U.S. cancels Iraq contract after questions raised

The U.S. Army canceled a $327 million contract to equip the Iraqi army on Friday, citing technical problems with the bidding process and denied political considerations played a role in awarding the original contract.

An Army official told reporters that new proposals for the work would be sought after a review found a huge spread in competing bids, an indication that competing suppliers had not understood the contract requirements in a uniform way.

“When we looked at the statement of work, we saw that there were some ambiguities in there,” said the U.S. Army official who spoke on condition he was not further identified.

Losing companies have claimed their bids were not properly assessed, that Virginia-based Nour USA had made an unrealistically low bid and that it did not have the experience to fulfill the contract.

Nour USA has said it stands by its proposal and insists it won the deal on merit. Its chairman, Houda Farouki, is a close friend of Iraqi Governing Council member Ahmed Chalabi.

Efforts to reach a Nour representative about the cancellation were not immediately successful.

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The U.S. Army official rejected suggestions that political connections played a role in the initial award to Nour.

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“We don’t know of any and I will tell you the procurement process is pretty much exempt from those sorts of things,” he said. “I want to make it very clear that Nour’s capabilities are not being assumed to be invalid.”

A new contract would immediately be sought by the U.S. Army Materiel Command located in Northern Virginia. The original award was made by the Coalition Provisional Authority in Iraq.

The U.S. Army official said alternatives to quickly supply the Iraqi army were also being examined.