Iraq security crisis jeopardises British reconstruction contract

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The Independent Online

Foster Wheeler, hailed by the Government for being the first British company to land reconstruction work in Iraq, is struggling to meet the requirements of its contract because of the worsening security situation.

Foster Wheeler, hailed by the Government for being the first British company to land reconstruction work in Iraq, is struggling to meet the requirements of its contract because of the worsening security situation.

Two months after winning a $6.8m (£3.8m) contract to oversee the reconstruction of oil facilities, Foster Wheeler has managed to send just two representatives to Iraq.

The company is contracted by the US Program Management Office (PMO), which is co-ordinating the reconstruction effort. A source in the PMO's base in Baghdad described the situation as "frustrating".

Foster Wheeler is struggling to secure insurance to send UK staff to Iraq after the Foreign Office advised last month against travelling to the country.

The PMO has raised the issue with the Foreign Office and Foster Wheeler has contacted the Department of Trade and Industry about the problem. So far, no solution has been found.

A PMO spokesman said: "Because of the company's insurance status, it has been unable to send out any more representatives. Foster Wheeler is not covered right now. We are in contact with the Foreign Office to try to resolve the situation. It is frustrating because Foster Wheeler has a job to do. But the British Government has a responsibility to look out for its citizens."

Foster Wheeler said it was committed to its contract, but refused to comment further.

Unless it can send staff to Iraq in the next few weeks, the deal could be in jeopardy.

A PMO representative in the US said: "We will have to see whether Foster Wheeler is able to fulfil its obligations."

Led by Brian Wilson, the Prime Minister's special envoy in Iraq, the Government launched an intensive lobbing campaign earlier this year to persuade the American authorities to award reconstruction contracts to British firms. Mr Wilson is thought to have personally lobbied on behalf of Foster Wheeler.

When Foster Wheeler was awarded the contract, Mike O'Brien, the trade minister, declared that "UK firms have the necessary skills ... to make a significant contribution to Iraq's reconstruction".

Insurance isn't the only issue for Foster Wheeler in Iraq. Under its contract with the PMO, security was to have been provided by the Coalition Provisional Authority. However, it is understood that Foster Wheeler was not happy with the level of security and was pushing the CPA to beef it up.

In other deals, contractors have hired their own security companies. Amec, the British engineering and project management group, has its own personnel and outside contractors working on security for the three contracts it has won in Iraq.

Amec, which is working with US firm Fluor, said that its contracts, worth $1.6bn, were on track. The company said that staff had been mobilised and were working as normal despite the worsening violence in Iraq. But the company warned last week that because of the "security challenges", it was difficult for it to predict the value of the work it would be able to complete in Iraq this year.

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