Building Blackwater
Founder Seeks 'Better, Smarter, Faster' Security As History, Iraq Shape the Firm's Fortunes
Erik Prince is founder and chief executive of Blackwater Worldwide, with revenue of $594 million in 2006.
By Robert O'Harrow Jr. and Dana Hedgpeth
Washington Post Staff Writers
Saturday, October 13, 2007; A01
MOYOCK, N.C. Erik Prince bounded up the stairs of a sand-colored building and paused on the flat roof, a high point of the 7,000-acre facility in North Carolina known as Blackwater Lodge and Training Center.
As owner of Blackwater, he has been the focus of intense scrutiny recently by Congress and critics because the company's private security forces have at times operated with impunity in Iraq, including allegations that they murdered innocent civilians. But on a steamy afternoon this week, just days after testifying on Capitol Hill, Prince seemed like a king surveying his domain.
Below him was a complex he calls Little Baghdad, a collection of drab structures used to prepare security forces for urban warfare in Iraq and elsewhere. In the distance, a half-dozen battered cars raced around a track in a high-speed motorcade, kicking up dust as they practiced tactics with a role-playing assailant in pursuit.
Blackwater has an airstrip and hangar filled with gleaming helicopters, a manufacturing plant for assembling armored cars, a pound filled with bomb-sniffing dogs and a lake with mock ships for training sailors. An armory is stacked to the ceiling with rifles. Throughout the place are outdoor ranges where military, intelligence and law enforcement authorities from around the country practice shooting handguns and assault rifles at automated metal targets made by the firm. An incessant pop, pop, pop fills the air.
There's no other place quite like Blackwater, at least not in private hands. The complex anchors a global training and security operation that is one of the government's fastest-growing contractors and both a fixture and a flashpoint of the wars in Iraq and Afghanistan.
In a decade, Blackwater's revenue from federal government contracts has grown exponentially, from less than $100,000 to almost $600 million last year. In August, the company won its biggest deal ever, a five-year counternarcotics training contract worth up to $15 billion shared with four other companies.
Blackwater's extraordinary rise would not have been possible without a swirl of historic forces, including sharp cuts in military and security staffing in the 1990s, the Bush administration's drive to outsource government services to the private sector and the sudden demand for improved security in response to the threat of terrorism.
Some law enforcement officials trained by Blackwater consider the firm a resounding success.
"They're the Cadillac of training services," said J. Adler, national executive vice president of the Federal Law Enforcement Officers Association. "You've got the best of the best teaching close-quarter-combat tactics."
But critics focused more on Blackwater's role in Iraq, where nearly a thousand of the firm's heavily armed contractors provide security, describe the firm as a private army and Prince as a war profiteer. During a recent hearing, Rep. Elijah E. Cummings (D-Md.) questioned whether Blackwater has "created a shadow military of mercenary forces that are not accountable to the United States government or to anyone else."
Prince seemed incredulous that anyone would suggest such a thing.
"The idea we have a private army is ridiculous," he said, as a group of sheriff's department deputies cleaned their weapons nearby. "This idea of a private mercenary army is nonsense. These guys have sworn the oath as military or law enforcement persons. These are guys who served voluntarily. They are all Americans, working for Americans, protecting Americans."
A Field of DreamsThe organization most people think of as Blackwater is actually a collection of companies with Prince and his McLean-based holding company, the Prince Group, at the top. Prince, a former Navy Seal and heir to an industrial fortune, owns everything.
Blackwater Maritime has a 183-foot long ship for naval training. Two aviation-services businesses operate more than 50 planes and helicopters. Blackwater Manufacturing makes special armored cars the firm hopes to market to the military, as well as moving metal targets for training. Total Intelligence Solutions is led by former CIA officials, including Blackwater executive Cofer Black, who worked on counterterrorism at the CIA and State Department.
The most well-known company is Blackwater Lodge and Training Center, a subsidiary of Blackwater Worldwide, which until recently was known as Blackwater USA.
