Thom Shankar / The New York Times – 2004-10-17 23:14:46

http://www.nytimes.com/2004/10/17/international/middleeast/17contracts.html?oref=login

Washington (17 October 2004 ) — American military commanders in Iraq are warning civilian leaders in Washington that delays in reconstruction projects caused by red tape are putting the lives of their troops at risk and undermining the military mission in Iraq.

From the junior officer level up through the senior ranks, these officers have outlined obstacles that they say frustrate the rebuilding just as much as the roadside bombs and terrorist attacks that are the more visible threats. They have argued to the new American Embassy in Baghdad and to Congressional delegations visiting Iraq that certain regulations are a dangerous impediment to the military’s mission.

“Bureaucracy kills,” said one senior commander.

“We went to the embassy. We talked to two Congressional delegations. We are asking for assistance,” said another senior American military officer in Iraq. “We can either put Iraqis back to work, or we can leave them to shoot R.P.G.’s at us,” a reference to rocket-propelled grenades.

In interviews and e-mail exchanges that are full of similar comments, a range of officers all across Iraq expressed the view that success at delivering electricity, water, sewer services and health care is just as important as killing enemy fighters. And they revealed deep frustrations with procurement regulations involving such matters as bonds required of local contractors and workers’ compensation costs.

The problem, they say, is the system of peacetime regulations governing routine federal contracts that is being applied in the chaos facing the reconstruction efforts. In detailed reports to the Baghdad embassy and the Pentagon, the officers described how projects were delayed and halted because of requirements to offer substantial workers’ compensation coverage to local laborers, or rules that required start-up Iraqi construction companies to post large bonds.

“It is hard to believe that we can possibly get but a small fraction of the $1.23 billion of projects slated to begin before 31 Dec. started on time,” said another military officer in Iraq.

Last week, the American ambassador in Baghdad, John D. Negroponte, sent a cable to Washington pleading for flexibility. He proposed 20 federal acquisition regulations that could be waived for projects in Iraq, according to four administration and military officials who read the internal report.

At the same time, the National Security Council has organized an interagency task force to conduct a wholesale review of contracting problems in Iraq.

“We are looking at all of the federal acquisition regulations,” said a senior administration official involved in the project. “Don’t you think some of these could be modified, waived or otherwise altered to allow us to work in this wartime environment?”

The Pentagon, meanwhile, has arranged for a few immediate remedies to be inserted into the defense authorization bill now before Congress. One would streamline contracting procedures for projects in Iraq costing up to $1 million, doubling the current ceiling of $500,000 for the speedier procedures. The second would allow commanders to make purchases of up to $25,000 without competitive bidding, up from the current limit of $15,000.

“Unfortunately, we have many more elaborate regulations for how we spend money than for how we fire tank ammunition,” said one senior Defense Department official. “And if we didn’t, people would be up in arms that we’re not careful with taxpayer money. If it was a simple problem, it would have been resolved a long time ago.”

The contract regulations were designed to prevent waste and fraud, and they are staunchly defended by members of Congress already upset with abuses of sole-source contracts in Iraq. Commanders say those concerns mean there is little appetite among American contractors to push for change: Potential bidders do not want to be lumped in with Halliburton, which holds a multibillion-dollar, no-bid contract for services in Iraq and is under investigation on suspicion of overcharges.

The federal acquisition regulations cover the spending of billions of taxpayer dollars authorized by Congress for reconstruction and security in Iraq. Rather than struggle to slice through the rules, American officers often tap small discretionary funds – mad money, in military slang – under the Commander’s Emergency Response Program.

Those funds, $180 million for Iraq and Afghanistan in 2004, are to grow to $500 million in the new fiscal year in an increase pushed publicly by Paul D. Wolfowitz, the deputy defense secretary, who has met with senior officers in Iraq and supports expanding the availability of funds to be spent directly by commanders, in particular to train and equip Iraqi forces.

Representative Ellen O. Tauscher, a California Democrat who specializes in military affairs, spent a week touring Iraq last month and heard these contracting complaints raised by officers there. She said she was sympathetic to considering legislative actions to accelerate the reconstruction contracts, but also complained that the current debate did not ask why more was not done during the first year of the American occupation, when the Coalition Provisional Authority was in charge of rebuilding Iraq.

“Congress is always willing to look at amending, especially in emergency situations, the ability to contract and produce both real goods and services that need to be provided, certainly when in the context of protecting American fighting men and women and getting the Iraqi security forces stood up,” she said. “But really, this debate is all a smokescreen. The real question is what did the C.P.A. do for an entire year?”

Administration officials said that at least some of the regulations criticized by commanders and the Baghdad embassy can be resolved directly by contracting officers in the field, and they are urging those contracting officers to be more aggressive in answering the commanders’ complaints.

But commanders say that even car-bombings are not considered by federal acquisition regulations to be excuses for project delays. Many potential bidders are not willing to do business on those terms.

Among other obstacles to accelerating Iraqi reconstruction, as described by the military and the Baghdad embassy in reports back to Washington, is a requirement for securing $500,000 in workers’ compensation insurance for projects in Iraq – even for jobs that employ Iraqis at just $5 a day.

Administration officials are considering proposals to cap workers’ compensation claims by Iraqis at $10,000. To jump that hurdle, American commanders subcontract work to Iraqi companies because they operate under Iraqi workers’ rules. The officers said that local rules do not yet exist or are unenforceable but theoretically would set limits on claims more in keeping with local salaries.

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