Iraq reconstruction failures tied to contracting breakdowns

Contracting problems have hamstrung reconstruction efforts in Iraq, raising questions about how the government can adapt its procurement system to effectively address unforeseen circumstances, according to a panel that examined the role procurement has played in the Iraq reconstruction effort.

T. Christian Miller, author of Blood Money: Wasted Billions, Lost Lives, and Corporate Greed in Iraq, Special Inspector General for Iraq Reconstruction Stuart Bowen and Katherine Schinasi, Government Accountability Office managing director for acquisition and sourcing management, spoke at a Friday event on the reconstruction effort. The panel was organized by the George Washington University Government Procurement Law Program.

Miller said he started his work in Iraq with an expectation for the story he would encounter there: the government procurement system meets the Wild West in Iraq, and the government procurement system wins. But he said he quickly realized that the reconstruction was not working.

The first U.S. government project Miller saw was a water treatment plant that, on the day of his visit, was out of chlorine and short on generator power because the machines had seized up for lack of antifreeze in the cold climate. Worse, when the plant eventually began to pump out clean water, what flowed from the taps of Iraqi homes was tainted with sewage and other contaminants because the old, leaky pipes between the facility and the homes had not been replaced.

Neither the engineers nor the project managers, Miller said, had considered the delivery aspect of the infrastructure project they had signed on to complete.

Miller described contracting staff shortages as central to the problems he encountered. He said David Nash, the first director of the Coalition Provisional Authority's Project Management Office, framed the issue as one of bodies and budgets: the Army Corps of Engineers had about 30,000 employees in the United States with a $13 billion budget for construction projects and contracts like the ones in Iraq, Nash told Miller. In Iraq, the Corps had 50 employees for the $18 billion budget it was allocated in late 2003.

"People were blowing cash around Iraq like they had leaf-blowers," Miller said.

Helping to manage that money and the projects it funded were layers and layers of contractors, Miller said. There sometimes were as many as nine tiers of contractors between the person ordering work done and a worker laying the bricks.

The CPA started out with only three contracting officers, Miller said. While the staff eventually grew, the office remained short-handed, sometimes having just one or two days to analyze and award large, complex contracts.

With government contracting officers working three-month tours of duty, contractors became the experts who had the knowledge needed to manage projects, Miller said, creating a situation vulnerable to manipulation.

"I really can't blame [the contractors] -- it's a business, that's how it's set up. They're supposed to make money. The person that's supposed to be the … regulation on that is the U.S. government, and it was just never, never there."

GAO's Schinasi and IG Bowen echoed several of Miller's concerns with staffing and oversight levels, though in less certain tones, drawing on a recent GAO forum on procurement and an IG report on Iraq contracting.

Procurement policy tries to strike a balance between the flexibility to allow agencies to respond quickly to circumstances, and the application of complex rules intended to minimize fraud, waste and abuse. But, Schinasi said, "The lesson so far is, what we have isn't good enough."