Clear as Mississippi Mud

Old black water, keep on rollin'
Mississippi moon won't you keep on shinin' on me

- Doobie Brothers

In 2005, the US Department of State sent its condolences:

"The Bureau of Diplomatic Security sustained an additional loss yesterday in Iraq. In addition to the helicopter crash, which killed six Blackwater employees working with Diplomatic Security, another Blackwater employee was killed...."

“We have 1,000 guys out in the field,” according to Eric Prince, founder/CEO of BlackwaterUSA, a security services company. See "Chief of Blackwater Defends His Employees" (NYT) By JOHN M. BRODER

Before Congress, Mr. Prince said, that "Blackwater personnel" had made sure that no person protected by them had ever been killed or injured, even though "thirty brave men had paid the ultimate sacrifice while working for Blackwater.... The entire Blackwater family mourns the loss of these brave lives."

He said, "the company and its personnel" are accountable. His "hiring and vetting guidelines" were approved under competitive bidding standards.

He said, "we have approximately 1,000 professionals serving..." in Iraq.

He spoke repeatedly of the "Blackwater team" and "Blackwater and its people".

And that is all honorable and loyal stuff. But how far does that lip service to the team and his people go?

Where it matters to the owners of Blackwater, in the hip pocket, not so far it seems. This band of brave battlers is not really so much of Team Blackwater as they would have us believe.

Because, for tax purposes and for purposes of qualifying for small business government contract set-asides, Blackwater disowns the Team entirely. Nope, those ain't our boys, they's "independent contractors". Don't wanna know 'em.

According to the Washington Post,

"The question of how the company classifies its workers came up after a Blackwater security guard, who was working in Afghanistan, asked the IRS to determine his status. In a March 30 letter, an IRS official at a field office in Vermont said the guard was an employee of Blackwater, not an independent contractor. That decision and charges that the employee was required to sign a non-disclosure agreement spurred Waxman to look into Blackwater's tax status.

Blackwater classifies its armed guards as independent contractors, allowing it to avoid paying certain federal taxes.

According to Waxman, Blackwater may have improperly avoided paying $31.8 million in Social Security, Medicare, federal income and unemployment taxes from May 2006 through March. In addition, Waxman said, the company may owe another $18 million in taxes that it should have paid from April through September. A spokeswoman for Sen. John F. Kerry (D-Mass.) said he would ask the Senate Finance Committee, which has jurisdiction over the IRS, to look into the matter.

Anne Tyrrell, a Blackwater spokeswoman, denied the company owes the money, calling Waxman's accusations "shortsighted." Tyrrell said Monday that the Small Business Administration had looked at IRS federal income tax criteria and found that "Blackwater security contractors are not employees."

A workers' view website calls this classification game a "scam where corporations claim their employees are 'independent contractors' rather than full-time employees, so they don't have to pay for their health, retirement, and other benefits"

But these are all games that people play and Guambat usually reads such matters with a yawn. After all, the report by the US Attorney's office in Maryland that they had charged a different security company and a government contracting officer with certain nefarious dealings involving over $130 million in government security contracts went by without much more than a "hushed tone".

But Guambat was roused from his reverie by a Guam connection. Yes there is a Blackwater backwater thingy going on.

It seems that Blackwater, who has had over a billion dollars in Federal contract awards in the last few years, has characterized itself as a small business, entitled to the small business set-aside preference, to obtain a contract to provide helicopters for Guam. It could only do so my disavowing all those Team Members and Family in Iraq and Afghanistan as "independent contractors", not of their own kind.

Reuters reported,

"The Guam contract with Presidential Airways came under congressional scrutiny after Rep. Henry Waxman accused North Carolina-based Blackwater of "significant tax evasion."

The California Democrat charged that the privately held company failed to withhold employee contributions or pay to the government millions of dollars in Social Security retirement funds, as well as medical and unemployment benefits.

Blackwater disputed Waxman's allegation and said the company treats deployed personnel in Iraq and Afghanistan for tax purposes as "independent contractors," not employees. Blackwater has about 1,000 people in Iraq alone.

The company said its tax policy was reached with outside advice and was "reinforced" by an SBA finding.

SBA documents obtained by Reuters show the federal agency determined on Nov. 2, 2006, that "Blackwater security contractors are not employees." The agency has since told Kerry that it was evaluating Presidential eligibility for the SBA contract but was not offering tax guidance.

Three small helicopter companies filed a protest over the selection of Presidential Airways for the Guam sealift job. They argued that Presidential, as part of the Blackwater organization, was too big to qualify for the job under SBA size standards. The SBA said Presidential was small enough because more than 1,000 of Blackwater's workers were independent contractors and not employees."

Guambat understands and appreciates that in some cases the definitional line between employee and independent contractor is hard to draw, clear as Mississippi mud. But, it would seem honorable that if a person was honored as a member of the family and a team for some purposes, that person should be counted as part of the team for all purposes.


THE BLACKWATER EMPIRE
Prince Group (Parent company)
*Blackwater divisions
**Blackwater Training Center -- Firearms and tactical training
**Blackwater Target Systems -- Manufacturing and sales
**Blackwater Security Consulting -- Security services
**Blackwater Canine -- Explosives-detecting dogs
**Raven Development Group -- Construction
**Blackwater Armor -- Armored personnel carriers
**Blackwater Airships -- Blimps
*Affiliated companies
**Presidential Airways -- Aviation
**Greystone -- International security services



Postscript:

Guambat wishes it known that he is not condemning Blackwater or its employees or independent contractors for any wrongdoing beyond, at a minimum, overreaching and maybe overpreaching. Guambat does consider it questionable, with hundreds of thousands of gun-toting civil servants on government payrolls why, in a war zone, private contracting of gun-toters is preferred to "our own" men in boots.

Maybe it's just this government's attempt to do a Blackwater and reclassify its responsibilities and employees as independent contractors to avoid accountability and liability for their health and welfare, the taxes and mistakes and bad tempers; i.e., management of the business of government. Sort of another deniability thing, ya think?

In the end, Guambat only knows what he reads in the newspapers and over the web. Guambat does, though, maintain a skepticism about contracting out responsibility for some government functions, though, like other definitional gray areas, Guambat's thoughts get muddled in the details.