Calif. firm wins contract to rebuild Iraq

U.S. government awards 1st major post-war job to politically-linked Bechtel

War In Iraq

April 18, 2003|By John Riley | John Riley,SPECIAL TO THE SUN

Bechtel Group Inc., the San Francisco engineering firm known for both outsized building projects and outsized political contributions, won yesterday the first big Iraq reconstruction contract awarded by the U.S. government.

The contract, which could be worth $680 million during the next 18 months, will give Bechtel a central role in rebuilding everything from power, water and sewer systems to seaports, schools and transportation links in the war-torn country.

Privately held Bechtel's global resume includes major roles in projects ranging from the Hoover Dam and San Francisco's transit system to creating the Saudi Arabian city of Jubail and extinguishing oil-well fires in Kuwait after the first Persian Gulf war.

But the process for awarding the first big Iraq contract has aroused criticism in Congress and abroad. Bechtel was one of just six bidders, all with strong political connections, hand-picked by the Bush administration to bid in a largely secret process. Only U.S. companies were considered.

George Shultz, secretary of state under President Ronald Reagan, is a Bechtel director. Past executives have included former Defense Secretary Caspar Weinberger and William Casey, later the CIA director. From 1999 to 2002, Bechtel and its workers gave $1.29 million in political donations, 59 percent to Republicans.

"The Bush administration was trying hard to justify the war in Iraq for reasons other than profiteering," said Steven Weiss of the Center for Responsive Politics in Washington, which computed the donations. "But because of the way the process was carried out, questions are going to be raised about whether this was payback to a well-connected company."

The contract was awarded by the U.S. Agency for International Development. A spokesman could not be reached for comment yesterday, but in the past the agency has said the unusual bidding process was required because of the need for speed and military exigencies.

The first installment of the contract is $34.6 million, and the larger total is subject to congressional appropriation. Because the work is funded by taxpayers, not Iraqi oil, the agency says it was legally required to give U.S. firms a preference. But foreign firms will be eligible for subcontracts.

Bechtel said in a statement that it was "honored" to be chosen. The company is expected to apply, under a seldom-used federal law, to receive insurance for the work from the government because of the unusually hazardous nature of the task.

The company has wide experience working overseas, with 47,000 employees on 900 projects in nearly 60 countries.

The San Francisco Chronicle reported in January that Bechtel and at least one other U.S. company sold Iraq technology that helped build up its military in the 1980s. The story attributed the information to a German journalist with access to a document on Iraq weapons that was turned over to the United Nations.

White House press secretary Ari Fleischer, asked about the story, said that the focus at the time was on the rise of Islamic fundamentalism in Iran, and "different administrations, beginning with President Carter, reached different conclusions about the level of military cooperation vis-a-vis Iraq."

Bechtel spokesman Jeff Berger said it was "absolutely false" that the company aided the Iraqi military.

Iraq's reconstruction also moved forward on another front with word that Peter McPherson, the president of Michigan State University, has been chosen by Pentagon and Treasury Department officials to head Iraq's economic reconstruction.

McPherson, former head of the Agency for International Development, will lead efforts to stabilize the currency, establish a central bank and get Iraq's $59 billion economy functioning again.

John Riley writes for Newsday, a Tribune Publishing newspaper.

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