defensive fire, sufficient force to 
extricate ourselves from that dangerous situation. We are not 
there to achieve firepower dominance or to drive the insurgents 
back. We are there to get our package away from danger.
    Mr. Burton. Thank you.
    Chairman Waxman. The gentleman's time has expired.
    The Chair now recognizes Mr. Cummings for 5 minutes.
    Mr. Cummings. Mr. Prince, you are a very impressive 
witness. I just want to ask you a few questions that cause me 
some concern that seems to go counter to some of the things 
that you have said.
    I am wondering whether Blackwater is actually helping our 
military or hurting them. Frankly, I am concerned that the 
ordinary Iraqi may not be able to distinguish military actions 
from contractor actions. They view them all as American 
actions.
    Now I want to go back to this incident that we have been 
talking about for the last few minutes, the 2006 Christmas Eve 
incident where the drunken Blackwater official shot and killed 
a guard of the Iraqi Vice President, which is basically like 
killing a Secret Service person guarding our Vice President.
    When this incident first happened, an Arab television 
station ran an incorrect story, saying that a ``drunken U.S. 
soldier'' killed the Iraqi Vice President's guard.
    Were you aware of this incorrect press report?
    Mr. Prince. No, sir, I was not.
    Mr. Cummings. Of course, you can see how a media report 
like that makes it more likely that Iraqis will blame the U.S. 
military rather than Blackwater for the killing of the Iraqi 
Vice President's guard. Again, what if it were our Vice 
President?
    Did Blackwater take any steps to inform the press that it 
was actually a Blackwater employee who killed the Vice 
President's guard?
    Mr. Prince. By contract, we are not allowed to engage with 
the press.
    Mr. Cummings. All right, and why is that?
    Mr. Prince. That is part of the stipulations in the WPPS 
contract.
    Mr. Cummings. After this report aired, an official who 
works for you--and this is what really concerns me and I just 
want to know your reaction to this--at Blackwater sent an 
email.
    This is an employee of yours sent an email internally to 
some of his colleagues. He did not suggest contacting the 
station, I guess, for the reason you just said. He didn't 
suggest putting out a press release, and he didn't suggest 
correcting the false story in any way.
    Instead, this is what the email said: ``At least the ID of 
the shooter will take the heat off of us,'' meaning Blackwater.
    In other words, he was saying: Wow, everyone thinks it was 
the military and not Blackwater. What great news for us. What a 
silver lining.
    Mr. Prince, you said in your testimony that Blackwater is 
extremely proud of answering the call and supporting our 
country. Did anyone in your organization ever raise any 
concerns that a lying, a false story to continue might lead to 
retaliation or insurgent activity against our troops?
    Mr. Prince. I don't believe that false story lasted in the 
media for more than a few hours, sir.
    Mr. Cummings. But the fact still remains that it was a 
false story, and we are trying to be supportive of the Iraqi 
government, trying to get this reconciliation, trying to make 
sure that they, as President Bush says, that they stand up so 
that we can stand down.
    But, at the same time, when these stories are put out--I 
think you would agree--that the Iraqi people then say, well, 
wait a minute, the United States is supposed to be supporting 
our Government.
    President Bush talks about how we have gone over to export 
democracy. Here is the very symbol. The Vice President of a 
country, killed by a drunken Blackwater employee.
    The question is then what lies in the mind of the Iraqi? 
What lies in the minds of those people who may have wanted to 
cooperate with our security over there?
    Then they say, well, wait a minute, if they, U.S. soldiers, 
but really Blackwater is doing this to the very Government that 
we are supposed to be supporting. Then what does that say and 
why should we support the United States? Fair question?
    Mr. Prince. Yes, sir. Look, I am not going to make any 
apologies for the----
    Mr. Cummings. I am not asking you to make any apologies. 
You are the president of this company, is that right?
    Mr. Prince. The CEO.
    Mr. Cummings. CEO, well, you are the top guy. You are one 
of the top guys, is that right?
    Mr. Prince. Pretty much, yes, sir.
    Mr. Cummings. All right. So I am just asking you a question 
about what your policies are. That is all.
    Mr. Prince. We have clear policies. Whether the guy was 
involved in a shooting that night or not, the fact that he 
violated the alcohol policy with firearms would have gotten him 
fired on the spot. That is why we fire people. We hold them 
independently accountable.
    The guy slipped away from the party. He was by himself. I 
am confident that if he had been with another guy from 
Blackwater, the other guy would have stopped him and said, 
enough. You know.
    Mr. Cummings. So contrary to what Mr. Burton said, this was 
after hours in the Green Zone, wasn't it? This wasn't some 
mission, was it?
    Mr. Prince. Correct.
    Mr. Cummings. Right.
    Mr. Prince. He was on his own time. It was a Christmas Eve 
party.
    Mr. Cummings. Do you understand what I mean? I have heard 
not a lot of complimentary things about what you all are doing. 
I am sure you are doing a great job, but it is not about what 
you do well. It is a question of when things go wrong, where is 
the accountability?
    Mr. Prince. And, sir, we fired him. We fined him. But we, 
as a private organization, can't do any more. We can't flog 
him. We can't incarcerate him. That is up to the Justice 
Department. We are not empowered to enforce U.S. law.
    Mr. Cummings. Do you think more should be done?
    Mr. Prince. I would be happy to see further investigation 
and prosecution by the Justice Department, yes, sir.
    Mr. Cummings. Thank you.
    Chairman Waxman. I am going to call Mr. Mica next.
    How much did you fine him?
    Mr. Prince. Multiple thousands of dollars, sir. I don't 
know the exact number, but whatever we had left due him in pay, 
I believe we withheld and plus his plane ticket.
    Chairman Waxman. Thank you.
    Mr. Mica.
    Mr. Mica. Thank you.
    Mr. Prince, in your testimony earlier, you said, ``Killing 
Americans, I guess, in Iraq is big media.''
    You said that?
    Mr. Prince. Yes, sir.
    Mr. Mica. Did you have any idea that wounding American 
contractors in a congressional hearing would be this big media?
    Mr. Prince. More than I bargained for, sir, yes.
    Mr. Mica. I described you are here because you are sort of 
in the chain of command to be attacked next by some folks who 
want to discredit what you are doing. I might say that I don't 
know if there were criminal acts committed, and there will 
probably be ways in which we can go after folks. One of those 
would be to have the Department of Justice pursue the case. 
Would that be the normal procedure?
    Mr. Prince. Yes, sir. We welcome it. We encourage it. We 
want that accountability. We hold ourselves internally 
accountable, but you know we put 1,000 guys out in the field. 
Humans make mistakes and they do stupid things sometimes. We 
try to catch those as much as we can, but if they go over the 
line.
    Mr. Mica. Well, they criticized you. I guess we could start 
with the pilots and the NTSB investigation. They should go back 
and look at the Comair crash in Kentucky with the accounts of 
the pilots which was a distraction and led to the crash 
according to their findings. I have chaired the Aviation 
Subcommittee and followed that very closely.
    Basically, as Al Gore would put it, there is no controlling 
authority for airspace in Afghanistan.
    Mr. Prince. There is no FAA in Afghanistan.
    Mr. Mica. Then you were criticized, too. You left the 
pilot. I guess he survived but was not found. Is that it?
    Mr. Prince. No. There were two of the DOD personnel in back 
survived the crash.
    Mr. Mica. Survived, OK. Well, two survived and weren't 
found, and I guess they perished.
    Mr. Prince. They perished before they were found.
    Mr. Mica. I guess in the United States, like we have an 
experienced pilot like Fossett. He is lost. Have we found him 
yet?
    Mr. Prince. No, sir.
    Mr. Mica. OK, but this is in the terrain.
    Mr. Prince. Terrain very similar to what is in Nevada.
    Mr. Mica. I just want to try to put things in perspective.
    There is also some argument that you cost the Government 
too much and that you are getting paid too much and maybe this 
is something that the military should be doing. Could you 
respond to that?
    Mr. Prince. Yes, sir. I think there are three arguments for 
or against privatization. There is reliability, there is 
accountability, and there is cost.
    Accountability issues can be handled by exercising MEJA. 
Congress expanded MEJA at the end of 2004 to any DOD 
contingency operation, I believe. So any time a U.S. contractor 
is abroad, they can be brought up on charges on behalf of the 
U.S. Government. They can be brought up on charges back here in 
the States.
    There is reliability. That comes down to, I think, 
individual vendor reliability. How well does that company 
execute? Are they complete, correct and on time?
    And then there is cost. The American automotive industry, 
any manufacturer in America has to deal with that cost issue 
all the time, whether they should make something. It is that 
make versus buy argument.
    I greatly encourage Congress to do some true activity-based 
cost studies. What do some of these basic Government functions 
really cost? Because I don't believe it is as simple as saying, 
well, this sergeant costs us this much because that sergeant 
doesn't show up there naked and untrained. There are a whole 
bunch of other costs that go into it.
    So, figure out if the Army does the job, how many of those 
people leave the wire every day? What is their tooth to tail 
ratio? How many people are operators versus how many people are 
support people? That all drives into what your total cost is.
    Now American industry got pushed by the Japanese car makers 
and you know by foreign competitors because you have to focus 
on cost and being efficient in delivering a good or a product 
or a service at a better competitive price.
    Mr. Mica. Finally, you were criticized for not detaining 
someone who committed a criminal act. Now if an employee 
commits a criminal act in the United States, and you fire him, 
are you responsible in the United States for detaining him and 
handling?
    Mr. Prince. Well, that would be a crime that we committed 
then because we are not allowed to detain.
    Mr. Mica. You are not allowed to detain?
    Mr. Prince. No, sir.
    Mr. Mica. OK. So, in that situation, you were criticized 
for providing someone transport back. Was it to the United 
States?
    Mr. Prince. It was.
    Mr. Mica. Or wherever.
    Mr. Prince. We acquired an airline ticket for him back to 
the States. That is all by direction of the State Department.
    Chairman Waxman. The gentleman's time has expired.
    Now the Chair recognizes Mr. Kucinich.
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    In my opening remarks, I pointed out that if war is 
privatized, private contractors have a vested interest in 
keeping the war going. The longer the war goes on, the more 
money they make.
    I want to, for my time here, explore the questions 
regarding how Blackwater got its contracts.
    Mr. Prince, your company has undergone a staggering growth 
just over the past few years. The committee's attention can be 
directed to the chart. In 2000, your company was bringing in 
only about $200,000 in Government contracts but since then, 
according to the committee, you have skyrocketed to something 
in the nature of $1 billion in Government contracts.
    The real increase in Blackwater's contracts began with the 
Iraq War. In fact, if you look at the chart, you can see how 
from 2004 on, the amount of taxpayer dollars Blackwater was 
awarded by the administration began to go through the roof from 
about $48 million in 2004 to $350 million in 2005 to over $500 
million last year.
    This is really an unprecedented rate of increase, and I 
want to understand how this happened, Mr. Prince.
    We have been informed that one of your first contracts in 
Iraq was for the Coalition Provisional Authority. Ambassador 
Paul Bremer awarded you a contract to protect officials and 
dignitaries. That was at the end of 2003, toward the end of 
2003. It may have been in August. Is that right, sir?
    Mr. Prince. I believe it happened right after the U.N. 
facility in Baghdad was blown up by a large truck bomb. Yes, 
sir, they then feared for the U.S. officials.
    Mr. Kucinich. Now that contract was no-bid, is that right, 
sir?
    Mr. Prince. It was off the GSA schedule.
    Mr. Kucinich. Can you tell us how you got this no-bid 
contract?
    Mr. Prince. Off the GSA schedule is considered a bid 
contract, sir. The GSA schedule is a pre-bid program kind of 
like catalogue of services that you put out, like buying 
something from the Sears catalog.
    Mr. Kucinich. Did you talk to anyone in the White House 
about the contract?
    Mr. Prince. No, sir.
    Mr. Kucinich. Did you talk to anyone in the Congress about 
the contract?
    Mr. Prince. No, sir.
    Mr. Kucinich. Did anyone, to your knowledge, connected with 
Blackwater talk to anyone in either the White House or the 
Congress about the contract?
    Mr. Prince. Not to my knowledge, no.
    Mr. Kucinich. Did anyone in the DeVos Family talk to anyone 
in the White House or the Congress about the contract?
    Mr. Prince. No.
    Mr. Kucinich. As a taxpayer, do you think it is proper that 
no other companies were allowed to bid?
    Mr. Prince. That, I am not aware of, sir. It is a 
requirement, Government officials had. They came to us, asked 
if it could be fulfilled. I don't know what other companies 
they went to as well. I am not aware of that.
    Mr. Kucinich. In 2004, the State Department awarded 
Blackwater a $332 million task order under its diplomatic 
protection contract. Are you familiar with that?
    Mr. Prince. I am familiar about the amount. I know that we 
transitioned over to working for the State Department from the 
CPA. I am not sure exactly when that happened.
    Mr. Kucinich. Thank you, sir.
    According to the Federal Contracting Data base, you didn't 
have to compete for that one either, is that correct?
    Mr. Prince. Again, I believe they continued that off the 
GSA schedule which is an approved contracting pre-bid method.
    Mr. Kucinich. Who at the State Department were you dealing 
with in order to get this contract?
    Mr. Prince. I don't know. I presume it was under the 
diplomat.
    Mr. Kucinich. Excuse me?
    Mr. Prince. It was under the Diplomatic Security Service. 
That is the folks at State we were working for.
    Mr. Kucinich. Now SIGIR reported that this was a no-bid 
contract. Was SIGIR incorrect? It was a no-bid contract or not?
    Mr. Prince. I am not sure how they are defining bid or no-
bid. In my understanding, they used, we used pricing off the 
GSA schedule, and I believe that is considered, regarded as a 
biddable contract.
    Chairman Waxman. Will the gentleman yield to me?
    Mr. Kucinich. I yield to the Chair.
    Chairman Waxman. It is on the GSA schedule. Did they come 
to you to put your offer of services on the GSA schedule? Did 
you go to them? How did that get on the GSA schedule?
    Mr. Prince. Oh, most companies in our kind of work have a 
GSA schedule. We have a GSA schedule for target systems. We 
have a GSA schedule for----
    Chairman Waxman. So you offered services and you are on the 
list of services that they can purchase?
    Mr. Prince. Yes, sir.
    Chairman Waxman. You don't know if anybody was on the list 
for these kinds of services?
    Mr. Prince. Oh, I am sure there are lots of companies that 
are.
    Chairman Waxman. For some of the services.
    Did you go to anyone else or did anyone else from the 
Government go to you to ask you to do the work?
    Mr. Prince. I don't know, sir.
    Chairman Waxman. Did they ask you to see if you could put 
together this operation and then they put you on the schedule?
    Mr. Prince. I would say we were present in the country 
already. We already had significant presence with the CPA under 
a bid contract. I believe that contract was called Security 
Services Iraq. So we had a large presence of static guards and 
PSD kind of work for them.
    So I think they probably just wanted to transition from DOD 
work to Department of State work.
    Chairman Waxman. Thank you.
    Mr. Shays.
    Mr. Shays. Thank you, Mr. Chairman.
    Mr. Chairman, I didn't make an opening statement. I was 
chairman of the National Security Subcommittee and ranking 
member, and so I have a keen interest in this issue, but other 
Members had important statements to make. So, first, I would 
like to make an observation.
    I want to align myself with the statement of Tom Davis, my 
ranking member now. I thought it adequately and perfectly 
expresses my view.
    I want to thank both the chairman and Mr. Davis for 
honoring U.S. Department of Justice's request not to discuss an 
incident we don't have enough facts to discuss, and we will 
deal with that later. I think that is responsible.
    I think this hearing, the way we are dealing with it, is a 
very important effort, given what we are doing.
    Now, saying that, during the Vietnam War, I was a 
conscientious objector. I was a Peace Corps volunteer, so I try 
to be very careful when I evaluate the performance of men and 
women under fire. Frankly, many of those behind you at this 
desk are exactly that. We are behind a desk, never been shot 
at, never tried to understand what it is like to be under fire.
    Blackwater, I want to say, has a reputation of being a bit 
of a cowboy, but I know we absolutely need protective security 
contractors. The role of security contractors is much different 
than the role of the military.
    But I also want to say that I feel that the State 
Department could do a better job of enforcing and holding 
contractors accountable, and I think they are going to make a 
point that they are willing to have this reviewed by an outside 
party and then have us look at it.
    Now, saying that, I also want to say the number of times 
that you all have to protect Members of Congress is 
infinitesimal compared to all the civilians you have to 
protect.
    One of the outrages, in my judgment, is that there haven't 
been more Members who have gone there and, frankly, that some 
Members who have never been there are passing judgment on what 
we are doing there. They are behind a desk with no sense of 
what is happening there.
    I am in awe of what your men and women and they have been 
mostly men, have done to protect our civilians. I am absolutely 
in awe of it. You know you can't be perfect, but in one way you 
have been perfect if this is true.
    Tell me, from June 2004 to the end of that year, how many 
missions you protected or let me say it this way, if you don't 
know how many missions you protected, how many people you 
protected were wounded or killed in 2004?
    Mr. Prince. No, sir, we have never had anyone seriously 
injured.
    Mr. Shays. I am going to do year by year. Did you have 
anyone wounded or killed in 2004?
    Mr. Prince. No, sir.
    Mr. Shays. Did you have anybody wounded or killed in 2005?
    Mr. Prince. No, sir.
    Mr. Shays. These are the people you are trying to protect.
    Mr. Prince. I mean wounded, yeah. A big IED ruptured an 
eardrum. That is the most serious level there.
    Mr. Shays. Did you have anyone wounded or killed in 2006?
    Mr. Prince. People that we were protecting?
    Mr. Shays. Yes.
    Mr. Prince. No.
    Mr. Shays. Did you have anyone who was wounded or killed in 
2007 that you were to protect?
    Mr. Prince. No, sir.
    Mr. Shays. That is a perfect record, and you don't get any 
credit for it for some reason.
    Now, were any of your people killed in 2004, trying to 
protect the civilians?
    Mr. Prince. Yes, sir.
    Mr. Shays. Were any of your people killed in 2005, trying 
to protect civilians?
    Mr. Prince. Yes, sir.
    Mr. Shays. Were any of your people killed in 2006, trying 
to protect civilians?
    Mr. Prince. Yes, sir.
    Mr. Shays. Were any of your people killed by trying to 
protect the civilians in 2007?
    Mr. Prince. Yes, sir.
    Mr. Shays. Every year, you have had men who have risked 
their lives and who have been killed, fulfilling their mission, 
and they have succeeded 100 percent, and I just want to be on 
record as thanking you for an amazing job that you do.
    I have been to Iraq 18 times. I have been outside the 
umbrella four times. It is one dangerous place. I have seen 
films where vehicles come up to our troops or to our security 
people, and they are blown up in it.
    You have done an amazing task, and there is a huge 
difference from being a police officer or protective and being 
the military, a totally different role.
    I have had no one in the military say to me, I want to 
guard all these civilians. The last thing you want is to have 
humvees and Army take civilians who are meeting other civilians 
like our State Department with that kind of precedent, and the 
military would not do it. They are not going to be in a 
Suburban. They are going to be in what their protocol requires.
    The protocol is totally different. We need security people 
who do their job.
    Thank you for doing a perfect job in protecting the people 
you are required to protect.
    I yield back.
    Mr. Prince. Thank you, sir. It is an honor to do the work.
    Chairman Waxman. The gentleman's time has expired.
    Before I recognize Mr. Davis, I want to put in the record, 
a statement from the Special Inspector General in Iraq from 
July 2004, that indicates that the security guards and two 
helicopters for Bremer, sole source directed; the security for 
inner ring Republican Presidential compound, Al Rashid Hotel, 
sole source; the security for Al-Rashid Hotel, sole source to 
Blackwater.
    Mr. Shays. I reserve my right to object. Would the 
gentleman say was that under Bremer or after Bremer?
    Chairman Waxman. This is in 2004. It would have been 
Bremer.
    Mr. Shays. So it was under Bremer, not since we transferred 
power to the Iraqis.
    Chairman Waxman. I don't know the answer to that. This 
document only refers to the period of time.
    Mr. Shays. Under Mr. Bremer. I don't object.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T5219.036
    
    Mr. Ryan. Mr. Chairman, may I have minute, please? May I 
have a minute, please? One minute, please?
    Chairman Waxman. Yes.
    Mr. Prince. Thank you, sir.
    Chairman Waxman. Thank you.
    Mr. Davis.
    Mr. Davis of Illinois. Thank you, Mr. Chairman.
    Mr. Prince, throughout your testimony and in other comments 
attributed to you, you have praised the Blackwater personnel on 
the ground in Iraq, but mistakes do, in fact, happen. You do 
admit that Blackwater personnel have shot and killed innocent 
civilians, don't you?
    Mr. Prince. No, sir. I disagree with that.
    I think there have been times when guys are using defensive 
force to protect themselves, to protect the package they are 
trying to get away from danger. There could be ricochets. There 
are traffic accidents. Yes. This is war.
    You know since 2005, we have conducted in excess of 16,000 
missions in Iraq and 195 incidences with weapons discharged. In 
that time, did a ricochet hurt or kill an innocent person? That 
is entirely possible.
    Again, we do not have the luxury of staying behind to do 
that terrorist crime scene investigation to figure out what 
happened.
    Mr. Davis of Illinois. Well, according to a document we 
obtained from the State Department on June 25, 2005, Blackwater 
guards shot and killed an innocent man who was standing by the 
side of the street. His death left six children alone with no 
one to provide them support.
    Are you familiar with this incident?
    Mr. Prince. I am somewhat familiar with that incident.
    I believe what happened, it was a car bomb or a potential 
car bomb had rapidly approached our convoy. I believe our guys 
shot rounds at the car, not at the driver, to warn them off. 
One of those rounds, as I understand, penetrated through the 
far side of the car, ricocheted and injured that innocent or 
killed that innocent man.
    Mr. Davis of Illinois. Well, again, according to the State 
Department document, this was a case, ``involving the PSD 
personnel who failed to report the shooting, covered it up and 
subsequently were removed from Al-Hillah.''
    The State Department described the death as ``the random 
death of an innocent Iraqi.''
    Do you know why Blackwater officials failed to report this 
shooting and later tried to cover it up?
    Mr. Prince. I can clarify that fully, sir. Thanks for 
asking that question.
    There was no cover-up because our people reported it to the 
State Department. They did look into the shooting and the 
justification of it, and it was deemed to be an appropriate use 
of force. The man was fired because he had tried to cover it 
up. He panicked and had asked the other team members to cover 
it up and to not report it.
    We discovered that through our, I mean our policy worked. 
We reported the incident to the State Department, and that is 
why you folks have it in the committee because we fired the 
guy. He was terminated not for an inappropriate shooting but 
for not following the reporting procedure.
    Mr. Davis of Illinois. Well, was there any reason this 
report was not provided to the committee?
    Mr. Prince. I don't know, sir. I will have to. I will look 
into that and get back to you.
    Mr. Davis of Illinois. Well, the same document states that 
the State Department contacted Blackwater headquarters to 
encourage you to offer this man's family, compensation. After 
this shooting of an innocent man and after the attempted cover-
up, Blackwater paid $5,000 to the family.
    Is that not correct?
    Mr. Prince. I believe that was paid through the State 
Department. That is similar to what DOD does, what the Army 
does if there is an accidental death from whether it is an 
aerial bomb, a tank backs over somebody's car or injures 
someone. There is compensation paid to try to make amends, but 
that was done through the State Department.
    That was not paid to try to hush it up or cover it up. That 
is part of the regular course of action. There was no cover-up 
because our guys reported the incident, and the company fired 
him for not reporting the incident.
    Mr. Davis of Illinois. Can you tell me how it was 
determined that this man's life was worth $5,000?
    Mr. Prince. We don't determine that value, sir. That is 
kind of an Iraqi-wide policy. We don't make that one.
    Mr. Davis of Illinois. Do you know how many payments 
Blackwater has made to compensate innocent Iraqis or their 
families for deaths or injuries caused by Blackwater personnel?
    Mr. Prince. I do not know that, sir.
    Mr. Davis of Illinois. Do you know what the total value of 
those payments might be?
    Mr. Prince. No, sir.
    Mr. Davis of Illinois. Could you supply the committee with 
that information?
    Mr. Prince. Yes, sir. I will make sure we get it back to 
you.
    Mr. Davis of Illinois. Thank you very much.
    Mr. Chairman, what I am concerned about is the lack of 
accountability. If one of our soldiers shoots an innocent 
Iraqi, he or she can face a military court martial. But when a 
Blackwater guard does this, the State Department helps arrange 
a payout to make the problem go away. This seems to be a double 
standard, and it is causing all kinds of problems in Iraq.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Platts.
    Mr. Platts. Thank you, Mr. Chairman. I appreciate your 
holding this hearing.
    Mr. Prince, I appreciate your testimony and want to thank 
you personally for your 5 years of service to our Nation as a 
Navy SEAL and also, having been to Iraq five times, for the 
dedication of your colleagues for delegations I have been part 
of and certainly many others as well. We are grateful for their 
courageous service.
    Your contract, and it has been discussed already, is under 
the Worldwide Personal Protective Services Contract. My 
understanding is under that contract, there are specific terms 
of conduct including rules of engagement with the use of force. 
Is that correct?
    Mr. Prince. Yes, sir, that is correct.
    Mr. Platts. You testified about, as an example of the 
seriousness with which your company takes the conduct of your 
employees, of 122 individuals that have been fired for 
misconduct. Are you able to give us what number of those were 
related to violations regarding use of force rules of 
engagement, specifically?
    Mr. Prince. I believe the committee report listed it. Don't 
quote me on it. I think it says in the committee report around 
10 or 15. I am not sure. It is in the committee report.
