British firms battle for Iraq security deals

By Luke Baker

LONDON (Reuters) - The U.S. government quietly gave a $485 mln (237 million pound) security contract for Iraq to a private British firm within the week that U.S. contractors were accused of opening fire on and killing Iraqi civilians.

The highly contested deal, the largest security contract awarded in Iraq, was won by Aegis Defence Services, a 5-year-old company run by a former British army officer one of whose previous companies helped put down coups in Africa.

Industry experts say the deal shows just how well positioned British firms are in the battle to make money amid Iraq's chaos, as U.S. companies, particularly in the wake of last month's shooting, come under increasing scrutiny.

The deal was not awarded without controversy -- Erinys, a rival bidder, has filed a lawsuit to try to block it and another has said it is "considering its options" -- but Aegis was expected to retain the contract.

Aegis, which employs about 1,200 people, has now attracted nearly $800 mln in U.S. government contracts, making it one of the most financially successful firms operating in Iraq.

Aegis said it won the contract days before the reputation of one of its top competitors, U.S. group Blackwater, was tarnished by the shooting in Baghdad. Witnesses said the firm's employees opened fire on civilians, killing 8. Blackwater has said they returned fire after being attacked.

Either way, the security landscape appears to be shifting, with U.S. operators regarded, rightly or wrongly, as "gung-ho" and British contractors seen as more restrained -- even if some of them, including Aegis, have been criticised in the past.

"We come from very different cultural backgrounds with very different support networks," said Amyas Godfrey, an associate of the Royal United Services Institute, a British defence think tank, who also consults to Blue Hackle, a security firm.