U.S. looking into Iraq reconstruction contract requiring Iranian parts

WASHINGTON, May 7 (UPI) -- U.S. forces are investigating two contracts to build schools in northern Iraq that required bathroom fixtures to be supplied by Iran.

The new elementary and middle schools built in Erbil were also authorized by a South Korean member of coalition forces, against U.S. contracting rules, but officials say this practice has been stopped and corrected.

The contracts for both the Sarwaran Primary School and Binaslawa Middle School, in the capital of the Kurdistan Region of Iraq, "required that the bathroom fixtures be produced in Iran, which is currently under United States trade sanctions," according to two recent reports by the U.S. Special Inspector General for Iraq Reconstruction.

The Binaslawa school bathrooms had not been furnished at the time of the Feb. 4 SIGIR inspection. There were three sinks and four toilets installed in each of the four bathrooms in the Sarwaran school, however.

"The contract required the wash basins and water closet fixtures be Iranian-made products," the report said. "Although we could not conclusively verify that the products were made in Iran, we noted that a Web site for the sink brand (www.chininam.ir) was an Iranian site."

A SIGIR official confirmed the contract language didn't require the specific company to supply bathroom fixtures, but the fixture did have to come from Iran. The company could not be reached. The Web site is only a homepage featuring pictures of bathroom fixtures and a note that "this site pages will be ready to see soon."

Col. Bill Buckner, spokesman for Multi-National Corps-Iraq, said U.S. funds are not allowed to be used to purchase Iranian products, and contracts "normally" do not specify supplier countries or companies.

"Contracts are typically executed based on a lowest bid process," he said in an e-mail response to questions. "However, there are some cases where Congress may stipulate items must be procured from certain sources (uniform items, minerals, etc.)."

The projects were awarded by MNC-I's Multi-National Division-North East, which is commanded by Korean forces, and awarded to a "local contractor" from a "list of competitors" provided by the Kurdistan Regional Government, the SIGIR report said.

United Press International has been unable to obtain copies of the contracts or the competitors list.

"A MNC-I investigation surrounding the MND-NE purchases is ongoing," Buckner said. "Based on trade sanctions the U.S. does not solicit bids from Iran."

He said it's unclear why an Iranian company was specified in the contract, adding "it would be inappropriate to comment further until the MNC-I investigation is complete."

The Sarwaran contract for $826,469 and the $676,741 contract for Binaslawa both exceeded the $500,000 minimum, above which a project using Commander's Emergency Response Program funds "must be negotiated by a warranted contracting officer," according to the SIGIR reports.

"The contracting officer for the Coalition Forces said that the delegation process for his authority started with the Multi-National Corps-Iraq Commanding General and continued through the Multi-National Division-North East Commanding General and Chief of Finance to him," the SIGIR reports said. "However, the Republic of Korea contracting officer could not provide any documentation showing that he was a warranted contracting officer authorized to award contracts on behalf of the United States."

Buckner said a U.S. government employee must "review and obligate funds for purchases" and "no documentation has been found" authorizing the Korean contracting officer's action.

"We identified the problem during the XVIII Airborne Corps' transition in early February 2008," he said, the same time as the SIGIR investigation. Coalition forces project purchasing officers were directed by the Corps "not to conduct any CERP funding transactions" without a U.S. government employee purchasing officer present, and issued an order "clarifying" only U.S. government employees could be PPOs.

"This was a procedural error that was immediately corrected once discovered," Buckner said. "There was no ill-intent, mismanagement of funds, or any other improprieties. As noted in the SIGIR report, the projects were managed and being completed to specifications."

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(e-mail: blando@upi.com)