New kid on the block ProPublica has had an excellent article up by Matthew Schwarzfeld about uber-contractor Blackwater winning deals from the Small Business Administration. The SBA’s Inspector General found that Blackwater was able to win $100 milion worth in contracts set-aside for small businesses– due to potentially illegal employment classification practices. Blackwater judged private security contractors it had recruited and trained for work in Iraq  not to be company employees, but instead independent contractors. This way, Blackwater had a small enough number of employees to qualify as a small business.

That Blackwater contractors are not Blackwater employees seems to fly in the face of common sense — and Blackwater’s own statements. CEO Erik Prince has said in Congressional testimony that he considers the contractors in Iraq to be Blackwater employees. In fact, Blackwater has argued that the families of the four Blackwater contractors mutilated at Fallajuh can’t sue — because the private warriors had signed an employee agreement prohibiting lawsuits.

Anyway, SBA has now referred the matter to the Pentagon. Few have heard of the federal agency, but its granting of small business status has a huge influence on who receives government money. The ProPublica piece centers around Blackwater but it raises the question of who else may be exploiting SBA rules.-MB

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