Opinion ID: 76149
Heading Depth: 3
Heading Rank: 1

Heading: Contract 20A

Text: 13 In 1988, USAID solicited bids from prequalified bidders to connect a wastewater treatment facility to pumping stations with nineteen kilometers of pipe in Cairo, Egypt. Three entities were prequalified to bid on the project: the Halbert-Jones joint venture, Fru-Con, and Fuller. Prior to the opening of the bids on August 4, 1988, Peter Schmidt contacted Dieter Kadenbach, a member of Fru-Con's supervisory board. Kadenbach met Schmidt at Schmidt's offices in Frankfurt, Germany. Representatives of the other bidders, including Anderson, were also present. Schmidt proposed that the companies rig the bids on Contract 20 to ensure that Halbert-Jones would win the contract. Schmidt contacted Kadenbach several weeks later and sought to work out the details. They agreed that Fru-Con would submit a higher bid than Halbert-Jones. In exchange, Schmidt agreed to pay Fru-Con two to three percent of the price of Contract 20A, or about $2,200,000. 14 Schmidt also worked out bid rigging agreements with representatives from Fuller, the third qualified bidder on Contract 20A. On August 3, 1988, Gunter Niebergall, a Holzmann employee Schmidt supervised, negotiated the terms of an agreement with Constantine Iatrou, an employee of Archirodon, Fuller's parent company. The agreement provided that Fuller would only serve as a subcontractor to Harbert-Jones on the project. Holzmann agreed to compensate Fuller for not bidding by either awarding Fuller a $25,000,000 subcontract and paying Archirodon a fee equal to three percent of the remaining contract value, or Holzmann would pay Archirodon a five percent fee of Contract 20A's value — about $5,000,000. Additionally, Harbert-Jones would not bid against Fuller for future USAID projects of approximately the same value. These details were specifically enumerated in the agreement. 15 The same day this agreement was signed, a letter was sent on Harbert letterhead to the Contract 20A project owner, Cairo Wastewater Organization (CWO), on behalf of the Harbert-Jones joint venture. The letter informed CWO that Harbert-Jones needed to increase its previously submitted bid by three to five percent due to last-minute price changes and other circumstances. 16 When the bids were opened, Harbert-Jones' bid of $129.3 million was the low bid. Fru-Con bid $151.8 million and Fuller did not submit a bid at all. Before the bids were opened, engineers for CWO estimated the cost would be about $60 million. Because of the large discrepancy, CWO and USAID engaged in a series of competitive negotiations with Harbert-Jones and Fru-Con and scheduled a second round of best-and-final bids for December 1988. 17 Prior to the December 1988 bidding, Schmidt met with Iatrou, Anderson, and several others on December 7. They discussed the August 3 agreement and negotiated a lower payoff on the bid-rigging scheme. Anderson wrote down the new agreement and signed it. Schmidt scratched out Anderson's name on the document because he was an American and this agreement was between European companies. Schmidt and Iatrou signed the document instead. 18 The companies' revised bids were opened on December 12, 1988. Harbert-Jones was awarded Contract 20A on April 16, 1989. Payment for services on the contract was made directly to Harbert-Jones from the U.S. Treasury. Harbert-Jones made its payments to Fru-Con, Fuller, and Holzmann as they had agreed. When confusion arose as to when the payments between the conspirators were due, Anderson, Schmidt, Iatrou, and others met in Frankfurt, Germany. Iatrou and Schmidt corresponded frequently about the issue, always referring to Anderson in the letters as our friend or their contact in the U.S. Harbert-Jones completed the work on Contract 20A in 1993. The total contract price was $107,071,000. Harbert-Jones earned a profit of $50,639,000 on the project.