U.S. Set to Award 7 Contracts for Rebuilding of Iraq Initial Work Will Go to American Firms
By Paul Blustein and Renae Merle Washington Post Staff Writers Friday, March 21, 2003; Page A30 The U.S. Agency for International Development said yesterday that it will shortly award seven contracts to American companies for the initial stages of reconstruction in postwar Iraq -- two of them as early as today. Justifying the decision to restrict the contracts to U.S. firms, Andrew S. Natsios, the USAID administrator, said one reason is the need for the firms' personnel to have security clearances, because "there are classified documents they have to see." Natsios and other officials emphasized, however, that they expect the long-term reconstruction effort to go well beyond the USAID contracts and include international organizations and aid agencies from other countries, which would presumably award contracts to non-U.S. firms. "We expect U.N. agencies will be involved in a major way," Natsios said, adding that he has also been talking "below the radar screen . . . for three or four months now" to his counterparts at the aid agencies of other wealthy countries in the expectation that they, too, would play significant roles in rebuilding Iraq after U.S.-led forces unseat President Saddam Hussein. Other U.S. officials said they envision important contributions from the International Monetary Fund and World Bank as well. The IMF has established a task force to study the Iraqi economy, although any financial support from either it or the World Bank probably would take considerable time because the two institutions last worked in Iraq in the 1970s and early 1980s. The U.S. officials' comments may go at least part way toward defusing a controversy that has arisen over USAID plans to limit its contracts to U.S. firms. The agency almost always awards American companies a large portion of its contracts, but international criticism erupted after recent news reports that the USAID had limited the selection process for the biggest contracts to a handful of huge U.S. multinational firms, some of which are well connected to the Bush administration. Those firms include a subsidiary of Halliburton Co., the company once headed by Vice President Cheney. The agency's handling of the matter, and the implication that international organizations and other aid agencies would be left out, was denounced as "exceptionally maladroit" by Chris Patten, the European commissioner for external relations. The amount of aid that is needed for reconstruction, although still far from determined, is certain to dwarf the sum that the USAID is planning to spend on the contracts in question, and that is one major reason that U.S. officials say they would welcome involvement by international agencies and other countries. Many experts have cited estimates ranging from $25 billion to $100 billion for the full reconstruction, while the largest contract the USAID is planning to award at this stage is for about $600 million. That contract, to repair the country's infrastructure, including roads and bridges, is to be awarded early next week. The field of competitors was narrowed from seven to two or three, and the companies have been asked to submit their "best and final offers," agency officials said. Two contracts to administer Iraq's seaport and airports may be awarded as soon as today. The total cost of the USAID's plan is still unknown, Natsios said, and will be allocated in a supplementary appropriation bill that President Bush plans to submit to Congress soon. According to people who have seen contract documents that have been distributed to some of the firms, the USAID effort is intended "to provide tangible evidence to the people of Iraq that the U.S. will support efforts to bring the country political security and economic prosperity." Even if Washington does not intend to have U.S. firms dominate Iraq's reconstruction, officials of many nongovernmental organizations (NGOs) that have been actively involved in aid are upset about the USAID plan because it apparently envisions a minor role for them. NGO officials contend that they have far more expertise than giant companies in the on-the-ground work in local communities that is required to build successful health and education systems. "We've received verbal assurances from the U.S. government that NGOs will be involved in reconstruction activities, but we'll believe it when we see it," said Sid Balman Jr., a spokesman for InterAction, an umbrella group of NGOs. "There's been a worrisome trend we've been seeing, based on what we saw in Afghanistan, where the Bush administration seems to be turning to a small pool of mainly large U.S. contractors for most reconstruction activities."
