Blackwater Heirs: America's New Mercenaries

Blackwater Heirs: America's New Mercenaries

As American commanders meet this week for the Afghanistan review, Obama is hiring military contractors at a rate that would make Bush blush.

December 15, 2010

The Daily Beast – Top U.S. commanders are meeting this week to plan for the next phase of the Afghanistan war. In Iraq, meanwhile, gains are tentative and in danger of unraveling.

Both wars have been fought with the help of private military and intelligence contractors. But despite the troubles of Blackwater in particular—charges of corruption and killing of civilians—and continuing controversy over military outsourcing in general, private sector armies are as involved as ever.

Without much notice or debate, the Obama administration has greatly expanded the outsourcing of key parts of the U.S.-led counterinsurgency wars in the Middle East and Africa, and as a result, for its secretive air war and special operations missions around the world, the U.S. has become increasingly reliant on a new breed of specialized companies that are virtually unknown to the American public, yet carry out vital U.S. missions abroad.

Companies such as Blackbird Technologies, Glevum Associates, K2 Solutions, and others have won hundreds of millions of dollars worth of military and intelligence contracts in recent years to provide technology, information on insurgents, Special Forces training, and personnel rescue. They win their work through the large, established prime contractors, but are tasked with missions only companies with specific skills and background in covert and counterinsurgency can accomplish.

Some observers fear that the widespread use of contractors for U.S. counterinsurgency efforts in Afghanistan, Pakistan, and the Horn of Africa could deepen the secrecy surrounding the American presence in those regions, making it harder for Congress to provide proper oversight.

Even in Iraq, where the U.S. has ended combat operations, the government is "greatly expanding" its use of private security companies, creating "an entirely new role for contractors on the battlefield," Michael Thibault, the co-chairman of the federal Commission on Wartime Contracting, recently warned Congress.

Among the companies getting contracts is Blackbird, which is staffed by former CIA operatives, and is a key contractor in a highly classified program that sends secret teams into enemy territory to rescue downed or captured U.S. soldiers.

Glevum, meanwhile, fields a small army of analysts in Iraq and Afghanistan who provide the U.S. military with what the company opaquely describes as "information operations and influence activities."

And K2 is a highly sought-after subcontractor and trainer for the most secretive units of the U.S. Army Special Operations Command, including the SEAL team that rescued the crew of the Maersk Alabama from a gang of pirates last year. It is based near the Army's Special Forces headquarters in Fort Bragg, North Carolina, and was founded by Lane Kjellsen, a former Special Forces soldier.

Gen. David Petraeus, the top U.S. commander of conventional and special forces in the war zones, is using contractors because "he wants an organization that reports directly to him," said a former top aide to the commander of the U.S. Special Operations Command, the umbrella organization for all Special Forces.

"Everyone knows Petraeus can't execute his strategy without the private sector."

The former aide spoke on the condition that he not be identified, saying his career could be jeopardized if he went public. The International Security Assistance Force, the general's home command, did not respond to a request for comment.

The use of contractors could become a serious problem if controversies about them are not addressed, a senior British official warned during a recent visit to Washington. Pauline Neville-Jones, the U.K.'s minister of state for security and counterterrorism (and a former executive with QinetiQ PLC, a major intelligence contractor), told an audience at the Brookings Institution that

"We have something of a crisis in Afghanistan" partly because of the "largely unregulated private sector security companies performing important roles" there.

The Pentagon's Central Command had nearly 225,000 contractors working in Iraq and Afghanistan and other areas at last count, doing tasks ranging from providing security to base support. Intelligence agencies such as the CIA and the National Security Agency field thousands more under classified contracts that are not publicly disclosed, but extend into every U.S. military command around the world. (According to reports in The Nation and elsewhere, Blackwater, which is now known as Xe, has contracted to send personnel into Pakistan to fight with the Joint Special Operations Command, although a command spokesman said the reports were "totally wrong.")

In response to a question from The Daily Beast, Neville-Jones said that:

American and British forces must work out "the operational rules and roles that they have when they are in the frontline." Unless that happens, "We are in danger of getting up against Geneva Convention problems and failure to observe fundamental rules of war."

A spokesman for SOCOM would not say exactly how many people work on its contracts, but did say that between 2001 and 2009, SOCOM's budget has grown from about $3 billion to about $10 billion.

Neither SOCOM nor Special Operations forces outsource combat operations, the spokesman said. "About the only contractors Special Operations forces might have with them on operations are interpreters," he said.

However, private contractors are now fulfilling vital functions previously done by the military itself.

Blackbird is a case in point. Based in Herndon, Virginia, a stone's throw from the CIA, Blackbird deploys dozens of former CIA operatives and provides "technology solutions" to military and intelligence agencies. Much of the company's revenue—including a $450 million contract awarded last year by the Navy's Space and Naval Warfare Systems Command—comes from the deployment of special teams and equipment into enemy territory to rescue American soldiers who have been captured by Taliban or al Qaeda units or have stranded after losing their helicopters in battle.

