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By Susan Cornwell
Reuters AlertNet
http://www.alertnet.org/
Thursday, June 12, 2003

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WASHINGTON (Reuters) - The U.S. government awarded a $157.1 million contract to rebuild Iraq's educational sector with essentially no bidding competition, a U.S. senator said on Monday after reviewing an internal investigation of the deal.

Although the U.S. Agency for International Development (USAID) invited five contractors to bid on the education contract, only one -- Creative Associates International (CAI) of Washington, D.C. -- submitted a proposal, the USAID Inspector General's office said in a June 6 memo released on the agency's website.

"The inescapable conclusion is that there was essentially no competitive bidding at all," Sen. Joseph Lieberman, a Connecticut Democrat, said in a statement.

He said the findings were another example of a "flawed process" for awarding postwar Iraq reconstruction contracts. An earlier probe by USAID's inspector general found the company picked for rebuilding an Iraqi port didn't have a required security clearance.

"The IG's office has now found serious flaws in the two USAID contracts it has investigated," Lieberman, the ranking Democrat on the Senate Governmental Affairs Committee, said.

He said it reinforced the need for hearings into the closed bidding of USAID's Iraqi contracts. Lieberman last month said such hearings should also probe the no-bid award of a contract to a subsidiary of Halliburton, the company formerly run by Vice President Dick Cheney, to revive Iraq's oil industry.

"Without competitive bidding, these contracts could cost the American taxpayer millions more dollars than necessary," Lieberman said.

The inspector general's probe found that USAID did not adequately document how it selected the five contractors invited to bid on the education contract to get Iraq's schools up and running again, the June 6 memo said.

Then when only one company, Creative Associates International, submitted a bid, it brought in as subcontractors three of the other firms invited to bid, the memo said. On April 11, Creative Associates was awarded the contract of $62.6 million for the first year, with options on two more years, for a total of $157.1 million.

A spokesman for Creative Associates International could not be reached for comment Monday evening.

Andrew Natsios, USAID's administrator, asked the agency's inspector general in April to review the procedures it used for Iraq reconstruction projects.

So far, seven contracts have been awarded costing a total of $985 million for personnel support, seaport administration , local governance, education, capital construction, health and airport administration, the June 6 memo said.

Lieberman was a co-sponsor of an amendment recently approved by the Senate that would require the Department of Defense to publicly justify the awarding of any Iraqi reconstruction contract without an open, competitive bidding process. It is not yet clear whether this amendment will be part of the final version of the defense authorization bill.

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