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WAR WITH IRAQ

First Major Contract to Rebuild Iraq Awarded

Amid criticism that such postwar deals are premature, Stevedoring Services is to be paid $4.8 million to reopen and operate a key port.

March 25, 2003|Mark Fineman | Times Staff Writer

WASHINGTON — The Bush administration Monday awarded its first major contract to manage a key government facility in postwar Iraq -- the strategic southern port of Umm al Qasr -- even as U.S. and British forces continued to encounter resistance as they fought for control of the town.

The $4.8-million deal was announced as some critics said the administration was moving too fast in parceling out an array of contracts to rebuild Iraq.

"I think there's a serious irony in the administration letting contracts to rebuild bridges that they haven't bombed yet," said Rep. Maxine Waters (D-Los Angeles).

Administration officials say the reconstruction contracts are critical to a seamless transition from war to peace. They added, however, that they are secondary to starting the flow of massive humanitarian assistance, which President Bush on Sunday said was just 36 hours away.

As its first major step toward the transition, the U.S. Agency for International Development gave the $4.8-million port contract to Stevedoring Services of America, a Seattle-based company that will develop plans to reopen and operate Umm al Qasr, Iraq's only deep-water port and a critical entry point for humanitarian aid. USAID has yet to award a more urgent and far more lucrative contract that includes reconstruction, demining and dredging of the port.

The latter contract, expected to be worth $600 million in the short term, will include rebuilding more than 100 bridges and thousands of miles of roads to Iraqi schools, hospitals and water-treatment plants. It is to be awarded later this week.

Waters and other critics expressed concern that the administration might steer some of the biggest contracts to the best-connected companies, a charge USAID officials denied.

USAID spokeswoman Ellen Yount said the agency adheres strictly to federal regulations in awarding contracts and has set up an oversight committee "to ensure that the political dynamic is completely removed from the procurement and contracting process."

Waters plans to reintroduce an amendment on Wednesday that would bar companies in which current Cabinet officials and top administration officials held high-level corporate positions during the previous four years from bidding on such contracts.

She said the amendment, which was defeated by a 12-4 vote in a House subcommittee last week, is aimed at Halliburton Co., which Vice President Dick Cheney headed until he resigned in 2000 to join the Republican presidential ticket.

Texas-based Halliburton, which was among seven companies that bid on USAID's major Iraq reconstruction contract through its Kellogg Brown & Root subsidiary, already has a key position as a Pentagon contractor to assess Iraq's oil infrastructure in the war's aftermath.

Waters said she views the company's past relationship with Cheney as a potential conflict of interest, especially now that Halliburton is in line for major business in Iraq.

"Given the suspicion that many Americans have about why we're going to war, and the constant speculation that we're at war for oil, I think the vice president should do everything he can ... to remove even the appearance of a conflict of interest," Waters said.

"There's always the opportunity for him to go back to the business. After having helped them to make billions of dollars, maybe, it puts him in a great position," she said.

Cheney and his aides stress that the vice president divested himself of all stock and all positions in Halliburton when Bush named him as his running mate.

Stevedoring Services of America, which won the Umm al Qasr port contract Monday, is a family-owned company. One of the world's largest terminal operators, its 150 port facilities include operations in Los Angeles and Oakland.

This is the company's first contract in the Middle East, according to Bob Watters, vice president for operations in Asia. Watters said that the company was invited by USAID to bid on the project and that negotiations ran through last week.

The company's operations managers and engineers have already begun security training at Fort Benning, Ga., and will head to Kuwait on April 2, he said.

Among the competitors for the Umm al Qasr contract was Britain's Peninsular & Oriental Steam Navigation Co.

Several British companies have complained that they were in danger of losing business in postwar Iraq to U.S. companies.

Most of the USAID contracts require that companies have U.S. security clearances, and most senior managers on the ground are American citizens.

USAID Administrator Andrew S. Natsios acknowledged that most prime contractors will be American companies, but he said he signed a waiver permitting them to make extensive use of subcontractors, which can come from any nation not on the U.S. terrorist list.

In addition to the reconstruction contract, USAID also is expected to award a contract this week to assess and manage up to five Iraqi airports, including Baghdad's main airport.

Times staff writer Nancy Cleeland in Los Angeles contributed to this report.

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