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standing complaints about cost overruns and construction delays. Attempts to reach a representative of Bechtel were unsuccessful Saturday.
Cliff Mumm, a Bechtel official, was quoted in a New York Times article Friday as saying the company had essentially volunteered to bow out of the project and recommended that work be stopped because of security problems. Any plan to press ahead, Mumm said, "is not a good use of the government's money."
The inspector general's report says USAID officials went to the Iraq Reconstruction Management Office in March 2005 seeking permission to downsize a number of its projects and adjust its handling of overhead costs to "resolve its funding problems" largely stemming from escalating security expenses.
The U.S. Embassy's reconstruction office allowed the changes, but the report says that USAID wrongly interpreted the agreement as "blanket permission to change the reporting of all indirect costs."
Even as the budget for the hospital soared, USAID continued to conceal the overruns from Congress, according to the report. In a series of reports to lawmakers from January 2005 through April 2006, the agency identified the hospital project as a $50-million project," the inspector general found.
The latest estimates of the cost to complete the hospital range from $149.5 million to $169.5 million, according to the inspector general's report.
The report also questions the accounting of other reconstruction projects.
USAID documents obtained by the inspector general, for example, list direct costs for the Musayyib thermal power station at $6.6 million, and indirect costs at $27.6 million, a ratio wildly out of line with those on other projects, according to the report.
In a more typical case, budgets for an electricity project in Baghdad list direct costs of $164.3 million and indirect costs of $1.4 million - a surprisingly small sum in a country where the expense of securing work sites typically causes indirect costs to balloon.
The budget problems involving the Basra hospital are likely to add to the criticism that the project has faced since its inception in 2004, when the first lady worked with the National Security Council to push for funding for a state-of-the-art children's hospital in Iraq.
From the beginning, critics questioned the wisdom of building such a high-end facility in a country where many citizens lack basic healthcare. At the time, Sen. Patrick J. Leahy of Vermont, the ranking Democrat on the foreign operations subcommittee, questioned whether the project was "more the result of political pressure than the best use of taxpayer dollars."
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