Non-American firms eligible for mega-deals

24 October 2003
Non-US firms are to be allowed to bid for US Army Corps of Engineers (USACE) reconstruction contracts for Iraq and Afghanistan worth up to $15,000 million over the next five years.

According to a pre-solicitation notice issued by USACE on 20 October, international construction firms, as well as US firms and joint ventures involving US firms, will be eligible to bid for contracts due to be tendered in mid-November.

USACE is planning to issue on 13 November a single tender for up to 10 five-year contracts, each worth up to $1,500 million. The contracts are worth up to $500 million in their first year and a further $250 million a year for four additional option years.

Officially, the contracts are for construction and reconstruction work, including design and build projects, in the US Army's Central Command area of operations, effectively the Middle East. But contractors close to USACE say the contracts will be for Iraq and Afghanistan. 'We have known about these for some time. It is our understanding that they are to be similar to the three contracts awarded in April,' says one.

On 1 April, USACE awarded three one-year indefinite delivery, indefinite quantity (ID/IQ) contracts for reconstruction work in Iraq and Afghanistan to Perini Corporation,the Washington Groupand Fluor Intercontinental - all of the US. These deals were originally worth up to $100 million each, but in early October had their contract ceiling raised to $500 million (MEED 10:10:03; 4:4:03).

The new contracts will supersede the three existing deals, which expire on 31 March, and Perini, Washington and Fluor are all likely to bid for the new contracts. Kellogg Brown & Root (KBR), which is one of three companies understood to be shortlisted for two $500 million USACE contracts to rebuild Iraq's oil infrastructure, is also likely to be among the bidders for the new deals.

USACE says contractors will be requested to submit bids for the new deals by 29 December and that it intends to make awards by 10 February.

The new USACE contracts could be administered by retired US admiral David Nash. Nash was recently appointed as Coalition Provisional Authority (CPA) director for infrastructure reconstruction and will have responsibility for the CPA's anticipated $17,000 million-20,000 million reconstruction budget. He has seconded about 10 people from the US' Michael Baker Corporationand The Stanley Group,which already work for USACE, to establish his new department.

It is unclear how the USACE contracts will affect the $1,300 million infrastructure reconstruction contract being tendered by the US Agency for International Development (USAID - MEED 3:10:03). On 20 October, USAID announced the closing date for bids had been extended by a week to 6 November. By 21 October, 160 firms had expressed interest in the contract. Surprisingly, the incumbent contractor Bechtelhad still to express its interest.

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