December 3, 2003

Iraq Project Update to U.S. Congress

Status Report: Iraq Infrastructure Reconstruction Project
December 2, 2003 
 
Major Milestones

• Port of Umm Qasr
  Reopened Iraq’s only deepwater port to receive hundreds of thousands of tons of food and humanitarian supplies for 22 million Iraqi citizens as well as other commercial traffic (June 2003)
• Power
  Restored desperately needed electricity generation to pre-conflict levels of 4,400 MW per day, up from 2,600 MW last summer (October 2003)
• Water
  Completed work on the Safwan water supply system south of Basrah, restoring reliable potable water service to Safwan’s 40,000 residents (November 2003)
• Buildings and Facilities
  Completed an accelerated program to refurbish 1,239 primary and secondary schools in time for 1 million Iraqi children to start the new school year (October 2003)
• Roads and Bridges
  Completed construction of the Al Mat Bridge bypass on Highway 10, a 3-km, 4-lane critical route in western Iraq, to enable 3,000 vehicles a day to deliver food, goods, and supplies to the Baghdad area from Amman, Jordan (July 2003)
• Telecommunications
  Working to restore telephone service to 240,000 Baghdad area subscribers by replacing switches and transmission equipment at 12 destroyed exchanges
• Airports
  Installed communications systems and provided emergency power generators to support the opening of both the Baghdad and Basrah airports for limited international commercial service
• Iraqi Subcontracting
  As of November 28, 2003, Bechtel had awarded 119 subcontracts to 101 different Iraqi companies, out of a total of 162 subcontracts — exceeding our goal of subcontracting 70 percent of our work to Iraqis.
• Employment
  This program has employed over 35,000 Iraqis in a variety of reconstruction tasks.
• Institutional Strengthening
  Establishing a Project and Construction Management Training and Development Program to further improve the engineering, construction, and project management skills of the Iraqi professional workforce. 

Sector Highlights
Port of Umm Qasr

• All major work is essentially complete; work has included dredging to the 12.5-m target to accommodate bulk grain-bearing ships, wreck removal, and restoration of the grain facility. A 52,000-ton grain ship has unloaded essential food supplies.

Power

• Having exceeded the pre-conflict level of 4,400 MW in early October, work is well under way to increase power generation to 6,000 MW by summer 2004.
•  Work continues in support of new and expanded power plants, and rehabilitation work is progressing at a key power station.

Water/Wastewater

• Efforts to provide a cleaner water and wastewater system for millions of Iraqis is progressing at several Iraq sites, including Baghdad, Najaf, Karbala, Kerkh, Diwaniyah, Hillah, and Basrah.
• Dredging at Basrah’s 240-km Sweet Water Canal terminal reservoir is nearly complete. Full restoration of the system will double the flow of clean, healthy water to residents.
• Work on the Safwan water supply system south of Basrah is complete, restoring reliable potable water service to Safwan’s 40,000 residents.
• In Baghdad, ongoing wastewater treatment facility restoration work is helping improve sanitation service for 700,000 people. Due to poorly functioning treatment plants, sewage from the city’s 5.5 million residents has been directly flowing into the Tigris River.

Buildings and Facilities

• With school refurbishment complete, focus has shifted to rehabilitation of clinics. Work is complete at eight clinics in Northern Iraq, 15 clinics in Baghdad, 12 facilities in Basrah, and five in Nasiriyah; and work continues at clinics throughout the rest of Iraq.
• Subcontractors have nearly completed rehabilitation of 10 Baghdad fire stations.

Roads and Bridges

• Reconstruction work is moving forward on the three priority bridges in Bechtel’s scope: Al Mat Bridge near the Ar Rutbah village in western Iraq, Tikrit Bridge over the Tigris River, and Al Khazir Bridge between the northern cities of Mosul and Arbil.

Rail

• Detailed inspections continue on earthwork and structures construction work, as well as detailed surveys of Port of Umm Qasr track that will be rehabilitated.
• Subcontracts for earthwork construction, concrete structures, and general services continue to be awarded.
• Iraqi Republic Railways has progressed with its rolling stock repair work, as part of an integrated construction program with Bechtel.

Telecommunications

• Installation of transmission equipment at six key exchange sites is nearly complete.
• In the coming weeks, the new satellite gateway at Mamoun supporting international calls to and from Iraq will link to the national network.
• Site preparation work is complete at Baghdad’s Abu Graib switch location.

Airports

• Supplemental infrastructure upgrades at Baghdad (BIA) and Basrah (BSR) International Airports continue.
• At BIA, the fire house repair work is substantially complete and the newly selected air traffic control building contractor is mobilized.
• At BSR, the subcontractor has progressed with perimeter security fence removal and disposal and begun new fence installation.

Bechtel’s Outreach to Iraqi Subcontractors – A Summary
 
A key Bechtel and USAID goal under the Iraq Infrastructure Reconstruction Program (IIRP) is to maximize Iraqi participation in our work. Indeed, to increase the cost-effectiveness of the work, and to help revitalize the Iraqi economy, Bechtel decided to award the vast majority of the subcontracting work to Iraqi subcontractors. The list below describes Bechtel’s specific outreach efforts in this area.
 
