U.S. Firms' Iraq Contracts Come Under Fire

The plan to rebuild Iraq is already under way, with millions of dollars in contracts awarded to U.S. companies that will help reconstruct everything from the war-torn nation's sewage systems to schools.

But as the potentially lucrative contracts are handed out, the process is coming under fire from critics assailing the lack of transparency of the selection procedure and some of the companies' political ties to the U.S. government.

One of the largest contracts given out last week is also one of the ones drawing critics. Bechtel, a San Francisco-based engineering and construction firm, was awarded an initial $34.6 million capital construction contract that could grow to up to $680 million over the next 18 months.

The contract is one of the biggest to be handed out so far. The bidding was conducted in secret, which has outraged critics.

The United States Agency for International Development, or USAID — the agency responsible for providing economic, development and humanitarian assistance to support U.S. foreign policy goals around the world — invited a limited number of companies to bid for the job, including Pasadena, Calif.-based Parsons Corp., Fluor Corp., Louis Berger Group Inc. and Washington Group International Inc.

Secret bids like this are legal, but controversial. USAID says it limited competition in compliance with Federal Acquisition Regulations, which are the rules that govern federal agencies' purchasing of goods and services, because they needed to choose a contractor quickly and did not want to do anything that might have complicated diplomatic efforts to prevent war.

But critics say the secrecy surrounding the bidding just raises questions among the public.

"The fact that the process was conducted largely in secret and involved only a handful of companies, some of which gave substantial campaign contributions, raised the questions about whether this process was open and fair," says Steven Weiss, communications director with the Center for Responsive Politics, a Washington-based research group that tracks money in politics.

Did Political Connections Yield Contracts?

The six groups that were initially considered for the contract (Halliburton subsidiary Kellogg, Brown & Root had also been in the running but took itself out) made a combined $3.6 million in individual, political action committees and soft money donations from 1999 to 2001, with 66 percent of that going to the Republican Party.

Bechtel contributed the largest amount of money with some $1.3 million in donations, 41 percent of which went to Democrats and 59 percent to Republicans, according to the center.

Some of Bechtel's executives also have Bush administration and Republican Party ties. A senior vice president, Jack Sheehan, sits on the Defense Policy Board formed to advise Defense Secretary Donald Rumsfeld. Bechtel's chairman, Riley Bechtel, is a member of the President's Export Council, which advises the White House on international trade matters.

Some who watch the government contract industry say they doubt political connections contributed to Bechtel's winning, noting that the company has more than 100 years of experience that includes helping to build the Hoover Dam and the Channel Tunnel Rail Link joining England and France. But they concede that the clandestine nature of the bidding process leads to questions in the public's minds.

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