Rising cost of security slows contractors' work in Iraq

Sunday, October 10, 2004

U.S. contractors have been steadily increasing their security investment as part of the cost of doing business in Iraq.

U.S. officials said American and other firms selected for Iraqi reconstruction projects have been spending up to 50 percent of contract funding on security. They said the security costs have increased rapidly amid the Sunni and Shi'ite insurgency campaigns in Iraq.

"When the program was first contemplated, we had envisioned expending approximately 30 percent of every dollar in terms of overhead cost, to include security activities," Charles Hess, director of the Project And Contracting Office, said in a video teleconference from Baghdad on Thursday.

"And what we are looking at now varies, frankly, across all of the sectors in terms of security activities and overhead."

Hess said that in some cases contractors awarded reconstruction projects in Iraq increased their security costs slightly over the last few months. In other areas, which he did not identify, the increase in security has been significant.

"In some cases, we're seeing a much more dramatic impact, on the order of 10 to 20 percent," Hess said in a briefing organized by the Defense Department. "And it's those areas that we are really focusing our attention, to make sure we are investing our money wisely and that we're not just investing in security costs, but we're investing in projects that truly make a difference and truly require us to expend that amount of money to get those projects built."

The United States has transferred $3.46 billion of an $18.4 billion Iraqi reconstruction fund for additional security. Officials said the United States has overseen more than 700 projects, most of them stuck because of repeated insurgency attacks.

Out of 13 sewer projects, officials said, only one has been completed.

They said five out of 28 water treatment plants have been completed.

"The security situation here in Iraq has made it much more difficult than I think than anyone anticipated to get the reconstruction work done," Bill Taylor, head of the U.S. embassy's Iraqi Reconstruction Management Office, said. "The security costs certainly show up in dollars, but they also show up in schedules."

Officials said the U.S. goal was to divert about 20 percent of the Iraqi reconstruction fund to bolster Iraqi military and security forces. At the same time, they said, 62 border forts and nine military bases were under construction in Iraq.

About $1.8 billion of the $3.46 billion siphoned from the Iraqi reconstruction fund would be allocated for the training and equipping of Iraq's military and security forces, officials said. They said that so far 39,000 Iraqi police 14,000 Border Police, three army battalions and eight Iraqi National Guard battalions have been trained and equipped.

The U.S. Army has increased security measures to help contractors and organized huge convoys for the transportation of material and equipment to reconstruction project sites in Iraq. Officials said these convoys usually move at 10 miles an hour and present easy targets for insurgents.

On Oct. 6, a U.S. soldier with the 13th Corps Support Command, a unit based in Fort Hood, Texas, was killed and two others were injured during an attack on a supply convoy near Faluja. The military said this was the second attack in three days on the unit's convoy. On Oct. 4 another soldier from the unit was killed and two others were injured in a similar attack near Baghdad.

"These kinds of movement, these kinds of attacks on these kinds of convoys stretch out, clearly, the work on reconstruction," Taylor said.

Copyright 2004 East West Services, Inc.

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