In the final installment of a 3-part series David Isenberg, columnist, analyst, researcher and author of Shadow Force: Private Security Contractors in Iraq provides analysis and commentary on the transcripts of testimony from the recent hearings by the Commission on Wartime Contracting which took place on the 14th of September in Washington.

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By David Isenberg

Like my previous posts, what I have done below is to copy various excerpts from the hearing. Each excerpt is italicized and indented. Each excerpt is usually followed by my comment in bold. Sometimes I make observations. Sometimes I ask questions. In some cases I feel the excerpt is so fascinating in its own right that it stands on its own and I make no comment.

PANEL III OF A HEARING OF THE COMMISSION ON WARTIME CONTRACTING;

SUBJECT: THE DEPARTMENT OF STATE AND SECURITY CONTRACTOR MISCONDUCT;

CHAIRED BY: CHRISTOPHER SHAYS AND MICHAEL THIBAULT;

WITNESSES: DOUG BROOKS, PRESIDENT, INTERNATIONAL PEACE OPERATION ASSOCIATION; WILLIAM BALLHAUS, PRESIDENT AND CEO, DYNCORP INTERNATIONAL; SAM BRINKLEY, VICE PRESIDENT OF HOMELAND SECURITY AND INTERNATIONAL SECURITY SERVICE, WACKENHUT SERVICES INC.;

LOCATION: 2247 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

TIME: 1:15 P.M. EDT DATE: MONDAY, SEPTEMBER 14, 2009

MR. BROOKS:

I’d like to take a moment first to offer condolences to the family of an IPOA member company employee killed in the savage suicide attack on the NATO base at the Kabul airport on the 8th of September — this was mentioned earlier — the attack that took place close to Camp Sullivan, home to the embassy security contractors. Four other contractors were wounded in that attack. This incident serves to remind us of the often unseen and seldom mentioned danger faced by our civilians who are supporting United States policies abroad.

Yes, that is, truly and sincerely, quite tragic. What does it have to do with the issue at hand, the unprofessionalism of ArmorGroup, which joined IPOA in 2003?

Founded in 2001, membership in IPOA is not automatic and requires disclosures and information not typical of trade associations. Companies can be expelled if they violate the association’s code of conduct.

In all the years that IPOA has had a code of conduct how many companies have been expelled, as opposed to resigning?

I often point out that Afghanistan and Iraq are the best-supported, best-supplied military operations in U.S. history.

And if it was all being done in-house by the regular military it would STILL be the best-supported, best-supplied military operation in U.S. history. Could we please get back to the issue at hand.

In the big picture, the model of private-sector support for the all-volunteer professional military works remarkably well, but nobody denies there are problems that we do need to address. Indeed, when operating in weak and failed states, it would be astonishing if there were not any problems.

Actually, there have been problems elsewhere. Iraq, for example, was a dictatorship but it was not a failed state.

Our industry employees are civilians who are owed all the privacy, human rights and due processes given to private citizens anywhere. At the same time, we recognize that operations in high-risk environments require a balance between rights and responsibilities.

This seems debatable. When contractors work for a client like the U.S. government they are often required to accept conditions that private citizens would never tolerate. Let’s give Mr. Brooks the benefit of a doubt and acknowledge that even the courts have yet to figure this out.

IPOA would welcome a practical review or government-wide conference on how procurement and contract management could be modified for the unique realities of contingency contracting.

There have already been numerous conferences on the subject. IPOA has sponsored many of them. Is he saying they were impractical?

It would be ideal to get the contracting officers, the contracting office representatives, industry executives and country managers in an environment conducive to resolving many of these issues, as partners instead of antagonists.

Are all these parties really antagonistic towards each other? My experience is that they all see each other already as partners.

One issue that perhaps relates to today’s topic is that intense competition is beneficial for obtaining a low price (for ?) the government, but focusing only on price when awarding a contract can ultimately degrade the quality of service. The Departments of Defense and State handle these contracts quite differently, and it would be interesting to explore why.

In theory this is true but real life doesn’t always simulate theory. Providing embassy security services is not like selling computers. How many companies are truly capable of guarding embassies? The State Department had only a handful of bids for the Kabul embassy contract. So it doesn’t seem like there could have been that much competition. But it is good to see he agrees that presumed cost-effectiveness is not the most relevant consideration.

IPOA continues to improve our widely recognized self-regulatory efforts, but it is important to remember that we are not the first responder in contractual and legal issues. We can and do supplement but not replace government oversight and accountability with our own codes and procedures in our focus on ethical concerns.

Widely recognized by whom, IPOA member companies? Is IPOA claiming that when things go well it is, at least in part due to its code of conduct, but when things go wrong it is really the government’s fault? Of course, in this case the U.S. government IS largely at fault.

MR. BRINKLEY:

Certain of our personnel behaved very badly. I am personally embarrassed by their misbehavior and I’m embarrassed to be here speaking about their poor judgment and inappropriate actions, which bring discredit to the Department of State, WSI, AGNA, and the hundreds of other professionals protecting the U.S. embassy in Kabul. There are no excuses. We do not tolerate, will never tolerate, such misbehaviors.

And yet, as both the Gordon law suit and previous CWC panel testimony established, AG did exactly that.

We are putting new management team in place. Phil Rudder (sp), my number two, is already in-country and taking charge of operations in Kabul. He has full executive authority to manage the contracts. He will also assist me in further examining the situation in Kabul and determining whether additional personnel actions are appropriate.

Mr. Rudder (sp) will meet with personnel individually and in groups to ensure they have the appropriate commitment to the highest standards of conduct. Soon Mr. Rudder (sp) will be joined in-country by Mr. Cornelius Medley, a manager with AGNA, who has extensive experience in managing embassy security contracts.

Medley was named as a defendant in Gordon’s law suit. To cite a few examples the complaint charged:

Mr. Gordon’s inquiries revealed that Mr. Du Plessis had authorized Logistics

Manager Sean Garcia to place the order for counterfeit cold weather clothing and boots through Garcia’s wife’s company, Trends General Trading and Marketing, LLC, which was based in Beirut and thereby banned as a contractor. Mr. Gordon consulted with North Face and Altama Boots, the companies whose goods had supposedly been purchased, and both companies confirmed that the items were counterfeit. Mr. Gordon ordered that a formal investigation be conducted by Defendant Cornelius Medley, then the Guard Force Commander and fill-in Deputy Program Manager in Kabul. He further instructed Mr. Medley to assume all of Mr. Garcia’s duties immediately. Unbeknownst to Mr. Gordon, Defendant Medley was a crony of Messrs. Du Plessis and Garcia and actively stonewalled his efforts to investigate this matter.

In addition to stripping Mr. Gordon of his duties, AGNA set out to make Mr.

Gordon’s working conditions intolerable. Mr. Medley excluded Mr. Gordon from management meetings, intimidated the rest of the staff by asking them if they supported Mr. Gordon or himself, shunned him, and relegated him to a persona non grata in the office. Mr. Gordon complained to Mr. Hoffman about Mr. Medley’s actions. Initially, Mr. Hoffman assured him falsely that these issues would be dealt with. However, no corrective action was taken, despite Mr. Hoffman’s knowledge that Mr. Medley’s actions had created a humiliating and hostile work environment for Mr. Gordon. In fact, Mr. Hoffman relegated Mr. Gordon to his office with minimal contacts with any other senior management and regularly excluded him from his meetings, all in an effort to force Mr. Gordon’s resignation. Mr. Medley made clear to Mr. Gordon by his behavior and to other staff members by his direct boasts that his priority was to force Mr. Gordon to quit.

In or around early March 2008, for example, Defendants Hoffman and Medley instructed Ms. Power to lie to DoS regarding Mr. Garcia’s continued employment with AGNA. They instructed her to tell DoS that AGNA had terminated Mr. Garcia from the contract when, in fact, he was still working under the Kabul contract and assisting AGNA in conducting inventories of its ammunition for its reports to DoS.

In fact, after Defendant Medley assumed responsibility for the Kabul Embassy contract, the ammunition inventory count revealed a shortfall of tens of thousands of rounds of ammunition. Mr. Medley directed AGNA employee Misty Maldonado, who was responsible for preparing the inventory report for DoS, to alter the report to remove any reference to the missing ammunition or the disappearance of the inventory. Only when Deputy Director of Operations Gregory Vrentas challenged Mr. Medley’s direction to provide false reports to DoS did Mr. Medley back down.

Defendant Medley knew that AGNA guards continued to frequent brothels and took no action to stop this unlawful practice. In a conversation with AGNA Training Manager Hal Simpson in mid-2008 about the fact that former Program Manager Nick Du Plessis and fellow guard members had frequented brothels, Medley remarked that at least AGNA knew what the men were up to when they visited prostitutes and if management took away that outlet, the guards would turn to something else.

How can Brinkley possibly think the appointment of Medley is a step forward?

MR. SHAYS: Why do you refer to it as the Gurkha force? I was waiting to hear why you would do that? They’re from Nepal, and they’re not Gurkhas, correct?

MR. BRINKLEY: Well, I differ from the previous panel members’ view. They have been referenced –

MR. SHAYS: I want to be — I want to be very clear.

MR. BRINKLEY: They’ve been — they are — (inaudible) –

MR. SHAYS: I want you to just listen to the question. Were these Gurkhas — are you calling them Gurkhas?

MR. BRINKLEY: The force is called the Gurkha guard force.

MR. SHAYS: Why do you call them the Gurkha guard force if they’re not Gurkhas?

MR. BRINKLEY: Well, I would like to take that question for the record.

MR. SHAYS: No. No, I’m not going to let you do that. Were these Gurkhas?

MR. BRINKLEY: It’s how you might define — your previous panel member had a definition of Gurkhas. We don’t use the same definition.

MR. SHAYS: No, but there is a definition. Gurkhas are individuals, I believe, who have gone through the military and have earned that title. And I just want to know, were these Gurkhas, or were they from Nepal and not Gurkhas? That’s all I’m asking. And it’s a simple answer.

MR. BRINKLEY: Chairman, the Nepalese individuals that are on this force have all served in either the British army, the Indian army, or the Nepalese army, and have met resume approval that is necessary to meet the requirements of this contract.

MR. SHAYS: But they were not Gurkhas, correct?

MR. BRINKLEY: We call them the Gurkha –

MR. SHAYS: I know you call them that. I don’t debate it. That’s my problem. I don’t know why you call them that if they’re not Gurkhas.

At Wackenhut they create their own reality. If they call them Ghurkas, then they’re Ghurkas.

MR.ERVIN : I want to talk about several whistleblowers, James Gordon and John Gorman, and then two other colleagues. Why were these four people — we don’t have the names of the two colleagues of James — of John Gorman. But to your knowledge, why is it that James Gordon was fired? He alleges one thing. What do you understand to be the reason why he was fired by ArmorGroup?

MR. BRINKLEY: First is I only can look at historical record, commissioner. This is before the acquisition. He left in — I — my recollection is February of 2008, and our acquisition was in May of 2008. So in the records that I have — indicate that he voluntarily resigned.

So nobody is saying Gordon’s charges are untrue. Gordon left only 3 months before Wackenhut acquired AG. Exactly how does Wackenhut do due diligence?  Does it have a sort of don’t ask, don’t tell policy?

MR. GRANT S. GREEN:

Mr. Brooks, in your testimony in — certainly in your literature you make a lot of — the code of conduct and the mission and so forth, and I certainly commend you for that, and I’ll quote a couple of short sentences here in the code of conduct, which is very detailed and all-inclusive, and that is “signatories shall respect the dignity of all human beings,” and in the mission statement, I quote, “provide high operational and ethical standards for firms active in the peace and stability operations industry. IPOA is committed to raising the standards of the peace and stability operations industry to ensure sound and ethical professionalism,” et cetera, et cetera, et cetera. I assume ArmorGroup is a member.