    Mr. Platts. You accept that information as accurate?
    Mr. Prince. That is a weapons violation. That could mean a 
dirty gun or possession of some unauthorized firearm. We have 
very clear rules. We are only issued. The Government issues us 
our weapons, even down to scopes. We are specified as to which 
optical device we can put on the weapon. Some guys get fired 
because they put, they like an aimpoint instead of an ACOG.
    Mr. Platts. Of those 10 to 15, they may not all be related 
to use of force, misuse of force.
    Mr. Prince. Yes, sir, correct.
    Mr. Platts. A number of times you were asked about in 
addition to firing and fining and removing the person from your 
employment and from Iraq, about what criminal actions you took, 
and you appropriately stated you are not a law enforcement 
entity. You are a private company.
    That being said, though, is it accurate to say that where 
there is a criminal investigation by the Department of Justice 
of Department of State pursuing, that you provide any 
information that your company has about misconduct?
    Mr. Prince. Yes, we fully cooperate in the Christmas Eve 
incident and any other ones that State Department or Justice 
Department wants to look at.
    Mr. Platts. Thank you, Mr. Chairman. That is all of my 
questions.
    Again, my thanks to Mr. Prince and his colleagues for their 
service.
    Chairman Waxman. Would the gentleman yield some of his time 
to me?
    Mr. Platts. Yes, Mr. Chairman.
    Chairman Waxman. Thank you.
    The point I want to ask you, Mr. Prince, is we appreciate 
what you have done, but it looks like a lot of people in the 
U.S. military don't appreciate it. One man, an Army colonel, 
Teddy Spain, said, ``I personally was concerned about any of 
the civilians running around on the battlefield during my time 
there. My main concern is with their lack of accountability 
when things went wrong.''
    Another senior U.S. military official said, ``We had guys 
who saw the aftermath,'' meaning the aftermath of your 
activities there. ``It was very bad. This is going to hurt us 
badly.''
    Then we had Secretary of Defense Robert Gates: ``These 
incidents may be uncommon. We don't know how common they are, 
but let's assume that they are uncommon. I believe that they 
still have disproportionate impact on the Iraqi people. We have 
people who are conducting themselves in a way that makes them 
an asset in this war, not a liability.''
    You are not answerable to the U.S. military, are you?
    You report to the State Department? You are under contract 
with State, isn't that right?
    Mr. Prince. In Iraq, we report to the State Department, but 
if I could just add.
    Chairman Waxman. So your people are under the same rules as 
the U.S. military.
    Mr. Prince. We operate under defensive rules of engagement.
    Mr. Davis of Virginia. Will the gentleman yield?
    Mr. Platts. Actually, Mr. Chairman, if I could reclaim my 
time in responding.
    Mr. Prince, you provided the committee a detailed list of 
the regulations, treaties, laws that you operate under, is that 
correct?
    Mr. Prince. Yes, sir.
    Mr. Platts. That includes items that relate to both 
Department of State and Department of Defense?
    Mr. Prince. It includes laws like MEJA, the UCMJ, all of 
which we can be held accountable. Our people can be held 
accountable for while operating overseas.
    Let me just ask, answer, Mr. Chairman, about whether we are 
adding value to the military or not.
    I have to say my proudest professional moment was about a 
year and a half ago. I spoke at the National War College. After 
my speech, a colonel, a full bird colonel, came up to me 
afterwards. He said, I just came back from brigade command in 
Baghdad, and he had 4,000 or 5,000 guys working for him.
    He said, as his guys were driving around the city, on the 
top of their dashboards of their humvees were the Blackwater 
call signs and the frequencies because his soldiers knew that 
if they got in trouble, the Blackwater guys would come for 
them. They would come to their aid and assist them, med evac 
them and help them out of a tough spot.
    So if that is the reputation we have, I----
    Chairman Waxman. The Brigadier General Karl Horst said, 
``These guys run loose in this country and do stupid stuff.''
    Mr. Platts. Mr. Chairman.
    Chairman Waxman. ``There is no authority over them, so you 
can't come down on them when they escalate force.''
    Mr. Platts. Mr. Chairman.
    Chairman Waxman. ``They shoot people, and someone else has 
to deal with the aftermath. It happens all over the place.''
    Security contractors in Iraq are under scrutiny after 
shootings.
    What do you say?
    Mr. Prince. Sir, I can also tell you there is 170-some 
security companies operating through Iraq. We get painted with 
a very broad brush of a lot of the stuff they do.
    On almost weekly basis, we get a contact from someone in 
DOD, some talk somewhere that says, oh, three Blackwater guys 
were just taken hostage here. Four guys were killed there. Oh, 
you were involved in a shooting over here.
    When we fully investigate, we didn't have any teams of guys 
within 100 miles of that location, but if a private security 
contractor did it, it often gets attributed to us.
    Chairman Waxman. Regardless of what private security 
contractor does it, it is a problem for the United States.
    Mr. Platts, you were kind enough to yield me time. Without 
objection, I would like to give to you another 30 seconds.
    Mr. Platts. If you could, I was going to yield to the 
ranking member. Thank you, Mr. Chairman.
    Mr. Davis of Virginia. I appreciate your questions, but let 
me just say, Mr. Chairman, for the sake of argument, you are 
right. If we are paying too much and getting too little, what 
is the answer? More troops in Iraq? Less safe troops? Less safe 
diplomats or less safe Members?
    I mean this is the tradeoff. This is what we are trying to 
explore here. They are contractors.
    At the end of the day, we have to look to the Government 
who is contracting this out, putting down the rules of 
engagement, and they will be on our next panel. He is just 
performing his contract at this point, and I think we have 
questions that we can ask the State Department.
    But the alternatives, none of them are attractive when you 
are in a war zone.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman.
    Mr. Ryan. Mr. Chairman, may I have 1 minute, please? We do 
not need to leave. One minute, please.
    Chairman Waxman. Yes, go ahead.
    Mr. Ryan. Thank you.
    Chairman Waxman. Without objection, I would like to ask 
that Mr. Davis and I, during this moment, have a minute each 
because I would like to say something that doesn't involve a 
question and you might want to respond to it.
    The point I want to make, you raise that very essential 
question, what do we do if we don't have enough troops there?
    Well, I think we have to look at the fact that this isn't a 
short term war. We have been there 5 years. It looks like we 
may be there another 10 years. Even General Shinseki said we 
need more troops.
    At some point, you have to make a decision in this 
battlefield, in this war. If we don't have enough troops to do 
the job, then we should get more troops. But if we are going to 
go on the cheap to get private contractors, we are not on the 
cheap at all. It is costing us more money, and I believe it is 
costing us problems, causing us problems with the Iraqi people.
    Let's let the military replan this. It seems to me we have 
had bad decisions from this administration too much of the time 
in handling this whole war, planning for it adequately and 
staffing it adequately with the U.S. military. They are the 
ones that ought to be doing this job.
    Mr. Davis.
    Mr. Davis of Virginia. Mr. Chairman, I understand, but let 
me just say troops that are there are not paid to protect 
civilians. That is not what military troops are trained for.
    I went through officer basic course in Georgia at Fort 
Benning. I went through basic training at Fort Ord. That is not 
what troops are trained for when they go out into the battle 
zone.
    This is a unique responsibility. It is through the State 
Department, not the Department of Defense. As we will hear from 
the next panel, our troops are not, at this point, being 
trained to do this kind of work. This is a different kind of 
process.
    Now if we want to train them to do that, we can do that, 
but that hasn't been the history throughout the last 50 years 
of the military that I am aware of. So we then have to decide 
from a cost-benefit perspective.
    I think this is an important conversation to have, but to 
date that is not the contractors' fault. I think our argument 
would be with the State Department.
    Chairman Waxman. I want to yield to Mr. Tierney, but 
Blackwater and the private military recruit from our military. 
So these people are trained to the job that Blackwater and 
other private military people are asking them to do. So why 
can't the military do it?
    I think they could do it if we had enough military 
personnel.
    Mr. Davis of Virginia. Sir, I would like Mr. Prince to 
respond, but I am sure they retrain them. They don't just take 
raw recruits out. Could I just ask him to respond?
    Mr. Prince. Yes, sir. There was an earlier allegation about 
companies like us raiding the ranks of the Special Operations 
community for this kind of work, and the GAO report found that, 
yes, they are getting out and working for companies like us, 
but they are not getting out at any higher rate than they ever 
did before.
    So, they are, instead of becoming a financial analyst or an 
accountant or some other kind of businessmen, they come to work 
for companies like Blackwater, but they are not getting out at 
any rate higher than they ever did before.
    If I could just correct two slight errors I made. We did 
not have any fatalities of Blackwater personnel in 2006.
    One of the contracts I testified to as being under the GSA 
schedule was, in fact, sole source. We will get you the very 
detailed information as to which contracts were GSA and which 
were sole source. I am not qualified to answer that right now.
    Chairman Waxman. Thank you. We will receive any documents 
you have.
    Mr. Davis of Virginia. Mr. Chairman, if I could just have a 
minute. I think that one of the things we want to get to in 
this and later hearings is if the mission is going to be 4 or 5 
or 6 years, do you want to change the mission of the military, 
but that is not the contractors' fault. Our argument there is 
with the Defense Department and the State Department.
    Mr. Prince. I strongly encourage the Congress to sponsor 
true activity-based cost studies. What does it cost the Air 
Force to move a pound of cargo in a war zone? What does it cost 
to put a brigade in the field or train it and to equip it? All 
these basic functions, even what is the hourly cost of aircraft 
doing refueling?
    Chairman Waxman. We are going to have you answer some more 
questions, I am sure, along those lines.
    Mr. Tierney, it is your turn.
    Mr. Tierney. Are you certain, Mr. Chairman?
    Thank you.
    Mr. Prince, thank you for being here today. We have been 
discussing a little bit here about the goal of this particular 
venture here. I think that General Petraeus has been pretty 
clear that he would like to change it from the type of war it 
has been to one where he wants to defeat insurgents, and that 
entails, in significant part, winning the hearts and minds.
    So I want to read to you this quote: ``Counterinsurgents 
that use excessive force to limit short term risk alienate the 
local populace. They deprive themselves of support or tolerance 
of the people. This situation is what insurgents want. It 
increases the threat they pose.''
    Do you know who made that statement?
    Mr. Prince. Do I know who made that statement?
    Mr. Tierney. Yes.
    Mr. Prince. No, sir.
    Mr. Tierney. That was General Petraeus. You know he was the 
one who wrote the official counterinsurgency manual.
    It does appear from some of the evidence here, though, that 
Blackwater and other companies, sometimes at least, conduct 
their missions in ways that lead exactly in the opposite 
direction that General Petraeus wants to go, but that doesn't 
mean you are not fulfilling your contractual obligations.
    In a recent report, there was a quote from Ann Exline Starr 
who is a former Coalition Provisional Authority Advisor. She 
talks about the fact that the private mission is different from 
the overall public operation. ``Those, for example, doing 
escort duty are going to be judged by their bosses solely on 
whether they get their client from point A to point B, not 
whether they win Iraqi hearts and minds along the way.''
    She goes on to talk about the fact that soldiers, when they 
escorted her because they are able to escort people in training 
for that, often times also interacted with the Iraqi community 
and did things to ingratiate themselves to the Iraqis.
    The contractors, by contrast, focused only on the contract. 
She said what they told her was our mission is to protect the 
principal at all cost. If that means pissing off the Iraqis, 
too bad, her language, not mine.
    Another counterinsurgency expert is Army Colonel Peter 
Mansoor. Earlier this year, he made a statement about private 
military contractors, and he said, ``If they push traffic off 
the roads or if they shoot up a car that looks suspicious, they 
may be operating within their contract, but it is to the 
detriment of the mission which is to bring people over to our 
side.''
    So when we look at Blackwater's own records that show that 
you regularly move traffic off the roads and you shoot up cars 
in over 160 incidents of firing on suspicious cars, we can see, 
I think, why the tactics you use in carrying out your contract 
might mitigate against what we are trying to do in the 
insurgency.
    Retired Army officer, actually, he is a conservative 
analyst now, Ralph Peters. He was more blunt about it. He said, 
``Armed contractors do harm COIN, counterinsurgency efforts. 
Just ask the troops in Iraq.''
    We have had complaints from military leaders over and over 
again that the ways that some contractors operate in Iraq are 
causing danger and anger against the U.S. forces. Let me give 
you one example. For most of 2005, the Army's Third Infantry 
Division was in charge of security in Baghdad.
    Here is what the deputy commander of this division, 
Brigadier General Karl Horst, said about Blackwater and other 
private military contractors: ``These guys run loose in this 
country and do stupid stuff. There is no authority over them, 
so you can't come down on them when they escalate force. They 
shoot people, and someone else has to deal with the aftermath. 
It happens all over the place.''
    Are you familiar with General Horst, sir?
    Mr. Prince. No, sir. I have never met him.
    Mr. Tierney. Well, here is what Colonel Hammes said when he 
was an officer in Iraq. He said, ``The problem is in protecting 
the principal, they had to be very aggressive and each time 
they went out, they had to offend locals, forcing them to the 
side of the road, being overpowering and intimidating, at times 
running vehicles off the road, making enemies each time they 
went out.''
    So they were actually getting our contract exactly as we 
asked them to, at the same time hurting our counterinsurgency 
effort.
    This goes on again back to Colonel Peter Mansoor who said, 
``I would much rather see basically all armed entities in a 
counterinsurgency operation fall under the military chain of 
command.''
    The CENTCOM Commander, Admiral James Fallon, who we all 
know now for his current work, his quote is: ``My instinct is 
that it is easier and better if they were in uniform and 
working for me.''
    Can you see and appreciate, Mr. Prince, why there might be 
some contradiction between what we are asking your organization 
and others like it to do under the contract as opposed to what 
we are trying to do as a military force in counterinsurgency?
    Mr. Prince. Sir, I understand the challenges that the 
military faces there.
    Like I said before, there is 170 some companies doing 
business in Iraq. Most of those security contractors are DOD. I 
think the DOD officers would even complain about their lack of 
reach over their own DOD Corps of Engineers, MNSTC-I type 
contractors.
    Second, we know we are part of the total force in trying to 
get the mission accomplished. Of the 16,000 missions our guys 
have done, only 195 resulted in any kind of discharge of a 
weapon. That is less than 1 percent. So we strive for 
perfection, but we don't get to choose when the bad guys attack 
us.
    You know the bad guys have figured out. The terrorists have 
figured out how to make a precision weapon with a car loaded 
with explosives with a suicidal driver.
    Mr. Tierney. Just to interrupt you for a second, you are 
not asserting that every time that you take affirmative action 
it was somebody firing at you first. You do acknowledge that, 
on some occasions at least, it was a preventive act on your 
part of your people.
    Mr. Prince. Yes, sir, but this is what happens when our 
guys are not able to prevent a suicide car bomb. This happened. 
This blew up three Blackwater personnel and one State 
Department security officer up in Mosul.
    It tossed a 9,000 pound armored Suburban 50 feet into the 
side of a building, followed by a whole bunch of small arms 
fire from the rooftops, a very serious ambush, killed four 
Americans that fast.
    Mr. Tierney. My question was that you are not disputing the 
fact that on some occasions when your people might be afraid 
that something like that is going to happen, that they may fire 
first, ask questions later.
    Mr. Prince. Sir, like I said the bad guys have made a 
precision weapon. The Air Force has a system called a DIRCM, 
Directional Infrared Countermeasures. It is used to break the 
lock of an incoming surface to air missile. It shines a laser 
in the seeker head. The missile breaks lock, and it veers away.
    We have to go through a use of force continuum to try to 
break the lock of this potential deadly suicide weapon: hand 
and arm signals, sirens, signs at the back of the vehicles, 
water bottles, pen flares, shots to the radiator, shots to the 
windshield before we even go to a lethal force option.
    So our guys do go through it, but they----
    Mr. Tierney. Well, some of the evidence indicates that----
    Chairman Waxman. The gentleman's time has expired.
    Mr. Tierney. Mr. Waxman, I would like to just finish up my 
thought if I might. I think there has been fairly good 
estimation on the part of the committee here.
    Chairman Waxman. If you can do it in seconds rather than 
minutes.
    Mr. Tierney. Thank you.
    The point being made is that there are instances--you are 
not denying--when people shoot first on that.
    When you multiply that by the number of times it happens 
and the number of people and Iraqis, that are implicated in 
those situations, the number of people that they tell, it goes 
against our counterinsurgency effort and it goes to the issue 
of whether or not we ought to have military personnel doing the 
job, whether this is an inherently Government function that we 
ought to have done on the public side of it as opposed to 
having contractors who, by what we are seeing here today, 
really don't have much accountability being exercised over them 
by either the State Department or the Department of Defense.
    I yield back, Mr. Chairman.
    Chairman Waxman. The gentleman yields back the rest of his 
time.
    The Chair now recognizes Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman.
    Mr. Burton. Excuse me, Mr. Chairman.
    Mr. Prince, did you want to respond to what was said?
    Chairman Waxman. That wasn't a question. That was a 
statement by the Member.
    Mr. Burton. Well, I know, but when an allegation.
    Chairman Waxman. Mr. Duncan is recognized.
    Mr. Burton. Mr. Chairman, when an allegation is made.
    Chairman Waxman. Mr. Duncan is recognized. You are using 
his time.
    Mr. Prince. I will get it, Mr. Burton. It is all right.
    Mr. Duncan. Thank you, Mr. Chairman.
    The Washington Post reported yesterday. It said Army 
General David H. Petraeus, the top U.S. Commander in Baghdad, 
overseeing more than 160,000 troops, makes roughly $180,000 a 
year or some $493 a day. That comes out to less than half the 
fee charged by Blackwater for its senior manager of a 34-man 
security team.
    Our committee memorandum says using Blackwater instead of 
U.S. troops to protect embassy officials is expensive. That is 
putting it lightly. Blackwater charges the Government $1,222 
per day for the services of a private military contractor. This 
is equivalent to $445,000 per year, over six times more than 
the cost of an equivalent U.S. soldier.
    This war has produced some of the most lavish, most 
fiscally excessive and most exorbitantly profitable contracts 
in the history of the world. It seems to me that fiscal 
conservatives should feel no obligation to defend this type of 
contracting. In fact, it seems to me that fiscal conservatives 
should be the ones most horrified by this.
    I notice in the table that Blackwater's contracting has 
gone from $25 million in 2003, $48 million in 2004, to $593 
million in 2006. If we are going to be there another 10 years, 
as some have said, I surely hope that we are not going to 
continue to see these types of ridiculously excessive increases 
in the contracts that are being handed out.
    I also notice that Blackwater is a subsidiary of the Prince 
Group, of Prince Group Holdings and that another one of the 
holdings of that firm is Presidential Airways, an aviation 
company that has held a contract with the U.S. Air Force Air 
Mobility Command.
    Mr. Prince, can you tell me what percentage of Prince Group 
Holdings comes from Federal contracts of all or any types?
    Mr. Prince. Could you say the question again, sir? I didn't 
quite hear you.
    Mr. Duncan. Can you tell me? I don't know all the companies 
that are in your Prince Group Holdings. Apparently, there is a 
Presidential Airways. I don't know how many other companies 
there are.
    What I am wondering about is how much of Prince Group 
Holdings comes from Federal contracts of any and all types?
    Mr. Prince. Most of Prince Group Holdings comes from 
Federal contracts, but if I could just come back and answer 
your statement about prices that we charge, that $1,222.
    Mr. Duncan. When you say most, does that mean 100 percent?
    Mr. Prince. No.
    Mr. Duncan. Rough guess, what percentage?
    Mr. Prince. Rough guess, 90 percent.
    Mr. Duncan. Do you still have a contract with Presidential 
Airways with Air Force Mobility Command?
    Mr. Prince. Yes, sir.
    Mr. Duncan. Rough guess, how much is that contract each 
year?
    Mr. Prince. I don't know what the exact number is, sir. It 
is for eight aircraft right now. I don't know what they price 
out at.
    Mr. Duncan. What other companies are in Prince Group 
Holdings?
    Mr. Prince. There is a long list. I have a manufacturing 
business that has nothing to do with Federal stuff, and we make 
pieces and parts for automotive, appliance, industrial, power. 
We compete with the likes of the Japanese and Koreans and 
European companies every day.
    Mr. Duncan. All right.
    Mr. Prince. But if I could just answer the question about 
how much we charge, those are competitively bid prices. The 
$1,222 cited in the report is not accurate.
    You also, the committee should have received this. I don't 
know if you have seen that. It lays out base year bill rates 
for an average security guy. Base year is $981, not $1,222, and 
our profit on that, projected to be 10.4 percent, nothing 
higher.
    And on top of that, I can tell you we have three 
helicopters that have been shot down this year, a Little Bird 
and two Bell 412s. Those are company helicopters, and when they 
go down that comes out of our hide. We have to self-insure on 
those.
    So the risks we take, the financial risks, whenever an 
aircraft is doing a mission for the State Department or 
responding to some med evac need, above and beyond the 
statement of our contract, trying to pull a U.S. soldier out of 
bad, wounded situation, we take that risk as a company, and our 
guys do themselves at great personal peril.
    So it is not just about the money. We are a business. We 
try to be efficient and excellent and deliver a good service.
    We are happy to have that argument, sir, not the argument, 
the discussion. Sponsor an activity-based cost study. What 
would it cost the Diplomatic Security Service to bring all 
those folks in house as staff?
    Look at it. We are happy to have that argument. If the 
Government doesn't want us to do this, we will go do something 
else, but there is plenty of case to be made and plenty of 
spreadsheets to be analyzed.
    Chairman Waxman. The gentleman's time has expired.
    The Chair now recognizes Mr. Clay.
    Mr. Clay. Thank you, Mr. Chairman.
    Mr. Prince, I am truly disturbed by reports of Blackwater 
contractors wreaking havoc on innocent Iraqi citizens. I am 
equally troubled that taxpayers have been taken for a ride by 
paying six times the cost of a U.S. soldier for Blackwater 
contractors.
    Now, Mr. Prince, you have argued that Blackwater provides a 
cost-effective service to the U.S. Government in part because 
by hiring private contractors the Government can avoid paying 
carrying costs such as training, salaries and benefits.
    Yet, in your written testimony, you state that Blackwater 
personnel are all military veterans and law enforcement 
veterans, many of whom had recent military deployments. Since 
so many of your employees have recently left Government 
service, doesn't that mean they have received years of 
specialized training at the expense of the Federal Government?
    Mr. Prince. People serve the U.S. Government for different 
periods of time, and that is a choice they make and have been 
making since the United States has had a standing military. 
They serve for 4 years. They serve for six. They serve for 20 
or 30.
    Mr. Clay. So the U.S. taxpayers are paying for that 
training.
    Mr. Prince. They are paying for that anyway. We provide a 
vehicle, a mechanism for the U.S. Government to utilize that 
sunk cost that they have put into the training for these 
people. We reorganize it and package in a way to fill these 
gaps that the U.S. Government has in these kinds of contingency 
operations.
    To stand up a 1,000-man or actually you need a 3,000-man, 
at least, military police brigade to do this kind of work 
because for every person that is deployed, they are going to 
have two more back stateside, one in training and one in 
standdown.
    So you spin that meter, and the costs get big very quickly. 
So we are just reorganizing those skills that the Government 
has already paid for and putting them back to work.
    Mr. Clay. Last week, Defense Secretary Robert Gates 
expressed concern that Blackwater and other private military 
contractors are actually poaching the military's ranks, luring 
service members away with much higher salaries.
    When Secretary Gates testified before the Senate 
Appropriations Committee, he said he asked Pentagon officials 
to work on drafting non-compete clauses in order to put some 
limits on the ability of these contractors to lure highly 
trained soldiers out of our forces to go and work for them.
    How do you feel about non-compete clauses, Mr. Prince?
    Mr. Prince. I think that would be fine, but the fact is 
everyone that joins the military doesn't necessarily serve 20 
years. So, at some point, they are going to get out after four, 
six, eight, whatever that period of time is, whatever they 
decide because we don't have a draft. We have a voluntary 
service.
    I think it would be upsetting to a lot of soldiers if they 
didn't have the ability to go use the skills that they have 
accumulated in the military to go work in the private sector 
because you could make the same case about aviation mechanics, 
jet engine mechanics, guys that work on a reactor on a 
submarine. All those skills have direct correlation to the 
private sector. I don't think putting in non-competes for them 
would do well to draw guys into the military in the front side 
either.
    Again, the GAO study found that the Special Operations 
community, yes, folks are getting out and they go to MBA 
school. They become some other private sector job. Yes, a lot 
of them come to work for companies like us but not at any 
higher rate than they ever did before.
    Mr. Clay. Well, I mean if the Pentagon adopts the non-
compete clause, it certainly indicates to me that the Secretary 
is really concerned about you all poaching on our service 
personnel, and that is what it indicates to me.
    Let me also say to the viewers of C-SPAN today. This 
Congress, some in this Congress and the administration seem to 
be steeped in hypocrisy as far as taking these frequent flies 
to the Green Zone in Baghdad. When you look, they are some of 
the same ones who would never lift a rifle to defend this 
country in Vietnam but yet ridicule and criticize those who 
have not traveled to Baghdad.
    I just want the American public to be aware that some in 
here are steeped in hypocrisy.
    I yield back my time, Mr. Chairman.
    Chairman Waxman. The gentleman's time has concluded.
    The gentleman from Idaho, Mr. Simpson.
    Mr. Turner. Thank you, Mr. Chairman.
    I come from Ohio, and Ohio is known frequently as the 
Heartland, and in the Heartland there are a few things that are 
easy that are not so easy in Washington, DC. Even in Hollywood, 
some of these things are easy, and those are the issues of who 
is on our team and who is on their team.
