Award of US $2 billion Iraqi tenders delayed

The award of two major contracts to rebuild and maintain 22 oil fields in Southern and Northern Iraq has been postponed by the US government.

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By  Eudore Chand Published  December 30, 2003

The award of two major contracts to rebuild and maintain 22 oil fields in Southern and Northern Iraq has been postponed by the US government following an undisclosed review. In a highly unusual move, the tenders which are worth US$2 billion, have been taken out of the normal contracting process, thereby preventing the US Army Corps of Engineers from awarding the deals. News of the review followed allegations from a Pentagon audit agency that Halliburton, the construction giant run by Dick Cheney before he became the US vice president, appeared to have overcharged the US government by US$61 million for gasoline imported into Iraq. The review delays yet further the US government’s drive to award competitve contracts in Iraq, replacing the controversial no-bid deal awarded to Halliburton subsidiary, Kellog, Brown & Root in March for stopgap protection of Iraqi oilpipes and other infrastructure. The tenders covering the building and maintenance of 22 oil fields were originally due to have been awarded in August, with a maximum cost of US$1 billion. However, the contracts, the values of which has now doubled, are not now expected to be awarded until mid-January at the earliest. “The award is on hold, pending a review of the matter at the Pentagon,” said Scott Saunders, a spokesman for the Army Corps of Engineers. “It’s been elevated above the Army Corps of Engineers.” After an initial delay, the contracts were to be awarded in October, but companies were asked to resubmit amended proposals, as the continuing violence in Iraq had significantly affected the scope and value of the projects. The amended tenders have now been recieved, but the Army Corps refused to say when the contracts would be awarded. The Corps is also forbidden from revealing which companies have bid for the contractsm but it is understood that four firms have expressed an interest, including Halliburton. The other names mentioned included a joint venture between Fluor Corporation and AMEC of the UK, and one between Parsons Corporation and the Australian Worley Group. The Pentagon has not released details of the scope and timeframe of the review, or about who ordered it. Major Gary Tallman, a Pentagon spokesman, did say though, that the review was “in light of the report that came out from the Defense Contract Audit Agency” about Halliburton’s past work in Iraq. The review is a highly unusual step as contracts are normally handled by just the Corps of Engineers, a quasi-independent body. “In my experience, that’s very unusual, especially if the contracts have been advertised and the corps is well down the pipe toward making an award,” Hank Chase, a retired Navy commander who worked for 15 years as a Defense Department contracting officer told the Sacramento Bee. “The Army Corps has done hundreds of billions of dollars’ worth of work around the world for decades. Certainly, in naval and Marine construction contracting in which I worked, I have no memory of anything being pulled up to ATL [Office of Acquisitions, Technology & Logistics].”

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