Lieberman Seeks More Answers on USAID Bidding Process
for Post-War Construction Contracts

WASHINGTON – Governmental Affairs Committee Ranking Member Joe Lieberman (D-CT) Wednesday questioned for a second time the federal government ‘s decision to use a closed and truncated contract bidding process in awarding huge construction contracts to rebuild post-war Iraq. U.S. Agency for International Development (USAID) officials have acknowledged that using fully open and competitive bidding procedures ensures fairness and saves taxpayers money. Yet USAID invited only a limited number of companies to bid on the Iraqi reconstruction contracts, potentially worth billions of dollars.

USAID officials said that, because they started the bidding process in January, they did not have enough time to engage in the open and competitive procedures ordinarily required by law. In a letter today to USAID Administrator Andrew Natsios, Lieberman asked why USAID waited until January to begin the formal bidding process, when the Bush Administration made public statements as early as August committing the U.S to rebuilding Iraq in the event of a military conflict.

” I am troubled by new information suggesting that USAID could have engaged in full and open competition in the awarding of contracts for Iraq reconstruction efforts, ” Lieberman said. “American taxpayers deserve to know why the agency used secretive and closed bidding procedures that will lead to more expensive contracts.”

USAID officials have said that they plan soon to announce the awards for four contracts, covering capital construction, airports, local governance, and primary and secondary education; a later contract will address Iraq ‘ s public health system. The full text of the letter is below.

April 16, 2003

The Honorable Andrew S. Natsios
The United States Agency for International Development
Washington, D.C. 20523

Dear Administrator Natsios:

Last week, members of my staff attended a briefing given by officials from your agency regarding USAID ‘s contracts for the rebuilding of postwar Iraq. Tim Beans of the USAID Contract Office and Ed Fox, Assistant Administrator for Legislative and Public Affairs, led the briefing and provided information about the ongoing bidding process for awarding the agency ‘s Iraqi contracts. While this information was useful, it also raised a number of new questions regarding the bidding process that I would like you to address.

The contracts for the rebuilding of Iraq are potentially worth billions of dollars and are, as you have acknowledged, on a scale far bigger than anything USAID has previously attempted. It is therefore especially important that you explain decisions taken by your agency, and the Administration, that led to a closed bidding process, potentially costing taxpayers millions of dollars and raising serious questions about the fairness of your selection of contractors. During last week ‘s briefing, Mr. Beans acknowledged that when USAID seeks bids for its contracts, it strongly prefers to use the full and open bidding process required by the Competition in Contracting Act of 1984. He agreed that an open bidding process always resulted in a lower price for the contractor. Not only does open bidding save money and ensure fairness for all contractors, it also helps to maintain public confidence in how government contracts are awarded.

In only two prior instances has USAID used a closed bidding process pursuant to an exception in the Competition in Contracting Act. Mr. Beans and Mr. Fox explained last week that the decision to use a closed and truncated bidding process was dictated by the limited amount of time the agency was given to award its contracts. The usual, more open process typically takes months to develop a ” request for proposals ” and then solicit, review, and award a winning bid. In this instance, because the formal contracting process began in January, USAID had insufficient time to award the Iraq contracts using its normal procedures. While I agree there is an urgent need for the rebuilding process to begin in Iraq, I question why USAID waited until January to begin the formal process for awarding the Iraqi contracts. Had your agency begun this process last fall, there would have been sufficient time to award the Iraqi contracts using a full and open competitive bidding process, which in turn, could have saved taxpayers millions of dollars, at the same time ensuring greater transparency and fairness.

Applicable law explicitly prohibits agencies from citing ” a lack of advance planning ” as a justification for not providing for full and open competition. FAR, Part 6.301(c)(1). When asked during last week ‘s briefing why the agency waited until January, Mr. Beans and Mr. Fox replied that diplomatic considerations delayed the process. They suggested that by publicly soliciting bids, USAID would have undercut the United States’ diplomatic efforts to avoid hostilities with Iraqi. However, by October the President and numerous top White House officials had made statements committing the United States to rebuilding Iraq in the event armed conflict became necessary. Just as the Administration understood the need to prepare for a possible conflict militarily, by moving troops and military assets towards Iraq, and that these deployments did not undercut ongoing diplomatic efforts, it would have been similarly prudent and consistent with diplomatic concerns to begin laying the groundwork early on for humanitarian reconstruction efforts.

In order to provide Congress with a better understanding of why open and competitive bidding procedures were not followed by your agency with respect to contracts for reconstruction in Iraq, please answer the following questions:

  • Why was a decision not made before January to begin the formal contracting process for USAID ‘ s contracts related to the postwar rebuilding process in Iraq? Who directed USAID to begin the contracting process and when was this direction given?
  • What planning took place within USAID before the formal contracting process began in January? Who directed that this planning begin and when was this direction given?
  • When would USAID have had to begin the formal bidding process in order to have a full and open competitive bidding process?
  • In you estimation, how much money could USAID have saved the American taxpayer by awarding the Iraq contracts using full and open competitive bidding procedures?
  • USAID officials stated that workforce constraints prevented the agency from using alternative contracting mechanisms. How many additional agency personnel would USAID have needed in order to award some of the contracts on a multiple award basis? How much money could USAID have saved the American taxpayer using this approach?
  • Similarly, how many additional agency personnel would USAID have needed in order to award a short term ” bridge ” contract, thus allowing subsequent long-term contracts to be awarded on a competitive basis?
  • I look forward to your prompt response to the above questions. Please contact Kevin Landy or Patrick Hart of my staff at (202) 224-2627 if you have any questions.


    Joseph I. Lieberman

    Ranking Member