    Today, I am a little saddened by this hearing because I am 
absolutely a supporter of congressional oversight and believe 
this committee has incredible functions that we have to do. Our 
witness today even talked about being a contractor, the 
questions that we should be asking of reliability, 
accountability, cost. A lot of the information we have before 
us is about dollars, rules of engagement and the like.
    But what unfortunately dissolves into our team versus their 
team, by any account, by Hollywood's account, by the 
performance account, Blackwater is our team. They are our team 
working in the trenches and in a war zone.
    I haven't heard many questions on this committee about the 
rules of engagement or the limits on the work of Al-Qaeda or 
the insurgents. In fact, I don't recall one hearing in this 
committee where there has been indignation or troubling 
responses as a result of the senseless and heartless killings 
of Al-Qaeda and the insurgents, but I hear today huge concerns 
over what we must exert as oversight on Blackwater. I think it 
crosses the line between our team and their team.
    Blackwater has questions to answer, and I believe that they 
are prepared to do that and today have come forward to do those 
things, but we should not go to the extent of undermining 
Blackwater's ability to perform as our team.
    The Washington Post today, in its editorial in reviewing 
how this issue has come to light, stated, ``Congressional 
Democrats despise the firm because it symbolizes the private 
contracting of military missions that many oppose in 
principle.''
    This is the Washington Post saying that the congressional 
Democrats are despising this firm because of its engagement in 
military missions that they oppose.
    The Washington Post goes on to say, ``At the same time, it 
is foolish''--that is a pretty strong word for the Washington 
Post.
    ``At the same time, it is foolish to propose the 
elimination of private security firms in Iraq and Afghanistan, 
at least in the short term.''
    I would hope as we continue our important functions of 
oversight that we don't undermine our team.
    Now, Mr. Chairman, you made a comment that I have to 
respond to in your opening statement. It is written in your 
opening statement, and it says, ``As a general rule, children 
from wealthy and politically connected families no longer serve 
in the military.''
    Mr. Chairman, that is an attack on our team. I can tell you 
that Duncan Hunter, former chairman of the Armed Services 
Committee, currently ranking member, whose son served in Iraq, 
would disagree with you. Joe Wilson with the Armed Services 
Committee, whose son served, would disagree with you.
    I can tell you that the DOD in its report on social 
representation in the U.S. military services and the GAO in 
their September 22, 2005 report would disagree with you.
    Quoting from the DOD report, it says, ``Our Population 
Representation Report shows both a diversity and quality of the 
total force. Men and women of various racial and ethnic groups, 
of divergent backgrounds, from every State in our country serve 
as active and selective reserve, enlisted members and officers 
of the Army, Navy and Marine Corps and Air Force and Coast 
Guard.
    ``One particular note, the mean cognitive ability and 
educational levels of these Soldiers, Sailors, Marines, Airmen 
and Coast Guardsmen are above the average of comparatively aged 
U.S. citizens.''
    The GAO, in their report, similarly confirms that between 
1974 and 2000, the force became older and better educated.
    So I would hope that the comments by the chairman are not 
interpreted as what I heard them as, as diminishing the 
abilities and the backgrounds of those who serve in our 
military.
    Mr. Prince, my question for you, you are free of some of 
the limiting acquisition rules that our military is subject to. 
A general has a different ability to be able to acquire 
something as you do corporately.
    Could you give us some insight as to how our acquisition 
rules inhibit our military in performing some of the things 
that you do and ways in which we can change those acquisition 
rules to deliver to them the things that they need?
    Mr. Prince. Thanks for that question.
    I would say we find that the requirements process for the 
military constantly looks for the 120 percent solution, and it 
overspecs the electronic capability. I mean there is an 
enormous amount of extra stuff and capability put on a vehicle 
that might not be necessary to just fulfill that job.
    I mean if you are going to, you could almost buy vehicles 
just planned on for Iraq right now, almost off the shelf, 
without having to plan about net-centric warfare and all the 
other bells and whistles that sometimes the DOD wants to put on 
things. So we buy to solve the situation at hand.
    Chairman Waxman. The gentleman's time has expired.
    I want to apologize to the gentleman for indicating that he 
is from a different State than Ohio. He is a proud Ohioan, and 
I certainly want to agree with him. I hope nobody misinterprets 
my comments.
    I would like to now call on Ms. Watson.
    Ms. Watson. Then I want an apology for the reference to 
Hollywood. That is the area that I represent here.
    I heard the Chair apologize. I just had to tail-in on that 
one.
    I want to commend Mr. Prince for his duties, for his skill 
and for his heading up Blackwater.
    However, when I hear that one of the patron saints of some 
people, Rush Limbaugh, called our soldiers, who have been 
critical of the experience in Iraq, phony soldiers, I am 
offended and you should be offended too.
    There was a sign over there earlier, Mr. Chair, the General 
Petraeus satire, and I had sent a message that it should be 
taken down because it was insulting to people.
    I think that people that call our soldiers, who speak from 
experience, phony, ought to be made to apologize.
    Mr. Issa. Would the gentlelady from Hollywood yield for a 
question?
    Ms. Watson. No, I will not yield because I have just a 
little time.
    Let me say this. I am really concerned when it comes to 
privatizing the various struggles that we are having in a war 
zone.
    I am looking at a book here that says Blackwater: The Rise 
of the World's Most Powerful Mercenary Army. That is really 
disturbing to me because I feel that every young man and woman 
or every man and woman in the military ought to be paid for 
their service, and I think you are making a good argument for 
the amount of money that you have been paid, your organization.
    I think my question is do you feel that we ought to 
continue on with privatizing the kinds of duties that our 
military should be trained to execute?
    Mr. Prince. Ma'am, the U.S. military is the finest, most 
powerful military in the world, bar none.
    Ms. Watson. Absolutely, and they should be paid 
accordingly.
    Mr. Prince. It is designed for large-scale conventional 
operations, what they did to Saddam in 1991 and then again in 
2003.
    Ms. Watson. Well, then there is something wrong with the 
design, and that is my point. I think you responded, and I hear 
you clearly. You are providing a service, and I commend you.
    Let me just continue on.
    You are providing a service, and those little voids, Mr. 
Chairman and committee members, ought to be filled by the 
young, the people who volunteer. We have no draft. These are 
volunteers.
    Why should they put their lives on the line for this 
country and not be compensated, so their families back at home 
don't have to go on welfare and are living in housing that is 
substandard?
    I am just infuriated, not with you, but with the fact that 
our State Department and our Department of Defense cannot see 
their way. They talk about we don't have the money, saving 
money. This war is costing $1 trillion.
    You have been paid over $1 billion and will continue to be 
paid so that you can buy the helicopters that are shot down.
    And so, my question to you, are we going to have to 
continue to privatize because we are not training to do what 
you do and would it not be better to hire you to train our 
military to do the kind of guarding of VIP personnel?
    Whenever there is a CODEL, you have to guard them. When 
people from the State Department come, you have to guard them 
because we say that our military is not prepared and not 
trained to do that.
    Mr. Prince. Well, ma'am, I am happy to say that we do a 
significant amount of training for the U.S. military every day 
at our couple of facilities we have around the country.
    Ms. Watson. But you are saying that you fill in a specialty 
area.
    Mr. Prince. It is a specialty gap, high-end personal 
security.
    Ms. Watson. My question that I throw out to all of us is 
why can't we train these people who are willing, who have 
courage to go into the military, but then we have to bring on a 
private firm to do the job they should be trained to do and pay 
them three or four times more than we pay those who choose to 
serve their country by fighting in theater?
    Mr. Prince. The military could do that, but the U.S. 
military can't be all things to all people all the time.
    Ms. Watson. Why not?
    Chairman Waxman. The gentlelady's time has expired.
    Mr. Prince. The tyranny of shortage of time and distance. I 
mean you can't have an anti-air missile guy also be doing PSD 
missions and knowing how to be an aviation mechanic. It is too 
broad of a base of skill requirement.
    Ms. Watson. We need more people.
    Chairman Waxman. Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    Mr. Ryan. Mr. Chairman, may I have 1 minute?
    Chairman Waxman. Thank you.
    Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    Boy, there are so many inaccuracies, so little time. 
Perhaps let's start with something from the gentlelady from 
Hollywood. Isn't it true that, in fact, the military's mission 
has historically not been to guard either VIPs or the State 
Department as a whole?
    Mr. Prince. Correct, yes, sir.
    Mr. Issa. Isn't it true that, in fact, your organization 
works under the regional security officer for Baghdad?
    Mr. Prince. Yes, sir.
    Mr. Issa. Isn't it true that contractors have been used 
directly and indirectly, in other words, non-Federal employees 
in places Beirut, Afghanistan, Bosnia, under the Clinton 
administration, routinely?
    Isn't there a historic time in which we used non-career 
RSOs or foreign service officers for these jobs?
    Mr. Prince. Since the founding of the republic.
    Mr. Issa. OK, so, we are not talking about the military 
here at all including, with all due respect, to Secretary 
Gates. Somebody, if the State Department recruited for the 
positions you are presently providing, they would be in all 
likelihood recruiting either current or prior military, 
wouldn't they?
    Mr. Prince. Yes, sir.
    Mr. Issa. Is it reasonable for the State Department to own 
attack helicopters or Bell helicopters that are weaponized?
    Mr. Prince. Well, that is up to them, and our helicopters 
aren't weaponized.
    Mr. Issa. Let's look at it another way. Outside of the two 
theaters, Afghanistan and Iraq, do you know of any place in 
which the State Department owns or directly controls weapons, 
gunships, if you will, to protect convoys?
    Mr. Prince. They do some crop eradication, some cocaine 
eradication work in Colombia. That is the only place I know.
    Mr. Issa. OK. So this is an unusual mission and one that 
begs for not creating a career position for foreign service 
helicopter pilot. There would only be about two or three places 
they would ever be, isn't that true?
    Mr. Prince. Well, actually, those are all flown by 
contractors as well, sir, down in Colombia.
    Mr. Issa. I am very well aware of that, and that is the 
point, I guess. We are having a hearing that is supposed to not 
be about your company and supposed to not be about one incident 
on September 16th. It is supposed to be about cost 
effectiveness of contractors, isn't it?
    Mr. Prince. Yes, sir.
    Mr. Issa. I wish we were bringing in facts and figures 
about let's say $600 billion of DOD contracts or DOD costs into 
one million soldiers so that we could go, well, isn't that 
about $600,000 for every soldier?
    Isn't, in fact, the cost of the Department of Defense, the 
military far greater than what we pay our men and women in 
uniform at the time that they are in combat?
    Mr. Prince. I don't know what those numbers are, sir, but 
that would be a great, fully burdened cost study that Congress 
could sponsor. They don't have to do the whole thing, just take 
some key nodes and really study it.
    Mr. Issa. Well, and hopefully, we will. Hopefully, we will 
get to serious discussion on these issues because I think 
looking at the costs-benefits should always be done. For 
permanent requirements, I don't want to use contractors if, in 
fact, Federal employees would be more appropriate.
    I will mention one thing. If you are feeling a little 
pressure today, if it is a little tough, just be glad you don't 
make a diabetes drug.
    Mr. Prince. To where, sir?
    Mr. Issa. Be glad you don't make a diabetes drug. Compared 
to what we did to the Avandia makers, GlaxoSmithKline, you are 
getting off easy. Trust me. They had their product destroyed by 
jury-rigged testimony and studies that were essentially co-
opted in advance.
    But let's just go to one area that I think hasn't been 
discussed and others might not discuss it. Is your sister's 
name, Betsy DeVos?
    Mr. Prince. DeVos.
    Mr. Issa. Yes. Is that your sister?
    Mr. Prince. It is.
    Mr. Issa. Was she a former Michigan Republican Party 
Chairwoman?
    Mr. Prince. Yes, she was.
    Mr. Issa. Was she a pioneer for Bush?
    Mr. Prince. I don't know. Could be.
    Mr. Issa. Was she a large contributor to President Bush?
    Mr. Prince. They probably were.
    Mr. Issa. And raised a lot of money for President Bush?
    Mr. Prince. Could be.
    Mr. Issa. Went to the Republican conventions in 2000 and 
2004?
    Mr. Prince. I would imagine they did, yes.
    Mr. Issa. Isn't it true that your family, at least that 
part of the family, are very well known Republicans?
    Mr. Prince. Yes.
    Mr. Issa. Wouldn't it be fair to say that your company is 
easily identified as a Republican-leaning company and, in fact, 
the Amway Co. somewhat so because of family members there?
    You don't have to speculate overly, but isn't that 
generally something you understand?
    Mr. Prince. Blackwater is not a partisan company. We 
haven't done any, you know. We execute the mission given us, 
whether it is training Navy Sailors or protecting State 
Department personnel.
    Yes, I have given individual political contributions. I 
have done that since college, and I did it when I was an active 
duty member of the Armed Services, and I will probably continue 
doing that forward. I don't give that. I didn't give up that 
right when I became a defense contractor.
    Mr. Issa. Right.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Issa. Mr. Chairman, just to finish like we did on the 
other side of the aisle, I think you are exactly right, that in 
fact being identified as partisan Republican, in fact your 
company appears to have done what all companies do which is in 
fact to operate, to do the job they are doing in a non-partisan 
way.
    I would hope that this committee and the public take note 
that labeling some company as Republican-oriented because of 
family members is inappropriate, and I would hope that we not 
do it again.
    I yield back.
    Chairman Waxman. Well, the only one who has done it is you. 
[Laughter.]
    Mr. Issa. Mr. Chairman, I think it has been made. I think 
the report made it very clear.
    Chairman Waxman. Maybe that is why all the Republicans are 
defending the company.
    Well, Mr. Yarmuth, it is your time.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    Mr. Prince, welcome. Thank you for your testimony.
    Mr. Prince. Thank you, sir.
    Mr. Yarmuth. I want to focus on the whole issue of cost and 
profitability, and I want to clarify something. You talked at 
one point about the fact that what you are essentially doing is 
bidding for people who would otherwise be able to make as much 
money as you would be paying them in the private sector.
    First of all, some of that defies imagination because we 
are talking about essentially $400,000 to $500,000 worth of 
cost per individual per year to the Government which would put 
that individual or that job category in the highest 1 percent 
of income earners in the country.
    So my question to you would be, and this is not in any way 
to impugn or to minimize the value of Navy SEALs, but outside 
of a military setting, where could a Navy SEAL, for those 
talents, make $400,000 to $500,000 if it weren't for a 
Government contract?
    Mr. Prince. I don't know of any of our people that have 
made $400,000 to $500,000 working as a contractor. They are not 
getting paid that much.
    They get paid for every day they are in the hot zone. So it 
is very much like a professional mariner's existence. They go 
to sea. They get paid every day they are in the hot zone. They 
day they leave, their pay goes to zero.
    Average pay, hypothetically, around $500 a day. We don't 
pay the $1,000 a day. That is a huge misperception. It is a 
flat-out error in the media.
    So if you take $15,000 a month and they work for 6 months, 
it is $90,000.
    Mr. Yarmuth. But that is not the cost of that job to the 
American taxpayer.
    Mr. Prince. Yes, sir, but they are not showing up at the 
job naked. They need uniforms, equipment, body armor, boots, 
everything you wear from head to toe, their training, their 
travel, their insurance, sometimes their food.
    I mean there are very, very sophisticated price models that 
we bid competitively for, hundreds and hundreds of line items. 
Believe me, our folks earn a lot of electrons putting those 
price models together because you really got to know what you 
are doing on the front end. But, again, it is a competitively 
bid product.
    Mr. Yarmuth. Well, I appreciate that, and I want to pursue 
that a second, but I do have in front of me an invoice from 
Blackwater to the Department of State in which one of the items 
is invoice quantity, 3,450 units each at a cost of $1,221.62. 
That is your invoice.
    Mr. Prince. I am not sure what that invoice is. Could I see 
that, sir?
    Mr. Yarmuth. I would be happy to submit that for the 
record.
    We dealt several months ago with a situation in which I 
don't believe your company was a subcontractor for the State 
Department or a contractor. You were a subcontractor. I am 
talking about the incident in Fallujah where four of your 
employees were ambushed and killed, and we had testimony from 
two of their wives and two of their mothers several months ago.
    In the course of that testimony, it was we were told that 
they had actually contracted, each of them, at a rate of $600 a 
day. That is what they were to be paid. By the time it got to 
the American taxpayer, it was around $1,100 a day. You were the 
third subcontractor under a contract given to KBR, as I recall, 
Halliburton, then a Halliburton subsidiary. And we asked the 
question of all of those subcontractors, did anybody add value 
up the ladder for that additional $500 based on--and we asked, 
did they provide any special equipment, any special services, 
whatever. And the answer was no.
    So in that case, that is not your profit, but it appeared 
to us that by and large that additional $500 that the American 
taxpayer paid for that one person was largely profit to three 
different corporations. Now, can you shed any light on that 
situation? And I don't believe, that was, I think, a Defense 
Department contract and KBR was just delivering supplies to 
troops and you were guarding the convoys.
    Mr. Prince. That could easily be. I am not completely 
familiar with the contracting and subcontracting arrangement 
that you are speaking of. But I can tell you, with our work 
with the State Department, we are direct to the State 
Department and there is no other intermediary adding cost or 
not adding value.
    Mr. Yarmuth. One other question I want to ask. You made the 
comparison, again, about that we have to bid for these people. 
But isn't there a significant distinction, I understand if we, 
the military trains a pilot and then the pilot goes out and is 
bid for by commercial aircraft and so forth, that is the 
private sector bidding. But in this situation, the American 
taxpayers are bidding against themselves. Because we trained 
Navy SEALs, Navy SEALs then go into your employ, then the Navy 
has to bid, as I understand, in one report, $100,000 to get 
them back.
    But we are bidding against ourselves, aren't we? We are not 
bidding against another external competitor.
    Mr. Prince. The nature of the demand of this, especially a 
group of Blackwater, even before 9/11, it grew after the Cole 
was blown up, that Navy ship. Now, in a post-9/11 world, you 
have a lot of different demands for those kinds of skill sets 
that are in much higher demand than they were in the late 
1990's. So that is the changing nature of the market.
    Chairman Waxman. The gentleman's time has expired.
    Mr. McHenry. Oh, I am sorry. Mr. Westmoreland.
    Mr. Westmoreland. Thank you, Mr. Chairman.
    Just to clarify a little bit about who is calling who a 
Republican company, I want to read from a December 13, 2006 
letter from Callahan and Blaine to Ms. Pelosi, Mr. Waxman, 
Senator Dorgan, Senator Reid, Representative Chris Van Hollen: 
``Nonetheless, as American citizens, we hereby petition to you 
to initiate support and continue the congressional 
investigations into war profiteering and specifically 
Blackwater's conduct. Now that there has been a shift in power 
in Congress, we are hopeful that your investigation, as well as 
the investigations by Senator Dorgan and Senator Waxman, will 
be taken seriously by these extremely Republican companies such 
as Blackwater, who have been uncooperative to date and that 
these investigations will be fruitful and meaningful.''
    And Mr. Prince, you may recognize that name, because I 
believe they also are the attorneys for some people who are 
suing you.
    Mr. Prince, first of all, let me give you a little 
background, probably, as to why you are here. There is a party 
in Congress that does not like companies who show a profit. If 
you are wealthy, they figure you should have paid more taxes or 
that you are a crooked businessman. They do not understand 
someone who is an entrepreneur and offers a valuable service 
that is above its competitors and that is based at a 
competitive price.
    They want to fight a war with no casualties. They exploit 
our children, whether it is with a plan that will socialize 
medicine in this country or the horrible situation when 
innocent children are victims of an act of war. They often have 
hearings such as this to bias lawsuits that their crony lawyer 
friends may be handling.
    There is no cost too high for them for citizens to pay, 
citizens of this country, whether it is the price of personal 
integrity or more of their wealth, as long as it moves forward 
with the ultimate goal of distribution of wealth of the 
successful for the takers of this world.
    They love to have their cake and eat it too, though. For 
instance, they think the Iraqi government is corrupt and inept, 
but yet they question you about taking one of your former 
employees out of the country with the government's permission. 
Another example, they say the military should be doing your 
job, yet they don't want additional troops sent to the theater.
    One more example, Mr. Prince, is they complain about what 
our military personnel make, and then they complain about what 
you pay the same people that they complained about making so 
little. So you can see that there is some confusion.
    I also want to point out to you that 9 of the 22 Members on 
this panel that voted voted that they agreed with MoveOn.org's 
attack on General Petraeus.
    Let me ask you, Mr. Prince, well, let me say, some of 
Blackwater's critics have stated that the firing of personnel 
has been surprisingly frequent. Have you or your managers ever 
fired an employee for doing a good job?
    Mr. Prince. Not that I know of.
    Mr. Westmoreland. I don't think anybody does, do they? So 
if one of your employees was doing a bad job or not meeting 
your criteria, then those were some of the people that you got 
rid of, right?
    Mr. Prince. If they don't hold to the standard, they have 
one decision to make: window or aisle.
    Mr. Westmoreland. And Mr. Prince, what kinds of 
professional backgrounds do most of your security personnel 
have?
    Mr. Prince. All of our personnel working on the WPPS-type 
contract come from the U.S. military or law enforcement 
community. They have a number of years of experience doing that 
kind of work, ranging from 5, 8 years up to 20 or 30 years of 
experience. They are discharged honorably, most of them are 
decorated. They have gotten out of the military to choose to 
take another career path. So we give them the ability to use 
those skills back again working for the U.S. Government.
    And let me just say, we are not a partisan organization. 
That is not on the interview form when you come to work for 
Blackwater, what party you affiliate with at all. We affiliate 
with America. And the idea that people call us mercenaries, we 
have Americans working for America, protecting Americans.
    Mr. Westmoreland. And I think you do a very good job.
    Mr. Prince. And the Oxford Dictionary defines a mercenary 
as a professional soldier working for a foreign government. And 
Americans working for America is not it. Yet we have a handful 
of, we call them third country national folks, folks from Latin 
America, they guard some gates and they guard some camps. They 
don't leave that area, they are static guards. Our PSD guys are 
Americans working for America.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Braley.
    Mr. Braley. Thank you, Mr. Chairman. Mr. Prince, my best 
friend married Mary Lubbers, whose father and grandfather were 
the presidents at Hope College.
    Mr. Prince. Small world.
    Mr. Braley. So I want to start by asking you about a 
statement you made on page 3 of your written statement that you 
shared with the committee, ``The company and its personnel are 
already accountable under and subject to numerous statutes, 
treaties and regulations of the United States.'' And then you 
went on and attached to your statement a list of existing laws, 
regulations and treaties that apply to contractors and their 
personnel. Is that the document that I am holding up that you 
attached?
    Mr. Prince. Yes, sir.
    Mr. Braley. Is it your testimony today, under oath, that 
all Blackwater employees working in Iraq and Afghanistan are 
subject to the Uniform Code of Military Justice, the Military 
Extra-Territorial Jurisdiction Act and the War Crimes Act?
    Mr. Prince. It is my understanding that is the case, yes, 
sir.
    Mr. Braley. All right, well, let's look at this document, I 
want to ask you about it. This document, the Uniform Code of 
Military Justice, applies in the time of declared war. You 
would agree that there has been no declared war in Iraq or 
Afghanistan?
    Mr. Prince. No, but I believe it has been amended to 
include contingency operations.
    Mr. Braley. Is it your understanding that a contingency 
operation would apply to what is going on in Iraq and 
Afghanistan?
    Mr. Prince. I am not a lawyer, but my layman's 
understanding is yes.
    Mr. Braley. All right. And then it says to persons serving 
with or accompanying an armed force in the field. Do you see 
that?
    Mr. Prince. I don't have it in front of me, but you are 
reading from it.
    Mr. Braley. Well, I am just reading from the document that 
you provided to us.
    Mr. Prince. Right.
    Mr. Braley. If that is what the Uniform Code of Military 
Justice provides, you would agree that based upon your own 
description of the activities of your company, there are times 
when your employees are not serving with or accompanying armed 
forces in the field.
    Mr. Prince. There are times when U.S. military units are 
actually embedded in our motorcades.
    Mr. Braley. But to answer my question, there are times when 
your employees are not serving with or accompanying armed 
forces in the field, isn't that correct?
    Mr. Prince. Sir, I am not a lawyer. So I am not going to 
give you that level of detail. If you want a clear written 
statement as to the accompanying opinion, I am sure the State 
Department can answer what their opinion is on that. But we 
have looked at it and we feel comfortable that our guys could 
be brought under investigation with those ruling legal 
authorities over their heads.
    Mr. Braley. Then let's look at the Military Extra-
Territorial Jurisdiction Act, Section 3261, Criminal Offenses 
Committed by Certain Members of the Armed Forces and by Persons 
Employed by or Accompanied by the Armed Forces Outside the 
United States. You would agree that there are circumstances 
where your employees would not meet that definition based upon 
their service in Iraq and Afghanistan.
    Mr. Prince. I believe that was changed yet again to include 
any U.S.-funded contract.
    Mr. Braley. Well, that is the definition that applies to 
U.S.-funded contracts from the statute.
    Mr. Prince. Again, I am not a lawyer, sir. I am sorry.
    Mr. Braley. Then let's look at the War Crimes Act of 1996, 
which applies if the perpetrator is a U.S. national or a member 
of U.S. armed forces. You would agree based upon your testimony 
today that there would be circumstances when some of your 
employees would not meet the definition of perpetrator to be 
covered by the War Crimes Act.
    Mr. Prince. Again, I am not sure, sir.
    Mr. Braley. Well, you testified that you hire some third 
country nationals. They would not be U.S. nationals, would 
they?
