Monday, July 28, 2008

SBA questions Blackwater contracts

Santa Barbara News-Press

Joseph Neff McClatchy Newspapers

(MCT) RALEIGH, N.C. - A high-stakes dispute that flared Monday between Blackwater and the federal government boils down to a definition: Are the hundreds of Blackwater guards protecting diplomats in Iraq and Afghanistan employees or contractors? By labeling them contractors, Blackwater and its affiliates qualified for federal small-business contracts worth nearly $110 million.

Those contracts and others were called into question Monday when the Small Business Administration's inspector general said Blackwater got dozens of the contracts even though the private security company may have exceeded size limits for a small business.

The audit was requested in March by Rep. Henry Waxman, a California Democrat who chairs the House Committee on Oversight and Government Reform.

Waxman also asked that the Internal Revenue Service investigate Blackwater. If the IRS determines that Blackwater's guards are employees, Blackwater could owe $50 million or more in unpaid Social Security and Medicare taxes, Waxman said.