Pledge to share out bulk of Iraq 'pie'

At least 90% of the Iraq reconstruction being managed by US construction giant Bechtel will be contracted out - with European firms all fighting for a slice of the pie yesterday as representatives from 250 firms crammed into a west London hotel for a seminar organised by the US government's prime contractor.

While about 30 anti-war protesters stood in the drizzle outside the Novotel, in Hammersmith, chanting "vultures, vultures", the US construction giant Bechtel told hopeful executives inside that it planned to farm out the bulk of its initial $36.6m (£21.6m) of work. Over the next 18 months that figure will rise towards $680m.

Tom Elkins, the Bechtel executive in charge of procurement, told the seminar: "We see very little Bechtel self-performance. Strictly only when we have to do it. Other than that it is all subcontracting - 90%, maybe higher, will be subcontracted."

The initial infrastructure contract awarded to Bechtel by the US development agency, USAid, includes work on one seaport, five airports, various electrical power systems, road and rail networks, water and sanitation services, and school and health facilities.

At the gathering yesterday of more than 1,000 business people, the UK companies in the audience - ranging from giants such as the engineering and construction firm Costain to smaller operations such as the Chester based scaffolding firm NSF -believed Britain's role in toppling Saddam's regime would give them an advantage over rivals from other countries.

According to the Wall St Journal, Bechtel has been told privately to favour America's coalition partners.

But the audience also included a host of European and Asian companies, as well as a sizeable group of Iraqi exiles hoping to return home and set up in business. One Iraqi man, for example, said he wanted to establish a telecoms operation.

While much of the event was taken up with an explanation of tendering processes, the delegates were warned that the race for contracts would be intense. "Look around the room, these are your competitors," Mr Elkins told them.

By the end of the week, after another seminar in Kuwait, Bechtel expects more than 10,000 firms worldwide to be fighting for the work, and the average individual contract will be worth less than $1m.

Companies were also reminded that, if their bids were successful, they would be working in a country where lawlessness was rife, a fact that would increase the cost of insurance and could make the contracts less lucrative than they expected. "Your security is your responsibility. It will not be provided for you," said Mr Elkins.

Despite the potential difficulties, British businesses were enthusiastic about securing the contracts against US and global competition.

Colin Adams, chief executive of the lobby group British Consultants and Construction Bureau, said the decision by Bechtel and the US government to open the bids to non-American firms was an "extraordinarily good step". He told Radio 4's Today programme: "It is the first building block in a long process, which involves the Work Bank, the UN, hopefully the EU in time, and other bilateral donors."

Patricia Hewitt, the trade and industry secretary, promised that the government would give "every possible help and facility" to British companies to ensure that they had a "fair chance" to win reconstruction contracts.

She said: "What we have been doing today with this joint conference with the American government is to make sure that hundreds of British companies with the expertise and experience to contribute to Iraq actually have an opportunity as partners and as subcontractors."

She dismissed reports that British firms would have a headstart. "There should be a level playing field and companies should be chosen on the basis of what they can contribute to the redevelopment of Iraq . I would like to see British companies get as much of this business as possible but I think the partners in reconstruction ought to be chosen on the basis of what they can contribute."