Hearing of the House Committee on Oversight and Government Reform - Blackwater USA; Private Security Contracting in Iraq & Afghanistan
Interview
Hearing of the House Committee on Oversight and Government Reform - Blackwater USA; Private Security Contracting in Iraq & Afghanistan
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REP. 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's 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, most exorbitantly profitable contracts in the history of the world. And it seems to me that fiscal conservatives should be under no -- 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.
And I noticed in the table that Blackwater's contracting has gone from 25 million (dollars) in 2003, 48 million (dollars) in 2004 to 593 million (dollars) in 2006.
If we are going to be there another 10 years, as some have said, I surely hope that we're not going to continue to see these types of ridiculously excessive increases in the contracts that are being handed out.
I also noticed that Blackwater is a subsidiary of the Prince Group -- of Prince Group Holdings and that another one of the holdings of the firm is Presidential Airways, an aviation company that has held a contract with 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.
REP. DUNCAN: Can you tell me -- I don't know what all companies are -- 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'm 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 come from federal contracts. But if I could just come back and answer your statement about prices that we charge, the $1,222 --
REP. DUNCAN: When you say most, does that mean 100 percent?
MR. PRINCE: No.
REP. DUNCAN: Rough guess, what percentage?
MR. PRINCE: Rough guess, 90 percent.
REP. DUNCAN: Ninety percent. Do you still have a contract with Presidential Airways with Air Force Mobility Command?
MR. PRINCE: Yes, sir.
REP. DUNCAN: And rough guess, how much is that contract each year?
MR. PRINCE: I don't know what the exact number is, sir. It's for eight aircraft right now. I don't know what they price out at.
REP. DUNCAN: What other companies are in Prince Group Holdings?
MR. PRINCE: There's a long list. I've got a manufacturing business that has nothing to do with federal stuff, and we make pieces and parts for automotive appliance industrial power. We compete against the likes of the Japanese and the Koreans and European companies every day.
REP. 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've seen that. It lays out base- year bill rates for an average security guy. The base year is $981, not $1,222. And our profit on that is 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 -- Little Bird; 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 medevac need above and beyond the statement of our contract, trying to pull a U.S. soldier out of a 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're a business. We try to be efficient and excellent and deliver a good service. We're happy to have that argument, sir, about -- 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're happy to have that argument. If government doesn't want us to do this, we'll go do something else. But there's plenty of case to be made and plenty of spread sheets to be analyzed.
REP. WAXMAN: The gentleman's time has expired.
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