Bechtel, partners get $1.8b Iraq deal
Bidding transparent, US says; plans unclear for subcontracting
WASHINGTON -- The US government yesterday awarded a $1.8 billion contract to a partnership led by Bechtel National Inc. for the second phase of rebuilding Iraq.
The San Francisco-based contracting giant, which along with Halliburton Co. already dominates postwar reconstruction, won the bid in partnership with Parsons Corp. of Pasadena, Calif. The two companies beat out Fluor Corp., also of California, which confirmed that it along with a British partner submitted one of the three bids evaluated for the work.
Halliburton said it did not participate in the bid.
A spokesman for the US Agency for International Development, which awarded the two-year contract, said the bidding was competitive and transparent. The original round of Iraqi rebuilding contracts, many of which were awarded before or immediately after the US invasion of Iraq in March, were handed out largely behind closed doors and to a limited number of companies. Most of those companies, like Bechtel and Halliburton, have close links to the Republican Party generally and to the Bush administration in particular.
Under the new contract, Bechtel will continue work similar to what it is already doing with its other contract, for $800 million, in Iraq: repairing roads, power grids, water supplies, schools, and ports and airports.
A USAID spokesman said $1 billion from the new contract would go to rehabilitate Iraq's power networks, damage to which has led to chronic electrical shortages that inhibit coalition efforts to stabilize Iraq and rebuild its economy. Another $210 million will be spent on the country's shattered water and sanitation facilities, and about $109 million will be earmarked for road repair.
How much of the subcontracting work will be awarded to Iraqi subcontractors -- a crucial stimulant for the economy as well as the coalition's image among Iraqis -- is open to debate. While Bechtel says the majority of subcontracts in the first phase of reconstruction funding went to Iraqi companies and USAID said it "is anticipated" that Bechtel will continue to work with Iraqis, business leaders in Iraq continue to complain that they have been cut out of all but the least lucrative deals.
Retired Admiral David Nash, who heads the program management office for the US-led coalition in Iraq, also said yesterday that bids are being sought for 17 other reconstruction projects, worth a total of $5 billion.
Nash told reporters at the Pentagon that 10 of the contracts are for projects relating to electricity, communications, transportation, security, justice, and health. The remaining seven contracts will cover project management services. Companies will have 30 days to respond to the requests for proposals, he said.
The requests were issued about a month behind schedule, a delay attributed largely to the precarious security situation in Iraq and fluid political environment, according to coalition officials.
In a quarterly report to Congress Monday, the White House's Office of Management and Budget said the process to rebuild Iraq will continue to be unpredictable. The office cited the November decision to accelerate the Iraqi transition to sovereignty by July 1, and the changing security environment in Iraq, as factors and events that can expedite or complicate reconstruction.
Also yesterday, the US Army Corps of Engineers said it had waived a requirement that Kellogg, Brown and Root Services, a Halliburton subsidiary doing a variety of oil and non-oil related business in Iraq, provide certified data on the pricing of gasoline it imports from Kuwait. The waiver comes three weeks after the Pentagon launched a probe into evidence KBR overcharged by $61 million for gasoline purchased from Kuwait.
The Defense Department said last week that it would assume KBR's fuel import services as soon as a new contract was put in place.
An Army Corps spokesman said the waiver was necessary because KBR's Kuwait subcontractor, Altanmia Commercial Marketing Co., is prohibited from releasing certified pricing data under bylaws of the emirate's association of petroleum distributors.
"We need to keep oil and kerosene coming into Iraq," said Army Corps spokesman Ross Adkins. "This waiver allows us to do that."
The waiver came under fire from critics of the Bush administration's postwar rebuilding policies. Representative Henry Waxman, a California Democrat, said the timing of the waiver, which was given in secret last month, was "incomprehensible."
"The Army Corps' position seems to be that KBR's price is reasonable because it's the only one available," Waxman said. "But the market price of gasoline is no secret. The Iraqis themselves are importing cheaper fuel from Turkey."
Waxman said the waiver followed complaints from Pentagon investigators that Halliburton had refused their request for company documents related to their probe and reports that Halliburton officials were complaining of "political pressure" to negotiate fuel-delivery deals exclusively with a single Kuwaiti subcontractor.
"What we need are serious hearings into this matter," Waxman said. "But there seems to be little interest in oversight among the Republicans when it comes to this administration."
Stephen J. Glain can be reached at glain@globe.com.
