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IRAQ: Rebuilding Effort Badly Hobbled, Report Says

by James GlanzThe New York Times
January 24th, 2006

The first official history of the $25 billion American reconstruction effort in Iraq depicts a program hobbled from the outset by gross understaffing, a lack of technical expertise, bureaucratic infighting, secrecy and constantly increasing security costs, according to a preliminary draft.

The document, which begins with the secret prewar planning for reconstruction and touches on nearly every phase of the program through 2005, was assembled by the office of the Special Inspector General for Iraq Reconstruction and debated last month in a closed forum by roughly two dozen experts from outside the office.

A person at the forum provided a copy of the document, dated December 2005, to The New York Times. The inspector general's office, whose agents and auditors have been examining and reporting on various aspects of the rebuilding since early 2004, declined to comment on the report other than to say it was highly preliminary.

"It's incomplete," said a spokesman for the inspector general's office, Jim Mitchell. "It could change significantly before it is finally published."

In the document, the paralyzing effect of staffing shortfalls and contracting battles between the State Department and the Pentagon, creating delays of months at a stretch, are described for the first time from inside the program.

The document also recounts concerns about writing contracts for an entity with the "ambiguous legal status" of the Coalition Provisional Authority, the question of whether it was an American entity or a multinational one like NATO.

Seemingly odd decisions on dividing the responsibility for various sectors of the reconstruction crop up repeatedly in the document. At one point, a planning team made the decision to put all reconstruction activities in Iraq under the Army Corps of Engineers, except anything to do with water, which would go to the Navy. At the time, a retired admiral, David Nash, was in charge of the rebuilding.

"It almost looks like a spoils system between various agencies," said Steve Ellis, a vice president and an authority on the Army corps at Taxpayers for Common Sense, an organization in Washington, who read a copy of the document. "You had various fiefdoms established in the contracting process."

One authority on reconstruction who attended the session last month, John J. Hamre, said the report was an unblinking and unbiased look at the program.

"It's gutsy and it's honest," said Mr. Hamre, president of the Center for Strategic and International Studies, a public policy group based in Washington. He was not the source of the leaked document. Even in the early stages of writing the draft, Mr. Hamre said, one central message on the reconstruction program was already fairly clear, that "it didn't go particularly well."

"The impression you get is of an organization that had too little structure on the ground over there, that it had conflicting guidance from the United States," Mr. Hamre said. "It had a very difficult environment and pressures by that environment to quickly move things."

A situation like that, Mr. Hamre said, "creates shortcuts that probably turn into short circuits."

The draft report is emerging as the rebuilding comes under fresh criticism in the United States and Iraq. Partly because of sabotage to oil and gas pipelines and electrical transmission lines, Iraq's oil exports have plummeted over the last several months, and its national electrical output has again dipped below prewar levels.

After years of shifting authority, agencies that have come into and out of existence and that experienced constant staff turnover, the rebuilding went through another permutation last month with almost no public notice. The Corps of Engineers has been given command of the severely criticized office set up by President Bush to oversee some $13 billion of the reconstruction funds.

The shift occurred days before Mr. Bush said the early focus of the rebuilding program on huge public works projects - largely overseen by the office, the Project and Contracting Office - had been flawed.

That office is now under Brig. Gen. William H. McCoy, commander of the gulf region division of the Corps of Engineers, said Lt. Col. Stan Heath, a spokesman for the corps who has served in Iraq.

Officials with the contracting office said the move was natural as more and more projects went from the contracting phase to construction and completion.

A spokesman for the office, James Crum, said 1,636 projects of 2,265 originally under the office had been completed.

Mr. Ellis, of the taxpayers group, said it was unclear that the change would satisfy critics of the rebuilding program. "At one level," he said, "you would say, 'Wow that makes a lot of sense.' But if your concern is that the previous organization built big New Deal-style projects, then the corps is not going to give you much of a change of pace."

The draft report by the inspector general says the rebuilding program began with a task that is tiny in retrospect but cast a long shadow.

The Army appropriated $1.9 million in November 2002 to create a "contingency plan" for what to do if Iraqi forces damaged or destroyed the nation's oil complexes and pipelines. That "task order," under a running contract, went to Kellogg, Brown & Root, a Halliburton subsidiary. The Army later used that task order as a justification for awarding the company a new $1.4 billion noncompetitive contract to restore oil equipment, a program that became one of the most criticized moves of the conflict partly because Vice President Dick Cheney was once the top executive at Halliburton.

Until January 2003, reconstruction planning was conducted in secrecy "to avoid the impression that the U.S. government had already decided on intervention," the draft history says. Possibly as a result, the American administrative authority arrived with no written plans or strategies for purchasing and contracting and no personnel with expertise in the area.

Among the first challenges the program faced were the impossibly great needs of crumbling public works. Mr. Nash is cited in the document as saying that officials realized early on that Iraq would need $70 billion to $100 billion over several years. They were forced cut the list of projects down again and again.

"No matter how we pared the list, we needed $20 billion more than we had available or Iraqi reconstruction and transition would stall," Mr. Nash is quoted as saying.

Finally, a list of mostly large projects in several infrastructure areas, including oil, electricity, water, health care and security, was settled on. But a bottleneck immediately arose as the contracting process descended into chaos, the document says. One informer for the inspector general said there were "about 20 different organizations undertaking contracting."

"The C.P.A. was contracting, companies were contracting subcontractors, and some people who didn't have authority such as the ministries were also awarding contracts," the informer told the inspector general.

In the midst of that confusion, at the offices that were actually charged with carrying out those duties "the contracting function was grossly understaffed," the document says.

"They were in need of both larger numbers of personnel, and personnel with qualifications more in line with the work that needed to be done," the document says.



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