Bechtel was a major contributor in the building of the Hoover Dam in the 1930s. It has also been involved in several other high profile construction engineering projects, including the Chunnel, numerous power projects, including pipelines, refineries, and nuclear power plants, the BART, Jubail Industrial City in Saudi Arabia, Hong Kong International Airport, the Big Dig, and most recently the rebuilding of the civil infrastructure of Iraq funded by the United States Agency for International Development (USAID).
The Bechtel family has owned Bechtel since the company's creation in the 1920s. Bechtel's size, its political clout, and its penchant for privacy have made it a perennial target for journalists and politicians since the 1930s. Bechtel has maintained strong relationships with officials in many U.S. administrations, including those of Reagan, George H. W. Bush, and George W. Bush. The company also has strong ties to other governments, particularly the Saudi Royal Family.
Recently, the company has come under criticism for alleged mismanagement of the Big Dig project, its financial links to the bin Laden family, and the manner in which it received Iraqi rebuilding contracts after the U.S. invasion of Iraq in 2003. Politicians in the United States and in Europe have raised accusations of cronyism between the Bush administration and Bechtel.
For many years, Bechtel has been a strong proponent of the privatization of utilities, highways, airports, and other facilities traditionally managed by governments. The company owns and operates its own power plants, oil refineries, water systems, and airports in several countries including the United States, Turkey, and Saudi Arabia. Bechtel's long involvement with oil, power, and water overseas have been a focus of criticism by the growing anti-globalization and environmental movements.
Bechtel has always been a family owned company. Its founder, Warren A. Bechtel, started as an employee of the burgeoning U.S. railroad industry in 1898 after his Oklahoma cattle ranch failed. Over the next 20 years, he built up a sizeable contracting business that specialized in railroad and highway building.
In 1919, Warren Bechtel and his partners (including his brother Arthur) built the Klamath Highway in California. In 1921, Warren Bechtel partners won a contract to build the water tunnels for the Caribou Hydroelectric Facility in California. In 1925, Warren A. Bechtel was joined by his sons Warren Jr., Stephen, and Ken and they incorporated as W.A. Bechtel Company. In 1926, the new company got its first major contract, the Bowman Lake Dam in California.
In 1928, the U.S. Congress passed the Boulder Canyon Project Act, which mandated the construction of a hydroelectric dam on the Colorado River. The dam was originally supposed to be called the Boulder Dam, but was later renamed (after some controversy) the Hoover Dam in honor of President Herbert Hoover. It was the largest civil engineering project ever undertaken at the time.
Over the next two years, several companies competed for dam-building contracts. To compete for the contract, the W.A. Bechtel Company joined with five competitors to form the Six Companies Corporation. This partnership was formed for the sole purpose of the Hoover Dam project, and their combined strength virtually guaranteed that they would be able to submit the most competitive bid. On March 11, 1931, the United States Department of the Interior selected Six Companies to build the dam. Construction of the Hoover Dam began in late 1931 and finished in 1936, two years ahead of schedule.
Warren A. Bechtel died suddenly while traveling abroad in 1933, in the midst of the Hoover Dam project. His son Stephen took over as president of the company and served in that position until he was succeeded by his son Stephen Jr in 1947.
After the Hoover Dam, Bechtel's reputation was soaring. However, Stephen Bechtel wanted the company to become more than just a construction firm. He pushed the W.A. Bechtel Company to undertake more complex engineering projects and oil contracts.
In 1936, Bechtel built the 8-mile long San Francisco-Oakland Bay Bridge.
In 1937, Bechtel became joined forces with John McCone's engineering company to form an engineering/construction firm called Bechtel-McCone Company.
On July 19, 1940, President Roosevelt signed the Two-Ocean Naval Expansion Act, which authorized the construction of two huge fleets in both the Atlantic and Pacific theaters. The U.S. Maritime Commission selected Bechtel to build a new shipyard for the Pacific fleet. The Bechtel Shipyards were constructed in Sausalito, California and produced hundreds of cargo ships and oil tankers for the Navy. John McCone's California Shipbuilding Company was also awarded many large and profitable shipbuilding contracts starting in early 1941 and continuing through the end of the war.
