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To the Victors Go the Spoils of Reconstruction

Firms from coalition countries such as Britain, Australia and Poland stand to win many subcontracts awarded to rebuild Iraq.

May 23, 2003|Warren Vieth and Mark Fineman | Times Staff Writers

KUWAIT CITY — When the first wave of U.S. forces secured Iraq's southern oil fields and ports, British, Australian and Polish soldiers were at their side, executing daring raids and taking heavy fire from Saddam Hussein's army.

Now it's payback time.

As Bechtel Group Inc., Halliburton Co. and other U.S.-based prime contractors award the first wave of subcontracts for the reconstruction of Iraq, British and Australian firms are among the early winners, and Polish companies are said to be on the short list for future deals.

Officially, the Bush administration and its private-sector collaborators say the competition for subcontracts is open to all comers, and awards will be made to the most qualified companies without respect to their country of origin.

But in corporate suites and foreign capitals -- and in the swank Kuwaiti hotels that have become the nerve centers of postwar reconstruction -- the word is making the rounds: When it comes to rebuilding Iraq, America's military partners are first among equals.

"We're certainly encouraging our contractors to hire coalition partners to do subcontract work," said one U.S. official directly involved in the reconstruction effort, who spoke on condition of anonymity.

The government may not be dictating the choice of subcontractors, but a little encouragement can go a long way in contracting circles.

"The general hope is that companies whose countries fought in the war will be the ones who participate in the economic reconstruction," said Equity International Inc. President William Loiry, who is coaching would-be contractors on opportunities in Iraq. "I don't know what the definition of fair share would be, but I think they will wind up with the majority of contracts and subcontracts."

They have certainly fared well so far.

When the U.S. Agency for International Development picks a location for its reconstruction headquarters in Baghdad, the site preparation work will be turned over to Crown Agents, a British firm founded in 1833 to procure goods for colonial outposts. Crown was hired by International Resources Group, a U.S. consulting firm that won a $7-million prime contract to help USAID plan and manage reconstruction projects.

Other British firms are getting in on the postwar action, too.

Weir Group, Scotland's biggest engineering firm, received a six-figure subcontract from Halliburton's Kellogg Brown & Root subsidiary to assess the state of oil pumping equipment in southern Iraq. The firm hopes the evaluation work will lead to bigger assignments to repair and upgrade Iraq's antiquated oil infrastructure.

"Yes, we would be interested, obviously," said Weir spokeswoman Helen Walker, who noted that some of the oil pumps were installed decades ago by a firm eventually acquired by Weir. "We've worked with Halliburton in the past. We know the area. We'd like to think it's our expertise and our knowledge that have allowed us to carry out this assessment."

One of the more forthright examples of private-sector coalition-building is a joint venture between Amec, Britain's biggest engineering and construction firm, and Orange County-based Fluor Corp., one of its main American rivals. The firms intend to submit a joint bid on a big long-term contract to rebuild the Iraqi oil industry. If the U.S. Army Corps of Engineers accepts their offer, Fluor would hold a 51% stake and Amec 49%, satisfying government requirements that prime contracts go to U.S. majority-owned ventures.

Fluor spokesman Jerry Holloway said Fluor and Amec have been partners in previous projects around the world, and their prospective collaboration in Iraq involves more than postwar geopolitics.

"Obviously, the fact that it's a British company is not lost on us," Holloway said. "We're not going to shyly demur on the obvious British-American nature of this team. But it's not a new, knee-jerk reaction to the political environment. If Amec didn't have what it has in terms of resources and experience, it would be unlikely we would see any reason to go into this kind of arrangement."

Australia contributed about 2,000 military personnel to the war. Its navy provided gunfire support to coalition troops in southern Iraq and helped clear mines from the port of Umm al Qasr. Its special operations troops participated in an early clandestine attack, ambushing Iraqi soldiers at Scud missile sites before the first U.S. bombs were dropped in Baghdad.

Now, as the coalition turns its attention to repairing the damage caused by 25 days of war and 25 years of neglect, Aussies and Americans are again working side by side.

SkyLink Air & Logistical Support, a U.S. firm holding a $10-million prime contract to manage Iraqi airports, has farmed out part of the work to Patrick Corp. of Australia.

Patrick personnel are already on the tarmac determining what needs to be done to restore operations at Baghdad's main airport.

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