[Mb-civic] U.S. Plan to Build Iraq Clinics Falters - Washington Post

[William Swiggard]

U.S. Plan to Build Iraq Clinics Falters
Contractor Will Try to Finish 20 of 142 Sites

By Ellen Knickmeyer
Washington Post Foreign Service
Monday, April 3, 2006; A01

BAGHDAD -- A reconstruction contract for the building of 142 primary 
health centers across Iraq is running out of money, after two years and 
roughly $200 million, with no more than 20 clinics now expected to be 
completed, the U.S. Army Corps of Engineers says.

The contract, awarded to U.S. construction giant Parsons Inc. in the 
flush, early days of reconstruction in Iraq, was expected to lay the 
foundation of a modern health care system for the country, putting 
quality medical care within reach of all Iraqis.

Parsons, according to the Corps, will walk away from more than 120 
clinics that on average are two-thirds finished. Auditors say the 
project serves as a warning for other U.S. reconstruction efforts due to 
be completed this year.

Brig. Gen. William McCoy, the Army Corps commander overseeing 
reconstruction in Iraq, said he still hoped to complete all 142 clinics 
as promised and was seeking emergency funds from the U.S. military and 
foreign donors. "I'm fairly confident," McCoy said.

Coming with little public warning, the 86 percent shortfall of 
completions dismayed the World Health Organization's representative for 
Iraq. "That's not good. That's shocking," Naeema al-Gasseer said by 
telephone from Cairo. "We're not sending the right message here. That's 
affecting people's expectations and people's trust, I must say."

By the end of 2006, the $18.4 billion that Washington has allocated for 
Iraq's reconstruction runs out. All remaining projects in the U.S. 
reconstruction program, including electricity, water, sewer, health care 
and the justice system, are due for completion. As a result, the next 
nine months are crunchtime for the easy-term contracts that were awarded 
to American contractors early on, before surging violence drove up 
security costs and idled workers.

Stuart Bowen, the top U.S. auditor for reconstruction, warned in a 
telephone interview from Washington that other reconstruction efforts 
may fall short like that of Parsons. "I've been consumed for a year with 
the fear we would run out of money to finish projects," said Bowen, the 
inspector general for reconstruction in Iraq.

The reconstruction campaign in Iraq is the largest such American 
undertaking since World War II. The rebuilding efforts have remained a 
point of pride for American troops and leaders as they struggle with an 
insurgency and now Shiite Muslim militias and escalating sectarian conflict.

The Corps of Engineers says the campaign so far has renovated or built 
3,000 schools, upgraded 13 hospitals and created hundreds of border 
forts and police stations. Major projects this summer, the Corps says, 
should noticeably improve electricity and other basic services, which 
have fallen below prewar levels despite the billions of dollars that the 
United States already has expended toward reconstruction here.

Violence for which the United States failed to plan has consumed up to 
half the $18.4 billion through higher costs to guard project sites and 
workers and through direct shifts of billions of dollars to build Iraq's 
police and military.

In January, Bowen's office calculated the American reconstruction effort 
would be able to finish only 300 of 425 promised electricity projects 
and 49 of 136 water and sanitation projects.

U.S. authorities say they made a special effort to preserve the more 
than $700 million of work for Iraq's health care system, which had 
fallen into decay after two decades of war and international sanctions.

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.

http://www.washingtonpost.com/wp-dyn/content/article/2006/04/02/AR2006040201209.html?referrer=email
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