Dyncorp Boss Disses Blackwater

News And Observer (2007-11-09) Joseph Neff

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Joseph Neff Friday, November 9, 2007

The president and CEO of Dyncorp did some corporate trash talking in a recent teleconference with investors and analysts. In comparing Dyncorp to Blackwater, Herb Lanese said "we believe we are a very different company. For example, we are highly selective in our hiring practices. We operate very, disciplined security teams. We enforce a strict, no-alcohol policy, strict no-alcohol -- not eight hours prior to going up on a work assignment, but no alcohol period."

His full remarks are below.

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Before I turn the call over talk the question-and-answer session though, I want to spend a moment discussing two items that have been in the news lately, because they affect Dyn Corp. One is Blackwater, and the second is the report of Special Investigate -- I always mess up this wording, excuse me, the Special Inspector General for Iraq Reconstruction, SIGIR.

First, talking about Blackwater, it's very important for our shareholders to understand that we compete with Blackwater in a very narrow field that currently represents 2% of our revenue -- I want to repeat that -- 2% of our revenue. So when you compare us to Blackwater, 2% of our revenue is on the same basis as Blackwater.

Unfortunately, it's very visible work that tends to attract a disproportionate amount of attention that I believe unfairly distorts the image of Dyn Corp. I don't need to tell you what kind of work we do or how long we've been at it, because I realize all of you understand and know that. But I do want you to know that in this narrow space in which we compete with Blackwater, we believe we are a very different company.

For example, we are highly selective in our hiring practices. We operate very, disciplined security teams. We enforce a strict, no-alcohol policy, strict no-alcohol -- not eight hours prior to going up on a work assignment, but no alcohol period.

And we've developed our own rules for the use of force that are more detailed than those issued by the U.S. government. In fact, our rules for the use of force are based on the most conservative elements of the three sets of rules in effect in Iraq.

And let me just take a moment to explain a couple of these points that are off from my prepared remarks. On the selection process, roughly 50% to 65% of the people that we interview in this protection area are declined for employees either because of background checks, physical exams or lack of experience. An additional 15% are rejected because they don't pass our psychological tests.

We're not in the game of firing people after we hire them. We're in the game of being selective in hiring the right people upfront. That is a really important distinction.

When you look for the rules for the use of force or rules of engagement in Iraq, there really are three sets of rules. And I think in recent Blackwater testimony, when asked, the person who was testifying said, "Well, we follow the rules of force -- rules for the use of force in Iraq." Well, there's three of them. Which one do you follow? All three are not the same.

There's the Coalition Provisional Authority Rules for the Use of Force, the Department of Defense Rules for the Use of Force, and the State Department Rules for the Use of Force. We've gone through and looked at the most conservative nature, or requirements, of each of those and developed rules for the use of force that apply to all three at all times, and that's what we do and operate under.

Look, we're not taking any pleasure in Blackwater's troubles, because I think it's harmful for not only other companies that do this work, like ourselves, but it's harmful for our country as well and our relations with Iraqi people. But I think our investors deserve to know how very seriously we take the work we perform and how responsibly we carry it out.

The second deals with the latest SIGIR report. This one issued by the Special Inspector General was the second one they've produce about Department of State programs that are supported by Dyn Corp. And this one, just like the previous one, contains numerous factual errors. That's become a trademark of the SIGIR. They've gone through -- we've gone through the report and intend to address the report's flawed assertions with the facts and set the record straight, just like we did last [time].

The CIVPOL, our civilian police program in Iraq and Afghanistan, are -- is a very large and complex program. And as you might imagine, with -- and as with other large complex government contracts, it's not unusual for the contractor and its government customer to identify and address a number of issues that may arise during the course of contracted performance.

We are, above all else, serious about the integrity of our operations. Neither I nor any of the people who work for me at this point in our careers are going to damage our good reputations with something silly. So integrity to us is absolutely critical.

We bring errors to our customers' attention, promptly address them, and we will make good on all our commitments and reimburse the government for any mistake in payments, should they exist. It's indicative of the open, transparent culture that we promote. That's the way we run the company. That's the way it is.

Unfortunately, the SIGIR work is all being done in a highly charged political environment where sensationalism has become the norm, but we will not allow our good name to be sacrificed on the altar of politics because of the political environment. That means we'll defend not only our reputation but also our contractual rights.

Now, all things considered, I'm extremely pleased with the progress the company's made since its initial public offering in May of 2006, and I truly remain very excited about our future.

We have some great opportunities. And, frankly, I really look forward to these calls over the next few quarters to be able to talk about some of the things that I think are ahead of us.