Despite publicly breaking with an American private security company in Iraq, the State Department continues to award the company, formerly known as Blackwater, more than $400 million in contracts to fly its diplomats around Iraq, guard them in Afghanistan, and train security forces in antiterrorism tactics at its remote camp in North Carolina.
The contracts, one of which runs until 2011, illustrate the extent to which the United States government remains reliant on private contractors like Blackwater, now known as Xe (pronounced zee) Services, to conduct some of its most sensitive operations and protect some of its most vital assets.
Disclosures that the Central Intelligence Agency had used the company, which most people still call Blackwater, to help with a covert program to assassinate leaders of Al Qaeda have touched off a storm in Washington, with lawmakers demanding to know why this kind of work is being outsourced. New details about Xe’s involvement in the covert program emerged Friday.
The C.I.A. and the State Department are both trying to reduce their dependence on outside contractors, but the administration is also struggling to deal with an overstretched military and spy service.
In the case of the C.I.A., outsiders still help carry out some of its most important jobs, including collecting intelligence in foreign countries, dealing with foreign agents, and taking part in covert programs.
The State Department continues to use Blackwater guards in Afghanistan, despite the company’s involvement in civilian shootings in Baghdad in 2007, and despite Secretary of State Hillary Rodham Clinton’s pledge to “reduce our dependence on private security contractors.”
The department declined to discuss its ties with Blackwater publicly, but a senior department official said it would be costly for the government to terminate, without cause, the other contracts that are in place. A spokeswoman for Xe Services did not respond to messages requesting comment.
Following the shootings in Baghdad, which killed 17 Iraqi civilians, the State Department required Blackwater contractors to undergo training in “Afghan cultural awareness,” said this official, who spoke on condition of anonymity because he was not authorized to speak publicly.
When the department announced it would not renew the company’s security contract in Iraq, it cited the refusal of the Iraqi government to issue a license for the company to operate in the country. But Xe has continued to supply aviation services to diplomats in Iraq under a two-year contract worth $217 million. That contract expires Sept. 3, and a spokesman for the State Department, Ian C. Kelly, said the work would be given to another security and logistics company, DynCorp International.
Xe’s contract to supply personal security to American diplomats in Afghanistan, which began in 2006 and runs through 2011, is worth $210 million. Xe earns $6 million under a three-year contract to train foreign security guards in antiterrorism tactics.
This web of ties is drawing the attention and anger of lawmakers, including Senator John F. Kerry, the Massachusetts Democrat who is chairman of the Senate Foreign Relations Committee.
On Friday, Mr. Kerry wrote to the founder and chairman of Xe, Erik D. Prince, asking for details of his company’s dealings with the C.I.A. In the letter, a copy of which was supplied to The New York Times, Mr. Kerry expressed concern that contractors could have used their State Department assignments as a “cover to gather information for the targeted killing program.” Leon E. Panetta, the C.I.A.’s director, canceled the program this year, in part because he learned the C.I.A. had used an outside company for the program, government officials who spoke on the condition of anonymity have said.
This week, government officials and current and former Blackwater employees said the company had also taken on a role in the United States’ most important counterterrorism program: the use of remotely piloted drones to kill Al Qaeda leaders.
Mr. Kerry also plans to write to Mrs. Clinton to raise his concerns, said one of his aides.
In a meeting with department employees in February, Mrs. Clinton said, “I certainly am of the mind that we should, insofar as possible, reduce our dependence.” But she added, “Whether we can go all the way to banning, under current circumstances, seems unlikely.”
The decision to use Blackwater contractors in the assassination program starting in 2004 was born partly out of desperation, said former C.I.A. officials: the spy agency had tried to operate the program in house, and had failed. The agency was still reeling from the botched assessments about Iraq’s weapons programs, said the officials who spoke on the condition of anonymity, and was desperate for information about Al Qaeda’s top leaders.
“You want to have everything when you know nothing,” said one former official familiar with details of the canceled program.
Top C.I.A. officials — including Jose A. Rodriquez Jr., the head of the agency’s clandestine service — found outside help.
Mr. Rodriguez had close connections to Enrique Prado, a career C.I.A. operations officer who had recently left the agency to become a senior executive at Blackwater. Both Mr. Prado and Mr. Prince signed agreements with the C.I.A. to participate in the program, officials said.
Over time, the officials said, Mr. Rodriguez and other senior members of the clandestine service gave up on the Blackwater arrangement to hunt Qaeda leaders. By then, the spy agency was starting to have regular success killing top militants in Pakistan and Afghanistan with drones, and the assassination program had yielded no successes. Robert S. Bennett, a lawyer for Mr. Rodriguez, declined to comment.
Government officials said that about $10 million was spent over the seven years of the assassination program. Experts who study government outsourcing point out that even a few million dollars is a significant sum when spent for training in a program that ultimately achieved nothing. "That’s a very expensive laser tag exercise or paint-ball war in the yard,” said Scott Amey, general counsel for the Project on Government Oversight.
Government officials have estimated that about 25 percent of the intelligence workforce consists of contractors, and as much as 70 percent of the entire intelligence budget goes to outside contracts. Yet these are rough estimates, and members of Congressional oversight committees lament that they cannot get reliable figures about the extent of intelligence outsourcing.
“Without even that basic information, you can’t render judgment about the risks associated with their growing role” in spy agencies, said Steven Aftergood of the Federation of American Scientists, an expert on intelligence contracting.