MR. BROOKS: Yes, they are.

MR. GREEN: Okay. In a sense, at least in my mind, you almost have a conflict of interest. On one hand, you have set some standards of conduct for your members, of which I just mentioned a few, while at the same time you try, I’m sure, to attract new members who may have difficulty meeting those standards, or they may have different standards. And I think this may be particularly true in the personal security area. What is your incentive for terminating a member, number one, and number two, have you ever terminated a member? I’m not talking about somebody resigning. Have you ever terminated a member, and what is the standard for that?

MR. BROOKS: Great question about — I think five questions, actually — but let’s see if I can address those –

MR. GREEN: Well, I’ll repeat –

MR. BROOKS: I’ll be sure to come back to you if I miss any. But, yes, there’s conflicts of interest. The reason I think our association is attractive to companies is because they do see it as one that — they see it as a selling point to be a member of an ethical association. If the association doesn’t have standards, if it’s not addressing problems within the association, then you lose that selling point. So essentially, getting — losing a company now and then, a member company, is not bad for us necessarily. We’re big enough that one company really doesn’t make a difference, and we’re certainly getting more companies in line to join, so — I mean, we were — we’re at 64 companies now. We were about two thirds of that a year ago.

Mr. Green’s first question was whether IPOA has ever terminated a member. And he only asked two, not five.

I think, yes, there are different standards, and again, I started this association as an academic, and my idea was to have a very large umbrella, get all the companies in, and then get — make sure their standards are compliant.

Exactly what kind of academic was Mr. Brooks? His bio on the IPOA website says that “Previously, he has been an Adjunct Faculty member at American University and an Academic Fellow and Research Associate with the South African Institute of International Affairs (SAIIA), Johannesburg. That would have been his last ‘academic” position before founding IPOA in 2001. If by academic he means he was essentially doing graduate student type work on a fellowship he is correct. But he was not a teacher at a college or university at that time.

Once we started getting members and we set up our membership committee, the first thing they said is, well, there are certain companies we don’t want to even allow in. So I had a big umbrella idea. The members had a small umbrella idea that said let’s make sure we properly vet these companies when they join, and the creation and the evolution of the Standards Committee, or the Membership Committee, I should say, has been quite interesting. So they are more exclusive. So a number of companies have been excluded.

And I think your third question was actually on — in terms of have — has a company been removed? We hope never to have to actually remove a company. It’s the death penalty essentially as far as we’re concerned. We have other — I think what our Standards Committee is best at is really the behavioral modification. We’ll get a complaint in, or we’ll get a general question about how the companies are operating in these areas, and the Standards Committee can do a number of things, either ask the company to provide information, alter its behavior, or do any other number of things. If the company refuses to do that, then through a process — and I’m happy to share that. We have a poster I can pass on to you that shows a process where the Standards Committee would actually recommend to the full Board of Directors that the company may need to be removed, and then that would be up to the board to do that.

If you are reluctant to remove a company from IPOA then what incentive does a company have to moderate its conduct? And given that member companies pay membership fees how would a company’s removal impact IPOA?

The process is in place. The companies take this very seriously, and it’s quite interesting that when an incident hits the news, the companies often — one of the first things they do is contact our Standards Committee and say here’s our perspective or here’s our side of that particular story. So they do take this quite seriously.

What does IPOA do after a company gives its side of the story? Does it just take the company’s word or does it take any steps to independently verify what the company says? If so, how does it do that?

MR. GREEN: Would the Standards Committee take on the challenge of trying to modify the behavior of ArmorGroup?

MR. BROOKS: If we received a complaint, we would bring the issue up with them, obviously.

Normally, our complaints come in — when they do on these sorts of incidents weeks later, the — obviously, the initial reaction is always contractual or criminal. And that’s not our venue, but if there’s an ethical question that is raised — and we do — we have created our complaint system, so anybody can bring a complaint against our members based on that code of conduct, and yes, we will review it, and that would apply to any company within the association.

Exactly what is not IPOA’s venue, criminal conduct, contractual conduct, or both? And why wouldn’t it be? IPOA had previously initiated an investigation to its former member company Blackwater after the shooting at Nisoor Square, until Blackwater pulled out of IPOA. Is the alleged deliberate shooting of civilians not considered an “ethical” issue?

MR. GREEN: Okay. But it has to be a company within the association that brings that complaint.

MR. BROOKS: No, no, sir. Anybody can bring a complaint, and this includes journalists and includes students. It includes people in the field, non-governmental organizations and so on. And they have brought complaints against our members. And if you want, I can describe the whole process of how it — the complaint goes from there to the Standards Committee, and then how they review it and so on.

Exactly how are complaints handled? Presumably there is a process by which people decide whether the complaint is worth investigating? Assuming it is considered valid what is the timeline for investigating? Who does the investigation? What methodologies are used? What resources are provided? How many non-member company instigated investigations has IPOA conducted over the years? Did any of them result in any kind of negative impact on a member company?

MR. GREEN: Based on what you’ve heard today and what you know about the performance of ArmorGroup in this case, might that not be a reason to terminate their membership?

MR. BROOKS: Again, it would be a process. There still is a due process, and the question would — you know, as we say, bad things happen to the best companies. Now, how does a company deal with it? And from what we’ve seen, ArmorGroup has been quite proactive in dealing with this particular issue once they learned of it. Again, I’m not on the Standards Committee. I don’t have a vote on the Standards Committee. It would be essentially up to a jury of peers to make that decision. And ArmorGroup would certainly be allowed to defend themselves.

Has IPOA bothered to look at the testimony of John Gorman and James Gordon? If they are correct then ArmorGroup conspired in trying to cover the issue, not deal with it. Has IPOA’s Standards Committee even asked ArmorGroup directly about the allegations?

MR. HENKE: Okay. I’m trying to understand if your organization is really — my sense is a Good Housekeeping stamp of approval without the Good Housekeeping. And I’m not being facetious there. I really want to understand what teeth are in your code of conduct. You go to great lengths in your statement to talk about your standards of conduct, committee, and how anyone can file a complaint. That’s anyone, right, any member company, any journalist, any NGO?

MR. BROOKS: You can file a complaint based on our code of conduct — yes, you can.

MR. HENKE: Has anyone yet — since September 1st since POGO went public with these — this gross misconduct — has any complaint been filed against ArmorGroup, WSI, or Wackenhut?

MR. BROOKS: At this point we don’t reveal those complaints until later in the process, and –

MR. HENKE: You won’t tell us here today — (inaudible)?

MR. BROOKS: I’d rather not — yeah.

MR. HENKE: You won’t tell us, or you’d rather not?

MR. BROOKS: I would rather not, to be quite frank. (Inaudible) –

MR. HENKE: (Inaudible) –

MR. BROOKS: We try and keep the system –

MR. HENKE: Have you filed a complaint?

MR. BROOKS: I don’t file — (inaudible) –

MR. HENKE: Has the organization?

MR. BROOKS: — on behalf of the organization, I won’t.

MR. HENKE: Okay. I’m filing a complaint now.

MR. BROOKS: Okay. I will send you information on the filing process.

MR. HENKE: Now I’m in your system and I want to see what happens to this code of conduct in your Standards Committee.

MR. BROOKS: (Inaudible) — complaint moves forward, and –

MR. HENKE: I’m filing the complaint against ArmorGroup for their gross misconduct and the violation of your organization’s code of conduct.

MR. : Bob, can I just interject just quickly? I would like you to answer the question for the question. I understand if you want to do it. I’d like you to answer whether there is presently on file –

MR. BROOKS: To be honest –

MR. : — a complaint against either ArmorGroup, WSI, or Wackenhut.

MR. BROOKS: To be honest, I’d have to actually check the policy on that, but I would prefer — (inaudible) –

MR. : Check the policy on whether there is a complaint?

MR. BROOKS: No, on the revealing of the complaint if there is a complaint, because — (inaudible) –

MR. : I would like for you to just take a minute before we end this hearing, check the policy, and get back to us.

MR. BROOKS: No, you know what? I’ll tell you right now at the risk of annoying my membership, but there’s been no complaint to date on ArmorGroup or Wackenhut — (inaudible).

MR. : No complaints to date at all?

MR. BROOKS: No, not — but these complaints usually take some time before they actually do come in. On our side –

MR. : Yeah.

MR. BROOKS: — it’s an ethics complaint rather than a –

MR. : It’s been 13 days, and no one, much less a member company, has said there’s something wrong here. I want to complain?

MR. BROOKS: That’s — (inaudible).

MR. : How many members do you have?

MR. BROOKS: We have 64 members currently.

MR. : Sixty-four member companies. No one’s said a word.

MR. BROOKS: Well, they said a word.

(Cross talk.)

MR. BROOKS: Well, I’m sure they’re talking about it.

MR. : Nobody’s filed a formal complaint.

MR. BROOKS: Yeah.

MR. : Nobody’s filed a complaint. I just think that’s egregious. It just doesn’t — I mean, I — this distinction of –

MR. BROOKS: Keep in mind most of the complaints come from outside the association, and –

MR. : Like mine just did.

MR. BROOKS: Yeah.

Personally I find this whole exchange mindboggling. No other company would file a complaint? I mean this is, to say the least, a very competitive field. It is routine for companies to file lawsuits against each other or to challenge a contract award in order to get business. Yet not a single company, either from within or outside IPOA, either under their own name, or, say, using their grandmother, has done so?

MR. : — get the question, and you can do that in your own time. You go to great lengths in your statement to talk about peacekeeping missions, first, humanitarian missions on a scale from left to right, peacekeeping missions, humanitarian missions, peacekeeping missions. Is what’s going on in Afghanistan right now a peace operation? The International Peace Operations Association — (inaudible) –

MR. BROOKS: We didn’t keep that name officially. It’s just IPOA now. But I would actually — it gets into academic definitions. I would consider it a stability operation, not a peace operation. It seems to me it’s more of a military operation rather than an attempt to keep the peace.

When and why did IPOA change its name? Should we take a leaf from Prince and now refer to IPOA as the trade group formerly known as the International peace Operations Association? What is the difference between stability operation and a peace operation?

MR. : I don’t disagree with you that it’s a very dangerous place, but I would say that in Afghanistan where 40-some, 50-some American troops are killed in a month, it’s not close, okay? I’m getting at this issue of where is the line on inherently governmental? Can you comment on that?

MR. BROOKS: Yes, I can. Actually, I think a lot of it comes down to sort of a pragmatic perspective, and again, this is how we got into it. The reality is the government is trying to do some fairly significant policies, and it has a certain limited capability to do that. I like to point out we have probably the most effective, most professional military in history, the United States does, I should say. But to do that, it’s outsources a lot of the aspects that, really, you don’t want soldiers doing. You know, they may have been cleaning toilets or flipping eggs in the past, but that’s something that obviously should be done by contractors. You don’t want a limited number of volunteers, the professional soldiers that we have, doing that sort of stuff. They should be focused on the policy aspect.

Policy aspect? Is that newspeak for combat?

Now, there’s the issue of security, and that’s the one that’s sort of the grey area. At what point, you know, can you use private security? I think if they’re protecting something, if it’s not a state-on-state war and everything — it’s really not that difficult of a choice. It’s simple security. And this is an issue I think that gets to the whole Mantro (ph) document. You have illegal combatants. You have issues of — when you’re protecting warehouses, do you need to use soldiers to protect humanitarian warehouses and things like that? It’s an issue that has to be able to evolve. I think the U.S. government has several definitions of what inherently governmental is, but I think we have to be practical when we make these decisions. And if we make a decision to say that, you know, all security work has to be done by the government, it’s essentially going to hamstring our larger policy issues.

No lawyer who has studies this issue thinks it is simple. For over two decades at least there has been a raging debate over how to classify security contractors, determine how they fit into national and international law, define the circumstances in which they can use force et cetera. They have yet to come to come to a resolution.