While the United States built its so-called arsenal of democracy, war planners were increasingly worried about what would happen if the Axis gained control of the world's oil reserves. The Italian invasion of Egypt and Libya in September 1940 was a cause for deep concern, as was the April 1941 coup in Iraq which brought the pro-German Golden Square faction to power.
Matters came to a head after the Japanese attack on Pearl Harbor in December 1941. War planners concerned that the Japanese would invade Alaska and threaten the northern oil fields, which were becoming an important part of the U.S. oil supply. In April 1942, the United States Army authorized the creation of the ALCAN (Alaskan-Canadian Highway) to allow troops and supplies to be moved to Alaska, and the CANOL oil pipeline was authorized soon afterwards.
The CANOL pipeline contract was awarded to Bechtel-Price-Callahan, a partnership formed for the purpose between the W.A. Bechtel Co., the H.C. Price Co., and the W.E. Callahan Construction Co. In June 1942, the Japanese invaded the Aleutian Islands off the coast of Alaska, and the construction began in earnest. However, due to poor planning by the Army and mismanagement by the contractors, the CANOL project was a total failure. The pipeline consumed more oil than it produced and cost taxpayers an enormous amount of money. Furthermore, as time went on, it became clear that the Japanese were not able to invade Alaska. The CANOL pipeline was abandoned after a mere 11 months in operation.
During the pre-war period in late 1940 and early 1941, there were several scandals and allegations involving wartime profiteering and widespread corruption at a number of defense contractors. In 1941, the Senate created the Special Committee to Investigate the National Defense Program at the urging of Senator Harry Truman. This committee, chaired by Truman, spent two years investigating waste and corruption in the defense industry.
In 1943, the "Truman Committee" released a scathing judgement of the $143 million CANOL project, calling it more destructive to the war effort than any act of sabotage by an enemy. Bechtel-Price-Callahan was singled out for criticism for its role in the cost overruns and mismanagement that plagued the project. The Committee was later to criticize the shipbuilding industry for its wartime activities, including fraud, bribery, and other forms of corruption.
After the war, the W.A. Bechtel Company bought out John McCone's share in Bechtel-McCone and incorporated as Bechtel Corporation. John McCone went on to head the Atomic Energy Commission and later the CIA (see below).
In 1947, Bechtel expanded its oil pipeline business with its construction of the Trans-Arabian pipeline in Saudi Arabia. At over 1,000 miles, this was the longest pipeline in the world at the time. In addition to the pipeline itself, Bechtel was responsible for building large parts of the modern infrastructures of Saudi Arabia and Kuwait, including airports, sea ports, and oil refineries.
In 1946, the United States Congress authorized government research into nuclear power with the Atomic Energy Act of 1946. This act created the Atomic Energy Commission, which was later headed by Bechtel's former partner John McCone. Following President Eisenhower's famous Atoms for Peace speech in 1953, commercial research into nuclear power was authorized.
In 1956, Bechtel was selected to build the world's first nuclear power reactor, the Dresden-1 in Illinois. Construction began in 1957 and the plant was fully online in 1960.
In 1959, a Bechtel partnership called Parsons Brinckerhoff-Tudor-Bechtel was awarded the contract for San Francisco's Bay Area Rapid Transit system. The system, completed in 1972, was used as a model for other urban transit systems around the world.
Throughout the 1960s and 1970s, Bechtel expanded its energy engineering business. In 1963, Bechtel began construction of the San Onofre nuclear power plant in California. This was also a time of diversification into other areas. In the late 1960s, Bechtel launched its development, finance, and investment arm named Bechtel Enterprises Holdings, Inc. This firm was able to leverage Bechtel's experience, its capital, and its government ties to help other companies compete for engineering contracts in the U.S. and around the world.
