By OGJ editors
WASHINGTON, DC, Dec. 10 -- The Pentagon Tuesday said it is excluding Canada, Germany, France, Russia, and China from US contracts to rebuild Iraq's oil sector and other critical infrastructures because of "essential" national security concerns.
US Deputy Secretary of Defense Paul Wolfowitz Dec. 5 signed a list of approved countries that can participate in 26 identified contracts, potentially worth $18.6 billion. Among the pending proposals before the Pentagon are two contracts to restore oil services to the northern and southern regions of the country.
Countries that are eligible to participate are described in his memo as "coalition partners and force contributing nations." Limiting prime contracts to companies from these countries is "clearly in the public interest," he said.
Other countries not on the approved list may still participate as subcontractors, the Department of Defense said. But those countries would still be prevented from directly providing even program management services for Iraq's oil sector.
Controversial action
Wolfowitz's action is a controversial one; every key ally excluded from the list objected to the move; some countries such as Germany protested loudly.
But White House officials indicated the decision would stand, despite protests from key allies. White House Press Secretary Scott McClellan told reporters Wednesday that the policy is "perfectly appropriate and reasonable."
The US Army Corps of Engineers Dec. 1 said it expects to announce the winners of two new Iraq oil infrastructure contracts by Jan. 17; they already delayed awards last fall in order to increase the value of the original tender. An announcement was expected by mid-December but the new date has since slipped.
The two new contracts are each expected to have a minimum value of $500,000, but as amended, each contract could reach as much as $800 million for the northern oil fields and $1.2 billion in the south, which includes Baghdad (OGJ, Nov. 10, 2003, p. 30). The original contracts had a maximum value of $500 million each.
The new contracts will still be awarded through "full and open" competition and will eventually replace the controversial noncompetitive contract awarded last March to Halliburton Co. subsidiary KBR. But as yet it remains unclear how much work the new contractors will perform.
USACE said the current KBR contract will continue until an undetermined time in which the "effective transition to the competitively awarded contract occurs." KBR is currently authorized to perform as much as $1.6 billion worth of work under the contract, but that amount could increase depending on future federal appropriation levels, officials said.