MR. SHAYS: I am stunned that your organization did not know about these problems, since everyone else seemed to, and when I say your organization, your organization out of country ’cause your folks in-country knew. They knew. And it says to me there is something so incredible sick about your organization that that would be the case. It says something very sick about a rat that says, “warning, this project is infested with rats. Be cautious of what you say and do around those suspected of being rats. Rats can cost you your job and your family.” Quote, “Never rat on your friend, and always keep your mouth shut.”

That would explain, Mr. Brinkley, why your management folks don’t know much, because there’s this kind of sickness, cancer in your organization.

…

MR. SHAYS: Mr. Brinkley, are you surprised that you don’t know anything, because you have to be a fool for someone to tell you — because you don’t seem to be at all outraged by the fact that this happened. There is a culture within your company that discourages people from speaking out. I would’ve thought that you, as the person in charge, would’ve said this is unbelievable. Why wasn’t I notified immediately? You’re out. I would’ve called State and said I have just been notified a few minutes ago, this is the case, and so on. I didn’t see that. I don’t feel it. I’ve been listening to this panel thinking ho hum, ho hum, ho hum. You don’t seem to get it, honestly. I mean no disrespect, but you do not seem to get it. What you have done by your conduct today is a strong indication that you know you better not try to expose — I’d like to ask –

MR. BRINKLEY: Commissioner, if I might –

MR. SHAYS: Yeah.

MR. BRINKLEY: — Mr. Chairman, I can assure that I am outraged. I met with the commission last week. Unfortunately, the chair was not there. I am outraged. I am embarrassed. I am humiliated.

MR. SHAYS: That is –

MR. BRINKLEY: We take this very, very seriously, so the idea that we don’t –

MR. SHAYS: If you take it seriously, then tell me what action you’ve taken to say to Alyssa Bowell (ph) we appreciate you more than the scum who did this? Give me one indication. MR. BRINKLEY: First –

MR. SHAYS: Did you ever say to your subcontractor that maybe you need to hire Terry Pearson back because he’s the one good guy in this group who spoke out? Have you done anything like that?

MR. BRINKLEY: I have not taken that action yet because that is — his actions are under investigation. He belongs to another company. I would — (inaudible) –

MR. SHAYS: No, not another company. He’s your subcontractor. Let me tell you — and this is the thing that bugs me more than anything. Seventy percent of our contractors are subcontractors, and somehow we hide and we put a curtain in front of them and say, you know, we can’t look at them. We can’t deal with them. We only deal with the project. That has got to stop. Why do you think that Terry was fired? Because he spoke out and because the sub was concerned that you would take action against the sub.

MR. BRINKLEY: I categorically deny that.

MR. SHAYS: Okay, tell me why.

MR. BRINKLEY: Because that is not our policy. We would not do that.

And we all know that nobody at AG or Wackenhut would dare to do anything against policy.

MR. SHAYS:

Mr. Brinkley, just to follow up on that last exchange, I hadn’t planned to, but I’ll do so now.

I just want to go over this one more time. You’re saying, you said earlier in the earlier round, that it is possible that the State Department, somebody in the State Department may well have approved of this surveillance mission, this operation snack pack. I just wanted to give you another opportunity to clarify that.

MR. BRINKLEY: When I read the allegation, we made an inquiry. I was led to believe that it was planned. And I was informed that, from the person that indicated that, it was approved by the department. Now, that is under investigation, commissioner. I do not know the final determination.

Did State really authorize that? If someone did let’s find out who.

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David Isenberg is an independent, Washington-D.C. based analyst and writer on military, foreign policy, national and international security issues and the author of Shadow Force: Private Security Contractors in Iraq.   In addition to his contributions to the Private Military Herald, Isenberg also blogs regularly at the Partnership For A Secure America.

In the second of a 3-part series David Isenberg, columnist, analyst, researcher and author of Shadow Force: Private Security Contractors in Iraq provides analysis and commentary on the transcripts of testimony from the recent hearings by the Commission on Wartime Contracting which took place on the 14th of September in Washington.

—

By David Isenberg

Like my previous posts, what I have done below is to copy various excerpts from the hearing. Each excerpt is italicized and indented. Each excerpt is usually followed by my comment in bold. Sometimes I make observations. Sometimes I ask questions. In some cases I feel the excerpt is so fascinating in its own right that it stands on its own and I make no comment.

PANEL II OF A HEARING OF THE COMMISSION ON WARTIME CONTRACTING SUBJECT: THE DEPARTMENT OF STATE AND SECURITY CONTRACTOR MISCONDUCT CHAIRED BY: CHRISTOPHER SHAYS AND MICHAEL THIBAULT WITNESSES: DANIELLE BRIAN, EXECUTIVE DIRECTOR, THE PROJECT ON GOVERNMENT OVERSIGHT (POGO); TERRY PEARSON, FORMER OPERATIONS SUPERVISOR IN KABUL, RA INTERNATIONAL LOCATION: 2247 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C. TIME: 11:53 A.M. EDT DATE: MONDAY, SEPTEMBER 14, 2009

MS. BRIAN:

The issue here is really not about obscene pictures and drunken men. It’s about a contractor that has been entrusted with a profoundly important mission — protecting our diplomats and embassy in an increasingly violent war zone — and a federal agency that has utterly failed to oversee that contractor.

What is truly obscene is that ArmorGroup knowingly under- performed in its mission in order to maximize its profits, endangering the diplomats and its own employees in the process, and the Department of State knew about it.

We now know that, as far back as 2007, an earlier generation of ArmorGroup whistleblowers vigorously pressed management to address all the concerns that have been raised today. When these concerns were dismissed by ArmorGroup, the whistleblowers reported the misconduct to a State Department official. They were fired the next day. This may answer some of the questions you have about why other whistleblowers later didn’t go to the State Department. Not only were those people fired, but the State Department never followed up to interview any of those claims that were being made back in 2007.

AG to employees: The truth will only get you fired.

Fast-forward to August 2009, when POGO started hearing from ArmorGroup guards. We discovered a demoralized workforce in crisis because they feared they were incapable of properly carrying out their mission. Because ArmorGroup failed to hire an adequate number of guards, leave was often revoked and the guards were working 14-hour-a- day work cycles for as many as eight weeks in a row. The guard force commander himself described the entire guard force as sleep-deprived.

Indeed, as any military officer would tell you, putting aside whether an attack happens or not, having guards work a 14 hour shift is inherently a security risk.

I have to say I am disturbed that so far in this hearing, as Commissioner Ervin noted, the State Department kept trying to limit the issue to two or three parties. The down side to having those photos is it makes it easy to focus just on those parties, overshadowing what we think are equally significant issues. But I also find it amusing, because we actually have photos of other parties of other dates, and we’re happy to share whatever is of interest to the commission.

Yes, please do share.

But for the past two years, the State Department’s response has consisted mainly of written reprimands and the renewal of ArmorGroup’s contract. Weak government oversight creates festering sores that breeds misconduct, as we see in this case.

Frankly, infuriatingly in response to the recent revelations, the State Department continues to repeat baseless statements that at no time was security jeopardized. Based on what facts can they possibly make those assurances?

To answer Ms. Brian’s question I think we previously established they can’t.

As some of the commissioners have noted, four times between June 7th and March 29th, the State Department itself told ArmorGroup that the inadequate number of guards, quote, “put security in jeopardy,” quote, “negatively impacted the security posture,” caused, quote, “serious and grave concerns” and, quote, “gravely endangers the performance of guard services.”

Nothing has changed since those statements were made. Yet the State Department is now assuring the Congress and the Wartime Commission that security at the embassy is sound.

I have last week’s shift schedule. I know they are still operating on a schedule that their own commander described as unsustainable. These public assurances by State are not supported in fact and make clear the department has not yet recognized its own role in this public-policy failure.

What can one say? Just freaking incredible!

And with regards to the hazing, let me quote one of the guards himself. He wrote to us, “I’m convinced the greatest threat to the security of the embassy is the erosion of the guard forces’s trust in its leadership and ultimately the Department of State.

The drain on morale, along with the systemic retaliation against guards, who did not participate in the unprofessional activities, has resulted in a near 100 percent annual turnover rate. This turnover rate feeds back into the guard shortage that causes the excessive overtime.

And now the guard force has to trust the State Department to fix the problem? Can we say Catch-22?

So these other issues do in fact have a direct impact on security. Furthermore Undersecretary Kennedy’s statement to the media that most of these problems were identified, in State Department correspondence with ArmorGroup, and therefore, quote, “there was oversight present,” makes a mockery of oversight, unless what he meant was the other meaning of oversight, which is meaning to overlook.

Simply documenting a problem and even imposing a fine is not effective oversight, if the problems continue to occur.

Oversight is no sight. No doubt Orwell is laughing.

The failed oversight also extends to the State Department’s inspector general, whose office, we now know, was contacted two years ago by Senator Lieberman’s staff, yet they never interviewed the whistleblowers to determine the extent of the problems.

Oops, never mind what I wrote earlier regarding using the State Department IG hotline.

Additionally, in testimony before the Senate in June, ArmorGroup parent company Wackenhut Vice President Sam Brinkley provided testimony that was also inconsistent with the facts. He asserted that the guard force for the U.S. embassy had been fully staffed since January. However, that March, nearly 50 guards stood before him at Camp Sullivan to point out the guard shortages that required them to be overworked and have their leave revoked. And now Wackenhut is taking some of their guards from our U.S. nuclear weapons facilities to try to patch up this guard shortage.

Ah well, why bother guarding a nuclear power plant?

At that hearing, State Department Deputy Assistant Secretary Moser echoed Wackenhut’s false assurances. Who will hold these officials accountable?

To paraphrase King Henry II on Thomas Beckett, will nobody rid me of these incompetent overseer’s?

And finally, it may be necessary to bring the military in to oversee the performance of the security.

Yes, I’m sure they will be happy to, just as soon as they can take a break from training the Afghan army and national police.

On a final note, I would like to thank the more than 20 whistleblowers, who came forward at great personal risk. The risk they took, and continue to take, is breathtaking. In return for their bravery, they have been called rats by some of their colleagues, woken up to posters on their doors with threats to their jobs and families, all while working 14-hour shifts and literally having bombs explode outside the gates of their compound.

Is the Commission talking to these people? One can only hope so.

In response to the scandal, the State Department did ask ArmorGroup to remove all the supervisors on this contract. However, incredibly, those supervisors, after being fired, were not actually removed for days, and continued to act in their official capacity; creating an untenable work environment for the many whistleblowers still on the guard force.

It just gets better and better.

As of today, not all the bad actors have been removed, and retaliation continues. State has issued warnings that retaliation won’t be tolerated, but what will they actually do to protect the whistleblowers? I continue to lose sleep worrying about them. But from their public comments, however, I sense the State Department is perhaps losing sleep focusing more on their own reputation.

Just how bad is it?

MR. THIBAULT: Well, the reason that’s important is, so often in whistleblower cases, there’ll be one or two individuals that bring the whistle and allege wrongdoing, and they’re kind of — the history says sometimes they’re summarily dismissed as disgruntled employees, or about-ready-to-be-fired employees. And in this case, it’s not everyone, but it’s — you know, have you experienced that kind of referral in your past?

MS. BRIAN: That’s a great question. I’ve been doing this for 20 years, and there has not been a circumstance that I can point to where such an enormous percentage of individuals have come forward essentially as whistleblowers. It’s — it’s — out of 150 English- speaking guards, we’re speaking to 20 of them. I mean, it’s really quite extraordinary. So it’s unlike anything I’ve ever experienced, and it’s a testament to the magnitude of the problem.

###

David Isenberg is an independent, Washington-D.C. based analyst and writer on military, foreign policy, national and international security issues and the author of Shadow Force: Private Security Contractors in Iraq.  In addition to his contributions to the Private Military Herald, Isenberg also blogs regularly at the Partnership For A Secure America.

