20851: Burnham: Toronto Star: Companies covet post-war rebuilding contracts (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: thor burnham <thorald_mb@hotmail.com>
    contracts (fwd)

A friend drew my attention to this article written several days ago in the
Toronto Star. I thought it was an interesting look at the business aspect of
political instability in Haiti specifically and the world generally. There
seems to be a lot of money to be made from "failed" states.

best,
Thor Burnham

Toronto Star
Mar. 23, 2004
Companies covet post-war rebuilding contracts
$200 billion U.S. a year business
Haiti the latest procurement hot spot


RICK WESTHEAD
BUSINESS REPORTER

PORT-AU-PRINCE—Hundreds of U.S. and Canadian soldiers already patrol the
rubble-strewn streets of Port-au-Prince, and the United Nations and other
countries have pledged thousands more will soon descend on Haiti.

While the troops may be well-armed and protected by state-of-the-art Huey
military helicopters, sustaining a peacekeeping force of thousands requires
more than security. There's also the matter of housing and feeding the
soldiers, not to mention more mundane chores like laundry, acquiring flush
toilets and showers and delivering mail.

Nation-rebuilding projects in countries such as Iraq, the Congo and Haiti
have spawned a growing industry as private-sector companies compete to win
contracts to aid in the rebuilding efforts. Some analysts say the business
now generates as much as $200 billion (U.S.) a year.

"When you roll up all the companies involved here, there's no question it's
in the billions," said Len Supko, a former U.S. Army colonel who's now a
program manager with Cubic Corp., a San Diego, Calif., company that uses
computer simulations to help train U.S. troops before their deployment
abroad.

Supporting U.S. military efforts in Haiti alone might produce $100 million a
year, said Doug Brooks, president of the International Peace Operations
Association, a Washington-based trade group representing companies that
covet military support contracts.

"There's going to be a lot of activity and bidding here," Brooks said.

"It may not be a big deal compared to Iraq, but it's right around the
corner, so there aren't the costs of getting your people around the world."

Then there are U.N. contracts.

The organization has already deployed a 24-member assessment team to Haiti
to determine what sort of support mission it might deploy, a U.N. source
said.

The team is expected to report to U.N. Secretary-General Kofi Annan within
the next week. Annan would then present its findings to the U.N.'s security
council, which would determine the size of force to send.

The U.N., which has already deployed troops and staff on peacekeeping
missions in 28 countries, including Liberia and the Ivory Coast, has a list
of companies with which it already has procurement agreements.

In 2002, the latest year for which figures are available, the U.N.'s
procurement division awarded $813 million worth of contracts.

U.S.-based companies garnered $194 million, or 24 per cent, of those
contracts. Canadian companies, meanwhile, accounted for $12.3 million. There
are 176 Canadian-based concerns, including Military International Ltd.,
SNC-Lavalin International Inc. and Zenon Environmental Inc., on the U.N.'s
approved vendor list.

While neither the U.S., Canada nor the United Nations have indicated how
long they might occupy Haiti, Canadian Ambassador Kenneth Cook said in an
interview that international forces need to take a longer-range plan when
considering the crippled Caribbean nation than in past military
interventions.

He said the U.N.'s blue-helmeted troops and other peacekeepers should remain
in the poverty-stricken nation through at least 2009, giving companies a
larger window to help aid programs take root.

Among private-sector firms, Halliburton Co., U.S. vice president Dick
Cheney's former company, has been among the companies that have benefited
the most after wars.

In 1992, the U.S. military, seeking to outsource some of its support-related
work, paid Halliburton's Kellogg, Brown & Root unit $3.9 million to devise
plans to support deployed U.S. forces in 13 parts of the world.

Nine years later, in December, 2001, KBR signed a 10-year pact with the
Pentagon to supply U.S. troops around the world with housing, food, purified
water and other non-military, but essential, services.

The worldwide Army logistics contract, referred to as LogCAP, guarantees
Halliburton 1 per cent of contract revenue as its profit margin, plus
performance bonuses of up to 8 per cent.

Kellogg, Brown, which generated about $141 million during the U.S.
military's last intervention in Haiti by supporting about 20,000
peacekeepers, spins off about 90 per cent of the over-all business to
subcontractors, Brooks said.

Other companies that may now seek to share some of the Haiti recovery
business with Kellogg include Computer Sciences Corp.'s Dyncorp division;
Vinnell Corp., which has trained the Saudi national guard since 1975;
Military Professional Resources Inc., which trains military and police
forces and boasts it employs more generals per square foot than the
Pentagon; and AECOM Government Services Inc., whose services range from
establishing banks and beauty shops to dentist offices.

A U.N. source said other firms likely to covet work in Haiti are Blackwater
USA, which trains security forces to protect embassies and other key
buildings; Virginia-based BMD International, which provides translators
fluent in Creole, the offshoot of French that many Haitians speak; and ICI
of Oregon.

In 1996, ICI was awarded a contract by the U.S. state department to support
Canadian peacekeepers in Haiti.

Bill Durch, a senior associate at the Henry L. Stimson Center, an
independent security research firm, said the prospective U.N. mission in
Haiti would "pump up" the procurement figures in coming years.

"It's a good time to be a vendor," Durch said.

It's also likely that insurance companies will bolster sales, since they
charge high premiums when companies send personnel and equipment into
dangerous regions.

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