Bidding process raising concern

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Iraq's ambassador to the United States said yesterday that Americans risk alienating Iraqis in the workplace if U.S. companies scoop up prime contracts to rebuild the country and leave the locals doing lower-level work.

"We are in danger of creating a feeling of alienation between those who have the money and those who do the menial work," Rend al-Rahim Francke told Coalition Provisional Authority (CPA) officials and businessmen at a two-day Iraq reconstruction summit in Washington.

"Alienation in the workplace is dangerous," she said.

Iraqi and Eastern European contractors also warned of a political backlash if Iraqis are consistently awarded only smaller subcontracting deals in the multibillion-dollar reconstruction effort.

"We are brewing revolution in Iraq," said Arnulf Ivan Simmon of the Czech company Infrastructure Consulting. "Iraqis are feeling demeaned and are getting aggravated."

Many Iraqis feel they are being left out of the contracting process at top levels, and say U.S. authorities are not considering at what level Iraqi companies could actively participate in the process.

U.S. experts counter that Iraqi firms are simply not up to the challenges of fulfilling the multimillion-dollar contracts being put out to bid by the CPA.

"The open market is not kind," said Mike Dufault, research director for Equity International, a Washington, D.C.-based business-development company.

"It operates on past performance and speculation of future profitability, neither of which are strong suits of current Iraqi businesses in the international community."

Another commonly heard complaint by Iraqis and some Eastern European companies is that the U.S.-managed bidding process has not been very clear and that information is hard to come by in Iraq.

"You are better informed here than we are in Baghdad," said Falah Wajdi, general manager of an engineering firm.

Mrs. al-Rahim acknowledged that the CPA system was initially "opaque" to most Iraqis but said accessibility was improving.

"Iraqis must feel ... ownership of the process," she said. "We need to build capacity within Iraq to continue the work" begun by the CPA.

CPA officials insist that the $18.6 billion reconstruction process is being fully coordinated with Iraqi authorities, that all contracts encourage a strong Iraqi component, and that Iraqi companies have been consistently encouraged to bid for subcontract-project work.

An estimated 75 percent to 80 percent of the reconstruction is expected to be done by subcontractors.

Joe Benkert, chief of operations for the CPA in Washington, said the authority was working to strengthen the private sector in Iraq and make the country attractive for foreign investment.

Addressing investor concerns about the planned return of sovereignty to Iraqis this summer, Mr. Benkert said he expected a transitional administrative law to be drafted by the end of February and a decision this week on Iraq's request for observer status at the World Trade Organization.