Bechtel pulling out after 3 rough years of rebuilding work

BECHTEL2.jpg 09/04/03--Bagdad, Iraq-- for David Baker Story Two workers at a sewage treatment plant in Baghdad, Iraq work to clean up some of the machinery so the plant can be come operational again. The project, among many others in post war Iraq, is being overseen by Bechtel International Systems. JUSTIN LANE FOR THE SAN FRANSISCO CHRONICLE ; on 9/4/03 in Baghdad. Justin Lane / Special To The Chronicle Ran on: 07-04-2004 Workers in Baghdad, left, clean equipment at a sewage plant in Baghdad, above, in a project overseen by Bechtel. As of June 22, only $366 million of the $18.4 billion U.S. package had been spent, the White House budget office says. Nothing from the package has been spent on sanitation or water. MANDATORY CREDIT FOR PHOTOG AND SF CHRONICLE/ -MAGS OUT less BECHTEL2.jpg 09/04/03--Bagdad, Iraq-- for David Baker Story Two workers at a sewage treatment plant in Baghdad, Iraq work to clean up some of the machinery so the plant can be come operational again. The ... more Photo: Justin Lane Photo: Justin Lane Image 1 of / 1 Caption Close Bechtel pulling out after 3 rough years of rebuilding work 1 / 1 Back to Gallery

Bechtel Corp. went to Iraq three years ago to help rebuild a nation torn by war. Since then, 52 of its people have been killed and much of its work sabotaged as Iraq dissolved into insurgency and sectarian violence.

Now Bechtel is leaving.

The San Francisco engineering company's last government contract to rebuild power, water and sewage plants across Iraq expired on Tuesday. Some employees remain to finish the paperwork, but essentially, the company's job is done.

Bechtel's contracts were part of an enormous U.S. effort to put Iraq back on its feet after decades of wars and sanctions. That rebuilding campaign, once touted as the Marshall Plan of modern times, was supposed to win the hearts of skeptical Iraqis by giving them clean water, dependable power, telephones that worked and modern sanitation. President Bush said he wanted the country's infrastructure to be the very best in the Middle East.

But Bechtel -- which charged into Iraq with American "can-do" fervor -- found it tough to keep its engineers and workers alive, much less make progress in piecing Iraq back together.

"Did Iraq come out the way you hoped it would?" asked Cliff Mumm, Bechtel's president for infrastructure work. "I would say, emphatically, no. And it's heartbreaking."

The violence that has gripped Iraq drove up costs and hamstrung the engineers who poured into the country after the U.S.-led invasion.

Bechtel's first reconstruction contract, awarded shortly after Saddam Hussein's overthrow in April 2003, assured the company that it would have a safe environment for its workers. But, by the end, dozens of Bechtel's employees and subcontractors had been killed, some of them kidnapped, others marched out of their office and shot. Forty-nine others were wounded.

Bechtel responded by hiring more guards, driving armored cars and fortifying its camps. Those steps ate up money that otherwise would have brought electricity and clean water to Iraqis.

The size of Bechtel's contracts also shrank over time, as U.S. officials diverted money from reconstruction and toward security. Instead of the nearly $3 billion originally budgeted, Bechtel finally received about $2.3 billion, a figure that includes money the company spent on projects as well as its undisclosed profit.

Mumm directed Bechtel's work from a bare-bones trailer in Baghdad. He is proud of his people for finding ways to work despite the threat of imminent death. Of 99 projects that the U.S. government directed Bechtel to complete, the company finished 97, abandoning only two for security reasons, the company says.

But Mumm's pride is mixed with frustration. Many of those completed projects later fell victim to collapsing security, which made maintenance dangerous and, in some cases, resulting in damage to plants and equipment.

He once hoped the new Iraqi government would turn into a steady Bechtel client, bringing the company lucrative new contracts in a country where virtually every road, power plant and waterworks needs repair.

"Had Iraq been a calmer place while we were there, amazing things could have been done," he said.

The U.S reconstruction push in Iraq is winding down. About $18 billion in funding that Congress approved three years ago was supposed to be spent or committed to specific projects by the end of September. Two of the U.S. government agencies that have overseen the work are scheduled to close shop early next year. The United States and other countries are discussing another round of aid, but if it comes, Iraqi ministries are supposed to take the lead on rebuilding.

"That's really an under-told story -- we've stopped the reconstruction," said Frederick Barton, co-director of the Post-Conflict Reconstruction Project at the Center for Strategic & International Studies think tank. "There are some things we're still finishing up, but we're wrapping up, and we're stepping back. It's really a tragedy."

What exactly did Bechtel accomplish in its three years in Iraq?

