Inside the Headquarters

Really, who wouldn’t want to gun tote with Blackwater/Xe or other private security firms-for-hire? While Blackwater/Xe and the many companies like it offer similar services now the stuff of myth and lore, the they command their weight in gold and provide a crucial service to those who cannot protect themselves.

As the final U.S. combat unit has departed Iraq, the State Department has said it is doubling its private security force to 7,000. (Larger than a the old U.S. Army regiment.) While guns for hire are nothing new, it is heart-stopping that the U.S. Department of State must hire thousands of private gunslingers for its protection. It seems a sad commentary on this powerful nation’s capabilities.

The U.S. departure leaves those who remain vulnerable in a nation not yet secure. Blackwater/Xe has been out of the State’s Iraq picture since the 2007 incident when two of its employees were accused of killing 14 Iraqis in a shoot-out/security incident.

Iraqis apparently have long memories and are angered at the prospect of more guns-for-hire in their country. We also may have reason for concern: This next Iraq chapter is reportedly the largest mission the State department has led without DoD backing.

With Blackwater/Xe founder Erik Prince’s boys gone, we wonder how many top-shelf companies remain to which State is willing to entrust its diplomats.

Prince is reported to have mused about putting together a combat battalion, something he has denied. As upsetting as that may be to some (and exhilarating to others), Prince, often the visionary, had an idea whose time has come. Such a force could be ideal for the U.S. predicament in Iraq.

While State’s situation is one of national import, it is Prince’s plight that’s piqued my interest. If you have followed this roller coaster ride, Prince stepped down as Blackwater CEO when controversy was killing his bottom line. Two employees now face murder charges while five former top company executives stand indicted on federal weapons, conspiracy and obstruction charges. While there remains a Blackwater USA, much of the company became Xe – yes, it sounds like a Cirque du Soleil show. It has been reported some part of the company is for sale.

Currently, Prince is paying a $42 million fine for export violations, which include illegal weapons exports to Afghanistan and providing the Taiwanese police with sniper training. (Bet the Chinese were miffed.) The fine should allow Prince to continue to do business in the U.S.

But that business will be long distance. It is now reported Prince has moved to Abu Dhabi. His PR people say he needs a break from the U.S. Our guess is he’s looking for lucrative Middle East contracts and a place with few extradition worries. The princes of the United Arab Emirates and others in the region may appreciate Prince Erik’s talents more than the U.S. Justice Department. Or Code Pink.

Several days ago, Prince was confronted in his U.S. home by a Code Pink cofounder, who was later arrested.

Stay tuned. I say Erik Prince has something planned.

So who will State hire?

The U.S. State Department reportedly is fielding its own army. It sounds so “Vatican City,” or part of some Will Smith shoot ‘em up movie about survival in the aftermath of the destruction of the world.

According to the 2008 status of forces agreement between the U.S. and Iraq, all U.S. military are to be out of Iraq by the end of 2011. Army Gen. Ray Odierno, head of U.S. forces in Iraq, is making the (hasty?) transition. The departure of Odierno could leave the diplomats in a highly volatile and unsafe nation without protection.

This contracted force will safeguard State’s presence in Iraq after U.S. forces pull out. Efforts to arrange this defense force are ongoing. They have five months until the U.S. military leaves Dodge for good. (Regardless of SOFA, will they pull out completely?)

It has been reported State has ordered gear to equip its army including Black Hawk helicopters, mine-resistant ambush-protected vehicles (MRAPs) fuel trucks, high-tech surveillance systems and other equipment to be operated by contractors the likes of, yes, you guessed it, Blackwater/Xe.

Blackwater/Xe, the brainchild of visionary Erik Prince has had is troubles. Founded in 1997 in rural Moyock, NC, the former SEAL trained a security force ahead of its time ready for the security needs unleashed by Sept 11. Unfortunately, Blackwater’s name became synonymous with “rogue cowboy,” and given the mission of the security contractors in a war zone, it is debatable if the harsh criticism was deserved.

