Video: Iraq hospital struggles to rebuild

updated 8/2/2006 7:13:20 PM ET 2006-08-02T23:13:20

It began as a beacon of hope for some of the sickest children in Iraq — a project with its own promotional video and a powerful advocate in first lady Laura Bush

"What a difference it will make in the life of Iraqi children when they have a modern medical facility right in their own country," said Mrs. Bush at a gala dinner for the Basra Children's Hospital in October 2005. The plan was for a 94-bed, state-of-the-art cancer hospital, to try to battle the high rate of pediatric cancers in southern Iraq.

But this effort, like so many other reconstruction projects in Iraq, has fallen far short of the promise.

By this month, though, all of the $50 million budgeted has been spent and the job was only about 35 percent complete, according to the Special Inspector General For Iraq Reconstruction.

A new audit from the inspector general is damning: "The Basra Children's Hospital, which should have been finished last December, at a price of $50 million, won't be done until a year from now, at a cost of at least $150 million, if that," says inspector general Stuart Bowen.

The contractor, Bechtel Corp., blames changing specifications and the deteriorating security situation.

Federal auditors place the blame squarely on the government agency managing the project — the U.S. Agency for International Development, or USAID. They say officials there hid ballooning costs and massive delays from Congress. USAID had an inadequate acccounting system, according to the audit, and the hospital project was hampered "by the lack of effective program management and oversight..."

"There's some evidence that the concealment of the cost was deliberate," says Bowen in an interview.

USAID insists that it reported all information promptly. It said in a response to the auditors that its accounting system fully complied with U.S. government standards and requirements.

But its contractor, Bechtel, is demobilizing and pulling completely out of Iraq. The firm says concrete foundations should be completed soon. But Bechtel, after everything, now insists the hospital cannot be finished given the chaos in Iraq.

"We think it cannot be built," says Bechtel official Cliff Mumm.

A private group raising money for the hospital hopes that's not the case.

"I think it will be a very sad thing to see this hospital not completed," says James Peake with Project Hope, which intends to train the hospital staff and purchase the medical equipment.

Basra, he says, is an area with a higher rate of pediatric cancers.

"I think the people of Iraq and the people really particularly of Basra, are expecting to see a hospital that represents the good faith of the United States," he says.

The Bush administration insists this hospital will be finished under the management of a different federal agency, since the U.S. Army Corps of Engineers is taking over from USAID. The White House says even though the allocated $50 million has been spent, it has the money to finish the project.

But at this point no one is promising how soon that will be.

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