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Bechtel National Inc. defeated two other contenders to win a follow-on contract worth as much as $1.82 billion from the U.S. Agency for International Development to rebuild electric power, water, transportation and other infrastructure in Iraq. Parsons Corp. will be a subcontractor to Bechtel on the two-year contract, which US AID Administrator Andrew Natsios announced Jan. 6 in Washington. It will cover an estimated $1.675 billion in construction across several sectors, but the projects and the priorities will be determined by L. Paul Bremer, head of the Coalition Provisional Authority, US AID officials said.
Bechtel continues to work in Iraq on a US AID infrastructure contract that has grown to $1 billion. The two contracts will overlap in time.
Tim Beans, director of US AID's office of procurement, said there were two other U.S. firms that bid for the job. But he wouldn't immediately release the names of those firms, saying they had to be notified and de-briefed first. Beans also declined release the value of their bids, except to say that Bechtel was rated highest in its proposed cost and its technical qualifications.
Natsios said that the agency followed the Foreign Assistance Act, which requires a U.S. firm to be the prime contractor. But the agency said that subcontracts could go to firms from any country except "restricted countries," including Cuba, Iran, North Korea , Libya and Sudan.
Beans said Bechtel's presence in Iraq didn't necessarily give the firm an advantage in bidding for the new contract. He said, "Bechtel had just as much chance to mess up as they did to do well."
Bechtel will receive funds to cover its costs plus an award fee of up to 10% of the costs, Beans said. He wouldn't immediately disclose what fee Bechtel proposed in its bid, but said, "I was very surprised at the reasonableness of Bechtel's fee."
Beans said that USAID ran the procurement for the contract. He said, "There was no influence whatsoever, either direct or indirect, on this contract process."
Natsios said all the contenders were asked to provide an estimated $1.675 billion worth of construction, divided as follows:
- $1.075 for the electric power sector
- $210 million for water and sanitation
- $109 million for surface transportation
- $90 million for buildings
- $50 million for further work on the Umm Qasr port
- $116 million for work on three airports
- $25 million for other items, including technical support
But those figures are only "guesstimates," Beans said. Officials said the exact mix of work and division of cost will be subject to Bremer's priorities.
The differences among the bid prices were due to how much each firm proposed for its overhead and fee, AID officials said.