- The Washington Times - Tuesday, July 1, 2003

Postwar looting and sabotage in Iraq has about doubled the cost of reconstruction so far, and security remains a pressing concern for private companies in the country, a top U.S. reconstruction official said yesterday.

“This was systematic pillaging of infrastructure,” said Thomas Wheelock, infrastructure project manager for the U.S. Agency for International Development, the State Department agency that is part of the U.S. government’s effort to restore Iraq’s economy and political system.

Mr. Wheelock, speaking yesterday at a USAID briefing in Washington, has been in the Middle East since mid-March to help oversee USAID’s efforts to restore power, sewerage, water, phone and road systems, and repair public buildings, such as medical clinics and schools in Iraq.

To overcome continuing theft and undoing of reconstruction work, Mr. Wheelock said, the U.S.-led Coalition Provisional Authority, which is the ultimate authority in Iraq, is considering a plan to allow individual government ministries to establish and arm security forces. The forces, staffed by Iraqis, would guard specific buildings or facilities.

They also plan to increase involvement of Iraqi companies and individual workers in the reconstruction process.

Bechtel Group, winner of a $680 million USAID contract to rebuild Iraq’s basic infrastructure, is tapping largely local companies for a $53 million project to repair medical clinics and schools, Mr. Wheelock said.

About half of Bechtel’s subcontracting work, more than $300 million, is expected to go to Iraqis, USAID and Bechtel officials estimate.

“It is very much a goal of ours to use as much Iraqi labor and as many companies as possible in the reconstruction effort,” said Howard Menaker, a spokesman for Bechtel.

Iraqi companies have expressed strong interest in the work. More than 1,000 companies turned out for a mid-June conference in Baghdad where Bechtel explained subcontracting opportunities.

The strong push to hire locally means that Iraqi reconstruction will not be a “gold mine for foreign companies,” Mr. Wheelock said.

Five Iraqi companies have won six subcontracts from Bechtel, according to information on the company’s Web site. Bechtel has awarded 34 subcontracts, though the Web site does not list a dollar figure for them and company officials would not disclose more detailed financial information.

Defense Secretary Donald H. Rumsfeld said Monday that the coalition authority is working “to get Iraqis engaged in aspects of that [reconstruction] process. The sooner that happens, in my view, the greater the likelihood that the people of Iraq will feel a stake in what’s taking place.”

Meanwhile, firms are trying to go about their business despite the security environment.

Companies supply their own security but rely on the U.S. military for a “permissive environment,” Mr. Menaker said. The security environment had not prevented Bechtel from doing work, though looting has presented setbacks.

“It definitely posed an issue for us during the assessment phase. We would show up to a facility, assess what needs to be repaired, then return later and realize equipment was gone. But I think it’s coming under control,” he said.

At a USAID briefing late last month, one contractor said the situation was “extremely fluid, and because it’s fluid, it’s dangerous.”

“Everywhere, pilfering, theft against public property still exists, and is difficult to contain law and order,” said Frank Dall, a senior associate at Creative Associates International, a Washington-based company that won a contract worth as much as $62.6 million to help ensure that schoolrooms are ready to open in the fall.

“It is an overwhelming issue, but it doesn’t stop the work. We’re making progress,” said Steve Horblitt, spokesman for Creative Associates.

USAID has awarded eight contracts to private American companies, worth as much as $995 million. Private companies are competing for two additional contracts that, when awarded, would wrap up the first phase of private-sector awards for work in Iraq.

The reconstruction bidding process proved contentious because a limited number of companies were invited to bid and Bechtel, a contractor with ties to the Republican Party, won the biggest of the awards.

Future reconstruction awards will be bid competitively, and current contracts will not be extended nor expanded, a USAID official said last month.

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