Prince lost his prized State contract over allegations his people gunned down 17 Iraqi civilians while protecting State personnel. The New York Times has reported Blackwater personnel have worked with the CIA in its clandestine raids.

It is reported Blackwater/Xe has thousands of trained security personnel and our guess is that training goes well past private security. There was talk earlier in the decade that Prince Erik wanted to raise a combat battalion. Those rumors were squashed, but our guess is something was afoot.

Fast forward to 2010. Despite Blackwater/Xe’s troubles, that trained battalion may be exactly what State needs. Gather the lawyers, but if State needs to contract a small army, appease international law and full speed ahead.

Some lawmakers are less than thrilled and see what they say as one bad contract being replaced by another. We say what a great opportunity to determine if we can contract out combat functions. (We contract just about everything else.) If the U.S. continues to fight unnecessary wars, it cannot afford to place most of its manpower eggs in one basket. Aside from hiring the French Foreign Legion, members of the defunct Soviet Army or a battalion of Chechen rebels, we don’t see another choice. This will cost some bucks, but if it works, well, options are priceless.

The Army’s Forces Command is moving to Fort Bragg. While this may be news to those who don’t plot base realignment and closure activities, it’s no surprise to the Fayetteville, N.C., business community, which hopes for an upswing in business.

The final round of BRAC has resulted in some overwhelming changes. How many thousands are heading to the Army’s Fort Belvoir in Northern Virginia? Drive up I-95 through Alexandria, Va., and gaze upon the cell-block looming over the interstate scheduled to house a slew of government workers and contractors. Bragg businesses would welcome a fraction of the D.C. area’s fortune.

We recently spoke with one Fayetteville barber shop owner. His livelihood is inextricably linked to unit rotations. (We said we’d never use that term, but it is appropriate here.) The deployment schedule for the 82nd Airborne Division, which makes its home at Fort Bragg, has been difficult on businesses. When the boys return, things are good; but when they go, Two Brothers Barber Shop and other businesses wait, hoping they can hang until the units return again.

He mentioned the Forces Command move first when we spoke. “Really?” I said. “Yeah. And these are the types of jobs where people will be staying at Fort Bragg, which should give us an influx of customers again,” he said. The Forces command employees will stay at Bragg. They would not deploy. Good news for businesses. This seemed the best news our owner had heard in years.

Maybe no one is more surprised about the size of the move than Forces Command itself. It has been reported a whopping 90 percent of the command’s civilian employees will be making the move from their BRAC’d Fort McPherson, Atlanta home to their new digs at the sprawling Fayetteville area Army base. In fact, 597 of 669 civilians will head to the Promised Land, a much larger contingent than anyone had envisioned.

While this is great news for Fayetteville, how do the businesses that lose customers to BRAC fare?

Over the past several years contractors have been in the news often because of some perceived misstep. They have been maligned for exceeding the boundaries set by their contracts. They have worked outside the law.

Our unscientific research shows, yes, contractors who cross that line have little choice: it is expected by the govvies that hire them.

According to reports by Reuters News Agency, Defense, and others, Defense Secretary (and Occasional Superhero) Robert M. Gates is reviewing the role of contractors in intelligence gathering, following accusations some helped track and kill militants in Afghanistan and Pakistan. The suspended defense official in this matter maintains he had approval for his work, and defends his contractors’ role.

Sadly, this finger-pointing with contractors is nothing new.

For many years, there was a clearer distinction between contractor and client. Contractors often come with tremendous expertise, but some retired military seem to think they have active-duty obligations and often possess misplaced loyalty.

Welcome to 2010. Contractors and government types have become interchangeable – and clients like it. In speaking to one technical supervisor. “Oh, we don’t like to distinguish between contractor and government personnel. We’re all here to do the same job.”

This brings us to the “Boxers or Briefs” question. The aforementioned government supervisor probably speaks for most. Today, contractors are making decisions for divisions and even commands because the process to do otherwise has become so arduous. The refrain, “That’s what we hired you for,” has become too common, though a department can come under scrutiny and a contractor can be tossed for encouraged violations.

