The Black Hole of Government Contracting
In January 2008, a 24-year-old Green Beret from Pennsylvania, Ryan Maseth, was electrocuted and killed while showering at Radwaniyah US base in Iraq. The cause, his family alleges in a negligence suit filed in district court in Tennessee, was improper electrical wiring by Kellog, Brown and Root (KBR), the contracting company in charge of the base. He is one of at least eighteen U.S. soldiers who have been electrocuted in similar situations at U.S. bases in Iraq.
Then, in 2012, KBR was found responsible in an Oregon court of knowingly exposing twelve Oregon National Guard soldiers to a toxic chemical, sodium dichromate, at the Qarmat Ali water treatment plant in Iraq. Information from depositions with KBR employees reveals that they were fully aware of the true nature of the yellow dust—which is, according to the chairman of the Department of Environmental Science at NYU Medical School, Dr. Max Costa, “one of the most potent carcinogens known to man” and that can “enter every cell … and potentially produce widespread injury to every major organ.” Two of the soldiers already died from cancer that their doctors attribute to sodium dichromate exposure.
In 2013, KBR was ordered to stand trial yet again, accused of human trafficking in the case of twelve Nepali men, eleven of whom were murdered. The men’s families say that in 2004 they were promised safe jobs in Jordan, but instead were smuggled to Iraq, destined for a KBR-run U.S. Air Force base. They were intercepted by insurgents en route, and their passports confiscated. Eleven were beheaded; the twelfth survived, and is among the plaintiffs in this case, filed in a district court in Texas.
This is a partial list of the allegations of negligence, corruption, and human trafficking that KBR has, or is still, facing from its operations in Iraq.
KBR is also the private military contractor that has made the most money from the U.S. government’s “war on terror”: $39.5 billion over the past decade. Despite its legal battles, the company continues to be one of the three main private military contractors that the U.S. government hires for work on military bases in Iraq.
And KBR is not the only one that wins lucrative contracts from the government despite having been tried for civil or criminal offenses in U.S. courts. In fact, most of the top contractors working for the U.S. government in Iraq and Afghanistan are in the same situation. In most cases, it is legal for the government to overlook unlawful behavior when hiring contractors, and experts say the government has become so reliant on private military contractors in modern warfare, that this is precisely what happens.
Like KBR, these contracting companies are large and multifaceted, offering services from security to intelligence to food service.
“This is the black hole of contracting,” said Tim Shorrock, a researcher who writes about private intelligence companies. “You can pretty much do almost anything and keep your contracts,” he said.
For instance, another of the top contractors, CACI International, is accused in a U.S. district court in Virginia of torture and war crimes at Abu Ghraib. According to court documents, Taha Yaseen Arraq Rashid — an Iraqi citizen who was freed because no evidence ever materialized linking him to terrorism — told the court that CACI employees tried to extract intelligence information from him by shooting him in the head with a taser gun, beating him to the point of breaking his limbs and causing him to lose some vision, and forcing to watch the rape of a female prisoner, among other torture. He is one of five former Abu Ghraib prisoners with similar claims.
On its website, CACI explains its defense: “We have cooperated fully with every government investigation, and we made clear that we would not condone or tolerate illegal or inappropriate behavior by any employee when engaged in CACI business. While three former employees have been cited in various reports in connection with disputed incidents in Iraq, no CACI employee took part or appears in any of the horrific photos released from Abu Ghraib.”
In April 2014 alone, CACI won five new or renewed government contracts.
Additionally, three of the four top recipients of reconstruction money in Afghanistan — Dyncorp, PAE Government Services Incorporated, and Civilian Police International, as named in a recent report from the Special Inspector General for Afghanistan Reconstruction — have all been accused of a range of civil and criminal violations, including corruption, tax evasion and human trafficking, according to the Project on Government Oversight (POGO).
