The agency awarding Iraq (search) reconstruction contracts deleted its requirement for a security clearance after realizing it awarded a project to a company that lacked one, an internal report says.

The U.S. Agency for International Development (search) justified the change by deciding the situation in Iraq made the clearance unnecessary for seaport rebuilding work.

The explanation didn't impress the agency's inspector general. USAID should have changed the requirement before selecting a contractor -- not afterward, according to a report Monday by Bruce Crandlemire, the assistant inspector general for audit.

A number of Democrats (search) have questioned other aspects of various Iraqi rebuilding contracts awarded by the agency.

"After discovering it had awarded a contract to a company without a security clearance, the agency changed the requirement," said Sen. Joe Lieberman of Connecticut, the ranking Democrat on the Senate Governmental Affairs Committee. "I'm left wondering if these contracting procedures result in the best value for the American taxpayer."

The $4.8 million award to Stevedoring Services of America of Seattle was announced March 24 -- the first USAID reconstruction contract for Iraq. Four contracts have been awarded since then and at least four others are awaiting a final decision.

The amount in this case was small compared to the main rebuilding contract for up to $680 million over 18 months. Bechtel National Inc. of San Francisco won that limited competition.

USAID has defended the fast-track procedure, arguing speed is essential and only experienced firms with proper security clearances can move quickly.

Agency spokeswoman Ellen Yount said the requirement was changed because "the circumstances on the ground had changed significantly enough that the security clearance was no longer warranted."

Stevedoring Services is the largest marine terminal operator in the United States. Between 1999 and 2002, the company and its employees made nearly $24,000 in political contributions -- about 80 percent to Republicans, according to the Center for Responsive Politics.

The Center, which tracks political contributions, said the donations include money given to individual candidates and political parties.

The inspector general said the formal request for bids was sent to only three companies who met several criteria, including the need for the security clearance. Two of the companies submitted proposals and one declined.

Stevedoring Services will manage the Umm Qasr port, considered critical to Iraq's economic recovery and shipment of humanitarian aid.

The company also will be responsible for port pilots who will guide ships to the channel and manage access of trucking companies to the port.