Until recently, the task of rescuing American soldiers was largely carried out by the military's Joint Personnel Recovery Agency. But Secretary of Defense Robert Gates has recommended that the agency's parent command in Virginia be closed. If the recovery agency is shut down, Blackbird would likely pick up the rescue business as it is outsourced.

In that case, recovery of captured or stranded American soldiers "won't be a military command anymore; it will be a business," said the former Special Operations command aide (an agency spokesman said, "It's too early to say what will happen.")

Blackbird is run by CEO Peggy Styer, an investor once labeled a "serial defense entrepreneur" by CNN. Last year, she hired Cofer Black, the former head of the CIA's Counterterrorism Center, to a senior position. (Black hired and managed some of the first private operatives to enter Afghanistan after the 9/11 attacks, and later joined Blackwater.) Perhaps anticipating a pickup in future business, a venture-capital fund launched by Styer and two other Blackbird founders recently raised $21 million on Wall Street. Blackbird did not return phone calls or emails.

Glevum Associates, for its part, has won contracts for controversial intelligence-gathering work.

The Boston-based company was founded in 2006 by Andrew Garfield, a former British intelligence officer with counterinsurgency experience in Northern Ireland. Garfield first gained public notice in 2004, when he was a key player in the Lincoln Group, a defense contractor that became notorious for engaging in a covert psychological operation to plant stories in the Iraqi press that put a positive spin on America and the U.S. war effort in Iraq. (Covert psychological operations are known in the trade as psy-ops.)

Garfield won his first contracts for Glevum as an adviser to the U.S. military in Iraq. Drawing on his experience in Northern Ireland, his company began researching the views of Iraqi citizens toward the U.S. military.

At the time, "no one was doing systematic target audience research," he told me in an interview.

Glevum's contribution to counterinsurgency efforts is a trademarked program called "Face-to-face Research Analysis" that combines intelligence collection with polls and interviews, primarily for the Army's Human Terrain System—a system that some American social scientists have described as unethical because information gleaned from anthropological researchers ultimately can be used to kill people.

Garfield denies the charge.

The U.S. military, he told me, can't "connect opinions to location." Rather, the military uses his information "to focus their operations the right way and to provide solutions that Afghans would choose."

Several experts on the program said it's impossible to divorce it from other—bloodier—counterinsurgency efforts.

"HTS has been an intelligence-funded program from the beginning," said John Stanton, a Virginia military analyst who has written extensively about the system.

(Glevum's corporate partners include primary contractors BAE Systems and ManTech International. K2, which declined to comment, also wins much of its classified work as a subcontractor for larger companies such as Boeing and CACI.)

Garfield pushes back against the notion that Glevum Associates bears any resemblance to Blackwater, which became synonymous with corruption and incompetence for a series of incidents that included shooting innocent civilians and smuggling illegal weapons.

"Whenever people think of contractors now, they think of Blackwater," said Garfield. "Well, if you hire a cheap plumber, don't be surprised when the plumbing breaks."

Former Blackwater Bought by Investment Group

December 17, 2010

AP – An investment group with ties to the founder of the company formerly known as Blackwater announced Friday that it has bought the security firm, which was heavily criticized for its contractors' actions in Iraq.

USTC Holdings said in a statement that the acquisition of the company now called Xe Services includes its training facility in North Carolina.

Terms of the deal were not disclosed. But the statement said owner and founder Erik Prince will no longer have an equity stake and no longer be involved in Xe's management or operations. The company will be managed by a board appointed by the equity holders and will include independent, unaffiliated directors, the statement said.

Prince founded the company in 1997 along with former colleagues from the Navy SEALs.

The ownership group is led by two private equity firms, including New York-based Forte Capital Advisors. Forte managing partner Jason DeYonker has been a longtime financial adviser to Prince, helping him expand the Moyock, N.C., training grounds and negotiating Blackwater's first training contracts with the U.S. government.

"The future of this industry belongs to those companies with the highest standards of governance, transparency, and performance," DeYonker said.

Xe announced in June that it was seeking a buyer. At the time, Prince said selling the company was a difficult decision, but constant criticism of Xe helped him make up his mind.

"Performance doesn't matter in Washington, just politics," he said.

In August, Prince moved to Abu Dhabi.

The private company became famous as Blackwater, which provided guards and services to the U.S. government in Iraq, Afghanistan and elsewhere. It became one of the most respected defense contractors in the world, but also attracted sharp criticism over its role in those missions.

It has been trying to rehabilitate its image since a 2007 shooting in Baghdad that killed 17 people, outraged the Iraqi government and led to federal charges against several Blackwater guards. The accusations later were thrown out of court after a judge found prosecutors mishandled evidence.

In March, Senate Armed Services Committee Chairman Carl Levin suggested the Pentagon should consider banning Xe from a $1 billion deal to train Afghan police. The Michigan Democrat said he thought the company's involvement was hindering the U.S. mission in Afghanistan.

Earlier this year, Xe sold its aviation division for $200 million to Wood Dale, Ill.-based AAR Corp. Also, five former executives, including Gary Jackson, the company's ex-president, were indicted on charges of conspiring to violate federal firearms laws. Jackson was among the top officials who left the company last year in a management shake-up.