Canceled Iraq contracts cost US $600 million

The Pentagon spent about $600 million on more than 1,200 Iraq reconstruction contracts that were eventually canceled, nearly half of them for mismanagement or shoddy construction, government investigators say. The Special Inspector General for Iraq Reconstruction (SIGIR) found that 42% of canceled contracts were terminated because the contractor either failed to deliver or performed poorly. The rest were canceled for the "convenience of the government," usually for security problems, lack of funding or changing requirements, an inspector general report says. The report, which analyzed contracts since 2003, detailed seven projects in which the U.S. paid total of $172.2 million for work that was substandard, unfinished or never built. Many of the factors causing contracts to be canceled are beyond the control of the companies or the United States, said DeDe Cordell, a spokeswoman for the Army Corps of Engineers in Baghdad. "The very small number of issues found by the SIGIR in this report is a testament to the hard work and dedication of the people managing these complicated contracts," Cordell said in an e-mail. The report, released Oct. 27, recommends better screening of contractors. The $50.8 billion U.S. reconstruction program in Iraq is winding down, with about 70% of the money already spent on about 50,000 projects. Still, federal investigators continue to find examples of waste, fraud and mismanagement. The canceled projects include: * Headquarters for two Iraqi military units. The Air Force paid Ellis Environmental Group of Florida $101.2 million, although one project was never started and another was 85% complete. A $31.9 million contract was canceled because of land disputes and the other for $69.3 million after the government determined "the contractor … was performing well below standards," the report says. George Cox, president of Ellis' parent company, called the allegations "a load of horse puckey." * Two prisons in Iraq. The Pentagon paid Parsons Global Services of California $62 million before canceling the contracts with less than half of the work completed because of delays and rising costs. Parsons is challenging the cancellations before a Pentagon appeals board, company spokeswoman Erin Kuhlman said in an e-mail. She said sectarian violence caused the delays and cost increases. * Headquarters for an Iraqi military battalion in northwestern Iraq. The report says the U.S. canceled a contract with Colorado-based CH2M Hill because of cost overruns and paid $4.1 million although nothing was built. CH2M Hill spokeswoman Tessa Anderson said costs increased because the military changed the requirements from rehabilitating existing buildings to building a new facility. In an e-mail, she said the company hired workers and subcontractors, brought them to the site and did earth-moving work.