They say, “Contractors don’t speak for the government.” Well, that may be true in a parallel universe, but it happens every day.

This reality in many a defense trench is just how the government wants it contractors – indistinguishable. It’s quicker and easier until someone makes a big mistake or the disgruntled wail on the whistle.

There are always more contractors to fill the sacrificial slot.

We have been reading the reports on the F-35 Joint Strike Fighter with waning interest. They call it “Lightning II.” We call it “Déjà vu.” Pick your poison. It is another DDG-1000 Zumwalt Class Destroyer-to-Nowhere. It is the littoral combat ship that more than doubled in price. It is the bankrupt and canceled presidential helicopter.  Just change the name and the general facts remain about the same.

The Joint Strike Fighter reportedly is the Pentagon’s most expensive system. Defense leaders bought into the dream. Yeah, it was pricey, but DoD would come out ahead in the long run. (Their opinion, not ours.) The Navy, Marine Corps, Air Force and nine allied nations all were going to the same bird. It made sense for everyone to have the same plane. (This seemed more a liability than combined advantage from the start.) And birds could be delivered quickly. (Read: Check’s in the mail.)

DoD’s Dream Machine seems to be anything but. The F-35 has been fraught with (you guessed it) cost overruns and delays. Reports say building the plane has been “difficult,” and it is running billions over budget. Defense Secretary and Occasional Superhero Robert M. Gates has described the situation as “troubling.” Worse, production is behind schedule. The Air Force delivery has been pushed from 2013 to 2015.

Our guess is things will get worse before they improve (or the program dies). We guess no one will see a full squadron of F-35s until well after 2015. Cost overruns will continue. (See programs above.) Given the size or the F-35 program, economies of scale will come into play: the size of the program will send costs further out of control at a faster rate.

Is the Joint Strike Fighter the Defense Department’s version of “too big to fail”?

We hear and read about so many – too many—contracts gone wrong. Is it the contract itself? The prime contractor? Below-average frontline workers? Is the military client at fault? We have an idea, but more on that later.

The Navy has discovered another round of construction problems on Northrop Grumman- built ships. Two years ago the Navy’s largest shipbuilder had welding issues at its Newport News facility. Now the Navy reports challenges farther south at the Avondale, La., facility as well as Pascagoula, Miss. Deficiencies include improper welds, defective engines and lube oil systems problems.

Unfortunately the shoddy workmanship has been found on multiple vessels including San Antonio class amphibious transport docks, several Arleigh Burke guided-missile destroyers and at least one amphibious assault ship.

Two amphibs already have been sidelined for repairs – the USS San Antonio (LPD 17) and the brand new USS New York (LPD 21) that just attended its commissioning ceremonies in New York City to much fanfare. (It is constructed in part with steel extracted from the World Trade Center.)

Navy inspectors are checking thousands of welds and deficient systems. Though the ships are not thought to be in any danger, the problems could present significant issues with some wear, and vessel life spans could be cut.
As a result of, let’s call it “Grummangate,” all Gulf Coast pipe welders and pipe inspectors have been de-certified until they are retrained and tested.

So who’s more of a threat, a guy in a vest or Northrop Grumman?

We say Northrop, and speculate (we have no proof) that increased demands on the Gulf Coast facilities without corresponding funding may be to blame. For example, let’s say a proper pipe weld takes 30 minutes. If the welding part of the project was not adequately funded, the shipyard might say, “Those welds can take no more than 15 minutes.” Profits are maximized. At the same time risk is increased, but the contractor has figured in the cost and comes out ahead no matter what.

Navy Shipbuilding: Who can you trust?

It appears contractors hired by the U.S. for work in Afghanistan have been buying off the Taliban for the safety of their employees as well as their projects. At the same time, it has been reported that U.S. lawmakers are buying off other U.S. lawmakers for safe passage of the Defense Appropriations bill and other important legislation.