    Mr. Prince. That is correct.
    Mr. Braley. And they would not be members of the U.S. armed 
forces.
    Mr. Prince. But they are serving in a U.S. DOD contingency 
operation.
    Mr. Braley. Then let's talk about these payments that have 
been made as a result of deaths that were related to the 
conduct of Blackwater employees. One of the payments that we 
have been provided information about was this $15,000 payment 
to the guard's family who was guarding Iraqi Vice President 
Mahdi. Are you familiar with that payment?
    Mr. Prince. Yes, sir.
    Mr. Braley. Did you have any input into the determination 
of the amount of that payment?
    Mr. Prince. I discussed it with some State Department 
officials, yes.
    Mr. Braley. Did you feel that it was a satisfactory level 
of compensation for the loss of that individual?
    Mr. Prince. I believe the cash that was paid was actually 
$20,000, not $15,000.
    Mr. Braley. All right, $15,000 or $20,000. Based on the 
information that we have been provided, one of the things we 
know is that Blackwater charges the Government $1,222 a day for 
the services of some of its employees, is that correct?
    Mr. Prince. I believe that number is lower. The chart that 
we provided the committee shows a blended average significantly 
less than that.
    Mr. Braley. Assuming that figure is correct, if you take 
someone your age in the United States and look at the U.S. life 
table, you will find that somebody your age in this country has 
a life expectancy of 40 years. So if you were to take that rate 
of $1,222 a day, multiply it times 365 days a year, multiply it 
by a 40 year life expectancy, you would get a total lifetime 
earnings payout of $17,841,200. You would agree with me that 
pales in comparison to a payment of either $15,000 or $20,000.
    Chairman Waxman. The gentleman's time has expired. You can 
answer the question.
    Mr. Prince. Your calculations there don't make any sense to 
me, because that charge, that $1,200 charge that you are 
talking about, claiming that we charge the Government, that 
includes aviation support. Some of those helicopters that got 
shot down, that comes out of our hide. Gear, training, travel, 
all the rest. So I am not quite sure how that math works out. 
But I would be happy to get back to you if you have any written 
questions.
    Chairman Waxman. The gentleman's time has expired.
    Mr. McHenry.
    Mr. McHenry. Thank you, Mr. Chairman.
    I want to go through a few facts and make sure we have this 
on the record. The gentleman is discussing cost, and I want to 
sort of understand all the facts before we get to a conclusion 
here. You were previously in the Navy SEALs. How long were you 
in the military, sir?
    Mr. Prince. In 1992 through the end of 1996.
    Mr. McHenry. What is the average time, having been in the 
SEALs, perhaps you would know this, what is the average time a 
special forces operator is in the service?
    Mr. Prince. Five or 6 years, up to 20. It really varies.
    Mr. McHenry. But based on your experience?
    Mr. Prince. Guys really make a decision point at about 12 
years whether they are going to stay for a career or get out. 
So I would say 10 to 12 years.
    Mr. McHenry. All right. Let's say an operator retires from 
the military, at which point a Navy SEAL, average Navy SEAL is 
doing a much more, a much different operation, they are dealing 
with explosives rather than defensive caravans and convoys. 
What do you do with those individuals? Do you take Navy SEALs 
and put them right in there, onto the streets? Is there 
training for Blackwater?
    Mr. Prince. The personnel that deploy for us, they go 
through, obviously we have the resumes, we do a criminal 
background check on them. When they have been accepted, when 
the resume has been accepted by the customer, they come in for 
training, they go through another 164 hours of training, 
embedding at Blackwater, tactics, techniques, procedures, 
driving, firearms, defensive tactics. They go through a full 
psychological evaluation, medical/dental exam, physical tests, 
shooting tests. There is a very, very rigorous pre-deployment 
program they all have to do.
    Mr. Braley. A significant amount of expense?
    Mr. Prince. Yes. And that is all baked into that daily 
cost.
    Mr. Braley. Just for the record, when was Blackwater 
formed?
    Mr. Prince. In 1997.
    Mr. Braley. At what point did you receive your first 
Government contract?
    Mr. Prince. For the first number of years, our customers 
were individual SEAL platoons or a Marine recon platoon or an A 
team. It was down to the individual team sergeant or warrant 
officer paying with a credit card. Our first big Government 
contract that we won competitively was the Navy force 
protection contract that they started off after the Cole was 
blown up. We had a $1\1/2\ billion ship blown up by two guys in 
a Zodiac.
    Mr. Braley. What year was that?
    Mr. Prince. We started that in 2001.
    Mr. Braley. OK. Who is your client in Iraq?
    Mr. Prince. Department of State.
    Mr. Braley. OK. How many competitors do you have within 
this contract?
    Mr. Prince. There are two others. There was a big 
competition before then to be down-selected for the WPPS 
contract.
    Mr. Braley. How is that contract awarded?
    Mr. Prince. It is awarded competitively. You go through an 
enormous proposal process, they come and inspect your 
facilities, your training standards, the resumes of each of 
your personnel. They even have to accept and inspect the 
resumes of the instructors you are going to have. And they come 
and audit the program on an almost weekly basis.
    Mr. Braley. So let's go forward. There are roughly 1,000 
Blackwater contractors, operators, these former veterans that 
you now have trained that are out securing embassy staff and a 
number of civilians in Iraq. Let's say it is 1,000, just for 
our purposes here. Roughly how much administrative staff do you 
have associated with those 1,000 individuals?
    Mr. Prince. We run that whole program, instructors, program 
management people, that sort of thing, with less than 50 
people.
    Mr. Braley. With less than 50 people?
    Mr. Prince. Yes, sir.
    Mr. Braley. So roughly it is 1,000 to 50, is the ratio from 
operators in the field to administrative staff?
    Mr. Prince. Yes, sir.
    Mr. Braley. All right. Now, there is this notion, we are 
not the Armed Services Committee here, but there is this notion 
of tooth to tail ratio, which means how many operators do you 
have in the field and the expense of them, how much 
administration function do you have. In active duty military, 
based on your recollection, what is that rough estimate?
    Mr. Prince. What is the DOD's tooth to tail ratio?
    Mr. Braley. Yes.
    Mr. Prince. I have seen as high as 8 to 1 or even 12 to 1. 
One tooth, 8 to 10, 12 tails.
    Mr. Braley. So one individual in the field, 12 individuals 
outside of operating. So the ratio, when these people on the 
committee talk about the expense of having that one operator in 
the field, it is far less for an individual contractor, when 
you are a private security contractor like you are in Iraq, it 
is far more efficient for the total program to have a 
contractor, because their tooth to tail ratio is far better 
than what it is in the active duty military.
    Therefore, the cost of that one operator in the field for 
all the support services they have associated with them is far 
less for a company like Blackwater than it is for the active 
duty military. And can you, and my time is up, but if you can 
actually discuss this with the committee and maybe in a minute 
or so explain the expense of the overall operations.
    Chairman Waxman. The gentleman's time is up, but Mr. 
Prince, you may go ahead and answer.
    Mr. Prince. I would just encourage the committee, and would 
be happy to make some suggestions on areas where you could do a 
true activity-based cost study, what does it cost the U.S. 
Government to do X, Y, Z functions in the field, and do an 
accurate drill-down. Because unless you know what something 
costs, everything before that or after that is hyperbole.
    Mr. Braley. Is it your contention that it is far cheaper--
--
    Chairman Waxman. The gentleman's time really has expired.
    Mr. Braley [continuing]. For you to operate in the field? I 
just want him to answer this question, if I could, Mr. 
Chairman. Is it your contention that it is much cheaper to the 
taxpayers for your activities as a contractor with the 
Department of State than it would be for active duty military 
to do the very same task because of that tooth to tail ratio?
    Mr. Prince. Yes, and because it is tough for the military 
to be all things to all people all the time. If they are going 
to have air defense artillerymen, all the other conventional 
warfare specifications they have to have, it is tough for them 
to do all things all the time.
    Chairman Waxman. If you have some kind of document that 
backs up your statement, we certainly would like to see it, and 
we would like to ask you to provide it to our committee.
    Mr. Prince. Yes, sir.
    Chairman Waxman. Thank you.
    Ms. McCollum.
    Ms. McCollum of Minnesota. Thank you, Mr. Chair. Mr. 
McHenry and I had the opportunity to go to Afghanistan 
together, where in fact the military did provide, when we went 
out on visits, did provide our security. I also had the 
opportunity of being in Iraq, where we had a private security 
detail take us from point to point. And I just, there has been 
some discussion about who is more caring about getting on the 
ground and seeing what is going on, and I just wanted people to 
know for the record here that I have been both places and under 
both circumstances.
    I would like to followup a little more on what Mr. Braley 
was talking about. You provided this chart on contractor 
accountability. And you have made the statement that the DOD 
can bring charges against your contractors. Can the Department 
of State bring charges against your contractors?
    Mr. Prince. I believe that would be done by the Justice 
Department. They do the prosecuting of those laws.
    Ms. McCollum of Minnesota. Under the CPA Order 17, 
contractors have immunity from the Iraqi legal system, is that 
correct?
    Mr. Prince. That is my understanding, yes.
    Ms. McCollum of Minnesota. So if a Blackwater contractor 
would commit, as what an investigation might determine would be 
murder, on their own time, it was a Christmas Eve holiday that 
you were describing, or Christmas holiday, do you believe the 
Iraqi government would not be able to charge that individual 
with a crime, even on their own time?
    Mr. Prince. That is my understanding, yes.
    Ms. McCollum of Minnesota. Do you believe that immunity 
should be repealed, if something happens when someone is ``off 
duty'' and an Iraqi is murdered?
    Mr. Prince. I believe U.S. laws should be enforced, and you 
can have that justice system back here in America work.
    Ms. McCollum of Minnesota. So you believe that the immunity 
under CPA Order 17 should stand?
    Mr. Prince. I believe so. I am not sure any foreigner would 
get a fair trial in Iraq right now. I think they would at least 
get a fair trial here in the United States.
    Ms. McCollum of Minnesota. Your charts indicate that 
contractors are accountable under the Uniform Code of Military 
Justice. Your contractors work for the Department of State. Is 
the Department of State accountable under the Uniform Code of 
Military Justice?
    Mr. Prince. I will not be presumptuous to answer for the 
Department of State, ma'am.
    Ms. McCollum of Minnesota. Well, you have provided this. 
You told Mr. Braley that all your employees are under this 
chart. So then you are saying that----
    Mr. Prince. Well, ultimately that is for the Justice 
Department to decide which avenue of jurisdiction they have.
    Ms. McCollum of Minnesota. So this is just what you feel 
that people might be held under accountability with your 
contract? This is just a feeling you have? You don't know any 
of that for a fact, do you?
    Mr. Prince. I have legal opinions that I respect, put that 
together and they gave their opinions that those were laws that 
State Department contractors, DOD contractors, contractors for 
the U.S. Government could be held accountable under.
    Ms. McCollum of Minnesota. So whether it is a feeling or an 
opinion, you cannot state for a fact, for a fact, that any of 
your contractors that have a State Department contract can be 
held accountable under the Uniform Code of Military Justice?
    Mr. Prince. That is correct, ma'am, because that is for the 
Justice Department to decide.
    Ms. McCollum of Minnesota. I think that is important to 
clear that up. Do you operate in a military capacity or a 
civilian capacity?
    Mr. Prince. Civilian capacity.
    Ms. McCollum of Minnesota. So now you are saying that 
civilians----
    Mr. Prince. Our men are not serving members of the U.S. 
military.
    Ms. McCollum of Minnesota. So you are saying that civilians 
can be held accountable to the Uniform Code of Military Justice 
in your opinion?
    Mr. Prince. And I believe that is why they extended that, 
not just to wars that were declared but also to contingency 
operations as well.
    Ms. McCollum of Minnesota. To your knowledge, have there 
been any military courts or civilian courts that have held any 
of the contractors who have been charged or been accused of a 
crime in Iraq?
    Mr. Prince. It is my understanding there is a conviction of 
a contractor that was working for the CIA that was convicted in 
North Carolina for actions in Afghanistan.
    Chairman Waxman. The gentlelady's time is expired.
    Ms. McCollum of Minnesota. Thank you, Mr. Chairman. Thank 
you for answering my questions. I appreciate it.
    Chairman Waxman. Mr. Jordan.
    Mr. Jordan. Thank you, Mr. Chairman.
    Mr. Prince, I too want to thank you for your service to our 
country and for the good work that your company has been doing 
in Iraq and Afghanistan.
    I just want to pick up on a couple of things that the 
Congressman from North Carolina had talked about, just some 
general questions. I know you have been sitting there for 3 
hours. Just a few questions, then I am going to yield some time 
to the gentleman from California.
    How many employees, you mentioned before a little bit 
earlier, 1,000 in the field, 50 administrative, but does that 
represent the entire work force at Blackwater?
    Mr. Prince. We have about 550 full-time folks in the United 
States, 1,000, 1,100 or so in Iraq, and then hundreds more in 
little pockets around the world. The next greatest 
concentration would obviously be Afghanistan, there are about 
300, 400 there.
    Mr. Jordan. So a couple of thousand?
    Mr. Prince. More or less, yes, sir.
    Mr. Jordan. And you mentioned the extensive training, some 
of the special operations individuals who come to work for you 
after they leave military service and the training they 
undergo, I believe you said earlier that there was a study done 
that shows there is no higher exit rate, or quicker exit rate, 
we will say, because of your company versus what typically 
happens. Is that true?
    Mr. Prince. Right. It was a GAO study and it was not just 
directed at us, it was directed at the private security 
industry.
    Mr. Jordan. And real quickly, in your testimony, your 
opening paragraph, you talk about you provide training to 
America's military and law enforcement communities who then 
risk their lives to protect Americans in harm's way overseas. 
So are there several types of contracts that your company does? 
You do training contract with the Government, protective 
contracts, or do you do one contract per year? Tell me how 
those work.
    Mr. Prince. We have a number of different contracts. We 
never started this operation to be a security provider. We 
started as a training facility. The SEAL teams, special forces, 
Marine recon, SWAT teams, those were our customers for the 
first few years. The Navy came after the Cole was blown up. We 
have trained well over 100,000 sailors since then on how to 
protect their ships.
    Through one of our affiliates, we do aviation support in 
Afghanistan.
    Mr. Jordan. Mr. Prince, how many contracts would you have 
right now with the Federal Government? Any idea?
    Mr. Prince. More than 50.
    Mr. Jordan. OK.
    Mr. Prince. Some are very small, some are very big.
    Mr. Jordan. Again, I want to thank you for your service. 
And Mr. Chairman, if I could yield to the gentleman from 
California.
    Mr. Issa. I thank the gentleman.
    I just wanted to point something out, Mr. Prince. Did you 
see the memorandum dated October 1st, that is yesterday, that 
is entitled Additional Information about Blackwater USA? It 
comes out of Mr. Waxman's office, it is 15 pages.
    Mr. Prince. I did see that, yes.
    Mr. Issa. OK. Did you note that on page 5, Mr. Waxman and/
or his staff said the following: ``Blackwater is owned by Erik 
Prince. Mr. Prince is a former Navy SEAL who owns the company 
through a holding company.'' After that, it begins to talk 
about the White House, your father, your father-in-law, your 
sister, etc., and basically talks about everything I asked you, 
the Michigan Republican party, the donations.
    So Mr. Chairman, hopefully you will appreciate that it was 
your staff that created everything that I brought up, and you 
put it out in writing 1 day before this hearing. My question to 
you, Mr. Prince, is have you ever seen a bio about your life 
that starts off, you were a Navy SEAL and then goes on to 
everything your sister did on behalf of the Michigan party and 
your Republican credentials? Is this the first time you have 
seen a bio like this?
    Mr. Prince. I love my sister very much, but it is not often 
our bios get printed together. [Laughter.]
    Mr. Issa. And you know, it is interesting, because I am 
noticing that for this committee, a donor search done on 
September 29th, at opensecrets.org, was done to find out how 
much money you gave to who. Did you know that?
    Mr. Prince. I did not know that.
    Mr. Issa. Do you think that is really germane to today, or 
do you think that attempts to paint you as a Republican 
supporter?
    Mr. Prince. I don't think it is germane to today. I think 
we do good work and I am mighty proud of the folks we have 
doing the work.
    Mr. Issa. OK, I heard a rumor that your company or someone 
in your company had given to the Green Party. Do you know about 
that?
    Mr. Prince. It could have been.
    Mr. Issa. OK. I just wanted to know that there were people 
on both the far left and the far right relative to the chairman 
who may have benefited by your company.
    But Mr. Chairman, I would ask that page 5 of your memo be 
considered as what I called it, an attempt to pain this 
gentleman and his company through Republican eyes to a Democrat 
base for political purposes. And I stand by my statement, Mr. 
Chairman, and yield back to the gentleman from Ohio.
    Mr. Davis of Virginia. Could I just ask one clarification, 
Mr. Chairman?
    Chairman Waxman. Yes.
    Mr. Davis of Virginia. Your first contract, Mr. Prince, 
Government contract, was in 1997, wasn't it?
    Mr. Prince. Yes. Well, no, our first customer, we started 
the business in 1997, first customer was January 1998.
    Mr. Davis of Virginia. First Federal customer----
    Mr. Prince. That was the SEAL team.
    Mr. Davis of Virginia [continuing]. That was under the 
Clinton administration?
    Mr. Prince. Yes, sir.
    Mr. Davis of Virginia. Thank you.
    Chairman Waxman. The gentleman's time has expired.
    I would like to now recognize Mr. Cooper.
    Mr. Cooper. Thank you, Mr. Chairman.
    Mr. Prince, in the charter or by-laws of your corporation, 
either the holding company or Blackwater, does it say 
explicitly that it will only work for the United States of 
America or its entities?
    Mr. Prince. No, it doesn't. If I could clarify, anything we 
do for any foreign government, any training, of anything from 
law enforcement training to any kind of aviation training, 
tactical flying, any of that stuff, all of that is licensed 
back through the State Department, another part of the State 
Department.
    Mr. Cooper. But you are the owner of the company, the CEO. 
If limitations like this are not in the charter and by-laws, 
isn't there a risk that should something happen to you that 
different management, in order to maximize profits, might seek 
contracts from any number of other foreign countries, like of 
Vladmir Putin offered a lot of money, why would you want to 
turn that down as a business entity?
    Mr. Prince. Because we would be violating Federal law and 
the whole place could be shut down very, very quickly.
    Mr. Cooper. But you are assuming a State Department license 
would apply.
    Mr. Prince. Oh, it does.
    Mr. Cooper. You are a regular, private company. You can----
    Mr. Prince. No, sir, I am sorry. We have to have a license 
to train----
    Mr. Cooper. I am not talking about training other people's 
private police. Say you took some of your former people who 
were former Navy SEALs, special forces, whatever, and they were 
working for hire, what prevents you in your current company 
charter or by-laws, prevents you from hiring out those people 
to foreign governments?
    Mr. Prince. U.S. Federal law does.
    Mr. Cooper. Which law?
    Mr. Prince. Defense Trade Controls Act. Any training, any 
security services, any export of any weapons, any equipment you 
would use to do that job requires a license. And on top of 
that, this idea that we have this private army in the wings is 
just not accurate. The people we employ are former U.S. 
military and law enforcement people, people who have sworn the 
oath to support and defend the Constitution against all 
enemies, foreign and domestic. They bleed red, white and blue. 
So the idea that they are going to suddenly switch after having 
served honorably for the U.S. military and go play for the 
other team, it is not likely.
    Mr. Cooper. But these are independent contractors or 
employees, they are supposed to do what they are told. And is 
your omission of this key bit of information from the charter 
or by-laws only due to the fact that it would be redundant? If 
it is assumed, why don't you go ahead and put it in the charter 
and by-laws that these people, this company will only work for 
the United States of America and its entities? Why wouldn't 
that be a nice addition to the charter and by-laws?
    Mr. Prince. That wouldn't make any sense, because we have 
NATO allies helping in Afghanistan, helping the U.S. mission 
there. And there might be opportunities for us to support, 
provide them with training or aviation support or logistics or 
construction, a lot of other things that allies need, 
especially as the United States is trying to build capacity 
around the world. There are a lot of countries that need help 
building out their police departments, giving them more 
counter-terrorism capability.
    Mr. Cooper. Twenty-six NATO allies. So you could work for 
any of them?
    Mr. Prince. Twenty-six NATO allies, but more and more, the 
United States is doing FID missions, foreign internal defense. 
We have done a number of successful programs for them working 
with the U.S. Government, where they hire us, we go in and we 
build that capacity and train them and provide the equipment, 
all of which is licensed by the State Department. When we apply 
for that license, it goes to the State Department and they farm 
it out to the relevant part of the DOD to control and authorize 
that licensing. What is the curriculum going to be, what 
tactics, even down to which individual in which country is 
going to be trained, so they can do a check on them. So that is 
all controlled by the U.S. Government already, sir.
    Mr. Cooper. On your Web site, it says that you were 
contracted to enhance the Azerbaijan Naval Sea Commandos 
Maritime Interdiction capability. Is Azerbaijan a member of 
NATO?
    Mr. Prince. No, but that was paid for by the U.S. 
Government.
    Mr. Cooper. Well, let me ask another question.
    Mr. Prince. It was part of their regional engagement 
policy. I don't make that policy, sir.
    Mr. Cooper. Wouldn't it be nice to put in your charter and 
by-laws that you only work for United States or U.S.-approved 
entities? Why would that be harmful to your company?
    Mr. Prince. We would be happy to do that. But it is 
absolutely redundant, because we can't work for someone that is 
not U.S.-approved.
    Mr. Cooper. Redundancy is a small objection to making sure 
that you are a loyal U.S. company.
    Let me ask another question. What if a large company inside 
the United States of America wanted to hire your company for 
services, say, to break a strike or for other purposes like 
that? Is that allowed under your charter and by-laws?
    Mr. Prince. That is not something we have even explored.
    Mr. Cooper. But it would be permissible under your current 
company charter? It is a new line of business possibly?
    Mr. Prince. No.
    Mr. Cooper. It might be very profitable?
    Mr. Prince. It is not something we are looking at, not part 
of our strategic plan at all, sir.
    Mr. Cooper. I know, but you are a mortal human being. Your 
company would allow it, according to its current charter and 
by-laws?
    Mr. Prince. Well, I have five boys I am raising, so one of 
them perhaps will take over some day.
    Mr. Cooper. Why not put it in the charter and by-laws? 
Thank you, Mr. Chairman. I see that my time is expired.
    Chairman Waxman. Mr. Cooper, your time is expired.
    Mr. Hodes.
    Mr. Hodes. Thank you, Mr. Chairman.
    Mr. Prince, thank you for being with us today.
    Mr. Prince. Thanks for having me sir. I am glad I could 
come here and correct some facts.
    Mr. Hodes. There has been some discussion from the other 
side of the aisle about whether or not these hearings are 
partisan. Do you agree that it is not a partisan issue to 
examine whether or not the use of private contractors, 
including Blackwater, is advantageous to American taxpayers?
    Mr. Prince. It is certainly part of the Congress to make 
sure the money is spent well that taxpayers pay.
    Mr. Hodes. And do you also agree that it is not a partisan 
issue to inquire whether failures to hold Blackwater personnel 
accountable for misconduct undermine our efforts in Iraq?
    Mr. Prince. It is a fair enough thing to look into.
    Mr. Hodes. Earlier today you were asked what action 
Blackwater took to penalize an employee who while drunk, shot 
and killed and Iraqi security guard for the Iraqi vice 
president on Christmas Eve of 2006. Do you recall those 
questions?
    Mr. Prince. Yes, sir.
    Mr. Hodes. And you responded that Blackwater fired and 
fined the employee, but you are not sure of the amount of the 
fine. Do you recall that?
    Mr. Prince. Yes, sir.
    Mr. Hodes. Blackwater, at the committee's request, provided 
the committee an internal Blackwater e-mail that appears to 
reflect a discussion of what Blackwater did to this employee. 
It is dated Monday, January 8, 2007, approximately 2 weeks 
after the incident in question. And it says, ``Regarding 
termination, he has forfeited the following compensation that 
he would have otherwise been authorized: return airfare, 
$1,630; completion bonus, $7,067; 4th of July bonus, $3,000 and 
a Christmas bonus of $3,000.'' Now, it appears to me that the 
so-called fine consisted of taking away the contractor's 
bonuses and making him pay his own way home. Is that accurate?
    Mr. Prince. And any forthcoming compensation that he had. I 
don't know when the guy's contract would have ended, but yes, 
we took away whatever else we could.
    Mr. Hodes. How long had he worked for your company?
    Mr. Prince. I have no idea.
    Mr. Hodes. Do you know what he had been paid during the 
time of his employment up to the time he shot and killed the 
Iraqi guard?
    Mr. Prince. I have no idea, sir.
    Mr. Hodes. Do you have any idea what your profit on that 
employee had been up until the time of this incident?
    Mr. Prince. Probably in keeping with the 10, 10\1/2\ 
percent indicated on our chart.
    Mr. Hodes. Would you have records that would show us what 
you had paid him up until that time and from which we could 
find out what profit you had made?
    Mr. Prince. I am sure we could dig through that and find 
it, yes, sir.
    Mr. Hodes. And would you be willing to provide that to us?
    Mr. Prince. I will get my people right on it.
    Mr. Hodes. I am asking for it now, so I would like to have 
that sent. Thank you very much.
    Chairman Waxman. Without objection, the document you used 
for your questioning will be made part of the record.
    Mr. Hodes. Thank you.
