One of the companies I use to work for is in the news:
MVM Inc., one of the biggest security contractors used by U.S. intelligence agencies, has lost the bulk of a Central Intelligence Agency contract in Iraq after failing to provide enough armed guards, according to company emails and contractors familiar with the decision.
The loss of the CIA contract, which was potentially worth more than $1 billion over five years, is a big blow to closely held MVM, based in Vienna, Va. Overseas work for U.S. intelligence agencies represents a third of the company's $200 million in annual revenue and is believed to be one of the fastest-growing areas of the contracting business.
Intelligence officers needing protective services are likely to remain in Iraq even after U.S. troops leave, so demand for such services will continue or possibly increase. The CIA's largest foreign station is in Baghdad, with hundreds of officers estimated to be based there. The loss of the contract will likely hurt MVM's chances of winning further work with the agency.
"We are disappointed to announce that the client has not chosen MVM Inc.," Rob Whitfield, who manages MVM's CIA work, wrote to the company's pool of guards on Aug. 22, according to a copy of the email viewed by The Wall Street Journal.
MVM declined to respond to specific questions. In a written statement, the company said it has an "outstanding performance history" working in dangerous regions and it has never failed to "secure any personnel or facilities that we have been contracted to protect." The company also said that it is "fully compliant with all of the contractual obligations of our diverse client base."
A CIA spokesman said the agency doesn't comment on contracting decisions.
MVM's performance on the CIA contract, known as Panther, was the subject of a Page One article in the Journal last month. The article also discussed alleged problems with a related National Security Agency contract, dubbed Scorpion, which provides guards for NSA employees overseas.
The article detailed allegations from a former MVM guard who said his teammates fabricated an after-action report about a November 2004 shooting incident to cover up their errors. Other contractors detailed problems in areas such as staffing and equipment.
In the article, MVM Chief Executive Dario Marquez said the government had been satisfied with MVM's work. "We have a great working relationship with both these clients," he said in an interview for the article, referring to the CIA and NSA.
The NSA has begun probing the allegations, according to a former MVM manager familiar with the inquiry, including sending an official to Baghdad last month to interview contractors employed by MVM at the time. An NSA spokesman said the agency had no information to provide on the inquiry or the contract.
The CIA's Panther contract with MVM was to protect CIA officers in Iraq. MVM will retain a small portion responsible for guarding CIA facilities and will continue to provide a handful of mobile guards at two sites whose locations are classified, but which aren't in Iraq, Afghanistan or Pakistan, according to Mr. Whitfield's email.
The CIA awarded the more profitable work-protecting officers traveling around the country to a Nevada company, SOC Inc. SOC has been providing logistical support such as food services and electricity to the CIA in war zones.
SOC didn't respond to requests for comment.
The U.S. relies on contractors throughout the intelligence community, though few are sent overseas. According to a recent report from the Office of the Director of National Intelligence, about 5% of the estimated 37,000 contracted intelligence personnel work overseas.
Overall, about 70% of the total intelligence budget, including electricity, is outsourced; some 27% of the total amount is spent on people doing core work, such as those with specific skills such as languages.
According to several former MVM managers, MVM was regularly 10 to 15 guards short of the 100 or so it promised. The lack of guards required the agency to postpone missions, one former manager said.
Guards working on Panther were frustrated with MVM's management and pay and many decided to sign on with SOC, which promised $715 a day, compared with $630 MVM offered, according to a contractor familiar with the situation.
MVM's Mr. Whitfield said in the email that the company "would have provided the most positive working environment for the independent contractors in the field."
MVM plans to pursue "other opportunities" with CIA, Mr. Whitfield added.
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