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Government promises `open competition' on Iraq contracts

ARLINGTON, Va.—Hundreds of companies hoping to get slices of the $18.6-billion Iraq reconstruction pie were promised Wednesday that there would be "full and open competition" for the contracts.

But many of the participants in a daylong federal government conference felt that the structure of the bidding continues to favor the big players in federal contracting, such as Houston-based Halliburton Co. and the San Francisco-based Bechtel Group Inc.

The federal government was criticized for awarding the initial Iraq reconstruction contracts under limited or no bidding to a few companies. One of those contractors, Halliburton, has close ties to the Bush administration. Officials justified the restricted bidding on the need for speed and confidentiality in the early stages of war planning.

The government plans to funnel as many as 2,000 individual projects—from building power plants to fixing bridges—through roughly 25 major contracts that are to be awarded by Feb. 3, an unusually fast pace.

Unlike earlier Iraq contracts, which were restricted to American companies, the next round is likely to be open to bidders from any country in the coalition occupying Iraq, said David Nash, a retired Navy rear admiral who's overseeing the upcoming contracts.

"I'm looking for the very best in the industry," Nash told representatives of more than 650 companies who paid $200 to $300 to attend the sold-out conference at a hotel in Arlington, Va., a Washington suburb near the Pentagon.

A second conference is to be held Friday in London.

Bundling the work into large contracts may be the most efficient way to get the work started, but it also gives an advantage to larger companies with proven track records of running programs that involve dozens of separate projects.

While those large companies need subcontractors, they often stick with known partners. During a question and answer period, one small business owner wondered if the government could get the big companies to return his phone calls.

Outside the main conference room, the hot topic among many participants was whether any of the work would trickle down to them.

"They're really talking to 25 people up there," said Charles Walker, a vice president at Realm Industries Corp., a small Rockville, Md., firm that does building maintenance and moving and storage for several federal agencies. "And of the 25 contracts, three or four of them could go to a Bechtel."

But two officials from another small company, Mendelian Construction Inc. of San Francisco, were more hopeful.

Mendelian has spent nine years in a Defense Department program to help small businesses win contracts. Now it's angling to be a subcontractor to the Shaw Group Inc., a major pipeline company in Baton Rouge, La., that is expected to bid for work in Iraq.

"It does take time," said Edgar Quintero, the company's controller. "You're not going to just meet someone here" and win a contract.

Nash pledged that bidding on the coming contracts would be "full and open," and he placed high priority on what he called "proper execution" of the contracts.

"We are going to be watched very closely," he said.

Despite the challenges, the size of the reconstruction program was an irresistible draw for many firms.

"It's obviously a huge program," said Don Kammann, the business development manager in the Washington office of Heery International Inc., an Atlanta-based construction management firm. "It's grabbed everybody's attention."


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(c) 2003, Knight Ridder/Tribune Information Services.