Blackwater's Fired Up by Audit Coverage

| Tue Jun. 16, 2009 12:09 PM EDT

Bruce Falconer and I reported yesterday that a federal audit [PDF] of Blackwater's security contracts in Iraq concluded, among other things, that the firm had regularly failed to meet staffing requirements on two of its State Department task orders and could owe the government $55 million. Blackwater's spokeswoman, Anne Tyrrell, just emailed an "amended statement" on the audit, disputing how its conclusions were characterized in some media reports. I saw this one coming when I read the Wall Street Journal's coverage this morning, which carried the headline, "Audit Finds That U.S. Overpaid Blackwater." (Similarly, ABC is now reporting: "There is no assurance that personnel staffing data was accurate or complete and that correct labor rates were paid.")

Here's what Tyrrell had to say:

The joint audit by the Special Inspector General for Iraq Reconstruction and the United State Department of State Inspector General released yesterday does not, as some press reports have suggested, allege that Blackwater was ever complicit in overbilling the United States government for work it performed in Iraq in 2006 and 2007. The audit does not even state that the government overpaid Blackwater for staffing issues.  All it suggests is that invoices spanning a period of time are reviewed. A $55 million penalty has in no way been determined. 

In fact, the government contracting officer determined that Blackwater was compliant with the terms of the contract at the time for which they were reviewing and the therefore did not apply any deductions or penalties. Blackwater only billed for services provided. 

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Tyrrell is correct on the overbilling issue (and we were careful not to make this claim in our story). From my reading of the audit, it never states explicitly that Blackwater was paid more that it was owed. Rather, it says the State Department neglected to invoke a contractual provision that would have allowed it to dock the firm $55 million for failing to meet the required staffing levels. There's a big difference here. Tyrrell told us yesterday, and maintains again today, that the company only billed the government for the hours its contractors put in.

What the audit does say, however, is that due to poor oversight by the State Department it's difficult to be sure whether Blackwater—and presumably other security firms the agency contracted with—had in fact overbilled. "There is no assurance that personnel staffing data was accurate or complete and that correct labor rates were paid," the audit notes. And that's a problem—but one that really has less to do with Blackwater (or Xe, as it's now known) and more to do with State and other government agencies that are overseeing billions in military contracting.

Along with the overbilling question, there's another enduring mystery arising from the audit. Where the heck is that government-issue deep fat fryer Blackwater can't account for? The taxpayers insist on its swift and safe return!