Working in Iraq

Along with the many brave American soldiers who were sent to fight in Iraq, many contractor employees also were deployed there in support of the U.S. efforts. As the active conflict winds down and the nature of their work changes, the number of contractor employees in the country is likely to rise even more.

Working in Iraq entails all the usual difficulties associated with performing overseas projects for the U.S. government. It also involves some unique risks. Among those is the possibility of not being paid. Indeed, there is an active rumor around Washington, D.C., that contractors working in Iraq are doing so "at risk" that they won't be paid unless Congress repeals a specific statutory prohibition on such work.

Fortunately, the rumor is wrong. But the situation is complex, and a few contractors may have difficulties.

There are two primary regulatory schemes applicable to this situation. First is the economic sanctions regime administered by the Treasury Department's Office of Foreign Assets Control (OFAC). Second is the Iraq Sanctions Act of 1990 (ISA), which is at the heart of the rumor.

In August 1990, when Iraq invaded Kuwait, then-President Bush immediately issued several executive orders that generally prohibited exporting to Iraq any goods, technology or services from the United States. He also prohibited "the performance by any United States person of any contract in support of an industrial or other commercial or governmental project in Iraq." Notably, however, all the prohibitions were subject to an exception for transactions authorized pursuant to applicable regulations.

In January 1991, OFAC issued the Iraqi Sanctions Regulations, which repeated and augmented the executive orders' prohibitions. The regulations also established a licensing scheme under which companies could request OFAC's approval for specific projects.

In the meantime, in November 1990, Congress passed ISA, which included three pertinent provisions. The first directed the president to continue indefinitely the procedures established under the executive orders, including the licensing of specific projects. The second prohibited the use of appropriated funds for any project that violated those executive orders. The third prohibited the issuance of any license that would permit the sale of arms or munitions to Iraq.

Thus, even under the present rules, as long as the required license is obtained from OFAC before the work is performed, there is no reason that payment for projects performed in Iraq for the United States would be in jeopardy. For contractors that have not obtained the license, they should note that the regulations specifically acknowledge the possibility of issuing a license after the fact in order to validate work already performed, under appropriate circumstances.

Currently, Congress is considering several proposals to suspend or repeal ISA. That may be a good idea, but it is not a prerequisite to getting paid for work that is performed under a properly issued OFAC license.

Peckinpaugh is senior counsel for Computer Sciences Corp. in Reston, Va. This column represents his personal views.