$8 Billion Wasted Rebuilding Iraq
Policy + Politics

$8 Billion Wasted Rebuilding Iraq

Reuters/Damir Sagolj

Billions of U.S. taxpayer dollars have been wasted in the Iraqi desert in the form of abandoned prisons, hospitals and water treatment plants. The U.S. government’s reconstruction efforts were supposed to be the glue that would bind a long-term partnership with the new Iraqi leadership and win the hearts and minds of citizens in the war-torn region after the American invasion ten years ago.

Between 2003 and 2012, the U.S. spent an average of $15 million a day on Iraq reconstruction, running up a tab of more than $60 billion. At least $8 billion has been lost to contract abuse and mismanagement, according to a final audit released this month by the Special Inspector General for Iraq Reconstruction.

In the report, SIGIR details a handful of multi-million dollar projects, riddled with cost-overruns that were either poorly constructed or never completed and left abandoned; from a $277 million water treatment plant that was so carelessly built by American contractors that it can only produce “murky water,” to a $165 million dollar Children’s Hospital that went 200 percent over budget and still isn’t complete.

In one instance, Special Inspector General Stuart Bowen Jr. recounted a conversation he had with Iraqi Prime Minister Nouri al-Maliki about a local school refurbishment project, in which the school administrator had requested $10,000 to cover construction costs. The U.S. insisted on doling out $70,000 instead, an “unneeded waste,” according to al-Maliki. Though $70,000 is a relatively small amount compared with many of the other projects detailed in the report, it demonstrates how generously the U.S. government was spending taxpayer dollars, even when it wasn’t requested.

This was just one of the many instances where money was spent on projects with little or no oversight, resulting in major cost overruns. But SIGIR’s report includes many more examples of  wasteful spending that was commonplace in Iraq during the nine years U.S. forces occupied the region.
To see some of the more egregious examples of waste and abuse, CLICK HERE

Here are some of SIGIR’s findings:

$419.1 million to Operate Two Warehouses
Would you pay $900 for a tiny control switch that has a market value of $7.05? Probably not. But the U.S. Government did. In 2007, the DOD awarded a $300 million contract to Anham, LLC, to operate and maintain two warehouses.  By 2009, the contract had incurred new costs of approximately $119.1 million. SIGIR looked into the Defense Contract Audit Agency and found that it had failed to review Anham’s cost-estimating system- this was quite apparent when SIGIR found that Anham had charged the U.S. $900 for a $7.05 control switch, a 12,666 percent price mark up. In another case Anham billed U.S. taxpayers $80 for a tiny segment of a drain pipe that was valued at $1.41, that’s a 5,574 percent price markup. And another case, Anham charged taxpayers $3,000 for a $94 circuit breaker, a 3,076 percent price markup. In total, SIGIR questioned 40 percent of Anham’s bill.

$345 million        Primary Healthcare Centers
In 2004, the U.S. awarded contractors $243 million to construct and equip 150 primary healthcare centers across the country.  In 2007, however, SIGIR found that not even half of the facilities had been implemented, and the centers that had were poorly constructed. The slowed production, lack of oversight and poor performance by contractors added more than $100 million to the project’s pricetag. It eventually cost the U.S. $345 million tax dollars to build and equip 133 primary health care centers, short of the original request, and the centers were still in poor quality upon SIGIR’s final inspection.

$277 million     Nassiriya Wastewater Treatment Plant       
The wastewater treatment plant in Nassiriya cost $277 million and is widely
viewed as a failure--that’s because the project was supposed to serve 550,000 people in five surrounding cities, but was built without access to a reliable and affordable electric power supply. The final project, completed in 2010, produced “murky water” that was not drinkable.

$165 million     The Basrah Children’s Hospital
The Basrah Children’s Hospital, originally estimated to cost $50 million, eventually totaled $165 million. The hospital was the largest individual healthcare construction project in Iraq’s reconstruction effort and was meant to be a 94-bed “state-of-the-art” pediatric oncology hospital. However, the combination of bad work site conditions, poor contractor performance and deteriorating security increased the price to $165 million. The hospital was completed and opened for limited treatment in 2010, four years behind schedule. Still, in late 2012, SIGIR found that there was still equipment procurement, installation and employee training that had not yet been completed.

$40 million      The Khan Bani Sa’ad Prison
In May 2004, the U.S. government awarded Parsons Delaware, a U.S. construction company, $80 million to build the Khan Bani Sa’ad Prison, which was supposed to add 3,600 beds to the province’s correctional capacity. In 2006, three months after the prison was supposed to be completed, Parsons asked for another two and a half years to complete the project.  Citing “massive cost overruns, the request was rejected. Instead, the U.S. government signed new contracts to complete the work, which was suspended in 2007. The project, which had already cost the U.S. $40 million, was then transferred to Iraq’s Ministry of Justice despite the fact that the ministry had made clear they did not plan to complete the building. In 2008, SIGIR visited the site to find it completely abandoned and completely unsecure, deeming Parson’s workmanship to be“poor-quality” and “potentially dangerous.” The site still sits dormant in Diyala and apparently will never be used.

$27 million           The Mosul Dam     
In 2005, the U.S. government awarded 21 contracts totaling $27 million to repair the poorly constructed Mosul Dam, which was supposed to supply drinking water, irrigation, flood control and hydroelectric power to the surrounding region on the Tigris River. However, when SIGIR inspectors visited the dam two years later, they found that no one had been monitoring the project and at least $19.4 million worth of equipment and materials were not being used.

$67.7 million         Fighting Corruption
The U.S. established the Commission on Public Integrity in 2004, to help Iraq fight against corruption. As of September 2012, the U.S.  had obligated $67.7 million for U.S. anticorruption efforts in Iraq. But according to an audit from SIGIR, little had changed between 2003 and 2012.