Blackwater and Iraq's contracting outlaws

March 2004 was a turning point in the Iraq war. That's the month that TV networks broadcast the grizzly images of dead and mutilated U.S. military contractors -- employees of the security firm Blackwater International -- being dragged through the streets of Fallujah.

No longer could Bush Administration officials deny -- as Bob Woodward's new book shows they aggressively tried to do -- that the Iraq insurgency was gaining in power and confidence (and it kept growing; Iraq now averages 100 insurgent attacks a day). The episode also sharpened the war debate, with war supporters emboldened for revenge, and war detractors decrying Fallujah as a symbol of all that was wrong in Iraq.

It also brought the troubles of private contracting in Iraq to the fore, especially the use of for-hire security firms like Blackwater, based in North Carolina. This debate sharpened yesterday, when in a Congressional hearing it was revealed that Blackwater was not even authorized to do security in Fallujah -- and that the saga involved the scandal-ridden Halliburton/KBR. As Joseph Neff reports in today's News & Observer:

On Thursday, the Army said that Blackwater was not authorized to guard convoys or carry weapons.

The revelation came at a congressional hearing that offered a window into the murky world of private contracting in Iraq. Representatives fumed about billions in misspent money, shoddy construction projects and the hiring of unqualified political operatives to rebuild Iraq.

One unsolved mystery at the hearing was whether Blackwater, based in Moyock in North Carolina's northeast corner, was ultimately working for U.S. taxpayers when its contractors were killed.

U.S. Rep. Chris Van Hollen held up a copy of Blackwater's contract, which said Blackwater was ultimately working for the Army's main contractor in Iraq, Kellogg Brown & Root, with two companies in between.

The Army and Kellogg Brown & Root denied in a letter that Blackwater had done any work for them.

Like many Iraq contracts, Blackwater's deal ran through a maze of subcontractors including Halliburton/KBR, food supplier ESS, and Regency Hotel so convoluted that even the Army, which issued the contract, couldn't follow it:

At the hearing Thursday, Van Hollen held up a copy of Blackwater's contract that showed the trail of subcontractors -- Blackwater, Regency, ESS -- leading to Kellogg Brown & Root. Did the Army contend that Blackwater provided no services to Kellogg Brown & Root?

Tina Ballard, an undersecretary of the Army, said that is correct.

"Was this contract authorized?" Van Hollen asked. "Did the American taxpayer pay [Kellogg Brown & Root] for those unauthorized contracts?"

Ballard promised that the Army would provide answers.

The Blackwater fiasco wasn't the only contracting problem revealed in the House Minority Office on Government Reform hearing held by Rep. Waxman (D-CA) yesterday:

[Special Inspector General for Iraq Reconstruction Stuart] Bowen made available copies of an inspection report on one of the 13 substandard projects, a $72 million police college in Baghdad where plumbing work was so poor that the pipes burst, dumping urine and fecal matter throughout the college's buildings.

And this:

[A] multimillion-dollar contract to build 142 health clinics that resulted in only six being completed.

An exasperated Rep. Chris Van Hollen called the degree of incompetence "mind-boggling." Rep. Waxman went further, arguing that the abuse and scandals surrounding private contractors, who have been shoveled billions of taxpayer dollars with little accountability, was defining the U.S. mission in Iraq:

"This debacle is not just a waste of taxpayers' funds, and it doesn't just impact the reconstruction," Representative Henry A. Waxman, the ranking Democrat on the committee, said of one of the failed projects. "ìIt impedes the entire effort in Iraq. This is the lens in which the Iraqis will view America."

For more about Blackwater, including its domestic operations in New Orleans, see the excellent series of stories by Jeremy Scahill in The Nation.