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July 29, 2008

Audit confirms that Blackwater isn't a small business

An audit by the Inspector General of the Small Business Administration shows that the giant mercenary firm Blackwater may have misrepresented itself as a small business in order to obtain tens of millions of dollars in set-aside contracts:

Blackwater Worldwide and the private security company's affiliates may have misrepresented their size to win more than $100 million in government contracts set aside for small businesses, according to a report released Monday by the Small Business Administration's Office of Inspector General.

The audit found that from fiscal 2005 to fiscal 2007, Blackwater and affiliates won 32 small business contracts worth more than $2.1 million even though the work was restricted to companies with revenue of $6.5 million or less.

In the same period, Blackwater's airline affiliate won more than $107 million in contracts set aside for companies with revenues of less than $25.5 million or fewer than 1,500 employees.

The IG report questioned whether Blackwater could meet any of those limits and says the company may have misrepresented itself. Blackwater executives said last week they are on track to reach annual revenues of $1 billion per year by 2010.

Blackwater's scam involved misclassifying employees as contractors, thereby making the company appear much smaller on paper while simultaneously dodging payroll taxes.


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Employee of independent contractor? This IC scam has been used by employers in every industry and profession to avoid paying the full costs, taxes and benefits for /to and employee. This amounts to 20% above the base pay and this is so common that it may be the rule and not the exception.

Check out IRS SS8 and find out if you are an employee or a IC.

I think FedEx got hit for $225MM or something for this scam.

ive read that this is a pretty common scam, too.

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