Feb. 1, 2010 -- After Blackwater contractors were accused of shooting 17 civilians in Iraq, the State Department announced it would stop doing business with the company, but ABC News has found that several other agencies, including the CIA and the Pentagon, continue to employ the controversial company, under a myriad of names, often via secret, classified contracts.
Blackwater, which changed the name of its parent company to Xe Services last year because of bad publicity, is also operating subdivisions under a variety of altered handles intended to lower its public profile. In some instances the flagship company has tried to distance itself from these offshoots, insisting they are merely "affiliates."
Public records and a source familiar with their ownership suggest, however, that the companies are nothing more than new names on the same old Blackwater. All are owned by Blackwater founder Erik Prince.
According to several military and government sources familiar with Xe's contracts, Xe also operates under the names Paravant and XPG. Both "affiliates" are based at the same Moyock, North Carolina address as Xe. Other Prince-owned companies that have received government contracts include Greystone, Raven, Constellation, US Training Center, GSD Manufacturing, and Presidential Airlines. The companies are among a total of 20 different limited liability corporations owned by Prince and registered to the same address as Blackwater-Xe.
In September 2007, Blackwater guards escorting a State Department convoy through Baghdad shot and killed 17 civilians in Nissour Square, resulting in international outrage, the loss of Blackwater's State Department security contract and criminal charges against the guards. Late last month Vice President Biden announced that the U.S. government would appeal a recent federal court decision to throw out charges against the guards involved in the shooting.
Damage control after the Nissour Square incident is what inspired Blackwater executives to scrap the iconic brand name of the parent company. According to several government and military officials, the incident lead to a company shakeup and name change intended to clean up Blackwater's image and limit legal liabilities.
Blackwater dropped the crosshairs from its company logo, and some executives were forced out. Then, after a lengthy internal name search, Blackwater decided to become Xe Services. "Blackwater" had referred to the water of the North Carolina swamp where the company was headquartered, but Xe, according to a company spokeswoman, had no connotations.
The change from Blackwater to Xe was announced in February 2009. Less known is that a variety of affiliated companies were also renamed. In the wake of the Nissour Square shooting Xe was barred from Iraq, and the corporate relaunch was supposed to include a de-emphasis on security contracts and a new focus on providing training. However, Xe and its rebranded affiliates still work in Afghanistan, and continue to provide security and training, though they often operate as security subcontractors to other contractors.
A recent review by the Special Inspector General for Afghanistan Reconstruction, known as SIGAR, has found that Xe Services has operated under different names. It often acts as a subcontractor, fulfilling training contracts originally won by other companies such as Raytheon, according to a person who has reviewed the SIGAR materials. According to several sources apprised of the contract, in Afghanistan Raytheon worked with the Blackwater entity called Paravant, LLC.
"Raytheon is supposed to train Afghan soldiers, but Raytheon subcontracted to Blackwater," said a source who has reviewed the contracts between the two companies.
Paravant came under scrutiny after a 2009 shooting incident in Afghanistan. Three Americans and an Afghan contractor were working for Paravant last May when they became involved in the shooting of Afghan civilians in Kabul. Americans Justin Cannon and Chris Drotleff were arrested in the U.S. earlier this month and face federal charges of second-degree murder. In a statement, Xe Services said it had "immediately and fully cooperated with the government's investigation." Both Cannon and Drotleff maintain their innocence.
According to people familiar with the Raytheon-Paravant relationship, Raytheon terminated the contract in August of last year as a result of the shooting. The May shooting also led to an investigation by the Senate Armed Services Committee. ABC News has confirmed that the Paravant employees connected to the shooting were subcontracted to Raytheon.
Jon Kasle, a Raytheon company spokesman, would not comment on the contract with Paravant, except to say that the company "currently has no contracts with any Blackwater company or subsidiary."
A second Xe offshoot, XPG, does classified work for the military's Joint Special Operations Command, JSOC, which handles special forces and special operations in Afghanistan, according to a government source who has seen the contract. XPG was once known as Select PTC.
In an exclusive report, ABC News revealed that contractors working for Select PTC had carried out a covert raid into Pakistan in 2006. A dozen Select PTC "tactical action operatives" were recruited by JSOC for a raid on a suspected al Qaeda training camp, according to a military intelligence planner. The planner said he did not know the outcome of the mission, which was codenamed "Vibrant Fury."
Select PTC was Blackwater's equivalent of the CIA's paramilitary or the military's Special Forces, and was used for classified operations with the CIA and JSOC. Select PTC was involved in classified clandestine activities in countries around the world, including Pakistan, Afghanistan, Iraq, Syria and the Philippines, according to a former military intelligence officer briefed on Select PTC's operations for the U.S. government. The same unit was awarded a contract to assassinate al Qaeda leaders around the world.
In August 2009, the New York Times reported that personnel from a Blackwater offshoot that it called "Blackwater Select" were allegedly responsible for loading missiles and bombs on CIA-operated Predator drones, which are used on suspected al Qaeda operatives and Pakistani militants in Pakistan's Tribal Areas.
The story was actually referring to Select PTC, but by then the name had been changed to XPG, LLC. As Select PTC was to Blackwater, so is XPG now to XE – the company's equivalent of Special Forces. XPG continues to hold classified contracts with the Pentagon's JSOC. One official who has seen XPG's contract with the Pentagon told ABC News that XPG currently has a classified contract providing security at seven Special Forces facilities in Afghanistan along the Pakistan border. The contract stipulates that the company receives $17,000 per day, earning XPG more than $6 million annually, according to a source who has reviewed the contract.
A Xe company spokesperson declined to describe the nature of the contracts thateither Paravant or XPG hold with the government. A source familiar with Paravant and XPG's relationship to Xe told ABC News that neither was a "subsidiary" of Xe. Paravant, the source said, was "affiliated" with Xe Services, but not owned by the company. A review of Paravant's web site shows that its facilities and services are at the North Carolina address as Xe, and also share another address associated with Xe in Illinois.
Xe Services continues to look for work in Afghanistan. Earlier this month it placed a bid for a roughly $1 billion training and security contract. The bid has been contested by competing contractors and has not yet been awarded by the Pentagon.
Rep. Jan Schakowsky, D.-Ill., a member of the House Intelligence Committee, has questioned why Blackwater, under any name, still wins contracts from defense and intelligence agencies.
"After everything that has gone wrong ... with Blackwater, I cannot understand why the U.S. Government has anything to do with them," said Rep. Schakowsky. "I have yet to hear a convincing reason for their continued work for the government."
Matthew Cole can be reached at Matthew.A.Cole [at] ABC.com.