The American government is on the verge of awarding construction

contracts worth hundreds of millions of dollars to rebuild Iraq once

Saddam Hussein is deposed.

Halliburton, one of the companies in the running for the highly

profitable deals, was formerly headed by the US vice-president, Dick

Cheney. Halliburton has already been awarded a lucrative contract to

resurrect the Iraqi oilfields if there is a war.

Other companies have strong ties to the US administration, including

the construction giant Bechtel, the Fluor Corporation, and the Louis

Berger Group, which is involved in the reconstruction of Afghanistan.

Only US companies are on the shortlist of five. The US Agency for

International Development (USAID) defended the narrow shortlist.

A spokeswoman said: "Because of the urgent circumstances and the

unique nature of this work, USAID will undertake a limited selection

process that expedites the review and selection of contractors for

these projects."

The spokeswoman said that it was a policy of USAID to use US

companies for projects funded by the American taxpayer. Non-US

companies were free, through their governments, to organise their own

business, she said.

The winning company would get about $900m (£563m) to repair Iraqi

health services, ports, airports, schools and other educational

institutions.

Sources at the companies said the invitation was unusual in that

USAID did not ask them to set a price for defined services but rather

asked them to say what they could do for $900m.

All five bidders have submitted their proposals or are preparing to

do so after USAID "quietly" sent out a detailed request soliciting

proposals from the likely bidders.

According to the Wall Street Journal, the Iraq reconstruction plan

will require contractors to fulfil various tasks, including reopening

at least half of the "economically important roads and bridges" -

about 1,500 miles of roadway within 18 months.

The contractors will also be asked to repair 15% of high-voltage

electricity grid, renovate several thousand schools and deliver 550

emergency generators within two months.

Construction industry executives said the handful of firms are

competing fiercely in part because they believe it could provide an

inside track to postwar business opportunities. The most highly

sought-after prizes are oil industry contracts.

The US government is believed to be wary of any backlash against an

invasion and is preparing plans for a "hearts and minds" operation

that will swing into place as soon as the country is occupied. The

government is mindful of the long-term benefits of feeding hungry

Iraqis, delivering clean water, and by paying teachers and health

workers.

"It's a sensitive topic because we still haven't gone to war," said

one industry executive. "But these companies are really in a position

to win something out of this geopolitical situation."

It remains unclear whether Iraqis, Americans or an international

consortium will manage the oil industry during an early post-conflict

period.

Steven Schooner, a George Washington University law professor, said

many billions of dollars are at stake. He estimated that $900m would

barely last six months given the scope of the projects the

administration has sketched out.

"The most sophisticated firms that come in first, and establish good

will with the locals obviously will reap huge benefits down the

road," said Mr Schooner.

"These are going to become brand names in Iraq. That's huge."