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> Series of Woes Mar Iraq Project Hailed as Model > > By James Glanz > The New York Times > Friday 28 July 2006 > Baghdad, Iraq - The United States is dropping Bechtel, the > American > construction giant, from a project to build a high-tech children's > hospital in the > southern Iraqi city of Basra after the project fell nearly a year > behind > schedule and exceeded its expected cost by as much as 150 percent. > Called the Basra Children's Hospital, the project has been > consistently > championed by the first lady, Laura Bush, and Secretary of State > Condoleezza > Rice, and was designed to house sophisticated equipment for > treating childhood > cancer. > Now it becomes the latest in a series of American taxpayer- > financed > projects in Iraq to face overruns, delays and cancellations. > Earlier this year, the > Army Corps of Engineers canceled more than $300 million in > contracts held by > Parsons, another American contractor, to build and refurbish > hospitals and > clinics across Iraq. > American and Iraqi government officials described the move to drop > Bechtel in interviews on Thursday, and Ammar al-Saffar, a deputy > health minister in > Baghdad, allowed a reporter to take notes on briefing papers on the > subject he > said he had recently been given by the State Department. > The United States will "disengage Bechtel and transfer program and > project management" to the Army Corps of Engineers, the papers say. > Bechtel, the > State Department agency in charge of the work and the Health > Department in Basra > all confirmed that the company would be leaving the project, but > the reasons > are a matter of deep disagreement. > The Iraqis assert that management blunders by the company have > caused the > project to teeter on the verge of collapse; the American government > says > Bechtel did the best it could as it faced everything from worsening > security to > difficult soil conditions. > A senior company official said Thursday that for its part Bechtel > recommended that the work be mothballed and in essence volunteered > to leave the > project because the security problems had become intolerable. He > also disputed the > American government's calculation of cost overruns, saying that > accounting > rules had recently been changed in a way that inflated the figures. > The official, Cliff Mumm, who is president of the Bechtel > infrastructure > division, predicted that the project would fail if the government > pressed > ahead, as the briefing papers indicate that it would. Because of > the rise of > sectarian militias in southern Iraq, Mr. Mumm said, "it is not a > good use of the > government's money" to try to finish the project. > "And we do not think it can be finished," he said. > Beyond the consequences for health care in southern Iraq, > abandoning the > project could be tricky politically because of the high-profile > support from > Mrs. Bush and Ms Rice. Congress allocated $50 million to the Basra > Children's > Hospital in late 2003 as part of an $18.4 billion reconstruction > package for > Iraq. Now the government estimates that the cost overruns are so > great that the > project will cost as much as $120 million to complete and will not > be finished > before September 2007, nearly a year later than planned. Some other > estimates > put the overruns even higher. Kadhim Hassan, general director of > the Basra > Health Department, said the project would be no more than 40 > percent complete > once the original $50 million, much of which is going to > subcontractors, had > been used up. He said little work had been done for months. > While Bechtel pointed to security problems in delaying the > project and > increasing its cost, the Iraqis generally rejected that view. > "The pretexts given by Bechtel to the Iraqi government to > justify its > failure in finishing the project are untrue and unacceptable, > especially the ones > regarding the rise in security expenses," said Sheik Abu Salam al- > Saedi, a > member of the Basra provincial council. > Western engineers were seldom seen at the project, Mr. Saedi > said, adding > that it was simply mismanaged. Mr. Saffar, of the Health Ministry > in Baghdad, > and an Iraqi contractor in Basra both asserted that Bechtel's use of a > complicated chain of subcontractors was part of the problem. > Bechtel hired a Jordanian company, for example, to oversee work > by local > Iraqi construction companies. The American government wasted money > by going > through such a complex chain of companies rather than working > directly with the > Iraqis who would do the work anyway, Mr. Saffar said. > "Our counterparts should have full faith in the Iraqi > companies," Mr. > Saffar said. > That kind of turmoil was far from the minds of planners and > supporters > when the hospital project was conceived and promoted. Mrs. Bush and > Ms. Rice > were unwavering supporters, and Project HOPE, a charitable > organization, planned > to provide at least $50 million in medical equipment. > In a gala for Project HOPE last October, Mrs. Bush praised the > project, > describing its plan for 94 beds, a state-of-the-art neonatal unit, > a linear > particle accelerator for radiation therapy and CAT scanners. Ms. > Rice added that > the hospital "will make