As the war in Iraq advanced into its second week, Congress was moving swiftly on more than $75 billion to pay for the conflict, Iraq reconstruction and U.S. domestic security. At press time, contractors were waiting for the U.S. Agency for International Development to say who would win a $600-million reconstruction contract.

Sources say the competition for the 21-month USAID contract had narrowed to two firms: Bechtel Group Inc., San Francisco, and Parsons Corp., Pasadena, Calif. Parsons' bid is being supported by Halliburton Co.'s Kellogg Brown and Root unit as a main subcontractor. Halliburton confirms KBR did not bid as a prime contractor for the USAID job, but would not confirm or deny that it had bid as a subcontractor. "We remain a potential subcontractor for this work," says Wendy Hall, a Halliburton spokeswoman.

The contract was expected to be awarded by the end of March. As April began without a decision, an agency spokesman said, "It's a very complicated contract and there are a lot of legal issues that need to be worked out." There appeared to be some sticking points. One was whether the contractor will be indemnified for risks faced in Iraq. "The government is struggling with indemnification issues," says one construction executive. As a result, bidders added insurance costs to their proposals, he says.

Meanwhile, a Corps of Engineers contract with KBR to extinguish oil well fires in Iraq was raising controversy. The firm claimed in its announcement that it had significant experience in fighting oil well fires in Kuwait set during the 1991 Gulf War (ENR 3/31 p. 10).

But Terry Farley, former president of Bechtel Construction, which Kuwait Oil Co. hired to manage fire suppression then, indicates KBR and Halliburton may have overstated their role. The company "put out no fires–zero," in Kuwait, Farley says. Halliburton's Hall clarified the announcement, noting that 60 of the company's workers were on the scene then, including Jerry Winchester, who now works for Boots & Coots International Well Control, Houston, a KBR subcontractor in Iraq.

But the contract to put out oil well blazes may not be very lucrative for KBR and its parent. At press time, just two of the 600 or so oil wells in the Rumaila oil fields in southern Iraq remained on fire. A 23-person team from Kuwait Oil reportedly put out three fires before being joined by Boots & Coots. Older wells in the Kirkuk oil fields in northern Iraq were not on fire. There are more than 1,600 active oil wells across Iraq.


For DOD, the $62 billion Bush requested, but Congress added spending restrictions
For rebuilding Iraq, $2.4 billion in Senate committee version, an additional $50 million in House panel version
For homeland security, $4.2 billion in House bill, $4.6 billion in Senate's
For airport security, $375 million in Senate bill, $235 million in House bill
Sources: House, Senate Appropriations Committees

On Capitol Hill, congressional appropriators moved quickly to approve funds for the war, rebuilding and homeland defense by Bush's April 11 target. On April 1, House and Senate Appropriations Committees approved their versions of the spending package and added to Bush's $74.7-billion plan. The Senate committee approved $78.9 billion; the House panel, $77.9 billion. The major additions were aid packages for U.S. airlines. The House panel approved $3.2 billion in grants to reimburse airlines for security expenses. In the homeland security part of the bill, the House committee also provided airports $235 million for costs of installing baggage-screening machines. The Senate panel's $3.5-billion airline aid includes $375 million for airport security operating and capital expenses.

Both committees included the $62.4 billion Bush sought for the Dept. of Defense. But they balked at Bush's proposal to put nearly $60 billion of that in a "Defense emergency response fund" that DOD could use for various purposes. Instead, lawmakers specified how much could go for personnel, operation and maintenance and other uses.

Appropriators topped Bush's $3.8-billion request for homeland security, with the House committee allocating $4.2 billion and the Senate panel $4.6 billion. But the top Senate Democratic appropriator, Robert C. Byrd of West Virginia, plans a floor amendment seeking $9 billion more for homeland security.

For Iraq reconstruction, Senate appropriators approved Bush's $2.44-billion request, but added reporting requirements. The House committee boosted Bush's proposal by $50 million.

European firms are hoping to take part in Iraq reconstruction but many don't anticipate major roles. British engineers don't see an Iraqi construction boom, but are keen for fair competition, says Colin Adams, CEO of the British Consultants and Construction Bureau. He says firms "are trying to get the U.K. government itself to give some kind of kick-start support for British companies."

German contractors, which operate mainly through local subsidiaries, are "not so eager as 20 years ago about the Middle East," says Frank Kehlenbach, director of Germany's contractors' association, Hauptverband der Deutschen Bauindustrie. In Iraq, he says, "As long as USAID will provide $1 billion, and the German government will not be involved in financing, we don't see much chance."

Some European countries' lack of support for the U.S. campaign in Iraq is clobbering sales of U.S. manufacturers and distributors with European ties, especially to France and Germany. "Contractors have told us point blank, ‘We're not buying a French product,'" says Alastair Robertson, sales manager for Haulotte U.S., Baltimore, a subsidiary of Pinguely-Haulotte, L'Horme, France. "We've got a lot of American components in our machines, but we're really getting hammered about being French."