Blackwater Under Fire Again

Lawmakers question the private security firm's eligibility for federal small-business contracts.

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House Democrats are calling for an investigation into whether a controversial private security firm working in Iraq and Afghanistan violated federal small-business contract size standards.

In letters to the Internal Revenue Service, the Small Business Administration and the Secretary of Labor, Rep. Henry Waxman (D-Calif.) claimed Blackwater Worldwide had improperly classified its security guards as independent contractors in order to be eligible for federal small-business contracts, among other benefits.

Blackwater says Waxman's claims were unwarranted.

In the past eight years, the company has received about $144 million in federal small-business contracts, despite earning more than $1.25 billion in government business, according to Waxman.

By listing its employees as independent contractors, Blackwater has also sidestepped anti-discrimination and affirmative action laws applied to federal contractors, Waxman said. He added the company has issued contradictory statements on the degree of control it exercises over its security guards overseas.

Last year, Congress tightened rules on federal contractors in Iraq following reports of civilian deaths involving Blackwater workers. In March 2004, four Blackwater workers were killed and dragged through the streets of Fallujah, Iraq.

Sen. John Kerry, the chairman of the Senate Committee on Small Business and Entrepreneurship, has pressed the Bush administration to investigate the company since October. He says Blackwater has avoided over $31 million in taxes by classifying its employees as contractors. 

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