-- The company helped repair 14 electrical generation units, built four new ones and created 25 substations around Baghdad.

-- It restored eight sewage plants and built one.

-- A canal bringing drinking water to Basra, Iraq's second-largest city, was dredged and its pumps restored. Seventy small water treatment plants were installed in rural areas.

-- Airports in Baghdad and Basra were repaired to handle civilian flights. The country's international shipping port -- Umm Qasr -- was dredged and its grain elevator refurbished.

-- Baghdad telephone switching stations knocked out during the war were restored, and the country's phone network was reconnected to the outside world.

-- War-damaged bridges on key highways were rebuilt.

-- Almost 1,240 schools were refurbished with new paint, fans and in many cases new windows and doors to replace those looters had stolen.

But many of these accomplishments were undone as security evaporated.

For example, Bechtel added 1,280 megawatts to the nation's power grid and improved the reliability of another 480 megawatts. In the United States, that much energy could light more than 1.3 million homes.

But Iraq's entire power system this summer produced 4,400 megawatts, just 442 megawatts more than before the invasion. The country needs about 9,000 megawatts to satisfy demand.

In some cases, the power plants have had trouble getting stable fuel supplies. In others, repaired plants were cut off from the national grid by sabotaged power lines. A series of coordinated attacks Oct. 20, for example, severed Baghdad from power generated in the rest of the country, leaving the city's 7 million residents with only a few hours of electricity each day.

"Infrastructure is assumed by the terrorists, correctly, to be a target," said Michael Izady, a professor at Pace University who has trained U.S. forces in Iraq. "They're not stupid. You just hit the power grid, and you have 120 degrees outside. Ask any American what they'd do after two days of that. Tempers run really high."

Making matters worse, Iraqi workers haven't maintained some of the repaired electrical plants.

U.S. government auditors blame the problem on a lack of funding and the attitudes of Iraqi workers, who in the past rarely did maintenance unless something broke. Auditors visited one plant where new control systems had been bypassed, the blades of new turbines already had oil residue building up on them, and a fire had broken out -- a problem, since the fire extinguishing system was missing key parts.

Similar problems plagued water and sewage projects.

At Baghdad's Kerkh sewage plant, Bechtel spent $5.7 million repairing equipment that hadn't worked in months, maybe years. But the plant's location, on the edge of the city, became increasingly dangerous -- turf for Hussein loyalists and criminal gangs. In November 2004, insurgents issued flyers telling the plant's Iraqi workers to stay home or die, according to Bechtel. Not long after, a power failure hit the plant, and the staff didn't turn on the backup generator. The plant stopped working.

"We'd get it completed, and then the Iraqis would all flee, and it'd get mortared," Mumm said. "It would operate for a while, then the same thing would happen. ... As we sit here today, I don't know if Kerkh is running or not."

Some places became too dangerous for Western and Iraqi employees alike. One of the projects Bechtel couldn't complete was a water treatment plant in Baghdad's Sadr City, a poor, crowded neighborhood dominated by Shiite militias. Bechtel's top project supervisors and the project's subcontractor fled to avoid assassination.

Violent intimidation also stopped another project -- a state-of-the-art children's hospital in which first lady Laura Bush had taken a personal interest.

The project, in Basra, was supposed to cost $50 million. The U.S. Agency for International Development assigned Bechtel the job in August 2004, with a completion date of Dec. 31, 2005. But Bechtel later warned its government supervisors that the hospital would take far more money and time to complete. The project was suspended this summer. Bechtel says the hospital now would cost $98 million. Federal auditors, who blamed USAID for not reporting the project delays and costs to Congress, say the figure is probably higher.

Basra had been quiet immediately after Hussein's fall. Its Shiite population suffered greatly under Hussein and was happy to be rid of him. But the calm was short-lived, as Shiite militias started to exert more and more control over the city.

Bechtel's hospital site security manager was murdered. The site manager received death threats and resigned. Bechtel's senior Iraqi engineer quit after his daughter was kidnapped. Twelve employees of a subcontractor in charge of the hospital's electricity and plumbing were killed in their offices. Eleven workers of another company supplying the project's concrete also died.

As the human cost of reconstruction rose, why didn't Bechtel pull out?

Mumm said the company constantly reviewed security and was convinced that it could keep its people safe.

"We didn't stay under duress," he said. "I think all of our people got in it, got involved in it, and no one wants to leave a job half-done."

He says the work hasn't been for naught. Even electrical or sewage plants that have broken down after Bechtel left can be revived if the country finds a way to quell the violence. If Iraq eventually stabilizes, the people Bechtel worked with may provide another opportunity to work in the country.

"Those people will be there, and I think they'll think favorably of us," Mumm said.