a real difference, a life-saving and lasting > difference, to the thousands of children and their families." > But like so many other reconstruction projects in Iraq, the > hospital was > blindsided by changing realities on the ground. Once considered a > relatively > tranquil section of Iraq, the south has become increasingly > dangerous with the > rise of Shiite militias in the past two years - so much so, said > Mr. Mumm, the > Bechtel official, that construction was often forced to shut down. > With those delays came increasing costs as the company absorbed > the > expenses of housing, feeding and protecting its work force while > the work sat idle, > Mr. Mumm said. One consequence was that the nonconstruction costs > usually > referred to as overhead or administrative costs skyrocketed. > Bechtel estimated that as much as 50 percent of its expenses on > the > project were overhead costs, which were paid with American money > separate from the > $50 million construction contract. > David Snider, a spokesman for the United States Agency for > International > Development, the State Department agency in charge of the project, > said that > technically, Bechtel's contract was not being terminated because > the contract > did not actually require the company to complete the hospital. > "They are under a ‘term contract,' which means their job is > over when > their money ends," Mr. Snider said. So despite not finishing the > hospital, he > said, "they did complete the contract." > A confidential report commissioned by the development agency > criticizes > it for failing to properly account for all of the costs of building a > functioning hospital. The agency is likely to face further > criticism as it seeks > additional money to complete the hospital as part of an Iraq > reconstruction program > that has increasingly come to be seen as overpriced and ineffective. > The State Department briefing papers describing problems with the > hospital project say the United States has been approached by Spain > with a potential > offer to donate some of the money needed to finish it. If that > money is not > forthcoming, the papers say, the United States will shift funds now > allocated to > the crucial oil infrastructure reconstruction to complete the > hospital. > > -------------------------------1154189744 > Content-Type: text/html; charset="UTF-8" > Content-Transfer-Encoding: quoted-printable > Content-Language: en > > <HTML><HEAD> > <META charset=UTF-8 http-equiv=Content-Type content="text/html; > charset=UTF-8"> > <META content="MSHTML 6.00.2800.1543" name=GENERATOR></HEAD> > <BODY style="FONT-SIZE: 10pt; FONT-FAMILY: Arial; BACKGROUND-COLOR: > #ffffff"> > <DIV><FONT size=5>Series of Woes Mar Iraq Project Hailed as Model</ > FONT></DIV> > <DIV><BR> By James Glanz > <BR> The New York Times </DIV> > <P> Friday 28 July 2006 > <P> Baghdad, Iraq - <STRONG>The United > States is dropping Bechtel, the American construction giant, from a > project to build a high-tech children's hospital in the southern > Iraqi city of Basra</STRONG> after <STRONG>the project fell nearly > a year behind schedule and <EM>exceeded its expected cost by as > much as 150 percent</EM></STRONG><EM>.</EM> > <P> Called the Basra Children's Hospital, > the project has been consistently championed by the first lady, > Laura Bush, and Secretary of State Condoleezza Rice, and was > designed to house sophisticated equipment for treating childhood > cancer. > <P> Now it becomes<STRONG> the latest in a > series of American taxpayer-financed projects in Iraq to face > overruns, delays and cancellations</STRONG>. Earlier this year, the > Army Corps of Engineers canceled more than $300 million in > contracts held by Parsons, another American contractor, to build > and refurbish hospitals and clinics across Iraq. > <P> American and Iraqi government officials > described the move to drop Bechtel in interviews on Thursday, and > Ammar al-Saffar, a deputy health minister in Baghdad, allowed a > reporter to take notes on briefing papers on the subject he said he > had recently been given by the State Department. > <P> The United States will "disengage > Bechtel and transfer program and project management" to the Army > Corps of Engineers, the papers say. Bechtel, the State Department > agency in charge of the work and the Health Department in Basra all > confirmed that the company would be leaving the project, but the > reasons are a matter of deep disagreement. > <P> The Iraqis assert that management > blunders by the company have caused the project to teeter on the > verge of collapse; the American government says Bechtel did the > best it could as it faced everything from worsening security to > difficult soil conditions. > <P> A senior company official said Thursday > that for its part Bechtel recommended that the work be mothballed > and in essence volunteered to leave the project because the > security problems had become intolerable. He also disputed the > American government's calculation of cost overruns, saying that > accounting rules had recently been changed in a way that inflated > the figures. > <P> The official, Cliff Mumm, who is > president of the Bechtel infrastructure division, predicted that > the project would fail if the government pressed ahead, as the > briefing papers indicate