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business & labor
CONTRACTS
Thousands Jockey To Rebuild Iraq
 
By Sherie Winston in Washington D.C. and Peter Reina in Hammersmith

Nearly 3,000 potential subcontractors showed up at two recent meetings hosted by Bechtel National Inc. on two continents to learn about construction opportunities in Iraq. Bechtel, the prime contractor for the $680-million Iraqi capital construction project, expects to award most subcontracts by August, but competition will be stiff.

LONG WAIT Potential subcontractors flock to Bechtel meeting in Washington May 21. (Photo courtesy of U.S. Agency for International Development)

As firms from all over the world jockey for current subcontracts, and to get a foot in the door for possible future work, reconstruction activities continue. In a key step, the U.S. Agency for International Development announced May 23 that the port at Umm Qasr had been transferred from military to civilian administration. It is the first such transfer for a reconstruction project in Iraq. Stevedoring Services of America, the Seattle firm that won a USAID contract to manage the port, says more than 3,520 local workers will be employed as managers, heavy equipment operators and maintenance workers. Bechtel is charged with rebuilding port administration buildings, restoring utilities and dredging.

As USAID also announced that the U.S. Army Corps of Engineers will serve as construction manager for the Bechtel rebuilding contract, the contractor held the first of three program supplier conferences, in Washington, D.C. The May 21 meeting attracted more than 1,800 attendees. The second meeting, May 23 in the London suburb of Hammersmith, was equally crowded. A third session was slated for Kuwait City on May 28. Corps officials say its role is to become official on May 30.

Both Bechtel conferences attracted representatives of construction contractors and equipment suppliers, consultants, foreign governments and lawyers. Also attending were design firms, transportation companies, claims consultants, managers of foreign construction associations, all manner of service providers and even a young information technology specialist hoping to find a job in Iraq.

Potential bidders came to learn about qualifications, financing and insurance needed to work in the region. Attendees at both meetings were greeted with the blunt truth: They must supply their own security and telecommunications, as well as provide food and accommodations for their crews. Safety concerns will also require employees to wear flak jackets and Kevlar helmets.

Such hunger for work in Iraq may be excessive, hints Tom Elkins, Bechtel’s acquisition services manager. Kuwait’s reconstruction effort a decade ago was four times larger, but drew a tenth of the interest, he recalls. Bechtel says 4,348 firms registered as potential subcontractors on its Website as of May 16, a month after the April 17 contract award. About 35% are based in the U.S. and another 25% in the U.K. Bechtel’s designated supplier portal Website for prospective suppliers and subcontractors recorded some 87,000 visits in its first month. The "intense interest will translate into intense competition," says Elkins.

Bechtel officials expect that about 5,000 companies will meet prequalification requirements. That list will be reduced to about 1,000 firms for project-specific consideration. Once their financial information has been evaluated, they will be invited to bid on specific subcontracts. "Only responsive and responsible bids will be considered," says Elkins. All subcontracts will be awarded on a fast track, and comply with U.S. government procurement rules.

About 90% of the work will be subcontracted, says Clifford G. Mumm, Bechtel’s program manager for the Iraq contract. Those subcontracts will not be large, he says. Many will be for under $1 million and the largest will be for about $30 million, he adds. Jobs are small because work across the country is "very different in nature," explains Lindsey Holbrook, Bechtel’s London-based manager of engieering. "It doesn’t lend itself to large contracts." Bechtel officials expect that roughly $600 million in subcontracts will be awarded by August.

Mumm also told potential subcontractors that Iraqi labor will perform at least 98% of work. He urged interested companies to make connections with Iraqi firms because Bechtel would not make those introductions. Many western and eastern European firms are already in Kuwait and Iraq, making those connections, Mumm said. Bechtel expects to post contact information for the Iraqi contractor association on its Website.

Typical subcontract work involves activities such as patching bridge decks and replacing doors in buildings, says Elkins. Airport rehabilitation focuses on avionics equipment. The only substantial element of the program will be renewing Iraq’s high-voltage transmission system. With subcontractors needing to be self-sufficient and responsible for their own procurement and security, such small foreign jobs would normally not attract major attention, agree executives. But some firms see beyond this project, knowing that it will take more time and money to rebuild the country’s battered and neglected infrastructure.

For Japan’s Marubeni Europe plc, rebuilding "is the entry" to Iraq, says Yoshio Hiro, its London-based general manager. The firm wants to return to work in the region but must still recoup payments owed since the first Gulf War. Similarly, Black & Veatch Consulting, Redhill, U.K., plans to resume its long connection with Iraq’s water sector. "We always had a very good relationship with our clients," says James Wilson, business development manager. Work now "seems to be very bitty, but we are looking very much to the long term."

Some firms might bid contracts at a loss just to a get a market toe-hold, suspects Haluk Bilgi, executive vice president of Tepe Group, Ankara. Having flown to London from Turkey, he was disappointed by the scale of available work. Bilgi also worries that Bechtel will select known partners rather than conduct a costly search through long lists of new names. "It will not be equal," he fears.

Other potential bidders see immediate benefits. Small-sized rehabilitation seems tailored to Thermal Energy Construction Ltd., Shardlow, U.K. Supplying specialist crews to work on powerplant cooling equipment, "no job is too small," says Peter Mason, its business development manager. Chris McDonald, sales general manager at Mitsui Babcock Ltd., Renfrew, Scotland, sees potential mainly in powerplant rehabilitation. "The fact that lights stayed on during the war means that powerplants are in reasonable shape," he says.

But Iraqi engineers in London complain they feel ignored, mostly because the rebuilding program is run under U.S. law and Arabic is not accepted for registration on the Bechtel Website. "We want to be consulted," says Emad Al-Ebadi, who runs a small U.K. construction firm. He claims to be among a network of hundreds of Iraqi professionals in the U.K., linked with a similar group in Iraq, wanting to help shape his country’s reconstruction.


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