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U.S. to Boost Bechtel's Iraq Reconstruction Contract

Faced with escalating costs and continued instability in Iraq, U.S. officials in Baghdad have decided to boost Bechtel Group Inc.'s postwar reconstruction contract by $350 million, or more than 50%, The Wall Street Journal reported Thursday.
U.S. to Boost Bechtel's Iraq Reconstruction Contract

Thursday, August 28, 2003 12:34 AM ET

"San Francisco-based Bechtel was originally awarded an 18 month, $680 million contract for Iraqi reconstruction work... Andrew Natsios, the head of the U.S. Agency for International Development, promised that no additional taxpayer money would go into the Bechtel contract beyond the $680 million ceiling."

"According to a funding document from the U.S.-led Iraqi provisional authority, however, U.S. officials recently decided that Bechtel requires the additional $350 million "to maintain momentum in high-priority infrastructure projects.""

Faced with escalating costs and continued instability in Iraq, U.S. officials in Baghdad have decided to boost Bechtel Group Inc.'s postwar reconstruction contract by $350 million, or more than 50%, The Wall Street Journal reported Thursday.

The decision to steer additional funds to Bechtel is the latest sign that the Bush administration has seriously underestimated the cost and complexity of rebuilding Iraq. Although the U.S. plans a dramatic push for new reconstruction funds -- part of what one U.S. official said will be a $2.75 billion emergency budget request for Iraq next month -- the administration remains vague on what the overall project is likely to cost.

The new Bechtel money, which could be turned over within days, is part of at least $1 billion the U.S. hopes to pour into Iraqi power generation alone over the next year. U.S. officials and Bechtel assessment teams now estimate Iraqi reconstruction will cost at least $16 billion and likely much more. L. Paul Bremer, the top U.S. official in Iraq, has said that the costs of rebuilding Iraq and revitalizing its economy could top $100 billion.

San Francisco-based Bechtel was originally awarded an 18 month, $680 million contract for Iraqi reconstruction work on airports, water, power, schools, roads and government buildings. After business rivals and some legislators criticized the limited competition involved in that award, Andrew Natsios, the head of the U.S. Agency for International Development, promised that no additional taxpayer money would go into the Bechtel contract beyond the $680 million ceiling.

According to a funding document from the U.S.-led Iraqi provisional authority, however, U.S. officials recently decided that Bechtel requires the additional $ 350 million "to maintain momentum in high-priority infrastructure projects." Mr. Bremer approved the new projects on Aug. 20, according to the document.

Yesterday, an AID spokeswoman said that "security conditions" had evidently led Mr. Bremer to lift the limit and give more work to Bechtel. The additional $ 350 million will come from what's left of a $2.5 billion Iraq reconstruction fund Congress approved early this year.

U.S. officials also said they are willing to consider sharing responsibility for security with a United Nations-backed multinational force as long as it was under American command.

Possibly within weeks, the Bush administration plans to put out for bids a new contract for follow-on work in Iraq that could be valued at well over $2 billion, according to administration and congressional sources. The contract would focus mainly on power and water work.

Congress has pressured the administration to open any additional Iraq work to competition and not simply to stick with the same contractors.

Michael Kidder, a Bechtel spokesman, said there have been "informal discussions" in Baghdad on the need for new funding but added that "we have not received any formal notification of additional work in Iraq."

Wall Street Journal staff reporters Neil King, Jr. and Simeon Kerr contributed to this article.

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wanna make some cash? 30.Aug.2003 07:27

this thing here

first, get really big. second, make sure your board and corporate management are staffed with former political leaders. third, use the connections to win government contracts. fourth, make sure the contracts are a specific kind: no-bid open ended. and the mullah will come rolling in. more mullah than you can possibly imagine... all of it taxpayer mullah too. if i was bechtel and halliburton/kbr, with a no-bid open ended contract, i would be hoping for lots more never ending instability and car bombings in iraq, because that would simply increase the time span of my contract, and in this case the longer the time span, the longer the string of zero's at the end of the final profit report. government and big business - the best business racket partners man ever created...