Tuesday, July 31, 2007
British firms emerge as finalists for largest U.S. security contract in Iraq
Contracts, Reconstruction
(Washington Post) - Two British firms have emerged as finalists to win the largest U.S. security contract in Iraq, according to sources familiar with the matter. In what has become a contentious competition, Aegis Defence Services and ArmorGroup International are considered top contenders for a contract worth up to $475 million to provide intelligence services to the U.S. Army and security for the U.S. Army Corps of Engineers on reconstruction work in Iraq. Aegis won the initial contract in 2004, a three-year, $293 million deal.
The Army has eliminated another British firm, Erinys Iraq, but that company is contesting the decision in sealed documents filed in the U.S. Court of Federal Claims, said sources who spoke on condition of anonymity because the contract review process is confidential. It was unclear yesterday whether the Army had chosen other finalists, but two other firms confirmed that they, too, are out of the running -- Control Risks of Britain and Blackwater Security Consulting of North Carolina.
The battle for the lucrative contract has drawn the attention of members of Congress who have questioned the use of private security contractors, about 20,000 of whom operate in Iraq, and whether the military should be outsourcing such critical tasks as security and intelligence to private firms. Based on a request from a member of Congress, the Special Inspector General for Iraq Reconstruction is conducting its second audit of Aegis.
Meanwhile, federal lawmakers have requested that the Government Accountability Office, Congress's investigative arm, also look into the use of private security contractors in Iraq. The GAO has begun to review contractors there, building on previous reports, spokesman Paul Anderson said. "We're still early in the process."
"The Army's decision to once again remove Erinys from the bidding process is bad economics and demonstrates the fundamental flaws in this procurement," said an Erinys spokesman. "We are taking steps to ensure that our proposal is given fair treatment on a level playing field, in accordance with applicable government laws and regulations."
ArmorGroup spokesman Patrick Toyne Sewell declined to comment. ArmorGroup already is one of the largest security firms in Iraq, with more than 1,200 employees. Aegis, which also has about 1,200 contractors in Iraq, declined as well to comment on the new contract, but Kristi M. Clemens, the firm's executive vice president, touted its work on the current contract.
The Army is expected to make a final decision soon. "We are proceeding with discussions and preparation for award," said Chuck D. Martino, deputy chief of staff of the Joint Contracting Command-Iraq/Afghanistan in Baghdad.
The Army has eliminated another British firm, Erinys Iraq, but that company is contesting the decision in sealed documents filed in the U.S. Court of Federal Claims, said sources who spoke on condition of anonymity because the contract review process is confidential. It was unclear yesterday whether the Army had chosen other finalists, but two other firms confirmed that they, too, are out of the running -- Control Risks of Britain and Blackwater Security Consulting of North Carolina.
The battle for the lucrative contract has drawn the attention of members of Congress who have questioned the use of private security contractors, about 20,000 of whom operate in Iraq, and whether the military should be outsourcing such critical tasks as security and intelligence to private firms. Based on a request from a member of Congress, the Special Inspector General for Iraq Reconstruction is conducting its second audit of Aegis.
Meanwhile, federal lawmakers have requested that the Government Accountability Office, Congress's investigative arm, also look into the use of private security contractors in Iraq. The GAO has begun to review contractors there, building on previous reports, spokesman Paul Anderson said. "We're still early in the process."
"The Army's decision to once again remove Erinys from the bidding process is bad economics and demonstrates the fundamental flaws in this procurement," said an Erinys spokesman. "We are taking steps to ensure that our proposal is given fair treatment on a level playing field, in accordance with applicable government laws and regulations."
ArmorGroup spokesman Patrick Toyne Sewell declined to comment. ArmorGroup already is one of the largest security firms in Iraq, with more than 1,200 employees. Aegis, which also has about 1,200 contractors in Iraq, declined as well to comment on the new contract, but Kristi M. Clemens, the firm's executive vice president, touted its work on the current contract.
The Army is expected to make a final decision soon. "We are proceeding with discussions and preparation for award," said Chuck D. Martino, deputy chief of staff of the Joint Contracting Command-Iraq/Afghanistan in Baghdad.
Labels: Aegis Defense Services, Armorgroup, Blackwater Security Consulting, Chuck D. Martino, contracts, Control Risks, Erinys Iraq, GAO, Iraq, Iraq reconstruction, USACE
Tuesday, May 29, 2007
U.S. military looking for convoy escort security services
Contracts
(FedBizOpps) - Joint Contracting Command Iraq/Afghanistan Reconstruction Logistics will solicit convoy escort security services that will be integrated into the current Supply Chain Management System and provide continuous convoy escort team availability in accordance with mission requirements.
