Blackwater Got Millions Pretending To Be A Small Business

Uber-contractor Blackwater Worldwide is nothing if not business savvy. An audit today reveals that a Blackwater affiliate, Presidential Airways, Inc. won 39 contracts between 2005 and 2007 by labeling itself a small business. The Inspector General of the Small Business Administration has concluded that 33 of these contracts involved misrepresentation of the numbers of employees working for Presidential Airways. The Blackwater affiliate dubiously claimed to have fewer than than 1,500 employees, which gave it small business status.

The gambit worked because the government decided that for Afghanistan and Iraq security contracts, workers trained by Presidential would be considered independent contractors, not company employees. Once providing security overseas, the independent contractors apparently lose their affiliation (if not their paychecks) with Blackwater/Presidential.

The report was requested by Henry Waxman’s House oversight committee. The committee has been looking for a while at how the world’s largest private security contractor has manipulated contracting and tax laws. Last week Blackwater said it was planning to leave the private security business. But they still haven’t reneged from any contract– though perhaps now they’ll have no choice.