that it would. Because of the rise of > sectarian militias in southern Iraq, Mr. Mumm said, "it is not a > good use of the government's money" to try to finish the project. > <P> "And we do not think it can be > finished," he said. > <P> Beyond the consequences for health care > in southern Iraq, abandoning the project could be tricky > politically because of the high-profile support from Mrs. Bush and > Ms Rice. Congress allocated $50 million to the Basra Children's > Hospital in late 2003 as part of an $18.4 billion reconstruction > package for Iraq. Now the government estimates that the cost > overruns are so great that the project will cost as much as $120 > million to complete and will not be finished before September 2007, > nearly a year later than planned. Some other estimates put the > overruns even higher. Kadhim Hassan, general director of the Basra > Health Department, said the project would be no more than 40 > percent complete once the original $50 million, much of which is > going to subcontractors, had been used up. He said little work had > been done for months. > <P> While Bechtel pointed to security > problems in delaying the project and increasing its cost, the > Iraqis generally rejected that view. > <P> "The pretexts given by Bechtel to the > Iraqi government to justify its failure in finishing the project > are untrue and unacceptable, especially the ones regarding the rise > in security expenses," said Sheik Abu Salam al-Saedi, a member of > the Basra provincial council. > <P> Western engineers were seldom seen at > the project, Mr. Saedi said, adding that it was simply mismanaged. > Mr. Saffar, of the Health Ministry in Baghdad, and an Iraqi > contractor in Basra both asserted that Bechtel's use of a > complicated chain of subcontractors was part of the problem. > <P> Bechtel hired a Jordanian company, for > example, to oversee work by local Iraqi construction companies. The > American government wasted money by going through such a complex > chain of companies rather than working directly with the Iraqis who > would do the work anyway, Mr. Saffar said. > <P> "Our counterparts should have full faith > in the Iraqi companies," Mr. Saffar said. > <P> That kind of turmoil was far from the > minds of planners and supporters when the hospital project was > conceived and promoted. Mrs. Bush and Ms. Rice were unwavering > supporters, and Project HOPE, a charitable organization, planned to > provide at least $50 million in medical equipment. > <P> In a gala for Project HOPE last October, > Mrs. Bush praised the project, describing its plan for 94 beds, a > state-of-the-art neonatal unit, a linear particle accelerator for > radiation therapy and CAT scanners. Ms. Rice added that the > hospital "will make a real difference, a life-saving and lasting > difference, to the thousands of children and their families." > <P> But like so many other reconstruction > projects in Iraq, the hospital was blindsided by changing realities > on the ground. Once considered a relatively tranquil section of > Iraq, the south has become increasingly dangerous with the rise of > Shiite militias in the past two years - so much so, said Mr. Mumm, > the Bechtel official, that construction was often forced to shut down. > <P> With those delays came increasing costs > as the company absorbed the expenses of housing, feeding and > protecting its work force while the work sat idle, Mr. Mumm said. > One consequence was that the nonconstruction costs usually referred > to as overhead or administrative costs skyrocketed. > <P> Bechtel estimated that as much as 50 > percent of its expenses on the project were overhead costs, which > were paid with American money separate from the $50 million > construction contract. > <P> David Snider, a spokesman for the United > States Agency for International Development, the State Department > agency in charge of the project, said that technically, Bechtel's > contract was not being terminated because the contract did not > actually require the company to complete the hospital. > <P> "They are under a ‘term contract,' which > means their job is over when their money ends," Mr. Snider said. So > despite not finishing the hospital, he said, "they did complete the > contract." > <P> A confidential report commissioned by > the development agency criticizes it for failing to properly > account for all of the costs of building a functioning hospital. > The agency is likely to face further criticism as it seeks > additional money to complete the hospital as part of an Iraq > reconstruction program that has increasingly come to be seen as > overpriced and ineffective. > <P> The State Department briefing papers > describing problems with the hospital project say the United States > has been approached by Spain with a potential offer to donate some > of the money needed to finish it. If that money is not forthcoming, > the papers say, the United States will shift funds now allocated to > the crucial oil infrastructure reconstruction to complete the > hospital. </P></BODY></HTML> > > -------------------------------1154189744-- Complete archives at http://www.sitbot.net/ Please let us stay on topic and be civil. OM Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/cia-drugs/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
