This summer, officials in the U.S. Program and Contracting Office for Iraqi reconstruction concluded that one of its design/build contractors was not performing. The PCO formulated an alternative plan.

By late summer the U.S. government had negotiated an agreement with the Arlington, Va.-based joint venture, Contrack/AICI/OCI Archirodon, to leave Iraq in November. The design work for numerous projects in the transportation sector, including roadways, airports and bridges, was advertised in Iraqi newspapers and awarded to several Iraqi firms.

News of the firm’s departure from Iraq did not become public until earlier this month. But initial press reports that Contrack left because of security concerns are false, say PCO officials. “They didn’t do anything,” insists Charles W. Keller, PCO’s program management director.

Contrack and its joint venture partners, American International Contractors, Inc., Orascom Construction Industries and Archirodon, were awarded a prime contract on March 23, 2004, to oversee design of the transportation projects. The indefinite delivery/indefinite quantity cost-plus award had a value up to $325 million.

Contrack “never started a project,” claims Keller. “They were a blocker to getting anything done,” he adds.

But Contrack disagrees. "The contract was terminated for convenience," asserts Wahid Hakki, Contrack's vice president for U.S. operations. There was a mutual agreement with PCO that the costs were too excessive, Hakki says. If non-performance were the reason, the joint venture would have been in default, he adds.

Keller says Contrack was paid for its time in Iraq and for expenses as part of the agreement ending the contract. He declined to give an exact dollar amount. When asked why details of the failed contract were only now becoming public, Keller replied:

“When you have a bad apple in your family, do you stand up and announce it?”
Instead of one prime D/B contractor overseeing the entire transportation sector, PCO split the work among different firms for similar projects in a variety of sub-sectors, including airports, village roads, major roads, railroads, bridges and ports.

“We followed the Federal Acquisiton Rules,” says Keller. “We have tons of auditors over here, checking everything,” he adds.

Keller also notes that project costs under the Iraqi firms is significantly less than with the U.S. prime contractors. “The Iraqis don’t have the same overhead as the U.S. design/build firms do,” he adds. Officials are also hopeful that having an “Iraqi face” in a highly visible role will keep insurgents away.