Thursday, July 12, 2012

Special Inspector General For Iraq Reconstruction’s “Hard Lessons” Chapter 10 “Contacting Billions for Reconstruction”

In April 2003, the Coalition Provisional Authority (CPA) took over the administration of Iraq. One of its first priorities was drawing up a strategic plan for how to rebuild the country, and then come up with a detailed list of how to accomplish those goals. Those were completed in July. The CPA then put together an office to manage the reconstruction effort, and started awarding contracts. The Americans ran into several problems trying to accomplish that. First, there was never enough trained staff to handle the immense project, the red tape, while eased, still caused huge delays, there was bureaucratic infighting between government agencies, the Iraqis were never included, and security was already deteriorating. All together that meant the CPA was only able to spend a fraction of the money that it was appropriated by the time it was dissolved in June 2004.

In mid-2003, the White House went to Congress to ask for money for the reconstruction of Iraq. In November, the administration was appropriated $18.4 billion, which was placed in the Iraq Relief and Reconstruction Fund. $12.6 billion was to go towards projects, $4 billion was for procurement, and $1.8 billion was for capacity development, governance, and economic reforms. Almost all of the money was under Pentagon control, which had authority over the CPA, and post-invasion Iraq. This was a big change for the Bush White House, which had originally claimed that Iraqis were going to cover almost all of the rebuilding costs, and that the U.S. was only going to be in Iraq for a few months, and then be able to leave.

In turn, Paul Bremer, the head of the Authority, created the Program Management Office (PMO), which was going to have total control of Iraq reconstruction. The PMO’s director Dave Nash had helped draw up the CPA’s rebuilding plans. He thought the PMO could have a small and efficient staff, while contractors would be hired to do most of the work. He had a wildly optimistic view that projects could actually start rolling by the end of the year, despite warnings from some officials. One noted that the large projects that the CPA envisioned would take months to award contracts, be approved, have the money appropriated, etc. Nash believed that could be overcome by the Defense Department delegating special powers to the CPA to get over some of the government’s regulations. That happened, but it still took too long. That was just the start of the problems that the Coalition would run into with its plans for Iraq. The bureaucracy proved too cumbersome, and the plans too ambitious to achieve many of the goals it had set for itself.

The grand plans the U.S. had for Iraq were always going to take time, something that the CPA lacked for a variety of reasons. First, the Pentagon created the Single Acquisition Management Plan (SAMP) to handle the awarding of contracts. It started its work in December 2003, only considering companies from the U.S., Iraq, or Coalition of the Willing countries. It received 53 bids, but did not pick any until March 2004. Congress was worried about the contract process, so the SAMP took extra time to go through all of the businesses, something that the PMO was hoping to avoid. Second, because Baghdad was never considered in the planning process, the Iraqi ministries had differing opinions on the projects the U.S. had in mind. The Health Ministry for example, wanted to build large hospitals, because that’s how the Iraqi health system was set up. The CPA adviser to the Ministry had an American vision of small preventive and primary care facilities. That led to disputes. Third, the initial contracts offered had 7% added on for security costs. By the end of 2003 however, the insurgency was already building, the price to do work in Iraq was skyrocketing, and projects would run into severe delays as a result. Fourth, there was bureaucratic infighting. From the inception of the CPA, the United States Agency for International Development (USAID) had disagreed with its plans. That continued from 2003-2004 as USAID’s administrator argued against the CPA’s goals, because they were not based upon building institutions that would outlast the American presence, thought that the huge projects advocated by the CPA would fail, and that the Coalition’s timeline for getting things started and completed were unrealistic. The combination of all these factors meant that from January to March 2004, the PMO was only able to give out $180 million worth of contracts, a pittance of the $12.6 billion it had. These were all issues that outside experts warned the U.S. about during the summer of 2003. During that time, think tanks, non-government organizations, and U.S. corporations and agencies issued four separate reports about reconstructing Iraq. The CPA however, ignored them all, and came up with its own plans instead of heeding their advice. The Coalition ended up paying for that.

Finally, in March 2004, the Pentagon announced that it had awarded more than $5 billion in contracts. That included $900 million for security and justice, $600 million for water, $600 million for public works in northern Iraq, $500 million for public works in southern Iraq, $500 million for electricity generation, $500 million for electricity transmission and distribution in northern Iraq, $500 million for the same in southern Iraq, $500 million for buildings, education, and health, $325 million for transportation, $75 million for communication, $55 million for water and public works, $30 million for security and justice, $30 million for oil, and more. The PMO demanded that all this work begin within 30 days. The companies were able to get their staff on the ground rather quickly, but took months to actually begin because of red tape, the lack of security, and the ending of the CPA in 2004. By June, the PMO had only spent $366 million of the $18.4 billion Iraqi Relief and Reconstruction Fund. That meant Paul Bremer and Dave Nash’s grand plans for rebuilding Iraq never came to fruition. They were hoping that their special situation would allow them to skirt the rules, and get special permission to start reconstruction projects within just a few weeks, but the reality was much different.

America’s plans for Iraq went awry the moment that its forces crossed the border to invade the country. The U.S. had no real plans for rebuilding Iraq. Instead it thought it would be more of a humanitarian mission dealing with refugees and food as happened after the 1991 Gulf War. Those ideas were quickly dispelled by the reality of Iraq, and the poor state of the country after twenty plus years of international sanctions. The Coalition Provisional Authority had to come up with plans for Iraq off the fly, but didn’t take into account the situation on the ground or the history of rebuilding in other developing countries. That meant the billions of dollars they were awarded by Congress were going to be wasted from the get go. Iraq would become the largest reconstruction project the U.S. ever embarked on, and one of its largest failures as well.

Other Chapters From The Special Inspector General For Iraq Reconstruction’s Hard Lessons

Preface Part I: Planning for Postwar Iraq September 2001 to May 2003


Special Inspector General for Iraq Reconstruction, “Hard Lessons,” 1/22/09

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