SIGIR Discloses USAID's MisManagement of Iraq Contractor

I have periodically said that USAID, the US foreign aid agency which is part of the State Dept., did not manage Iraq contracts very well.   USAID staff in Iraq were mostly liberal ex Peace Corps people who did not know how to  manage "hard" contracts well, in my opinion.

When I was in Iraq in 2004-2006, I periodically asked SIGIR (Special Inspector General for Iraq Reconstruction) auditors why they would not review the approximately $4-billion of reconstruction spending "managed" by USAID.  They gave me various excuses, and mostly worked on auditing IRMO (Iraq Reconstruction Management oFFICE) managed contracts.  I really believe they had a closed door deal not to look at USAID projects, probably by "relying" on the USAID Inspector General staff to review the USAID contracts.

So, here we finally have a SIGIR review of one of the early, BIG USAID contracts from RTI (Research Triangle Institute).  The Research Triangle is an area in North Carolina surrounded by three towns, Raleigh-Durham, and two others, and I think the Institute was made up of folks from the local colleges and vendors.  IBM has a huge work center in the Research Triangle area, but they were not in Iraq.

I used to go to the RTI compound in the Green Zone and was amazed at all the VERY expensive Mercedes Benz SUV's in the covered garage area.  NO other contractor had such luxury, and they had their own restaurant that many Green Zone residents would visit for dinner and lunch, even though you had to go through a tight security check.   It was the only restaurant you could go to that had security checks, and local nationals could not enter, thus it was believed to be safer from possible suicide bomber attacks. (A nearby Green Zone restaurant, the Green Zone Cafe, was actually blown up by a suicide bomber and killed 4-5 people).

Although the "lost money" described in the report is notable, I think the bigger issue is what I observed in my evaluation of some USAID contracts I researched when in Iraq.  The USAID folks just did not have the skills or knowledge to establish hard nosed contract terms or monitoring systems.  Because they did NOT have "subject matter experts" that really understood the technical areas of a contract, they tended to issue RFP's that were vague, and basically asked vendors to supply RFP's with ideas, then they chose a favored vendor.  After that, the contract still was vague, but it had been awarded and now they went around to other folks trying to get ideas on what to do to meet the contract.  I was in meetings where that happened.  

At some point, it would be interesting to find out why SIGIR really resisted auditing USAID projects in the early years.
vj

Favorite Quotes:

"...auditors couldn't figure out whether the U.S. government got what it paid for in the two huge contracts, partly because no process was put in place for laying out objectives and assessing success over the first four years of the contract. In other words, auditors tend to think that the contractor — and Iraqis — are making progress with the governance program, they just can't prove it."

"On August 19, 2004, Research Triangle Institute physically lost $185,481 in Local Governance Project cash," the report said. "It reported the loss to USAID, and on October 3, 2004, the USAID Iraq contracting officer issued a letter" stating the loss was "unforeseen" and not the institute's fault.

Bowen (SIGIR) said USAID approved the payment of more than $242,000 to the institute in the case — including the $185,481 in lost cash and an additional $57,000 in "general and administrative expenses" and a "fixed fee."

from the Associated Press - Oct. 22, 2008

An expense account in war zone: Taxpayers pay tab

By PAULINE JELINEK – 10 hours ago

WASHINGTON (AP) — Say you lost $185,481? Just expense it — Iraq style.

A U.S. contractor hired to teach Iraqis about good government lost that amount in cash, then claimed the loss as "an expense."

And the U.S. government not only covered the loss, but paid the contractor tens of thousands of dollars more in special fees for overhead and other costs relating to the missing money, according to a report by the Special Inspector General for Iraq Reconstruction.

"SIGIR questions this decision," said the report, released Tuesday.

At issue is an admittedly small portion of money committed in a deal with the nonprofit Research Triangle Institute of North Carolina. The institute was awarded two contracts in 2003 and 2005 valued at $598 million to help Iraqis work on building local government and representative councils across the country's 18 provinces, said inspector general Stuart Bowen.

Bowen said in Tuesday's report that his auditors couldn't figure out whether the U.S. government got what it paid for in the two huge contracts, partly because no process was put in place for laying out objectives and assessing success over the first four years of the contract. In other words, auditors tend to think that the contractor — and Iraqis — are making progress with the governance program, they just can't prove it. Oversight of the contracts has been improved, Bowen said.

But then, there also was that matter of the missing cash.

During its work, the institute "lost $185,481 in cash," Bowen's report said. And with the agreement of the contracting agency — the State Department's U.S. Agency for International Development — the institute "claimed the loss as an expense."

In addition to getting the lost money back from the U.S. government, the institute also got an extra $57,000 — something USAID says is standard practice — in fees for administering contracts.

"On August 19, 2004, Research Triangle Institute physically lost $185,481 in Local Governance Project cash," the report said. "It reported the loss to USAID, and on October 3, 2004, the USAID Iraq contracting officer issued a letter" stating the loss was "unforeseen" and not the institute's fault.

Bowen's office said it had no details on how or where the money was lost and USAID didn't immediately explain on Tuesday. RTI spokesman Patrick Gibbons said the money had been stored in safes in several offices around the country.

"We had to evacuate some of our offices under pressure," due to rising violence as the insurgency in Iraq was spreading, Gibbons said, adding that the institute lost equipment and the money was left behind in safes as employees "in some cases ... left in a great hurry."

Bowen said USAID approved the payment of more than $242,000 to the institute in the case — including the $185,481 in lost cash and an additional $57,000 in "general and administrative expenses" and a "fixed fee."

Officials say it all might be legal under federal acquisition regulations. But USAID says it nevertheless agrees with Bowen's office that the fees should not have been paid and it will deal with the issue when the contract comes to final closeout.

On the Net:

• Special Inspector General for Iraq Reconstruction: http://www.sigir.mil

Comments

[Ahmed]

I worked in USAID Iraq as FSN for the few first years.
I can tell you that USAID staff worked very very hard despite the bad security and the Continuous political changes. Yet the big challange was the un qulified contractors, and sub contra. which unfortunately still getting job there. One of the sub contracor was from Jordan called Primus he started the contracr with couple of hundred tof thhousands and ended with million that without delevringA. The contractor used the political changes to pass this.