    [The information referred to follows:]

    [GRAPHIC] [TIFF OMITTED] T5219.037
    
    Mr. Hodes. Mr. Prince, you also said that Blackwater is 
extremely scrupulous in enforcing your standards. And you have 
told us that you did basically all you could to this employee 
and that the rest was up to the Department of Justice. What you 
did was you took away his bonuses, July 4th, completion bonus, 
Christmas bonus, he paid his own way home and he couldn't work 
for you any more.
    Mr. Prince. And made sure his clearance was canceled as 
well.
    Mr. Hodes. Is that your idea, Mr. Prince, of corporate 
accountability?
    Mr. Prince. Could you say the question again, sir, please?
    Mr. Hodes. Is that your idea, Mr. Prince, of corporate 
accountability?
    Mr. Prince. This employee, I can't make any apologies for 
what he did. He clearly violated the rules that he knew. We 
give each of our guys an independent contractor handbook. It is 
all the dos and don'ts of what they are expected to do and not 
do.
    Beyond firing him for breaking the rules, withholding any 
funds we can, we can't flog him, we can't incarcerate him, we 
can't do anything beyond that. That is the sole reservation of 
the U.S. Justice Department.
    Mr. Hodes. The Justice Department has not acted against 
this individual?
    Mr. Prince. I believe their investigation is ongoing.
    Mr. Hodes. They haven't done anything so far, right?
    Mr. Prince. We are not privy to that information, sir.
    Mr. Hodes. This was a potential murder, was it not?
    Mr. Prince. It was a guy that put himself in a bad 
situation.
    Mr. Hodes. Would you agree with me that this was 
potentially a murder, sir?
    Mr. Prince. Beyond watching detective shows on TV, sir, I 
am not a lawyer, so I can't determine whether it would be a 
manslaughter, a negligent homicide, I don't know. I don't know 
how to nuance that. But I do know he broke our rules, he put 
himself in a bad situation and something very tragic happened.
    Chairman Waxman. Thank you, Mr. Hodes.
    Mr. Sarbanes.
    Mr. Sarbanes. Thank you, Mr. Chairman.
    Actually, I want to followup on that line of questioning a 
little bit more. I think you said that when people violate the 
rules in a significant way, they have one decision left to 
make, which is aisle or window, right?
    Mr. Prince. Because they are fired.
    Mr. Sarbanes. They are on their way out, they have one 
decision, and that is whether to sit on the aisle or sit by the 
window.
    And then the other consequence that Mr. Hodes spoke to was 
the financial penalty that they would experience. But it just 
seems like a few thousand dollars, particularly against a 
pretty lucrative contract that they would have had. And it 
strikes me that if that is the only deterrent that is at work 
in terms of people performing at a high level, that is not 
much. In other words, you can say, well, let me get in here, 
let me make a good living here. And if I screw up, and if I 
screw up in a terrible way, as this one incident illustrates, 
then the worst that is going to happen to me is I am going to 
have to choose between an aisle seat or a window seat and maybe 
give up a bonus and my last paycheck, I mean, that is 
essentially the consequence that they face, isn't that right?
    Mr. Prince. I would also add that we endeavor to get their 
security clearance pulled, canceled. And once that is done, 
they will never work in a clearance capacity for the U.S. 
Government again, or very, very unlikely.
    Mr. Sarbanes. OK. But you would agree that it is not, it 
doesn't have the same kind of deterrent effect that it would 
have if they thought that they were going to be subject to 
prosecution, if there was a clear set of rules in place, a 
clear context in which they could be prosecuted, they could 
face something akin to a court martial, or all the other kinds 
of measures that can occur if you are in a traditional military 
setting? You would agree that provides an extra level of 
deterrence?
    Mr. Westmoreland. Mr. Chairman, I think the witness has 
already testified that he did everything that his company could 
to this person----
    Chairman Waxman. I'm sorry----
    Mr. Westmoreland [continuing]. And that he is not the 
prosecutor.
    Chairman Waxman [continuing]. You are not acting in 
accordance with the rules.
    Mr. Sarbanes. Well, I am actually, I am headed in the 
direction----
    Chairman Waxman. This is not a court case. The gentleman 
has time and I am going to restore his time. He can ask 
whatever he wants and to say whatever he wants. Some people on 
this committee have said completely outlandish things. Nothing 
we can do about it. They have their right, including you. You 
read a whole blasphemous statement about Democrats, but no one 
objected to that.
    So the gentleman is going to be recognized for an 
additional minute.
    Mr. Sarbanes. In any event, would you agree that would 
provide some extra deterrence, some extra reason for people to 
exercise their conduct in a careful way?
    Mr. Prince. We welcome that level of accountability. Most 
of our people have already served in the U.S. military or they 
served in a law enforcement capacity. They are used to that 
kind of accountability and transparency into what they are 
doing.
    Mr. Sarbanes. Well, I appreciate your saying that, because 
I----
    Mr. Prince. We are not hiding anything.
    Mr. Sarbanes. Yes. I would like to leave aside the question 
of whether you should be, Blackwater should be in this space 
that you are in. I don't know enough about the history of 
whether providing the sort of protective services that you do 
is something that isn't done by the military traditionally, or 
is. So I am going to leave that aside. I am also leaving aside 
the issue of the cost, which strikes me as exorbitant, in terms 
of what the taxpayers are paying here. You keep calling for, I 
think, an activity-based cost analysis or assessment, which I 
think we would be happy to get more information about. I have 
to believe there is a less expensive way, even to hire private 
contractors like yourself.
    And so I am really left with the accountability issue as 
the one that strikes me as front and center here. And as I have 
listened to your testimony, in particular you are saying with 
respect to this one person who was drunk and committed this 
homicide, I will characterize it that way, I think you said you 
would be happy to see that person prosecuted, something akin to 
that. And I would like to enlist you as an advocate to 
strengthen whatever the rules of engagement are, whatever the 
statutes are that are out there. Mr. Braley took us through 
these various things and you indicated that you weren't sure 
whether each of those necessarily reached as far as they could 
in providing that kind of penalty environment. I would like you 
to speak to whether it would be a good thing to make sure that 
it does.
    Mr. Prince. I believe Congressman Price from North Carolina 
has been pushing to amend some of that language. And we support 
that fully.
    Mr. Sarbanes. Thank you.
    Mr. Cooper [presiding]. The gentleman yields back his time.
    The next questioner on the list from the chairman looks 
like Mr. Welch.
    Mr. Welch. Thank you, Mr. Chairman.
    Mr. Prince, thank you for coming. I want to ask a few 
questions about the finances. My understanding is that 
Blackwater had contracts with the Federal Government in 2001 in 
the amount of $736,000.
    Mr. Prince. It could easily be, yes, sir.
    Mr. Welch. And in 2006, that number had exploded to $593 
million.
    Mr. Ryan. May I have just 1 minute, please?
    Mr. Prince. I am not sure.
    Mr. Welch. Well, you don't dispute it. This is what is in 
the report that was referred to earlier.
    Mr. Prince. Well, some of the later years on that report 
aren't quite accurate. So I am not going to discount the whole 
thing.
    Mr. Welch. OK. According to the report, 51 percent of the 
Blackwater contracts were no-bid contracts, $493 million that 
were explicitly no competition, and $30 million were awards 
after limiting or excluding qualified bidders. Is this more or 
less correct? Any reason to dispute it?
    Mr. Prince. It could be, sir. I don't know.
    Mr. Welch. All right. And since 2003, when the war began, 
Blackwater contracts have exceeded $1 billion, correct?
    Mr. Prince. I don't know the answer, sir. If you have 
specific questions on financials, we will get you the answers.
    Mr. Welch. Well, these are facts that are in the record. 
You can check them out. But I will just advise you----
    Mr. Prince. Well, there is some stuff in the committee's 
report that is not accurate. So I can't agree to the entire 
committee report.
    Mr. Welch. Let me continue going through this. One of the 
concerns that has been expressed is that a sergeant who 
provides security services in a full military setting is paid 
$50,000, $60,000. If it is an employee from Blackwater, the 
cost to the taxpayer is about $445,000. Is that more or less 
correct?
    Mr. Prince. Could I have a copy of what you are reading 
from, at least?
    Mr. Welch. Well, you have been asked about this by several 
Members already. Let me just continue.
    Let's talk a little bit about training. You were a SEAL and 
served with distinction, as I understand it, as a SEAL, 
correct?
    Mr. Prince. Yes.
    Mr. Welch. And your training as a SEAL was beneficial to 
you in the work that you are doing now as the head of this 
company?
    Mr. Prince. It helped form me in my life, absolutely.
    Mr. Welch. And you had also I think indicated that 
Blackwater hires our military veterans and law enforcement 
veterans, many of whom have recent military deployments, 
correct? It makes sense to do that?
    Mr. Prince. Yes.
    Mr. Welch. So it is fair to say that Blackwater as a 
company in recruiting personnel has benefited from the 
taxpayer-financed training of people that Blackwater hires, 
correct?
    Mr. Prince. We have people that have prior honorable 
military service and provide them an opportunity to use those 
skills again at their highest and best use.
    Mr. Welch. And it is fair to say that Blackwater contracts 
have in fact surged since 2003 when the war began, correct?
    Mr. Prince. The nature of the security environment around 
the world has changed, yes.
    Mr. Welch. And it is true, or is it true that as reported 
by the Center for Responsive Politics, you did make, as you 
have a right to make, contributions of $225,000 to the, that 
include $160,000 to the Republican National Committee and the 
National Republican Campaign Committee?
    Mr. Prince. I don't know that sitting here right now. 
Again, I can go back and dig through our contribution records 
to figure out exactly what we gave in what period.
    Mr. Welch. Well, that is the report that we have been 
given. And again, you have a right to do that. My concern is 
the nature of the contracts.
    Now, you are also aware that General Petraeus, who is in 
command of 160,000 troops, is paid by taxpayers $180,000 for 
the extraordinary responsibilities that he bears for our 
security in Iraq, correct?
    Mr. Prince. I don't know what General Petraeus gets paid.
    Mr. Welch. Well, that is what it is. Blackwater has 861 or 
so personnel, according to this report in 2006, in Iraq. Is 
that more or less right?
    Mr. Prince. It could be, yes, sir.
    Mr. Welch. All right. General Petraeus is paid $180,000 for 
supervising 160,000 troops. How much were you paid in 2006?
    Mr. Prince. I'll get back to you with that exact answer. I 
don't know.
    Mr. Welch. Well, you can give me an estimate.
    Mr. Prince. More than $1 million.
    Mr. Welch. Well, as I remember, when my colleague, Mr. 
Hunter, asked you about your contracts, you indicated 90 
percent of your Blackwater contracts came from the Federal 
Government, correct?
    Mr. Prince. Yes.
    Mr. Welch. I.e., the taxpayer. And he asked you what your 
profit margin was, and my recollection of your testimony today 
was about 10 percent?
    Mr. Prince. That is what the report that we submitted to 
the committee says, yes.
    Mr. Welch. So walk through the math with me. If Blackwater 
has had $1 billion in contracts since the war began in 2003, 
and there is a 10 percent profit margin, that is $100 million 
in profit, is it not?
    Mr. Prince. This is representative of one of the WPPS 
contracts. Some contracts we lose money on, some we lose all 
kinds of money on. Some we make money on.
    Mr. Welch. Mr.----
    Mr. Prince. Understand we have significant variables.
    Mr. Welch. You were asked a question and you gave an 
answer. And the question was very simple. It is the kind of 
question that a CEO pays real attention to: what is your profit 
margin. Your answer was, 10 percent. I am doing the math, $1 
billion, 10 percent, $100 million.
    Mr. Cooper. The gentleman's time is expired.
    Mr. Prince. Some contracts we lose money on. Losing three 
helicopters this year is certainly beyond the scope of math.
    Mr. Cooper. The next questioner is Mr. Murphy.
    Mr. Murphy. Thank you very much, Mr. Chairman.
    Let me just followup on Mr. Welch's question. Certainly, as 
a CEO of a company, you can tell us what your profit has been 
in the past several years as a company.
    Mr. Prince. I can give approximate numbers, but we are a 
private company. And I am sure it is the Congress's main 
interest in maintaining healthy competition amongst Government 
vendors. So we are a private company, and there is a key word 
there, private.
    Mr. Murphy. And so you will not disclose to us what the 
profit, what the annual profit or----
    Mr. Prince. No, that is not what I just said. We gave you 
an example of what the profitability of a WPPS contract looks 
like. But I am not going to go into our full financials.
    Mr. Murphy. And I guess, I am a new Member of Congress, but 
as a representative of my constituents that pay 90 percent of 
your salary, pay 90 percent of the salaries of your employees, 
I think it is a little difficult for us to fathom how that 
information isn't relevant to this committee or this Congress.
    Mr. Ryan. Mr. Chairman, may I have a minute with the 
witness, please?
    Mr. Cooper. Yes.
    [Witness and counsel confer.]
    Mr. Prince. I am sorry. Go ahead.
    Mr. Cooper. Mr. Murphy has 4 minutes left. The hearing will 
resume.
    Mr. Murphy. Thank you, and I want to wrap up so Mr. Lynch 
can ask some questions before we break. So let me ask the 
question again after your consultation with your colleague. It 
is your position that you don't believe that it is in the best 
interests of your company or this committee to have discussions 
with the U.S. Congress about the profit that you make off of 
U.S. Government contracts?
    Mr. Prince. We can have that discussion, but I am not fully 
prepared, sitting here today, to answer each and every one of 
your questions down to that level of detail.
    Mr. Murphy. I am not asking for a level of detail. I am 
asking for an approximation of your annual profit, based on the 
fact that you make 90 percent of your money from U.S. 
taxpayers.
    Mr. Prince. Again, we will come back to you. If you have 
written questions, we will give you written answers after the 
hearing is done.
    Mr. Murphy. Because you testified today that you are not 
sure of that number?
    Mr. Prince. I am not sure of that number. How can I 
calculate in depreciation on assets when our helicopters parked 
around near the embassy in Baghdad get hit by rockets all the 
time, that they get fragged, that three of them have been shot 
down? There is a whole host of variability to our 
profitability, depending on when an asset is expended or 
destroyed.
    Mr. Murphy. Mr. Prince, I am not a businessman. But I find 
it pretty hard to believe that the CEO of a major company in 
this country, whether it be privately financed or publicly 
financed, can't give an approximation of your annual profit on 
a year to year basis.
    Mr. Prince. I think when the committee meets with any of my 
finance folks, they will tell you I am not a financially driven 
guy.
    Mr. Murphy. Let me just ask one other quick question before 
I yield back. You made a comment before that you had a handful 
of third country nationals working for you. And not to 
disparage the need to have third country nationals working for 
the company, but I just want to get a better handle on what a 
handful has. The memo that we have before us, and I understand 
you draw issue with some of those numbers, so I want to get it 
straight, suggests that of the 861 Blackwater personnel in Iraq 
today, 243 of them are third country nationals. Does that sound 
right?
    Mr. Prince. Your best bet is drawing off of page 1 of what 
we submitted to the committee, where it says, ``UCTCN or HCN.''
    Mr. Murphy. What percentage of those serving in Iraq under 
Blackwater are third country nationals? By your numbers. 
Because by our numbers, it is just less than one third, which 
doesn't sound like a handful. That sounds like one third of all 
your personnel are not U.S. citizens.
    Mr. Prince. Well, I am looking at one here. It shows 576 
United States, 129 TCN and 16 locals.
    Mr. Murphy. So again----
    Mr. Prince. So divide 129 by 576 and you get your 
percentage.
    Mr. Murphy. OK. Sounds like a little bit more than a 
handful, but I appreciate your testimony and I yield back.
    Mr. Cooper. The gentleman yields back his time. The next 
questioner is Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman. And I want to thank the 
witness for his perseverance here today and for helping the 
committee with its work.
    We have heard a lot today about the loss of accountability 
when an inherent Government function, in this case duties that 
are incidental to the prosecution of war, are subcontracted out 
to private entities. And as Mr. Shays and Mr. Platts have 
mentioned earlier, my Republican colleagues, I also have had an 
opportunity to view first-hand on more than a few occasions the 
work of Blackwater employees. I would guess that in the dozen 
or so occasions when I have traveled with my colleagues to Iraq 
and Afghanistan, your area of operations, principally, I would 
bet at least half of those times, or at least a portion of time 
there, we have been protected by Blackwater employees.
    And based on my own personal experience, I have to say, 
from personally what I have seen, and what I have experienced, 
those people who were protecting us who were Blackwater 
employees did a very, very good job. I have to give you credit 
for that. They are brave employees, brave Americans in a very 
hostile environment.
    I find myself right now with this committee having a 
difficult time criticizing those employees, because I am in 
their debt. That is a very hostile environment and they do a 
good job on our behalf.
    Which brings me to my problem. If I have a problem 
criticizing Blackwater and criticizing the employees and some 
of the times that you have fouled up, what about the State 
Department? The State Department employees, you protect them 
every single day. You protect their physical well-being, you 
transport them, you escort them. And I am sure there is a heavy 
debt of gratitude on the part of the State Department for your 
service.
    And yet they are the very same people who are in our system 
responsible for holding you accountable in every respect with 
your contract and the conduct of your employees. And I know 
from my own experience, in the time there, that is an 
impossible conflict for them to resolve.
    I have here in my possession, I am going to ask that they 
be entered into the record in a minute, some internal e-mails 
from the State Department. These documents that the committee 
has received raise questions again about the State Department's 
oversight of Blackwater's activities under the contract. Even 
in the cases involving the death of Iraqis, it appears that the 
State Department's primary response was to ask Blackwater to 
make monetary payments to--this is from the e-mails--``to put 
these matters behind us,'' that is, the deaths of Iraqi 
civilians, ``rather than to insist upon accountability or to 
investigate Blackwater personnel for potential criminal 
liability.'' The most serious consequence faced by a Blackwater 
personnel for misconduct appears to be termination of their 
employment.
    Even though Secretary of State John Negroponte asserted 
that every incidence in which Blackwater fires its weapons is 
``reviewed by management officials to ensure the procedures 
were followed,'' the documents that we have before the 
committee don't indicate that. I do have some e-mails, though. 
And this one is dated--I will ask these to be entered into the 
record, Mr. Chairman.
    Mr. Cooper. Without objection, so ordered.
    [The information referred to follows:]

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    Mr. Lynch. This one is dated July 1, 2005 from RSO Al-
Hillah. This is a situation where Blackwater personnel fired 
and killed. It says, ``This morning, I met with the brothers of 
an adult Iraqi male who was killed by a gunshot to the chest at 
the time and location where the PSD, in this case, Blackwater 
team, fired shots in Al-Hillah on Saturday, June 25th of 
2005.'' The gentleman in question was killed. And then it says, 
``Gentlemen, allow me to second the comments on the need for 
Blackwater to provide funds ASAP. For all the reasons 
enunciated in the past, we are better off getting this case and 
any similar cases behind us quickly. Again, the Department of 
State needs to promptly approve and fund an expedited means of 
handing these situations. Thanks.'' And it mentions $5,000 for 
the family there.
    Again, another e-mail dated December 26, 2006. And it says, 
this is again a situation where Blackwater personnel killed an 
individual civilian innocently, standing near an area where the 
convoy was traveling, it criticizes the way the charge 
d'affaires was talking about ``some crazy sums. Originally she 
mentioned $250,000 and later, $100,000. Of course, I think that 
a sum this high will set a terrible precedent. This could cause 
incidents with people trying to get killed by our guys to 
financially guarantee their families' future.''
    Mr. Cooper. The gentleman's time has expired.
    Mr. Lynch. I am going to wrap up here. And again, I am 
going to ask these to be placed in the record.
    Mr. Cooper. I am afraid----
    Mr. Lynch. The question is, based on that arrangement----
    Mr. Cooper [continuing]. The gentleman's time has expired.
    Mr. Lynch [continuing]. Does it not make sense that an 
independent inspector general, instead of the State Department 
inspector general, review these? I think it would help the 
credibility of the company to have an independent inspector 
general reviewing these cases instead of having the State 
Department basically make you pay up $5,000 every time----
    Mr. Burton. Mr. Chairman, I have high regard for the 
gentleman from Massachusetts but has gone 2 or 3 minutes over 
his time.
    Mr. Cooper. The gentleman's time has expired.
    I need to ask the witness, we have two questioners 
remaining. If you would like to take a break now, that would be 
fine. Or there are about 10 minutes of questions remaining. It 
is your call.
    Mr. Prince. If there are two questions left, I will take 
them and let's be done.
    Mr. Lynch. Mr. Chairman, do you want to give the witness a 
chance to answer that last question?
    Mr. Cooper. Well, the gentleman considerably exceeded his 
time limit. We had actually given you considerably more than 
the 5-minutes due to a mistake in the clock. So I think we need 
to keep this in regular order.
    The gentlelady is recognized, Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman.
    Mr. Prince, I want to be clear that however you serve your 
country, whether as a member of the armed forces or now as a 
contractor in time of war, the American people are indebted to 
you. We understand that the risk is the same.
    I want to avoid confusing the higher purpose of the 
volunteer army with what some nations, how some nations 
candidly operate. However you define mercenary armies, some 
nations have long used mercenary soldiers to deal in foreign 
countries with unpleasant tasks. The more dependent we become 
on contractors, the more we risk falling right off the cliff 
into a mercenary army that is nothing that you would have 
responsibility for.
    But it must be said, people fight wars that, countries 
fight wars where the people support them. And the people 
support them by being willing to provide the troops to fight 
those wars. That is a risk we have.
    I want to ask you a question or two about your contract 
with the State Department. Under this contract, you employ 
security personnel as independent contractors rather than as 
your own direct employees, isn't that right?
    Mr. Prince. Yes, ma'am.
    Ms. Norton. You don't have to provide employee benefits, 
such as health or disability insurance, vacation or retirement 
and the like as a result?
    Mr. Prince. Each of the individuals that deploys for us has 
a very robust insurance package that is with them every day 
they are working for us.
    Ms. Norton. You also can avoid making Social Security 
contributions or withholding taxes, is that not true?
    Mr. Prince. I am not sure on that.
    Ms. Norton. I believe that is true, sir.
    By contrast, DynCorp and Triple Canopy and other security 
firms that support the State Department treat their personnel 
as employees entitled to these benefits. Why do you treat your 
personnel differently from these two companies?
    Mr. Prince. I don't know the differences in how they 
compensate their people. I will tell you we have the highest 
retention in the industry. We have guys that sign up for us at 
a very, very high rate. So we don't get losses. Men and women 
seem to feel very well treated by us.
    Ms. Norton. Well, of course one of the differences is in 
the employee benefit package I have just named. Does Blackwater 
hire personnel as independent contractors in order to avoid 
legal responsibility for the company?
    Mr. Prince. No, it is actually really what the men that 
deploy for us prefer. We find it is a model that works.
    Ms. Norton. Well, Mr. Chairman, it may in fact----
    Mr. Prince. They like the flexibility of signing on for a 
certain period of time and being able to schedule their off 
time around an anniversary, a child's birthday, being home for 
Christmas, etc. So it gives them flexibility as to when they 
are going to deploy, when they are going to go to work. Just 
like----
    Ms. Norton. Does it really give them more flexibility than 
the other two companies who have them as employees? Those 
people don't have the same kind of flexibility? What kind of 
flexibility can you have if you need your employees at a time 
of engagement, for example?
    Mr. Prince. I don't know, ma'am.
    Ms. Norton. Well, I think the fact is, when you need them, 
you need them. You don't say, you can go home for Christmas, 
sir.
    Mr. Chairman, I think we should, I am very disturbed, very 
disturbed by this confusion, which amounts to legal confusion 
about the responsibilities of contractors. I will concede the 
notion that employees can choose whether they want to work for 
a company that in fact requires them to save for their own 
benefits or not. My confusion----
    Mr. Prince. Ma'am, let me just add, we have a program that 
allows them, it is like an individual 401(k) plan. So they are 
able to, while working for us, able to have a 401(k)-like 
program.
    Ms. Norton. I understand that. Probably the other 
employees, excuse me, companies, that I mentioned probably also 
have 401(k) programs. And again, my major concern is not what 
private employees decide to do.
    Mr. Chairman, my concern is that these Blackwater 
contractors, so far as I can see, operate under the direct 
command or are supervised by Prince, Mr. Prince and his 
company. They are, they operate under the law of the United 
States in some fashion. It is simply unclear, after a full 
day's hearings, whether these employees, whether this company 
is subject to law in the way that the American people expect 
anybody in a field of combat to in fact be subject to the law 
of some place. I believe we need an investigation, Mr. 
Chairman, by the GAO to clarify what law if any such companies 
and their employees, whether contract employees or not, should 
answer to.
    Mr. Prince. If I could just answer, ma'am, I think the FBI 
investigation regarding the September 16th incident proves that 
there is a measure that accountability is in place, that 
process is working. And as for us----
    Chairman Waxman [presiding]. That remains to be seen.
    Mr. Prince [continuing]. Working for us overseas, we 
provide the trained person with the right equipment, the right 
training, the logistics to get them in and out of theater, when 
they get to Iraq or to Afghanistan, they work for the State 
Department. We work under that, the RSO's operational control, 
they are not under our operational control.
    Chairman Waxman. Thank you, Ms. Norton.
    Ms. Schakowsky.
    Ms. Schakowsky. Thank you, Mr. Chairman. I really 
appreciate your allowing me to participate in this hearing, and 
I thank the committee for their indulgence.
    I wanted to let everyone know that I am shortly going to be 
introducing legislation to carefully phaseout the use of 
private security contractors, for-profit companies that carry 
out sensitive missions that have repeatedly and dramatically 
affected our mission. I want to recognize the mother of Jerry 
Zovko, who is here today. Jerry was an Army Ranger before 
becoming a Blackwater employee. He died in Fallujah in an 
infamous mission, fraught with mistakes on the part of his 
Blackwater supervisors. That was over 3\1/2\ years ago, and led 
to the Battle of Fallujah during which many of our U.S. forces 
lost their lives.
