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Despite the rising tide of insurgent violence in Iraq in October 2003, United States administration claims and field reports show solid progress is being made in reconstruction. Both the U.S. Senate and the U.S. House are fine-tuning legislation to authorize about $18 billion for Iraq reconstruction as part of a fiscal 2004 emergency supplemental bill. The final bill also will determine the amount of the second-phase construction contract now out for bid by the U.S. Agency for International Development.

This article presents information on attempts of U.S. President George W. Bush to enhance rebuilding in Iraq. If the U.S. Congress goes along with President Bush's proposal, the scope-and the cost of rebuilding post-war Iraq will take a quantum leap. The federal funds would cover only part of a rebuilding that officials estimate will cost $50 billion to $75 billion. U.S. Agency for International Development, USAID, issued a draft request for proposals on September 15, 2003, for a second capital construction contract to follow the $680-million contract awarded to Bechtel National Inc. in April. But agency spokesperson Ellen Yount says most of the $350 million will go for electricity restoration and sanitation. INSET: Bechtel's $680-Million Contract Is Now Tapped Out.

From the U.S. government's first requests for proposals to rebuild war-torn Iraq last year, contractors hoping for a piece of the massive reconstruction effort have had one thing made perfectly clear to them, that it is each firm's responsibility to provide security for their personnel and the projects under their domain. And a new round of rebuilding contracts will soon be awarded as the number of military forces decreases through troop rotation and coalition plans to depart Iraq in July. As troop numbers decline, the coalition wants newly trained Iraqi security forces to take their place and have more of a stake in the reconstruction effort, says Lieutenant General Robert B. Flowers, chief of the U.S. Army Corps of Engineers.

Sometimes politics and procurement get in the way of each other, which may explain some of the government's delays in issuing the second wave of Iraq construction contracts and releasing the next round of contracts for bidding. But as if hoping to make up for lost time, on January 6, 2004, the United States Agency for International Development awarded a second-phase capital construction contract worth up to $1.82 billion to Bechtel National Inc. The San Francisco-based contractor has been working on infrastructure repair tasks in Iraq since April. Separately, the Pentagon's Iraq Program Management Office said it would issue the long-awaited Requests for Proposals for 10 construction contracts and seven management contracts worth about $5 billion.

Nearly 3,000 potential subcontractors showed up at meetings hosted by the construction company Bechtel National Inc. on two continents to learn about construction opportunities in Iraq. As USAID announced that the U.S. Army Corps of Engineers will serve as construction manager for the company's rebuilding contract, the contractor held the first of three program supplier conferences in Washington D.C. The May 21 meeting attracted more than 1,800 attendees. About 90% of the work will be subcontracted, says Clifford G. Mumm, company's program manager for the Iraq contract.

The article focuses on the controversy raised by two construction contractors, San Francisco, California-based Bechtel Group Inc. and Pasadena, California-based Parsons Corp., supported by Halliburton Co.'s Kellogg Brown and Root (KBR) Inc. unit for the Iraq reconstruction contract USAID. As the war in Iraq advanced into its second week in March 2003, the U.S. Congress was deciding to use more than 75 billion dollar to pay for the conflict, that is, for Iraq reconstruction and U.S. domestic security. Meanwhile, a Corps of Engineers contract with KBR to extinguish oil well fires in Iraq was raising controversy. The firm claimed in its announcement that it had significant experience in fighting oil well fires in Kuwait set during the 1991 Gulf War. But Terry Farley, former president of Bechtel Construction, which Kuwait Oil Co. hired to manage fire suppression then, indicates KBR and Halliburton may have overstated their role. INSET: SPENDING BILLS INCLUDE:.

Focuses on the strategy plotted by U.S. military and civilian officials for rebuilding Iraq after a possible war between the two countries. Goals of the reconstruction plan; Interagency team formed to co-ordinate the strategy; Contract offered to engineering firms for the rebuilding process.

This article presents news briefs related to the construction industry as of October 11, 2004. Non-defense federal agencies will keep running through Nov. 20, under a stopgap spending bill that U.S. President George W. Bush signed on September 30. The measure, which the U.S. House and Senate passed Sept. 29, also permits shifting more than $3 billion from Iraq reconstruction to security and economic development there. Congressional attempts to expand a corporate tax and trade bill now in final negotiation could sink the entire package or at least delay final consideration until after the November election.

While potential subcontractors ramp up to compete for Iraq reconstruction jobs, firms already rebuilding infrastructure in Iraq are picking up the pace again after weeks of violence. Repairs of some units coming back on line have also yielded disappointing results, according to Tommy Crangle, a former Tennessee Valley Authority senior manager advising the Iraqi Ministry of Electricity. Firms interested in that work, which covers seven industry sectors, had the chance to pitch their capabilities to the primes at an Army-sponsored Iraq.

