Hundreds of companies turn out seeking Iraq subcontracts

Nearly 1,500 representatives from hundreds of U.S. and foreign firms packed a room the size of an airplane hanger in Washington Wednesday to hear from the company reconstructing war-torn infrastructure in Iraq.

Bechtel, the San Francisco-based engineering company that recently won a contract to repair Iraq's water, electricity and transportation systems, held the conference at the Ronald Reagan Building to brief potential subcontractors on how the company plans to award work.

While the Agency for International Development awarded Bechtel the contract for the reconstruction a month ago, the agency is not responsible for hiring or overseeing the work of subcontractors. That makes Bechtel the portal for business opportunity in Iraq, the company's executives said.

Addressing a capacity crowd, the Bechtel executive overseeing the awards process said the company estimates that 90 percent of all work would be done by other firms. "I view you as my labor force," Tom Elkins, the company's acquisitions services manager, told the audience.

However, Elkins also tried to temper companies' enthusiasm. He said Bechtel has awarded 14 subcontracts in the past month. Excluding the largest contract, one to dredge the port of Umm Qasr to clear a path for grain shipments, the remaining 13 contracts have an average value of less than $500,000 each.

Elkins also noted that Bechtel has received 10 times the volume of response to the Iraq contract as it did for a contract to extinguish oil well fires in Kuwait after the first Gulf War. However, that contract was worth three times the work going on now in Iraq, he said.

"This is all out of proportion," Elkins said of the overwhelming display of interest. He advised companies to deliberate carefully about whether they were prepared or able to bid on reconstruction work. If they do bid, Elkins said, they should make their "best and final offers the first time," because the company intends to make awards very quickly.

Bechtel has established a Web site where companies can list their qualifications. As of Sunday, Elkins said the site has received nearly 87,000 visits. Already, more than 4,300 companies have registered there. After a process of elimination, in which companies will be evaluated on the strength of their finances, their level of skill and their ability to provide their own insurance and security forces, Bechtel will create a bidders list of about 1,000 firms, Elkins said. Then, only about six to 12 companies at a time will be invited to bid on task orders on the contract, he said.

Bechtel's contract only covers reconstruction of facilities affected by the war and subsequent looting, which exacted more damage on the infrastructure than the U.S. military's bombing campaign, said Cliff Mumm, Bechtel's reconstruction project manager. In addition to dredging the port at Umm Qasr, Bechtel is in charge of bringing Iraq's major electricity system back online, replacing avionics and communications equipment at the airports in Baghdad and Basra, and making repairs to bridges that were damaged during military operations.

AID, the agency that awarded Bechtel's contract, plans to contract out oversight of the company's work, a senior official said this week. The agency is also negotiating with the Army Corps of Engineers to conduct on-site administration, and Elkins said the Defense Contract Audit Agency might provide oversight of the subcontractors.

The manner in which the government has awarded the handful of reconstruction contracts thus far has caused consternation among some lawmakers, who have called for more transparency in the procurement process. Last week, Sen. Joseph Lieberman, D-Conn., called for hearings on selectively bid contracts like Bechtel's, in which the company was one of seven that AID invited to compete.

Lieberman also wants the hearings to examine a contract to extinguish oil well fires in Iraq that was given without competition to Halliburton, a company once led by Vice President Dick Cheney. That contract is potentially worth $7 billion. Rep. Henry Waxman, D-Calif., also has been critical of the contract, and now is investigating the scope of its work, which he says includes provisions to distribute oil.

In a related matter, Sen. Susan Collins, R-Maine, the chairwoman of the Governmental Affairs Committee, announced Wednesday that the committee would investigate whether bankrupt telecommunications firm WorldCom should be allowed to compete for federal contracts. The company, which now does business as MCI, this week agreed to pay investors $500 million to settle charges that it committed massive fraud over a three-year period. MCI was recently awarded a contract to build a small mobile phone network in Iraq.

Collins has asked the General Services Administration to supply the committee with information about any investigations it has conducted on WorldCom. In November, GSA barred two WorldCom executives from conducting business with the federal government. However, at that time the agency also renewed a lucrative long-distance telephone contract with the company.