    As Mr. Davis, the ranking member, said, we need a 
conversation in this Congress about that, and I am hoping that 
my legislation will provide that.
    Mr. Prince, in your testimony you stated Blackwater 
personnel supporting our country's overseas missions are all 
military and law enforcement veterans. You did not state that 
they were all Americans, all American military and law 
enforcement veterans. Is it true that Blackwater hires foreign 
security personnel?
    Mr. Prince. One of your colleagues previously asked that 
question. Yes. Some of the camp guards, gate guards, static 
locations are indeed third country national soldiers.
    Ms. Schakowsky. And in 2004, Gary Jackson, the President of 
Blackwater USA admitted that your company had hired former 
commandoes from Chile to work in Iraq, many of which served 
under General Augusto Pinochet, the former dictator of Chile. 
As you must know, his forces perpetrated widespread human 
rights abuses, including torture and murder of over 3,000 
people. Did Blackwater or any of its affiliated companies at 
that time, at any time, use any Chilean contractors with ties 
to Pinochet?
    Mr. Prince. Well, I can say Mr. Jackson did not admit to 
hiring some commandoes. Yes, we did hire some Chileans. Any 
foreign national soldier that works for us now, for the State 
Department, has to have a high public trust clearance. It is 
basically a security clearance for a third country national 
soldier where you take their name, it goes back through the 
U.S. embassy in that country and their name is run, kind of 
like a national agency check here, which is what someone does 
for a security clearance. That way we can ensure that they have 
no criminal record, ma'am.
    Ms. Schakowsky. I understand that one of your business 
associates, Jose Miguel Passaro, was indicted in Chile for his 
role in supplying commandoes to serve Blackwater. Is that 
correct?
    Mr. Prince. He was not an associate. He might have been a 
vendor to us.
    Ms. Schakowsky. In your written statement today, you state 
that Blackwater mandates that its security professionals have a 
security clearance of at least the secret level. Did any 
Chilean contractors who worked for Blackwater ever get a 
security clearance?
    Mr. Prince. I believe what I said is for the WPPS contract, 
the Americans working on that are doing the PSD mission are 
required to have a secret clearance.
    Ms. Schakowsky. Did any Chilean contractors get a security 
clearance?
    Mr. Prince. I don't know, ma'am.
    Ms. Schakowsky. Because if yes, they were provided with 
classified information, if no, then it is not true that all 
Blackwater personnel in Iraq have security clearances.
    On your Web site, I don't know if it is still there, there 
was a recent one, there was a jobs fair advertised in 
Bucharest. And we have heard allegations that Blackwater 
recruited Serbians and former Yugoslavs with combat experience 
from the Balkan wars, some linked to atrocities committed in 
Croatia and Kosovo and in Bosnia and associates of Milosevic. I 
am wondering if you could talk to me about that for a minute.
    Mr. Prince. To my knowledge, we have never employed anyone 
out of those countries.
    Ms. Schakowsky. Would you know?
    Mr. Prince. There are some Romanians that were on a 
contract that we took over from a previous vendor, competitor. 
But we phased them out and we use guys out of Latin America 
now.
    Ms. Schakowsky. Would you know if people have been 
associated with Pinochet or Milosevic before you hired them? Is 
this part of your inquiry?
    Mr. Prince. Again, for the State Department, for the static 
guards that were utilized, third country national soldiers, a 
high public trust clearance is required----
    Ms. Schakowsky. I heard you say that.
    Mr. Prince [continuing]. Where their name, their 
background, their address, their date of birth, whatever 
information is available on them, is run back through the 
equivalent country that they are from, a national agency check, 
to ensure that they don't have any criminal record, human 
rights abuses, or any other bad marks against their name.
    Ms. Schakowsky. OK, well, we should check into that 
process. But let me ask a question. You said that you as a 
company would not work overseas in any way that is not 
associated, that the United States does not approve. However, 
Chile has made a decision not to participate as part of a 
coalition member in this war. They won't send any troops. Do 
you have any qualms about hiring people out of Chile to 
participate actively in this war?
    Mr. Prince. We don't hire anybody from Chile right now, to 
my knowledge.
    Ms. Schakowsky. Have you ever?
    Mr. Prince. I previously just said that we had, previously. 
Yes.
    Ms. Schakowsky. And so the answer is you don't have any 
qualms about doing that, based on the fact that Chile has made 
a public policy decision not to participate?
    Mr. Prince. I believe the persons of that country have a 
free right to contract. I will give you an example. The 
Philippines doesn't allow their personnel to go to Iraq. So we 
don't hire their people to go to Iraq.
    Ms. Schakowsky. OK, but you do hire Chileans. Thank you. I 
appreciate it.
    Chairman Waxman. Thank you very much, Mr. Schakowsky.
    Mr. Prince, let me thank you very much. You have been very 
patient. You have been here a long time.
    I do want to acknowledge the presence today of Rhonda 
Teague and Kristal Batalona, the daughter and wife of Wesley 
Batalona. Ms. Schakowsky acknowledged the mother of Jerry 
Zovko, who is in the audience today. These are people from 
Fallujah. I am sorry we didn't get a chance to ask you more 
questions about Fallujah. I might, with your permission, send 
you some questions and ask you to respond for the record.
    Because that was an example, we had a hearing on that 
issue, and that was an example where one of the ways 
corporations could make money is not to have fully trained 
personnel. I don't know if that was the case or not, but it 
certainly appeared to us that the people were not given 
adequate protection and training for that Fallujah mission and 
it had an unprecedented consequence in the battle of Fallujah 
that followed.
    In closing, let me just say that we really have a 
remarkably unprecedented experiment going on in the United 
States today by having private military contractors. It raises 
a lot of issues. It raises issues about costs, it raises issues 
about whether it interferes with our military objectives. And I 
think this hearing and with you and the next witnesses will 
help us continue to sort through what that means for our 
Nation. We have never had anything of this magnitude before 
where we have turned so much of our military activity over to 
private military that used to be, for the most part, provided 
by the U.S. military itself.
    I want to thank you. If Mr. Davis has any last comments, I 
will recognize him.
    Mr. Davis of Virginia. Mr. Prince, thank you very much. I 
think you have--is there anything else you would like to add 
after all this? Would you like to add anything you didn't get 
to say?
    Mr. Prince. Thanks for having me. I would invite some of 
the leadership of the committee, if they would like, to come 
and visit our operations. We would be happy to show you what we 
do.
    Mr. Davis of Virginia. Fine. Let me just say, I think we do 
need a dialog, and our next panel will tell us the State 
Department's rationale and the large number of contractors and 
why they are utilizing that versus active duty. I think that 
will give more clarification to Members.
    Thank you very much.
    Mr. Prince. Thank you, sir.
    Chairman Waxman. We will proceed to our next panel, but we 
want to give Mr. Prince and his group an opportunity to leave.
    The committee will now continue on and proceed to our 
second panel. We have with us Ambassador David M. Satterfield, 
Special Advisor and Coordinator for Iraq, U.S. Department of 
State; Ambassador Richard J. Griffin, Assistant Secretary, 
Bureau of Diplomatic Security and Director of the Office of 
Foreign Missions, U.S. State Department; and Mr. William H. 
Moser, Deputy Assistant Secretary for Logistics Management, 
U.S. Department of State.
    I gather you are not taking your seats because you know you 
are taking the oath. But it is the practice of this committee 
to swear in all witnesses.
    [Witnesses sworn.]
    Chairman Waxman. The record will indicate that each of the 
witnesses answered in the affirmative.
    Your prepared statements will be in the record in full. We 
would like to recognize each of you for an oral statement for 5 
minutes, and then after that we will have questions that we 
will want to pursue with you.
    Ambassador Satterfield, if we might start with you.

 STATEMENTS OF AMBASSADOR DAVID M. SATTERFIELD, SENIOR ADVISOR 
 TO THE SECRETARY AND COORDINATOR FOR IRAQ, U.S. DEPARTMENT OF 
 STATE; AMBASSADOR RICHARD J. GRIFFIN, ASSISTANT SECRETARY OF 
STATE, BUREAU OF DIPLOMATIC SECURITY, U.S. DEPARTMENT OF STATE; 
AND WILLIAM H. MOSER, DEPUTY ASSISTANT SECRETARY FOR LOGISTICS 
              MANAGEMENT, U.S. DEPARTMENT OF STATE

          STATEMENT OF AMBASSADOR DAVID M. SATTERFIELD

    Ambassador Satterfield. Thank you, Chairman Waxman, Ranking 
Member Davis, members of the committee. Thank you for inviting 
me here today and for the opportunity to speak to the vital 
security that private security firms provide to our State 
Department personnel.
    In Iraq, as in Jerusalem, Gaza and the West Bank, I have 
been protected by Blackwater and other private security 
details. As you know, Mr. Chairman, I was the Deputy Chief of 
Mission in Baghdad from the spring of 2005 until late summer of 
2006. I witnessed first-hand what Ambassador Crocker has 
rightly described as the capability and courage of our 
protective details, as have many Members of Congress, including 
some, Mr. Chairman, on this committee.
    The contracting of security personnel for State Department 
officials is neither new nor unique to Iraq. For example, we 
have employed private protective security details, PSDs, in 
Haiti, Afghanistan, Bosnia, as well as Jerusalem, Gaza and the 
West Bank. We do not bunker down in dangerous environments. But 
we do need, and we do take prudent precautions to protect the 
safety and welfare of our personnel.
    Iraq is a dangerous place. Yet I think we can all agree 
that our diplomats and civilian personnel need to be able to 
operate alongside our military colleagues and to have the 
broadest possible freedom of movement throughout that country. 
We must be able to interact with our Iraqi counterparts and 
with the Iraqi population. Without protective security details, 
we would not be able to have the interaction with Iraqi 
government officials, institutions and other Iraqi citizens 
critical to our mission there.
    The State Department uses multiple security specialists in 
Iraq. Furthermore, it should be noted that the Department of 
State is not the sole client of these security companies. The 
U.S. military, Iraqi government officials, private Iraqi 
citizens, independent institutions and non-governmental 
organizations as well as journalists all use private security 
firms, of which Blackwater is one of many. A black Suburban 
does not equal Blackwater.
    Insofar as the State Department's security contractors in 
Iraq are concerned, we demand high standards and 
professionalism. Those standards include relevant prior 
experience, strict vetting, specified pre-deployment training 
and in-country supervision and oversight. As you know, many of 
the individuals serving are veterans who have performed 
honorably in America's armed forces.
    All Embassy Baghdad security contracts fall under the 
oversight of the regional security office. Those contracts 
require high standards, covering areas ranging from conduct and 
demeanor to use of force to mission operational guidelines. 
Those standards are written into the companies' contracts. 
These policies, these standards only allow for the use of force 
when absolutely necessary to address imminent and grave danger 
against those under their protection, themselves and others.
    In those rare instances when security contractors must use 
force, management officials at the embassy conduct a thorough 
review in each and every instance to ensure that proper 
procedures were in fact followed. In addition, we are in 
constant and regular contact with our Iraqi counterparts about 
such instances. And the incident of September 16th was no 
exception.
    I want to underscore, Mr. Chairman, the seriousness with 
which Secretary Rice and the Department of State view both the 
events of September 16th and the overall operations of private 
security contractors working for the Department of State in 
Iraq. At the direction of the Secretary, we are conducting 
three different reviews. As I stated before, the embassy 
conducts regular reviews of every security incident. We are 
conducting a thorough investigation into and review of the 
facts surrounding the events of September 16th.
    At the request of the Department of State, the Federal 
Bureau of Investigation is sending a team to Iraq to assist on 
the ongoing investigation into that incident allegedly 
involving Blackwater employees. The Secretary of State has made 
clear that she wishes to have a probing, comprehensive, 
unvarnished examination of the overall issue of security 
contractors working for her Department in Iraq. And so we are 
working on two different fronts, Mr. Chairman. Following direct 
communication between Secretary Rice and Prime Minister Malaki, 
our embassy in Baghdad and the Prime Minister's office have 
established a joint government of Iraq and U.S. Government 
commission to examine issues of security and safety related to 
U.S. Government-affiliated protective security detail 
operations.
    This will also include review of the effect of CPA Order 17 
on such operations. This joint commission will make policy 
recommendations for resolving any problems it may uncover. 
Finally, the Secretary has directed Ambassador Patrick Kennedy, 
a very senior and extremely capable Department management 
officer, to carry out a full and complete review of security 
practices for our diplomats in Iraq. His review will address 
the question of how we are providing security to our employees. 
It will take into account all aspects of this protection, 
including the rules of engagement and under what jurisdiction 
they should be covered. Ambassador Kennedy is now in Baghdad 
with some of his team.
    In addition to Ambassador Kennedy, his team will ultimately 
include General George Joulwan, Ambassador Stapleton Roy and 
Ambassador Eric Boswell, outsiders who will bring with them 
clear eyes and an independent view of what needs to be done. 
This is an extraordinarily well-qualified team and it has 
experience directly relevant to this review.
    We are fully committed to working with both our security 
specialists and the Iraqi government to ensure the safety of 
U.S. Government personnel. Both are and will be essential to 
our success.
    With that, Mr. Chairman, Assistant Secretary Griffin, 
Deputy Assistant Secretary Moser and I are happy to take your 
questions.
    [The prepared statement of Ambassador Satterfield follows:]

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    Chairman Waxman. Neither of you two have opening 
statements? You are just here to answer questions, is that 
correct? Thank you.
    Mr. Ambassador, when Mr. Prince was testifying here earlier 
today, we asked him about that very disturbing incident on 
Christmas Eve, 2006. The basic facts of the incident are that a 
Blackwater contractor shot and killed an Iraqi security guard 
working for the Iraqi vice president. According to the 
documents the committee received, Blackwater transported the 
shooter out of Iraq within 36 hours of the killing, and it did 
so with the approval of the Baghdad embassy's regional security 
officer.
    Why did the State Department facilitate the departure of 
the Blackwater contractor suspected of murdering one of the 
Iraqi vice president's security guards?
    Ambassador Griffin. As you know, the incident that you 
described is presently in the Department of Justice for a 
prosecutive review. I think that to pre-judge exactly what 
occurred that evening as far as the facts of the case go would 
be inappropriate for me at this time.
    [The prepared statement of Ambassador Griffin follows:]

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    Chairman Waxman. I am not asking about the facts of the 
case. I am asking you about the State Department's response. 
Why did the State Department respond in this way?
    Ambassador Griffin. At the time of the incident, after a 
number of interviews were conducted, there was no reason for 
him to stay in Baghdad.
    Chairman Waxman. Well, the committee had a briefing from 
Ambassador Kennedy last week, and he stated that the subjects 
of investigation should be kept in-country, because the 
investigators may need access to them. In fact, when you think 
about this, this is an obvious point. Why didn't you follow the 
policy recommended by Ambassador Kennedy?
    Ambassador Griffin. You can't describe how a case should be 
handled universally. Each case has to be judged on its own 
merits. And Ambassador Kennedy may have had some other notion 
about the proper way to proceed.
    Chairman Waxman. Well, this is not an ordinary case. This 
is a pretty extreme one. You have a private military contractor 
within the Green Zone, which is an internationally protected 
area, shoot and kill an Iraqi security guard. What we saw was 
that within 36 hours, he was ushered out of the country and the 
State Department helped that happen. In fact, the documents 
show that the primary response of the State Department was to 
ask Blackwater to make a payment to the family in the hope that 
this would make the problem go away. There is even a discussion 
among State Department officials about how large the payment 
should be. One official suggested $250,000, but this was 
reduced instead to just $15,000.
    Yesterday during the State Department's daily press 
briefing, the agency's spokesman said, ``We are scrupulous in 
terms of oversight and scrutiny not only of Blackwater, but all 
of our contractors. I would strongly dispute anyone's assertion 
that the State Department does not exercise good and strong 
oversight in our efforts to manage these contractors.'' That 
was the statement made yesterday.
    When I look at the State Department response to the 
Christmas Eve shooting, I don't see scrupulous oversight and 
scrutiny. I see an effort to sweep the whole incident under the 
rug. How would you respond to that?
    Ambassador Griffin. I would say that the area of what laws 
are available for prosecution is very murky. I believe it is 
something that the executive and legislative branches have been 
working on to try and clarify. And I think that lack of clarity 
is part of the problem.
    Chairman Waxman. So you weren't sure at the State 
Department whether this was a possible criminal violation, when 
a person hired by a contractor of the United States shoots and 
kills an Iraqi in the Green Zone? There is a question of 
whether this is criminal? Is that why the State Department 
helped get him out of the country and gave Blackwater a 
suggestion of how much to pay to get rid of the whole incident?
    Ambassador Griffin. That is your judgment that is what 
happened. I was not there. I think that is why the Department 
of Justice is examining this case. And they are examining the 
potential ways that it might be prosecuted.
    Chairman Waxman. Well, it just seems to me common sense to 
say that if there is an examination going on, and the man is 
not there any longer, you can't pursue some of those issues. 
And the ones that pursue the investigation are the ones right 
there on the ground. You don't get the guy out of the country 
as fast as possible and then say we did what we thought was a 
responsible thing to do. Even the deputy director of the trade 
association representing private security contractors sees a 
problem. He told the Washington Post, ``Blackwater has a client 
who will support them no matter what they do.''
    As I view the record, it shows that the State Department is 
acting as an enabler to Blackwater tactics. The company acts as 
if they are untouchable for a simple reason: the State 
Department demands no accountability. They are not accountable 
to the military. They are not accountable to the Iraqi criminal 
system. And the State Department, who is the contractor, seems 
to have acted like they are helping Blackwater get rid of the 
guy so that the whole incident can go away.
    Ambassador Griffin. The incident was referred to the 
Department of Justice of our country for their prosecutive 
decision and followup. They are the prosecutors. The State 
Department isn't the prosecutive department for the U.S. 
Government.
    Chairman Waxman. Have the State Department people been 
asked any questions by the Department of Justice about this 
issue?
    Ambassador Griffin. I am sure there has been conversation, 
but I can't----
    Chairman Waxman. You should, but you don't know?
    Ambassador Griffin. No, I can't name when and where.
    Chairman Waxman. The fact of the matter is, it seems 
strange that if there is this kind of situation, there hasn't 
been any action by the Justice Department to date. This is 
almost, well, not quite a year, but this is the fall, nine, 10 
months later. I wonder what really is going on.
    Mr. Davis.
    Mr. Davis of Virginia. Thank you. My good friend here said 
that this was unprecedented in terms of the amount of security 
going on over there, private security. I just wonder, Mr. 
Satterfield, my understanding is the State Department has been 
contracting for security services at diplomatic posts 
throughout the world for decades. Is this unprecedented?
    Ambassador Satterfield. The scale of the operation in Iraq 
is unprecedented. But the fact of contracting, both through 
direct hire, and by use of private security contractors, such 
as Blackwater, DynCorp, Triple Canopy and others, is certainly 
not unprecedented. It is practiced at a number of posts in a 
number of countries around the world.
    Mr. Davis of Virginia. If you could go back 4 years, would 
you have taken this in-house or would you stick to what we are 
doing at this point in terms of contracting out?
    Ambassador Griffin. At the time that the decision was made 
to use contractors, it was made because there was an immediate 
need to provide security for U.S. Government employees working 
in a hostile environment, trying to assist the Iraqi people in 
standing up various civilian agencies. Everyone knows that the 
military was doing their function there. We were trying to 
stand up the civilian side of the government, which was pretty 
much in shambles at that time.
    In order to fulfill that security mission, in order to be 
able to immediately deploy people in the near-term, contractors 
were used. The fact is, if we were to attempt to recruit and 
train diplomatic security agents for that mission, it would 
take anywhere from 18 months to 2 years to identify them, do 
all the backgrounds, do the clearance work, 7 months of basic 
training, follow-on training for high threat parts of the 
world.
    Mr. Davis of Virginia. Also, when the mission winds down, 
what do you do with them at that point, too?
    Ambassador Griffin. When the mission ends, you may have 
more people than you have work for.
    There are also specialists that are employed by the 
contractors, people who have training in, helicopter pilots, 
people who are mechanics for armored vehicles, people who are 
armorers, people who are medical technicians, etc., that are 
all part of the requirement that you have when you are working 
in a combat zone. So for a multitude of reasons, it made good 
sense to deploy people with the expertise that is needed but 
for what was expected to be a short to medium term duration.
    Mr. Davis of Virginia. But it has been a longer term 
duration, hasn't it?
    Ambassador Griffin. It has been. But the fact is, we have 
used contractors going back to 1994 for this protective 
security mission, when they were first used in Haiti. So those 
previous contracts, some have come and gone, so it does 
demonstrate that this is not a career-type assignment for 
somebody.
    Mr. Davis of Virginia. Is it cheaper to go outside, or 
would it be cheaper to take them inside and basically start a 
bureaucracy within the Government to handle these kinds of 
things?
    Ambassador Griffin. Mr. Moser can speak to all the contract 
costs, but when you are looking at the cost of whether it is a 
contractor or a person in the military or a person in the State 
Department, you have to look at what we call the fully loaded 
costs, which includes all of the expenses, which you are all 
very well aware of from your dealing with the budget for all 
these years. The fact is that the costs for a State Department 
special agent to be deployed in a high threat area approaches 
$500,000.
    Mr. Davis of Virginia. Mr. Moser, do you want to comment?
    Mr. Moser. Well, I will add one thing to that. We actually 
do cost analyses in the acquisition activity. And I am very 
proud of the cost analysis they do, because particularly, if we 
have a situation, our first contract to Blackwater was awarded 
in 2004. We did not have competition, so we had to actually do 
extensive analysis at that time to make sure that the costs 
were reasonable.
    But to add to what Ambassador Griffin has said, I used to 
work in an office called Global Support Services and 
Innovation. We spent many, many months discussing how much it 
actually costs to position an American overseas, an American 
diplomat like me, or a DS agent. And their prices range from 
around $400,000 for a regular mission around the world to 
around $1 million for an American diplomat positioned in Iraq.
    So when we talk about using contract employees, I think 
that we have to be very careful to consider what the fully 
loaded costs would be of direct hires, and as you have already 
pointed out very wisely, Congressman Davis, you do have to 
think about, do you really need these people for a long term.
    Mr. Davis of Virginia. So basically, when we start 
comparing costs, I think earlier someone used the analogy of a 
sergeant being $60,000 to $80,000 a year, and a contract 
employee being $400,000 a year, those aren't fully loaded costs 
and it is not apples to apples. Would that be your opinion?
    Mr. Moser. Well, I look at it this way. We have lots of 
employees in Iraq and the missions around the world. Well, I 
actually, also one of my duties is to run the transportation 
part of the State Department. And that is where we move 
people's household effects around the world. That activity 
alone is around $220 million a year. That does not appear in 
that employee's salary cost, that is something that we do for 
each employee.
    Mr. Davis of Virginia. So if you divided the number of 
employees by the $220 million, you would get a high number?
    Mr. Moser. That is right, and you can keep on adding these 
costs. And as I said, in my previous assignment, we looked at 
this. How do you amortize the building costs for over the 
years, like what the rental price is?
    Mr. Davis of Virginia. One of the things that Mr. Waxman 
and myself and the committee ultimately want to understand is 
really what are the costs. I don't know if we can get GAO to 
look at that, or how we compare apples to apples in an 
objective way. Because everybody has their own numbers on this. 
And that is something that would be helpful to you, I would 
think, as well.
    Mr. Moser. It is very helpful to me. And I will say that 
over the years, I have actually discussed this topic with a 
number of employees at GAO. Because it is not an old topic, by 
any means.
    Chairman Waxman. Thank you, Mr. Davis.
    Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman.
    Mr. Moser, can you tell us whether or not the number of 
diplomatic security service agents has been reduced at the 
State Department since 2001?
    Mr. Moser. I think Ambassador Griffin is going to need to 
answer that question.
    Mr. Tierney. Ambassador, can you answer that question?
    Ambassador Griffin. Current staffing is about 1,450, and it 
does reflect an increase over the past 4 to 5 years. I have 
been on board 2 years, and I know one of those years we brought 
on 175 additional agents, and there were some brought on the 
year before. But I could certainly give you the specifics for 
the record if you would like to have that.
    Mr. Tierney. Were any of those additional agents brought in 
with respect to Iraq, or were they other places around the 
world?
    Ambassador Griffin. They are for various places around the 
world. We have at the present time approximately 36 of our 
agents in Iraq.
    Mr. Tierney. Now, I think we can all agree that Baghdad is 
not just any other embassy right now, it is the largest post 
and it is in a war zone. There are about 800 personnel, I think 
you said earlier, or told the committee earlier, that are 
involved in the private security detail to protect embassy 
personnel in Iraq, would that be accurate?
    Ambassador Griffin. There are 845 Blackwater personnel in 
Baghdad and Al-Hillah, and the other two contractors have 
additional resources. So it is about 1,150 total.
    Mr. Tierney. Are there any other embassies around the world 
where the security details are that large?
    Ambassador Griffin. I don't believe so.
    Mr. Tierney. Now, just looking at some of the statistics 
here, we have reports that say Blackwater engaged in shooting 
incidents on 195 occasions in less than 3 years. That is about 
1.4 times per week. Are there any other embassies around the 
world in which the security details have been engaged in that 
many shootings in the last 3 years?
    Ambassador Griffin. I would say that the environment in 
Iraq is unique and that we are operating in a combat zone.
    Mr. Tierney. So is that a no?
    Ambassador Griffin. As to whether anyone else has the same 
level of----
    Mr. Tierney. As to whether there is any other embassy 
around the world where the security details have engaged in 
that many shootings in the last 3 years?
