Flaws found in bidding on reconstruction contracts in Iraq

Tuesday, June 10, 2003

WASHINGTON -- The bidding on Iraqi postwar reconstruction contracts at the U.S. Agency for International Development is flawed, with the education contract essentially awarded without competition, an internal investigation concluded.

The total contract to Creative Associates International is worth $157 million, including optional extensions, the USAID inspector general's office said.

The office made public Monday the second of a series of inquiries into the limited bid awards of contracts for Iraqi capital construction, airports, seaports, local governance, primary and secondary education and others.

In a memorandum dated June 6, the office said its review on the contract to rebuild Iraq's education sector found:

Five contractors were invited to bid, but only one did. That company also brought in as subcontractors three of the firms invited to bid. The conclusion is that there was essentially no competitive bidding at all.

USAID did not adequately document how it selected the five contractors invited to bid, and didn't have a clear methodology for the selection process.

Four months before the request for bids, a representative from the company awarded the contract attended an agency forum on Iraq's education sector. It was the only one of the five companies invited to bid on the contract that was represented at the forum. The inspector general's office could not determine whether that company had been given an unfair competitive advantage. The other companies invited to bid were given only two weeks' notice to submit their bids.

USAID is in the process of awarding 10 or more contracts for Iraq reconstruction. As of Friday, USAID had awarded seven contracts worth $985 million for personnel support, seaport administration, local governance, education, capital construction, health and airports administration.

Closer oversight of the bidding process is needed, said Sen. Joe Lieberman of Connecticut, senior Democrat on the Government Affairs Committee and a presidential contender.

Without competitive bidding, the contracts could cost millions of dollars more than necessary, Lieberman said.

The inspector general's office recommended that USAID's procurement office conduct a full review of the contract award process to determine whether an unfair competitive advantage was given in the Iraq education sector.

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