BearingPoint Thinks Global

From Kosovo to Kabul, McLean-Based Firm Finds Work Rebuilding and Modernizing War-Ravaged Economies

In late 2002, when Lori A. Bittner's team from BearingPoint Inc. arrived in Afghanistan, the hallways of the Central Bank were dotted with little fires that had been lit to cook chicken and heat tea. The only way to transfer money in or out of the country was to hire messengers who stuffed cash into cases and carried it across the border. And the salaries of civil servants were hand-delivered by independent agents, dispatched from Kabul and not exactly known for their speed or reliability.

The 30-person group from BearingPoint of McLean was hired to fix and modernize the war-ravaged country's financial systems, most of which were antiquated if not destroyed. It might seem an odd job for a company best known for designing software and hooking together networks, but over the past 15 years BearingPoint has developed a niche creating economic policies and procedures for nations in turmoil.

"What we do is . . . put all the pieces in place so that the economy works," said Bittner, a managing director who oversaw much of BearingPoint's work in Afghanistan.

The work included planning national budgets, setting up a banking system and helping entrepreneurs start businesses.

The economic reform work is part of a public-sector division that is BearingPoint's most successful unit and has buoyed the company in recent years. While the firm will not say how much revenue the economic consulting work generates, contracts in Afghanistan and other countries announced in the past two years could potentially be worth more than $350 million.

In contrast, BearingPoint's commercial divisions have lagged in comparison with competitors. And the firm has operated amid some tumult in the past year. Its longtime chief executive, Randolph C. Blazer, was ousted last November and the company is grappling with accounting problems that prompted an investigation by the Securities and Exchange Commission.

The company first got into the business of rebuilding economic systems in the early 1990s, when a unit of its predecessor, the consulting division of accounting firm KPMG, was hired to help turn communist economies in Eastern Europe into capitalist ones.

In the late 1990s it won contracts from the U.S. Agency for International Development to help create economic policies and taxation systems in post-conflict countries like Montenegro and Kosovo. The business snowballed, and today the firm has employees working with emerging economies in 60 countries.

The company turned to Afghanistan after USAID put out a request for help in September 2002. Within a month, BearingPoint employees were preparing for life in a war zone.

Last week, the company won its third contract there, this one for $6.85 million to assist Afghanistan's treasury department. Though not a huge deal, landing it is part of a larger strategy.

"I think some of the smaller deals are prerequisites for some of the bigger deals they could really make some profits out of," said Jamie Friedman, an analyst with Fulcrum Global Partners LLC.

Unlike most of the company's employees who come from technical and business backgrounds, the 550 people working in economic reconstruction have often spent years in government jobs or working with organizations like the World Bank. And many of those who spent time in the Balkans and Eastern Europe were quick to volunteer for Afghanistan.