    Ambassador Griffin. Not that I can think of.
    Mr. Tierney. And when we look at the Blackwater reports, we 
also show that Blackwater has caused at least 16 casualties and 
significant property damage from fired weapons on over 160 
occasions in the last 3 years. Are there any other embassies 
around the world in which security details have caused that 
many casualties or that much property damage in the same period 
of time?
    Ambassador Griffin. No, but there are no other embassies 
like Baghdad.
    Mr. Tierney. Well, I think we established that in my first 
question. I was fully in agreement with you that it was a 
unique situation.
    Ambassador Griffin. Thank you.
    Mr. Tierney. So I think Blackwater thinks that all the 
shootings were justified, and I think that raises another 
question. You told us that there is a special use of force 
policy specific to the embassy in Baghdad and that special 
policy would allow security forces to do things that ordinarily 
they might not be able to do, such as shooting at cars that get 
close to the motorcades.
    Are there in fact special rules on the use of force that 
permit that type of shooting in Baghdad?
    Ambassador Griffin. Yes, there are.
    Mr. Tierney. OK. And is there any other place, other than 
perhaps Afghanistan, is there any other place where those 
special rules are in effect?
    Ambassador Griffin. I can't say, as I sit here. Each post 
in the State Department operates under a chief of missions 
firearm policy. In most of our posts, they are fairly similar. 
All of our agents operate under the normal DOJ guidance for 
Federal law enforcement personnel for deadly use of force.
    Mr. Tierney. I guess my point on the special rules that 
apply to Iraq is that when you have those special rules and the 
need for those special rules, are you going to be able to shoot 
at cars that get within a particular distance of a motorcade 
because you are concerned about an IED attack? That happens 
over 160 times in 3 years? It appears to me that this might not 
be a mission for civilian law enforcement agents, like the 
diplomatic security or the contractors. It in fact might be a 
mission for the U.S. armed forces.
    So the real question we are trying to get at here as a 
committee is, whether or not the diplomatic security has enough 
agents may be beside the point, the question may be whether or 
not this isn't a case where 800 troops or 845 troops actually 
should be taking over that mission. And if we are fighting a 
war and we have two different departments, State Department and 
the Defense Department, maybe they ought to get together and 
try to figure out when and how they are going to perform that 
responsibility.
    Let me just, in the time left to me, the brief time, just 
ask a quick question here. On February 4, 2007, the Iraqi 
government alleged that on that day, Blackwater shot and killed 
Iraqi journalist Hana al-Ameedi near the Iraqi Foreign 
Ministry. Is that true?
    Ambassador Griffin. I am aware that there were a number of 
allegations made about shootings in the newspaper. If I may, I 
would like to describe what happens when one of our PSD teams 
is involved in a shooting incident, so we can have a clear 
understanding of how the procedures work.
    Mr. Tierney. Could I ask you, in the course of doing that, 
if the chairman is going to allow us to get into this, my way 
of approaching that, if you would be good enough to work with 
me on that is, let us know which of the incidents the State 
Department has actually investigated, and then tell us whether 
or not you can provide us with copies of that investigation and 
then after you have done that, we will be happy to hear the way 
that you go about doing it.
    Ambassador Griffin. We will provide you copies of every 
investigation that has been done.
    The standard procedure is, when one of our protective 
security details is on a mission and a weapon is fired, as soon 
as they get back to the international zone, the team that was 
involved in that incident comes to the tactical operations 
center which is the hub for DS operations. Members of the team 
are segregated, they are interviewed by DS agents to report 
what had happened.
    Within 24 hours they have to provide a written, sworn 
statement as to what happened. The statements are reviewed to 
make sure that the statements are consistent as to what 
occurred. They are reviewed by management at the post and on a 
parallel track, on a weekly basis, our people who manage our 
overseas protective operations have weekly meetings with our 
contractors. So at the same time, they are also exchanging 
information about any incident that might have occurred during 
the course of that week.
    Chairman Waxman. Thank you, Mr. Tierney.
    Mr. Burton.
    Mr. Burton. Thank you, Mr. Chairman.
    I will probably ask you some questions that we asked of the 
CEO of Blackwater, because I would like to get a perspective of 
that from the State Department.
    First of all, would it be more effective if we used active 
Army personnel to provide these services? Would it be more cost 
effective or generally more effective?
    Ambassador Griffin. I think that the professional men and 
women in the armed forces could do this mission, provided that 
they were given the training that the professional security 
specialists have. It is not the normal military training that 
they receive to go out and fight a war. When you are in a 
professional security mission where your mission is to protect 
the person who is your principal and you come under fire, your 
response is not to stay and fight, your response is to get off 
the X.
    Mr. Burton. So the mission is more defensive than 
offensive?
    Ambassador Griffin. That is right.
    Mr. Burton. Several times it has been suggested that the 
Department's contract with Blackwater and other firms was sole 
source, a sole source contract. Was it awarded improperly or 
not?
    Mr. Moser. I think I need to take that question, Mr. 
Burton.
    In 2004, as the U.S. Government made the transition from 
the Coalition Provisional Authority to a U.S. embassy presence, 
we decided to do a sole source contract for Blackwater to 
provide the personal security services that Blackwater 
provides. That was the only time that this contract has been 
sole sourced in the Department of State. The reason we did that 
was for urgent, compelling reasons, and essentially, there was 
a fully signed document by the proper officials within the 
State Department that signed that justification.
    We were under a very, very urgent situation to make that 
transition. We had to make an effective transition and provide 
the security services, so that the embassy could get up and 
running.
    That document for urgent and compelling reasons was signed 
by the procurement executive of the State Department, by the 
Department's legal counsel for acquisition, and by all the 
necessary officials in both diplomatic security and in the 
acquisition activity. We did not like doing a sole source award 
to Blackwater, and therefore, at the close of 2004, we asked 
our OIG to get an audit of their price proposal. And Mr. Waxman 
actually put the results of that audit in his letter of 
yesterday. We were very glad to see that there, because that 
was an audit that the acquisition activity asked for.
    The reason we asked for it is that sometimes we need an 
outside audit to come in and take a look at a contractor to see 
if the rates are correct. And the actual results of that audit, 
we were able to take part of the Blackwater contract costs, 
which were, Blackwater proposed around $140 million, and 
negotiate those down to $106 million. So we think that the 
audit was a very positive thing.
    Then the next year, in 2005, this contract was incorporated 
into the World-wide Protective Services Contract, and it was 
competitively bid and awarded.
    Mr. Burton. That was a very thorough answer.
    In the opinion of the State Department, are the contractors 
out of control, or are any of them untrained?
    Mr. Moser. Well, I know that by the terms of the contract, 
they are very well trained. I will defer to my colleagues in 
diplomatic security to answer the question about out of 
control. I am, as part of the contracting activity, I would not 
make that judgment. But that is where we would rely on the 
advice of the programmatic people.
    Mr. Burton. Would one of you Ambassadors like to comment?
    Ambassador Griffin. Please, if I may, Mr. Burton. All of 
the WPPS contractors who are employed under the terms of that 
contract must have at least 1 year of prior military 
experience, prior law enforcement experiences. Very often the 
military experience is special forces, the law enforcement 
experience is SWAT-type experience.
    Upon being identified they have to successfully undergo a 
background check. They have to qualify for a secret clearance 
from our Government. And they also have to go through a 
training course, which has been prescribed by DS, of 164 hours 
in order to give them specific training on the mission that 
they will be tasked to do when they arrive in-country.
    Mr. Burton. I see my time has expired. I had some more 
questions, Mr. Chairman. Are we going to have a second round?
    Chairman Waxman. I wasn't planning on it. How many more do 
you have?
    Mr. Burton. Just one or two more.
    Chairman Waxman. Why don't you see if you can do the one or 
two more?
    Mr. Burton. Thank you, Mr. Chairman. I appreciate that.
    Chairman Waxman. We will give you another minute.
    Mr. Burton. When your contractors fire first at a vehicle 
speeding toward a chief of mission motorcade, is that a 
violation of the contract rules of engagement?
    Ambassador Griffin. Absolutely not.
    Mr. Burton. Tell me from your perspective what takes place, 
what should take place? That will be my last question.
    Ambassador Griffin. The use of force policy, which is 
prescribed in the chief of mission policy in Baghdad and our 
standard procedures for our high threat protection division, 
one does not have to wait until the protectee or co-worker is 
physically harmed before taking action.
    We have an escalation of force policy in order to try and 
take a number of steps, prior to having to go to the use of the 
firearms that our people carry. On the back of all our 
motorcade vehicles in Arabic and English there is a warning to 
stay back 100 meters. These vehicles are operating with lights 
and sirens. If a vehicle approaches from the rear when everyone 
else has stopped or goes around stopped vehicles and appears to 
be approaching our convoy, hand signals will be given, verbal 
commands will be given in order to get the attention of that 
driver, in order to get them to stop. If they still haven't 
gotten their attention, they will shoot a flare at the vehicle, 
which also will get their attention but it won't hurt anybody. 
They will use a bright light to shine at the vehicle. If the 
vehicle is still coming, they may even throw a bottle of water 
at the vehicle.
    Having all of those steps failed, they will put a round in 
the radiator of the vehicle or a couple of rounds to try and 
stop the vehicle. If the vehicle continues to come, realizing 
the number of BB/IED attacks that occur in this environment, 
they are then authorized, for their safety and the safety of 
the people they are protecting, to shoot into the windshield in 
order to stop that vehicle.
    Chairman Waxman. Thank you, Mr. Burton.
    Ambassador Griffin. It is the escalation of force policy, 
as we call it.
    Mr. Burton. Thank you, Mr. Chairman.
    Chairman Waxman. Ms. Watson.
    Ms. Watson. Thank you, Mr. Chairman.
    The panel has spoken about how important private security 
contractors are for the State Department and how good they are 
at their jobs. Ambassador Griffin, in your prepared testimony, 
you referred to private contractors as a skilled cadre of 
security professionals. And Ambassador Satterfield, you 
mentioned that you demand high standards and professionalism 
from these contractors.
    In general, do you feel that private security companies do 
a good job in carrying out their mission of protecting State 
Department personnel?
    Ambassador Satterfield. Congresswoman, we do believe that 
the overall mission of security contractors in Iraq is 
performed exceedingly well, with professionalism, with courage. 
The undertaking that the Secretary of State has made is to have 
a comprehensive review of all of those operations, to look at 
the mission, to look at the resources brought to the mission, 
to look at all aspects of procedures, rules of engagement, 
questions of jurisdiction and authority, to take a solid look 
at whether something better can be done, whether there are 
issues that need to be addressed. Then we are going to expose 
that to outsiders for independent review.
    Ms. Watson. Let me just cut you off. Are you doing that 
review for all security or just for those in the theater in 
Iraq?
    Ambassador Satterfield. For all private security 
contractors operating in Iraq.
    Ms. Watson. OK. Now, you know I have been an ambassador. I 
probably am the only one in Congress at the time, in the House, 
that has been there. And I would insist that you do that. 
Because I had an incident with a private contractor at my post 
where he would knock trainees down and then kick them with the 
point of his boot. I would have fired him, but the word back 
from the State Department was that there was no one else to 
hire. So I would hope that would be broad-based, the 
investigation, and not just there.
    One of the major reasons this committee has expressed some 
skepticism about the use of Blackwater and other private 
security contractors is because of the great respect we have 
for all the men and women who wear the uniform in Iraq. And we 
trust the military to face our most pressing challenges and 
stand up to our greatest threats. And yet for all your 
statements about the skill and professionalism of these private 
contractors, and I am a witness, if you want to come and talk 
to me privately, I will tell you about my experiences with 
these private contractors.
    So many in the military have been very critical of private 
security contractors in Iraq, and especially Blackwater. 
Brigadier General Karl Horst said, ``These guys run loose in 
this country and do stupid stuff.'' ``There is not authority 
over them.'' I was the authority over my security team when I 
was the Ambassador, and I reprimanded them for how they treated 
their trainees. ``So there is not authority over them so you 
can come down on them when they escalate force. They shoot 
people and someone else has to deal with the aftermath. It 
happens all over the place.''
    An Army lieutenant colonel serving in Iraq said of 
Blackwater, ``They are immature shooters and have very quick 
trigger fingers. Their tendency is to shoot first and ask 
questions later. We are all carrying their black eyes.''
    A senior U.S. commander serving in Iraq said, ``Many of my 
peers think Blackwater is oftentimes out of control. They often 
act like cowboys over here.'' Another U.S. military commander 
put it bluntly: ``Iraqis hate them. The troops don't particular 
care for them, and they tend to have a know-it-all attitude, 
which means they rarely listen to anyone, even folks that 
patrol the grounds on a daily basis.''
    And I can go on and on. But I would like you to address how 
we can, if you will, be sure that our military has the 
training, you, the State Department contract, and you go to 
private firms. If you see areas of our training that are 
missing, would you make that recommendation to the Department 
of Defense?
    Ambassador Satterfield. Madam Congresswoman, there are 
different missions in Iraq today. Certainly, the ones you raise 
are ones that can be considered by the Department of Defense 
and by the Joint Chiefs in terms of the mission to be assigned 
to U.S. forces, whether in Iraq or elsewhere. I really can't 
speak to that.
    What I can speak to is the oversight and accountability 
which the Department of State has and must exercise over those 
private security contractors that work for us today in Iraq. 
That is a responsibility we take quite seriously. It is a 
responsibility that we will be carrying out in terms of this 
overall review in a very comprehensive fashion and we will make 
the results of that available.
    Ms. Watson. OK, my time is up, and there is a call to go to 
the floor. But I would just like to say in closing as I run out 
the door, I think somebody from the State Department ought to 
come and talk to me.
    Chairman Waxman. Thank you, Ms. Watson.
    Ambassador Griffin. We will get on your schedule at your 
earliest convenience, and we look forward to talking to you.
    Chairman Waxman. Mr. Shays.
    Mr. Shays. Thank you.
    Gentlemen, would you agree that there is a huge difference 
between an ambassador in a country where there is not a threat 
to their lives and the challenge that Ambassador would have 
with a contracting team that is to protect them and one in 
places like Jordan and other areas in the Middle East and 
particularly Iraq? Is there not a big difference? In other 
words, don't you have a lot more contractors having to secure 
people in a nplace like Iraq versus what an Ambassador would 
have to protect his or her well-being?
    Ambassador Satterfield. Some of the personnel that we have 
under contract----
    Mr. Shays. I want you to move the mic closer, please.
    Ambassador Satterfield. I am sorry?
    Mr. Shays. Move the mic closer to you, please.
    Ambassador Satterfield. Some of the people at our posts 
around the world are part of our local guard force. And those 
local guards----
    Mr. Shays. You are not answering the question. I asked is 
there a difference.
    Ambassador Satterfield. There is a huge difference between 
Baghdad----
    Mr. Shays. Thank you, there is a huge difference.
    Ambassador Satterfield. My point is there are guards----
    Mr. Shays. Case closed. Let me take the next question. I 
only have 5 minutes. It's an easy answer. There is a big 
difference. The men and women who are being defended in Iraq by 
security people, their lives are in danger every day. Now, Mr. 
Satterfield, isn't it true the Ambassador has responsibility in 
Iraq for those security personnel?
    Mr. Moser. Indeed he does, Congressman.
    Mr. Shays. Thank you. And does he exercise it?
    Mr. Moser. Yes, he does.
    Mr. Shays. Thank you. Would you tell me, Mr. Satterfield, 
can you describe the process that is followed by the 
Department--excuse me. Let me ask this question. If there were 
sufficient, I would like to know if there were sufficient 
military personnel to provide armed escorts for convoys in 
Baghdad and conduct protection, would you still use contractors 
to provide such security?
    Ambassador Griffin. As I mentioned a minute ago, Mr. Shays, 
if the outstanding young men and women of the military received 
training in protective security operations, then they certainly 
would be capable of performing----
    Mr. Shays. That is not what I asked. I want to know if you 
have a preference for using--and I am sorry, these are 
basically simple questions. I want to know if your choices 
between people, outside contractors, or would you like to use 
the resources of the military to have to spend their time to 
protect State Department employees. Do you want State 
Department employees to go around in HumVees with lots of 
armored personnel, or would you prefer that they go around the 
way they do in civilian clothes with people who are securing 
them that aren't in Army uniforms?
    If you prefer the Army, tell me to do it.
    Ambassador Griffin. All I was saying is the Army would be 
capable of doing it if it was done in the manner which we 
prescribed, which would not be HumVees, they would not be in 
uniforms. The protective security personnel that we utilize are 
trained for that specific mission.
    Mr. Shays. If they were Army personnel, would they be under 
your command and oversight? Or would they be under the command 
of the Army?
    Ambassador Griffin. If they were performing a protective 
mission of the Ambassador and other----
    Mr. Shays. Do you command the Army or does the Army command 
the Army?
    Ambassador Griffin. The Army command the Army.
    Mr. Shays. So the answer is, isn't it, that they would be 
under the command of the Army and not under your jurisdiction 
and oversight if they were in fact Army? I don't want to put 
words in your mouth?
    Ambassador Griffin. No, no. Well, I guess they would be.
    Mr. Shays. I am just asking the question. Yes, sir.
    Let me ask you this. Would it be a problem if in fact you 
had no responsibility and they were to be answerable to the 
Army? Generals and so on.
    Ambassador Griffin. I think that is a national policy 
consideration, as to the staffing levels of the Army to perform 
that mission.
    Mr. Shays. Well, as a Peace Corps volunteer, and I will 
just make this point, the last thing you want when you are 
going into the community is to come in with a military force. 
What you want is to have a low profile. You want a protocol 
that says you don't bring in tanks, you don't bring in HumVees, 
you bring in a civilian car, you want people dressed in 
civilian clothes for the most part, not dressed in Army 
uniform.
    Let me ask you in closing, Mr. Satterfield, when Mr. Bremer 
went into places, wasn't one of the criticisms that he was 
going in with the Army, with a high profile of military 
personnel and having an Army footprint instead of having a 
civilian footprint?
    Ambassador Satterfield. Congressman, around the world, 
whether it is at a critical threat post or a different threat 
level post, we try to make our protective details, our 
presence, as low profile as possible consistent with the 
protect mission, as unobtrusive as possible, and as consistent 
with the civilian setting in which we operate as possible.
    Mr. Shays. Thank you.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Cooper.
    Mr. Cooper. Thank you, Mr. Chairman.
    I took my 88 year old mother to the movies the other day. 
We saw a movie called No End In Sight. It is really more of a 
documentary than a movie. In the middle of it, they say that 
the following footage was filmed by a U.S. security contractor, 
and he or she set the film footage to their own music. So it 
sounds like MTV, driving rock music. But the video footage is 
truly startling. It is shooting up cars, apparently on a street 
in Baghdad, killing civilians, to this driving rock music.
    Is the State Department aware of this film or have you made 
inquiries as to which contractor, employee or independent 
contractor shot this footage?
    Ambassador Griffin. No, I am not familiar with the footage.
    Mr. Cooper. And you are not familiar with the fact that it 
is being shown all over America?
    Ambassador Griffin. I am not familiar with the footage.
    Mr. Cooper. Ambassador Satterfield, same answer?
    Ambassador Satterfield. I am aware of that footage. It is 
outrageous. The U.S. Government responded in just that fashion 
at the time it was initially circulated, I believe that was 
some years ago. It may be featured in a movie today, but the 
film footage is not new. It does not reflect in any way the 
standards of conduct that are prescribed by our regional 
security office on the operation of any private security 
contractor operating in Iraq, not today and not then.
    Mr. Cooper. So you have not seen it, but you know it is not 
true?
    Ambassador Griffin. I have seen that footage.
    Mr. Cooper. Mr. Ambassador, you say in your testimony, in 
those rare instances when security contractors must use force, 
management officials at the embassy conduct a thorough review 
to ensure that proper procedures were followed. Ambassador 
Negroponte has tried something similar just days ago. The 
committee tried to find out about an incident that happened on 
November 28, 2005. That is when a Blackwater convoy 
deliberately smashed into 18 different cars en route to and 
from the Ministry of Oil. Blackwater's own internal memo on the 
incident said that Blackwater's tactical commander on that 
mission ``gave clear direction to the primary driver to conduct 
these acts of random negligence for no apparent reason.''
    We have the Blackwater memo right here, the Blackwater 
aviation team that was accompanying convoy pointed out the 
problems. It also says that when Blackwater officials 
responsible were questioned about this incident, they gave 
statements, official statements, that your own employees said 
were ``deemed to be invalid, inaccurate and at best dishonest 
reporting.''
    So we have a problem here, and the State Department 
investigates problems. Well, when the committee asked the State 
Department about this incident, we got no response. So we don't 
know whether that means you investigated it and won't tell us, 
or you didn't investigate it. Which is it?
    Ambassador Griffin. There were a number of incidents that 
the committee requested reports on 6 days ago. I regret that we 
were unable to pull all those reports together in time for the 
hearing. We will certainly provide those reports for the 
record.
    Mr. Cooper. We requested this in March of this year. So it 
has been more like 6 months than 6 days. Are you saying that 
Blackwater's recordkeeping is better than yours?
    Ambassador Griffin. No, I am saying that there were a 
number of other requests made 6 days ago, and I don't have 
instant recall of all of them. But we will certainly get a 
report to you about this particular incident.
    Mr. Cooper. Another question. Blackwater testified they 
hired away a number of military personnel. And Secretary Gates 
is even worried about that, and has talked about non-compete 
agreements. How many diplomatic security folks have they hired 
away?
    Ambassador Griffin. I am not aware that they have hired 
any.
    Mr. Cooper. Do you take that as an insult, they don't covet 
your employees?
    Ambassador Griffin. No.
    Mr. Cooper. Do you take it as an insult that we have to 
have extra help in so many places around the world, including 
Haiti? Are you not training your folks up to that level?
    Ambassador Griffin. I take it as an indicator of the 
environment that we are operating in a number of posts around 
the world.
    Mr. Cooper. Have you requested the money or the training or 
the resources to train your people up to the level that we need 
them in Jerusalem and Port Au Prince and Kabul and Baghdad and 
Basra and lots of places around the world?
    Ambassador Griffin. My people have the training necessary 
to work in those areas, and they are working there. But we 
don't have the numbers of people that it would take to fully 
staff all of those operations, and we don't have all of the 
various areas of expertise, as I mentioned, such as helicopter 
pilots and medics and armorers and mechanics, etc.
    Mr. Cooper. Have you asked for the additional resources so 
that you could augment your forces to meet the mission in those 
areas?
    Ambassador Griffin. We have requested additional resources. 
But again, the question includes whether or not you hire a 
full-time Government employee who is an employee for 25 or 30 
years when the mission might only last 2 years. So certainly 
there is a middle ground somewhere.
    Mr. Cooper. So the State Department is saying we are 
exiting from Iraq in 2 years?
    Ambassador Griffin. No. I am just saying that we have 
deployed in other places, going back to 1994. And certainly at 
the beginning of a mission, it is hard to predict exactly how 
long the operation will go on. But that we have operated in a 
number of different countries using these protective security 
specialists.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    I am going to continue along that line, because I think it 
is a very good line of questioning, and I appreciate this part 
of the hearing, because I think we are getting to some 
fundamental questions about, what we are supposed to be 
Oversight and Government Reform. And if at the end of this day 
the oversight doesn't lead to constructive dialog on reform, 
then we didn't do our job.
    When we look at nominally 1,000 security people related to 
the State Department, 800, almost 900 in Iraq, if, 
hypothetically they all were standard pays and training that 
you have somewhere else in the world, how often would you have 
to be rotating these people in? This is assuming that every one 
of those 900 or so positions were standard security within the 
State Department security apparatus. What would that do to your 
rotating into Iraq? How often would these people be going to 
Iraq?
    Ambassador Griffin. Presently, the rotation is 1 year.
    Mr. Issa. No, no, that is not what I am saying. What is the 
total number of Government employee RSOs and below that you 
have at your disposal worldwide, not including contractors?
    Ambassador Griffin. Our total staffing is roughly 1,450.
    Mr. Issa. OK. So every year, almost, figuring schooling and 
retirement, every year you would be rotating half your people 
in. You have 1,400. If we added 1,000, then you would have 
2,400 and you would need 1,000 of them in Afghanistan and Iraq, 
is that right?
    OK, so this is a surge of huge proportion, isn't that 
right?
    Ambassador Griffin. Yes, it is.
    Mr. Issa. But let's go to a couple other areas.
    Ambassador Satterfield, you and I have known each other for 
a few years, because of my travels to Lebanon while you were 
there. You have been a specialist in the Middle East. When you 
were Ambassador in Lebanon, this is an area in which the State 
Department contracts itself for its employees, is that correct?
    Ambassador Satterfield. That is correct.
    Mr. Issa. OK. At the time that you were Ambassador in 
Lebanon, what was your amount of career foreign service 
personnel that were security, your RSO and so on, versus the 
contracted personnel that were mostly Lebanese?
    Ambassador Satterfield. We had a team of approximately 
eight RSOs. We had approximately 450 local guards who mainly 
performed static guard duties of mission. We had a team of 
about 75 bodyguards who had a specialty protective rule both at 
the compound and more importantly, outside the compound.
    Mr. Issa. And substantially, that is still what is going on 
at Embassy Beirut?
    Ambassador Satterfield. Those ratios have changed, 
Congressman, in terms of the number of local guards, the number 
of bodyguards and the number of RSOs. But the ratios in general 
are similar.
    Mr. Issa. So I am trying to understand, from a standpoint 
of how you do business in a situation like Beirut, which since 
1983 has been unique, you have refined it. But for all 
practical purposes, what you do is you use your career State 
Department people, many of them at the pinnacle of their 
training and experience, to oversee essentially 75 mostly 
national----
    Ambassador Satterfield. All national.
