DUBAI, United Arab Emirates -- Mac McClelland
did some quick math as he
steered his Lincoln Navigator through chaotic
Dubai traffic.
He'd just learned of a contract to supply food
to 12,500 U.S. soldiers in
Iraq. If he won it, he'd be a subcontractor to
a subcontractor on a deal
that originally went to Kellogg, Brown &
Root, which provides support
services to the military overseas.
"Twelve thousand five hundred mouths," he mused.
"That's about 40,000
meals a day." He figured if he could clear 10
cents profit on each meal,
he could make as much as $4,000 a day. "That's
real money," he said to himself.
Rebuilding Iraq will take billions of dollars,
and dozens of
entrepreneurs such as Mr. McClelland are angling
for a share of that
money. These businesspeople -- mostly retired
military or diplomatic
personnel who spent their careers in the Middle
East -- act as middlemen
for hire. They do everything from rounding up
local suppliers for construction
projects to helping companies set up branch offices
in the region.
Mr. McClelland, a retired Marine Corps major,
figures he's got three
dozen deals cooking right now related to Iraq
reconstruction. In the past
month, he's rounded up local companies to bid
on a contract to supply
automobiles to the new Iraqi police force. He's
signed on as a consultant
to help 3M Co. and a company that makes X-ray-scanning
equipment break
into the Iraq market. And he's set up a deal
with a scrap-metal company
based in Houston that wants to bid for the remains
of Iraqi tanks blown
up by U.S. bombs. On the side, the 47-year-old
Mr. McClelland is trying
to persuade some key members of the royal family
here to let him organize
a Dubai jazz festival -- the U.A.E.'s first.
Mr. McClelland describes himself as a "bit player"
in the Iraq gold rush.
But even for the bit players, there's the potential
for big money. "If 10% of
the projects come through, I'll have made enough
to retire twice over," he says.
A couple of big ones, such as the food contract,
could make his year.
Middlemen and go-betweens with strong military
contacts always appear
wherever there's a war and wherever there's money
to be made supplying
the U.S. armed forces. What makes Iraq different
is the size of the
rebuilding effort the U.S. has taken on and the
huge number of U.S. troops
involved. The U.S. government is spending several
billion dollars a month on
troop support, fuel, equipment and, to a lesser
extent, reconstruction.
Rather than bid out each individual project, the
U.S. government has
awarded large contracts to a handful of corporations,
including Bechtel
Group Inc. -- which won a $680 million deal to
coordinate the rebuilding
effort -- and Halliburton Corp.'s Kellogg, Brown
& Root, which has taken
in about $425 million of U.S. Army work, much
of it related to supporting
troops with food and housing in Iraq and the
Gulf. Those big players then
offer hundreds of subcontracts to other companies.
Bechtel, for instance,
is subcontracting about 90% of its work.
Seal of Approval
Because Iraq is too unstable for large-scale rebuilding
projects, the
first subcontracts aren't huge by corporate standards
-- they mostly
involve housing and feeding troops, and getting
basic infrastructure back
up and running. But they're valuable in another
way, says Frances Cook, a
former U.S. ambassador to Oman who formed the
Phoenix-Iraq Consortium in
Dubai to help Arab companies get their own piece
of the rebuilding
effort. With so much competition for the early
subcontracts, she says,
winning an early deal is a kind of "Good Housekeeping
Seal of Approval."
"It means you are vetted and gives you a presence
inside Iraq," says Ms.
Cook, whose firm's current clients are a medical
business owned by a
prominent Saudi family, as well as three major
construction companies in
Egypt and Oman.
But competing for subcontracts can be messy and
confusing, even for big
corporations with decades of experience in the
U.S. Between mid-April and
late May, Bechtel officials say, they received
about 87,000 inquiries
from companies eager to get into Iraq. When the
company held a
subcontractor conference in Kuwait City in late
May, "about half of Dubai
showed up," says Horst Hoeller, the managing
director of 3M's Gulf
operations, who attended the conference.
Companies such as 3M hope middlemen can help them
cut through the chaos.
At war's end, the Minneapolis-based industrial
giant, which has an office
in Dubai, wanted to open another in Baghdad.
The plan: to solicit business --
offering everything from construction materials
to office products -- directly
from big contractors and to a lesser extent the
military. But the company
quickly decided the Iraqi capital was too dangerous.
Instead, it decided to hunt for subcontracts at
the Bechtel conference.
Executives needed someone savvy who could guide
them through the process
and get them close to important military and
corporate officials. So they
tapped Mr. McClelland, who attended church with
Dr. Hoeller's assistant.
Mr. McClelland supplied the company with the names
of 15 senior military
contracting officers in Kuwait, the U.A.E., Oman
and Qatar. Mr. McClelland
also gave 3M a list of names of local executives
from companies such as Bechtel;
Kellogg, Brown & Root and military-supply
firm DynCorp, many of whom are
former officers Mr. McClelland served with in
the Gulf. Soon after Dr. Hoeller
arrived in Kuwait for the Bechtel conference,
he met a senior military officer,
one of Mr. McClelland's contacts, who complained
about a lack of Post-It
notes in Iraq. Within days, the military had
put in an order for Post-Its,
electrical tape and multimedia projectors.
Dr. Hoeller estimates Iraq could soon generate
as much business for 3M as
Saudi Arabia, his largest Middle East market,
although he declines to be more
specific. The St. Paul, Minn., company, he says,
"is going to make good money in Iraq."
