April 30, 2008

U.S. says millions of dollars worth of Iraq construction contracts never finished

WASHINGTON

Millions of dollars of lucrative Iraq reconstruction contracts were never finished because of excessive delays, poor performance or other factors, including failed projects that are being falsely described by the U.S. government as complete, federal investigators say.

The audit released Sunday by Stuart Bowen, the special inspector general for Iraq reconstruction, provides the latest snapshot of an uneven reconstruction effort that has cost U.S. taxpayers more than $100 billion. It also comes as several legislators have said they want the Iraqis to pick up more of the cost of reconstruction.

The special IG’s review of 47,321 reconstruction projects worth billions of dollars found that at least 855 contracts were terminated by U.S. officials before their completion, primarily because of unforeseen factors such as violence and excessive costs. About 112 of those agreements were ended specifically because of the contractors’ actual or anticipated poor performance.

In addition, the audit said many reconstruction projects were being described as complete or otherwise successful when they were not. In one case, the U.S. Agency for International Development contracted with Bechtel Corp. in 2004 to construct a $50 million children’s hospital in Basra, only to “essentially terminate” the project in 2006 because of months of long delays.

But rather than terminate the project, U.S. officials modified the contract to change the scope of the work. As a result, a U.S. database of Iraq reconstruction contracts shows the project as complete “when in fact the hospital was only 35 per cent complete when work was stopped,” said investigators in describing the practice of “descoping” as frequent.

“Descoping is an appropriate process but does mask problem projects to the extent they occur,” the audit states.

Responding, USAID in the report said it disagreed that its descoping of the hospital project was “effectively a contract termination,” but that it had changed the work because of escalating costs and security problems.

Mark Tokola, the director of the Iraq transition assistance office, also responded that the database the IG’s office reviewed of Iraq reconstruction contracts was incomplete.

Bowen’s office said its review was preliminary and that it planned follow-up reviews to investigate descoping more closely. Investigators said they were also looking into whether contractors whose projects were terminated by the U.S. government due to inadequate performance might have been awarded new contracts later despite their poor records.

Associated Press

Print | Email | Comment