Bechtel Bid Under Scrutiny

Iraq. A soldier from the United States 173rd Airborne stands guard at one of the refineries at the Baba Gurgur oil field in Kirkuk, Iraq Thursday, April 17, 2003. Local officials say they can have the facility operating soon, but looting seriously hampered employees' ability to come back to work.
AP
Bechtel Corp., a politically active corporation with wide experience overseas, has won a competition to help rebuild Iraq under a contract that could grow to $680 million.

The San Francisco construction and engineering company will receive $34.6 million to start work under Thursday's award, but could earn the larger figure over 18 months if Congress approves the funds.

Several Democratic lawmakers have criticized the fast-track bidding process that allowed only a few experienced companies to submit proposals. The U.S. Agency for International Development has controlled the bidding, saying speed was essential to meet Iraq's pressing postwar needs.

The contract covers rehabilitation of Iraq's power, water and sewage systems, rehabilitation or repair of airport facilities and dredging, repair and upgrading of the Umm Qasr seaport in cooperation with other contractors.

Bechtel also may have a role in repair and reconstruction of hospitals, schools, selected government ministry buildings, irrigation facilities and transportation links.

The company has wide experience working overseas, with 47,000 employees on 900 projects in nearly 60 countries.

Sen. Ron Wyden of Oregon, one of the Democratic critics, said the contract showed that "a troubling pattern is beginning to emerge, as some of the most powerful business interests in the country continue to receive these huge contracts without ... open, transparent bidding."

Wyden and others are sponsoring a bill that would require a public explanation of contracts awarded under a limited bidding process.

Other companies invited to bid were Parsons Corp.; Fluor Corp.; Louis Berger Group Inc.; and Washington Group International Inc. A subsidiary of Houston-based Halliburton Co., which was formerly run by Vice President Dick Cheney, was invited to bid but decided instead to seek work as a subcontractor.

Bechtel rose from a family business into a privately held international engineering powerhouse. Its executives have included former Secretary of State George Shultz and ex-Defense Secretary Caspar Weinberger.

More recently, President Bush named Ross Connelly, a former Bechtel executive, as executive vice president and chief operating officer of the Overseas Private Investment Corp. — the agency that supports U.S. investment around the globe.

Shultz, in a television interview, said, "Bechtel, by its track record, will do an excellent job."

The Bechtel Group and its employees have been among the biggest political givers in the general contracting industry, according to an analysis by the Center for Responsive Politics, a nonpartisan Washington-based group that tracks campaign finance.

The company and its workers contributed at least $277,050 to federal candidates and party committees in the last election cycle, about 57 percent to Democrats and 43 percent to Republicans, the center found.

Bechtel gave at least $166,000 to national Republican Party committees, center figures show.

The San Francisco Chronicle reported in January that Bechtel and at least one other U.S. company sold Iraq technology that helped build up its military in the 1980s.

The story attributed the information to a German journalist with access to a document on Iraq weapons that was turned over to the United Nations.

Bechtel spokesman Jeff Berger said it was "absolutely false" that the company aided the Iraqi military. The company worked on two projects in Iraq in the 1980s: a hydroelectric dam and a petrochemical plant that was to make "garden variety" products including plastics and synthetic rubber, Berger said. The plant was still under construction when Bechtel's involvement ended.

Bechtel and Parsons jointly ran the costly and controversial Big Dig highway project in downtown Boston. Audits determined that Bechtel overbilled the state of Massachusetts by $2.4 million by 1992, then underbilled by $1.4 million from 1994 to 1996, on the total $14.6 billion project.

Other lucrative contracts for postwar Iraq have been awarded to firms with powerful political connections.

A $7 billion contract to cap oil fires in Iraq was awarded to Kellogg, Brown, and Root — a subsidiary of Halliburton, the company once run by Cheney.

The Army Corps of Engineers sealed the deal without seeking bids from other companies, prompting calls from some in Congress for an investigation, reports CBS News Correspondent Jim Acosta.

In a letter to House Democrat Henry Waxman of California, who's called for a probe into the deal, the army denies any wrongdoing, arguing an open bidding process "would have delayed…war-planning in order to obtain security clearances for potential competitors."