Cashing in on Reconstruction

Aljazeera (Doha) 19pr03

[Wall Street Journal article below]

The controversial agency in charge of rebuilding Iraq’s shattered infrastructure has awarded a contract worth up to $680 million to a US company, Bechtel Group Inc.

Worth $34.6 million initially but expected to include repair of airports, ports and possibly work on hospitals, schools, other government buildings and irrigation systems, the contract is the biggest awarded to date by the US Agency for International Development in its Iraq portfolio.

The 105 year-old Bechtel, a privately held engineering, construction and technical services company helped build the Hoover Dam in the 1930s and 50 years later completed work on the Channel Tunnel linking Britain and France.

US vice president Dick Cheney,
former CEO of Halliburton which
stands to benefit from reconstruction
contracts REUTERS/David Rae Morris

It beat off a fellow American rival, Fluor, to the contract. Fluor said it was disappointed it was outbid on the infrastructure contract but expected to get work in other areas where it had expertise, such as restoring Iraq's oil and gas industry.

"It's safe to say that what you're seeing in dollar amounts to date is just the beginning," said Fluor spokesman Jerry Holloway.

Foreign companies have complained that they cannot be prime contractors under USAID's Iraq programme, although the agency has repeatedly said non-US firms can be subcontractors. In recent weeks, US officials have intimated that they were unlikely to give a piece of the Iraqi pie to those countries who did not help bake it, such as Russia, France and Germany.

The true cost of rebuilding Iraq, hit by 12 years of UN sanctions and the recent US-led war, is expected to be tens of billions of dollars. Bechtel is one of several firms in the hunt for contracts to have employed a senior statesman on its board, in this case the former US Secretary of State George Shultz, an advocate of the war in Iraq. He denied using his political connections to win work for Bechtel.

"Over the 100-year period there have Republicans in office and Democrats," Shultz told Reuters.

Bechtel would identify what needs to be done and let others bid on parts of the work, Shultz said. "Bechtel may do some of it itself, but undoubtedly most will be subcontracted out to others," he said.

Last March the US Army awarded a multi-million dollar fire-fighting contract in Iraq to a subsidiary of a company, Halliburton, that was headed by vice president Dick Cheney until 2000. The contract, won by Kellogg, Brown and Root, was not put out to tender.

While Cheney was CEO of Halliburton in the late 1990’s, he oversaw $23.8 million worth of oil industry-related contracts, equipment and services to Iraq. In 2002 Halliburton stockholders filed a class action suit against Cheney alleging large scale financial fraud.

Cheney retired from Halliburton in August 2000. He received $4.3 million in deferred compensation that year, plus $806,332 in salary. He subsequently sold more than $40 million in stock options. Even though he is no longer on Halliburton's executive, Cheney is still receiving payments classified as "deferred compensation" from Halliburton.

USAID has already awarded smaller contracts to run Iraq's Umm Qasr port, restock schools, bolster local government and assist the aid agency in its Iraq planning effort. -- Al Jazeera and agencies

source: http://english.aljazeera.net/topics/article.asp?cu_no=1&item_no=2813&version=1&template_id=263&parent_id=258 19apr03

Bechtel Wins Pact to Restore Iraq In Deal Worth up to $680 Million 

SUSAN WARREN / Wall Street Journal 18apr03

Contract Covers 18 Months Of Infrastructure Projects

Construction and engineering powerhouse Bechtel Group Inc. has won a wide-ranging contract to rebuild Iraq's vital infrastructure, from buildings and roads to electrical grids and airports, the U.S. Agency for International Development said.

The contract -- the largest awarded yet in a series of government contracts designed to get a war-torn Iraq back on its feet -- includes an immediate $34.6 million in construction work. The whole contract covers 18 months of projects with funding as high as $680 million.

However, that amount is widely regarded to be only a starting point in a U.S.-guided reconstruction of Iraq that is expected to last for years and eventually cost billions of dollars. Subsequent work under the contract will be parceled out with congressional approval.

While only a handful of U.S. companies were invited earlier this year to bid for the contract, the competition had recently narrowed to Bechtel National Inc., a unit of Bechtel Group in San Francisco, and Parsons Corp., of Pasadena, Calif.

Other companies that lost the bid were Fluor Corp., of Aliso Viejo, Calif.; Washington Group International Inc., of Boise, Idaho; and Louis Berger Group Inc., of East Orange, N.J. Halliburton Co.'s Kellogg Brown & Root construction unit also was invited to bid, but declined amid speculation that it would benefit from its connection to Vice President Dick Cheney, who was chief executive of Halliburton until 2000. Halliburton has said it will settle for subcontracting work.

Bechtel has its own connections to the Republican administration in Washington. President Bush appointed Bechtel Chairman and Chief Executive Riley P. Bechtel to his President's Export Council in February. Bechtel also has a history of government work, most famously the construction of the Hoover Dam, and it has extensive operations around the world.

Bechtel had no comment on the award, other than to say it was "honored" to be selected.

The company earlier this week said it also would be interested in bidding for a U.S. Army Corps of Engineers contract to restore Iraq's oil fields. Bechtel did a similar job in Kuwait in the early 1990s after fires set during the Gulf War left those oil fields in ruin.

The contract Bechtel won will cover the repair and restoration of power facilities, city water and sanitation systems, as well as the airport, and the dredging and upgrading of Iraq's Umm Qasr seaport. The contract may also include repair and reconstruction of hospitals, schools, government buildings and "essential transport links."