GAO: No-Bid Contracts in Iraq Appear Legal

[Lefty Wilbury]

http://www.lasvegassun.com/sunbin/stories/w-me/2004/apr/27/042700376.html


GAO: No-Bid Contracts in Iraq Appear Legal
By KEN GUGGENHEIM
ASSOCIATED PRESS

WASHINGTON (AP) - U.S. officials met legal guidelines in awarding billions of dollars in new contracts for Iraq reconstruction to a Halliburton subsidiary and other companies without seeking competitive bids, congressional investigators say in a draft report.

But the government often appeared to go beyond the rules when it ordered new work under older, existing contracts, the General Accounting Office said in its review of 25 reconstruction contracts. The contracts represented almost all of the $3.7 billion committed for reconstruction through September.

The draft report, which has been submitted to federal agencies for comment and to Congress, was obtained by The Associated Press.

Democratic lawmakers have accused the Bush administration of showing favoritism to companies such as Halliburton, Vice President Dick Cheney's former company, that were major contributors or had close ties to the Bush administration.

Among the contracts reviewed by the GAO, Congress' investigative and auditing arm, was the Army Corps of Engineers' $1.39 billion contract to Halliburton subsidiary KBR to repair Iraq's oil infrastructure. The GAO found that the contract met legal standards because KBR was the only source capable of performing the work, which was planned before the war.

Overall, the GAO found that the 14 no-bid or limited-competition contracts it reviewed generally complied with requirements. But its review of 11 "task orders" - work ordered under existing contracts - were generally questionable. Only two were deemed to be within the scope of the contracts, seven were at least partly outside the scope, and two were unclear whether they were within the scope.

For example, a Pentagon acquisition office used a management improvement agreement with Science Applications International Corp. to obtain media services and experts from the company. Because the work didn't involve management improvement activities, it was outside the scope of the contract, the GAO said. The two task orders cost a total of $49 million.

The House Government Reform Committee will consider the report as it examines contracting issues, said David Marin, a spokesman for committee Chairman Tom Davis, R-Va.

Marin said he understood the report would "paint a predictable good-news, bad-news picture." He said Davis has maintained that "procurement in a war zone, where lives are literally at stake, is a tremendously complex matter prone to mistakes."

In a separate investigation, the GAO found that food distribution problems in Iraq continued even after the U.N. oil-for-food program ended in November. The history of corruption in the program also raises concerns about how a new Iraqi government will distribute food and handle billions of dollars in international aid, a GAO official said in testimony prepared for a congressional hearing Wednesday.

The GAO has found that Saddam Hussein's government collected $10.1 billion through kickbacks and smuggling from the oil-for-food program. The United Nations has approved an independent investigation into the allegations.

The program allowed Saddam's government to sell unlimited amounts of oil provided the money went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War. When the program ended, pending contracts worth $6.2 billion were turned over to the U.S.-led Coalition Provisional Authority that governs Iraq.

But poor coordination and communication between the United Nations and the CPA, inadequate staffing and security problems have hampered deliveries of food, according to testimony prepared by Joseph A. Christoff, director of the GAO's International Affairs and Trade division for a House International Relations Committee hearing. The AP obtained a copy of the prepared testimony.

Christoff said the CPA's failed plans to privatize the food distribution system and delayed negotiations with the U.N. World Food Program to administer it resulted in localized shortages. The GAO said 60 percent of Iraqis rely on monthly rations as their main source of nutrition.

The interim Iraqi government expected to take control July 1 "will have to balance the need to reform a costly food subsidy program with the need to maintain food stability and protect the poorest populations," he said.

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[MtnBiker]

Right now Ford is getting the spins.

 

[posternutbag]

Since we're on the topic of the GAO




Iraq is Worse Off Than Before the War Began, GAO Reports
by Seth Borenstein

WASHINGTON - In a few key areas - electricity, the judicial system and overall security - the Iraq that America handed back to its residents Monday is worse off than before the war began last year, according to calculations in a new General Accounting Office report released Tuesday.

The 105-page report by Congress' investigative arm offers a bleak assessment of Iraq after 14 months of U.S. military occupation. Among its findings:

-In 13 of Iraq's 18 provinces, electricity was available fewer hours per day on average last month than before the war. Nearly 20 million of Iraq's 26 million people live in those provinces.

