The US government has awarded an American company a contract that could be worth £430 million sterling to help rebuild Iraq's power, water and sewage systems and repair airports and a seaport.
The US Agency for International Development said the San Francisco-based engineering and construction company Bechtel Corp will initially receive £22 million.
The value of the contract could rise to £430 million over 18 months if the US Congress approves the funds.
Some Democrats have complained that President George Bush's administration did not allow open competitive bidding, inviting only a few companies to submit proposals.
Democratic Sen Ron Wyden of Oregon, said it showed that "a troubling pattern is beginning to emerge, as some of the most powerful business interests in the country continue to receive these huge contracts without ... open, transparent bidding."
Sen Wyden and others are sponsoring a bill that would require a public explanation of contracts awarded under a limited bidding process.
The federal agency has defended the procedure as the only way to get help to Iraq quickly.
Bechtel grew from a family business to a privately held international engineering powerhouse. Its executives have included former US Secretary of State George Shultz and former US Defence Secretary Caspar Weinberger.
The company has wide experience of working overseas, with 47,000 employees on 900 projects in nearly 60 countries.
Mr Bush named Mr Ross Connelly, a former Bechtel executive, as executive vice resident and chief operating officer of the Overseas Private Investment Corp - the agency that supports US investment around the globe.