Secret Contracting Process to Rebuild Iraq Draws Criticism

Times Staff Writers

Fighting the war in Iraq turned out to be easier than expected. Getting peace off the ground has proven a bit harder.

The U.S. Agency for International Development says the $600-million contract to start the rebuilding could be awarded any moment now, which is what it has been suggesting for three weeks.

For the record:

12:00 AM, Apr. 19, 2003 For The Record
Los Angeles Times Saturday April 19, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 60 words Type of Material: Correction
Iraqi reconstruction -- An article in Section A on Wednesday about the contracting process for rebuilding Iraq said that at the behest of two members of Congress, the General Accounting Office was looking into a contract the Army Corps of Engineers gave to Halliburton Co. In fact, the GAO says it was planning an inquiry before the request from Congress.

But USAID’s attempt to make the process both secret and ultra-quick has drawn suspicion, criticism and investigations. Sen. Susan Collins (R-Maine), head of the Senate Committee on Governmental Affairs, is co-sponsoring the Sunshine in Iraq Reconstruction Contracting Act of 2003, which would make public all documents on secret Iraq contracts that aren’t classified.

Meanwhile, at the behest of two other members of Congress, the General Accounting Office is looking into a contract that the Army Corps of Engineers gave the oil-services giant Halliburton Co. without any competition.


“This is pretty darned unique,” said Michael Hershman, a former deputy auditor general for USAID. “I don’t recall this much controversy over the awarding of contracts before the work had even begun.”

Pasadena-based Parsons Corp., the San Francisco-based Bechtel Group and the Louis Berger Group Inc. in East Orange, N.J., have all been reported as the finalists for the construction contract.

Yet USAID officials have said there are only two finalists. Either two of the companies have entered a joint bid, or one company is under a misapprehension. The confusion illustrates how public yet veiled this bidding process has been. The companies say they can’t comment.

“The very fact that there are so many questions swirling around this issue leads one to believe that political influence might have been used,” said Hershman, the co-founder of Transparency International, a nonprofit that promotes government and corporate accountability.


USAID officials in Washington denied Tuesday that the process has been in any way beset by problems, politics or delays, and they bristled at any criticism that the agency is lagging in awarding contracts for work in Iraq.

“We are fully within the time frame envisioned by the agency when we began doing contingency planning many months ago,” chief USAID spokeswoman Ellen Yount said.

But the agency started raising expectations almost a month ago. As early as March 20, USAID Administrator Andrew S. Natsios said the construction contract and several others “will be announced later today and tomorrow.”

Five days later, Natsios said, “We expect the engineering and construction contract will be awarded later this week or next week.”


USAID said the extra time was the result of a late-breaking dispute over whether the winning contractor would be insured, something the government does very rarely.

“As for the timing of the contract award,” Yount said, “if we have erred, we have only erred in being too optimistic.”

But outsiders have other interpretations.

“USAID was in over its head,” said Steve Schooner, co-director of the government contracting program at George Washington University.


“They’ve never spent this kind of money this fast before. Someone called them up and said, ‘We need to rebuild Iraq tomorrow.’ They never thought about the trade ramifications, for instance.”

Foreign companies have been angered by their exclusion from the bidding process, a condition that could lead to trade retaliation from other countries.

Natsios said the U.S.-only rule is enshrined in U.S. law. The secrecy surrounding the bidding was dictated by national security considerations and the need to move quickly. But the lack of openness has bothered both members of Congress and advocates of openness in government.

Timothy Beans, USAID’s chief acquisition officer, has gone to Capitol Hill twice in the past week to brief key congressional committees.


“That’s unusual, no question,” said Charles Tiefer, a professor of contracting law at the University of Baltimore School of Law and a former House deputy counsel. “Rarely if ever does Congress show such doubt about a big contract as to quiz the top procurement official well before the award is even granted.”

Yount, the USAID spokeswoman, said Beans met Friday and Monday with the staffs of key House and Senate committees.

“We want to be as transparent and accurate as possible,” Yount said.

Collins is still moving ahead with her full-disclosure bill, which covers not only contracts from USAID but the Army Corps of Engineers. It is co-sponsored by Sen. Hillary Rodham Clinton (D-N.Y.) and Sen. Ron Wyden (D-Ore.).


“If they had been more open, this wouldn’t have been necessary,” a staffer on the Senate governmental affairs committee said Tuesday.