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US Firms Set for Postwar Contracts
Danny Penman and agencies
The Guardian
Tuesday 11 March 2003
The American government is on the verge of awarding
construction contracts worth hundreds of millions of dollars to rebuild Iraq
once Saddam Hussein is deposed.
Halliburton, one of the companies in the running
for the deals, was headed by the US vice-president Dick Cheney between 1995
and 2000. Halliburton has already been awarded a lucrative contract, worth
hundreds of millions of dollars, to resurrect the Iraqi oilfields if there
is a war.
Other companies have strong ties to the US
administration, including the construction giant Bechtel, the Fluor
Corporation, and the Louis Berger Group, which is presently involved in the
reconstruction of Afghanistan. Both Bechtel and the Fluor Corporation
undertake construction and project management work for the US government.
Only US companies are on the shortlist of five. The
US agency for international development (USAID) defended the narrow
shortlist.
A spokeswoman said: "Because of the urgent
circumstances and the unique nature of this work, USAID will undertake a
limited selection process that expedites the review and selection of
contractors for these projects."
The spokeswoman said that it was a policy of USAID
to use US companies for projects funded by the American taxpayer. Non-US
companies were free, through their governments, to organise their own
business, she said.
The winning company would get about $900m (£563m)
to repair Iraqi health services, ports, airports, schools and other
educational institutions.
Sources at the companies said the invitation was
unusual in that USAID did not ask them to set a price for defined services
but rather asked them to say what they could do for $900m. However, the
winning company could expect to make a profit of about $80m from the deal.
All five bidders have submitted their proposals or
are preparing to do so after USAID "quietly" sent out a detailed request
soliciting proposals from the likely bidders.
According to the Wall Street Journal, the Iraq
reconstruction plan will require contractors to fulfill various tasks,
including reopening at least half of the "economically important roads and
bridges" - about 1,500 miles of roadway - within 18 months.
The contractors will also be asked to repair 15% of
Iraq's high-voltage electricity grid, renovate several thousand schools and
deliver 550 emergency generators within two months.
Construction industry executives said the handful
of firms are competing fiercely in part because they believe it could
provide an inside track to postwar business opportunities. The most highly
sought-after prizes are oil industry contracts.
The US government is believed to be wary of any
backlash against an invasion and is preparing plans for a "hearts and minds"
operation that will swing into place as soon as the country is occupied. The
government is mindful of the longterm benefits of feeding hungry Iraqis,
delivering clean water, and paying teachers and health workers.
"It's a sensitive topic because we still haven't
gone to war," one industry executive told the Wall Street Journal. "But
these companies are really in a position to win something out of this
geopolitical situation."
It remains unclear whether Iraqis, Americans or an
international consortium will manage the oil industry during an early
post-conflict period.
Steven Schooner, a George Washington University law
professor, said many billions of dollars are at stake. He estimated that
$900m would barely last six months given the scope of the projects the
administration has sketched out.
"The most sophisticated firms that come in first,
and establish good will with the locals obviously will reap huge benefits
down the road," said Mr Schooner.
"These are going to become brand names in Iraq.
That's huge."
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