Homeland Security Committee Examines Iraq Reconstruction Contracts

Washington, D.C. – Senate Homeland Security and Governmental Affairs Committee Chairman Susan Collins (R-ME) held a hearing today to examine Iraq reconstruction contracts. The hearing is in response to the Special Inspector General for Iraq Reconstruction’s (SIGIR) “Lessons Learned” report on Iraq contracting and the SIGIR’s newest Quarterly Report, both of which were recently released. The “Lessons Learned” report provides a chronological review of contracting in Iraq for the reconstruction effort. The SIGIR’s latest Quarterly Report reveals cost overruns, accounting irregularities, unfinished work, and evidence of waste and corruption.

Committee Members heard testimony from Stuart Bowen, who has served as the SIGIR since October 2004, and has worked closely with the Committee on oversight efforts. During this past quarter, the SIGIR completed ten audits and twelve project assessments that provided important new recommendations for program improvements. In addition, the SIGIR has opened 40 new investigations of alleged fraud and corruption, and continues to pursue investigative leads in Iraq and throughout the Middle East, Europe, and the United States.

“The reports of the Inspector General indicate that while billions have been spent, reconstruction has fallen far short of promised outcomes. Funds that should have been used to build schools and health clinics, improve electricity access, and repair the oil infrastructure have been squandered,” said Senator Collins. “What I found remarkable about this report is how many of the lessons apply to any massive reconstruction undertaking. In both Iraq and the hurricane-ravaged Gulf Coast, cases of mistakes, mismanagement and abuse led to unacceptable waste of precious resources and prolonged suffering. These recent events have shown us that the existing procurement structure is inadequate for mounting quick, effective, and accountable relief and reconstruction efforts.”

One notable instance of wasted funds and uncompleted projects detailed in the hearing was the case of the Basrah Children’s Hospital, where the United States Agency for International Development (USAID) used an accounting shell game to hide ballooning costs and significant schedule delays. The project’s original completion cost was budgeted at $50 million, and the hospital was scheduled to open in January 2006. Yet the most recent cost-to-complete estimates range from $149.5 million to $169.5 million and the projected completion date is now July 31, 2007 – more than 576 days late.

Senator Collins’ post-Katrina legislation, which was approved by the Committee last week, would implement four of the SIGIR’s six recommendations to improve the planning and coordination of reconstruction efforts.

Reconstruction efforts for Iraq and the Gulf Coast total more than $112 billion combined.

The SIGIR report is available online at http://www.sigir.mil/reports/quarterlyreports/Jul06.aspx.