ARLINGTON, VA: How confident is the new management at private security contractor ACADEMI — formerly known as Xe and, also, infamously, as Blackwater — that they’ve turned the company around?
Last month, apparently without attracting any public attention (until now), they quietly bought another security firm, International Development Solutions, and took over its piece of the State Department’s $10 billion World Protective Services contract, which then-Blackwater got kicked out of years ago.
And ACADEMI plans on further acquisitions, CEO Ted Wright confirmed in an exclusive interview with Breaking Defense.
The company has spent a year rebuilding and is set to grow again, said Wright, who took over in June 2011. (He was hired by a new ownership team that bought out Blackwater founder Erik Prince the previous December). “The things we said we were going to do a year ago, we’ve kind of done,” said Wright, just back from visiting employees in Afghanistan.
Since he started, the company has not only a new name but a new management team, a new board of directors — in fact it didn’t even have a board before — and a new corporate headquarters in Arlington, looking across the Potomac River straight at the headquarters of the State Department. Many of the employees doing security work in the field are new, Wright said, and the core of ACADEMI’s business, its training cadre, has turned over almost completely: Only about 10 instructors remain from the old days, compared to 30 new hires, with another 20 on the way.
“After a year, back office is good, governance is good, and now we’re beginning to grow,” Wright said. “Now we’re going to be acquisitive.”
Wright downplayed the acquisition of International Development Solutions as a first step, more consolidation than expansion. IDS was not a truly independent company but a joint venture that ACADEMI co-founded, subcontracted for, and already owned 49% percent of. Critics in Congress and the media even called IDS a “shell company” and a “front,” created as a cut-out so the ACADEMI / Xe / Blackwater name would not appear on State Department contracts, though Wright said ACADEMI always did some work directly for State. The main difference is that ACADEMI was a subcontractor on the World Protective Services program, but now it will be a prime contractor working directly for State. (The State Department did not return multiple calls and emails requesting comment; we will update this story when and if they do).
“The people in the field doing the work [for State], they’re employes of IDS and they’ll become employees of ACADEMI,” said Wright. “That was the reason I was just in Afghanistan, to go to talk to the employees. [For them] there’s no difference at all, zero….The only difference is the administrative functions that were split between us and the other company now are just all us.” In terms of both personnel and revenue, he said, absorbing IDS only grows ACADEMI by “10 or 15 percent.”
Wright has much bigger targets in mind. “[We'll] maybe buy companies that give us new capabilities,” he said,” or spread us to a new location like maybe the Pacific or Latin America or Africa.” ACADEMI is already standing up a new training site in North Africa, he said, while its existing site in Afghanistan, called “Camp Integrity,” is “about to double in size,” from under 200 to 300 to 400 people, with an influx of new Special Operations customers Wright declined to talk about in any detail. Last month, the company started a new branch, ACADEMI Consulting Services, aimed at commercial clients — “oil and gas, multi-nationals, high net-worth individuals”: ACADEMI only does about $15 million a year for such non-governmental customers currently, Wright said, but he expects rapid growth. Some day, Wright even hopes to get back into business in Iraq, where the company is currently banned.
So while the US military is out of Iraq and drawing down, albeit slowly, in Afghanistan, Wright said, that doesn’t mean ACADEMI will shrink. To the contrary: Wright plans to grow. After all, the State Department, other civilian agencies, and the private sector are still in dangerous places, only with fewer US troops deployed to protect them. “We’ve got some very stable customers that have enduring requirements for security in Afghanistan,” said Wright. “Our business is not going going to shrink quickly.” While some private security contractors will ultimately go out of business, he predicted, ACADEMI will be trying to buy them up. “The industry will now consolidate,” he said. “The strong will survive: We intend to be one of those.”
The company once called Blackwater isn’t going away. But what about the culture that permitted its infamous abuses — mistreatment of Afghan and Iraqi civilians, misappropriation of weapons, drug use, drinking, and the killing of at least 14 innocent Iraqis in 2007 in Baghdad’s Nisour Square?
“You can’t instantly change the culture of a company; it takes a great deal of time,” Wright said. To start with, he said, ACADEMI has invested heavily in its recruitment and vetting process. We vet people well beyond the requirements of our customers,” Wright said. “We interview them now in much greater detail.” The instructors who train ACADEMI operatives are almost all new: Only 10 in 60 will be holdovers from the Blackwater era by the end of the year. And every employee from the board of directors on down is trained on and must sign a new corporate code of conduct. “That may seem like a trivial thing,” Wright said, but when you have someone working security in in a foreign land, “he’s got a gun in his hand, he’s doing a dangerous job, [so] how do you control him? I can’t. He’s 8,000 miles away. What I can do is give him a code of conduct.”
The bet that Wright is making– and his customers in the State Department, the Pentagon, and elsewhere — is that ACADEMI will do a better job of inculcating those ethics than Blackwater ever did.