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As a new report forecasts that the 190,000 private contractors in Iraq and
neighboring countries will cost U.S. taxpayers more than $100 billion by the
end of 2008, an under-the-radar Florida court case suggests that President
George W. Bush – a staunch contractor supporter -- is preparing to throw
security firms such as Blackwater under the political bus.

In the Florida case, relatives of three American servicemen killed in the
2004 crash of an aircraft owned by Blackwater Aviation in Afghanistan are
suing the company for damages, based in part of U.S. government reviews
that concluded that errors committed by Blackwater staff were responsible
for the deaths. This week, despite President George W. Bush's support for
what he has called the critical roles played by overseas contractors, his
Administration failed to meet a deadline for presenting the court with any
defense of Blackwater.

The Administration's silence has caused consternation among Blackwater
and its supporters. Erik Prince, Blackwater's chairman, told TIME magazine,
"After the President has said that, as Commander-in-Chief, he is ultimately
responsible for contractors on the battlefield it is disappointing that his
Administration has been unwilling to make that interest clear before the

Some observers have speculated that the Administration's silence can be
attributed to the controversial nature of the contractor issue and a reluctance to address it during a hotly contested presidential election year.

The Florida battle, which could eventually find its way to the U.S. Supreme
Court, turns on the question of whether Blackwater and other overseas
contractors are subject to U.S. law. That question arises because of a decree issued in 2005 by the then U.S. Iraq Administrator, L. Paul Bremer, granting contractors legal immunity. The Iraqi government claims that Blackwater and other contractors have been responsible for the deaths of Iraqi civilians and wants to make them subject to Iraqi law.

The U.S. has resisted this move, which is thought to be part of the ongoing
stalemate in negotiations with Iraq over the future status of U.S. forces in
that country.

The White House has also attacked a bill recently passed by the House of
Representatives that would place combat-zone contractors under the
jurisdiction of U.S. courts. It called the measure is an unacceptable extension of federal jurisdiction overseas, and said it would place additional burdens on the military.

Blackwater's argument is that the company should be covered by the same
"sovereign immunity" that protects the U.S. military from lawsuits because
the downed flight was under the command and control of the U.S. military.

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Last month, this argument was rejected by three federal judges, who cited
the U.S. government's failure to take a position in defense of Blackwater as
one of their reasons. In their opinion to allow the lawsuit to proceed, the
judges ruled that "The apparent lack of interest from the United States...
fortifies our conclusion that the case does not yet present a political

Lawyers for many major contractors including DynCorp, Kellogg Brown
and Root, Blackwater and others, say a dangerous precedent would be
established if this and similar cases are allowed to go forward. Such a
decision, they say, would open contractors to large money damages and
greatly higher risk insurance costs that could adversely affect their ability to
carry out the jobs the U.S. government has hired them to do.

As the Florida case made its way through the U.S. legal system, a new report from the Congressional Budget Office (CBO) contends that the cost ofhaving military personnel provide security services in Iraq might be little
different from the prices charged by private security contactors.

The report said that $6-$10 billion has been spent on security contactors thus far in 2008 and estimated that about 25,000-30,000 employees of security fiirms were in Iraq as of early this year. It estimates that, if spending for contractors continues at about the current rate, $100 billion will have been paid to military contractors for operations in Iraq.

The report revealed that about 20 percent of funding for operations in Iraq
has gone to contractors. Currently, it said, there are at least 190,000
contractors in Iraq and neighboring countries, a ratio of about one contractor per U.S. service member. It noted that the U.S. has relied more heavily on contractors in Iraq than in any other war to provide services ranging from food service to guarding diplomats.

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The report also noted that the legal status of contractor personnel is a gray
area of U.S. law, particularly for those who are armed. It said that military
commanders have less direct authority over contractors because their
contracts are managed by a government contracting officer rather than a
military commander.

The CBO review was requested by Senator Kent Conrad, a North Dakota
Democrat who is chairman of the Senate Budget Committee. In a statement,
Conrad said the Bush administration's reliance on military contractors has
set a dangerous precedent. The use of contractors "restricts accountability
and oversight; opens the door to corruption and abuse; and, in some
instances, may significantly increase the cost to American taxpayers," he

The report comes at a time when the actions of contractors in Iraq and
Afghanistan are coming under increased scrutiny. Contractors, including
Blackwater and KBR, have been investigated in connection with shooting
deaths of Iraqis and the accidental electrocutions of U.S. troops. The Senate
Democratic Policy Committee heard testimony a few weeks ago from a
former DCAA contract overseer who was effectively fired because he
refused to authorize $1 billion in unsubstantiated charges from KBR. The
Government Accountability Office released a report that confirmed
whistleblower complaints of DCAA supervisors issuing unsupported
findings that were favorable to contractors.

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William Fisher has managed economic development programs in the Middle East and elsewhere for the US State Department and the US Agency for International Development. He served in the international affairs area in the Kennedy Administration and now (more...)

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