The Get Out of Jail and Stay on Contract Free Card

This article appeared in the Huffington Post on March 2, 2010.
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My mother was right. I should have gone to law school. Perhaps then I would be able to understand one ignored aspect of the Feb. 24 Senate Armed Services Committee hearing “Contracting in a Counterinsurgency: An Examination of the Blackwater Paravant Contract and the Need for Oversight” which has received much publicity in the past week.

The relevant background is this.

In the fall of 2008, a company called Paravant entered into a subcontract with Raytheon Technical Services Company to perform weapons training for the Afghan National Army. Paravant was created in 2008 by Erik Prince Investments (the company which is now named Xe).

On May 5, 2009, Justin Cannon and Christopher Drotleff, two men working for Paravant in Afghanistan, fired their weapons, killing two Afghan civilians and injuring a third. In reviewing the Army’s investigation of the incident, then‐​CSTC‐​A Commanding General Richard Formica said that it appeared that the contractor personnel involved had “violated alcohol consumption policies, were not authorized to possess weapons, violated use of force rules, and violated movement control policies.” According to the Department of Justice prosecutors, the shooting “caused diplomatic difficulties for United States State Department representatives in Afghanistan” and impacted “the national security interests of the United States.” which had “no regard for policies, rules or adherence to regulations in country.”

Now, go look at the hearing documents posted online by Sen. Levin. Scroll down to Document 20, “June 9, 2009 Show Cause Notice from Raytheon to Paravant’.”

Raytheon Technical Services Company LLC (“RTSC”) hereby gives notice to Paravant LLC of Paravant’s failure to perform the Task Order, issued under the Subcontract, in accordance with its terms and conditions. Accordingly, RTSC directs Paravant to show cause in writing, by 12:00 p.m. Eastern Time on Monday, June 15, 2009, why RTSC should not terminate the Subcontract for default under Article 5 (Termination for Default) of Section 0.01 of the Subcontract. Nothing in this letter is intended to waive, or should be construed as waiving, any of RTSC’s rights under the Subcontract or the Task Order.

Reference is made to the Paravant shooting incident that occurred around 9 p.m. local time in Kabul on May 5, 2009. The available evidence concerning the incident shows the following: (J) that after consuming alcoholic beverages at a going‐​away party at the Kabul Military Training Center (“KMTC”), four Paravant personnel checked out two Paravant SUVs and several weapons, including at least one AK-47 assault rifle, and drove off the training center, all without authorization; (2) that one of the SUVs, while speeding and trying to swerve around a slow or stopped truck on Jalalabad Road, rolled over and left the road; and (3) that the two Paravant personnel in the second SUV fired their weapons, including the AK-47, at a car being driven by an innocent Afghan local national, causing the death of a passenger in the car and serious injuries to the driver of the car and to a bystander who is in a coma and not expected to live.

Okay, it’s not hard to understand. Raytheon is informing Paravant that its people screwed up and as a result Raytheon no longer wants to use Paravant.

But this is where it starts to get interesting. The next document (No. 21) is a ten page response from Paravant to Raytheon. Essentially it says that Paravant is not in default of its contract with Raytheon because, wait for it:

It is hornbook law that an entity is not liable for misconduct of one of its employees or that occurs beyond the scope of that individual’s employment. An entity is likewise not liable for actions of an independent contractor involving conduct beyond the scope of the contractor’s engagement. Accordingly, such conduct provides no basis for RTSC claiming the right to terminate the Subcontract by default.”

That the Subcontract provisions cited in the Show Cause Notice do not cover individual conduct unrelated to the performance of the contract is of no surprise. A company is not liable for the acts of its independent contractors that cause harm to others except in limited circumstances that are inapplicable here.

To my lay eyes Paravant seems to be arguing that it enjoys a sort of contractual immunity for any illegal actions committed by its “independent contractors” as long as they occur off the clock. We might call it a sort of get out of jail and stay on contract free card.

This is, to say the least, a novel development. A few years ago not even Blackwater would make this argument. In December 2006 an off‐​duty Blackwater employee, Andrew J. Moonen, who had been drinking heavily, tried to make his way into the “Little Venice” section of the Green Zone, which houses many senior members of the Iraqi government. He was stopped by Iraqi bodyguards for Adil Abdul‐​Mahdi, the country’s Shi’ite vice president, and shot one of the Iraqis. Officials say the bodyguard died at the scene.

