An April 3 article quoted Stuart Bowen, the top U.S. auditor for reconstruction in Iraq, as saying, "I've been consumed for a year with the fear we would run out of money to finish projects." Bowen actually said, "I've been concerned about cost-to-complete for a year, and the reason I've been concerned about cost-to-complete is the fear that we would run out of money to finish projects, and so I can't say that this isn't going to happen again because we never really did get a good grasp on cost-to-complete data."
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U.S. Plan to Build Iraq Clinics Falters
People receive medicine from U.S. troops in Shumeyt village, north of Baghdad. A contract for the building of 142 primary health centers across Iraq has run out of money, with 20 clinics now expected to be completed.
(By Sasa Kralj -- Associated Press)
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Doctors in Baghdad's hospitals still cite dirty water as one of the major killers of infants. The city's hospitals place medically troubled newborns two to an incubator, when incubators work at all.
Early in the occupation, U.S. officials mapped out the construction of 300 primary-care clinics, said Gasseer, the WHO official. In addition to spreading basic health care beyond the major cities into small towns, the clinics were meant to provide training for Iraq's medical professionals. "Overall, they were considered vital," she said.
In April 2004, the project was awarded to Parsons Inc. of Pasadena, Calif., a leading construction firm in domestic and international markets. McCoy, the Corps of Engineers commander, said Parsons has been awarded about $1 billion in reconstruction projects in Iraq.
Like much U.S. government work in 2003 and 2004, the contract was awarded on terms known as "cost-plus," Parsons said, meaning that the company could bill the government for its actual cost, rather than a cost agreed to at the start, and add a profit margin. The deal was also classified as "design-build," in which the contractor oversees the project from design to completion.
These terms, among the most generous possible for contractors, were meant to encourage companies to undertake projects in a dangerous environment and complete them quickly.
McCoy said Parsons subcontracted the clinics to four main Iraqi companies, which often hired local firms to do the actual construction, creating several tiers of overhead costs.
Starting in 2004, the need for security sent costs soaring. Insurgent attacks forced companies to organize mini-militias to guard employees and sites; work often was idled when sites were judged to be too dangerous. Western contractors often were reduced to monitoring work sites by photographs, Parsons officials said.
"Security degenerated from the beginning. The expectations on the part of Parsons and the U.S. government was we would have a very benign construction environment, like building a clinic in Falls Church," said Earnest Robbins, senior vice president for the international division of Parsons in Fairfax, Va. Difficulty choosing sites for the clinics also delayed work, Robbins said.
Faced with a growing insurgency, U.S. authorities in 2004 took funding away from many projects to put it into building up Iraqi security forces.
"During that period, very little actual project work, dirt-turning, was being done," Bowen said. At the same time, "we were paying large overhead for contractors to remain in-country." Overhead has consumed 40 percent to 50 percent of the clinic project's budget, McCoy said.
In 2005, plans were scaled back to build 142 primary clinics by December of that year, an extended deadline. By December, however, only four had been completed, reconstruction officials said. Two more were finished weeks later. With the money almost all gone, the Corps of Engineers and Parsons reached what both sides described as a negotiated settlement under which Parsons would try to finish 14 more clinics by early April and then leave the project.
The agreement stipulated that the contract was terminated by consensus, not for cause, the Corps and Parsons said.
Both said the Corps had wanted to cancel the contract outright, and McCoy rejected the reasons that Parsons put forward for the slow progress.
"In the time they completed 45 projects, I completed 500 projects," he said. Parsons has a number of other contracts in Baghdad, from oil-facility upgrades to border forts to prisons. "The fact is it is hard, but there are companies over here that are doing it."
Bowen called the outcome "a worst-case scenario. I think it's an anomaly." He said, however, that U.S. reconstruction overseers overwhelmingly have neglected to keep running track of the remaining costs of each project, leaving it unclear until the end whether the costs are equal to the budget.
"I can't say this isn't going to happen again, because we really haven't gotten a grasp" of the cost of finishing the many pending projects, Bowen said.
