Video: New questions surround Iraq contract

By Lisa Myers Senior investigative correspondent
NBC News
updated 3/4/2004 12:54:28 PM ET 2004-03-04T17:54:28

It’s one of the biggest postwar contracts in Iraq yet: $330 million to equip the new Iraqi army with everything from helmets and trucks to 16,000 AK-47 rifles. 

Nineteen international companies bid.  The victor: tiny Nour USA, headquartered in an office building in the Washington suburbs — set up only last May.

But now the Pentagon has put the contract on hold because of serious questions raised by competitors and outside experts about Nour’s alleged inexperience, political connections and extremely low bid.

“Something is definitely wrong,” said Mark Spry. Spry was part of a losing American consortium.  He complains Nour’s $330 million bid was so low it wasn’t credible — that the equipment alone would cost more than $500 million.

“We are very upset because we don’t believe we have a level playing field,” said Spry.

Nour is run by Huda Farouki, a big Democratic contributor and longtime close friend of Ahmed Chalabi, head of the Iraqi National Congress (INC), a member of the Iraqi Governing Council and guest of President Bush at the State of the Union address.

A Chalabi spokesperson denies he played any role, “Dr. Ahmed Chalabi and the INC did not help this company to get the contract.”

Competitors question how well coalition authorities checked out Nour.

When NBC went looking for Nour’s Baghdad office at the address listed on its Web site, NBC found nothing.  No such address.  Nour then claimed the office had moved to another building.

The Polish company that is supposed to provide machine guns under the Nour contract doesn’t even have a license to export weapons, according to Polish authorities.

Nour told authorities that giant American consulting firm Booz Allen Hamilton was a partner in its bid. Booz Allen denies it.

And two retired U.S. military officials who Nour claimed were on its advisory board told NBC they have no ties to the company and were placed on the board without their permission or even a courtesy phone call.

“Yes, it’s a mess. It’s a big mess,” said Charles Tiefer, an expert on federal contracting. He says a key test is supposed to be a company’s past performance on similar contracts.

“You can’t justify taking a company that was just created last May and say that they have the past experience that’s required,” Tiefer added.

Wednesday, a Nour spokesman said its principals and partners have decades of experience, that the company welcomes the review and stands by its bid, saying, “What some call low-balling, we call fair pricing.” 

Lisa Myers is NBC’s senior investigative correspondent.

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