One Fifth of Iraq Funding Goes to Private Contractors

As a new report forecasts that the 190,000 private contractors in Iraq and neighboring countries will cost U.S. taxpayers more than 100 billion dollars by the end of 2008, an under-the-radar Florida court case suggests that U.S. President George W. Bush -- a staunch contractor supporter -- is preparing to throw security contractors such as Blackwater under the political bus.

In the Florida case, relatives of three American servicemen killed in the 2004 crash of an aircraft owned by Blackwater Aviation in Afghanistan are suing the company for damages, based in part on U.S. government reviews that concluded that errors committed by Blackwater staff were responsible for the deaths. Last month, despite Bush's support for what he has called the critical roles played by overseas contractors, his administration failed to meet a deadline for presenting the court with any defense of Blackwater.

The administration's silence has caused consternation for Blackwater and its supporters. Erik Prince, Blackwater's chairman, told Time magazine, "After the president has said that, as commander-in-chief, he is ultimately responsible for contractors on the battlefield it is disappointing that his administration has been unwilling to make that interest clear before the courts."

Some observers have speculated that the Administration's silence can be attributed to the controversial nature of the contractor issue and a reluctance to address it during a hotly contested presidential election year.

The Florida battle, which could eventually find its way to the U.S. Supreme Court, turns on the question of whether Blackwater and other overseas contractors are subject to U.S. law. That question arises because of a decree issued in 2005 by the then U.S. Iraq administrator, L. Paul Bremer, granting contractors legal immunity.

The Iraqi government claims that Blackwater and other contractors have been responsible for the deaths of Iraqi civilians and wants to make them subject to Iraqi law. The U.S. has resisted this move, which is thought to be part of the ongoing stalemate in negotiations with Iraq over the future status of U.S. forces in that country.

The White House has also attacked a bill recently passed by the House of Representatives that would place combat-zone contractors under the jurisdiction of U.S. courts. It called the measure an unacceptable extension of federal jurisdiction overseas, and said it would place additional burdens on the military.

Blackwater's argument is that the company should be covered by the same "sovereign immunity" that protects the U.S. military from lawsuits because the downed flight in question in the Florida case was under the command and control of the U.S. military.

Last month, this argument was rejected by three federal judges, who cited the U.S. government's failure to take a position in defense of Blackwater as one of their reasons. In their decision to allow the lawsuit to proceed, the judges ruled, "The apparent lack of interest from the United States … fortifies our conclusion that the case does not yet present a political question."

Lawyers for many major contractors including DynCorp, Kellogg Brown and Root (KBR), Blackwater and others, say a dangerous precedent would be established if this and similar cases are allowed to go forward. Such a decision, they say, would open contractors to large money damages and greatly higher risk insurance costs that could adversely affect their ability to carry out the jobs the U.S. government has hired them to do.

As the Florida case made its way through the U.S. legal system, a new report from the Congressional Budget Office (CBO) contends that the cost of having military personnel provide security services in Iraq might be little different from the prices charged by private security contractors.