In Part 1 of a 3-part series David Isenberg, columnist, analyst, researcher and author of Shadow Force: Private Security Contractors in Iraq provides analysis and commentary on the transcripts of testimony from the recent hearings by the Commission on Wartime Contracting which took place on the 14th of September in Washington.

—

By David Isenberg

Much of the time U.S. governmental investigations and hearings into whatever is the current controversy are highly scripted affairs. Congressional hearings in particular usually have a certain kabuki drama or classic Greek play quality about them, insofar as everything that occurs is highly scripted and predetermined. Everyone knows the questions, and the answers to them, before they are even asked.

But, every now and then, one gets a rare moment of unscripted candor. In the recent hearing of the Commission on Wartime Contracting (CWC) on the ArmorGroup scandal in Afghanistan we had several such moments. And for those who are patient enough to watch or read the transcripts such moments are truly revelatory.

But before going any further let me note that, and no disrespect to other U.S. governmental agencies, I consider the CWC to be the one U.S. group in several years to be doing truly worthy work on this issue. They start with the premise that private military and security contractors are necessary. As CWC co-chair, Chris Shays, said in the first panel, “Contractors have provided critical support to American military operations since the Revolutionary War. More than 250,000 contract employees are working in Iraq and Afghanistan, and more than 1,000 have died in the line of duty. They bring special skills to bear, free up warfighters for combat missions and represent a vital resource for contingency needs. Our focus today is, therefore, on understanding how we can improve this system and make it work.”

They also acknowledge that the current situation with regard to oversight and accountability is seriously flawed. Their interim report issued earlier this year is highly worth reading

Like my previous post, what I have done below is to copy various excerpts from the hearing. Each excerpt is italicized and indented. Each excerpt is usually followed by my comment in bold. Sometimes I make observations. Sometimes I ask questions. In some cases I feel the excerpt is so fascinating in its own right that it stands on its own and I make no comment.

PANELS I, II, and III OF A HEARING OF THE COMMISSION ON WARTIME CONTRACTING; THE DEPARTMENT OF STATE AND SECURITY CONTRACTOR MISCONDUCT

September 14, 2009

PANEL I OF A HEARING OF THE COMMISSION ON WARTIME CONTRACTING;

SUBJECT: THE DEPARTMENT OF STATE AND SECURITY CONTRACTOR MISCONDUCT;

CHAIRED BY: CHRISTOPHER SHAYS AND MICHAEL THIBAULT;

WITNESS: PATRICK F. KENNEDY, UNDERSECRETARY OF STATE FOR MANAGEMENT, DEPARTMENT OF STATE;

LOCATION: 2247 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

D.C. TIME: 9:31 A.M. EDT

MR. SHAYS:

With reports of misconduct among ArmorGroup personnel surfacing as early as December 2008, and with two contracting office representatives tasked full-time to the Kabul contract, how could the State Department detect no signs of trouble until it received notice from ArmorGroup leaders in Washington, not Kabul, in late August 2009? Why did the State Department display no visible signs of outrage at the delayed notice of problems at the ArmorGroup encampment? Has the State Department issued a new tour notice or reviewed the security contract for possible default termination?

Great questions. Let us not have the equivalent of Abu Ghraib here, where wrongdoing was pinned on various enlisted men and women at the bottom of the chain of command. Instead, let’s look at the people who were supposed to be monitoring the contract from the very beginning. And yes, we’re talking about you, U.S. State Department.

It is hard to exaggerate the importance of these issues. American foreign policy goals, mission objectives and lives depend in no small part on the behavior of the contractor employees, who make up half of the contingency operation workforce in Iraq and Afghanistan. Maintaining a reputation for honorable and decent treatment of foreign nationals, as well as our own countrymen, is a key asset in the struggle against terrorists. It’s just basic common sense. Gross misconduct by employees of U.S. contractors devalues that asset. It is unfair, insulting and dangerous to the military, State Department, USAID and nongovernmental personnel working in the Southwest Asia theater to have America’s image sullied and trampled by outrageous and revolting behavior of contract employees. That concern is even more salient in countries, like Afghanistan, that have strict views of sexual misconduct and use of alcohol.

Indeed, being professional means using one’s common sense, and not just living up to the letter of the contract, although that wasn’t done either.

The incidents reported near the Kabul embassy undermine American efforts to build a stable, peaceful and democratic Afghanistan. To put it bluntly, they provide free recruiting material to the Taliban. ArmorGroup officials acknowledge the problem. They certainly can’t claim they were unaware of their obligations. Their contract with the State Department explicitly describes not only conduct requirements but also the reason for them.

Of course, lack of adult supervision by the State Department does not absolve ArmorGroup. AG can’t even claim ignorance of the requirements, as both they, and the rationale for them, are spelled out in the contract.

I’ll quote just one of those provisions. Quote, “Each contractor employee or subcontractor employee is expected to adhere to standards of conduct that reflect credit on themselves, their employee (sic) and the United States government,” end of quote.

Perhaps the AG guards and supervisors should have asked themselves how eating chips out of someone’s ass brought credit on the U.S. government.

We have seen no evidence that State Department employees participated in the incidents or had any knowledge of them until recently. That leaves open, of course, questions about the levels of vigilance and diligence that ArmorGroup and State were exercising.

Not very much apparently.

The scope and duration of misconduct are both greater than they first seemed. Initially, we thought the list of disturbing episodes comprised the parties of June 15th and August 1st and August 10th. We have since discovered that other incidents occurred during December 2008 holiday parties, and that cafeteria-catered bunker parties became a recurring event during off-duty hours.

Do we yet have the full timeline on how long the misconduct went on?

Tough young guards can’t be expected to spend their leisure hours diagramming sentences or studying the etiquette of the local tea ceremony. But we can expect them to be mature and use good judgment, and we certainly can insist that their managers and the government’s contract managers pay close attention to employee conduct on an important mission in a sensitive region. Obviously, we need a great deal of improvement on those points.

Possible contender for understatement of the year.

Honorable Patrick F. Kennedy, undersecretary of State for Management:

As the State Department’s senior management officer, I take responsibility for having failed to prevent them and for not having uncovered them earlier.

How exactly have you taken responsibility? You have not resigned and are still undersecretary. You have not suffered a demotion, a reprimand, a bad job evaluation or even a slap on the wrist.

And the consumption of alcoholic beverages has also been prohibited at Camp Sullivan.

Yet many other PSCs continue to allow the use of alcohol. But perhaps that is okay as they actually have professional guards and managers who know when it is okay to drink. Let’s face it the work is stressful. Perhaps better a few beers than using other drugs. Still, maybe people should ask if there needs to be an industry standard on this. If so, what? In the interim, until people figure it out, the State Department, can always write into the contract a simple clause that says, no alcohol whatsoever. Better yet, State needs to vastly improve its oversight mechanisms.

We have always had in place a rigorous regime of oversight for security operations by contractor personnel while they are on duty. Allegations of contractor misconduct are investigated, and if substantiated, appropriate action is taken.

You have, since when? Where was it in Iraq? Right now it looks like it is MIA.

The cost of using contractors also is often higher than it would be to hire and manage an internal workforce.

Now here is a money quote if ever there was one. Contractor industry advocates have always claimed that they are cheaper and more cost effective than their public sector counterparts, although there has never been an authoritative analysis confirming that. Now, for once, someone relatively high up in government is admitting that is not always the case.

On March 12th, 2007, a contract award was made to ArmorGroup North America after full and open competition involving a number of countries. This contract has required extensive oversight in management. Since award, we have issued seven deficiency notices addressing 25 deficiencies; one cure notice; and one show-cause notice. Each deficiency notice, cure letter and show-cause notice demanded separate corrective action plans to permanently resolve these issues.

But if the charges in James Gordon’s law lawsuit against ArmorGroup North America are true then AGNA would simply lie when they said they were taking corrective action. So how exactly did State go about verifying whether AG’s corrective actions had happened, let alone whether they actually improved anything?

Despite the administrative deficiencies discussed with ArmorGroup, the department did not observe any breaches of the mission. Through the constant oversight of the regional security office and the contracting officer, Diplomatic Security personnel on the ground in Kabul felt that the administrative contract deficiencies did not jeopardize the security and safety of the personnel assigned to our mission. Static security at Embassy Kabul, as well as all our overseas missions, is based upon multiple layers of staffing to ensure appropriate security coverage and no single point of failure.

…

Thus, while the staffing shortages for ArmorGroup received deficiency notices and represented a failure to meet contract specifications, they did not represent a security risk. And based upon our reviews to date, the safety and security of our diplomats has not been compromised and the security of the embassy was not threatened.

Just keep this quote in mind for a while. We’ll come back to it later.

For the ArmorGroup contract, weekly meetings and, at times, daily meetings are held on contract performance. The contracting office is represented as a Diplomatic Security federal agent who sits in Washington and works daily with the two contracting officer representatives on the ground in Kabul, who are also both Diplomatic Security federal agents.

And yet with all those meetings the DS agent and CORs evidently had no clue about the parties at Camp Sullivan.

We simply made a mistake. We assumed that the contractor was going to be managing its conduct at the guard camp in accordance with the standards in the contract, as your fellow co-chair outlined.

Maybe you should have kept in mind the words of Ronald Reagan: “Trust but verify.”

It is clear that they should have stopped. I’ve seen the pictures. You’ve seen the pictures. It’s a no-brainer. That conduct is appalling and should have been stopped immediately.

The failure of the management onsite, to do what they should have done, to adhere to the standards of the contract, caused us to ask for their removal, which has been accomplished.

If it turns out that there was — as you used the word, and I realize you also put it in quotes — a conspiracy to keep this away from the State Department, if this turns out to be larger than that, I think I stand by the statement in my — that I made in my testimony which is, this — we are waiting for the results of the investigation. And then we will decide whether or not it is proper to continue this contract.

Are you really saying that the only reason State would terminate the contract is if it was proven that there was a conspiracy to keep this away from the State Department (one of the central charges in the Gordon lawsuit by the way)? What about the already confirmed charges of gross misconduct and unprofessionalism. Given that the governmental concerns about AG go back years is that really the only standard by which you can find justification to terminate a contract?

Now, let’s return to that security issue.

CLARK KENT ERVIN (commission member):

But I have to tell you, I am also very much troubled by the State Department’s repeated characterization, not just of these incidents but this whole litany of problems over the course of two years with this contract…

In your own statement today, you — the State Department draws a distinction — attempts to draw a distinction between contract compliance and the security of the embassy. In your statement, despite the administrative deficiencies, the department did not observe any breaches of the security of the mission.

Your own letters, the State Department’s own letters — there is a June ‘07 letter: The purpose of this letter is to advise you that I consider the contract deficiencies addressed below to endanger performance of the contract to such a degree that the security of the embassy is in jeopardy.

There is an August 28 letter: Upon review of the most recent corrective action plan, the government has serious concerns regarding ArmorGroup’s ability to respond in the aftermath of a mass casualty incident or extreme loss of personnel due to mass resignation, hostile fire, a loss of manpower due to illness, et cetera.

…

In March, before that, we had 18 guards, apparently, who were off-duty of their post, some for as long as three hours.

And then we learned in May of 2009 there was this Operation Snack Pack (sp) incident, when some guards, on their own initiative, went into Kabul dressed as Afghans and pretended to undertake a reconnaissance mission. The potential for loss of life is huge there, and for a while the embassy was night-blind as a result of that.

All of these incidents, I would argue, are not administrative deficiencies. They directly — and your own correspondence indicates that this behavior over the course of time jeopardized the security of the embassy. I’d just like your comment about that. How can you justify this distinction?

MR. KENNEDY: Commissioner, we’re — we’re not attempting to justify anything.