-Only $13.7 billion of the $58 billion pledged and allocated worldwide to rebuild Iraq has been spent, with another $10 billion about to be spent. The biggest chunk of that money has been used to run Iraq's ministry operations.

-The country's court system is more clogged than before the war, and judges are frequent targets of assassination attempts.

-The new Iraqi civil defense, police and overall security units are suffering from mass desertions, are poorly trained and ill-equipped.

-The number of what the now-disbanded Coalition Provisional Authority called significant insurgent attacks skyrocketed from 411 in February to 1,169 in May.

The report was released on the same day that the CPA's inspector general issued three reports that highlighted serious management difficulties at the CPA. The reports found that the CPA wasted millions of dollars at a Hilton resort hotel in Kuwait because it didn't have guidelines for who could stay there, lost track of how many employees it had in Iraq and didn't track reconstruction projects funded by international donors to ensure they didn't duplicate U.S. projects.

Both the GAO report and the CPA report said that the CPA was seriously understaffed for the gargantuan task of rebuilding Iraq. The GAO report suggested the agency needed three times more employees than what it had. The CPA report said the agency believed it had 1,196 employees, when it was authorized to have 2,117. But the inspector general said CPA's records were so disorganized that it couldn't verify its actual number of employees.

GAO Comptroller General David Walker blamed insurgent attacks for many of the problems in Iraq. "The unstable security environment has served to slow down our rebuilding and reconstruction efforts and it's going to be of critical importance to provide more stable security," Walker told Knight Ridder Newspapers in a telephone interview Tuesday.

"There are a number of significant questions that need to be asked and answered dealing with the transition (to self-sovereignty)," Walker said. "A lot has been accomplished and a lot remains to be done."

The GAO report is the first government assessment of conditions in Iraq at the end of the U.S. occupation. It outlined what it called "key challenges that will affect the political transition" in 10 specific areas.

The GAO gave a draft of the report to several different government agencies, but only the CPA offered a major comment: It said the report "was not sufficiently critical of the judicial reconstruction effort."

"The picture it paints of the facts on the ground is one that neither the CPA nor the Bush administration should be all that proud of," said Peter W. Singer, a national security scholar at the centrist Brookings Institution. "It finds a lot of problems and raises a lot of questions."

One of the biggest problems, Singer said, is that while money has been pledged and allocated, not much has been spent. The GAO report shows that very little of the promised international funds - most of which are in loans - has been spent or can't be tracked. The CPA's inspector general found the same thing.

"When we ask why are things not going the way we hoped for," Singer said, "the answer in part of this is that we haven't actually spent what we have in pocket."

He said the figures on electricity "make me want to cry."

Steven Susens, a spokesman for the Program Management Office, which oversees contractors rebuilding Iraq, conceded that many areas of Iraq have fewer hours of electricity now than they did before the war. But he said the report, based on data that's now more than a month old, understates current electrical production. He said some areas may have reduced electricity availability because antiquated distribution systems had been taken out of service so they could be rebuilt.

"It's a slow pace, but it's certainly growing as far as we're concerned," Susens said.

Danielle Pletka, the vice president of foreign and defense policy studies at the conservative American Enterprise Institute, said other issues are more important than the provision of services such as electricity. She noted that Iraqis no longer live in fear of Saddam Hussein.

"It's far better to live in the dark than it is to run the risk that your mother, father, brother, sister, husband or wife would be taken away never to be seen again," Pletka said.

Pletka pointed to a Pentagon slide presentation that detailed increases and improvement in telephone subscribers, water service, food, health care and schools in Iraq.

But Sen. Joseph Biden, D-Del., the ranking Democrat on the Senate Foreign Relations Committee that asked for the GAO report, said the report showed major problems.

"So while we've handed over political sovereignty, we haven't handed over practical capacity - that is, the ability for the Iraqis themselves to provide security, defend their borders, defeat the insurgency, deliver basic services, run a government and set the foundation for economic progress," Biden said in a written statement. "Until Iraqis can do all of that, it will be impossible for us to responsibly disengage from Iraq."

The GAO report can be found at:

http://www.gao.gov/new.items/d04902r.pdf