U.S. House Committee on Oversight and Accountability – Blackwater USA Hearing, October 2, 2007 — Part III: Questioning of Erik Prince, Chairman, Blackwater USA Lyrics

Blackwater USA Hearing, October 2, 2007 — Part III: Questioning of Erik Prince, Chairman, Blackwater USA – U.S. House Committee on Oversight and Accountability Lyrics

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.

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.

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.

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 $11/2 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 . 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.

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 . 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, 101/2

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.

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 . And that he is not the

prosecutor.

Chairman Waxman . 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 . 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.

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.

T5219.038

T5219.039

T5219.040

T5219.041

T5219.042

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 . The gentleman's time has expired.

Mr. Lynch . 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 . That remains to be seen.

Mr. Prince . 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 31/2 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 . 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.