Lawmakers call their actions compromise. Contractors call theirs lifesaving.

Contractor money may be funding the Taliban’s war against the U.S., killing U.S. Marines and soldiers.

Not even lawmakers can trump that one.

U.S. and international firms have been hired for transportation projects and road and bridge construction in Afghanistan. Gear has got to get to U.S. forces in a nation where roads (when you can find one) are a luxury. Contracts total in the billions of dollars, and the work can be dangerous. But it seems contractors and their private security chiefs have broken the “Welcome to Afghanistan” code: First, meet with the local guy in charge. If it seems Local Leader Guy is a gun-toting Taliban Bad Man, the next step is to pose this query: “So, how much for you to leave us alone so we can get this work done?”

A House subcommittee is looking into the allegations of “protection rackets.” Love it or hate it, the practice makes sense. Protection money may mean roads get built. The projects create jobs, all be they short-term. As any Afghan will tell you jobs are the nation’s number one issue. They are the one path out of Afghanistan’s mind-blowing poverty and away from Taliban enticements.

For all its creativity and daring, these pay-offs have had one lethal catch: Aside from posing long-term problems for non Afghans and future shake-downs, it appears the Taliban may be funding their operations against the U.S. with contractor (U.S.) dollars. Officials finally have a pretty good idea how the Taliban in the east has remained funded and so well-armed.

Afghanistan has been buying off the Taliban and other factions for years, including through seats at the national table. Great work if you can qualify and fabulous vantage from which to fund and direct thugs back in the ‘hood. What about those so-called “rape laws”?

Given the ways of Afghanistan, are the contractor pay-offs so unreasonable?

When does DoD get to cross from red to black? It is not the day after Thanksgiving (Can you believe Old Navy opens 3 am? Hey, that’s an hour after the bars close and an hour before Sears opens, so one could start with the Macy’s Thanksgiving Day Parade on Thursday and run right through to Friday night.)
But we digress. Though parallel accounting lines never cross, DoD is making a half-hearted run for the black.

The Defense Department has said that aircraft bad boy Lockheed Martin must pony up a portion of cost overruns plaguing the big-bucks, multi-service, multi-nation F-35 joint strike fighter.  The aircraft reportedly has fallen so far behind schedule, defense officials have estimated it would cost an extra $16 billion to get the program back where it needs to be. Currently more than 2,400 aircraft are planned to outfit the U.S. Air Force, Navy and Marine Corps. That does not include those for U.S. “partners” around the world.

Despite Lockheed’s missteps, DoD officials say they are prepared to plow another $200 million (deficit) dollars into the F-35 program to encourage … we’re not sure what. It has been reported the Pentagon also may add additional aircraft in an effort to get Lockheed to hire more software engineers—to keep the program moving. We speculate the move could be an effort to ensure at least one plane will roll off the production line someday, unlike the presidential helicopter or a number of Army programs that have been killed taking billions to their gold-lined graves.

So spend more money to get a better response from the contractor? That’s how we’re reading it. This seems an odd client-contractor relationship. A contract is a contract, be it fixed-price or otherwise. Lockheed’s behavior lies in the terms of the contract, and probably isn’t impacted significantly by DoD’s efforts to show its “commitment” to the F-35 at this point. The belief that “we’re all in this together” may have been possible during World War II, but this is a global economy, and the defense giants sell to just about anyone within the law.

The world is waiting on this aircraft and reports have been published by concerned foreign customers about the cost overruns and production slowdowns. The Government Accountability Office reported last year that the F-35 program could top $1 trillion: $300 billion for the aircraft and more than $700 billion in lifetime maintenance.

When will DoD, or one of its programs, have a Black Friday?

Call this speculation, but the “canceled” planned missile defense system to have been based in Poland and the Czech Republic may have been rigged from the beginning. (Gasp!) Bad relations with Russia and the sinister glare of former president and hit man Mad Vlad Putin are of concern.

