I wonder when the books are closed, what the final tab will be, for Bush's vanity war against Saddam?

BAGHDAD, Iraq, July 29 - The State Department agency in charge of $1.4 billion in reconstruction money in Iraq used an accounting shell game to hide ballooning cost overruns on its projects there and knowingly withheld information on schedule delays from Congress, a federal audit released late Friday has found.

The agency hid construction overruns by listing them as overhead or administrative costs, according to the audit, written by the Special Inspector General for Iraq Reconstruction, an independent office that reports to Congress, the Pentagon and the State Department.

Called the United States Agency for International Development, or A.I.D., the agency administers foreign aid projects around the world. It has been working in Iraq on reconstruction since shortly after the 2003 invasion.

The report by the inspector general’s office does not give a full accounting of all projects financed by the agency’s $1.4 billion budget, but cites several examples.

The findings appeared in an audit of a children’s hospital in Basra, but they referred to the wider reconstruction activities of the development agency in Iraq. American and Iraqi officials reported this week that the State Department planned to drop Bechtel, its contractor on that project, as signs of budget and scheduling problems began to surface.

The United States Embassy in Baghdad referred questions to the State Department in Washington, which declined to comment immediately.

In March 2005, A.I.D. asked the Iraq Reconstruction and Management Office at the United States Embassy in Baghdad for permission to downsize some projects to ease widespread financing problems. In its request, it said that it had to “to absorb greatly increased construction costs” at the Basra hospital, and that it would make a modest shift of priorities and reduce “contractor overhead” on the project.

The embassy office approved the request. But the audit found that the agency interpreted the document as permission to change reporting of costs across its program.

Referring to the embassy office’s approval, the inspector general wrote, “The memorandum was not intended to give U.S.A.I.D. blanket permission to change the reporting of all indirect costs.”

The hospital’s construction budget was $50 million. By April of this year, Bechtel had told the aid agency that because of escalating costs for security and other problems, the project would actually cost $98 million to complete. But in an official report to Congress that month, the agency “was reporting the hospital project cost as $50 million,” the inspector general wrote in his report.

The rest was reclassified as overhead, or “indirect costs.” According to a contracting officer at the agency who was cited in the report, the agency “did not report these costs so it could stay within the $50 million authorization.”

“We find the entire agreement unclear,” the inspector general wrote of the U.S.A.I.D. request approved by the embassy. “The document states that hospital project cost increases would be offset by reducing contractor overhead allocated to the project, but project reports for the period show no effort to reduce overhead.”

The report said it suspected that other unreported costs on the hospital could drive the tab even higher. In another case cited in the report, a power station project in Musayyib, the direct construction cost cited by the development agency was $6.6 million, while the overhead cost was $27.6 million.

Keep in mind this report does not even talk about the millions that have gone "missing," since the war started. No wonder Bush was a failure as a CEO.

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