Lt. Col. Hank Arnold, 39, of Pensacola, Fla., has distributed $20,000 to $30,000 a week since early June for local projects in Iraq. (Ariana Eunjung Cha -- The Washington Post)
Military Uses Hussein Hoard For Swift Aid
Red Tape Cut, Cash Flows to Iraqi Contracts
By Ariana Eunjung Cha
Washington Post Staff Writer
Thursday, October 30, 2003; Page A01
MOSUL, Iraq -- Looters had torn apart the seven-room pediatric wing at the medical center and there was no place to treat the children who were lined up in the streets. Kifah Mohammad Kato was desperate and told a U.S. soldier about it in late June on the off-chance he could help.
Within a week, a Humvee pulled up with the first installment of $9,600 in cash to fix the wing. Within four more weeks, the building was rebuilt and refurnished, complete with fuzzy blankets in primary colors and Mickey and Minnie Mouse decorations.
"It happened so fast I almost couldn't believe it," said Kato, director of the Sinjar General Hospital.
The speed and ease with which reconstruction money is being handed out by the military here contrasts sharply with the delays and controversy surrounding the handling of major reconstruction funds by the Pentagon and U.S. Agency for International Development.
The fact that the money comes from seized Iraqi assets, the Saddam Hussein regime's overseas bank accounts and cash stockpiles found in palaces and the walls of government buildings in Iraq has provided a fortuitous loophole. Since the money was not appropriated by Congress, officials of the U.S.- led occupation government in Iraq believe that it does not have to be disbursed under the usual contracting regulations.
The money for most military projects in Iraq goes through something called the commander's emergency response program. About $100 million has been allocated so far and the 101st Airborne Division, which oversees northern Iraq, has spent about $31 million of it. It has been used, officials said, for more than 11,000 projects such as hiring a civil defense corps, patching roads and fixing an oil refinery and a sulfur plant.
It's a new idea that has allowed soldiers who are patrolling the streets, and have a ground-level view of people's needs, to make a quick impact without having to go through the bureaucratic details that government contracts usually require.
Almost all the money is given to Iraqis, while other reconstruction funds -- about $3 billion so far -- have gone almost exclusively to American companies, which may or may not subcontract with Iraqi companies.
Maj. Gen. David H. Petraeus, commander of the 101st, said the money has been critical to keeping people employed and providing tangible evidence the occupation powers are helping the populace -- which he believes keeps his soldiers safer.
"Money is the most powerful ammunition we have," Petraeus said in an interview.
The cash flow has slowed down somewhat recently, though the interim government says the program will continue. In its supplemental allocation for reconstruction, Congress is considering replenishing the fund with $180 million for 2004. The fact that the money would come from the U.S. government, however, could change how it can be spent.
Some aid groups say they worry that the system is ripe for abuse, that those who control the money can hand it out with only one bid and without doing any research to assess the market.
"Soldiers are not development workers. There is industry skill, a body of knowledge that goes with it. You can't just say 'There's a pothole over there and get it filled' and fix a country," said Dominic Nutt, a spokesman for Christian Aid, a British humanitarian group.
That criticism is a key component of the controversy over what the U.S.-led interim government, the Coalition Provisional Authority, is doing with the $5 billion of Iraqi money that it controls. About $1 billion was left over from the United Nations Oil for Food program, $2.5 billion came from assets seized from the old government and about $1.5 billion is from the oil sales.
L. Paul Bremer, head of the occupation authority, has said accusations about the lack of transparency are unfounded and that all information about the money would be posted on the Internet and given to independent reviewers.
The United Nations last week created an auditing board that will look into how the Oil for Food and oil-sales cash is being spent. But that includes only part of the seized assets.
The Sinjar General Hospital is in one of the most remote parts of Iraq, a mountainous area close to the Syrian border. When soldiers of the 101st reached this point in April, it seemed that their role in the war would soon be over. They were to secure the area. Then they were supposed to go home.
Instead, they were told to stay put. And as security remained precarious, the soldiers had to take on some of the duties of contractors and aid workers.
The commander in this region of 89 villages, 350,000 people and 6,800 square miles is Lt. Col. Hank Arnold. When it comes to contracts in this area, he is pretty much a god.
Since the first week of June, Arnold has received $20,000 to $30,000 each week for local reconstruction projects. It comes in cash -- in $100 bills -- in a bundle that he must count out, sign for and carry. Soldiers pass on requests to his deputies, who pass them up to Arnold during command meetings three times a week. A simple "yes" from him is usually all it takes to authorize money for a project. Bigger projects, of which there are few, require at least three bids and the approval of his bosses -- $10,000 to $50,000 from the brigade commander, $50,001 and above from the general.
If a contract is for less than $10,000, a single bid is sufficient. Paperwork in English and Arabic is drawn up. The work usually begins within days.
Normally in government contracting, officials must draw up "requests for proposals" and then "requests for bids." They must wait a certain time for the offers to come in, evaluate them and inform the winner and losers. The agency must follow up to ensure that contractors are following safety procedures, building codes and other regulations.
Officials with the 101st say they try to stick as closely as possible to the federal acquisition regulations used by executive branch agencies. A high-ranking officer accounts for all the cash. A lawyer who reports directly to the commanding general audits the paperwork. There is a "reasonable degree of rigor and safeguards" built into the process, Petraeus said.
Maj. Daniel C. Evans of the 926th Engineer Group, who reviews bids and contracts, acknowledged that some shortcuts are necessary. "In the states, we'd have a certified contracting officer. Here we don't have one yet," Evans said.
The program makes its impact with visibility and jobs.
"The average Iraqi sees this clinic, not the port or sanitation plant built to capacity by American standards," said Command Sgt. Maj. Rory L. Malloy, with the 2nd Battalion, 187th Infantry.
Arnold passionately believes that local people should be hired to build in their areas. He is not required to give them the work, but almost always does. He was angry recently when he found that a contract for a clinic in the village of Domis had been awarded to a company in Irbil -- 110 miles away. That company in turn contracted with people in the village, adding a layer of cost and bureaucracy.
To fix the Sinjar General Hospital, all Arnold required was one assessment, from a construction specialist that Kato had worked with before. The Army team reviewed the work, concluded that the $9,600 price was reasonable, and gave Kato the green light. The hospital formed an oversight committee of five doctors, which divided the contract into 15 parts, which went to 15 different experts in specialties such as welding and electrical wiring.
For larger projects, the Army hired a team of local Iraqi engineers to audit the work. For smaller ones like the pediatric wing, it depends on those who will use the facility to report problems. Americans later stopped by the hospital to make sure everything was okay. It was.
In general, Arnold said, contractors have been "brutally honest" about cost and time and have lived up to their promises. "Maybe," he mused, "because they are terrified." That could be because their bosses are wearing bulletproof vests and packing semiautomatics.
Arnold said he had to fire several contractors who dawdled or didn't do the work they were supposed to. But perhaps the biggest challenge has been having to learn about so different industries on the fly -- his portfolio includes rebuilding a courthouse and digging wells. He said he will celebrate when the transition is made to Iraqi rule, when there will no longer be a need for military administrators.
"At the end of the day," Arnold said. "I'm not a doctor, I'm not a construction expert. I'm an infantryman."