Blackwater did not argue that Moonen was off duty and thus it was not their problem. Instead Blackwater fired him and fined him $14,697 — the total of his back pay, a scheduled bonus, and the cost of his plane ticket home. Maybe, if the State Department had threatened to terminate Blackwater’s contract back then it would have argued it had no responsibility. We’ll have to let the lawyers figure that out.

Actually, Paravant makes an at least reasonable case that Raytheon is far from an innocent party. In its response it said:

Paravant’s ability to monitor and enforce its own no‐​alcohol policy has been undermined by the actions of RTSC’s management personnel in Afghanistan. For example, Paravant and USTC personnel have been informed that RTSC’s management personnel consumed alcohol in Kabul with Paravant’s then‐​In Country Manager during the evening of 22 April, 2009 at Becochios Restaurant in Kabul. Paravant subsequently terminated the contract with that In‐​Country Manager for violation of Paravant’s alcohol policy and other reasons, only to be instructed by RTSC Country Manager that Paravant must continue contracting for the services of this individual for 30 days, even “if you make him a bus driver.” Paravant did not follow this instruction.

Similarly, RTSC’s Country Manager told a USTC Vice President in a telephone conversation occurring at approximately between 1000 and 1100 hours (EDT) on 29 April 2009, that he had a “case of Corona” beer in his room and looked forward to a toast to “Flashman” (a character in a loaned book from the USTC Vice President). Even assuming the Subcontract obligated Paravant to supervise and monitor all off‐​duty conduct of an independent contractor, the conduct of RTSC’s own management regarding the use of alcohol sends the wrong message and has materially interfered with Paravant’s ability to monitor and enforce its no‐​alcohol policy.

Still, Raytheon’s July 2, 2009 reply seems to nicely eviscerate Paravant’s argument that it can’t be fired because its contractors killed and wounded the Afghan civilian while off duty.

Especially troubling is Paravant’s legal position regarding the limits of its contractual responsibility for its trainers, grounded on the assertion that they are “independent contractors.” Even if that assertion were correct (and Paravant never sought the contractually required consent to subcontract any of the work, let alone all of it), Subsection 7.9.1 of Section A of the Subcontract states that Paravant “shall be responsible for and have control over the acts, errors and omissions of its lower tier subcontractors and any other persons performing any of Subcontractor’s obligations under this Subcontract.” The terms of this obligation are clear and unqualified. Accordingly, RTSC rejects Paravant’s attempt to disclaim its contractual responsibility for its trainers and to deny its clear breaches of the Subcontract based on their asserted status as independent contractors. Equally troubling is Paravant’s assertion that bears no contractual responsibility for the actions of its trainers at any time other than during the performance of training activities. To the contrary, reflecting the obvious fact that the Paravant trainers are operating alongside the U.S. Army in “24/7” war zone, Subsections B(i), (iv), and (v) of Section K of the Subcontract state in relevant part that “Subcontractor will ensure that its personnel, representatives, and agents behave at all times in accordance with the highest professional and ethical standards” and that “Subcontractor will comply with, and shall cause all o/​its personnel, representatives, and agents to comply with, all applicable laws, regulations, treaties, and directives in the predominance of this Subcontract.” (Emphasis added.) Given this unambiguous language and its obvious intent to avoid bringing discredit onto the U.S. Army, Paravant’s responsibilities cannot and do not end when its trainers clock out. Thus, on May 5, Paravant violated its responsibilities when it permitted four of its trainers to retain or reacquire their Paravant‐​issucd weapons after the training day ended, and when it allowed them to drive Paravant owned vehicles out of the Kabul Military Training Center and onto a public highway while under the influence of alcohol, with tragic consequences.

As I said, I’m not a lawyer and it will be very interesting to see how this ends up. But one thing does pique my interest. Private military industry supporters often say that the contractors can be particularly relied on because they are mostly ex‐​military and as such retain the high degree of professionalism they showed while on active duty.

Putting aside the fact that there is an enormous administrative and legal apparatus to maintain that professionalism for active duty servicemen and women, which private industry does not have, I remember from my days in the Navy that there really wasn’t such a thing as being off the clock. Yes, one could go on liberty or leave but one was always expected to conduct oneself properly and responsibly.

Yes, I know that private security contractors aren’t on active duty any more but they are still expected, as Raytheon notes, to act “in accordance with the highest professional and ethical standards.”

It would be nice if industry supporters make up their mind. Either its contractors are in accordance with the highest standards, in which case they are never off the clock and thus their employers are subject to termination for default of contract, or they are not, and their responsibility ends with their shift and their employer gets legal cover, but they can’t claim to have the same degree of professionalism as those on active duty.