More than 100,000 people in the military and in local, state and federal law enforcement agencies, including those in Virginia and Maryland, have taken the center's courses. So have thousands of special operations personnel from the Navy, Army and other federal agencies. Before the Sept. 11, 2001, terrorist attacks, the training center hosted up to 50 people a day. Now the number of students on a given day is 500, sometimes higher. The company has more than 550 full-time employees and 1,400 contractors, who operate in nine countries, including Jordan, Azerbaijan and Burkina Faso. Contractors in Iraq earn the equivalent of $115,000 a year, a company official said.
Federal government officials generally have declined to discuss contractual arrangements with the company. As a private corporation, Blackwater does not have to divulge such details. Public procurement data show that over the past six years, about half of Blackwater's federal contracts were awarded with little or no competition from other companies, according to a congressional report. Company officials dispute the data, claiming that the bulk of the awards were openly competed.
Prince said the increasingly large awards came as a result of good service and the word spreading among government officials. He said he has largely made good on his goal of doing a better job training special military and police forces than the government. He said he aims for a "country-club like experience" with tight schedules and good service.
Strolling on a garden path marked by 30 stones, each bearing the name of a Blackwater contractor who died on assignment in Iraq or elsewhere, he spoke about the success of his idea almost as an inevitability. He said the company has never reached out to Capitol Hill for help.
"This started as a field of dreams: Build it, and they will come," he said. "It was a little success that led to another success to another success."
A review of legal papers, contracting documents, company literature and news accounts, along with interviews with Blackwater and government officials, suggests the story is more complicated.
One factor fueling the company's ascent is the business savvy and deep pockets of Prince, 38, a zealous entrepreneur and heavy contributor to conservative and Christian causes.
Prince was a White House intern under President George H.W. Bush. His political donations over the past two decades total almost $263,000 to Pat Buchanan, Oliver North, Rep. Ron Paul (R-Tex.) and former senator Rick Santorum, a Pennsylvania Republican, among others. His sister, Betsy DeVos, is former chairwoman of the Republican party in Michigan. She's married to Dick DeVos, son of the co-founder of Amway and a Republican gubernatorial candidate in Michigan. After he was sued in 2005, Prince retained former special prosecutor Kenneth Starr and current White House counsel Fred Fielding, who was then in private practice.
Prince has hired a stable of former officials from the Navy, State Department, CIA, FBI and other agencies. He also maintains a database of 40,000 contractor candidates, mostly former military and law enforcement officials, and their particular military, language, mechanical and other skills.
And there's his timing. Prince started the company at a time of sharp cutbacks in federal spending on the military and security. The al-Qaeda bombing of the USS Cole in 2000 and the Sept. 11, 2001, terrorist attacks created sweeping security demands by the government, contractors and others, in and out of the war zones.
Behind it all was the Bush administration's philosophical push to shrink government. Over the past seven years, federal agencies have used changes in contracting rules launched during the Clinton administration to outsource an unprecedented amount of government business, including life-and-death duties once the domain of the military.
Prince insists the security work that brings in so much of the company's revenue was supposed to be a secondary part of the business, behind the training operations. The company was called on by the government in a time of need, he said, and it answered that call.
"The customer demanded it. People asked us to do something, and we did it well," Prince said. "It pushed us as an organization. It made us better. But we're paying a huge price politically."
At odds with that assertion, though, were Black's boasts last year. At a conference in Amman, Jordan, Black touted the company's willingness to provide more aggressive peacekeeping forces around the globe. "We're low-cost and fast. The issue is, who's going to let us play on their team?" he said, according to a story in the Virginian-Pilot.
'Better, Smarter, Faster'The birth of Blackwater began with the death of Prince's father in 1995. Edgar Prince, a native of Holland, Mich., founded Prince Corporation and made a fortune inventing and selling auto parts. He also helped found and guide some of the country's most aggressive Christian and family-values groups, including the Family Research Council and Focus on the Family.
"I can say without hesitation that without Ed and Elsa and their wonderful children, there simply would not be a Family Research Council," Gary Bauer, then president of the organization, wrote to his members shortly after Prince's death.
At the time, Erik Prince was a Navy Seal on a ship in the Mediterranean, he said. He had joined the Navy after studying economics at Hillsdale College in Michigan and, he said, loved being a Seal. But he was dissatisfied with the military's training, saying the facilities were often shabby and lacked good instructors. While on the USS America, he wrote a letter to his wife about the possibility of starting what he later described as his own "state of the art facility."
