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Usaid Awards Bechtel National Iraq Infrastructure II Contract

January 6, 2004

The U.S. Agency for International Development (USAID) announced today the award of a contract to Bechtel National, Inc. to undertake Iraq Infrastructure II, a program to rehabilitate and repair Iraq's infrastructure system. Bechtel is teamed with Parsons of Pasadena, California, and Horne Engineering Services of Fairfax, Virginia.

Under terms of the new contract, the Bechtel team will provide a major program of engineering, procurement, and construction services for a series of new Iraqi infrastructure projects, with work beginning in January 2004 and extending through December 2005, at a total value of up to $1.8 billion.  Bechtel had previously been awarded a reconstruction contract in Iraq by USAID in April 2003 that will extend through December 2004.

Announcement of the latest contract was made after a nearly three-month competitive process during which agency officials examined the bids and qualifications from competing firms.

"We are honored to have been selected to continue to help rebuild Iraq," said Bechtel National President Tom Hash.  "This award, made after an open, competitive process, demonstrates our customer's confidence in our team's capacity and commitment to quickly begin Iraq Infrastructure II work, while at the same time continuing work under our initial Iraq reconstruction contract."

Hash said Bechtel's new work will support both the Coalition Provisional Authority and USAID and will involve such major infrastructure sectors as electric power systems, municipal water and sanitation services, road networks and rail systems, selected public buildings, ports and waterways, and airports.  The new assignment also requires Bechtel to supply institutional strengthening support to Iraqi utilities and institutions.

Hash added that the company intends to build on its current goal of hiring the maximum number of Iraqi employees at all levels, of subcontracting to qualified Iraqi companies to the maximum extent possible, and of providing comprehensive training and work experience for Iraqi managers and their employees. Bechtel also has planned a significant program to include small businesses in the project.

Award of the Iraq Infrastructure II contract to Bechtel marks the company's latest involvement in the Middle East, a region of the world where it has been active for the past six decades. Since its arrival on the scene after the most recent Iraqi conflict in the spring of 2003, Bechtel and its subcontractors have already reopened the deepwater port of Umm Qasr to receive hundreds of thousands of tons of food and humanitarian supplies, refurbished 1,239 primary and secondary schools, restored reliable potable water service to the city of Safwan's 40,000 residents, and returned desperately needed electricity generation to pre-conflict levels.  In addition, Bechtel so far has awarded 122 subcontracts to 102 Iraqi companies out of a total of 162 subcontracts.

After the Gulf War, in 1991, Bechtel coordinated and directed a massive effort to rebuild Kuwait's energy infrastructure.   Although experts had predicted five years of environmental and economic ruin for Kuwait, Bechtel and its subcontractors extinguished the 650 oil fires in only eight months. In addition, Bechtel carried out the environmental cleanup and restoration of more than 400 miles of Saudi Arabian shoreline.

Bechtel also has a long work history with USAID.  The company has provided the agency with a wide range of services for a number of hydroelectric, power, and telecommunications projects over more than 40 years in various parts of the world, including the Middle East, central and eastern Europe, Asia, and Africa. Among the services provided have been construction, technical assistance, engineering, and in-country training for a number of energy projects.

Bechtel National is the government contracting arm of the San Francisco-based Bechtel group of companies, which has earned an unparalleled reputation for managing some of the world's largest, most complex, and hazardous projects.  During its 105-year history, the Bechtel organization has worked on 20,000 projects in 140 countries on all seven continents.

Parsons is a leader in many diversified markets, including transportation, facilities, industrial processes, communications, infrastructure, water, advanced technology, environmental, and planning. The company provides technical and management solutions to private industrial customers worldwide as well as federal, regional, and local government agencies.

Parsons has several years of reconstruction experience.  Most recently, the company teamed with USAID in the restoration of infrastructure and medical, education, and government facilities in Bosnia-Herzegovina and Kosovo. Parsons is providing program management and logistics support to the U.S. Army Engineering and Support Center, Huntsville, Ala., for the Captured Enemy Ammunition program at various sites in Iraq.  Parsons also has been working in Kuwait since the first Gulf War to restore and upgrade key energy facilities, a corporate headquarters, and development of an industrial campus in Ahmadi. For more about Parsons, please visit www.parsons.com.

Horne Engineering, an award-winning small business, is a technology and technical engineering solutions firm whose primary service areas are national security, energy and environment, and transportation. More information may be gained by visiting www.horne.com.

Additional information on USAID Web site.

Summary and Fact Sheet
Bechtel National Wins Competition For USAID Iraq Infrastructure II Contract
 
The U.S. Agency for International Development (USAID) has announced the award of a competitively bid contract to Bechtel National, Inc. to undertake Iraq Infrastructure II, a program to rehabilitate and repair Iraq’s infrastructure system. The contract is valued at up to $1.8 billion.  For a copy of the USAID announcement, see www.usaid.gov.
 
Bechtel is teamed on this new contract with Parsons of Pasadena, California (www.parsons.com), and Horne Engineering Services of Fairfax, Virginia (www.horne.com).  Parsons will focus on water and sanitation, and increase our team's capacity across all industry sectors. Horne Engineering will serve as the team's purchaser of major equipment.
 
Under terms of the contract, the Bechtel team will provide engineering, procurement, and construction services for a series of new Iraqi infrastructure projects, with work beginning in January 2004 and extending through December 2005. Bechtel was previously awarded a reconstruction contract by USAID in April 2003 that extends through December 2004.
 
