New Contract for Controversial Bechtel Worth Billions.
The United States awarded a 1.8-billion-dollar reconstruction contract to U.S. engineering giant Bechtel on Tuesday despite charges from watchdog groups that the company is too close to the U.S. administration and that such deals exclude many Iraqis.
The United States Agency for International Development (USAID), said the 24-month 'Iraq Infrastructure II' contract will fund a wide range of projects, which include repairing power generating facilities, electrical grids, municipal water systems and sewage systems.
It will also cover repair to airport facilities and additional dredging, repair and upgrading of the seaport at Umm Qasr.
Under the deal the company will also refurbish and build government and public facilities, including schools, ministry buildings and major irrigation structures, as well as restore essential transport links.
San Francisco-based Bechtel was handed an 18-month infrastructure contract worth 680 million dollars in April 2003.
This time it will work with two other U.S. companies, Pasadena-based Parsons and Fairfax, Virginia-based Horne Engineering Services.
Bechtel National President Tom Hash said in a statement that his company won the deal in "an open, competitive process".
In the past, many critics inside and outside Iraq have criticised USAID for awarding such lucrative work to Bechtel, which has ties to prominent Republicans like former secretary of state George Shultz, who serves on the company's board.
In February, Bechtel CEO Riley Bechtel was appointed by U.S. President George W. Bush to the President's Export Council, an influential economic advisory panel.
Groups monitoring the U.S.-led occupation in Iraq have decried the awarding of the contracts because they sidestep Iraqi contractors, while several Iraqis have complained that U.S. officials have let firms associated with the former regime enrich themselves via the deals.
Under its previous contract, Bechtel re-opened the deepwater port of Umm Qasr, refurbished 1,239 primary and secondary schools and worked to restore water service to the City of Safwan's 40,000 residents. The company also says that it returned desperately needed electricity generation to pre-conflict levels.
Reconstruction contracts in Iraq are awarded through three sources: the U.S.. Army, USAID and the Coalition Provisional Authority (CPA) headed by U.S. administrator Paul Bremer.
U.S. officials have denied accusations of cronyism and exclusion of Iraqis in the contracting process. The USAID said in a statement that in all of its activities, contractors will work with Iraqis to strengthen the local capability to undertake infrastructure projects.
Hash said Bechtel intends to build on its current goal of hiring the maximum number of Iraqi employees at all levels, and to provide comprehensive training and work experience for Iraqi managers and their workers.
The firm is also developing a programme to include small businesses in the project, he added. Bechtel says it has awarded 122 subcontracts to 102 Iraqi firms out of a total of 162 subcontracts.
But critics say subcontractors are used only to provide basic, low-skilled services, and that other bidding requirements eliminate medium-size and small Iraqi companies.
"In most of the cases, these companies have to purchase American insurance and therefore they immediately limit the field to only those Iraqis who have a very large capital base, which then disadvantages the middle-class Iraqi businessman and the low-income Iraqi businessman," said Rania Masri of the Campaign to Stop the War Profiteers and Corporate Invasion.
The size and span of the subcontracts also limits which companies can apply, say critics. "When USAID and other U.S. agencies offer contracts that are extremely large in nature, they immediately limit the number of companies that can apply for these contracts," Masri told IPS from South Carolina State.
"The more stuff they bring together under one contract, the more they are implicitly limiting the numbers of companies that can apply for the contract ... instead of breaking the contract down and awarding, say, a smaller contract just for schools or awarding a contract for an electrical facility in Baghdad, for example."
U.S. watchdog groups have previously criticised the contracting process. In October, the Centre for Public Integrity (CPI), an independent research group, said that some 70 U.S. firms with strong connections to the Bush administration have won at least eight billion dollars worth of reconstruction contracts in Iraq and Afghanistan in the past two years.
Nearly 60 percent of the 70 companies had employees or board members who either served in or had close ties to the executive branch in Republican and Democratic administrations, to members of Congress or at the highest levels of the military, it added.
But USAID said this contract, unlike the previous Bechtel deal, was awarded through competitive bidding in full compliance with the Federal Acquisition Regulations (FAR) which considers technical capability, previous experience, past performance and cost.
Washington is also maintaining its ban on companies from countries that opposed the U.S. invasion of Iraq -a decision that has angered U.S. friends such as France, Germany and Canada.
Bechtel has a history of profiteering after wars and of disregarding human rights conditions in Iraq.
Last month newly declassified official documents from the U.S. State Department showed the company planned in 1988 to continue to build a petrochemical plant for the Saddam Hussein regime despite a U.S. congressional ban to stop American companies from working in Iraq because of Saddam's well-documented use of chemical weapons on Iraqi Kurds.
The project was stopped when Iraq invaded Kuwait in 1990.
After the 1991 Gulf War, Bechtel won contracts to rebuild Kuwait's energy infrastructure and extinguish 650 fires blazing in the oil fields. The company later won lucrative contracts to clean up and restore more than 400 miles of Saudi Arabian shoreline.
Source: Emad Mekay by IPS ,Washington, 07Jan04
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