Specific Outreach Efforts

• Of the 90 percent of the work hours performed on this project that are being subcontracted, 70 percent will go to Iraqi firms. (The remainder will go to firms outside Iraq only because the Iraqis are not able to supply the work themselves — for example, the huge dredger for Umm Qasr and the high tech air traffic control systems.)
• We have established a link from our supplier and contractor portal (http://supplier.bechtel.com/) to the Iraq Business Center, where international firms may post their interest in partnering with Iraqi companies and vice-versa.
• As of November 28, 2003, Bechtel had awarded 119 subcontracts to 101 different Iraqi companies, out of a total of 162 subcontracts. This exceeds our goal of subcontracting 70 percent of our work to Iraqis.
• Of the five conferences Bechtel conducted within five weeks of contract award, three were held in Kuwait City, Baghdad, and Basrah. The conferences were intended to describe the scope of our work, clarify government contracting to local contractors, present a simplified procedure for qualifying contractors, and demonstrate how interested firms could register. Subsequently, Bechtel has held additional conferences and meetings in Iraq to further explain our work under the IIRP and how Iraqi firms can compete for subcontracts.
• We massively simplified our subcontractor qualification documentation to a few-page questionnaire. This is the simplest qualification process in our 100-year history. Iraqi contractors that complete the questionnaire are listed as Bechtel-registered bidders. We have so far identified more than 1,000 qualified Iraqi contractors in this way. 
• Bechtel maintains offices in the Baghdad Convention Center and in Basrah’s Marbad Hotel that are completely open to the public, require no appointments, and are staffed with Arabic-speaking personnel to make it easy for Iraqis to register and qualify their firms by completing the short questionnaire.
• Early in the subcontracting process, we reached out to Iraqi business, trade, and professional associations to spread the word about who we were and how they could do business with us. Our activities in this area include making presentations at the regular meetings of these professional associations and translating into Arabic key documents about our company in general and our contracting processes in particular. In addition, we have worked with the Federation of Iraqi Contractors to help address contractor questions.
• Recognizing the need to be as flexible as possible in our business practices, Bechtel has waived normal insurance requirements for Iraqi subcontractors on this project. We also have leveraged our relationships with insurance carriers to obtain necessary insurance for their benefit.
• Because many small Iraqi contractors do not have sufficient working capital to perform the work, we instituted a program to advance funds from Bechtel to many of these contractors, at no cost to them.
• In September, we initiated a new payment process for Iraqi subcontractors that were unable to open offshore accounts or cash Bechtel-issued checks for payment. This process was intended to reduce the need for excessive cash payments and fill the void created by a lack of normal banking services in Iraq. The process involved an agreement between National Bank of Kuwait (NBK) and two Iraqi banks: Credit Bank of Iraq and The Bank of Baghdad. NBK provided for a transfer of funds, per Bechtel's instruction, into specific bank accounts that the respective subcontractor had opened in either of the two Iraqi banks. NBK now offers electronic transfer of funds to these banks.
• While the firms we have worked with have great professional capability, many are not accustomed to the safety standards and some of the construction management systems we take for granted — schedules, procurement, invoicing, and record keeping. We’ve worked to educate and train them in the business practices we expect — and they have been very receptive to this training.
• While the individual sectors continue to accomplish much in the area of institutional strengthening, in November the Bechtel team decided to augment that effort by establishing a Project and Construction Management Training and Development Program. The program will further improve the engineering, construction, and project management skills the Iraqi professional workforce needs to effectively implement future infrastructure projects. Engineering, construction, and project management training will be provided to Iraqi ministries, to the Iraqi engineering and construction industry that supports the ministries, as well as to high-potential Iraqi direct-hire employees who would be candidates to replace Bechtel expatriate personnel. In addition, Bechtel will work with Baghdad University to develop its capacity to provide this training. Ultimately, the program will help sustain USAID’s infrastructure reconstruction effort well into the future.
• Before the work is completed, Bechtel and its subcontractors will have employed more than 40,000 Iraqis. For instance, nearly all of the telecommunications work is being performed by Iraqis, the rail work near Basrah is all Iraqi, the bridge repair workers are all Iraqi, all the water and wastewater work is being completed by Iraqi contractors, and nearly all of the power work is being completed by Iraqis.
• In all phases of our work, we have hired Iraqi nationals to complement our expatriate staff, which has been invaluable in communicating with our subcontractors.

About Bechtel

Bechtel is a trusted engineering, construction and project management partner to industry and government. Differentiated by the quality of our people and our relentless drive to deliver the most successful outcomes, we align our capabilities to our customers’ objectives to create a lasting positive impact. Since 1898, we have helped customers complete more than 25,000 projects in 160 countries on all seven continents that have created jobs, grown economies, improved the resiliency of the world’s infrastructure, increased access to energy, resources, and vital services, and made the world a safer, cleaner place.  

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