Image: Erik Prince
Susan Walsh  /  AP
"The experience we've had would certainly be a disincentive to any other companies that want to step in and put their entire business at risk," says company founder and CEO Erik Prince.
updated 7/21/2008 7:18:43 PM ET 2008-07-21T23:18:43

Blackwater Worldwide said Monday that it planned a shift away from the security contracting business that earned it hundreds of millions of dollars and made it a flash point in the debate over the use of security contractors in war zones.

"The experience we've had would certainly be a disincentive to any other companies that want to step in and put their entire business at risk," company founder and CEO Erik Prince told The Associated Press during a daylong visit to the company's North Carolina compound.

Blackwater executives say they have unfairly become a symbol for all contractors in Iraq and thus the company is a target for those opposed to the war. It will continue guarding U.S. officials in Iraq but its future will be focused on training, aviation and logistics.

"Security was not part of the master plan, ever," company president Gary Jackson said.

The company has made hundreds of millions of dollars defending U.S. diplomats in Iraq, one of several government contracts that earned Blackwater more than $1 billion since 2001.

The company has been under intense scrutiny since September when its security contractors opened fire in a crowded Baghdad intersection while responding to a car bombing. Seventeen Iraqis were killed, prompting congressional hearings and an FBI investigation.

In 2005 and 2006, security jobs, including protecting diplomats and helping secure New Orleans following Hurricane Katrina, represented more than 50 percent of the company's business.

In the past year, Jackson said, the name Blackwater has become synonymous with security contractors. "It's been like Coca-Cola," he said. "Blackwater: Security contractors."

The security business is down to about 30 percent of Blackwater revenue now and company president Gary Jackson said it will go much lower.

"If I could get it down to 2 percent or 1 percent, I would go there," he said, adding that the media have falsely portrayed much about that aspect of the company. "If you could get it right, we might stay in the business."

The Justice Department is expected to decide soon whether to bring charges against a handful of contractors involved in the shooting in Baghdad's Nisoor Square. The company itself is not a target of the investigation and has pledged its cooperation with the probe.

Company executives would not say whether they expect their contractors to face charges but said an indictment likely wouldn't affect the core business model.

"Indictment of any of the folks who were in Nisoor Square wouldn't be grounds for disbarrment (from government contracts)," Andrew Howell, the company's general counsel, said.

Blackwater's 7,000-acre compound offers unparalleled training facilities that attract swarms of U.S. military, federal law enforcement and local officials each year.

The company also has expanded its aviation division, which provides airplane and helicopter maintenance and also drops supplies into hard-to-reach military bases. A 6,000-foot runway is under construction and a large map in the company's hanger shows units based across the world, from Africa to the Middle East to Australia.

"Our focus is away from security work. We're just not bidding on it," Jackson said.

That decision reflects not only the difficult year Blackwater has had but also the fact that there's likely not as much growth opportunity. The State Department recently renewed the company's contract but it's unclear what else is available for those services.

The growth in Blackwater's aviation and international training sectors could also buffer the company against other changes in military policy. Defense Secretary Robert Gates is looking into why the military uses private contractors for combat and security training.

"In my mind, the fundamental question that remains unanswered is this: Why have we come to rely on private contractors to provide combat or combat-related security training for our forces?" Gates wrote in a July 10 memo to the Pentagon's top military officer, Joint Chiefs of Staff Chairman Adm. Mike Mullen.

"Further, are we comfortable with this practice, and do we fully understand the implications in terms of quality, responsiveness and sustainability?"

The memo was released Monday to The Associated Press by the office of Sen. Jim Webb, D-Va. Webb raised concerns about the role of private contractors and specifically Blackwater, which opened a new counterterrorism training center in San Diego last month over the opposition of city officials.

Webb had been blocking Senate consideration of four civilian Defense Department nominees while waiting for answers. On Monday, Webb told Gates he was lifting his opposition to the nominees.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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