Judge Halts Award Of Iraq Contract

By Alec Klein and Steve Fainaru
Washington Post Staff Writers
Saturday, June 2, 2007

A federal judge yesterday ordered the military to temporarily refrain from awarding the largest security contract in Iraq. The order followed an unusual series of events set off when a U.S. Army veteran filed a protest against the government practice of hiring what he calls mercenaries, according to sources familiar with the matter.

The contract, worth about $475 million, calls for a private company to provide intelligence services to the U.S. Army and security for the Army Corps of Engineers on reconstruction work in Iraq. The case, which is being heard by the U.S. Court of Federal Claims, puts on trial one of the most controversial and least understood aspects of the Iraq war: the outsourcing of military security to an estimated 20,000 armed contractors who operate with little oversight.

Brian X. Scott, a 53-year-old Colorado man, filed the complaint in early April. He argues that the military's use of private security contractors is "against America's core values" and violates an 1893 law that prohibits the government from hiring quasi-military forces.

Scott's challenge set off a domino effect, prompting the Government Accountability Office to dismiss protests brought by two major private security contractors the Army had removed as potential bidders -- Erinys Iraq, a British firm, and Blackwater USA of North Carolina.

Michael Golden, the GAO's managing associate general counsel for procurement law, said the agency dropped the matter because Scott's court complaint may force the Army to revise the lucrative contract.

The GAO's dismissal of the two protests on Thursday freed the Army to award the contract at any time. Erinys moved quickly yesterday to seek a temporary restraining order to prevent the Army from awarding the contract.

Erinys already provides security for some military personnel in Iraq under a separate contract. The company's temporary restraining order is under seal. But sources, who spoke on condition of anonymity because of the sensitivity of the matter, said the firm claims that the government is about to award the contract, that Erinys would be irreparably harmed and that there is a strong factual basis for it to be reconsidered as a bidder. Erinys declined to comment.

Anne Tyrrell, a spokeswoman for Blackwater, said the company does not intend to join Erinys's efforts to obtain a restraining order. "We're leaving it to the process, and we're not going to take it any further," she said.

In his court protest, Scott relied on the Anti-Pinkerton Act, which Congress passed more than a century ago to thwart businesses that had hired mercenaries to disrupt labor groups.

Scott said he served nearly 13 years on active duty in the U.S. Army and worked six years at the Interior Department on contracting issues. He now works full time trying to obtain government contracts and protesting the use of private security contractors. He has filed about a dozen protests against the use of the contractors in Iraq. All were filed with the GAO, and all were dismissed.

The Army has been narrowing the field of candidates for the Iraq security contract. One is Aegis Defence Services, a British security firm. Aegis won the initial Iraqi security contract in 2004. That contract, worth $293 million, was set to expire in May but has been extended as others have filed protests. Scott said he was indifferent that his court claim had complicated the Erinys and Blackwater protests. "They're just trying to get a piece of the mercenary action," he said.

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