Announcement of the new contract was made after a nearly three-month process during which agency officials examined the bids and qualifications from competing firms. 
 
Project Milestones:  Initial USAID Reconstruction Contract
 
Since April 2003, Bechtel’s work on the initial USAID Iraq Reconstruction contract has included several key milestones, including:   Port of Umm Qasr:  Bechtel has completed all major work -- including dredging, wreck removal, and grain facility rehabilitation -- at Iraq’s only deep-water port, enabling commercial use and entry of ships for delivery of critical food and humanitarian supplies to 22 million Iraqi citizens.
 
Buildings and Facilities:  Bechtel was assigned to manage the rehabilitation of 1,239 of Iraq’s schools in 14 urban areas. Initially completed by the start of the school year in October 2003, this work allowed more than 1 million Iraqi school children to return to class for the first time since the conflict.  Bechtel has also completed improvements to selected fire stations in Baghdad and is completing refurbishments to more than 50 clinics across Iraq.
 
Power:  Bechtel, working with other USAID and CPA contractors, restored electricity generation to pre-conflict levels of 4,400 megawatts per day, and is progressing toward the target of 6,000 megawatts by summer 2004.
 
Other: Significant progress has also been made in other sectors, including water and wastewater, roads and bridges, rail, telecommunications, and airports.
 
Iraqi Subcontracting and Employment:  As of mid-December 2003, Bechtel had awarded 122 subcontracts to 102 different Iraqi companies, out of a total of 162 subcontracts.  Bechtel has employed more than 35,000 Iraqis in a variety of reconstruction tasks.
 
Frequesntly Asked Questions
 
Q. Does the Iraq Infrastructure II contract replace Bechtel’s initial Iraq reconstruction contract?
A. The two contracts are separate. Each contract has its own scope of work and schedule:

  • Our initial contract is scheduled for completion in December 2004, while Iraq Infrastructure II will run from January 2004 through the end of 2005.

  •  Iraq Infrastructure II calls for engineering, procurement, and construction services, while the initial reconstruction contract focuses on emergency repair, rehabilitation, and reconstruction.

  • Iraq Infrastructure II targets a new set of infrastructure projects in these infrastructure sectors: power, water, and sanitation; surface transportation and buildings; and the Umm Qasr Seaport, waterways and airports. Our initial reconstruction contract required rapid, detailed assessments to identify emergency priorities followed by restoration of vital, basic infrastructure.

Q. Are the USAID contracts competitively bid?
A. Yes. Bechtel won the initial reconstruction contract and the Iraq Infrastructure II work after bidding competitively in accordance with all USAID and other federal regulations.  USAID judged each competitor on competence, performance, experience, and capabilities.
 
Many critics have confused these competitively bid contracts with the non-competitive award to Halliburton’s KBR unit by the U.S. Army Corps of Engineers.  These are two completely different contracts awarded by two different government agencies.
 
Q. Did politics play any role in award?
A.  These awards were made on merit, and are subject to scrutiny by several federal agencies.  USAID has stated that Bechtel had the best technical qualifications and one of the lowest prices in both competitions. More.
 
Q. What is Bechtel earning?
AThe vast majority of the funding is allocated for labor and procurement of equipment to implement the defined projects in each sector. These funds are paid to the subcontracted providers of services or equipment.  Most of the balance goes to operational costs, such as overhead and facility costs. In addition, Bechtel will earn a fee.  Fees are part of any contractor’s competitive bid, but are generally considered proprietary information not subject to disclosure. 
 
USAID, the Defense Contract Audit Agency (DCAA), and the U.S. Army Corps of Engineers all oversee Bechtel’s performance and costs.
 
Q.  Are you going to hire any subcontractors from non-coalition countries?
A.  We do not discriminate against companies from any nation, except those nations designated as embargoed by the U.S. Government or restricted by related laws or regulations, or on the U.S. Government list of Specially Designated Nationals and Blocked Persons or related lists.  Therefore, it is possible that companies from non-coalition countries may be awarded subcontracts.
 
Q. How do you select and vet subcontractors?  Is the process overly difficult for Iraqi applicants?  
A.  Potential subcontractors are vetted two ways. First, we clear subcontractors to ensure they are not on the Restricted or Excluded Parties Lists issued by the U.S. Government. Second, we look at a company’s past experience, financial strength, current workload capacity.  For construction subcontracts, we assess a bidder’s available equipment and key potential project team members. Also, for Iraqi firms we work to select firms located in the area where the work will be performed.
 
Iraqi firms that win contracts typically say the process was easy and those that have been disappointed often say the process is difficult. In fact, the qualification questionnaire consists of just a few pages in Arabic. This qualification process, which is the simplest in our history, requires standard information such as work performed, resources the company can provide, and other general information.
 

Q. What is the status of the Iraqi schools program?
A.  Bechtel managed the rehabilitation of 1,239 Iraqi schools. Bechtel’s assignment from USAID was to perform a standard set of repairs at each school, including cleaning and painting; repairing electrical and plumbing systems; replacing windows, doors, fans and other fixtures that were broken or had been looted; and fixing lavatories.  This work allowed more than a million Iraqi children to attend classes at the start of the school year. Some schools still need additional work, and appropriate repairs are being made without delay.
 
Some media reports have misreported information about our work in schools.  Bechtel has responded to these inaccurate reports: