Infotech and the Law: Reconstructing Iraq -- A primer on the contracting maze

Rebuilding Iraq is under way. The most ambitious nation-building program since the Marshall Plan in 1945, this effort will involve about $75 billion in expenditures. Much of the effort will focus on updating the country's technology infrastructure, and most of this money will be spent on contracts issued to the private sector.Understanding the technology needs in Iraq, the business opportunities to meet those needs and the evolving structure and funding of contracting activities is essential for companies wishing to play a role in this effort.Just last month, the World Bank and the United Nations published a "Joint Iraq Needs Assessment" on the reconstruction requirements. The assessment, which was divided along sector lines, identified a wide range of technology needs:While many technology firms may be able to offer products and services to fulfill these needs, few companies will be able to effectively navigate the waters in which the contracting activities will take place.Two distinct organizations are primarily responsible for issuing contracts for Iraq reconstruction efforts: the executive agencies of the U.S. government and the Iraq Coalition Provisional Authority, or CPA. The CPA is a temporary authority governing Iraq.The federal government has appropriated more than $20 billion for Iraq reconstruction. The departments of Defense and State are administering most of the contracts funded by these appropriations. The Commerce Department has established a comprehensive Web site at http://www.export.gov/iraq/ that provides information to American companies that want to participate in Iraq's economic rebuilding. Federal procurement laws and regulations govern U.S.-issued contracts.The CPA issues contracts and grants using monies in the Development Fund for Iraq, which contains approximately $2.8 billion collected from proceeds of oil and gas sales, frozen Iraqi assets, the U.N. oil-for-food program and other contributions. Business opportunities provided through the CPA can be found at http://www.cpa-iraq.org/business_center.html . Contracts issued by the CPA are not governed by U.S. law and regulation, but by CPA-issued procurement regulations and memoranda. While these acquisition rules are based largely on U.S. federal procurement principles, there are significant variations that are important for contractors to recognize. Additionally, the United Nations and the World Bank have established a Reconstruction and Development Fund Facility for Iraq, which includes a wide range of donors. The procurement rules governing these funds have yet to be determined.Technology companies accustomed to standard U.S. procurement practices should be flexible. Participating in this process will require adapting to security problems, geopolitical influences and the unpredictable wartime environment in Iraq. For example, the recently reported that American officials in Baghdad are offering contracts totaling hundreds of millions of dollars, but they are giving companies as little as three days to submit bids.Nonetheless, the reconstruction of Iraq is among the largest rebuilding efforts in history, and upgrading technology will play a substantial role for years to come. For businesses that choose to participate, the rewards may be well worth the effort. Robert Nichols is an attorney with Piper Marbury Rudnick & Wolfe LLP in Washington. His e-mail address is Robert.Nichols@piperrudnick.com.