USA: Firms Set for Postwar Contracts

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 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 fulfil 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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• 124 War & Disaster Profiteering