Yes, just as well; no point in trying to do the impossible

We’re attempting to describe a set of facts on the ground. I’m — I — I’m not offering justification for ArmorGroup’s performance. We’re saying — drawing a distinction between the off- duty conduct of a certain number of ArmorGroup personnel, which was reprehensible and totally inappropriate, to say the least, and their on-duty performance in protecting the U.S. embassy facilities in there.

Did you not understand his question? He was not talking about the party, he was talking about security breaches.

MR. ERVIN: Explain to me, then, why this language was used in these letters in 2007 and 2008.

If the course of conduct by ArmorGroup, even in those early years, did not endanger the security of the mission, why was that language used in these letters?

MR. KENNEDY: In an attempt to get ArmorGroup’s attention. We wanted to shock ArmorGroup and tell them that they were endangering their continued contractual relationship with the State Department if they did not (sic) fail to correct these deficiencies.

MR. ERVIN: It didn’t say that. It said it endangered the security of the mission. But let’s — let’s pursue that further. You could really get ArmorGroup’s attention by terminating the contract, failing to exercise the option to continue. And you didn’t do that.

You know, there’s this old adage: If you want to reward something, you — you, you know, give it — you do more of it. If you want to penalize something, you know, you do less of it. The fact of the matter is, you continued this contract. And why is it, under the circumstances that we’ve had for these two years?

So AG was deficient but it kept getting paid. Doesn’t government normally have the option of not paying a contractor when it does not perform to the terms of the contract? Is this what you call failing upward?

LINDA GUSTITUS (commissioner member):

I want to go to this issue of terminating contracts, because that issue isn’t new. And what you just told us today, both Mr. Moser and Mr. Kennedy, was, we’re going to wait for the results of this investigation and then decide whether to continue the contract. That was the exact same situation after Nisoor Square with Blackwater.

In other words, it is not as if you haven’t had to deal with this issue before

But when you didn’t terminate your contract with Blackwater after Nisoor Square and the problems in Iraq, that helped to send a message to other contractors that you can do a lot and not have your contract terminated by Blackwater.

I asked the State Department for their documentation on that decision to continue their contract with Blackwater, to extend it. It was extended shortly after Nisoor Square. And we were given — we were told that there was one document relevant to that decision, which I thought would be a fairly complex decision: Are we accomplishing the major mission of winning the hearts and minds of the people, versus the security? And there was only one document, which just said, re-up the contract with Blackwater. There was no analysis of the cost and benefits of doing so with respect to Iraq.

And I raise this because it’s in the same context. You’re giving us the exact same response as the Blackwater situation, that you’re going to await the outcome of the investigation. But I don’t know, given the history, that there’s any confidence that you’d actually take action, regardless of the outcome of the investigation.

So given its record why should we trust the State Department now?

MR. DOV ZAKHEIM (commissioner member):

And let’s be clear about this. This is the equivalent of Abu Ghraib for Afghanistan. Last night, I went on the Web, just to see how many websites they had of this — these photos. And there are loads of them. And some of them are linked to sex websites, which really is going to look really good with Muslims in Afghanistan.

Well, at least the porn industry is benefitting from this.

Another problem is that this isn’t really new for State. You say, you know, this is relatively new and a new situation. Actually, it’s five years, because my former boss, Don Rumsfeld, made that change five years ago. Five years is an awful long time. Most wars don’t even last five years. Some last less than a week. So to say we’re in a learning situation, I mean, this sounds like we’ve been in the first grade for five years. A problem there.

Is that the equivalent of saying the State Department is a special needs child?

Let’s go back to the security issue one more time

MR. ZAKHEIM: Well, again given the situation we’ve got, and as you know very well, with what could have been a crisis, I mean, let’s face it. When there were 18 guard posts vacant, you say there was no risk. Well, there was no risk because nothing happened. I guarantee you, if something had happened, there would have been a risk.

My question again is, why do you think an investigation must be completed, before you get rid of a contractor, before you descope a contractor?

MR. KENNEDY: Because of the — because of the specifications and the requirements in contract law.

MR. ZAKHEIM: But contract law allows you to descope.

MR. KENNEDY: Commissioner, we’ll look at this again.

Wait a minute Commission Zakheim. Undersecretary Kennedy just avoided answering your question. You just laid out how the law allowed State to get rid of a contractor. But Kennedy just said they will look at it again. Well, that means they looked at it previously and decided not to do anything. Why not?

MR. SHAYS:

First off, it appears that what happens in Camp Sullivan stays in Camp Sullivan, and the fact is, it didn’t, just like it didn’t stay in Abu Ghraib. In Abu Ghraib, we had a military unit run amok. In Camp Sullivan, we had Charlie Group run amok.

…

I accept that part of the answer, and — but I want to then just ask you this. We learned of these incidents from POGO — the lurid behavior, the intimidation by this rogue group. And the intimidation is something that is particularly distressful. We didn’t learn it from State, we didn’t learn it from anyone else, but — and they learned it first from a lawyer who referred people to POGO.

Something is really off base when people have to go through a real different direction. There was no one that they could go to in ArmorGroup and get their complaint heard honestly. They were punished. There appears to be no one in State Department they felt they could go to and not be punished.

And our witness from Great Britain will tell you that he basically was forced to go because he was trying to stick up for his Afghan employees. So this is what really concerns me.

And why is that? After all the State Department Inspector General is a clearinghouse for receiving and handling allegations regarding fraud, waste, abuse, mismanagement or misconduct affecting Department of State programs and operations. One can Email: oighotline@state.gov; send mail to

Office of Inspector General

HOTLINE

P.O. Box 9778

Arlington, Virginia 22219

or Phone:

(Washington D.C., Metropolitan Area)         (202)-647-3320

(Elsewhere, Toll Free)                                 1-800-409-9926

MR. SHAYS: Is — no, let me just clarify. Is there any allegation that people were involved in either sponsoring a prostitute or — in somehow being connected with a brothel or the women?

MR. Eric BOSWELL[Assistant Secretary of State for Diplomatic Security]: There are allegations out there that are being investigated by the Office of the Inspector General.

MR. SHAYS: Relating to people — employees potentially doing more than frequenting a brothel, but actually participating?

MR. BOSWELL: I don’t think I want to get into exactly what’s — (we’ll be ?) investigating.

Uh, why not? Exactly what are you investigating?

MR. SHAYS: Why did ArmorGroup supervisors delay reporting news of misconduct in an attempt to intimidate people who might report it?

MR. KENNEDY: I have no idea, other than just to say that is totally inappropriate and —

MR. SHAYS: They gave you no reason, no justification for why it took them two weeks in this last circumstance?

MR. KENNEDY: No, they did not, sir.

MS. GUSTITUS: Did you ask them?

MR. KENNEDY: We have told them that that is an unacceptable action on their part, yes.

MR. : That’s not the question.

MS. GUSTITUS: No, the question was, did you ask them why they waited two weeks to give you the information?

MR. MOSER: Yeah, we have asked them. Yeah, we’ve asked them formally.

MS. GUSTITUS: And what was their answer?

MR. : They haven’t given — (off mike).

MR. MOSER: We have yet to get a formal answer on that.

Perhaps AG was having a bad hair day?

MR. ERVIN:

But let me ask this. If the investigation, and I hope it proceeds apace and I assume that it is, if the investigation establishes that all of these allegations we’ve been talking about and the allegations that bring us here today are true, will you pledge to terminate the contract?

MR. KENNEDY: Commissioner, it’s very, very hard for me to state a hypothetical. We don’t know what the investigation will say. I mean, I can say this. I can imagine facts unearthed in the investigation that would cause us to immediately terminate the contract.

And if you don’t terminate the contract what kind of signal does it send to other PSCs? Can Mr. Kennedy think of ANY reason or circumstance that would cause him to unambiguously recommend the contract be terminated?

MR. HENKE: Okay. I want to get at this issue of low-price, technically acceptable. In non-Beltway terms, I guess you’d call it –

MR. SHAYS: I think this needs to be the last area.

MR. HENKE: Okay. But I’d ask for two more minutes?

MR. SHAYS: Okay. Fine.

MR. HENKE: In non-Beltway terms, I think that would be called a low-bid contract. Fair? I mean, in a colloquial term?

MR. MOSER: Mr. Commissioner, all contracts are low-bid. There is always a low bidder in any contract, what their bids put out for. There’s somebody who bids lower than the other bidders.

MR. : But I’m not trying to characterize. I’m actually trying to help you. I think your — I think your hands are bound by law.

MR. KENNEDY: Correct.

MR. : By law, State has an authorization to accept the low- price, technically acceptable contractor.

But I think it’s important that we understand this. Technically acceptable means that the contractor is just pass — pass/fail, they pass. It doesn’t allow you to exercise judgment that this vendor came in with a Grade A proposal and this vendor game in with a Grade C or D proposal, right? They’re just acceptable. They both pass.

MR. KENNEDY: That is correct. They both deliver on the contract specifications.

MR. : Right.

MR. KENNEDY: One may have proposed a better way of doing it, but if their price is higher, we are unable to accept their better way of writing it.

MR. : Yes, sir.

MR. : If Company A comes in — Company A comes in with a Grade A proposal, and they propose $1.1 million, and Company D comes in with a Grade D proposal, but it’s still technically acceptable, at $1.0 million, you have to pick Company D.

MR. KENNEDY: That is correct.

MR. : You have to, by the law.

MR. KENNEDY: Provided that they are — both meet the technically acceptable definition. Yes, sir.

MR. : Right. You can’t decide, even in a wartime — in a war — let’s be plain — in a war, you can’t decide to pay a little more for a lot more quality.

MR. KENNEDY: That is correct.

MR. : Have you submitted a legislative proposal to the House and Senate to change that law?

MR. KENNEDY: We are in discussions within the executive branch on this, sir.

MR. : So you have not submitted to the Congress a legislative change?

MR. KENNEDY: We’re still — we have been — we’re in discussions within the executive branch.

MR. : Okay. So you’re thinking about it, but it hasn’t gotten up to Congress yet, fair?

MR. KENNEDY: There’s been — there is no bill at the moment on — for State Department authorization for the next cycle.

MR. : Right. I’m just going to — I’m going to end with this statement. I think the law makes no sense in peace time. In war, I think it’s egregious that you have no flexibility; you have no ability to apply your judgment and pick who you think is the best vendor even at a little more price. What do you think, Mr. Kennedy?

MR. KENNEDY: My personal opinion is, you’re absolutely right, Commissioner.

Okay, they are both in agreement, and so am I. Even if the perennial claim of the contracting industry is true, i.e., that it is more cost-effective, that is not the most relevant criterion by which to judge. So can we now please change the law?

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David Isenberg is an independent, Washington-D.C. based analyst and writer on military, foreign policy, national and international security issues and the author of Shadow Force: Private Security Contractors in Iraq.   In addition to his contributions to the Private Military Herald, Isenberg also blogs regularly at the Partnership For A Secure America.

In a Private Military Herald exclusive David Isenberg, author of Shadow Force: Private Security Contractors in Iraq dissects James Gordon’s suit against ArmorGroup North America.  To download the entire piece in pdf format click here.

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Per our past conversation here are my comments re the law suit filed by James Gordon against his former employer ArmorGroup North America (AGNA). Consider this a bit of quasi content analysis.

What I have done below is to copy various excerpts from the September 9 law suit complaint. Each excerpt is italicized and indented. Each excerpt is usually followed by my comment in bold. Sometimes I make observations. Sometimes I ask questions. In some cases I feel the except is so fascinating in its own right that it stands on its own and I make no comment.

In light of all the publicity given to the report on AGNA in Kabul released by the Project on Government Oversight, unfortunately, mostly centered around the pictures, it occurs to me that most people are not focusing on the important things. That is why I am writing this.

I think everyone in the “industry” (you may recall my past comments as to why it is not yet so) should read the whole thing. To read the full original complaint click here.

