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Letter to the Honorable Steven C. Preston, Administrator U.S. Small Business Administration


Location: Washington, DC

Today Senator John Kerry (D-Mass.) pressed the Bush Administration for more information about how size determinations were made before awarding Blackwater USA federal contracts. Last week, Senator Kerry inquired about a Small Business Administration (SBA) size ruling referenced in a Blackwater press release defending its classification of workers as independent contractors, not employees. The SBA provided some information on the size determination, but Senator Kerry says details on how the determination was made are still needed.

"There are plenty of unanswered questions about how Blackwater may have abused contracting loopholes, and whether the SBA made the appropriate decision on the size of the firm," said Kerry, Chairman of the Committee on Small Business and Entrepreneurship. "The Bush Administration has outsourced much of our national security to private contractors. I want to know how we got to this point, hold people accountable, and make sure we're not sitting here again next year."

In a letter to SBA head Steven Preston, Kerry asked for a detailed accounting of the Administration's worker classification ruling and any information not yet provided to the Committee about size determinations made for any of Blackwater's affiliates.

Following is the text of the letter sent to SBA Administrator Steven Preston:

November 1, 2007


The Honorable Steven C. Preston
U.S. Small Business Administration
409 Third Street, SW, Room 7000
Washington, DC 20416

Re: U.S. Small Business Administration's Size Determination regarding Presidential Airways, an affiliate of Blackwater

Dear Administrator Preston:

Thank you for your timely response to my letter concerning the employment status of Blackwater USA's workers. I appreciate the information you sent, but have further questions regarding the size determination made in regards to Presidential Airways, Inc., a Blackwater USA affiliate.

Specifically, please provide my office with:

A thorough analysis of the size determination made regarding Blackwater;
The information that was relied on in making the size determination;
The number of employees and independent contractors Blackwater and each of its affiliates or related companies listed in Size Determination Memorandum File Number 3-2007-3-4-5 were determined to have through the SBA's analysis;
The number (and location) of site visits that were done to confirm any information Blackwater or its affiliates provided;
How the SBA used the Twenty Factor Common Law Test in making the size determination;
Any additional materials related to other size determinations involving Blackwater USA or any of its affiliates.

The emergence of companies working in combat zones like Blackwater certainly presents a new challenge to SBA's size determination process. It would be helpful to me to know whether the SBA has a formal policy about how to deal with the status of workers in combat zones in future procurements.

I request that you provide these documents no later than November 9, 2007. If you have any questions please don't hesitate to contact me or have your staff contact my staff at 202-224-5175. Thank you for your timely attention to this matter.


John Kerry

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