Contractors in Iraq

JEFFREY KAYE:

Doing business in Iraq is dangerous work. Dozens of employees of U.S. companies there have been killed by insurgents. They have been victims of ambushes, kidnappings, grenades, and car bombs. No one knows the exact number of casualties among the thousands of U.S. civilians now working there.

One major contractor facing perils in Iraq is the Parsons Corporation, an engineering and construction company based in Pasadena, Calif. Parsons has seven major Iraq contracts worth a maximum of $2 billion.

The company is destroying munitions stockpiles, rebuilding water and power systems, restoring oil fields, and constructing military bases, police stations, court houses, prisons, hospitals and schools.

SPOKESMAN:

To start off-- knock on wood-- we have gone through another couple of weeks with no accidents no security incidents.

JEFFREY KAYE:

When top Parsons executives meet every two weeks to discuss their Iraq projects, security is always at the top of the agenda.

EARNEST ROBBINS:

We stay on top of that through our security consultant, and again, our project managers are prudent enough to know that if the coalition forces say it's not safe, it's not safe.

JEFFREY KAYE:

The firm has about 200 people working in Iraq. For security reasons, they asked us not to give an exact number. James McNulty, parson's chairman and CEO, says company employees in Iraq are housed in or near U.S. military installations.

JAMES McNULTY:

However, the military's got a mission, very active mission, and it doesn't include providing protection for contractors. So we have secured private security firms that work with us and for us.

Every one of our contracts, the project manager has a private security adviser who works daily with he or she for the management of that contract, and they provide everything from intelligence to physical security as our people have to move around the country and go to different locations and different meetings.

SPOKESPERSON:

Well, the only thing left for you to sign is your agreement.

JEFFREY KAYE:

The Parsons' personnel department recruits and processes employees to work in Iraq .

SPOKESPERSON:

Are you over 40? Okay, you'll have to have a stress test then.

JEFFREY KAYE:

Because of hardship and overtime pay, Parsons' employees in Iraq , mostly engineers and managers, earn more than double their U.S. salaries. But despite the hefty paychecks, Parsons' executives worry about job vacancies in Iraq .

SPOKESMAN:

We have a need right now for about 12 project managers on that job.

JEFFREY KAYE:

Jim Ridings, head of Parsons' Iraq staffing office, says some people picked to go get cold feet at the last moment.

JIM RIDINGS:

Generally, it's one of two things. Either "I forgot to run it by my spouse," or they watch CNN too much. A lot of these people get cold feet listening to the news, and that's unfortunate.

JEFFREY KAYE:

Can you blame them?

JIM RIDINGS:

It is a dangerous... it's a war zone, it's a dangerous place to be, but if I went by everything I see on television, I'm surprised anybody would go.

JEFFREY KAYE:

Is there any point which you would say, this is too dangerous to continue?

SPOKESMAN:

There could be. I mean, we assess... we're constantly assessing the situation and monitoring the situation. To date, we haven't seen anything that would cause us to say we can't protect our people or we can't manage the risk.

JEFFREY KAYE:

Other companies hoping to do business in Iraq are betting that for them, the rewards will outweigh the risk. More than 300 small business leaders came to Las Vegas earlier this month, like other visitors with dreams of hitting a jackpot.

They gathered at Caesar's Palace for a two-day conference sponsored by the U.S. Army to learn how they could find opportunity in the rebuilding of Iraq.

Most of the business people here came looking for subcontracting work. If they get it, most won't share the security risk of the larger firms because they would send products, rather than personnel, to Iraq. U.S. government rules require that at least 10 percent of the subcontract work in Iraq be done by small businesses. (Applause)

The meeting was kicked off by Mark Lumer, a senior army official responsible for policy and procurement. His chief message -- Iraq is open for business.

MARK LUMER:

You are here to help us build a free and democratic Iraq. Congress has appropriated significant amounts of money for us to do that.

JEFFREY KAYE:

Congress authorized nearly $18.5 billion for Iraqi reconstruction. Of that, so far $3 billion-$4 billion have been committed to specific projects. In Las Vegas, Lumer told attendees that he expects the U.S. government's role in the rebuilding effort will continue, even after Iraqis assume control of their country at the end of the month.

