Iraqi ministries emerge as management, contracting agencies

As the U.S. government rushes to transfer power in Iraq by a June 30 deadline, Iraqi ministries are emerging as the primary management and procurement authorities, government contracting officials said Tuesday.

"The Iraqis at the level of the managers and the doers are able to manage their own affairs. They have done so," said retired Marine Corps. Col. John Garrett, an adviser with Patton Boggs, the Washington-based law firm representing companies doing business in Iraq. "They have experience in all sectors. They know how to procure, they know how to do bids and they know how to buy."

Occupation of Iraq continues to be mired in violence and criticism that foreign companies are not including average Iraqis in the country's reconstruction process.

The Washington Post reported Tuesday that a bomb attack on an Iraqi police station south of Baghdad killed at least 50 people and wounded another 50, some of them reportedly civilians waiting in line to apply for jobs. On Monday, Rend Rahim Francke, the Iraqi Governing Council's top diplomat in Washington, warned of political disaster if Iraqi businesses and citizens do not participate more in the country's reconstruction process.

"We are in danger of creating a feeling of alienation between those who have the money to create the work and those who do the menial jobs. It could create a revolution," Francke said during a keynote speech at Tuesday's conference.

According to Jordan's ambassador to the United States, Karim Tawfiq Kawar, Iraqis are the most qualified people to rebuild their country. He said U.S.-imposed sanctions after the first Gulf Warcreated "gaps" in the country, particularly in the area of technical capability, but Iraqis and neighboring countries can recover and lead the reconstruction.

"Anybody interested in doing business in Iraq should find Iraqi partners and should find partners from the neighboring countries," Kawar said. He added that Iraq's neighboring countries-Saudi Arabia, Iran, Turkey, Syria, Egypt and Jordan-will meet later this week in Kuwait to discuss Iraq's reconstruction.

Patton Boggs' Garrett believes Iraqi ministries will be able to take over management and contracting operations from the U.S.-led Coalition Provisional Authority when power is transferred to an Iraqi sovereign government, creating an environment where Iraqis are given contracting preference for work funded by the country's revenue.

The U.S. government would continue to administer U.S. funds, while the World Bank and United Nations would manage funds donated to Iraq during an international donor's conference last year.

"What we're moving toward now, I think, is the U.S. government being responsible to the Iraqi ministers and the ministries," said Garrett. "We believe that they are going to emerge. They have to, they will. That's all part and parcel of what this is all about."

Iraqi ministries will administer hundred of billons of dollars in contracts, such as money within the Development Fund for Iraq, which is currently controlled by the CPA, said Patton Boggs attorney Timothy Mills.

According to Mills, CPA powers would be dramatically reduced as it folds into a large U.S. embassy in Iraq.

"When Iraq regains its sovereignty, the management of DFI funds will go to the Iraqi government and the Americans will be out of that," Mills told industry representatives. "More and more, the CPA and the robust American embassy that follows will have less and less to say about your business with the ministries and also the ministries dealings with you and budgets."

Mills offered several strategies for doing business in Iraq, such as creating alliances with Iraqi businesses or including Iraqis in contract negotiations.

He also said that after June 30, 2004 the CPA's procurement agency would morph into the U.S. embassy and continue administering funds from the U.S. government.

Mills said he has a "high level of confidence" that contracts awarded by the CPA to date will be honored by a new Iraqi government, but he cautioned nothing is definite.