Troubled handover for US-Iraq projects

A new investigation on Iraq shows that the troubled reconstruction efforts there face deeper problems if the Iraqi government doesn't accept control for some of the projects that the US is completing.

The US government continues to share the blame and must better scrutinize the billions of dollars it is spending to erect power stations, build water-treatment plants, and other facilities, according to a report by the Special Inspector General for Iraq Reconstruction (SIGIR) released Monday.

The report paints a picture of an Iraqi government that is still not accepting responsibility for the billions of dollars of projects the US is completing and attempting to hand over to the Iraqis. Since last year, the Iraqi governmenthas yet to accept one project, the report said.

"The failure of the asset-transfer program raises concerns about the continuing operation and maintenance of US-constructed projects," the report said. "In some cases, the United States has continued to pay for maintaining completed projects that have not been accepted by the [government of Iraq]."

The Iraqi government took control of more than 400 facilities completed by the US between April and June of 2006, but it has not taken over any facilities since then. As of May 2007, there have been 2,362 US-built projects completed, valued at about $5.3 billion that are awaiting transfer to the Iraqi government, the report said. This is a problem for the US because the Iraqi government cannot leverage those facilities to borrow money it needs to maintain other facilities for which it is already responsible, the report added.

For example, the Iraqis failed to maintain one project, the Doura Power Station, after the US spent more than $90 million fixing it, the report said.

The SIGIR recommends that Ryan Crocker, the US Ambassador to Iraq work to finalize a new agreement between the US and Iraq on how to better transfer projects completed by US defense contractors to the Iraqi government.

Nearly $100 billion is being spent on Iraq reconstruction, and the Inspector General has completed more than a dozen quarterly reports analyzing reconstruction efforts that began in Iraq in the summer of 2003.

Since then, the office has cited numerous problems with contractors, corruption in Iraq, security challenges on the ground, and an overall lack of oversight. Stuart Bowen Jr., the inspector general, has received criticism from some members of Congress, who wanted to shut the office down since the bulk of US reconstruction money had already been spent. But reconstruction problems continue to be serious enough that the office is allowed to continue operating.

Congress, meanwhile, is debating legislation that would make defense contractors more accountable for the work they are doing in Iraq and elsewhere. But that legislation is part of the overall defense spending bill that is tied up in Congress. As a result, substantive contracting reform may not happen this year, analysts say.

The Inspector General's report also included the first of a new series of investigations on major US defense contractors working in Iraq, including Bechtel National. The report concluded that oversight of the contract between Bechtel and the US Agency for International Development was insufficient. In one case, only two people were in charge of accounting for more than $1 billion worth of contracts with Bechtel. According to a provision within the contract, that small staff had only 10 days to pay all bills presented by Bechtel.

"This decision was troubling because only two officials were assigned to review these invoices, raising concerns from an oversight perspective about the reliability of the receipt review process," the report said.

Of 24 job orders completed under the phase two contract with Bechtel, 10 did not achieve their original objectives, according to the original scope of work for each job. Investigators for the SIGIR were unable to assess three other jobs, the report said, because the objectives of the contract or the work completed was unclear. Eleven other jobs were completed satisfactorily, the report said.

Representatives for Bechtel could not be reached, but the company, in an attempt to explain why some work wasn't completed or the scope of work changed, said on its website that the changing conditions on the ground meant some contracts had to change as well. And to the extent that the audit was critical of the way USAID managed its contract with Bechtel, the government agency took issue with the report:

"USAID believes that focusing exclusively on the original objectives of individual job orders is not a proper way of determining whether job orders and the contractual requirements were successfully completed, and gives a distorted view of the overall success of the Bechtel contract,"said a statement from USAID that appears on the Bechtel website.

The flexibility afforded under the contract actually improved the ability of the government agency to get the work done, the statement said.