Labels: contracts, convoy escort, security
Saturday, April 07, 2007
Asian companies likely to get first Iraqi oil contracts
Oil
(India Times) - Despite whispers in some quarters that the Bush administration invaded Iraq to take control of its oil, the first contracts with major oil firms from Iraq's new government are likely to go not to US companies, but rather to firms from China, India, Vietnam, and Indonesia. "While Iraqi lawmakers struggle to pass an agreement on exactly who will award the contracts and how the revenue will be shared, experts say a draft version that passed the cabinet earlier this year will likely uphold agreements previously signed by those countries under Saddam Hussein's government," CNNMoney.Com has said in a report citing energy experts.
"The Chinese could announce something within the next few months" if all goes well with the oil law, James Placke, a senior associate at Cambridge Energy Research Associates who specializes in the Middle East has been cited in the report. The Asian firms are advantaged and for several reasons: they are less constrained by Western sanctions during the Hussein regime, they've been operating in Iraq and know the country's oilfields, according to Falah Aljibury, an energy analyst who has advised several Iraqi oil ministers as well as other OPEC nations.
Aljibury said the first contracts likely awarded will be to the Chinese in the south central part of Iraq, the Vietnamese in the south, the Indians along the Kuwaiti border, and the Indonesians in the western desert;but that the contracts under consideration are small. According to Aljibury, the Chinese agreement is to produce about 70,000 barrels of oil a day, while the Vietnamese one is for about 60,000. The report said it is hard to to put a dollar amount on what those contracts might be worth, as security costs, drilling conditions and the exact terms to be offered by Baghdad are unknown. But the barrel amount is tiny even by Iraq's depressed post-war production of around 2 million barrels a day.
Labels: China, contracts, India, Indonesia, oil, Vietnam
Wednesday, March 21, 2007
ArmorGroups' profits fall after failure to win more Iraq contracts
Business, Security
(Financial Times) ArmorGroup's profit fell sharply last year after the armed security provider failed to win new contracts for its Iraqi training camp. David Seaton, chief executive at the Westminster-based company, blamed the lack of business at the Camp Ghassan facility on a "slowdown in coalition-funded training of Iraqi security forces and a continued lack of funds for training from Iraq's ministries".
In 2005, profit was boosted by a contract to train close protection officers for the Iraqi judiciary. However, this was not replaced with new business. As a result, pre-tax profit fell in the year to December 31 to $9.5m (£4.85m), down from $12.1m the previous year. The training problems overshadowed an improvement in Armor's protective security division, which accounts for most of its sales.
The company reduced its reliance on Iraq, cutting revenues from 59 per cent of group sales to 49 per cent after winning new contracts in the Middle East, Afghanistan and Africa. It also managed to improve margins in Iraq by reducing costs, hiring more locals and lowering capital investment.
Sales rose 17 per cent to $273.5m ($233m) on the back of growing business in protective security in Iraq, Afghanistan and Nigeria. Earnings per share were 13.35 cents (16.24 cents) and the recommended final dividend is 1.5p, giving a yearly total of 2.75p, the same as 2005. Its shares, which have rallied 43 per cent in the past three months because of the improved Iraq performance, fell 3p to 87p yesterday.
In 2005, profit was boosted by a contract to train close protection officers for the Iraqi judiciary. However, this was not replaced with new business. As a result, pre-tax profit fell in the year to December 31 to $9.5m (£4.85m), down from $12.1m the previous year. The training problems overshadowed an improvement in Armor's protective security division, which accounts for most of its sales.
The company reduced its reliance on Iraq, cutting revenues from 59 per cent of group sales to 49 per cent after winning new contracts in the Middle East, Afghanistan and Africa. It also managed to improve margins in Iraq by reducing costs, hiring more locals and lowering capital investment.
Sales rose 17 per cent to $273.5m ($233m) on the back of growing business in protective security in Iraq, Afghanistan and Nigeria. Earnings per share were 13.35 cents (16.24 cents) and the recommended final dividend is 1.5p, giving a yearly total of 2.75p, the same as 2005. Its shares, which have rallied 43 per cent in the past three months because of the improved Iraq performance, fell 3p to 87p yesterday.
The private security market has expanded from $900m in 2003 to $2.6bn last year, with about half of that outside Iraq, showing that the industry is maturing. However, operating margins of 4.7 per cent in the armed guard business, while good for the industry, are slim, especially for a company that experienced 450 "hostile actions" against staff last year. Armor's future attractiveness will lie in higher margin training work and consulting services, similar to those of Control Risks, its non-listed rival.
