- The Washington Times - Monday, April 28, 2008

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

The audit released yesterday by Stuart W. Bowen Jr., 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 lawmakers have said they want the Iraqis to pick up more of the cost of reconstruction.

Mr. Bowen’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 (USAID) contracted with Bechtel Corp. in 2004 to construct a $50 million children’s hospital in Basra, Iraq, only to “essentially terminate” the project in 2006 because of monthslong 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 percent complete when work was stopped,” said investigators in describing the practice of “descoping” as frequent.

Responding, USAID in the report said that it disagreed that its descoping of the hospital project was “effectively a contract termination” and said 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 of Iraq reconstruction contracts reviewed by the inspector general’s office was incomplete.

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

Investigators said the database they reviewed lacked full data on projects such as those done by USAID or the State Department and those completed before 2006. But they said the figures cited in the report offered a baseline in terms of unfinished Iraq reconstruction contracts.

The audit comes amid renewed focus in recent months on potential abuse in contracting throughout the government. Last year, congressional investigators said that as much as $10 billion charged by U.S. contractors for Iraq reconstruction was questionable or unsupported and warned that significantly more taxpayer money was at risk.

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