USAID keeps Iraq contracts in-house

The US Agency for International Development (USAID), which looks likely to run the reconstruction of Iraq, is relying exclusively on an in-house team of around 40 lawyers as it negotiates the lucrative contracts to rebuild the country.

USAID's legal department, headed by general counsel John Gardner, expects to advise on all eight of the prime contracts, including the $900m (£573.3m) deal for the restoration of civilian architecture, which is expected to be announced this week.

Meanwhile in the UK, privatised development operation Crown Agents has become the first non-US company to profit from the reconstruction of post-war Iraq. The former government agency was advised by its associated law firm CA Legal, a joint venture with Surrey law firm Marriott Davies Yapp (MDY) which was established when Crown Agents was privatised in 1997. MDY is a partnership of lawyers which used to be the in-house legal department at Crown Agents before it was privatised.

At the time of privatisation, the department's largest client was the Overseas Development Agency (now the Department for International Development), but the in-house department could not continue to advise it as a private entity so it was spun off.

MDY's largest clients remain the Department for International Development and Crown Agents, but it also advises a number of public and private organisations.

Crown Agents will act as a subcontractor to USAID's prime contractor International Resources Group (IRG), a Washington-based professional services company tasked with providing technical advice for the reconstruction of Iraq.

US law firms hoping to profit from the immediate post-war Iraq spoils will have to scrap it out for work with contractors such as Bechtel and Fluor Daniel, which are expected to be the beneficiaries of the first large contracts. Other UK companies such as Amec, Costain, Balfour Beatty and Thames Water remain hopeful that they will get a look-in.

The IRG contract covers a period of just 90 days and has a value of around $7m (£4.5m), with two additional one-year options that can be ordered by USAID.