Before going any further let’s keep the obvious in mind. This is a complaint and the charges in it are, at this point, just that, charges. None of the points in the complaint have been proven in a court of law. And given the way the legal system works it will be a long time before we have any kind of findings or verdicts.

Nevertheless I don’t think it is farfetched that many people, especially on the operator side, will shake their heads in agreement if they make the time to read the complaint. There have just been too much documented wrongs with regard to PMs and PSCs in Iraq and Afghanistan since 2003 not to assume that some of the charges are likely true. At least that is my personal opinion.

Please note I am not saying that the actions described in the suit reflect a majority or even a great many people in the sector. I generally go with the not very surprising belief that most contractors are trying to do difficult jobs in difficult situations, often without much, if any, in the way of support. And it is true, as I have seen you and others state, that the government has often been missing in action when it comes to doing what it was supposed to be doing from the beginning, i.e. providing proper oversight.

But with that said it only takes a few people, especially if they are in management, to really screw things up, not only for their own company, but for the rest of the companies in the field. And I don’t think there has been nearly enough said about that. For all the purported negative media coverage I often hear and read people complaining about it is my sense that people in management largely gets a free ride, or at least a benefit of the doubt, simply because they are assumed to be ex-military, i.e., a former colonel, general, ex-SOF,… as if that is supposed to a guarantee of ethical conduct or integrity. Although, as this complaint shows, the decisions at the highest level may be made by people who have never been in the military.

Please note that I am happy if people comment re the below excerpts. I don’t assume my views are the only way to look at this. After all, there is much to be said and read in the future as this goes to trial. But I am pretty sure that at this point “industry” has a problem. If it is to continue on in the future it needs to address this now and not bunker down in the office and complain about the liberal media.

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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

JAMES GORDON V. ARMORGROUP NORTH AMERICA, INC.; CORPORATION SERVICE COMPANY ; ARMORGROUP INT’L, PLC; WACKENHUT SERVICES,

PRENTICE-HALL CORPORATION SYSTEM, INC.; JERRY HOFFMAN; and CORNELIUS MEDLEY

COMPLAINT FOR DECLARATORY, INJUNCTIVE, AND MONETARY RELIEF

AND JURY DEMAND

3. During his seven-month tenure as Director of Operations, Plaintiff investigated, attempted to stop, and reported to DoS a myriad of serious violations committed by Defendants, including:

• understaffing the guard force necessary to protect the U.S. Embassy to such an

extent that Plaintiff felt compelled to warn DoS that under AGNA’s staffing

scheme, “if one person gets sick or slips on a banana peel the whole thing falls

apart like a cheap suit;”

• hiring and retaining a Gurkha workforce to guard the U.S. Embassy, the vast

majority of whom could not speak English, in violation of AGNA’s contract with

DoS, and misrepresenting the workforce’s language qualifications to DoS;

• allowing the AGNA project manager and employees to frequent brothels

notorious for housing trafficked women in violation of the Trafficking Victims

Protection Act, and shutting down Plaintiff’s efforts to investigate and put a stop

to these violations;

• deliberately withholding documents relating to reports of violations of the

Trafficking Victims Protection Act by AGNA’s Program Manager and other

AGNA employees and other acts of misconduct under the contract when

responding to a document demand from Congressman Henry Waxman on behalf

of the Congressional Committee on Oversight and Government Reform;

• endangering the safety of the guard force during transport to and from the

Embassy by attempting to substitute company-owned, subpar, refurbished

vehicles from Iraq rather than purchasing armored escort vehicles as promised to

DoS, despite Defendants’ awareness that without proper escort vehicles the

transportation of guards would remain, in Defendant AGI’s own words, “a

laughing matter within the Kabul private security industry”;

• knowingly using DoS funds to procure cheap counterfeit goods from a company

in Lebanon owned by the wife of AGNA’s Logistics Manager; and

• Defendants’ practice of attempting to maximize profit from the contract with

reckless disregard for the safety and security of the guard force, the U.S.

Embassy, and its personnel.

…

5. Plaintiff vigorously complained of Defendants’ improper activities to Defendants and to DoS, attempted to correct AGNA’s numerous deficiencies, insisted that Defendants refrain from making material misstatements and omissions to Congress, and made clear to Defendants that he would not communicate false information to DoS.

6. In retaliation for these protected disclosures, his refusals to violate the law, his

efforts to stop violations of the False Claims Act, his investigation and reporting in furtherance of a potential action under the False Claims Act, and his disclosures to AGNA management and DoS about AGNA’s violations of the Trafficking Victims Protection Act, Defendants conspired together to strip Plaintiff of his job duties, subject him to a hostile work environment, and drive him to an involuntary termination in an effort to silence him and conceal the unlawful practices he had identified. Defendants’ termination of Plaintiffs employment is in keeping with their pattern and practice of retaliating against conscientious employees who raise concerns about and report to DoS AGNA’s contractual and statutory violations and material misstatements to the U.S. government.

The above are the central charges.  Note that this is not a case about AGNA making just a few innocent mistakes. The charges indicate a pattern of willful contractual violations and a continuing conspiracy to cover it up and to ignore, marginalize and ultimately force out Gordon who sought only to do his job as required by contract.

16. The Trafficking Victims Protection Act (“TVPA”) and its implementing

regulations provide that that the United States has adopted a “zero tolerance policy” regarding trafficking in persons. The TVPA and its implementing regulations prohibit Contractors, like AGNA, AGI, WSI, and their employees, from engaging in severe forms of trafficking in persons and from procuring commercial sex acts during the period of performance of the contract. The Contractor must inform its employees of these prohibitions and the corrective actions that will be taken against violators, including removal from the contract, reduction in benefits, or termination of employment. The Contractor must notify the Contracting Officer immediately of any information it receives from any source that alleges a Contractor employee has engaged in prohibited conduct and the corrective actions taken, if any, by the Contractor against the employee. A Contractor’s failure to comply with these requirements may result in suspension of contract payments, loss of award fees, termination of the contract, suspension or debarment.

This pretty clear cut — U.S. contractors shall not frequent whorehouses, regardless of whether the prostitutes are willing or not. The law and thus, AGNA contract, says if you see it you report it, which is what Gordon did.

22. In response to the RFP, Defendants AGI and AGNA, through the assistance of

James D. Schmitt, then Vice President of Business Development for AGNA, submitted a bid for this government contract, in which they knowingly made exaggerated and demonstrably false statements about AGNA’ s ability — including its capacities, experience, staffing capabilities, equipment, personnel, and facilities — to provide a guard force to protect the U.S. Embassy in Afghanistan. Defendants’ bid included material false statements about Camp Anjuman, a two acre base modestly comprised of a series of trailers that served as Defendant AGI’s base of operations in Afghanistan. The bid also made outlandish misrepresentations about AGNA’s infrastructure, government contacts, ISAF/NATO contacts, equipment, and support personnel.

This speaks volumes about the U.S. government’s ability, or lack thereof, to judge the value of contracts. Everyone says they should be judged on the basis of best value, not just cost, but how many people are there in government qualified to judge? More important, what recourse does the government have if a company lies? Obviously this is not just a business question. What if the embassy had been successfully attacked while AGNA held the contract?

Among other things, Schmitt is a former U.S. Army officer with service in Special Operations and Infantry units, In 2007 he served as the chairman of the board for the International Peace Operations Association. ArmorGroup has been a member company of IPOA since August 2003.

On September 14 the Commission on Wartime Contracting, a congressionally established body mandated to study wartime contracting in Iraq and Afghanistan, held a hearing. Among the witnesses was Doug Brooks, founder and president of IPOA. He said, “membership in IPOA is not automatic and requires disclosure and information not typical of trade associations. Companies can be expelled if they violate the association’s code of conduct.” IPOA’s code, currently in its twelfth version, adopted Feb. 11, 2009, states:

3.2 Signatories shall support effective legal accountability to relevant authorities for their actions and the actions of their personnel. Signatories shall proactively address minor infractions, and to the extent possible and subject to contractual and legal limitations, fully cooperate with official investigations into allegations of contractual violations and breaches of international humanitarian and human rights laws.

3.3. Signatories shall take firm and definitive action if their personnel engage in unlawful activities. For serious infractions, such as grave breaches of international humanitarian and human rights laws, Signatories should report such offences to the relevant authorities.

6.12 Signatories shall not engage or allow their personnel to engage in the act of trafficking in persons. Signatories shall remain vigilant for instances of trafficking in persons and, where discovered, shall report such instances to relevant authorities.

6.13. Personnel shall be expected to conduct themselves humanely with honesty, integrity, objectivity and diligence.

11.4. Signatories shall have an effective mechanism for personnel to internally report suspected breaches of international humanitarian and human rights laws and violations of other applicable laws or the IPOA Code of Conduct. Signatories shall not retaliate against any person who reports in good faith and on reasonable grounds such suspected violations.

24. Upon their arrival in Afghanistan, up until the date of their unlawful terminations on June 13, 2007, Messrs. Sauer, Martino and Gorman raised significant concerns, on almost a daily basis, with senior management of the ArmorGroup Defendants about AGNA’s inability to provide appropriate protection for the U.S. Embassy and Embassy personnel, to no avail. They objected to Defendants’ attempts to enhance AGNA’s profits by significantly altering the work schedules of the guard force. Over their heated objections and in contravention of the DoS RFP, which was designed around an 8-hour-day shift schedule, the ArmorGroup Defendants implemented plans requiring more hours per individual and fewer shifts of staff in order to cut costs and maximize their profit margin. By violating the maximum workable hours per week, as mandated by the DoS contract, AGNA was able to cut the needed guard force by approximately twenty percent, resulting in a substantial savings to AGNA.

If one cuts the guard force to save money that means longer shifts for the remaining guards with the inevitable exhaustion that entails. From a security viewpoint this is dangerous and is clearly in violation of the terms of the contract.

26. By email dated March 11, 2007, Mr. Sauer raised concerns about AGNA’s

screening and ability to hire personnel to staff up the contract. In response, by email dated March 11, 2007, AGNA Vice-President of Operations Michael O’Connell advised Mr. Sauer that the “main concern” for AGNA President Semancik is that Defendant AGI’s “Business Development guys developed the transition budget w/o input from you or the Ops folks” and the budget “may be SIGNIFICANTLY below what is required for you to stand this program up.” He went on to explain that “AGNA bid this at a very low price and a very low margin.., which means that if we don’t adhere to the transition budget closely … we/you are going to take a huge hit in the profit on year one.” He stated: “I’m sure you won’t give a rats (sic) if you have to take a huge hit but Karl [Semancik] is now the CEO and ultimately responsible for your program which means that Karl will have to take a huge hit from London and there’s the rub.” In ending this email, Mr. O’Connell stated: “You made an observation that ‘Anjuman [AGI’s base of operations] is not as well flushed out as some of you may think.’ I would suggest that you consider that a universal law for all support you require and expect.”

27. The following day, Mr. O’Connell admitted to Mr. Sauer that the timelines and resources in AGNA’s proposal to DoS “don’t match up,” which he described as “[p]robably not a big deal unless COR [the DoS Contracting Officer’s Representative] calls us on it.” He then encouraged Mr. Sauer to assure DoS, falsely, that AGNA had recruited and was in the process of vetting appropriate personnel. In response to Mr. Sauer’ s complaints to Mr. Semancik about the 12 ArmorGroup Defendants’ deceptive business practices, Mr. Semancik explained in a March 17, 2007, email exchange that AGNA had seriously underbid [my emphasis] the proposal to provide security for the U.S. Embassy in Kabul. In response, Mr. Sauer told Mr. Semancik that it would be preferable “to pull out of the contract than to jeopardize the Embassy security.” Mr. Semancik acknowledged that he was not sure that AGNA could do the project successfully.

I ask this sincerely. How often do people in the field get told by people back at corporate HQ to keep silent, when they note improprieties or contractual irregularities or reporting violations? Certainly, AGNA is not the first time this has happened. And how big a problem is underbidding?