Contractors hoping to win a key role in Iraq reconstruction work worth billions of dollars are putting the finishing touches on the first round of bid proposals due at the Pentagon's Iraq Program Management Office this week. The bids for managing nearly $7 billion in design-build construction are due on February 2, 2004 and bids for the actual building contracts are due on February 5. Nearly 600 officials representing contractors, suppliers and subcontractors attended the all-day session in suburban Virginia, near Washington D.C. But many officials from large design and construction firms said the session should have been sooner and limited to prime contractor candidates. Government sources said that under federal procurement law, care has to be taken to ensure that no potential bidder receives an unfair advantage.

Prospects are improving for firms angling for the U.S. government funded Iraq reconstruction work. On January 12, 2004 the U.S. Army Corps of Engineers selected 10 contractor teams to compete for forthcoming U.S. Central Command task orders that could total $10 billion over the next five years. Corps also expects to award by January 17, 2004 two follow-on contracts for Iraqi oil-sector infrastructure repair. Recent task orders have included electrical repair work in Iraq and military construction in Afghanistan.

The new Iraq Infrastructure Reconstruction Office (IIRO) will oversee awards of approximately 21 contracts worth $18.6 billion by February 1. To help meet that accelerated procurement schedule on awards not yet proposed, IIRO has scheduled two "industry days" this month for prospective contractors. The first session is November 19 in Arlington, Virginia. The second session will be in London on November 21. The new IIRO Web site, www.rebuilding-iraq.net, includes an agenda and registration details. Retired Admiral David Nash, former head of the Naval Facilities Engineering Command, is leading IIRO's Baghdad-based operations.

Tensions between the U.S. Senate negotiators have been heightened by the promise of a presidential veto before the two groups even begin meeting to reconcile differences in an $87-billion spending bill to fund military operations and reconstruction in Iraq. The biggest difference in the emergency supplemental bills passed October 17 by both chambers is that the Senate-backed measure requires that $10 billion of the $18.5 billion approved for reconstruction be considered a loan. If other nations forgive 90 percent of Iraq's debt, the loan would be converted to a grant. INSET: Reconstructing Iraq.

Two senior House Democrats are turning up the heat on the administration of the U.S. President George W. Bush asserting federal contractor Halliburton Co. is overcharging the U.S. taxpayers for gasoline it imports into Iraq. Representatives Henry Waxman and John Dingell claim Houston-based Halliburton, the energy giant once headed by Vice President Dick Cheney, has hiked its prices between 65 and 88 percent over what the Iraqi state-owned oil company pays for imports. Legislators say they are particularly concerned because the House and Senate supplemental spending bills to fund reconstruction in Iraq each authorize $2.1 billion for oil infrastructure and procuring emergency stocks such as kerosene.

Officials with the U.S. Agency for International Development (USAID) in conjunction with the Coalition Provisional Authority (CPA) have approved the remaining specific reconstruction projects that will fall under the $680-million capital construction contract awarded in April to Bechtel National Inc., as of August 11, 2003. The work is based on recommendations Bechtel National Inc. made in June to USAID and CPA. Work orders approved so far for water and sanitation total $79 million. Work is progressing at the Safwan pump station in Iraq where the receiving reservoir is complete and an Iraqi contractor is installing pumps, says Bechtel National Inc. spokesman Howard N. Menaker. Officials also report progress in electricity generation. The CPA expects to connect Basra in Iraq with the main power grid by August 10 and hopes to guarantee power 24 hours a day for such strategic sites as hospitals, water and wastewater plants and oil installations.

The top coalition civilian in Iraq estimates that it will cost about $29 billion over the next four to five years just to restore the country's electricity and water sectors. Ambassador L. Paul Bremer III, head of the Coalition Provisional Authority in Iraq, told a National Press Club audience in Washington D.C. on July 23, 2003, that engineers estimate the cost to rebuild the electricity sector at $13 billion while United Nations experts claim that $16 billion must be spent on water. While in Washington for several days of briefings with administration and congressional officials, Bremer outlined a three-stage strategy for rebuilding the country: enhancing security, restoring the economy and establishing governance. Bremer said he expects power generating capacity to be restored to pre-war levels of 4,000 Mw, but he did not provide details on how this would be accomplished.

The U.S. engineering community is reaching out to its Iraqi counterparts, offering assistance in a variety of areas, including professional practice, technical aid and education. Representatives from more than a dozen U.S. engineering societies, the Army Corps of Engineers, White House, State Department and the U.S. Agency for International Development held a video teleconference July 16 with members of the Iraqi Engineers Union. U.S. sources have said Iraqi engineers are highly skilled but need assistance on management practices, including program management, contract management and construction management. Because the cost to attend these conferences is prohibitive for the Iraqis, some suggested that U.S. university professors visit Iraq to teach the engineers and their students the latest technology and practices.