It is interesting there would be a presidential visit and BAM! an announcement soon after that we have found Iran’s nuclear deployment capabilities are far short of what we had thought.

(Oops.) And oh, here is our detailed plan for an alternative system, one that we jotted down on a cocktail napkin at 2 a.m. (Ok, we made up the latter.) Puh-lease. You’d have trouble selling that idea in an episode of TV’s “24.”

Is it possible this land-basing plan inside the former Soviet sphere of fear was a bargaining chip all along with the Ruskies?

The 10 or so land-based interceptors planned for Eastern Europe will be replaced by as many as 100 missiles on U.S. seagoing vessels. Clearly the latter affords the U.S. tighter control. It is still difficult to believe our intelligence on Iran’s nuke capabilities would be so far off. Regardless, we bet Chief of Naval Operations Gary Roughead is doing back flips over the news. This could translate to additional dollars for the Navy and maybe push the beleaguered sea service past the planned (albeit meager) 313 ships.

Though there were delays in ratification of the land-based plan by Poland and the Czech Republic that slowed the program by a reported two years, this sudden sea-basing option will commence Phase One in 2011 with the deployment of sea-based interceptors. That’s quick.

Under the old plan Boeing had the lead, but now at sea Lockheed Martin’s Aegis combat system and Raytheon’s Standard Missile-3 (SM-3) interceptors rule. Lockheed is also one of two behemoths constructing the Navy’s littoral combat ships. Cha-ching.

The missiles are de rigueur. The Navy has long toted similar babies and has already modified 18 of its Arleigh Burke class destroyers (DDG 51) and Ticonderoga class cruisers (CG 47) to carry the more advanced SM-3 missile.

Sea-based deterrence (there’s an old term) will be under complete U.S. control in international waters. Protecting Europe from Iran? Sure. Why not? This possible ruse gives the U.S. and its defense department more power and increased cache with Old Europe and New. (Look out, France!) Why this was not announced as the plan from the beginning leads one to conclude this was some sort of bargaining chip with the Ruskies as mentioned earlier. Also, a sea-basing option might have drawn intense fire from European allies as well as the anti-defense crowd. All are now silenced and the plan seems to be cruising forward at warp speed.

As recently reported by The Washington Post , Pennsylvania Congressman John P. Murtha is not the only King of the Hill rolling lucrative contracts to friends and family.

According to the watchdog group the Center for Public Integrity, 12 of 16 members of the House Appropriations Subcommittee on Defense (which Murtha chairs) have replicated ol’ Blurtha’s behavior, channeling money to supporters, former staffers and the like. While the argument can be made that lawmakers believe in the standards and proven performance of these trusted allies, (not to mention “to the victor goes the spoils,”) these members of the powerful committee have earmarked $100 million for their cronies.

(Murtha, a long-time supporter of earmarks in general, has an area of his House Web site that lists earmark requests.)

The analysis, entitled, “The Murtha Method,” is a detailed, sobering look at an alleged slice of political business in Washington. Aside from the master, Murtha, the dozen members are highlighted. Northern Virginia’s own Rep. Jim Moran joins the ranks of defense dollar earmark royalty. Many companies, large and small depend upon defense contracts. It is tough to compete when fair competition is circumvented.

What can be done? Maybe not much. Watchdog groups and journalists can report this situation, but these lawmakers bring home the bacon to their districts, rendering them beyond reproach. In fact, Moran has been so effective that every conceivable command and office is being crammed into Northern Virginia. Forget that the roads, public transportation and critical infrastructure will be pushed well beyond capacity, but jobs and money will be flowing around the Beltway.

Our guess is that committees with dough to throw show similar behavior. But defense is fraught with cronyism, as most recently underscored by the findings of the DoD Inspector General investigation into disgraced former Air Force chief of Staff T. Michael Moseley – another wheeler and dealer with defense dollars. (Can you say Jumbotron?)

But is cronyism (real or perceived) bad for defense?