Blackwater hopes to grow without hired guns

updated 7:04 p.m. ET July 22, 2008

MOYOCK, N.C. - The world over, guns for hire are known as “Blackwater guys” — and that’s the reason Blackwater Worldwide wants to move beyond the business of private security contracting.

But Blackwater’s breakneck growth in the past decade has come largely from successfully protecting the nation’s top diplomats on the world’s most volatile streets. The company has earned more than $1 billion since 2001 in government contracts, much of it providing security and protective services for U.S. diplomats working in Iraq.

There’s no guarantee a change in focus to more conventional contracting, including the privately held company’s roots in combat training, will allow Blackwater to reach its revenue target of $1 billion a year by 2010. Meanwhile, the company faces federal investigations and civil lawsuits that could disrupt its work and the money it needs to expand.

“All we can do to save ourselves in crisis and to grow our business is to make sure that every contract we get, we execute flawlessly,” said Bill Mathews, Blackwater’s executive vice president.

The company’s leadership team said this week that the current “crisis” stems from the damage its work in private security contracting has inflicted on the Blackwater name, and they blame both the media and the politics of war. The company has become such a symbol for unruly contractors that television dramas have riffed off its name in their portrayal of security contractors.

More than a dozen federal agencies have investigated the company for its security contracting work, Blackwater said, a list that includes the Transportation Security Administration and the Department of Agriculture. Company officials don’t mention the FBI, which is leading a probe into a September 2007 shooting at a crowded Baghdad intersection involving Blackwater guards. Seventeen Iraqis were killed.

“Their brand was damaged by the war,” said John Pike, who tracks military policy as director of globalsecurity.org. “It seemed to me that they had a crisis communications problem without an evident crisis communications strategy. They just became radioactive.”

Blackwater has two large protection contracts — one with the State Department and one that’s classified — and company president Gary Jackson said they’re not bidding for any others because the cost of doing business is too high.

Industry observers say Blackwater’s decision to scale back security work is not a ruse to cover up a decline in business. Loren Thompson, a military analyst with The Lexington Institute, said Blackwater’s work would be dearly missed if the company left the industry.

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