He was driven by the same entrepreneurial zeal as his father, who he said wanted "precision in all things" and tried to solve problems by making things "better, smarter, faster."
"I wanted to do a free-market version of how units could be trained," he said. "I wanted to do something excellent in this world."
Prince's inheritance funded Blackwater's launch. In July 1996, Prince and his family sold much of his father's business for $1.35 billion. Prince used about $900,000 of his share to buy the first 3,100 acres of land in North Carolina, not far from Norfolk and about 220 miles south of the District.
Prince bought a backhoe and, for a while, worked at clearing the land himself. The company's name was inspired by the dark, brackish water he encountered everywhere on the low, sandy expanse near the Great Dismal Swamp. Its logo -- a bear claw in a rifle scope -- alludes to the nearly 100 black bears he says are on the property.
The company's first training contract came in 1998. A Seal unit in California had heard about the camp through word of mouth in the close-knit special forces world, and it came to practice combat, shooting and other skills. For the next few years, the company worked with law enforcement and small military units. It considered a $40,000 contract a big deal.
All that changed after the October 2000 al-Qaeda attack on the USS Cole in the Yemeni port of Aden. The suicide bombing not only killed17 sailors and crippled a high-tech destroyer, but it also exposed how unprepared the Navy was to defend against a new, unpredictable kind of threat. The top brass demanded better training.
Blackwater employees, many of them former Navy pilots and special forces, heard that demand and called everyone they knew in the military to promote the company.
It eventually won a $46 million training contract in September 2002. It was the pivot-point in the company's brief history because it gave Blackwater credibility in Washington.
"It was our first big-volume, predictable customer," Prince said. "It conferred legitimacy. . . . At that point, we became a government contractor."
By then, the other key event shaping Blackwater's history had occurred. The Sept. 11, 2001, terrorist attacks changed the security landscape. Suddenly, everyone from corporate America to agencies across the Defense Department and the rest of the government felt the need for protection against looming terrorist threats.
Once again, Prince and his Blackwater colleagues put out the word in the special forces community. "We made it known to them that we have a lot of capacity and we're ready to help in any way we can," he said.
Not long after Sept. 11, 2001, he received a call from an agency he won't name. He went to a meeting in a room filled with people seeking urgent and classified help in Afghanistan. He was told that a couple of secret buildings in Afghanistan needed protection.
Prince himself was among a small group of Blackwater contractors who made the initial trip. Although he still declined to name the agency, Prince said officials were so satisfied with the performance of Blackwater contractors that they hired the company to do similar work in Iraq at the beginning of the war.
"We're a service business. We bend over backwards," he said. "Our direction to the guys is to make themselves indispensable."
'They're Greatly Disliked'In August 2003, the company won a $25 million contract to protect L. Paul Bremer, administrator of the Coalition Provisional Authority. It was a step into the center of the conflict in Iraq -- and undreamed-of revenue for Blackwater.
The scene of Blackwater guards moving throughout Baghdad became a familiar, menacing sight. The entourage looked like something out of a movie. A dozen bodyguards wearing assault rifles joined U.S. soldiers to flank Bremer. A Blackwater helicopter or two hovered over their convoys of dark sport-utility vehicles.
Blackwater is only one of dozens of security firms from around the world operating in the region. The estimated 160,000 contractors of all stripes working in Iraq equal the number of war fighters. Security contractors number about 48,000.
Still, Blackwater stood out. Retired Marine Col. Thomas X. Hammes, who served in Iraq in 2004, said the Blackwater contractors were no-nonsense guards who did whatever necessary to protect Bremer. In contrast to other security guards in the Green Zone, he said, they were "remarkably professional."
But that was part of the problem. They didn't seem to care how abusive they could be to regular Iraqis, and they didn't seem to be under the control of U.S. authorities, Hammes said. In addition, when Bremer left his post, he signed an order exempting U.S. contractors such as Blackwater from being prosecuted under Iraqi law.
As a consequence of the contractors' aggressive behavior, Hammes said, Blackwater undermined the counterinsurgency efforts that depend so heavily on winning over civilians. "They're greatly disliked," he said.