MARK LUMER:

And, frankly, we need your help. Right now, small business have won in excess of $500 million worth of contracts. The opportunities are there for you.

JEFFREY KAYE:

Lumer's message resonated with many attendees.

DONNIE McDANIEL, Best Products Company:

I see Iraq right now as a golden opportunity for American small business. You're talking about $500 million worth of opportunity.

JEFFREY KAYE:

Others saw opportunities to sell insurance, shipping materials, security items, building materials, even disposable washcloths.

LINDA DOMEC-WIEMERT, Thantex:

It's a disposable fabric washcloth in a bag with cleansing solution, lotion, et cetera. And already we're getting a lot of demand for it.

JEFFREY KAYE:

But many Iraqi business people attending this conference expressed frustration.

YASIR SHALLAL, Capital Companies:

I think there is this preconceived notion that the Iraqis are going to be satisfied with the crumbs.

JEFFREY KAYE:

Yasir Shallal, a longtime U.S. resident, is with Capital Companies, which represents Iraqi businesses seeking reconstruction work in their own country.

Shallal says most of the money and contracts have gone to western firms, leaving Iraqi companies out in the cold.

YASIR SHALLAL:

In essence, their compensation has not been consistent with their work effort. And so, when a contract is awarded for $50 million to a U.S. company, it trickles down to less than 10 percent to the Iraqi company that's doing 90 percent of the work.

JEFFREY KAYE:

But Lumer says not only are Iraqi firms gradually getting tens of millions of dollars worth of reconstruction business, U.S. companies, the prime contractors, are employing thousands of Iraqi workers.

MARK LUMER:

The good news is that we are making substantial progress in rebuilding Iraq . That is indicated in the show. Almost 400,000 Iraqis have jobs. We're improving electrical, water. Virtually across the board, Iraqis' lives today are better than they were under Saddam at any time.

JEFFREY KAYE:

Some of the titans of the international construction industry, such as Parsons, already tapped for multi-billion dollar contracts in Iraq , also came to Vegas. Their government contracts require them to be there to talk to potential subcontractors. Jim McNulty says Parsons' Iraq projects will represent significant earnings for his company.

JIM McNULTY:

If the contracts go to their full value, the full $2 billion, it would probably, in any given year, maybe be 15 percent of our overall profitability in revenues.

JEFFREY KAYE:

But such frank talk about making money in Iraq angers some elected officials, such as Los Angeles democratic Congressman Henry Waxman, a fierce critic of the Iraq contract process.

REP. HENRY WAXMAN:

And that has happened within many, many wartime situations. It is looked at as profiteering. And we shouldn't have that go on at a time when we've got brave American men and women who are facing the possibility of giving their lives to help the U.S. effort.

JEFFREY KAYE:

McNulty rejects Waxman's criticisms.

JIM McNULTY:

I don't accept that and I don't accept the connotation that we are somehow taking advantage of either the Iraqi people or our government.

Our employees, frankly, take pride in the fact that we are helping the Iraqi people and Iraq as a country reestablish their infrastructure, and enable them to stand on their own two feet. It makes us feel good.

JEFFREY KAYE:

Waxman has charged there's been too little competition and inadequate oversight of Iraq contractors.

He's also concerned about another issue -- What will happen to the billions of dollars worth of U.S. contracts following June 30, when sovereignty passes to an Iraqi government?

REP. HENRY WAXMAN:

What will happen if the government decides they want to terminate some of these contracts with American contractors and hire more Iraqis? Are we going to object to it? And what will happen if they decide on different priorities in spending?

JEFFREY KAYE:

The Pentagon's Lumer doubts an Iraqi government would terminate current contracts, but he says if Iraq asks the U.S. to leave, it will.

MARK LUMER:

We haven't worked substantially at any sort of planning about getting everybody out of there, but if we are told to leave or the military leaves, then the civilians and the contractors will more than likely come with us.

JEFFREY KAYE:

So would the U.S. government still be obligated to the contractors?

MARK LUMER:

Oh, absolutely. We have an existing contracting vehicle, which has obligations on both sides.

JEFFREY KAYE:

As they networked, those attending the business forum in Las Vegas seemed to have few worries that the end of occupation would diminish lucrative business opportunities in Iraq.