Bechtel beats Amec to $1.8bn contract to rebuild Iraq

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Bechtel, the engineering company with close ties to the Bush administration, has been controversially awarded another contract to help reconstruct Iraq.

Amec, its British competitor, bid for the work in conjunction with its US partner Fluor but failed to win the $1.8bn (£990m) deal to work on power and transport infrastructure, funded by the US Agency for International Development.

The news will fuel charges of cronyism and accusations that British companies are not being rewarded by the British Government's military support for the Iraq war.

Bechtel executives gave thousands of dollars to President George Bush's 2000 election campaign and two of the company's top managers serve as advisers to the White House and the Defence Department.

Halliburton, the US services group formerly run by Dick Cheney, the US vice-president, has also been awarded major contracts in Iraq. Halliburton is bidding for $2bn worth of new oil contracts, funded by the US Army, the award of which has been delayed three times. In the intervening period, Halliburton continues to do the oil reconstruction work. Again Amec will is bidding for this work, now due to be awarded this month. Amec declined to comment yesterday.

Colin Adams, chief executive of the British Consultants and Construction Board, an industry body, insisted that it was "not a waste of time" for UK companies to bid for work in Iraq. However, he added that he has advised British companies not to bid for US government-funded work "unless they have worked closely with people like Bechtel".

Mr Adams has told members to go instead for work that will be funded by multilateral agencies, such as the World Bank and the United Nations. Such contracts will be much slower in being tendered.

USAID said Bechtel had won the latest contract because it came up with the best proposal at the lowest price when competing for bids against two other companies.

Tim Beans, the agency's procurement director, said: "There was no influence whatsoever, either direct or indirect, on the contract process. I was never contacted at any point by anyone on this procurement and if I had been I would have reported it to the inspector general."

Separately, the United States yesterday invited bids for $5bn of new work in Iraq, the first in a series of new deals to be funded by $18.6bn appropriated by the US Congress for rebuilding the country. These contracts are open to companies from countries that supported the Iraq war.

After more than a month's delay, the Pentagon-run Program Management Office kicked off bidding by issuing solicitations for 17 major construction contracts and project management deals to oversee the work. The United States has drawn up a list of 63 eligible countries but says the list could be revised. Sub-contracts will be open to all nations.