Blackwater Disclosure Adds to CIA Worries
News of 'Targeted Killing' Program Precedes Interrogation Report, Possible Probe
The disclosure Wednesday of the CIA's decision five years ago to let a private security contractor help manage its sensitive effort to kill senior al-Qaeda members drew congressional criticism Thursday on the eve of key decisions by the Obama administration that current and former intelligence officials fear could compound the spy agency's political troubles.
Those decisions include the expected release Monday of newly declassified portions of a 2004 CIA report that questions the legality and effectiveness of the agency's harsh interrogations at secret prisons. Additionally, Attorney General Eric H. Holder Jr. may order a probe of possible criminal actions by CIA officers and contractors during those interrogations.
"In September, you are going to have a hurricane coming through Washington that is aimed right at the intelligence community," warned Porter J. Goss, the CIA's director from September 2004 to May 2006. He noted that a Justice Department inquiry is also pending into whether laws were broken when CIA officers destroyed videotapes of the harsh interrogations.
Democratic House and Senate lawmakers and staff members have already described as inappropriate the Bush administration's decision to hand management and training responsibility for the CIA's "targeted killing" efforts to Blackwater USA, and they have reiterated their intent to press for speedier and more complete disclosure by the agency of such activities in the future. CIA Director Leon E. Panetta terminated the program in June, shortly before telling Congress about its existence.
Sen. Dianne Feinstein (D-Calif.), chairman of the intelligence committee, sharpened her previous criticism of the program. "It is clear to me that the failure to notify before now constituted a violation of law," she said in a statement Thursday.
She said she could not address the program's parameters but emphasized that it "had, in fact, gone beyond the simple planning stage."
"I have believed for a long time that the Intelligence Community is over-reliant on contractors to carry out its work," she said. "This is especially a problem when contractors are used to carry out activities that are inherently governmental."
Democrats have previously pushed to ban the use of contractors to conduct interrogations, and some suggested Thursday that the restriction should extend to hit squads. "There is still too much being done by contractors that ought to be done by government employees," said a congressional staff member who spoke on the condition of anonymity because the CIA program remains classified.
Goss said he had not been fully briefed on the details of the CIA activities in question, many of which are classified, so he could not confirm the reported involvement of Blackwater, now known as Xe Services LLC. A spokeswoman for the firm did not return a phone call Thursday, but two former intelligence officers familiar with the effort said the company had received millions of dollars for helping train and equip teams to undertake the killings.
Goss alluded to that effort, stating that "my standing orders were 'field-forward' mission."
"We wanted to catch the people who brought down the trade centers and killed innocent people and wanted to kill more," he said. "And we wanted to have every possible legal means at our disposal that we could to deal with them. That was certainly in my vision statement, and that is the briefing that was given to members of Congress" during his tenure.
"In my view, we should constantly be looking at all our options in terms of national security," Goss said. "Suppose you got a high-value guy, a terrorist, part of al-Qaeda, a radical fundamentalist trained to kill innocent people, who you cannot talk down from the tree. What happens when you actually find that guy? Do you send the FBI? That's probably not the best option for the tribal areas" in Afghanistan and Pakistan.
Political controversy over conducting lethal activities overseas stems from the fact that "we have not resolved the basic rules of engagement for covert forces in the world today," Goss said. "It keeps getting pushed by the prevailing political winds." He added that the CIA, when confronted by a particularly tough problem involving a shortage of manpower, too much regulation or political indecision, has "a tendency to say, 'Let's see if we can farm this out.' That does not mean we are trying to evade a law, but to get the mission done in a creditable way."
One motive the CIA might have for hiring contractors may be to add personnel without officially enlarging its bureaucracy, Goss said. "But it's also the case that there are some folks at retirement age who still feel like they have some horsepower left, so they go off into a consulting business and make themselves available."
A former intelligence official familiar with the effort said the decision to outsource a substantial portion of the program stemmed partly from the agency's close ties to Blackwater, which hired several of the agency's top executives, including former CIA counterterrorism chief Cofer Black and former deputy director for operations Robert Richer.
A second former intelligence official intimately familiar with Blackwater's role said that there was never a formal contract, but rather a verbal agreement between top executives of the company and the agency. The former official said that the agreement covered only Blackwater's expenses and overhead, with no additional profit for the firm. "No one made a dime off of this," the former official said.
Michael V. Hayden, Goss's successor as CIA director, also declined Thursday to comment on Blackwater's involvement in the targeted killing program but told reporters that the use of contractors had ended by the time he became head of the agency in 2006. At the time he learned about it, he said, the initiative was still in the planning stages and "never reached either the political or the legal threshold" that would have triggered a mandatory congressional briefing.
"Somewhere in that mix, I probably would have gone down to talk to Congress, but . . . the threshold I probably would have first crossed was a political one, not a legal one," Hayden said. There was no specific legal requirement, he said, but "the fact was that this was maybe of a bit of a different flavor than the kinds of things we had briefed the Hill on in the past."
Presidential aides, as well as CIA officials, have said they fear that heightened controversy over the Bush administration's counterterrorism efforts will push the Obama administration into a partisan debate it has sought to avoid.
The release of the CIA report Monday -- on a date picked by a federal judge in New York in response to a lawsuit by the American Civil Liberties Union -- will come as the president settles into his holiday at Martha's Vineyard, increasing the likelihood that it will draw attention during a political lull.
Hayden said he expects the report's release to damage CIA morale, even though some passages will bolster CIA assertions that the harsh interrogations had helped the country learn about "the basic infrastructure of al-Qaeda" and plan its counterattack.
Holder, speaking at a news conference in Washington, said the Justice Department has worked closely with the CIA in an effort to release only those portions of the report that will not compromise national security. "We will not be doing anything that will endanger the American people," Holder said.