The US Army Corps of Engineers plans to open for competitive bidding new contracts to repair and maintain existing Iraqi oil infrastructure that could be worth as much as $500 million or as little as $500,000.
But the Corps cautioned potential oil service contractors June 24 that there might not be much work left to perform under the terms of the proposal they plan to issue this month.
"It is anticipated at this time that there may be little work remaining," the Corps said. "The level of work to be accomplished has been and will continue to be influenced by external factors such as potential sabotage or looting, the speed at which the Iraqi oil companies are able to resume responsibility for the oil infrastructure operation, and the availability of funds required to execute repairs to the oil infrastructure."
The Corps intends to award one or two "Indefinite Delivery Indefinite Quantity" (IDIQ) cost-plus-fee 24-month contracts with three 1-year options, officials said. That will replace the noncompetitive contract for emergency services work related to the oil infrastructure that was awarded to Halliburton Co. unit Kellogg Brown & Root (KBR) by the Corps in March before the start of the war in Iraq.
KBR has performed about $235 million of work on a contract that could reach $600 million over a 2-year span. Under existing law the value of that contract could potentially climb even higher into the billions of dollars if the Pentagon asked KBR to expand its work duties. But given the political fallout of the existing KBR contract, that scenario is unlikely to happen, according to industry and government sources.
Instead, the Pentagon is expected to seek future bids on updating and expanding the oil infrastructure beyond war-related repairs. But at present the focus remains on restoring current facilities (OGJ Online, Apr. 15, 2003).
Military officials said they would prefer to award two contracts: one to support the northern oil company and the second to support the southern oil company, with no geographical overlap.
Corps officials said they expect to issue a formal request for proposals July 8, with proposals from interested companies due Aug. 14.
"Competition for this contracting action will be advertised as unrestricted. Companies from countries qualifying under the Trade Agreements Act and Balance of Payments Act, and companies from coalition members that are not qualified under the Acts are eligible to compete for the award," the Corps said. A preproposal conference will be held in Dallas on July 14.
The IDIQ contracts will cover a full range of services including but not limited to extinguishing oil well fires; environmental assessments and cleanup at oil sites; oil infrastructure condition assessments; engineering design and construction necessary to restore the infrastructure to a safe operating condition; oil field, pipeline, and refinery maintenance; procurement and importation of fuel products; distribution of fuel products within Iraq; technical assistance in marketing and sale/export; and technical assistance and consulting services to the Iraqi oil companies.
The existing Halliburton contract has been a political lightening rod from the start, with Democratic lawmakers alleging that the company received preferential treatment because Vice-President Dick Cheney used to be its chairman.
