Officials acknowledge some problems with contractor billing

By Ralph Dannheiser
Washington File Special Correspondent

Washington -- A panel of military and civilian officials with responsibilities in rebuilding Iraq told a congressional committee March 11 that despite inevitable problems in what started out as a chaotic setting, the effort is proceeding extremely well.

Major Gen. Carl Strock, director of civil works for the U.S. Army Corps of Engineers, set the tone as he outlined multi-billion dollar efforts to rebuild an infrastructure "crippled by a combination of long-term neglect, recent looting, and sabotage."

On the civilian side, Lewis Lucke, deputy assistant administrator of the U.S. Agency for International Development, outlined progress in areas that included not only infrastructure repair but also improving education and health, local governance and economic growth.

And Rear Admiral David Nash, director of the Coalition Provisional Authority's program management office, pledged that the mission to rebuild Iraq's infrastructure will continue even after June 30, when a sovereign Iraqi government is due to assume power.

"Rebuilding power plants, water treatment facilities, telecommunications facilities, schools, security facilities and public buildings will take time," he said. "I am confident Iraq's new government will be a proactive and productive partner."

Strock, Lucke, Nash and the other officials testified at a hearing by the House Committee on Government Reform, called to focus on how the billions of dollars that Congress has approved for the reconstruction effort are being spent, and on allegations of improper conduct by some contractors.

On the matter of contractor performance, Department of Defense Comptroller Dov Zakheim confirmed that the department is investigating possible violations by some companies, but said the problems reflected are not surprising in a chaotic area emerging from war.

"Contractor performance in Iraq has not been perfect, but it has not been terrible," Zakheim told the panel, adding, "We believe that contractor financial and internal control problems will resolve themselves."

And William Reed, director of the Pentagon's Defense Contract Audit Agency, assured the committee that "the audit process is alive and well, and is being pursued aggressively."

Committee Chairman Tom Davis, a Republican from Virginia who has led two congressional inspection trips to Iraq -- the latest three weeks ago -- agreed with Zakheim that "when you went in there, it was a mess," and that as a result, "there are mistakes that got made."

And he told Reed, "We want you to stay tough...we want you to do your job, and we're going to hold you accountable" for dealing with contractor misdeeds.

In his opening comments, Davis called the rebuilding of Iraq "a monumental task."

"Saddam Hussein spent decades frittering away his nation's vast wealth on himself and his Ba'ath party cronies, while little to nothing was spent to meet the urgent needs of the Iraqi people," he said. But now, he said, "We are witnessing a rebirth of Iraq."

On his recent visit, Davis said, he had seen significant progress in coalition reconstruction efforts since he was last there six months earlier. "Each day Iraqis are getting a better life thanks to the dedicated American soldiers and civilians working there," often under life threatening conditions, he said.

Turning to allegations of contractor abuses -- charges that are being investigated by both the Defense and Justice departments -- Davis said he expects that "any such instances that are proven will result in harsh punishment for the perpetrators.

"I also expect that, as conditions on the ground improve, the next generation of contracts will be awarded and administered in accordance with our standard acquisition procedures. Emergency procedures are for emergencies only," Davis said.

Reflecting a partisan division on the issue between the committee's Republicans and Democrats, Rep. Henry Waxman of California, the senior Democrat, attributed problems in Iraq contracting to a "profoundly flawed" Bush administration procurement strategy.

He said that none of some 2,300 coalition reconstruction projects planned for Iraq is subject to competitive bidding.

"Instead of promoting competition, the administration is giving contract monopolies over huge sectors of the reconstruction effort," Waxman charged. For example, he said, "One company -- Halliburton -- gets all work related to oil reconstruction in southern Iraq, and another company -- Parsons -- gets all work related to oil reconstruction in northern Iraq. And they never have to bid against each other for any specific project."

In exchanges with Waxman, Reed confirmed his auditors had found that Halliburton was "not following reasonable procedures...[and exhibited] significant deficiencies in estimating procedures" on certain contracts.

But Zakheim cautioned Waxman to remember that the fact that multiple investigations are in progress "doesn't mean that those people are guilty."

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)