Although it may seem counterintuitive, in most cases it is not illegal for the government to hire companies that are accused of breaking laws. The Federal Acquisition Regulation (FAR) is the legal authority in deciding under what circumstances a company can be “debarred” from working with the federal government. It declares that a company must have been convicted of one among a short list of felonies within the past three years: tax evasion, fraud, providing false information to federal government regarding a contract, or bribery. If a company has been found guilty of one of these felonies, it is then up to the discretion of the federal government whether to debar it from receiving further contracts, which would last a period of three years.
The government sometimes decides not to debar a company, when the benefit derived from the product the company offers seems to outweigh its unlawful behavior, says Robert Stumberg, the director of the Harrison Institute for Public Law at Georgetown University. “Public interest is complicated,” says Stumberg. “Sometimes [the government] will look at a company and say, “Gosh, you’re really bad, but we choose not to debar you because we need you too much, because you’re too important to kick out,” says Stumberg. “It’s seemingly in the public’s interest to keep it in even though it’s bad.”
Experts suggest that this may be the case for the U.S. government’s relationship with private military contractors accused of misbehavior. “The U.S. government is simply too dependent on private contractors to be able to enforce accountability,” says Neil Gordon of POGO.
The government’s language in some contracts supports Gordon’s point. For instance, one of CACI’s five April contracts is an agreement with the U.S. Navy to provide, among other things, technical, engineering and human resource support on war ships designed for fighting in shallow seas. “CACI Technologies is the only known company which currently possesses the knowledge and expertise to meet the Navy’s technical and schedule requirements to support,” says the Navy report, as justification for a sole-source contract.
In a document justifying another of the April contracts—this one with the U.S. Defense Information Systems Agency, a unit of the U.S. Department of Defense, to extend a warranty on bomb-detection technology—the author of the report justifies contracting CACI because, when the government called CACI to ask if a third party was authorized to do the same work, the company said no. Therefore, the warrantee was extended, says the report.
And it isn’t only the Navy and Department of Defense that believe CACI to be “the only known company” which can fulfill their needs: The CACI website lists key clients that include the U.S. Departments of Justice and Homeland Security, NATO, the Drug Enforcement Administration, and the New Jersey Police, among others. The company’s revenues totaled $3.7 billion in 2013, according to its website. $998 million of this money came from the U.S. government, according to government records, making it the 42nd top recipient of federal contract awards in the year 2012.
Pratap Chatterjee, the executive director of Corpwatch and author of Halliburton’s Army, says that another reason that the government has come to inescapably rely on private military contractors is that the modern U.S. public expects war to be outsourced. “One of the problems with fighting a war is that a lot of it is not sexy. It’s dirty, dull and dangerous,” says Chatterjee. “So modern kids with their Gameboys and Nintendos and McDonalds — why would they go to war? The use of contractors has become key…. The US government is trying to make war easier and more comfortable,” says Chatterjee.
Experts speculate that these companies maintain their significance to the government also through proximity to lawmakers in Washington. For instance, MPRI, one of the subsidiaries of top Afghanistan aid recipient CPI, was created by retired senior military officers who maintain close relationships with the Pentagon, according to the AP.
Campaign contributions may also help. CACI, for instance, has drasticallyincreased its spending on campaign contributions — from $1,500 in 1998, to $160,000 in 2012. KBR’s contributions followed a similar trajectory, from about $12,000 in 2006, to $289,000 in 2012.
Revolving door lobbyists also may give companies leverage. In 2004, for instance, eleven of CACI’s twenty-two registered lobbyists were once U.S. government employees, including former members of the Department of Defense, House of Representatives, the Navy and the U.S. Coast Guard, among other government institutions, according to lobbying records. This relationship with Washington may help the company maintain influence, even while it fights war crimes allegations in Virginia.
But not all of the government’s addiction to contractors can be explained by corporate proactivity. The government also granted companies generous limited liability stipulations that make it relatively easy for them to shift the majority of the responsibility for unlawful behavior back onto Uncle Sam’s shoulders, experts say.
