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Blackwater and the $78.5 Million Olly Olly Oxen Free Contract

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'Olly olly oxen free' is a catchphrase used in such children's games as hide and seek to indicate that players who are hiding can come out into the open without losing the game. And if you were to use it with respect to military contracting it also means that your government contract can hide safe from oversight, as long as it is not over $78.5 million.

The below excerpt is taken from the article "An Interview with Jim Webb" which appears in the current (Vol. 2, No. 1, 12/2010) issue of Prism, which is published by the Center for Complex Operations at the National Defense University.

The Project on National Security Reform [PNSR] proposed certain legislative changes. It argued that the committee structure reinforces stovepipes between foreign affairs and defense and between appropriations and authorizations. PNSR argued for a change in the way the committee structure addresses national security issues. Do you agree?

Senator Webb: Let me give you a different take on that. This is my third tour through government. I've spent most of my professional life in the private sector; I have 4 years Active duty in the Marine Corps, 4 years as a committee counsel in the House 1977-1981, and then 5 years in the Pentagon (1 year as a Marine and 4 as a defense executive 1984-1988), and now I'm a Member of Congress. I'm comfortable with the structure of the committees in Congress. My greatest surprise in the Senate was the lack of true oversight by Congress of the executive branch. It's one of the major objectives that we have in this office-to rebalance the two branches. After 9/11, everything was moving fast; the money was moving so fast that DOD went off on its own inertia unchecked. I started from 2007 forward asking prototypical management questions: how do these things work? I'll give you a couple of examples. There are two problems to be addressed in terms of congressional structure. One is whether Congress has the wherewithal to reassert its proper position and its proper role, and the other is the relationship between the authorizing committees and the appropriating committees. The authorizing committees, for instance the Foreign Relations Committee, just stopped authorizing. And that gives too much power to the appropriations side, where we don't really get the right sort of policy hearings.

When I mentioned oversight with respect to the executive branch, I think this is what's happened. People [in Congress] have confused a requirement for a report with what real oversight means. So the Chairman of the Joint Chiefs comes in with a thick book of reports and says, "I have to deliver to you every year a stack of reports this high." I said to him, "Show us the ones you don't think are appropriate." A lot of times people in the agencies think they've solved a problem by submitting a report, and as you know, paper doesn't solve a problem. With true oversight-like we had in 1977-1981 and 1984-1988, when I was on Caspar Weinberger's staff and then Secretary of the Navy-agencies would not dare cross authorizing committees because they would be reined in. There was great respect between the two branches, and I don't see that now.

When I came to the Senate in 2007 I saw-I'll give you two data points here because you'll see where I'm going-I read in the Wall Street Journal that San Diego County was protesting a facility that Blackwater was going to use to train Active-duty Sailors how to go room by room, or compartment by compartment, to determine if there were unauthorized persons on their ship. I wrote Secretary Gates a letter; I asked him: Was this ever specifically authorized by Congress? Was there any paper trail? (The Navy's training contract had a ceiling price of nearly $64 million.) Was it ever authorized or appropriated in specific language, and, quite frankly, how have we reached the situation where a private contractor should be training Active-duty people how to do their job? It would be like Blackwater teaching me how to patrol when I was going through Marine Corps training in Quantico years ago. And we got stiff-armed. It's just like, "I'll have someone talk to you about it." We got a non-answer. And I said, "All right, I'm holding up all civilian nominations from DOD until we get specific answers."

Then they started talking to us, and the answer was that there was never any specific authorization. In other words, Congress never reviewed the use of these funds. They moved hundreds of millions of dollars of O&M [Operations and Maintenance] money through the appropriations committee to the Navy. I was told that such contracts had to exceed $78.5 million before they would be reviewed by the Service secretary. So without specific approval from Congress, they could kick these things off as long as the cost was $78 million or less. They called it "needs of the service/O&M money." We've been working with DOD to get a more rigorous management model in place for senior-level oversight of such outsourcing contracts. That's example number one.

(pp. 147-148)