By Lisa Myers Senior investigative correspondent
NBC News
updated 3/24/2004 5:55:09 PM ET 2004-03-24T22:55:09

Editor's note: When initially published, this article may have left an impression that a Pentagon contract awarded to Nour USA was canceled because of charges of improper influence. The president of Nour USA is a friend of Ahmed Chalabi, a Governing Council member in Iraq with close ties to the Pentagon. In fact, the Pentagon has said the contract was cancelled because of numerous problems with the bidding process.  Nour USA, Chalabi and the Pentagon have all denied that political connections played a role in awarding the contract.

Wednesday in Baghdad, a senior military official complained that Iraqi security forces are still without body armor, radios and SUVs that were supposed to arrive in November.

Why?  Delays in contracts to buy the equipment.

Maj. Gen. Charles Swannack Jr., commander of the 82nd Airborne Division in Baghdad said, “They want to defeat these enemies of a new and free Iraq. If we had the equipment for these brave young men we would be much farther along.”

There have been some successes in the rebuilding process:

But experts say there have been more than the usual problems, even given the hostile environment. 

“The contracting process itself has been chaotic, at best, uh, often disorganized and there’s been a real push to get the money out faster, perhaps, than the capacity to spend it,” said Paul Light, New York University professor and contracting expert.

American companies that once viewed reconstruction as a potential gold rush now complain of confusion and, in some cases, corruption.

“It’s a mess. One of the biggest obstacles confronting business right now is this corruption question. In other words, how do you know that you have to make a payoff? Unfortunately they’re being rather blatant about that.… Corruption in Iraq is considered a common practice. It’s not considered necessarily bad,” said Washington lawyer Rick Johnston, who has been to Baghdad many times for clients.

Charges of improper influence and overcharging have triggered investigations:

In fact, Halliburton now warns that it could face cash flow problems if the government demands a significant refund or delays payments — another potential problem in a contracting process that one consultant calls a train wreck.

Lisa Myers is NBC’s senior investigative correspondent.

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