David Kirkpatrick

August 13, 2008

Blackwater facing auditor questions

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 4:38 pm

Embattled Iraq civilian contractor, Blackwater (read about its misdeeds here) is facing some serious auditing questions after apparently obtaining federal contracts meant for small businesses through creative employee designations. The total of the contracts in dispute is over $100 million.

From the AccountantsWorld (second) link:

The companies could have skirted small business size criteria because they counted many workers as independent contractors, not employees, which allowed them to exceed the 1,500-employee ceiling set in some contracts, according to the auditors.

The inspector general’s office found that Blackwater and the other companies’ sizes and revenues may have ”involved misrepresentations,” and suggested that the agency may want to ”determine whether it is appropriate for Blackwater affiliates to continue receiving small business set-aside contracts.”

When rival firms had challenged the 2006 contract for helicopter services to Presidential Airways on grounds that the company was too large, the airline provided data that 28 Blackwater-affiliated entities had a total of only 715 employees.

But the inspector general found that Blackwater had hired more than a thousand independent contractors and treated them as if they were regular employees, with scheduled shifts, for example, which called the size determination into question. The report also said the Small Business Administration should have ”attempted to reconcile discrepancies” in the data Blackwater provided.

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