In 1972, Bechtel was awarded a $13 billion contract for the James Bay hydroelectric project in northwest Quebec. The project was completed in 1985 and drew criticism from the growing environment movements in the U.S. and Canada.
In 1976, Bechtel was awarded a contract to build Jubail Industrial City in Saudi Arabia. By 1992, the 360-square mile city of Jubail was one of the most modern cities in Saudi Arabia, with a population of over 70,000. After the successful completion of the project in the late 1980s, Bechtel's contract was extended by the government of Saudi Arabia through 2007.
In 2000, the government of Bolivia privatized its water industry and awarded a large water contract for Bolivia's 3rd-largest city, Cochabamba, to a Bechtel subsidiary named Aguas del Tunari (which was formed for that purpose). Shortly thereafter, the company tripled the water rates in that city, an action which resulted in protests and rioting. Despite the Bolivian police's attempts to quell the rioting, the situation continued to deteriorate. Amidst Bolivia's nationwide economic collapse and growing national unrest over the state of the economy, the Bolivian government was forced to withdraw the water contract. In 2001, Bechtel filed suit the Bolivian government for $25 million in lost profits. The continuing legal battle has attracted attention from anti-globalization and anti-capitalist groups.
In early 2003, the Boston Globe launched an investigation into Bechtel's role in massive cost overruns and accounting irregularities in Boston's Big Dig project totaling over $1 billion. The Globe, along with the Associated Press, filed papers requesting that Massachusetts Turnpike Authority make public the results of all Bechtel's performance audits related to the Big Dig. Bechtel sought a preliminary injunction to block the release of the documents, but the superior court judge in the case denied Bechtel's request on April 11, 2003, opening the way for public release of the documents.
Bechtel has long had close ties to the American government. From 1974 to 1982 George Schultz, former Secretary of Treasury and future Secretary of State, was president and director. As Secretary of State, Schultz sent Donald Rumsfeld to Iraq to discuss with Saddam Hussein a Bechtel contract for an oil pipeline to Jordan.
In 1988 Bechtel was awarded a contract to build a chemical plant in Iraq, but construction was halted with the Iraq invasion of Kuwait. On April 17, 2003, following the 2003 U.S. invasion of Iraq, USAID awarded a $680 million reconstruction contract to Bechtel. This placed Bechtel in the spotlight along with other American firms like Halliburton who have come under intense international scrutiny for receiving no-bid contracts for the rebuilding of Iraq.
Like most large American companies, Bechtel has contributed large amounts of money to United States politicians (over a million dollars in campaign contributions between 1999 and 2002). The company has particularly close ties with the current U.S. administration, and critics in both the U.S. and allies like Britain have questioned the process by which the U.S. awards Iraq contracts to American companies.
On May 5, 2003, The New Yorker ran an article revealing that the bin Laden family have invested $10 million in The Fremont Group, a private equity fund owned by the Bechtel family (the fund was formerly called Bechtel Investments).
American companies, Cochabamba protests of 2000, Big Dig, Riley P. Bechtel, Stephen D. Bechtel, Sr, Warren A. Bechtel
North America: Bajo power project, Mexico; AT&T wireless network, US wide; Equinix business exchange, US wide; Delta Energy Center, California
Europe, Middle East, Africa: OGD2 Gas, United Arab Emirates; Athens Metro, Greece; Coca-Cola plant, Ireland; Croatian Motorway; Shoaiba power plant, Saudi Arabia; Rail improvement projects, UK
Asia: CSPC petrochem plant, China; Meizhou Wan power station, China
Company History and Timeline
Early 1900s
1930s
World War II
Post-war era: late 40s through 50s
60s and 70s
1980s and beyond
Former and Current Executives
See also
Joint Ventures and Subsidiaries
TODO (other Bechtel projects)
South America: Aracaria Power project, Brazil; Jorge Chávez International Airport in Lima, Peru; a nickel smelter for the Cerro Matoso mine in Colombia; Antamina coper mine, Peru;
Klabin Riocell pulp mill, BrazilExternal References