YEAR-END REVIEW TO U.S. CONGRESS: IRAQ INFRASTRUCTURE RECONSTRUCTION PROJECT

Bechtel has completed all major work — including dredging, wreck removal, and grain facility rehabilitation — enabling commercial use and entry of deep-draft ships for offloading of critical food and humanitarian supplies to 22 million Iraqi citizens.
Buildings and Facilities
 
Under its USAID contract, Bechtel was assigned to manage the rehabilitation of 1,239 of the most dilapidated of Iraq’s schools in 14 urban areas. Initially completed by the beginning of the school year, this work has provided more than 1 million Iraqi school children with a greatly improved learning environment. 
 
Bechtel awarded this work to Iraqi subcontractors, each of whom then employed and managed several smaller specialty trade subcontractors. At the program’s peak, more than 30,000 skilled and unskilled Iraqi laborers were working simultaneously at more than 1,100 sites throughout Iraq. At the end of the initial program, the work was inspected and accepted by the U.S. Army Corps of Engineers on behalf of USAID.
We are proud that we were able to accomplish this uniquely challenging program in less than three months. An article in the December 22, 2003 issue of Engineering News-Record (ENR) said, “A USAID spokeswoman notes that Bechtel had a specific scope of work, and under a tight deadline, performed extremely well. She says the work is under warranty, and if additional work is needed, subcontractors are responsible for correcting what needs to be done under the original job order.”
 
We are now engaged in an ongoing process of soliciting and resolving concerns that have been brought to our attention related to a small number of schools. Only 2 percent of the Bechtel program schools have required additional work. Inspections are being performed or have been scheduled and appropriate repairs are being made at these schools.
 
Our subcontractors’ work carries a one-year warranty, during which time the subcontractors are responsible for correcting faulty materials and workmanship, at no additional cost to the taxpayer. In addition, we have withheld 10 percent of our subcontractors’ payments to ensure that they complete any necessary follow-up work.
 
Bechtel has also completed improvements to selected fire stations in Baghdad and expect to complete refurbishments to over 50 clinics across Iraq by the end of 2003.
 
Power
 
Bechtel, working with other USAID and CPA contractors, restored electricity generation to pre-conflict levels of 4,400 MW pers day, and is progressing toward the target of 6,000 MW by summer 2004.
 
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, Bechtel had awarded 122 subcontracts to 102 different  Iraqi companies, out of a total of 162 subcontracts — exceeding our goal of subcontracting 70 percent of our work to Iraqis. Bechtel has employed more than 35,000 Iraqis in a variety of reconstruction tasks. 
We will continue to provide information on our work on our Web site, in reports to USAID, and in many other ways. Please feel free to contact me with questions or to discuss any aspect of our work in Iraq.
 
Best wishes for a Happy Holiday to you, your family, and your staff,
 
Robert H. Ragan
Principal Vice President and Manager, Bechtel Washington Office.