Iraq fails to take over U.S. projects

Iraq’s central government has refused to take possession of more than 2,300 completed reconstruction projects financed with billions of U.S. taxpayer dollars, according to the latest quarterly report by the U.S. agency that oversees the rebuilding effort.

As a result, many projects are being turned over to local entities that cannot adequately support them or are being run with continued U.S. funding, according to the report by Stuart W. Bowen Jr., special inspector general for Iraq reconstruction.

The report, to be released today, says the U.S. government has overseen completion of 2,797 projects at a cost of $5.8 billion. The central government has taken over 435 of them, worth $501 million.

No project has been turned over to the central government since July 2006, two months after Prime Minister Nouri Maliki’s government was installed and the Finance Ministry “changed the ... conditions on the asset transfer process,” the report says.

But even the Iraqi government’s acceptance of projects does not mean they will be adequately funded or maintained, the report says, citing problems with the Dora power station, which services Baghdad.

The rebuilt units were transferred to the Electricity Ministry in the spring of 2006. But in August, workers removed parts from one unit, taking it off-line, to keep the other functioning after it failed because of poor maintenance. That second unit failed again, says the report, which notes that “the ministry has operated ineffectively or has insufficiently maintained equipment” at the power station.

The U.S. Army Corps of Engineers has taken over the repair and hopes to have both units operational next month.

Reconstruction efforts are also hampered by attacks on contractors and other security issues; by insufficient capital spending at both the national and provincial levels; and by widespread corruption, which the report describes as a “second insurgency.”

The report includes the first congressionally mandated “forensic audit” of large contracts paid for by the Iraq Relief and Reconstruction Fund, which has received about half the $44.5 billion for relief and reconstruction appropriated by Congress. The initial review examined the work of Bechtel National Inc., a San Francisco engineering company that won the largest contract, worth $1.33 billion, awarded by the U.S. Agency for International Development.

Due to changes in requirements and unanticipated costs and delays, among other things, about half the projects have failed to meet their objectives, the report says. In addition, the U.S. government failed to supply enough personnel to oversee the contract, it says.

leslie.hoffecker@latimes.com