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Iraq arms contract misses deadline

None of the bidders competing for an already-delayed contract awarded this week to equip the new Iraqi army were able to meet the schedule set by U.S. military officials, according to a U.S. Army contracting document.
A group of graduating Iraqi Army non-commisioned officers and squad leaders at the Iraqi army base in Kirkush, Iraq. Scott Nelson/epa/sipa / Sipa Press file
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

None of the bidders competing for an already-delayed contract awarded this week to equip the new Iraqi army were able to meet the schedule set by U.S. military officials, according to a U.S. Army contracting document.

ANHAM Joint Venture of Vienna, which the Army on Tuesday announced won the contract with a bid of $259 million, is a reconstituted version of the group of companies that won the first round of bidding in January only to see the award cancelled and the contract rebid because of complaints about the bidding process.

Equipment delays
Senior U.S. commanders, preparing to turn over sovereignty to Iraq on June 30, have complained for months that delays in providing the basic military equipment called for in the contract have hampered efforts to rebuild Iraq's army, which is considered a key to taming insurgents and maintaining security.

"None of the [proposals] meet the solicitation's desired delivery schedule," according to the Army's Source Selection Authority summary, dated May 21, which was obtained by The Washington Post. "ANHAM deliveries begin in September 2004 and conclude in March 2005, while [a rival bidder] deliveries begin in November 2004 and complete in December 2004," the contracting document states.

An Army contracting official familiar with the process said that all of the bidders failed to meet the military deadline for providing the supplies -- which include tents, first aid kits, rifles, machine guns and vehicles -- by an average of more than three months. He asked not to be named.

The document shows that ANHAM ranked second in terms of ability to meet the delivery deadlines. The next-closest bidder ranked slightly better, but contracting officials said they were impressed that ANHAM could begin armament deliveries sooner.

"They could start sooner," the official who asked not to be named said yesterday. "We know the urgency of it."

The winner's ability to deliver sooner, combined with a better bid price, which was deemed "clearly more advantageous than that of any other offers," helped make the difference, according to the document.

Army spokesman Maj. Gary Tallman said ANHAM was expected to begin providing some supplies Iraqi forces on July 15. A spokesman for ANHAM, Robert Hoopes, said, "We're going to start delivering materials on July 15, maybe sooner. Obviously they are in desperate need of this material, so were doing everything we can to get this material there."

Ties to Chalabi
ANHAM is only slightly different from Nour USA Ltd., which led the group that first won the contract. It is made up of American International Services/Uni Trans of Reston; Nour; HAIFinance Corp. of Tyson's Corner; Arab Supply and Trading Co. (ASTRA), of Riyadh, Saudi Arabia, and Munis Sukhtian Group of Amman, Jordan. Astra was not originally part of the Nour-led group.

A key ANHAM official, A. Huda Farouki, is a longtime friend of Ahmed Chalabi, the former Pentagon informant and Iraqi National Congress official whose offices were searched for evidence of espionage last week.

Chalabi's ties to Farouki -- a founder of HAIFinance and part-owner of American International Services -- go back more than a decade. Chalabi's Petra Bank lent money to a Farouki business that was having difficulties in the 1980s.

Rival bidders complained about the Chalabi ties, but their formal challenges to the Nour group's initial winning bid were based on the bidding process. The rivals said Nour's bid was unrealistically low to meet the terms set by the military. The rivals also contended that the Nour group lacked experience for a particularly risky operation.

An Army review found vague contract language, missing paperwork, staff turnover and general instability had made the process so flawed that the contract to the Nour group had to be terminated.

"There is a perception we have been fighting that Nour did something wrong, which is totally not true," Tallman said.

The Army contracting official who asked not to be named said yesterday that 60 percent of ANHAM's proposal contained items different than those in the original Nour contract. The bid was lower because the latest request was for fewer supplies. Military officials have supplied Iraqi forces through interim contracts.

After the first contract award, six contractors filed protests to the General Accounting Office. Yesterday none had done so, a GAO spokesman said.