Polish Firm Protests Loss of Iraq Bid

A state-owned Polish arms company that lost the bidding to equip the new Iraqi army announced Wednesday that it has lodged a protest, throwing into doubt one of the United States’ largest and most prominent nation-building projects.

Bumar Group accused the U.S.-led Coalition Provisional Authority of ignoring key documents in the company’s $558-million proposal while failing to determine the credibility of the winner, Virginia-based Nour USA, which undercut the Poles’ bid with a $327-million offer.

Nour USA, formed in May, has no experience in supplying weapons. Its president, A. Huda Farouki, is a friend of Ahmad Chalabi, a member of the U.S.-chosen Iraqi Governing Council who has had close connections to the Pentagon.

Another company, Cemex Global, backed by Jordan-based Shaheen Business & Investment Group, also has filed a protest, charging that the authority “improperly” evaluated its bid to supply items including rucksacks, rifles, helmets and heavy jeeps for 26 battalions.

“This protest is 100% justified,” Bumar Group Chairman Roman Baczynski said during a news conference here in the Polish capital, noting that it was the first the company had filed in its 30-year history. “We are questioning their credibility.”

Farouki, a well-known Washington financier and political donor who has been a White House guest during several administrations, said the charges were groundless. He noted that his firm had delivered communications equipment and vehicles to Iraq under a 2003 contract.

Farouki said Bumar was frustrated because it had turned down a chance to partner with Nour in the bid, which was accepted Jan. 30. As recently as Tuesday, he added, Bumar offered its services to Nour USA to help fulfill the contract.

“This is all nonsense. There’s no credibility to their allegations,” said Farouki, who is represented by the lobbying firm of former Defense Secretary William S. Cohen. “They are grasping and grabbing at straws.”

The protest, filed with the General Accounting Office, could delay the equipping of the planned 40,000-man Iraqi army, which the coalition authority is training in preparation for the planned hand-over of sovereignty to Iraq this summer.

The complaint is also a major legal test of the rules governing how the $18.4 billion in U.S. taxpayer money earmarked for Iraq’s reconstruction is being spent. At issue is whether the coalition authority is subject to the same contracting rules that apply to U.S. government agencies.

Under normal circumstances, a protest filed with the GAO results in the automatic suspension of a contract. But in papers filed this year, the Army indicated that the GAO had no dominion over the authority because it is not technically a federal agency.

If that opinion is upheld, the authority would be free to award contracts without justifying its decisions to an impartial government agency. It is unclear whether the dispute could be taken to a U.S. court.

In a typical protest, the GAO can take a variety of actions, including ordering that the bidding be redone. Such a decision in this case would further delay the equipping of Iraq’s army.

“There is doubt here” regarding jurisdiction, said Daniel Gordon, head of the GAO’s bid protest office, which handles about 1,300 complaints a year.

Coalition and U.S. Army officials did not respond to repeated calls for comment on whether they would freeze the contract. In an earlier e-mail, however, the coalition authority said the contract had been properly evaluated and awarded.

Navy Capt. Bruce Cole said the contract went to the company that had the best mix of experience, price, promised arms and delivery date. “Nour USA was judged to have the best bid,” he said.

Cemex and Bumar questioned whether Nour had accurately represented itself. They suggested that Nour had portrayed itself as a larger, more experienced company than it is.

In its proposal, Nour said it was the lead company of a consortium called DES Group. Nour itself is an alliance between a U.S. financial firm, HAIFinance, headed by Farouki’s wife; and a Jordanian pharmaceutical and construction consortium called Munir Sukthian Group.

A member of the DES consortium, a Polish company known as Ostrowski Arms, came under investigation by the Polish prosecutor’s office when investigators learned that its owner, Andrzej Ostrowski, had no license to export arms.

Other members of the consortium, including Virginia-based American International Services and UniTrans International, are partly owned by Farouki. The consortium also includes four Iraqi companies with which Farouki said he had agreements to provide financial and commercial support.

All together, Farouki has financial ties or what he described as a “contractual relationship” with seven of the nine members of the DES consortium. These relationships were fully disclosed to the authority in Nour’s proposal, he said.

A second question raised by the companies concerned a Polish consortium that produces “Honkers” -- all-terrain vehicles that Nour USA said it would supply as the Iraqi version of the Humvee, the U.S. all-purpose vehicle.

Production of the Honker was tied up in legal issues until this month, when a Polish company and a Russian company agreed to jointly produce the vehicle.

“I find it difficult for the government to have confidence in a contractor who is going around trying to find a product after the contract is awarded,” Cemex Chief Executive Anthony DeLuca said. “This is not a normal contract. We’re talking about a matter of national security and defense.”

Bumar also questioned Nour’s pricing, saying the two offers were separated by an unusually large gap -- 40%.

“In our judgment, Nour’s price offer is unrealistic,” Baczynski said.