The opportunities in rebuilding Iraq

As the war in Iraq draws to a close, the U.S. Agency for International Development is ramping up efforts to rebuild and modernize that country's infrastructure with projects that likely will include business for IT integrators. "In post-battle Iraq, the opportunities will be awesome," said Louis Ray, president of Matcom International Corp., Alexandria, Va. Ray pointed to building cellular and land-line telephone networks as examples. "I see this area as being a major growth area for our industry."USAID has about $541 million on hand to spend in Iraq, including money for assisting refugees and distributing food and water. Some of the money, according to budget documents, will go to contracts for reconstruction efforts. In addition to these contracts, President Bush submitted in March a wartime supplemental budget request to Congress that included $3.5 billion for rebuilding Iraq. Retired Army Lt. Gen. Jay Garner, director of the Office of Reconstruction and Humanitarian Assistance, has been tapped to coordinate these efforts.Ultimately, the cost of the rebuilding effort may be even higher than President Bush's estimate, said Dale Neugebauer, chief of staff for Rep. Darrell Issa, R-Calif. Issa has introduced legislation to allocate as much of the rebuilding money as possible to U.S. contractors. Not surprisingly, IT integration companies are watching this space closely. Sysorex Federal Inc., Vienna, Va., a division of Sysorex Consulting Inc., Mountain View, Calif., has opened an office in Saudi Arabia and plans to pursue the rebuilding work, especially those projects that require wireless communications, said Nadir Ali, company president. Another company watching for opportunities is BearingPoint Inc., McLean, Va. Its recent win from USAID to foster economic growth in Afghanistan points to the skills it could provide in Iraq. On March 27, the integrator won a three-year, $39.9 million contract to help the Afghan government implement policy and institutional reform measures for economic development. "The Afghanistan project is a comprehensive, economic, government reform program. It is to enable an infrastructure for effective government and longer-term private-sector growth," said Darwin Johnson, a senior vice president who leads BearingPoint's international public services group. The integrator will help the country improve its budget planning, revise its tax and trade policies and set legal and regulatory frameworks for a market-based economy. It has provided this sort of assistance for about 60 countries, Johnson said."I would expect that, in the areas in which we work, we would be very favorably disposed to the reconstruction and reform effort in Iraq," he said. The war already has boosted business for many providers of commercial satellite capacity and services, but some expect the rebuilding effort to spur even greater demand. Military personnel and relief workers coming in to rebuild the country will need telephone communications, and may not find existing lines working because of war damage, said Mac Jeffery, spokesman for satellite phone firm Globalstar LP of San Jose, Calif. Ray Bjorklund, vice president of consulting services for the market research firm Federal Sources Inc., McLean, Va., said opportunities to support possible military occupation in Iraq may arise as well. Already, the Army Corps of Engineers has awarded three $100 million contracts to companies that will support U.S. Central Command operations. Central Command is the Defense Department organization overseeing the military actions in Iraq.Winning contracts were Washington Group International Inc., Boise, Idaho; Fluor Corp., Aliso Viejo, Calif.; and Perini Corp., Framingham, Mass. The contracts are worth a minimum of $500,000 and have a $100 million ceiling over one year.Central Command will use the contracts for construction and short-term operations and maintenance. The contracts are not exclusive to Iraq, but can be used for needs in any parts of Central Command's geographical purview.USAID has awarded four of the nine requests for proposals that have been issued for rebuilding activities in Iraq. The initial RFPs are not specifically for information technology, but the winning contractors likely will rely heavily on IT for infrastructure and support functions, said USAID spokesman Harry Edwards.The first contract, worth $7 million over three months with two one-year options, went to International Resources Group of Washington Feb. 7. The company will set up and staff offices for USAID to improve the health, education and other government systems, said Cynthia Pflugh, an IRG spokeswoman.Stevedoring Services of America, Seattle, won a seaport administration contract from USAID, worth about $4.8 million to assess and manage the Iraqi port at Umm Qasr.Creative Associates International Inc., Washington, won a $2 million contract April 11 to implement USAID's program for primary and secondary education. The program's goal is to get Iraq's schools ready for students by September.Research Triangle Institute won a $7.9 million contract to promote Iraqi participation in reconstruction. The institute, based in Research Triangle, N.C., will create programs to increase management skills, knowledge and capacity of local administrators to run services such as water, health and public sanitation.Contracts still to be awarded include airport administration, capital construction, logistical support, public health and the Iraq Community Action Plan.The capital construction contract likely will be the largest, Edwards said. Industry sources said an early round of elimination has left two companies in competition for this contract, which is potentially worth about $900 million: Bechtel Group Inc., San Francisco; and a team of the engineering firm Louis Berger Group Inc., East Orange, N.J., and Kellogg, Brown and Root, a subsidiary of the oil field services provider Halliburton Co., Houston. Bechtel spokesman Larry Miller declined to say whether the company has assembled a team, but he did say Bechtel has a large IT component within the company itself. Edwards declined to give a time frame for when awards would be made. While the RFPs are posted on the USAID Web site, they are not open to all bidders. Only those companies that were invited to bid could submit proposals, Edwards said.This closed bidding process has generated controversy. "We don't know the exact reason for the prequalification criteria," said Bill Carroll, a government contracts attorney for Dykema Gossett Pllc, who also teaches government contract law at American University in Washington. "I would tend to say it wasn't an unreasonable decision, but it was one that invited unnecessary controversy."USAID has responded to criticism on its Web site at http://www.usaid.gov/press/releases/2003/fs030411.html by saying the contracts were done in accordance to Federal Acquisition Regulation rules, which apply to federal procurements. Restricting bidding on the proposals may have been done to speed the contract process and keep leakage of sensitive government information to a minimum, Carroll said. But it also has a negative effect of not allowing smaller companies to pitch their services as subcontractors."If a potential subcontractor knew the full scope of the work that was to be undertaken, it would submit a capabilities statement. How strong can you make that when you don't have the full picture?" Carroll said. *Staff Writer Joab Jackson and Senior Editor Nick Wakeman can be reached at jjackson@postnewsweektech.com and nwakeman@postnewsweektech.com.