    Mr. Issa. All national trigger-pullers, to use a term that 
has been used here today, and another 450 watchtower people. 
And that is an efficient way to leverage your U.S. citizens 
relative to the total exposure to the U.S. Government at 
Embassy Beirut.
    Ambassador Satterfield. In Beirut, we found it a highly 
effective way to run the operation.
    Mr. Issa. OK. So this is a model that would not be 
unreasonable if we knew we were going to be doing the next 20 
years in Iraq at this level? Is that true, Ambassador Griffin?
    Ambassador Griffin. That is true. And the fact is that if 
you look at all of our posts worldwide, we have in excess of 
30,000 local guard force employees that secure our embassy and 
consulate facilities overseas.
    Mr. Issa. OK, so I am going to ask you the question, this 
is the reform question, again. Do you have or are you working 
out plans for areas like Haiti, Bosnia, Afghanistan and Iraq to 
increase the number of direct contract personnel, particularly 
indigenous, where appropriate, in order to both increase the 
domestic participation and reduce the reliance on out of 
country and comparatively expensive contract people?
    Ambassador Griffin. I think Mr. Moser can talk about the 
cycle for our contracts and the fact that they are of a short 
term. We are always looking for ways to improve the way we do 
business.
    Mr. Issa. I understand that you can terminate Blackwater at 
the end of a year, any time you want. But I guess the question, 
because this is a committee that should be looking at the long-
term costs, and I share with the chairman the fact that we 
shouldn't be spending $200,000 forever if we could be spending 
in some cases a lesser amount and getting as good or better 
service, whether or not that is a career foreign service person 
or an indigenous person taking the place.
    Mr. Moser. Mr. Issa, I have been in the Foreign Service for 
a number of years, too, and I have actually been, visited or 
actually served in a couple of posts in the Middle East. I 
think my career colleagues in diplomatic security would agree 
that our preference is to always use local personnel for these 
services, if it is possible to do so. It is not in the State 
Department's interest to have expatriate contractors for these 
kinds of services. It is only something we do in the most 
extreme circumstances. Just as you pointed out, and in Mr. 
Satterfield's experience in Beirut, that is closer to our 
traditional model.
    Chairman Waxman. Thank you very much, Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    Chairman Waxman. Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman. I want to thank the 
panelists for their testimony.
    Ambassador Satterfield, in the testimony you prepared for 
today's hearing, you wrote: ``In those rare instances when 
security contractors must use force, management officials at 
the embassy conduct a thorough review to ensure that proper 
procedures were followed.'' I would like to ask you about the 
investigation conducted by the State Department, and a couple 
of incidents we have looked at. I might only get through one.
    During our investigation, we found that on June 25, 2005, a 
Blackwater operator shot and killed an innocent Iraqi bystander 
in Al-Hillah. According to State Department e-mail, Blackwater 
personnel failed to report the shooting, they covered it up, 
and subsequently they were removed from Al-Hillah. The State 
Department then in their e-mail asked Blackwater to pay $5,000 
in compensation.
    But we have no information showing that the State 
Department ever conducted an investigation of that incident in 
Al-Hillah. Could you tell me, was an investigation ever 
conducted?
    Ambassador Satterfield. Congressman, if you will, we will 
get back to you with full details of that incident and the 
investigatory followup.
    Mr. Lynch. You are kidding. This is a June 25, 2005 case.
    Ambassador Satterfield. Congressman, we will respond in 
detail on the questions you have posed.
    Mr. Lynch. But sir, you were the Deputy Chief of Mission at 
the time. You don't recall this?
    Chairman Waxman. Congressman, I do not recall in the 
fashion necessary to respond to your question in the detail it 
deserves.
    Mr. Lynch. I am just asking if there was an investigation. 
That is not, OK, you have the shooting, you were there, do you 
remember if there was an investigation? That is not heavy on 
detail?
    Ambassador Satterfield. And Congressman, I would prefer to 
respond to you in writing on this.
    Mr. Lynch. Are you refusing to answer?
    Ambassador Satterfield. No, Congressman, I want to give you 
a full answer. I am not able to do that at this time.
    Mr. Lynch. I am just looking for a yes or no. Was there an 
investigation, yes, if there wasn't an investigation, no?
    Ambassador Satterfield. I am not able to confirm the 
details of what happened following that incident at the time.
    Mr. Lynch. I am not looking for the details. I am just 
looking for the fact of an investigation, did it occur or 
didn't it occur?
    Ambassador Satterfield. Congressman, I will have to check 
on that for you.
    Mr. Lynch. So you don't know, you don't remember if there 
was an investigation?
    Ambassador Satterfield. I cannot recall.
    Mr. Lynch. OK.
    Chairman Waxman. Will the gentleman yield to me?
    Mr. Lynch. I will yield to the gentleman.
    Chairman Waxman. The committee asked for investigative 
reports and other documents relating to incidents involving 
allegations of Blackwater's misconduct which would presumably 
include shooting civilians and seeking to cover it up. But 
virtually none were provided. That fact alone casts doubt on 
the sufficiency of any State Department investigations into 
these incidents.
    We have had a better response from Blackwater than we have 
from the State Department on getting information. Does that 
bother you as much as it bothers me, or do you have to find out 
whether you feel that way or not?
    Ambassador Satterfield. No, Mr. Chairman. I----
    Chairman Waxman. I can't understand why we don't get 
responses from the State Department.
    Ambassador Satterfield. We will be responding fully to all 
of the requests made both at this hearing and by the committee.
    Chairman Waxman. Well, some of these requests were made in 
March, some were requested in June, we are already holding the 
hearing. We made requests so that we could have them before the 
hearing, not so that we could get them after the hearing.
    I thank the gentleman for yielding.
    Mr. Lynch. With all due respect, reclaiming my time, sir.
    Look, what I am getting at is this. The State Department 
works hand in hand with Blackwater, from my own experience in 
Iraq, in a fairly coordinated team approach in protecting State 
Department personnel. The closeness of that relationship 
between State Department personnel, look, Blackwater is 
protecting these folks every single day in a very hostile 
environment. Friendships develop. Reliance develops. It is just 
not possible, because of the conflict that is created, that the 
folks that are being protected, State Department, are going to 
do an objective job in reviewing the conduct of the people who 
are protecting them.
    And all I am suggesting is this, please, if you can answer 
this question. Don't you think it might provide a little 
separation and a more objective assessment of Blackwater's 
conduct if we had a special inspector general reviewing those 
incidents, so that there be a little space there, they wouldn't 
be reviewing the conduct of people that protect them every day? 
If you would take a crack at an answer on that one. Thank you.
    Ambassador Satterfield. Congressman, we do take the issue 
you raised very seriously, about distance, transparency, 
objectivity of review of incidents, as well as objectivity of 
review of rules of operation in general, conduct in general. We 
are looking at that right now comprehensively.
    But to go back to your original question, do we believe it 
is possible to objectively oversee the operation of security 
personnel in the field who protect us? Yes, we believe that is 
possible. It is executed every day around the world. There are 
dismissals from service made every day in response to 
incidents. This is done.
    But we are looking at the overall picture in Iraq right 
now. And we will consider what steps may be appropriate.
    Mr. Lynch. Here is my problem with that answer. The case 
which I cited, there was a killing of an innocent Iraqi, the 
RSO in question, I think, worked for you and Ambassador 
Griffin. They were part of the review of the incident itself. 
So just from an objective standpoint, looking at the whole 
situation, there may have been some complicity or some 
involvement, or, let's call it negligence even on the part of 
that individual, and they are now reviewing the events in 
question.
    So that is all. I would just like some good, hard objective 
review of the conduct here that would not be tainted by these 
relationships. I yield back.
    Chairman Waxman. Thank you. Blackwater and the private 
contractors have to be responsive to you. But you have to be 
responsive to us. We have the oversight jurisdiction and you 
have the oversight jurisdiction over Blackwater. We want to 
know if you are exercising that oversight responsibility.
    Ms. Schakowsky.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    I would think that the State Department is very concerned 
on whether or not these private contractors, security 
contractors, are actually helping us achieve our mission, that 
is, whether they are helping to win hearts and minds or exactly 
the opposite.
    So what we are seeing is that this is a benign function, 
all these various incidents. Are they making the job harder? 
For example, after the Fallujah Four were humiliated and killed 
in Fallujah, we had the Battle of Fallujah, where a number of 
our forces who participated, a large number, were killed there. 
The latest incident that we had has enraged the Iraqis, but 
also shut down the Green Zone essentially, so that our 
diplomats couldn't leave for a certain period of time.
    I am just very concerned that all of these things have been 
virtually ignored, and in fact, when it comes to Blackwater, 
the position that seems to be taken with a number of different 
quotes of e-mails and memos has been, let's just pay people off 
and put this incident behind us. I could go back and quote all 
these various things, but I think you have probably been here 
and heard that.
    I am concerned that you are allowing these private 
contractors to hurt our mission in Iraq. And I would like a 
comment.
    Ambassador Griffin. If I may, David. Again, realizing the 
environment that we are operating in in Iraq, just this 
calendar year, Blackwater has been involved in 3,073 missions, 
protective missions on behalf of the State Department. Let me 
correct myself. There have been 3,073 country-wide missions by 
the----
    Ms. Schakowsky. I heard all that. That is the Blackwater 
talking points. I have heard those.
    Ambassador Griffin. This is a DS talking point. The reality 
is, this year, there have been 6,000 attacks per month going on 
in Iraq. That is the environment that they are trying to 
perform the protective mission in, 6,000 attacks per month.
    Ms. Schakowsky. And I am not questioning the level of 
violence in Iraq. I am asking, and I will move on, I guess in 
some ways I was commenting that these private security guards 
who, we are unclear on what kind of oversight we can exert and 
what you can exert, have been damaging our mission in Iraq.
    So let me proceed to that. Under CPA, the Coalition 
Provisional Authority Order 17, contractors have immunity from 
the Iraq legal system. I heard you say, Ambassador Satterfield, 
that you were going to review, this is 4 years later, the 
effectiveness of CPA Order 17. Don't you think there is prima 
facie evidence, since only two contractors that I know of have 
been prosecuted in any way that we are insufficiently providing 
oversight?
    Ambassador Satterfield. Congresswoman, CPA Order 17----
    Ms. Schakowsky. Deals with Iraqi law.
    Ambassador Satterfield [continuing]. Which is part of Iraqi 
law----
    Ms. Schakowsky. Right.
    Ambassador Satterfield [continuing]. Provides immunities 
not just for security contractors, but for our armed forces in 
Iraq, for diplomatic personnel of all diplomatic and consular 
missions, not just that of the United States, in Iraq and for 
contractors associated with them. It is a very broad mission.
    Ms. Schakowsky. And does it still apply to everyone? They 
are not subject to Iraqi law at all?
    Ambassador Satterfield. CPA Order 17 provides immunities 
for those classes of individuals, military and civilian, 
diplomatic and non-diplomatic, operating in Iraq today. But the 
question you raise, Congresswoman, is broader than the 
operation of CPA Order 17, and we recognize that.
    Ms. Schakowsky. Correct.
    Ambassador Satterfield. It deals with issues of 
jurisdiction and authority in U.S. domestic law, not just the 
operation of a piece of Iraqi law that provides immunity to 
Iraqi prosecution.
    Ms. Schakowsky. Right. And so is it your position that a 
Blackwater contractor working for the State Department can be 
court martialed in the military justice system?
    Ambassador Satterfield. The issue of jurisdiction and 
operation of U.S. domestic law, the reach of U.S. domestic law, 
over individuals who are covered by the operation of CPA Order 
17----
    Ms. Schakowsky. No, no----
    Ambassador Satterfield [continuing]. In certain cases is a 
question being examined now.
    Ms. Schakowsky. So almost 5 years later, we are now 
figuring out who is subject to what laws?
    Ambassador Satterfield. This is a broader issue than Iraq, 
CPA Order 17 or Blackwater. It is a global issue involving 
jurisdiction.
    Ms. Schakowsky. Do you think it is a problem that almost 5 
years into, or 4\1/2\ years into the war, that only two of the 
God knows how many people of the 160,000 we think are now 
serving in terms of contractors have been formally charged with 
anything and prosecuted? Don't you think that is prima facie 
evidence that we are not doing enough?
    Ambassador Satterfield. No, Congresswoman, because that 
would require an examination of whether in fact there was a 
body of individuals for whom there was reason to believe 
prosecution should be made. And I am not able to comment on 
that.
    Ms. Schakowsky. So you would say that perhaps only two 
people out of all those private contractors that have served 
should be charged with anything?
    Ambassador Satterfield. Congresswoman, I am not able to 
comment on culpability under U.S. law, existing or----
    Ms. Schakowsky. I am asking you to comment on whether our 
oversight structure is sufficient if that has been the outcome.
    Ambassador Satterfield. There are significant issues 
involving the clarity and application of U.S. domestic law with 
respect to certain classes of individuals who operate in 
environments such as Iraq, but not exclusively in Iraq.
    Chairman Waxman. The gentlelady's time has expired.
    Mr. Cummings.
    Mr. Cummings. Thank you, Mr. Chairman.
    Gentlemen, first of all, thank you for being with us. 
Blackwater has had enormous growth in the size of its Federal 
contracts. Would you agree, Mr. Satterfield?
    Ambassador Satterfield. [No audible response.]
    Mr. Cummings. Mr. Moser.
    Mr. Moser. I have been told that is true. I am really only 
concerned with the growth of its size with regard to the State 
Department. And that operation has grown some.
    Mr. Cummings. In 2000, the company had less than $1 million 
in Federal contracts, but since then, the company has received 
over $1 billion in Federal contracts. I consider that 
incredible growth for any company.
    The first State Department contract that Blackwater got was 
awarded in June 2004, is that correct?
    Mr. Moser. Yes, that is correct.
    Mr. Cummings. It was a contract to provide security 
services to State Department officials in Iraq. And it was 
worth over $300 million, is that correct?
    Mr. Moser. Yes, that is correct.
    Mr. Cummings. What bothers me is that this contract, and I 
know you talked about this a little bit earlier, Mr. Moser, but 
it was a no-bid contract.
    Mr. Moser. Yes, it was a sole source award.
    Mr. Cummings. And according to the Federal procurement data 
base, the contract was awarded as a sole source contract 
without any competition on the basis of urgency, is that 
correct?
    Mr. Moser. On the basis of urgent and compelling, because 
we were transitioning from the Coalition Provisional Authority 
to a State Department entity, that is correct.
    Mr. Cummings. And how do we determine, let's say we have 12 
companies that can do the same thing. Do you just pick up the 
phone and say, hey, guys, I think we want to give you this $300 
million contract? What do you do? All things being equal, 
urgent situation, how do you determine? Because, let me tell 
you something, if you choose Blackwater and I am Company X and 
I can do the same thing, and you say, well, we gave it to 
Blackwater because of urgency, I want to know, well, hey, why 
wasn't I in the pool for the urgent group?
    Mr. Moser. Mr. Cummings, that is a very, very good 
question. As the head of the acquisition activity, we are 
always concerned about promoting competition. This one was done 
for urgent and compelling reasons. It is something the 
acquisition activity does very reluctantly. At the time when 
that was done, there was market research done. We examined the 
capabilities of four other firms and made the determination 
whether they could take on this task of providing these 
services.
    Realizing that we had done a sole source contract, we 
worked with our partners in diplomatic security and awarded on 
a competitive basis the worldwide protective services contract 
iteration two in the next year, so that we only had a sole 
source award for that 1 year for urgent and compelling reasons. 
And as I said earlier in my remarks, because we were very 
concerned about this contract, we asked for an independent cost 
audit to be done on this. This is something we take very 
seriously.
    Mr. Cummings. Yes, you say the audit was done when?
    Mr. Moser. The audit was done actually in January 2005. In 
other words, of the current contract award. And we actually 
negotiated down the cost of that contract by about $25 million.
    Mr. Cummings. Let me make sure I am clear on this. Are you 
trying to tell me that when you did this evaluation, you said 
there were four other companies, are you trying to tell me that 
those four other companies were not as qualified as this 
company?
    Mr. Moser. That is correct. Given the urgent and compelling 
circumstances, we did not feel that they could meet the 
Government's need at that time.
    Mr. Cummings. And were there any other companies that you 
considered outside now of the total of five? In other words, 
you have Blackwater, who got the contract, $300 million, and 
then we have four other companies that weren't apparently 
qualified. I guess I am concerned about this qualified pool. I 
hear people talk about pools and who is qualified. And I am 
trying to figure out who is qualified and how are they 
qualified, because I can, I mean, I can imagine there are a lot 
of people that feel like they have not been treated right.
    Mr. Moser. And I agree with that, Mr. Cummings, and that is 
the reason why we use the authority within the Federal 
Acquisition Regulations to use an urgent and compelling reason 
to award a contract very sparingly. This is the reason why that 
when we did this particular award, we had it reviewed by our 
procurement executive to make sure, and by our competition 
advocates, to make sure that we were not unjustifiably taking 
this action. That is the reason why we were so anxious, 1 year 
later, to award this competitively.
    Mr. Cummings. It is my understanding that the previous year 
they had a contract for $3 million and then, lo and behold, the 
next year, $300 million. Boy, that sounds like the lottery.
    Mr. Moser. I can understand that, too. But I really can't 
speak about any contract that was awarded by the Coalition 
Provisional Authority.
    Mr. Cummings. But would you have looked at those contracts? 
Would that have been a part of your consideration?
    Mr. Moser. Yes. We would have actually examined those for 
the past performance criteria.
    Mr. Cummings. And who made the decision? Who made the final 
decision to award it and who signed the contract?
    Mr. Moser. I would have to look. I can't remember which one 
of my contracting officer's staff actually signed it. I would 
have to look at that contract. But that contracting action has 
gone through and we have actually given those documents to the 
committee. I see my colleagues on the staff, they have received 
copies of those several times.
    Chairman Waxman. Did that go any higher than just your 
contracting officer? This is a pretty serious thing.
    Mr. Moser. Yes, as I said, it was signed by the procurement 
executive of the Department of State, which is not part of the 
acquisition activity. He is an independent entity. It was also 
signed by our acquisitions attorney to make sure that it had 
full legal review.
    Mr. Shays. Was this in 2004? Not 2007, not 2006?
    Mr. Moser. This was in 2004.
    Mr. Shays. It was in 2004 under Mr. Bremer?
    Mr. Moser. No, actually 2004, as the embassy was stood up. 
In other words, the 2003 award, I think it was 2003, and this 
is where I am not really competent to speak, I think it was 
made under Mr. Bremer. And I can't really speak to that. I can 
only speak to the contracts the State Department has awarded.
    Chairman Waxman. May I ask this question of maybe the 
others, maybe Ambassador Satterfield or Ambassador Griffin 
would know, maybe you know, you told us who signed it, but who 
approved it? How high up did it go in the State Department for 
approval? It is a large contract.
    Mr. Moser. Oh, OK. The head of the acquisition activity 
signed the sole source justification. That is the senior 
executive service officer. It was reviewed by the Deputy 
Assistant Secretary at the time who I replaced.
    Chairman Waxman. Deputy Assistant Secretary?
    Mr. Moser. Deputy Assistant Secretary, yes.
    Chairman Waxman. Thank you.
    Mr. Cummings. I just have one other question, very briefly. 
Do you look at a company's capacity to perform a contract?
    Mr. Moser. Yes, we do.
    Mr. Cummings. And did you look at it in this instance?
    Mr. Moser. Yes, we did.
    Mr. Cummings. Did they have the resources to do this 
contract at that time, or did they have to use the $300 million 
to ramp up to doing it?
    Mr. Moser. No, in fact, Congressman Cummings, we actually 
always look at the capital requirements in the contract and 
then look and see if the contractor, the offeror in this case, 
because he is not really a contractor until he has gotten an 
award, if the offeror has the financial capacity in order to 
provide the resources that we are going to need.
    And this is a typical, this is very much a business 
analysis type decision. Because what we are looking to make 
sure is that they are going to be depending on the next 
paycheck to come so that they can actually keep on going. We 
never want to put the U.S. Government at risk in that kind of 
situation. Because in fact, our biggest criterion at the end of 
the day is what risk is the Government at in terms of the 
financial arrangements in the contract.
    Chairman Waxman. Thank you very much.
    In conclusion--yes?
    Mr. Issa. We were going to alternate the time?
    Chairman Waxman. We had Mr. Cummings take the questions. Do 
you want to ask a question or two? Do you want a minute?
    Mr. Issa. I do. My understanding, Mr. Chairman, was----
    Mr. Shays. Take a minute. He's given you a minute. Just 
take it.
    Chairman Waxman. OK, your questions, in a minute.
    Mr. Issa. I will be brief.
    Chairman Waxman. The gentleman is granted a minute.
    Mr. Issa. The recent report by Retired General Jim Jones 
and Chief Ramsey appears to say in pretty much no uncertain 
terms that there are roughly 300,000 police forces throughout 
Iraq, 85 percent of whom are Shia, who are constituted in large 
amounts by people who are not working in the best interests of 
fairness and justice in Iraq, and that they have been so 
infiltrated by people who will in fact kill Sunis and do other 
things wrong that they should be, for all practical purposes, 
torn down and started over again.
    In that environment, and this is for Ambassador Griffin, 
what does that mean to anyone, DS or contractor, trying to 
protect your people when Iraqi police forces appear to be 
coming on the scene?
    Ambassador Griffin. As you can well imagine, it is an 
extremely difficult task, as is, and if you are not sure if the 
people who are supposed to be supporting your mission are 
really with you or not, it only makes it more complicated. We 
recently had an incident in Baghdad in September where one of 
our convoys that was out to do an advance for a chief of 
mission motorcade proceeded through an intersection where the 
traffic was being held up by a police official in order to 
clear the way for our motorcade which was promptly hit by an 
EFP, an explosively formed penetrator.
    Mr. Issa. The worst of all.
    Ambassador Griffin. The worst of all. It resulted in three 
injured Blackwater employees who had to be Medivaced to the 
combat support hospital after the small arms fire ceased, 
because it was a complex attack.
    So it makes it extremely difficult. And it is part of this 
environment that I alluded to where you have 6,000 attacks a 
month and you don't always know who is with you and who is 
against you.
    Chairman Waxman. Thank you----
    Mr. Issa. Final question----
    Chairman Waxman. No, Mr. Issa----
    Mr. Issa. Mr. Chairman, the rules of the committee----
    Chairman Waxman. Your time has expired.
    Mr. Issa. Mr. Chairman, are we going to have regular order?
    Chairman Waxman. Mr. Shays is recognized for any closing 
comment he wishes to make. Your time has expired. I am only 
going by the rules.
    Mr. Issa. Mr. Chairman--would you yield for a final 
comment?
    Mr. Shays. No.
    Let me just thank you, Mr. Chairman, for holding this 
hearing and making sure it didn't focus on an incident we do 
not yet know the facts on. I want to thank our first panel and 
also our second and say, as I wrestle with this issue, it seems 
to me we are really debating whether, one, we want contractors 
or we want the Army. Or a second issue is, do we want the State 
Department to have its own protective force that would be paid 
employees. I think these are all issues that are valid and we 
need to have dialog on it.
    I want to say to you again, Mr. Satterfield, when I have 
been in Iraq, you have been at the forefront of tremendous 
sacrifice for our country. Mr. Griffin, our paths didn't really 
cross. But I just want to say to you, Mr. Satterfield, thank 
you for your service in Iraq.
    Again, Mr. Chairman, thank you.
    Chairman Waxman. I just want to conclude by saying, it is 
interesting how, at the end of the hearing, we come to the 
recognition on both sides of the aisle that this is a valid 
question and an important one, whether we should contract out 
these kinds of services in Iraq or anywhere else. At the 
beginning of this hearing, all we had from the other side of 
the aisle were complaints that we shouldn't even be holding 
this hearing.
    Now, as far as the State Department is concerned, what we 
have heard is that this was anticipated to be temporary. You 
need to quickly put out a contract, because it was going to be 
a temporary matter. Yet the embassy was being built for $600 
million. This doesn't indicate to me that there was going to be 
a temporary presence in Iraq. It indicates to me that we were 
planning to be in Iraq and may still be planning to be in Iraq 
for a very long period of time.
    I can't understand why a security officer that is hired by 
Blackwater should be paid two or three times what our commander 
in Iraq is paid. It confuses me why we need Mr. Prince to 
figure out to hire military veterans and give them the training 
to do the job that the State Department could do with these 
military personnel. I just think no one cared about the money 
because Blackwater was organized and you just paid them an 
aamount of money and they did the job.
    From my point of view as a chairman of an oversight 
committee, and I want to work together with Democrats and 
Republicans, the taxpayers are not getting their money's worth, 
by all the billions of dollars that have gone to Blackwater and 
these other private security contractors, when it could have 
been done a lot cheaper. And we are not getting our money's 
worth, when we have so many complaints about innocent people 
being shot, and it is unclear whether they are actually being 
investigated by the State Department, because we haven't had 
cooperation from the State Department to even tell us if 
investigations have been done by them.
    So if we are paying more and getting less than what we can 
get from our military, I think that the American people are 
entitled to ask why, and I still am not satisfied after this 
whole long day of hearings, that I have had a good answer to 
this question.
    I thank the three of you very much for being here. We will 
continue to be in touch with you, because we think you owe us 
more answers and we are going to continue to ask the questions 
until we get those answers.
    The committee stands adjourned.
    [Whereupon, at 3:39 p.m., the committee was adjourned.]
    [The prepared statements of Hon. Diane E. Watson and Hon. 
Bill Sali, and additional information submitted for the hearing 
record follow:]

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