For instance, KBR’s contracts include a legal figure called an indemnity, says Texas Attorney Mike Doyle, who is a prosecutor in several cases against KBR. “What KBR did is get the government to agree that even if KBR kills U.S. soldiers, Iraqis, Brits, the government is on the hook for anything bad we do to anybody. It’s very uncommon you’d allow a contractor to do that,” says Doyle. “It’s kind of unknown why they’d agree to this,” he says.
What is known is the circumstance under which they agreed upon the indemnity. In a videotaped deposition interview in which Doyle questions Mary Wade, KBR’s chief contract negotiator, Wade testifies that the contract between the company and the government — a no-bid contract worth over one billion dollars — was negotiated in one morning. She also acknowledges that mere days after receiving the no-bid contract, the company went back to the government and renegotiated for the indemnity. “It was about risk on performance,” Wade said in the deposition.
Doyle speculates that the government felt they needed KBR in order to go to war. “It seems like KBR basically said, ‘You want your war? Give us this indemnity,’” says Doyle.
Limited liability structures, like indemnity, are a strategic move for contractors because they can “potentially be used to skirt accountability,” says Gary Ruskin, the director of the Center for Corporate Policy. “The intent is to avoid accountability; it works as intended.”
KBR argues that limited liability is non-negotiable if it is to be able to fulfill its duties. In court documents from the case of electrocuted soldier Maseth, the company asserted that indemnity “is based on a long-standing principle,” and is a “fact of life in the modern military, given the U.S. government’s frequent reliance on services provided by war-zone contractors in inherently risky and unpredictable circumstances.”
It argued that if the government goes back on the principle now — for example, by refusing to reimburse KBR for the damages it must pay to Maseth’s family or the U.S. soldiers poisoned by sodium dichromate — then it will endanger contractors’ willingness to work with the government in the future. Thus “allowing Maseth’s family to sue KBR in effect allows them to sue the federal government,” the company argued in the documents.
Despite the fact that it is legal for the government to overlook unlawful behavior in awarding contracts, some experts argue that it’s a problematic on a deep level. “I do think it’s a moral issue,” says Gwynne Skinner, law professor at Williamette University and expert on legal accountability mechanisms for private actors. “We have regulations in our government that say we shouldn’t do business with foreign governments that are engage in human rights violations, so why are we allowed to do so with companies? It’s not only a moral issue, it’s incongruent with our government’s own policy.”
Indeed, the pockmarked track record of companies like KBR and CACI has prompted U.S. congressional officials to introduce legislation seeking to increase accountability over private contractors. They argue that the issue only becomes more important with time, because as the U.S. military pulls out of the Middle East, the number of U.S. contractors in the region is scheduled to increase.
Actors from all sides of the debate, including human rights groups, the U.S. Department of Defense, the Obama administration, and even some contractors have all expressed support for such increased accountability mechanisms.
At least six such bills have been introduced to congress in the past decade; nevertheless, five have died in committee. The one that did pass — the Military Extraterritorial Jurisdiction Act, passed in the year 2000 — so narrowly defined the exact circumstances in which a contractor violating a law could be prosecuted, that it was inapplicable in all cases but one.
Again, the roadblock seems to be traceable to the government’s reliance on contractors in modern warfare, says Chatterjee. “When these bills come before Congress, in reality not many people care,” he says. “In general, Congress is in the thrall of lobbyists and big money — but with these guys, it wasn’t that they went on the hill and said to senators, ‘You must vote against this!’ Chatterjee says. “Even the Democrats essentially believe they must defend the country against this existential threat of terrorism. So nobody was really in favor of this.”
Attorney Skinner argues that business concerns also impact here. “One force working against accountability is that most people in Congress want to be pro-business, and they still have this belief that regulation makes business really expensive and chills economic growth,” she says. In the end, experts can only speculate about the root cause of the government’s behavior.
Danielle Marie Mackey is a journalist specializing in Latin America.
This article appears in the excellent Le Monde Diplomatique, whose English language edition can be found at mondediplo.com. This full text appears by agreement with Le Monde Diplomatique. CounterPunch features two or three articles from LMD every month.