Rebuilding Iraq: A Contract Goes Awry

Second of a two-part series.

Workers prepare for the 'Rebuild Iraq 2007' conference in Amman, Jordan, held earlier in May. i i

Workers prepare for the 'Rebuild Iraq 2007' conference in Amman, Jordan, held earlier in May. Khalil Mazraawi/AFP/Getty Images hide caption

itoggle caption Khalil Mazraawi/AFP/Getty Images
Workers prepare for the 'Rebuild Iraq 2007' conference in Amman, Jordan, held earlier in May.

Workers prepare for the 'Rebuild Iraq 2007' conference in Amman, Jordan, held earlier in May.

Khalil Mazraawi/AFP/Getty Images

Among the thousands of projects undertaken to reconstruct Iraq, one case offers a good microcosm of the challenges and missteps that have bedeviled the multibillion dollar rebuilding effort.

In mid-2004, a California construction company, Parsons Corp., was given a project to build 151 primary health care centers across Iraq.

The clinics were part of a broader, ambitious effort to give all Iraqis top quality medical care.

The $200 million contract was awarded by the U.S. Army Corps of Engineers. Parsons used Iraqi subcontractors, who usually hired local people to do the work.

Earnie Robbins, a senior vice president with Parsons, says the projected number of clinics began to dwindle quickly.

"About 10 were deleted up front for some site-condition problems," Robbins said. "Others, when the government said 'go build there,' either the local residents or the ministry of health said 'we don't want you to build a clinic there.' "

Robbins says other problems developed. In one common pattern, he says, one U.S. government project manager would approve designs and timeframes — then "rotate out" of Iraq. Another manager would come in and reverse many of the earlier decisions.

The confusion caused delays at construction sites. Meanwhile, violence from the insurgency and sectarian fighting started to take a toll.

As the situation deteriorated, Parsons stopped sending non-Iraqi employees on site visits to oversee subcontractors.

The Iraqi engineers who did make site visits would e-mail photographs of the progress at the construction site back to Parsons officials sitting in the relative safety of Baghdad's Green Zone.

Army Corps Issues

Ginger Cruz, a senior adviser to the Special Inspector General for Iraq Reconstruction (SIGIR), says the Army Corps of Engineers should have been providing oversight of the projects.

But like other government agencies, which contracted thousands of projects all over Iraq, Cruz says the Corps found it difficult to provide much oversight.

"They have manpower shortages that they have to contend with, they have issues moving around the country, they have issues trying to perform quality control," Cruz notes. "You've got an inherently insecure situation."

As the violence in Iraq increased, so did security costs. Construction of many of the health centers came to a near standstill.

When Parsons' budget for the clinics started to run out, the contract was terminated for "convenience."

Getting a definitive answer on the number of clinics completed by Parsons is not easy.

Of the original 151 promised, the construction company says it handed over 20 fully equipped, completed health-care centers.

The Army Corps of Engineers disputes that number, saying it received only six completed clinics. Some of those needed additional work, the Corps says.

The Corps says Parsons was given another month to finish the other 14 clinics. That deadline was not met, the Corps says.

A Difficult Blame Game

Like so many other troubled projects in Iraq, it's difficult to know where to lay the blame.

Steven Schooner is the co-director of the government procurement law program at George Washington University's law school.

"What is very, very difficult at this point is to go back and say who's responsible for the error," Schooner says. "I think that as a taxpayer, it's very easy to say, well, the work didn't get done, let's blame the contractor."

The contractors in Iraq were paid enormous sums of money. Federal investigators have uncovered many examples of corruption, waste, overbilling and bad workmanship.

Schooner says contractors were often not given direction, and government officials awarding the contracts were not always honest about the security risks. But Schooner says not all the blame rests with those government officers handing out the contracts, either.

He says government bureaucrats "were dealt an unfair hand as well."

"They were given insufficient resources to do the work, they were told to perform the work against an unrealistic deadline, and they were told frankly that money was no object: 'Get it done however you can get it done,' " Schooner says.

Frederick Barton, a post-conflict reconstruction expert with the Center for Strategic and International Studies, says there was never a clear U.S. strategy for reconstructing Iraq. There was very little planning, and the country wasn't stabilized before enormous projects got under way. Barton says there were too many agencies involved, instead of a single reconstruction "czar."

"When you look at the reconstruction and you find out there really wasn't anybody singularly in charge, then you have to go to where the buck stops, which is the president and the vice president, because they were the ultimate decision makers," Barton says.

Enforcing Accountability

There are efforts now to recover the financial losses — or make sure contractors live up to their obligations. The Gulf Region Division of the Army Corps of Engineers in Baghdad is responsible for managing reconstruction contracts.

It is also tasked with chasing down underperforming contractors. Ginger Cruz of SIGIR says once again there's a lack of resources to do the job.

"If you barely have enough people to manage the reconstruction program, you don't have the extra people sitting around to be able to go through all invoices and see where all that money went and to go back and to try to actually recover it," Cruz said.

Congress, now controlled by Democrats, has also been trying to establish some accountability.

There were reports that Halliburton and its subsidiary KBR (formerly Kellogg Brown and Root) had been overbilling the government for tens of millions of dollars.

Rep. Henry Waxman of California, the chairman of the House Committee on Oversight and Government Reform, wanted to examine those reports. He says it's been a long, slow process trying to get to the truth.

"It's all very hard to get the facts that we wanted," Waxman says. "And we weren't getting a lot of cooperation from a lot of folks who should have been more forthcoming."

"Bit by bit," Waxman says, the information came in. But much of it was conflicting:

"One agency of the government would say that they were doing a good job and not overcharging, but they were in fact ignoring the auditors who were saying otherwise," Waxman says.

Ongoing Investigations

Three government auditing agencies overseeing contract work in Iraq have been instrumental in trying to track down billions of unaccounted-for dollars.

In February, the agencies told Congress that some $10 billion was wasted or poorly documented and that the problem could get worse because not enough was being done to correct it.

Stuart Bowen, the Special Inspector General for Iraq Reconstruction, told the Senate Judiciary Committee in March that it's difficult to find evidence such as documents or eyewitnesses that are needed to prosecute cases of waste or mismanagement.

"That's why I have pushed my office to pursue other alternative punitive measures, such as debarments and suspensions," Bowen says. "I think this is a fruitful path to pursue in order to hold accountable those who've taken advantage of the situation in situations where we can't come up with sufficient evidence to convict them of criminal wrongdoing."

Bowen's office is still working on dozens of investigations. To date, 19 individuals or companies have been suspended and nine have been debarred for shoddy practices.

So far, there have been 10 arrests and three imprisonments. The government has recovered $9 million — a fraction of the amount squandered or lost during the reconstruction of Iraq.

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