29. By email dated April 1, 2007, Mr. O’Connell emphasized that despite the

formidable problems that AGNA was having in complying with the contract, he had little

concern that DoS would actually pull the contract from AGNA because the DoS contracting officer was “under severe pressure to make it work” given the intense Congressional scrutiny for all procurements out of his office as a result of Blackwater. Mr. O’Connell subsequently admonished Mr. Sauer not to tell U.S. Embassy personnel that AGNA had problems with staffing under the contract.

Well, isn’t this interesting. Not to excuse AGNA but if Gordon has been able to report all violations as legally and contractually required, how seriously would the State Department has taken him? And exactly who at State was exerting “severe pressure” on the State COR?

30. Messrs. Sauer and Martino also clashed with Mr. Semancik and Mr. O’Connell about: 1) AGNA‘ s failure spend sufficient funds to acquire appropriate annored vehicles to safely move the guard force to and from the U.S. Embassy; 2) AGNA’s failure to implement a strict policy to ensure that the safety and security of the U.S. Embassy and its personnel were not compromised by the guard force’s off-hours activities; 3) AGNA’s failure to ensure that “Moderate Risk Public Trust” security clearances were obtained for AGNA hirees before they were deployed to Afghanistan; and 4) AGNA slashing Gurkha salaries. Mr. Sauer advised them that AGNA “needed to either fund the project correctly or pull out, given that the operational chaos could lead to a loss of life.” When the Gurkha guard force walked off the job in May 2007 because of the low wages and poor treatment they were receiving from AGI, Carol Ruart, AGI’ s Human Resources Director, insisted that AGNA “lock [the Gurkhas] in their rooms until they agree to work for less.”

Lock the guards in their rooms? What, are they children being sent off because they refused to eat their spinach? Is management saying it has to be able to discipline its employees to ensure compliance with the terms of original contract? If so, what happens when the conditions detailed in the original contract change, i.e., become more dangerous? And, more importantly, is there anything in the contract that says employees have to suffer silently at the hands of stupid and incompetent management. Remember, this is not the military. They don’t have to follow all orders because someone says to.

And failing to spend sufficient funds to acquire appropriate armored vehicles to safely move the guard force? I mean, come on, how many times since Blackwater at Fallujah are we going to see crap like this?

32. By email dated May 31, 2007, to high-level AGNA and AGI managers, Mr. Sauer stated that “there’s one more thing that may be slipping the corporate mind: The U.S. Embassy Kabul is a national security issue even more than a business issue.”

Well, that kind of encapsulates the divide nicely. People in the field often say, rightfully, that for them it is not just about the money but about serving the country. But does anybody back at corporate give a damn? What happens when the greater public good means cutting into the profit margin?

Years ago, back when MPRI was being bought up by L-3, I predicted two things could happen, either separately or simultaneously. Either the greater financial and administrative resources that the bigger firms, which were buying up the specialized PSCs, were providing could make them far more effective, or, second, the people at the parent corporations would seek only to maximize profit, even if it means screwing people in the field. Undoubtedly both have happened but anecdotal impressions seem to indicate more of the latter.

34. During this period, Messrs. Sauer, Martino and Gorrnan received reports that

recruits for guard force positions who were then in pre-deployment training in Texas had been engaging in lewd, aberrant, and sexually deviant behavior, including sexual hazing, urination on one another and equipment, bullying, “mooning,” exposing themselves, excessive drinking, and other conduct making them unfit for service on the contract. Messrs. Sauer and Martino immediately notified Mr. Semancik about these reports and objected vehemently to allowing those involved to deploy to Afghanistan. Mr. Semancik insisted that the men would be deployed given the chronic staffing shortages AGNA was experiencing.

So, there were problems with AG guards long before they even got to Kabul? What does this say about AG vetting and training procedures? Remember that back in September 2004 AG International published a white paper arguing that companies offering armed guards abroad should be vetted under the 2001 Private Security Industry Act. At that time only companies offering services within the United Kingdom were covered by the law. Christopher Beese, director of ArmorGroup International, said “It seems extraordinary that the doorman for a nightclub, catering for a particular clientele in a particular part of town may have to be vetted and licensed, when the same man can be equipped with a rifle and an armoured vehicle and be engaged to protect diamond concessions for a foreign regime in clear breach of public interest and perhaps even in contravention of human rights, but needs no such regulation.”

Beese was still AG International’s Chief Administrative Officer at the time the events described in the complaint were happening.

35. Mr. Sauer further highlighted the dangers of allowing mentally unbalanced personnel to come to Kabul and be armed, and insisted that he had an obligation to inform the RSO. They also advised Mr. McConnell that the staffing and shift rotation plan AGNA corporate officials had come up with was “unrealistic and not in keeping with the requirements of the RFP.” Mr. O’Connell rejected their concerns and charged that ArmorGroup was a “publicly held corporation” and that their “ultimate responsibility” was to its investors.

Well, I guess, that answers my above question, “What happens when the greater public good means cutting into the profit margin?”

36. Messrs. Sauer, Martino and Gorman were disgusted by AGNA’s “profit over

safety” mentality and concluded that they had a legal duty to report Defendants’ fraudulent misstatements concerning AGNA’ s capacities, qualifications and readiness to take over security of the U.S. Embassy. Accordingly, on the evening of June 12, 2007, they went to the U.S. Embassy and reported their concerns verbally and in writing to the Assistant RSO Neil Pietrowicz. They informed him that AGNA personnel were not being properly screened and vetted and complained about AGNA’s hiring of an employee “who had been fired from a previous project for pulling a pistol on another employee while drunk.” They further complained that “the training program run for new hires has been plagued with hazing and intimidation of students by students. This included physical threats and perversions.”

37. Assistant RS0 Pietrowicz advised them that given the seriousness of the concerns they had raised, he would immediately report the information to the Regional Security Officer and to the Department of State in Washington, D.C. He informed them that the ArmorGroup Defendants would be notified “at once” about the serious concerns Messrs. Sauer, Martino and Gorman had raised, and that the information they had provided would negatively impact on a separate $500 million proposal the ArmorGroup Defendants had submitted to provide security services in Iraq.

38. On June 13, 2007, Mr. O’Connell terminated Messrs. Sauer and Martino and

directed that they be confined against their will to the compound. AGNA personnel then stripped them of their weapons, cell phones, computers, and vehicles, making it impossible for them to communicate with the RSO or other government officials, and forced them to fly out of Afghanistan. AGNA pressured Mr. Gorman to tender his resignation and leave Kabul on the same flight as Sauer and Martino. Later, Mr. Schmitt candidly admitted to Mr. Gordon that “AGNA cut them off at the knees” because “they had gone to the RSO to seek asylum.”

Okay, that also seems pretty clear. If you try to do the ethical, not to mention legally required, thing management is going to fire you. Probably smear and blackball (see 118-119 below) you too. Anybody wonder what kind of message this sends other companies, like, say those working on the WPPS contract?

39. AGNA installed Nick Du Plessis, a South African national, to replace Mr. Sauer as Program Manager, even though as a foreign national he was unable to obtain a U.S. security clearance, as required for the position.

So AGNA just said screw it? Exactly who or what did DuPlessis know that enable him to get the job?

43. After submitting its response to the Cure Notice to DoS, AGNA promoted Mr.

Gordon to the position of Director of Operations purportedly to implement AGNA’s corrective action plan, which unbeknownst to Mr. Gordon it had no intention of doing. Immediately upon assumption of the position of Director of Operations, Mr. Gordon sent an email dated September 3, 2007, to Program Manager Du Plessis and his staff stating:

You can rest assured that there is no hiding of information from DoS. Anyone who thinks that they can get away with this will probably end up in a Federal Penitentiary. It is our duty to report on all aspects of the contract performance and we are required to be transparent and honest in our dealings. Personally I wouldn’t accept anything else.

Mr. Gordon’s admonition to Mr. Du Plessis went unheeded. For the remainder of his tenure at AGNA, Mr. Gordon was placed in the impossible position of trying to reign in a rogue Program Manager who refused to comply with mission critical terms of the Kabul embassy contract and who took his direction from AGI, the foreign parent corporation, while simultaneously dealing with corporate executives who were unwilling to spend the necessary funds to bring the contract into compliance.

Yep, Joe Heller is smiling from heaven looking at this latest Catch-22. Anybody else experience problems like this?

46. From the outset, AGNA lacked the requisite necessary administrative staff to run the Kabul Embassy contract. Instead, AGNA was little more than a shell company set up by AGI to bid for and obtain U.S. contracts that could only be awarded to American companies. During most of Mr. Gordon’s tenure, the entire AGNA staff in the United States consisted of 21 employees whose time was spent overseeing several U.S. contracts that had been awarded to AGNA. Only two members of Mr. Gordon’s staff were dedicated to the U.S. Kabul Embassy contract. Although Mr. Gordon repeatedly informed AGI that AGNA could never bring the contract into compliance with the staff on hand, AGI Chief Operating Officer Noel Philp refused to permit AGNA to hire additional administrative staff. One of the consequences of AGI’ s refusal to allow AGNA to hire an adequate number of administrative staff was that AGNA repeatedly failed to perform requisite background checks for new employees or even to contact

prior employers. This resulted in AGNA’s hiring and training of unqualified personnel that lacked the requisite licenses and clearance and ultimately to the rejection by DoS of many of AGNA’s proposed hires, including several with serious criminal records. It also led to the hiring of personnel who had track records for engaging in misconduct, including drunken, lewd, and deviant behavior both at previous places of employment and during pre-deployment training.

We have all seen the criticisms in the past of insufficient, inexperienced, and undertrained government auditors and CORs. We know that it is indeed bad, very bad. No question about that. But what about the reverse situation, when it is the company which is lacking? Could the whole AGNA scandal have been avoided if some corporate suit had approved hiring a couple more admin staff?

47. Determined to increase its “profit margin,” AGI took over AGNA’s responsibility for recruiting and hiring the Gurkha and non-U.S. expatriate guards. (Gurkhas are people from Nepal and Northern India who are known for their history of bravery and strength in the Indian Army’s Gurkha regiments and the British Army’s Brigade of Gurkhas. The term “Gurkha” may also be used generically to describe guards from the region who are employed by private security contractors. There is a high degree of variability in the skills and training.) AGI’s goal was to do this as cheaply as possible, regardless of whether the personnel recruited and hired were qualified to assume the critical task of guarding the U.S. Embassy. AGI imposed several cost cutting measures, such as reducing the proposed Gurkha salaries by half, eliminating an entire guard shift, and increasing guard shifts from eight to twelve hours in order to reap a greater profit margin for the company.

So we have someone struggling to stay awake towards the end of a 12 hour shift, guarding the embassy, a magnet for attacks if ever there is one. Need we say more?

50. Despite AGNA’s representation in its contract proposal that it had a rigorous

program to ensure that all guards assigned to the U.S. Embassy were able to converse in the required languages with employees and visitors while on posts and that it would conduct language proficiency tests for its TCN workforce, Defendants hired Gurkha guards who could not speak English. AGNA falsified [my emphasis] their language qualifications in its submissions to DoS. When Mr. Gordon sought to ascertain what language tests had been administered to the workforce to determine whether their language skills complied with contract requirements, he learned that no language tests had been administered. Mr. Gordon informed DoS of this contract violation and immediately sought to rectify it. Subsequently, AGI hired a language teacher to perform language assessments who concluded that that the Gurkha workforce would need years of language training in order to meet the contract language requirements.

Yes, speaking the same language as your client probably IS a good idea, even a necessity.

53. Under the International Traffic in Arms Regulations (ITAR), a set of U.S.

government regulations that control the export and import of defense-related articles and services, AGNA was required to possess a license issued by the United States Directorate of Defense Trade Controls to conduct training of non-U.S. personnel for the performance of guard services at the U.S. Embassy in Kabul and to export munitions from the U.S. to Afghanistan for training.