Middlemen also are crucial to the cottage industry
of consulting firms that have
sprung up in Washington and the Middle East to
guide companies through the
Iraq contracting maze. In late May, Joe Allbaugh,
the national campaign manager
for President Bush in 2000, and Ed Rogers, a
senior official in the Reagan and
first Bush White Houses, put together one such
firm, New Bridge Strategies LLC.
"We can take people to the Pentagon" and the Agency
for International
Development, Mr. Rogers says. "But to do it right,
you need people who
know the Middle East and people who are there
all the time." One of the
firm's first moves was to team up with Leigh
Gribble, a retired Naval
officer whose last post was at the U.S. embassy
in Kuwait City, where he
advised the Kuwaiti navy on weapons purchases.
For these retired military officers in the Gulf,
the sudden crush of
business couldn't have come up at a better time.
Last year, business in
the Middle East virtually stopped. Nobody wanted
to invest in a region
where a chemical or biological attack seemed
like a real possibility.
"Absolutely nothing was happening out here,"
says Mr. Gribble, 47.
He moved back to Rhode Island with his wife and
children to sit out the
war. When the fighting was finished, he and his
wife decided it was time
to introduce their young kids, who had spent
their lives in Kuwait, to
American culture. But he saw business opportunities
back in the Middle
East, so he asked his wife to give him two years
in Iraq on his own.
Bright Future
"She recognizes the opportunity," says Mr. Gribble,
who returned to
Kuwait in early June and plans to go into Iraq
this week to scout
business. "The future looks pretty damn bright
right now."
Before Mr. McClelland went into business for himself,
he was the
political adviser to the admiral who runs the
U.S. Navy's Central
Command, which oversees naval operations in the
Middle East and Central
Asia. He retired in 1996 and worked as a general
manager overseeing
Middle East operations for Enron until that company
imploded.
Right after Sept. 11, 2001, he pitched himself
as a security consultant,
drafting evacuation plans for the Middle East
offices of companies such
as Gillette. He did seminars on Marine Corps
leadership tactics and in
his spare time coached his son's baseball team.
He says he even convinced
the Crown Prince of Dubai to donate land to build
four baseball diamonds.
The young ballplayers lost their previous fields
when the owner evicted
them to protest U.S. policy in the Middle East.
Mr. McClelland landed his first big Iraq deal
in the run-up to the war
when he got a tip, from an old Oman embassy colleague,
about an Air Force
base that DynCorp was building near Dubai. Eager
to move quickly, DynCorp
decided to subcontract out much of the work to
local companies in the U.A.E.
Within two days, Mr. McClelland had lined up a
half-dozen local
businesses to provide essentials such as food,
toilets, showers,
generators and gravel at the base. Less than
24 hours later he had won a
subcontract to provide more than 50 separate
services to the base.
Why didn't DynCorp, a unit of Computer Sciences
Corp., which sells
information-technology products to the federal
government and private
companies, just find the suppliers on its own?
"Mac is a superstar," says
John Thomas, program manager for DynCorp in Oman.
"He has so many
contacts, when we don't know our way around in
a place [like the U.A.E.],
he can get things done quick."
Mr. McClelland won't disclose how much he made
from the deal, but says,
"It was the best month I've ever had." And it
led to other business.
A few weeks later, Mr. McClelland wrangled an
invite to a meeting of U.S.
military officers and contractors held weekly
at the U.S. embassy in Jordan.
The former Marine, who speaks fluent Arabic,
had gone through language
training in Tunis with the defense attache at
the embassy who organized the meeting.
At the Jordan meeting, Mr. McClelland learned
the Army had tapped Kellogg,
Brown & Root to quietly set up a Special
Forces base in Jordan for the coming
war in Iraq. Shortly after the meeting, Mr. McClelland
contacted one of his clients,
Aggreko LLC, a British company that rents generators.
A few days later Aggreko
landed a contract to supply generators to power
the base.
Since then, Mr. McClelland has bid on a contract
to supply 250 diesel trucks and
SUVs to Kellogg, Brown & Root for use in
Afghanistan. He learned about that deal
from a Kellogg employee who attends his church
in Dubai. A few weeks later,
he submitted a bid on a contract to provide more
than 500 cars and trucks to
DynCorp, which has the contract to help rebuild
the Iraqi police force. He discovered
that deal while on a one-week consulting stint
in Oman for DynCorp. In both cases,
he teamed up with local auto dealers in the Emirates
that he met while working in
Bahrain at Navy Central Command.
The dealerships could bid on the contracts by
themselves. But without Mr.
McClelland, they likely wouldn't learn about
the deals, which frequently
aren't broadly advertised. And Mr. McClelland
provides another service.
"I am an American, veteran-owned business. That
helps when you're doing
business with the U.S. military," he says. Neither
of the two car
contracts has been awarded yet.
In addition to chasing his own deals, Mr. McClelland
has corporate
consulting contracts that will bring him steadier
paychecks. Sometimes
those deals bear other fruit. One executive at
a prospective client,
supply-giant W.W. Grainger, recently called him
about the big catering
contract in Iraq. "Do you know anyone who can
feed 10,000 to 12,500
people a day in Iraq?" the executive asked.
The executive had run into a representative from
a U.S. company in Kuwait
that had subcontracted to set up temporary bases
for U.S. troops in Iraq.
Now that subcontractor needed help finding someone
who could do the
catering at the base and had the necessary security
certifications from
the military. Grainger didn't do that kind of
work. "I've done catering
and I'm certified," Mr. McClelland said.
Racing to a meeting with 3M on a separate matter,
Mr. McClelland called
the catering company that had helped him provide
meals to the Air Force
base in the U.A.E. Within 24 hours he had put
together a proposal. About
a week ago he learned he had won the deal. The
first meals are due in
Iraq on June 27.