Iraq Intelligence

U.S. restricts Iraq reconstruction contract bids to coalition members, 12/9/03

WASHINGTON—The Pentagon is restricting the bidding on $18.6 billion in Iraq reconstruction contracts to companies from nations in the U.S.-led coalition, shutting out firms from countries that opposed the U.S. invasion, including France, Germany and Russia.

Deputy Secretary of Defense Paul Wolfowitz, in a Dec. 5 order posted Tuesday on the Web site of the U.S.-led Coalition Provisional Authority, said the move "is necessary for the protection of the essential security interests of the United States."

The decision clearly was aimed at rewarding the 63 countries, including Iraq, that have contributed security forces, resources or political backing to the U.S.-led military coalition that is striving to stabilize Iraq in the face of a guerrilla insurgency.

The order set the ground rules for bids that for the first time will be open to foreign firms to compete for major contracts to rebuild Iraq's decrepit infrastructure. The Pentagon intends to award 26 contracts by Feb. 1 in an accelerated bidding process.

Previously, only American firms were given contracts. Some of those went to companies with strong ties to the Bush administration on a no-bid basis, raising some protests.

By restricting the bidding on the new round of contracts to firms from coalition members, the Pentagon is excluding those from dozens of other countries, including France, Germany and Russia, which previously had been among Iraq's major foreign trade partners. Under Wolfowitz's order, companies from non-coalition countries will be permitted to compete only for subcontracts.

The contracts will cover projects ranging from rebuilding electrical and water systems to reconstruction of military courts, housing, health-care facilities and oil industry infrastructure.

A U.S. defense official, speaking on condition of anonymity because of the sensitivity of the issue, insisted that Wolfowitz's decision was not retaliation against countries that opposed the invasion.

"It is not that there is a deliberate decision to exclude those particular countries," he said. "Since they have chosen not to become coalition supporters or members, they are not eligible. Should they change their positions they would be eligible to compete."

A European diplomat, who also requested anonymity, noted that France and Germany aren't the only European countries whose firms cannot bid. "They are excluding more than half of the European Union," the diplomat said. "So at first glance, it does not appear to be retaliation."

In his order, Wolfowitz was clear that the Bush administration is using the bidding process to bolster international support for the U.S.-led occupation and to ensure backing for any future use of force against regimes deemed threats to international stability and U.S. security.

"Limiting competition for prime contracts will encourage the expansion of international cooperation in Iraq and in future efforts," he said. "Coalition partners share in the U.S. vision of a free and stable Iraq. The limitation of sources to prime contractors from those countries should encourage the continued cooperation of coalition partners."

Wolfowitz noted that the number of foreign peacekeeping troops deployed in Iraq has risen since May from 14,000 to 23,700, while U.S. forces have decreased by about 12,000.


(Knight Ridder correspondent Ken Moritsugu contributed to this report.)


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