U.S. Promises Fast, Transparent Process for Iraq Contracts

Under pressure to be faster and fairer, U.S. officials Wednesday unveiled a new system for reconstruction work in Iraq that would award up to $18.7 billion in 25 contracts over the next 10 weeks.

Speaking outside Washington to a conference of potential bidders, retired Rear Adm. David Nash, head of the office overseeing the contracts process, said U.S. authorities would answer critics’ charges of cronyism by offering regular public disclosures and would hire six private project managers to help ensure efficiency in the rebuilding effort.

Despite the breakneck pace of awarding contracts, “we will have maximum transparency from beginning to end,” Nash said, as he formally kicked off the new program.

With so much money at stake, the sold-out session at a northern Virginia hotel had the fevered atmosphere of a land rush. About 1,300 representatives of more than 650 U.S. and foreign companies attended the daylong session. Among them were executives of large companies and individual entrepreneurs, some of them Iraqi Americans.

The contracts are for building schools, police and fire stations, power and water facilities and other infrastructure, projects that may take four years to complete, Nash said. Last year, the federal foreign assistance budget -- excluding special aid for Iraq -- totaled $17 billion.

Nash’s Program Management Office has been scrambling to respond to White House pressure to show quick progress in Iraq. Congress has been prodding the office to assure the fairness of the process, while Iraqis and America’s allies in the war have been demanding that their companies be allowed to share in the lucrative rebuilding.

Nash said contractors would be chosen in two steps. Companies would first submit information showing their qualifications, and contracting officers would recommend three of the bidders, from which the winner would be picked.

To answer complaints about the lack of openness, information about the contract proposals and bidders would be posted on the office’s Web site.

Yet contractors and procurement specialists at the session said the system would still strongly favor large, experienced government contractors such as Halliburton and Bechtel Group, which won large contracts last spring. Thousands of smaller and less established companies that are clamoring for a piece of the business could be at a disadvantage.

Jessica Abrahams, a government contracts specialist at the Washington law firm of Powell, Goldstein, said that the two-step process “seemed to support the idea of open and transparent competition. But ultimately, given everything I’m hearing ... I’m not sure that everyone out there will have an equal opportunity to compete.”

Nash said the authorities expected that only companies from the U.S., coalition countries and Iraq would be allowed to bid for prime contracts. However, he acknowledged that top administration officials, despite months of studying the issue, had not made a final decision.

It was unclear, he acknowledged, whether they would exclude from prime contract bids, for example, a French or German company with a wholly-owned subsidiary based in the United States. Once contracts are awarded, however, foreign companies will be able to bid for subcontracts, Nash noted.

There has even been uncertainty about the contracting organization’s name. Authorities had recently changed it from the Program Management Office to the Iraq Infrastructure Reconstruction Office. But Nash said the name had been changed back, because the other version was deemed too unwieldy.

The new approach drew criticism from Rep. Henry A. Waxman (D-Los Angeles), a critic of early contracts awarded by the administration.

Waxman said in a statement that he was pleased that “the administration is attempting to inject competition into the process” but that he had “serious reservations” about the new contracting strategy. Dividing the effort among 24 umbrella contracts would “give a company a monopoly over a large sector” of the rebuilding, Waxman said. The “cost plus incentive” contracts that would be used in the process “are the most susceptible to inflated costs.”

Security in Iraq was a subject of intense interest at the meeting.

U.S. and British troops were providing much of the security for private companies after the first reconstruction contracts were awarded last spring. But increasingly, the winning bidders have had to rely on their own security forces, driving costs up sharply and increasing worries about accidental and “friendly fire” injuries.

Nash said that coalition authorities were trying to keep tabs on contractors’ security forces, so that the armed men would not be mistaken for insurgents and fired on accidentally. Close communication was needed, he said, “so we don’t have an unfortunate accident.”

Capt. Sam Dickson, an Air Force reservist working on security in Iraq, told contractors that they should provide their security forces with more than just pistols, and he warned them to be cautious in hiring Iraqis.

“Not everyone you hire may be on your side,” Dickson said.

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Times staff writer Edmund Sanders contributed to this report.