USA: Secret Bidding on Iraq Contracts Looks Bad

On the face of it, the Bush administration should get a pat on the back
for inviting engineering companies to submit bids for reconstruction work
in Iraq.

The move shows foresight as the US contemplates the enormous task of
rebuilding Iraq after a likely war and 10 years of crippling sanctions
that have undone years of economic progress.

But whatever kudos the White House may get for its foresight risks being
undone by the surreptitious way the bid process was handled. Only five US
companies have been invited to bid for contracts worth at least $900m
and the names on the list are bound to give conspiracy theorists a
field day.

The select group of companies includes Kellogg Brown & Root, a subsidiary
of Halliburton, an oil services company, where the vice-president, Dick
Cheney, held the position of chief executive from 1995 to 2000.

Kellogg Brown & Root has already won a government contract to oversee
firefighting operations at Iraqi oilfields after any US-led invasion,
while the other companies also have strong ties to the US administration,
including the construction giant Bechtel, the Fluor Corporation, and the
Louis Berger group, already involved in the reconstruction of Afghanistan.

The winning company would get contracts to repair Iraqi health services,
ports, airports, schools and other educational institutions. The Bush
administration is only too aware of the need to be seen feeding hungry
Iraqis, delivering clean water, and paying teachers and health workers to
dispel accusations of imperial ambitions.

To speed up the project, the US agency for international development
(USAID) invoked special authority to solicit bids from just a few
companies. The move bypassed the usual rules that would have permitted a
wider array of companies to seek the contract, first reported by Time
magazine and the Wall Street Journal.

A USAID official defended the restricted nature of the contract on the
grounds of urgency and because of the unique nature of the work. But that
cut little ice with British unions, who criticised the move as typical of
the US's "master and servant" attitude towards its only key ally on the
eve of war.

"Why should Britain have to share the blood in a war but British companies
not be allowed to share in the economic upturn afterwards," said Richard
O'Brien, a spokesman for Amicus, Britain's largest manufacturing union.

An unseemly row over the spoils even before war has been fought is the
last thing the Bush administration needs as it desperately seeks votes for
a second resolution in the UN security council. But the US has only itself
to blame for the clumsy way it has handled this particular aspect of
reconstruction.

The brouhaha over these initial contracts is just a foretaste of what is
to come. The cost of reconstruction is bound to be a bone of contention in
congress as the US faces record budget deficits and struggles to
invigorate economy.

So far the White House has been coy about putting a price tag for war and
reconstruction so as not to alarm the American public on the vast amount
of work and expense that will be needed. President Bush has only said that
his administration would ask congress "at the appropriate time" for a
supplemental spending bill outside the regular budget to pay for the war -
estimated by analysts to cost anything between $50bn and $200bn.

There has been talk about using revenue from Iraqi oil sales to pay for
reconstruction and to pay back nations for the costs of fighting Iraq. But
in reality, Iraqi oil is being used to meet the basic needs of Iraqis at
subsistence level, so there will be little scope for using Iraqi oil to
pay for reconstruction. Very probably, the scale of reconstruction will be
so large that US companies will not be able to hog all the work, even if
they wanted to.

• 124 War & Disaster Profiteering