Substantial investment will be needed to increase Iraq's electricity generation capacity 75% and strengthen its transmission grid by 2009. Iraq's electricity minister and his U.S. advisor have estimated the cost at up to $15 billion. Peter Gibson, chief U.S. advisor to the Iraqi Electricity Commission, and Karim Hassan, the electricity minister, represent the U.S.-Iraqi cooperation needed to rebuild the country's fragile infrastructure. Much investment will focus on making up of certain shortcomings in the project.

Officials from the U.S. Army Corps of Engineers, Kellogg Brown & Root Inc. and the Iraqi Oil Ministry have taken out a consolidated list of projects necessary to restructure the Iraqi oil industry. The essential elements for hitting prewar production capacity are pipeline restoration, maintaining steady filtered-water supplies needed to reinject into Iraqi oil wells, electricity and security against the looting and sabotage that is being witnessed throughout the country, explains Steven Wright, the spokesman for the Corps' Kuwait-based Restore Iraqi Oil Task Force. Clifford G. Mumm, Bechtel National Inc.'s project director overseeing the $680-million U.S. Agency for International Development rebuilding contract in Iraq, agrees that looting and other security concerns have hindered work. United States

Paul Bremer, the U.S. civilian chief administrator for Iraq, on July 7 earmarked $1.1 billion for reconstruction, new construction and security as part of an overall $6.4-billion national budget that will fund the country through the end of this year, as of July 14, 2003. Half of the money will come from anticipated revenue from the sale of oil exports, bolstered by frozen Iraqi assets in the U.S., seized assets of the deposed regime in Iraq and $1 billion in United Nations Oil for Food funds that have been turned over to the coalition. Beyond the budget, the U.S. is pledging an additional $3.2 billion to help with reconstruction.

As the U.S. administration assembles a new administrative team to oversee the reconstruction of Iraq, there are mixed reports about the level of obstacles facing those charged with the actual rebuilding. Officials from the contractor Bechtel National Inc. have awarded 10 subcontracts to seven firms to support the work of dredging the Umm Qasr seaport and to provide other supportive services. Bechtel continues evaluating power facilities, three major airports and four damaged bridges in Iraq, including Kharza Bridge near Mosul, two on the Jordan Highway and one on the Euphrates. Officials from Houston, Texas-based KBR are performing emergency restoration of Iraqi oilfields and fuel distribution systems under a contract awarded in March by the U.S. Army Corps of Engineers.

As the U.S. Senate begins debate on a 421-billion dollar tax-cut package, the construction industry was launching a full-frontal assault to rid the bill of a provision that would have a significant impact on firms and their staff working overseas, including those involved in rebuilding Iraq. The tax bill, narrowly approved 12-9 by the Senate Finance Committee on May 8, 2003, struggled to include a top White House priority to end the double taxation of corporate dividends. The provision repeals the foreign earned income exclusion, Section 911 of the tax law that now allows U.S. taxpayers working overseas to exclude up to 80,000 dollar of income earned in a foreign country from U.S. federal taxes.

Bechtel National Inc. continues to make progress in awarding subcontracts to aid in the rebuilding of Iraq. Officials from the San Francisco, California-based firm said progress was continuing in rehabilitating the Umm Qasr seaport, a top priority for relief agencies to bring food and grain into the country. Crews headed by Cliff Mumm, Bechtel's program director, and Terry Valenzano, deputy program director, are also evaluating the physical and mechanical condition of grain elevators located at the port as well as power needs to restart operations.

The article reports that San Francisco, California-based firm Bechtel National Inc. has awarded its first two subcontracts under a $680-million capital construction contract received from the U.S. Agency for International Development (USAID) on April 17, 2003. The port is a top priority for relief agencies that are working to bring food and grain to the country. Bechtel and USAID officials met April 28 in Basara with Iraqi powerplant managers to determine the most efficient way to bring electric power from less-damaged southern plants to Baghdad, where damage was greater.

The San Francisco, California-based construction company Bechtel National Inc. was awarded a $680-million contract to begin rebuilding key infrastructure in war-torn Iraq, a group of the firm's senior engineers were still in Kuwait awaiting government processing. Bechtel was one of a handful of engineering and construction firms invited to bid for the contract under special procurement rules that allow for expedited contract awards during emergencies. TheU.S. military and government officials were still assessing infrastructure damage April 22, 2003 and trying to prioritize construction plans and determine the exact scope of the work.

In a rush to give the U.S. President George W. Bush emergency funds for initial costs of the war in Iraq and money to start post-war reconstruction, Congress approved a$ 78.5-billion spending bill just before leaving Washington D.C. on April 12, 2003 for a two-week spring break.President Bush had urged Congress to finish the spending measure by April 11.At press time April 15, the White House had not yet received the bill, but President Bush was expected to sign it shortly. The bill allots $62.4 billion for war costs and $7.5 billion for Iraq relief and reconstruction. The military money establishes a Natural Resources Risk Remediation Fund, providing up to$ 489.3 million to support U.S. military efforts to fight oil fires and preserve Iraq's oil production infrastructure.