Blackwater's U.S. complex: mini war zone

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 by Congress and critics because the company's private security forces at times have operated with impunity in Iraq, including allegations they killed innocent civilians. But on a steamy afternoon last week, 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 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 across the country participate in target practice. An incessant pop, pop, pop fills the air.

There's no other place quite like Blackwater, at least not in private hands.

In a decade, the company's revenue from federal government contracts has grown from less than $100,000 to almost $600 million last year. In August, the company won its biggest deal, 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 1,000 of the firm's heavily armed contractors provide security, describing the firm as a private army and Prince as a war profiteer. During a recent hearing, Rep. Elijah Cummings, D-Md., questioned whether Blackwater has "created a shadow military of mercenary forces that are not accountable to 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. "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."

Collection of companies

The organization most people think of as Blackwater is a collection of companies. 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 and moving metal targets for training. Total Intelligence Solutions is led by former CIA officials, including Blackwater executive Cofer Black.

The most well-known company is Blackwater Lodge and Training Center, a subsidiary of Blackwater Worldwide, until recently known as Blackwater USA.

More than 100,000 people in the military and in local, state and federal law-enforcement agencies 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 attacks, the training center hosted up to 50 people a day. The number of students on a given day now 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.

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 about half of Blackwater's federal contracts over the past six years were awarded with little or no competition, according to a congressional report. Company officials dispute the data.

Prince said the increasingly large awards came as a result of good service. He said he largely has made good on his goal of doing a better job than the government at training special military and police forces. He said he aims for a "country-club-like experience" with tight schedules and good service.

"This started as a field of dreams: Build it, and they will come," Prince 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. Political donations over the past two decades total almost $263,000 to Pat Buchanan, Oliver North, Rep. Ron Paul, R-Texas, and former Sen. Rick Santorum, R-Pa., among others. Prince's 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 Prince was sued in 2005, he retained former special prosecutor Kenneth Starr and current White House counsel Fred Fielding, 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 there's timing. Prince started the company at a time of sharp cutbacks in military and security spending. The al-Qaida bombing of the USS Cole in 2000 and the Sept. 11, 2001, attacks created sweeping security demands.

Behind it all was the Bush administration's philosophical push to shrink government, including life-and-death duties once the domain of the military.

Prince insists the security work that brings in so much revenue was supposed to be a secondary part of the business, behind training operations. The company was called on by the government in a time of need, he said, and it answered that call.

Blackwater in Iraq

Not long after Sept. 11, Prince received a call from an agency he won't name. He was told that a couple of secret buildings in Afghanistan needed protection. 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.

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. 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 one of dozens of security firms worldwide operating in the region. The estimated 160,000 contractors of all stripes working in Iraq equal the number of soldiers. Security contractors number about 48,000.

Retired Marine Col. Thomas Hammes, who served in Iraq in 2004, said Blackwater's no-nonsense guards 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 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 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 Fallujah were ambushed by three insurgents in a large truck. The attackers shot and killed all four contractors and fled. Onlookers took two bodies, burned them and hung them on a bridge over the Euphrates River.

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.

Families of the victims in both incidents have filed lawsuits, claiming Blackwater failed to prepare the men to go into those areas.

More questions arose from the State Department inspector general, 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 who lives in Seattle got drunk and shot dead a bodyguard for Iraqi Vice President Adel Abdul Mahdi. Blackwater worked with the State Department to fly Andrew Moonen 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, Blackwater contractors allegedly shot and killed 17 Iraqis in a crowded square in downtown Baghdad.

As such incidents mounted, Blackwater hired some of the country's most politically connected and conservative lawyers and lobbyists. The Alexander Strategy Group — Jack Abramoff's former lobbying outfit — provided public-relations advice. Starr is defending Blackwater in the Fallujah case, and former Pentagon inspector general Joseph Schmitz joined the Prince Group as in-house counsel.

Meanwhile, Blackwater's contracting business continued to grow markedly, according to federal procurement data collected by Eagle Eye, a database marketing company.

Increasing criticism

Democrats in Congress could not have been clearer about how they view Blackwater during an oversight hearing two weeks ago. The company, lawmakers said, operates as an out-of-control, mercenary force.

Six days after the hearing, Prince still fumed.

Acting as a proud tour guide, he seemed to want Blackwater's facilities to prove that Congress and other critics are wrong.

Prince noted that Blackwater has lost $10 million in aviation equipment in Iraq and Afghanistan. He said Blackwater helicopters repeatedly have helped save the lives of U.S. soldiers.

The lobby of the Blackwater headquarters resembles a ski lodge with a twist: The front doors feature barrels from .50-caliber machine guns. Inside are oversize wood-and-leather chairs and a large stone fireplace. 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, Va., where his wife had just had his seventh child. A helicopter 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 who can hold his 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.

"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."

Washington Post researcher Julie Tate contributed to this report.