That animosity boiled over on March 31, 2004, when four Blackwater contractors driving in the battered city of Fallujah were ambushed by three insurgents in a large truck. The attackers shot and killed all four contractors and fled. A crowd of onlookers took two of the bodies, burned them and hung them on a bridge crossing the Euphrates River. The company's striking name and its bear-paw logo suddenly became, for some, horrific symbols of everything wrong with the war in Iraq.
And Blackwater's performance became a high-profile issue. In November of that year, a plane owned by Blackwater subsidiary Presidential Airways crashed into a mountain in Afghanistan, killing three soldiers and three Blackwater contractors on a mission under a $35 million Air Force contract.
Families of the victims in both incidents have filed lawsuits against the company, claiming Blackwater failed to prepare the men to go into those areas.
More questions arose from the inspector general at the State Department, who said in 2005 that Blackwater had failed to keep track of contractors' hours, appeared to double-bill for drivers and vehicles that weren't used and allegedly charged more than double the proper amount for overhead expenses.
On Dec. 24, 2006, a Blackwater contractor got drunk and shot dead a bodyguard for Iraqi Vice President Adel Abdul Mahdi. Blackwater worked with the State Department to fly the contractor back to the United States and fired him. Five months later, Blackwater guards shot and killed an Iraqi driver outside the Interior Ministry in Baghdad, prompting an armed standoff between ministry commandos and the guards.
On Sept. 16 of this year, during a chaotic confrontation in downtown Baghdad, Blackwater contractors allegedly shot and killed 17 Iraqis in a crowded square.
As such incidents mounted, Blackwater hired some of the most politically connected and conservative lawyers and lobbyists in the country. The Alexander Strategy Group -- Jack Abramoff's former lobbying outfit -- provided public relations advice. Former independent counsel Starr is defending Blackwater in the Fallujah case, and Joseph Schmitz, former inspector general for the Pentagon, joined the Prince Group as in-house counsel.
All the while, Blackwater's contracting business continued to grow markedly, according to federal procurement data collected by Eagle Eye, a database marketing company.
In early 2004, the State Department announced a need for a contractor to protect the new U.S. Embassy in Baghdad. DynCorp had a contract to protect U.S. embassies worldwide but was unable to do the work in Baghdad, according to a document provided by Blackwater. So the State Department turned to a company already in position through its work for the Coalition Provisional Authority: Blackwater.
In June 2005, Blackwater's revenue stream took another leap. After a competition, the State Department awarded Blackwater, DynCorp and Triple Canopy work worth $2.5 billion in the coming years to provide security in Afghanistan, Bosnia, Israel and Iraq.
Democrats in Congress could not have been clearer how they view Blackwater during a packed oversight hearing last week. The company, lawmakers said, operates as an out-of-control, mercenary force.
As Prince drove around the grounds of his property Monday, six days after the hearing, he still fumed at the accusations.
Acting as a proud tour guide in a black Suburban, he seemed to want the facilities to prove that Congress and other critics are wrong and that he has nothing to hide.
In his hangar, he looked on as technicians took meticulous care of $4.5 million helicopters, the gray painted floor gleaming beneath them. Prince noted that Blackwater has lost $10 million in aviation equipment in action in Iraq and Afghanistan. He said Blackwater helicopters have repeatedly helped save the lives of U.S. soldiers.
At the center's original lodge, he proudly pointed out a stuffed bobcat, a wild turkey and a beaver that he recalled killing. The lobby of the Blackwater headquarters resembles a ski lodge with a twist: The front doors feature barrels from .50-caliber machine guns. Inside, a glass showcase displays replicas of guns used to assassinate presidents.
Prince visits the complex once or twice a week. He wrapped up his tour and prepared to go home to McLean. He hopped in a waiting helicopter that shuttled him to another airstrip, where he boarded a small Presidential Airways prop plane normally used to fly government and corporate VIPs.
Prince had become more voluble about his business, but he grew frustrated when pressed about exactly who can hold his growing Blackwater empire accountable. When it comes to his contractors, he said, there's only so much he can do. It's up to the Justice Department and the Pentagon to enforce criminal infractions.
In the end, he said, Blackwater is always ultimately answerable as a business to its government customers.
"We're open honest Americans trying to do a good job," he said. "If they don't like what we're doing then" -- he snapped his fingers -- "cut off that revenue steam right now."
