Ex-US Navy chief to hand out $15bn Iraq contracts

A new US-backed organisation is being established in Iraq to award $15bn (£9bn) of contracts to the private sector for reconstruction work.

The new body will channel money provided by the US government for infrastructure projects and will hold a conference next month, probably in London, to tell the international business community of the opportunities available.

The scale of the business contracts available through the new Project Management Office will dwarf those deals already awarded by the US authorities immediately after the Iraq war formally ended.

David Nash, a retired US naval admiral, will lead the body. The PMO, which will be based in Baghdad, will cover a dozen or more sectors, from transport to water. It is likely to concentrate on areas other than oil, where Iraq's vast resources mean private sector money may be more readily available.

John Shaw, a senior official in the US Department of Defence, told a seminar in London yesterday: "This is the first real sign of mature management [in Iraq], in a strategic sense. Capable people are being put in."

It is estimated it will cost up to $100bn to fund the reconstruction of Iraq, following the war and decades of underinvestment in its infrastructure. Private companies, in areas such as engineering, energy, construction and finance, have been keenly looking for a way into the country, in what could be a once-in-a-lifetime opportunity to take part in a project of this scale. However, so far, it has been unclear who to approach and how to get involved.

The PMO promises to offer entry to Iraq for the private sector, backed by $20bn that is being approved in Washington for Iraq. Some $5bn of this is for security purposes, leaving $15bn for reconstruction work.

Mr Shaw, deputy under secretary of defence for international technology security, said it had taken "hideously long" to get the right structure in place but now the "fog of reconstruction" was lifting at last.

He said the PMO would hold a conference next month and that it "made sense" for the event to be in London. Mr Shaw thought the $15bn would be allocated over "a couple" of years.

"We're moving out of the gridlock. [Admiral] Nash will give us a process that everyone can understand, access and things will move relatively fast."

The PMO will sit under the Coalition Provisional Authority, headed by Paul Bremer, which runs Iraq along with the Iraqi Governing Council.

The PMO will be organised into sector teams, who will allocate and oversee contracts. It will be staffed by civil and military personnel.

Mr Shaw said the PMO will "regard Iraqi ministries as its customers". Contracts will be awarded on the basis of competitive tendering, open to companies from all US trading partners. He said the PMO should be fully functioning by the beginning of next year.