54. On October 19, 2007, AGNA became aware that it had allowed its ITAR license to lapse on August 31, 2007. After learning of this, Mr. Gordon ordered a halt to all training of non-U.S. personnel until the issue was resolved. Mr. Semancik discussed this problem with AGI’s CEO, Mr. Seaton, who told him that AGNA should delay disclosing the ITAR lapse to Contracting Officer Rogers pending further word from the Directorate of Defense Trade Controls

about how long it would take to renew the license.

Okay, how does a PSC not stay on top of the paperwork that allows it to lawfully possess arms and ammo, and all the other things that go along with it. Seriously, how does it overlook that? Remember, we are talking about paperwork that has is required by the USG, not that required by a possibly corrupt ministry in the local government.

62. On October 10, 2007, AGNA’s guard force in Kabul was involved in a number of serious incidents which included: 1) the detention by AGNA guards of a group of Afghan civilians and their involuntary transport to the U. S. Embassy; 2) a verbal and physical altercation between AGNA guards and an Afghanistan Ministry of Interior policeman in which the guards handcuffed the policeman; 3) a confrontation between AGNA guards and an Afghani General and several Ministry of Interior policemen; and 4) the refusal of AGNA guards to obey an order given by the U.S. Regional Security Officer order to withdraw from a checkpoint in order to defuse a potentially explosive situation.

“the detention by AGNA guards of a group of Afghan civilians?” Did someone decide to use Jack Idema as a role model? Refuse to listen to the RSO? Sounds serious, anybody have details?

85. Throughout the fall of 2007, AGNA routinely delayed sending invoices to DoS because the data received from Mr. Du Plessis about personnel and hours worked did not comport with the time cards. When invoices were submitted, DoS’s audits revealed errors and therefore routinely rejected them.

Was that mere incompetence or an attempt at deliberate deception?

86. On November 27, 2007, AGI announced that its operating profits had dropped

from the prior year and that CEO Seaton had been asked to resign. AGI blamed its declining profits in part on the “onerous administrative and human resource requirements for the US Embassy contract in Afghanistan, which have had a significant impact on the profitability of its operations in the country.” AGI further announced that AGI had “recently restructured the management team involved in running the contract and believes that this strategic project will become profitable in the early part of 2008.”

This seems to indicate the role of the profit motive’s impact on proper execution of the complaint as clearly as anywhere in the complaint.

89. As a “sweetener” to induce DoS to release the withheld funds, Defendants

directed Mr. Gordon to promise DoS that if the funds were released they would be used, in part, for the immediate purchase of the critically needed armored escort vehicles. On December 5, 2007, Mr. Gordon appealed to DoS Contracting Officer Rogers to release some of the funds due to AGNA and assured him that a portion of the released funds would be used to procure the armored vehicles that AGNA had agreed to purchase. Mr. Gordon also represented, per his instructions from Defendants, that the monies would be used to meet payroll and pay AGNA’s outstanding invoices. Mr. Gordon advised Mr. Rogers that ifAGNA did not receive payment of the outstanding invoices immediately, its financial crisis would most likely lead the company to default on the contract. Mr. Gordon successfully convinced DoS to release the approximately $5.5 million in contract funds based on these representations, which it did on December 6, 2007.

Unbeknownst to Mr. Gordon, at the time he made these representations to Contracting Officer Roger, AGI had no intention of permitting AGNA to retain the released funds to pay AGNA’s outstanding bills and honor its contractual commitments. Rather, as soon as the money was transferred into AGNA’s account, AGI’s Chief Financial Officer, Matthew Braben, directed AGNA’s Finance Manager to send AGI all funds AGNA received from DoS, leaving AGNA without funds to pay its bills and to purchase the requisite armored escort vehicles.

So Gordon is set up to lie on behalf of AG. That’s cold.

91. In lieu of purchasing the required armored vehicles as AGNA promised DoS it

would do, AGI sought to transfer subpar, refurbished AGI vehicles from Iraq that did not come close to meeting the workforce needs.

Nothing is too good for our boys so that’s what we’ll give them, nothing.

103. In mid-to-late January 2008, AGNA formulated a response to Congress’

document demand that deliberately omitted inclusion of any documents relating to the allegations that AGNA’s Program Manager, Armorer, and Medic frequented brothels, the subsequent investigation of and disciplinary action taken against Mr. Du Plessis, the outbreak of STDs among the workforce, or the incident involving the trainee referenced above. AGNA also omitted information on the purchase of counterfeit goods by the AGNA Logistic Manager from his wife’s company.

104. Mr. Gordon discussed the submission with Mr. Schmitt, who had assumed

responsibility for preparing the report to Congressman Waxman. During this discussion, it became clear to Mr. Gordon that Defendants intended to conceal information from Congress. In response to Mr. Gordon’s strong objections, Mr. Schmitt responded that AGNA decided that those items “were best left out of the report,” as it would “not look good for the company.” Mr. Gordon also raised the issue with Mr. Hoffman, who responded that these incidents would not be helpful to AGNA and should not be disclosed.

At what point does trying to put the best spin on things become what we, back in the old days, used to call a cover-up?

105. After much discussion, Mr. Hoffman came to the same conclusion as Mr. Gordon that, given Mr. Du Plessis’s unethical and illegal conduct and the recent revelations regarding AGNA’s purchase of counterfeit goods, it was necessary to remove him from his position as the Program Manager. On or around February 5, 2008, Mr. Hoffman and Mr. Gordon also informed Contracting Officer Mr. Rogers that Mr. Du Plessis would be removed as Program Manager. Mr. Rogers agreed that it was a necessary decision and “well overdue.”

106. Mr. Hoffman departed for Kabul on or around February 10, 2008, with the

express purpose of terminating Mr. Du Plessis from the Program Manager position. Upon information and belief, AGI personnel, including Carolyn Ruart, leaked word of the impending termination to Mr. Du Plessis. In an effort to save his job and in complete disregard for the security of the Embassy and its personnel, Mr. Du Plessis persuaded the Gurkha workforce to threaten to walk off the job and leave the U.S. Embassy unprotected if AGNA removed Mr. Du Plessis from the position. Mr. Du Plessis had been instrumental in hiring them, despite the fact that they failed to meet the language requirements set out in the DoS contract.

107. Upon his arrival in Afghanistan, Mr. Hoffman was confronted with the threat of the Gurkha workforce walking off the job. As Mr. Hoffman subsequently informed Mr. Gordon, he concluded that AGNA was left with no choice but to retain Mr. Du Plessis.

“persuaded the Gurkha workforce to threaten to walk off the job and leave the U.S. Embassy unprotected if AGNA removed Mr. Du Plessis from the position.” Extraordinary. Now, how did DuPlessis manage that? Really, how?

118. Subsequently, Mr. Hoffman met with Mr. Gordon to discuss his complaint. Mr. Gordon reiterated that he could not work under the hostile conditions and for a company that continued to engage in unlawful practices. He further indicated that, given the removal of his duties and responsibilities and his exclusion from meetings, he felt that he had no choice but to resign. Mr. Hoffman did not dispute Mr. Gordon’s conclusion that AGNA had indicated by its actions a desire to get rid of him, nor did he try to address Mr. Gordon’s concerns in the interest of encouraging him to remain with the company. Rather, Mr. Hoffman instructed Mr. Gordon to submit a formal and favorable letter of resignation to allow AGNA to save face with DoS, in exchange for which he would provide Mr. Gordon with a letter of reference.

119. Mr. Gordon was well aware of actions AGNA took to disparage and blackball Messrs. Sauer, Martino and Gorman following their terminations. Accordingly, he acceded to this demand and submitted the requested letter because he feared that he too would be blackballed in the industry if he did not do so. Additionally, Mr. Gordon had recently married a U.S. citizen and was concerned that if he did not accede to Mr. Hoffman’s demand, AGNA might try to impede his application for his U.S. legal permanent residence. [my emphasis} Left with no options, Mr. Gordon was forced into an involuntary resignation on February 29, 2008.

126. In fact, after Defendant Medley assumed responsibility for the Kabul Embassy contract, the ammunition inventory count revealed a shortfall of tens of thousands of rounds of ammunition. Mr. Medley directed AGNA employee Misty Maldonado, who was responsible for preparing the inventory report for DoS, to alter the report to remove any reference to the missing ammunition or the disappearance of the inventory. Only when Deputy Director of Operations Gregory Vrentas challenged Mr. Medley’s direction to provide false reports to DoS did Mr. Medley back down.

What happened to the ammo? Did it make it way to the local black market? Is it now being used by the Taliban? Will some contractor or ISAF soldier be killed by one of those rounds?

128. Upon information and belief, after Mr. Gordon’s departure, AGNA again violated its ITAR license. AGNA had a valid ITAR license which listed David Smallwood as the ITAR approved trainer. Mr. Du Plessis dismissed Mr. Smallwood; however, AGNA did not obtain a modified ITAR license, as required by law. Consequently, it conducted training in Afghanistan without a valid ITAR license.

Rather difficult to inculcate respect for the rule of law in a country, when one’s own contractors ignore it.

130. AGNA was cognizant of its serious breaches of its contractual obligations to DoS. In March 2008, AGNA conducted an audit of the company’s compliance with 45 specific requirements from the DoS contract and its own procedures. It concluded that of the areas audited, 40% were found to be non-compliant to various degrees. Of those areas that were determined to be non-compliant, AGNA’s audit deemed one-third to be in mission-critical areas, including, most problematically, in the area of hiring and retention of a stable personnel force. Upon information and belief, AGNA failed to provide a copy of its voluminous audit and report to DoS or to disclose the serious problems identified by AGNA’s auditors.

If you can’t live up to the contract requirements don’t tell anyone.

140. By letter dated April 1, 2009, DoS denied AGNA’s request for a waiver to meet contractual language proficiency obligations, the third request of its kind. DoS stated: “[W]e are quite dismayed to learn that after nearly two years of contract performance, AGNA still has language deficiencies among [its) guard force…. AGNA took a huge risk in placing these individuals in positions for which they did not meet the full qualifications.”

What about the risk to residents of the Embassy who were under the mistaken belief they were being safely guarded?

141. Because of his ongoing concerns that AGNA and its new owner Wackenhut had failed to take appropriate action under the contract, that DoS remained lax and ineffective in its oversight of the U.S. Embassy Kabul contract, and that conditions existed which endangered the safety of the U.S. Embassy, Mr. Gordon took his concerns to Senator Claire McCaskill, Chairman of the Subcommittee on Contracting Oversight. The Subcommittee held oversight hearings on June 10, 2009. Mr. Brinkley provided false testimony to the Committee about AGNA’s full compliance with contractual requirements, insisting that the contract was fully staffed.

There need to be some way for people seeking to do the right thing, other than going to Congress or a watchdog group as a last resort. More internal investigations and audits need to be conducted by or on behalf of outside actors, particularly governments, not the companies themselves. To that end they could use the same standards and practices used by various Inspector Generals, If the Inspector General Act was used as a model, a private entity could provide oversight for PMCs. Given that the government has essentially resigned itself to continued dependence on PMCs this could actually provide more accountability.

One final thought is this. To this day many in the “industry” say that self-regulation is the way to go. It was not that long ago that the British government came out with its long awaited recommendations, saying just that. Perhaps someday industry will be in a position to credibly demand that. But now is not that time. It had its chance in Iraq and Afghanistan and, I’m sorry to say, it has not demonstrated that it is capable of being trusted to effectively oversee itself.

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David Isenberg is an independent, Washington-D.C. based analyst and writer on military, foreign policy, national and international security issues and the author of Shadow Force: Private Security Contractors in Iraq.  In addition to his contributions to the Private Military Herald, Isenberg also blogs regularly at the Partnership For A Secure America.