Bechtel cleared to subcontract reconstruction

0 Comments | Oakland Tribune, Jul 30, 2003 | by David Streitfeld, Los Angeles Times

Federal officials have approved Bechtel Group's blueprint for Iraq reconstruction, making restoration of electric power the top priority in a $680 million budget that authorities concede will just scratch the surface of what needs to be done.

The spending plan, approved last week by the U.S. Agency for International Development, clears the way for Bechtel to hire subcontractors to do everything from repairing bridges to fixing schoolroom toilets.

"The money is now spoken for," said Cliff Mumm, Bechtel's project director in Iraq. "We're moving ahead to implementation."

About one-third of the money, $230 million, is devoted to restoring electrical power. The spending plan also earmarks $53 million to repair 1,300 schools and health clinics, and sets aside $45 million for water purification and sanitation.

Ross Wherry, USAID's senior reconstruction adviser, said the $680 million that the agency awarded Bechtel under an 18-month contract April 17 is "just enough to get the country rolling again." While Bechtel has awarded some subcontracts on an emergency basis during the past three months, the implementation plan covers the bulk of the work and the money.

Under the rebuilding budget, about $50 million will be used to make airports operational, while $30 million will be spent fixing bridges. An unexpected drain on the budget was $50 million for a telecommunications backbone, deemed essential by coalition authorities at the last minute. The budget also includes $45 million to reopen the deep-water port at Umm al Qasr, much of which has already been spent.

San Francisco-based Bechtel, the largest construction and engineering company in the United States, will get $80 million to cover its administrative costs.

The process of deciding where the money should go, Wherry said, was akin to emergency-room triage, when doctors and nurses choose whom to focus their efforts on, depending on the severity of their injuries and their chances of survival.

"We passed the various needs through a sieve of how much does it cost, how much can be done, and how do we get the most benefit for the most Iraqis quickly," Wherry said.

Ultimately, it will take billions of dollars to repair and replace the Iraqi power plants. In the meantime, Bechtel is concentrating on getting power to Baghdad homes as well as some industrial plants in the city. The loser in this calculation is the "Sunni triangle," north and west of the capital, the part of Iraq most loyal to deposed leader Saddam Hussein. Until order is restored, Bechtel considers the area too dangerous for repair crews.

Looting also influenced decisions about reconstruction. In May, Mumm flew over the main power transmission line on the eastern side of Iraq, which runs from Baghdad to the southern city of Basra. Thirteen power-line towers were down. A couple weeks later, he flew over it again. This time, 65 towers were down, and looters were burning the transmission cables to harvest the copper wires. The latest count this month showed 80 towers felled.

"It's slowed down," Mumm said by phone from Baghdad. "But instead of relying on the grid, because they were systematically taking the grid down, we're recommending point generation." That means putting diesel generators in critical facilities such as waste-treatment plants, where the power source can be guarded.

Most of the damage, however, wasn't due to the war or sabotage, Mumm said.

"It was years and years of neglect. All the money was skimmed off. It was a serious thugocracy. Take the water in the south: It's just absolutely contaminated. None of the water-treatment plants are working. In fact, some of the tanks were being used for diesel storage."

As for the schools, "there were no windows, the toilets were backed up, the walls were coming down, there were no lights. I don't know how these kids were learning anything," he said.

At the height of the assessment period in May, 76 Bechtel employees were kicking the tires on the entire nation, an enterprise with little precedent. They visited 20 power plants, rat-choked grain elevators and a large sampling of schools.

By last month, the assessment reports were filling up file cabinets. Bechtel summarized them for USAID in one thick binder and then followed up June 25 with a much briefer implementation plan. Last week, the agency approved the plan with no major modifications.

Bechtel is hiring Iraqi companies to rebuild the schools. Originally, it expected to hire other multinational companies that would hire Iraqis as laborers. The hope of getting some of the work led nearly 9,000 companies, most based in the United States or Britain, to register on Bechtel's Web site.

Instead, Bechtel is cutting out the middlemen. Of the 11 subcontracts Bechtel awarded in the first half of this month, 10 went to Iraqi companies. The sole exception was a British company.

"There isn't a Yellow Pages to go look up Iraqi companies, but this is obviously the way to get the most bang for the buck," Mumm said. He noted that it's also politically expedient: "The Iraqis were pretty adamant that they'll rebuild Iraq. The big issue is not finding capability, it's finding equipment."