Labels: Armorgroup, Camp Ghassan, contracts, David Seaton, private security companies
Sunday, March 11, 2007
Spiralling economy as Iraqi entrepreneurs invest elsewhere
Economy
(Azzaman) Wealthy Iraqis are fleeing with their capital to neighboring states, dealing a heavy blow to the country’s war-torn economy. According to Mohammed Majeed, a private entrepreneur, the last few months saw “massive flight” of capital from the country. There are no statistics on the money leaving the country, but it is estimated that at least two million Iraqis have fled the violence that struck Iraq in the aftermath of the 2003 U.S. invasion.
The majority of Iraqis leaving the country are poor and can hardly make ends meet as refugees abroad. But among them are Iraqis with money, who are buying property and setting up businesses particularly in Jordan, Syria and other Arab states. Majeed said Iraqis with money were no longer willing to invest in the country due to the political uncertainty and mounting violence. “This is having a negative impact on the economy as most private entrepreneurs are selling businesses and fleeing with the money,” he said.
In a move to halt the flight, the Planning Ministry has upgraded the status of Iraqi contractors to enable them win deals which previously fell in the domain of foreign firms. Alaa al-Hilali, a businessman, praised the ministry’s move, but said more incentives were needed to lure Iraqi businessmen, industrialists and traders to stay.
Despite insecurity, the government has earmarked billions of dollars for development this year as part of its $41 billion budget. No foreign contractors can now venture into Iraq and the government almost wholly relies on domestic entrepreneurs to implement its projects. Fawzi Mohammed, who owns a contracting firm in Baghdad, said, the flight of Iraqi industrialists has resulted in a sluggish economy and higher unemployment. He said most private businesses were idle either because they could no longer compete with the influx of cheap foreign goods or their owners had fled the country.
The majority of Iraqis leaving the country are poor and can hardly make ends meet as refugees abroad. But among them are Iraqis with money, who are buying property and setting up businesses particularly in Jordan, Syria and other Arab states. Majeed said Iraqis with money were no longer willing to invest in the country due to the political uncertainty and mounting violence. “This is having a negative impact on the economy as most private entrepreneurs are selling businesses and fleeing with the money,” he said.
In a move to halt the flight, the Planning Ministry has upgraded the status of Iraqi contractors to enable them win deals which previously fell in the domain of foreign firms. Alaa al-Hilali, a businessman, praised the ministry’s move, but said more incentives were needed to lure Iraqi businessmen, industrialists and traders to stay.
Despite insecurity, the government has earmarked billions of dollars for development this year as part of its $41 billion budget. No foreign contractors can now venture into Iraq and the government almost wholly relies on domestic entrepreneurs to implement its projects. Fawzi Mohammed, who owns a contracting firm in Baghdad, said, the flight of Iraqi industrialists has resulted in a sluggish economy and higher unemployment. He said most private businesses were idle either because they could no longer compete with the influx of cheap foreign goods or their owners had fled the country.
Labels: contracts, economy, investments, Planning Ministry
Thursday, March 01, 2007
Halliburton expects extension on LOGCAP contract
Business
(Reuters) Halliburton Co., whose KBR unit is the largest private contractor in Iraq, said on Wednesday it expected the U.S. Department of Defense would announce awards for new Iraq contracts in the second quarter, later than the company expected. The Houston company, which will complete its split off of the engineering and construction business KBR in the coming months, said last month it expected the Pentagon would announce the LogCAP IV contracts by the end of the first quarter.
KBR has so far booked more than $20 billion in revenues from its work in Iraq and has been the target of several investigations into the company's billing practices. It has also faced complaints from some U.S. lawmakers about the company's close ties to the Bush administration. Vice President Dick Cheney formerly served as Halliburton's CEO before taking up his current office.
In its annual 10-K filing to the Securities and Exchange Commission, Halliburton said its awards under a new LogCAP contract would reduce its revenues from the Pentagon."We expect our overall volume of work to decline as our customer scales back the amount of services we provide. However, as a result of the recently announced surge of additional troops in Iraq, we expect the decline to occur more slowly than previously expected," Halliburton said in the filing. The LogCAP contract includes logistical services for U.S. troops stationed in Iraq, including transportation, laundry, entertainment and dining services. KBR had also previously held contracts to help rebuild Iraq's damaged oil producing infrastructure.
Labels: contracts, Halliburton, KBR, LogCAP, U.S. Department of Defense
