Sue Pleming
Reuters
February 1, 2005
WASHINGTON - The United States is revising its $18.4 billion Iraq (news - web sites) rebuilding plan and in a major
policy shift will hand over some contracting power to Iraqi ministries for U.S.-funded work, said U.S. officials on Tuesday.
The changes, which could cut what some U.S. contractors had expected to earn in Iraq, reflect a new drive after Sunday's election to give Iraqis more control over reconstruction, lower the U.S. profile and curb spiraling security costs.
A senior State Department official said a "reallocation" of U.S. funds to rebuild Iraq should be completed in the next month and it was hoped this would be the final reshuffle of monies agreed by Congress in 2003 for Iraq's reconstruction.
"This is called being agile, responding to the conditions on the ground," said the official.
Last September, the State Department switched $3.4 billion in U.S. funds from water and power projects to boost security. In December, it shuffled nearly half a billion more to cover cost over-runs,
No decisions have been taken over which sectors will be touched this time but the $10.4 billion already obligated, or contractually agreed on, with U.S. contractors will likely not be greatly affected.
The remainder of the $18.4 billion earmarked for various sectors but not yet contractually tied up would
be touched first and companies promised large amounts of work in earlier contracts would likely not reach their top values.
This means construction and engineering giants such as Bechtel, Fluor, Parsons, Perini, Halliburton unit Kellogg Brown and Root
and others with prime deals in Iraq, will not make as much as they anticipated.
Officials conceded some companies might be disappointed, but pointed out others overwhelmed by security risks in Iraq could be
relieved. One firm quit at the end of last year.
"This has not been the golden egg people thought it was going to be," said one official, referring to the heady days when the U.S.
government staged roadshows for eager firms.
POWER TO IRAQIS
Insurgent attacks have stalled many giant U.S. funded projects and the U.S. focus in recent months has been to move away from
big-ticket, long-term deals to smaller ones.
Aside from more job creation for Iraqis, a new plan is to give ministries with a proven track record the authority to hand out contracts
using U.S. funds.
So far, big contracts have been awarded by U.S. government agencies which follow strict procurement rules that critics say are
ill-suited to a conflict zone like Iraq.
In the next few weeks, about $50 million of U.S. taxpayer money will be allocated to Iraq's Housing and Construction Ministry for
projects ranging from bridges to roads. Other ministries will follow if this pilot project is a success.
"The ministries will hire the contractors and supervise the work and the idea is it will have many benefits. Number one, they can do it
more cheaply and two, it will lessen the expatriate footprint and lower security costs," said the State Department's Iraq
reconstruction coordinator, Robin Raphel.
In a bid to curb abuse, the Pentagon (news - web sites)'s Iraq Project and Contracting Office (PCO) will be responsible for paying
Iraqi contractors chosen by the ministry.
Talks between the State and Defense departments have been animated over these plans, with some Pentagon staff nervous they
would be held responsible for mistakes made by the ministries. "We don't want to be the fall guys," said one defense official.
But PCO chief in Baghdad, Charlie Hess, said he was pleased with the new arrangement. "It's a logical step forward," he said. "One
criticism all along is that we have not done this fast enough and this will help," said Hess, speaking via telephone from Baghdad.
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Citation:
Sue Pleming, "U.S. Reviews Rebuilding, Gives More Power to Iraqis", Reuters, 01 February 2005. Original URL:
http://news.yahoo.com/news?tmpl=story&cid=564&u=/nm/20050201/ts_nm/iraq_rebuilding_dc&printer=1