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The War Profiteers - War Crimes,
Kidnappings, Torture and Big Money |
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October 25th, 2006 - Idle Contractors
Add Millions to Iraq Rebuilding |
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Idle Contractors Add
Millions to Iraq Rebuilding By James Glanz New York Times October 25, 2006 Overhead costs have consumed
more than half the budget of some reconstruction projects in Iraq, according to
a government estimate released yesterday, leaving far less money than
expected to provide the oil, water and electricity needed to improve the
lives of Iraqis. The report provided the
first official estimate that, in some cases, more money was being spent on
housing and feeding employees, completing paperwork and providing security
than on actual construction. Those overhead costs have
ranged from under 20 percent to as much as 55 percent of the budgets,
according to the report, by the Special Inspector General for Iraq
Reconstruction. On similar projects in the United States, those costs
generally run to a few percent. The highest proportion of
overhead was incurred in oil-facility contracts won by KBR Inc., the
Halliburton subsidiary formerly known as Kellogg Brown & Root, which has
frequently been challenged by critics in Congress and elsewhere. The actual costs for many
projects could be even higher than the estimates, the report said, because
the United States has not properly tracked how much such expenses have taken
from the $18.4 billion of taxpayer-financed reconstruction approved by
Congress two years ago. The report said the prime
reason was not the need to provide security, though those costs have clearly
risen in the perilous environment, and are a burden that both contractors and
American officials routinely blame for such increases. Instead, the inspector
general pointed to a simple bureaucratic flaw: the United States ordered the
contractors and their equipment to Iraq and then let them sit idle for months
at a time. The delay between
“mobilization,” or assembling the teams in Iraq, and the start of actual
construction was as long as nine months. “The government blew the
whistle for these guys to go to Iraq and the meter ran,” said Jim Mitchell, a
spokesman for the inspector general’s office. “The government was billed for
sometimes nine months before work began.” The findings are similar to
those of a growing list of inspections, audits and investigations that have
concluded that the program to rebuild Iraq has often fallen short for the
most mundane of reasons: poorly written contracts, ineffective or nonexistent
oversight, needless project delays and egregiously poor construction
practices. “This report is the latest chapter
in a long, sad and expensive tale about how contracting in Iraq was more
about shoveling money out the door than actually getting real results on the
ground,” said Stephen Ellis, a vice president at Taxpayers for Common Sense
in Washington. “These contracts were to
design and build important items for oil infrastructure, hospitals and
education, but in some cases more than half of the money padded corporate
coffers instead,” he said. Although the federal report
places much of the burden for the charges squarely on the shoulders of United
States officials in Baghdad, the findings varied widely over a sampling of
contracts examined by auditors, from a low of under 20 percent for some
companies to a high of over 55 percent. One oil contract awarded to
a joint venture between Parsons, an American company, and Worley, from
Australia, had overhead costs of at least 43 percent, the report found. One
contract held by Parsons alone to build hospitals and prisons had overhead of
at least 35 percent; in another, it was 17 percent. The lowest figure was found
for certain contracts won by Lucent, at 11 percent, but the report indicates
that substantial portions of the overhead in those cases could not be
determined. The report did not explain
why KBR’s overhead costs on those contracts - the contracts totaled about
$296 million - were more than 10 percent higher than those at the other
companies audited. Despite past criticism of KBR, the Army, which administers
those contracts, has generally agreed to pay most of the costs claimed by the
company. Melissa Norcross, a
spokeswoman for KBR, said in a written reply to questions, “It is important
to note that the special inspector general is not challenging any of KBR’s
costs referenced in this report.” “All of these costs were
incurred at the client’s direction and for the client’s benefit,” she said,
referring to the Army Corps of Engineers, which is in charge of the oil
contract. But a frequent Halliburton
critic, Representative Henry A. Waxman, a California Democrat who is the
ranking minority member of the House Committee on Government Reform, disputed
those assurances. “It’s incomprehensible that over $160 million - more than
half the value of the contract - was squandered on overhead,” Mr. Waxman said
in a written statement. The majority leader of the
same committee, Thomas M. Davis III, a Virginia Republican, declined to
comment. A spokeswoman for Parsons,
Erin Kuhlman, said the United States categorized overhead and construction
costs differently from contract to contract in Iraq, making it difficult to
make direct comparisons. “Parsons incurred, billed and reported actual costs
as directed by the government,” she said. In Iraq, where construction
materials are scarce and contractors must provide security for work sites and
housing for Western employees, officials have said they expect the overhead
to be at least 10 percent, but the contractors and American officials have
grudgingly conceded that the true costs have turned out to be higher. But even the high of 55
percent could be an underestimate, Mr. Mitchell said, because the government
often did not begin tracking overhead costs for months after the companies
mobilized. He added that because of the haphazard way in which the government
tracked the costs, it was not possible to say how well the figures reflected
overhead charges in the entire program. The report’s conclusions
were drawn from $1.3 billion in contracts for which United States government
overseers actually made an effort to track overhead costs, of the total of
$18.4 billion set aside for reconstruction in specific supplemental funding
bills for the 2006 fiscal year. When all American and Iraqi
contributions are added up, various estimates for the cost of the rebuilding program
range from $30 billion to $45 billion. Language included in the Defense
Authorization Act, signed by President Bush last week, states that the
inspector general’s office will halt its examination of those expenditures by
October of next year. Maj. Gen. William H. McCoy,
who until recently commanded the Persian Gulf region division of the Corps of
Engineers, disputed some of the inspector general’s findings in a letter
appended to the report. Things like “waiting for concrete to cure” could
still be taking place during what seem to be periods of inactivity, General
McCoy wrote, so a quiet period “does not mean that the project is not moving
forward.” But many of the delays came
during 2004 and took place in response to political developments in Iraq, the
inspector general’s report says. The American occupation government, the
Coalition Provisional Authority, mobilized many of the companies early that
year. After the authority went out
of existence in June 2004, handing sovereignty to the Iraqi government, top
American officials then kept the companies idle for months as the officials
rewrote the rebuilding plan, and ran up costs as little work was done. External link:
http://www.nytimes.com/2006/10/25/world/middleeast/25reconstruct.html |