Coalition to Reopen Bidding for Iraqi Military Contract

The U.S.-led authority running Iraq decided Friday to reopen the competition for a multimillion-dollar contract to equip the new Iraqi army that had been awarded to a small Virginia company lacking arms-dealing experience.

The decision by the Coalition Provisional Authority to reevaluate the $327-million contract will further delay the creation of a new Iraqi army of 40,000 men, which would reduce the risk faced by U.S. soldiers performing the bulk of military patrols.

It comes amid growing concern over the CPA’s contracting process as it prepares to award the rest of its $18.4 billion in U.S. taxpayer dollars for large-scale infrastructure projects in Iraq.

The authority overlooked key information in evaluating proposals from two other companies, according to documents filed by those companies to protest the award. At the same time, it apparently did little to verify the background of Nour USA, the winning bidder, which claimed links to companies and people who have since denied their involvement with the firm in interviews with The Times.

Friday’s decision means the CPA will reevaluate Nour’s bid along with those presented by the two companies that protested the award: Bumar Group, a state-owned Polish military company, and Cemex Global, a U.S.-Jordanian consortium.

“It’s important that government take corrective action now,” said John Podgore, Bumar’s Washington-based attorney. “It’s in the interests of our troops, the U.S. taxpayers and all members ... of force-contributing nations.”

However, the process could become bogged down in legal challenges from any of the other 16 unsuccessful bidders who are shut out of the reevaluation, said Daniel I. Gordon, the head of the bid protest unit for the General Accounting Office, which was informed of the provisional authority’s decision Friday.

“It might be a matter of days, but there obviously will be some delay,” Gordon said.

Nour officials said they stood by their proposal and looked forward to working with the provisional authority.

Provisional authority and U.S. Army representatives did not return calls for comment. But in a letter explaining their decision, CPA contracting officials said they had decided to take “corrective action” in the face of the protests.

The protests, “although not clearly meritorious, raise questions concerning the evaluation,” the letter said.

Bumar officials based their protest partly on an e-mail from a provisional authority officer who acknowledged overlooking the part of their bid proposal that dealt with their decades of experience, though the officer denied that it affected the final decision.

Cemex executives said provisional authorities told them their proposal lost in part because it did not include a delivery schedule for the equipment. However, Cemex said, a delivery timetable was included.

CPA officials also apparently did not physically visit the facilities listed in the proposals of the 19 original competitors. Several of the competitors contacted by The Times said they had never received such visits, which are usually a part of the process of awarding high-dollar contracts in the U.S.

The contract was a source of controversy almost from the moment it was awarded to Nour, which was formed in May. The company’s president is A. Huda Farouki, a Washington insider. He is a friend of Ahmad Chalabi, a member of the Iraqi Governing Council who has close ties to the Pentagon.

Bumar and Cemex, whose bids were each $200 million higher than Nour’s, questioned Nour’s ability to deliver. A Polish company that partnered with Nour in winning the award, Ostrowski Arms, is under investigation in Poland because it has no permit to export weapons.

Nour’s proposal raised other questions. For instance, the firm told the CPA that it had partnered with Booz Allen Hamilton, a well-regarded Washington consulting firm whose participation would have lent credibility to the newly formed company. But Booz Allen officials denied Friday that they were partners with Nour, saying they had only a small contract with Nour to help in planning the execution of the contract.

Moreover, a source with knowledge of the negotiations said the $50,000 contract with Booz Allen was signed nearly a week after Nour had won the award -- meaning that Nour had no formal link with Booz Allen during the proposal phase.

“We don’t have a teaming arrangement,” said George Farrar, a Booz Allen spokesman.

Nour also told provisional authority officials that the firm had an advisory board with an impressive list of high-ranking military officers, according to several of those officers. However, the officers said they had been in touch with Nour only indirectly, never had any formal agreement and were never consulted in the bid preparation process or paid for their services.

“Our resumes were used in the competitive bid process, but we never met nor were we ever consulted or paid,” said retired U.S. Marine Corps Maj. Gen. Dave Richwine. After they learned of the award, Richwine and a retired Army lieutenant general submitted e-mails to the CPA stressing that they had no links to the company.

Another person who was told he was listed as an advisory board member, retired U.S. Navy Vice Adm. Joe Dyer, said that a friend had sent his resume to Nour but that he had never had any contact with the firm.

“I was pretty dumbfounded when I heard that I had been listed. I am not related in any way to this company,” Dyer said in an interview.

Nour has also described itself as having a “collaborative arrangement” with Munir Sukhtian Group, a Jordanian company whose long history of business in the Middle East would have helped establish the firm’s credentials overseas.

But several Jordanian sources with knowledge of the internal workings of the company said Munir Sukhtian, jointly owned by three brothers, was not a full participant.

Instead, they described an internal feud in which one of the brothers, Ghiath Sukhtian, had unilaterally pledged the company to the deal with Nour without the approval of the other brothers.

Ghiath Sukhtian, in a conversation this month, acknowledged a “small tiff” among the brothers but said it would be worked out soon. Nidal Sukh- tian, the group chairman, declined to comment on the matter this month.

Neither man could be reached for comment Friday.

“Ghiath has never had permission from any of his brothers to enter into the agreement,” said a Jordanian source with knowledge of the firm’s dealings. “Munir Sukhtian, as a company, is not involved in any way with Nour USA. The two brothers were stunned when they found out from the news that their company was named as being involved in the contract.”

Nour also told provisional authorities that it was part of a consortium of nine companies, seven of them having ties to Farouki.

One of those companies, American International Services, a procurement agency, claims on its website to have more than 25 years of business experience.

The company was formed in 1991, according to corporate records in Virginia.

Nour President Farouki, in an earlier interview, said the experience claim was justified because one of his earlier companies, American Export Group International Services, had been created 25 years ago. AEGIS, as it was known, filed for bankruptcy protection in 1987.

American International Services “is the successor to AEGIS,” he said. “I owned part of AEGIS.”

Farouki said the Nour proposal was sound and in no way misleading.

“It was very clear what was in the proposal,” he said. “Not one fact in that proposal is incorrect.”