Rebuilding Iraq

continued ... an imaginary discussion with Stuart Bowen ... based on public information, quarterly reports to Congress, and Congressional testimony...

So, Stuart, how is the rebuilding of infrastructure going in Iraq?

We've restored electricity to most of the country, most of the time.

But 40 percent of the time, Iraq has no electricity, is that correct?

That's not exactly accurate. Some parts of Iraq have electricity only 6 hours a day. For example, Erbil province has 1.8 million people and has spent over 70 percent of its rebuilding funds, and is without electricity 18 hours a day. Sulaymaniyah province has 2.1 million people without electricity 13 hours a day. So almost one in five Kurdish Iraqis live without electricity. But, Baghdad with 6.3 million people is without electricity only 10 hours a day.

So we haven't restored power to pre-War levels?

We have not. Baghdad for example had at least 14 hours of electricity each day and Saddam provided the electric service virtually for free. The power under Saddam was dependable and consistent in comparison to the intermittent service today. [ It's estimated that Iraq generated 9,000 megawatts of electricity in 1991. Currently production varies between 3600 and 4000 megawatts, less than half of national capacity. (Christian Science Monitor)

Stuart, in your April 2008 report to Congress, Iraq has had access to more than $112 billion dollars for reconstruction. Does reconstruction mean spending all that money, charging for monthly power, and supplying less power than total plant capacity?

In April 2003, the U.S. expected Iraq to assume complete sovereignty within 12 to 18 months, to include full responsibility for relief and reconstruction efforts, funded primarily by Iraqi oil revenues. The Perini Corporation was to construct electrical distribution and transmission lines in southern Iraq.

How did Perini do, given that 40 percent of the time, the lights are out and no one is home at the power plants?

An audit found that, of the Perini contract's 10 task orders, only five were ever completed. These five were "significantly" scaled down. And the other five tasks were terminated.

Was Perini paid?

Yes. The U.S. government paid Perini $123 million dollars plus another $8 million in ... fees.

So, the U.S. government allocated $500 million dollars to completing 10 tasks. Paid more that $131 million to Perini, and you can't tell us what was done?

That is not true. In the Anbar Distribution project, 4 out of 15 jobs were completed. In Basrah, 5 out of 8 jobs were done. Babylon, 7 out of 12 jobs were finished. Thi-Qar, 3 out of 3 were done. Najaf, 3 out of 4 jobs are finished.

And, the official explanation is?

Tasks were terminated for the convenience of the government prior to starting construction. (“Outcome, Cost, and Oversight of Electricity-Sector Reconstruction Contract with Perini Corporation,” April 29, 2008.)

Could Perini have done the work in 2003, 2004, 2005?

Yes.

But, it was more convenient for our government for Perini to stop working on rebuilding Iraq?

Yes, indirect costs were too high.

Did your audits determine the exact nature of the indirect costs?

No. (Iraq Reconstruction: Lessons in Contracting and Procurement, Jul. 2006.) Former PCO officials cited Perini’s high indirect cost estimates as a major contributing factor to
its high cost estimates. The high indirect costs also created difficulties for the government and
Perini in coming to agreement and definitizing the five partially completed task orders.
Modification 5 to the contract was issued in April 2005 to require Perini to provide a detailed
indirect-cost report, but most tasks were terminated the reports were completed.

What about the ... fees paid to Perini?

We paid Perini 70 percent of the total award fees as if Perini completed 70 percent of all 10 original on time, under costs, and in an exemplary manner. However, the actual award fee earned by the contractor is determined by the Government's assessment of the contractor's performance. Criteria for contract performance are included in the contract, and the contractor is then judged on how well it performs in relation to those criteria. While the contractor can comment on the Government's evaluation, it cannot dispute the score and the resulting fee. The contractor can earn any amount of award fee, from all of the award fee pool to none of it. A contractor will not be paid any award fee or base fee for less than satisfactory overall performance.

So, we paid Perini $8 million dollars as a reward for a job well done.

Correct.