Watchdog: Follow the Money

USAID paid $500 a gallon for gas, failed to catch $500,000 in overpayments on long-delayed Afghan hospital

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Watchdog,Watchdog Blog,Michal Conger,Afghanistan,Inspectors General,Waste and Fraud,Follow the Money

Construction of a $14.6 million hospital in Gardez, Afghanistan, is 23 months behind schedule and costing taxpayers more than half a million dollars in overpayments the U.S. Agency for International Development and its contractor failed to catch.

And once it's finished, there's no guarantee the Afghan government can even afford to run the facility, according to the Special Inspector General for Afghan Reconstruction.

The 100-bed hospital is 12 times larger than the one it will replace and will cost at least five times more to run, the IG said.

Its original completion date was Nov. 24, 2011, at a projected cost of $13.5 million.

USAID's primary contractor, the International Organization for Migration, gave construction contractor Sayed Bilal Sadath Construction Co. five extensions, through June 30.

When Sadath asked for yet another extension through October, IOM finally terminated the contract. USAID has given IOM a Dec. 31, 2013, deadline to finish the hospital.

Sadath also charged outlandish costs during its long-delayed construction, which neither IOM or USAID caught. The contractor charged $500 per gallon for 300 gallons of gas, which should have cost no more than $5 per gallon, according to the IG.

Sadath also charged $220,000 for an automatic temperature control device that should have cost between $2,000 and $10,000. Together, these overpayments came to $507,000.

"The fact that IOM did not discover that the U.S. government paid $500 per gallon for diesel fuel and could not provide vendor invoices for the fuel and other items clearly shows that its controls were not sufficient to account for and safeguard U.S. taxpayers’ money," said IG John F. Sopko.

A thorough financial audit could uncover even more overpayments, Sopko said.

USAID's three-year-old "Administrator’s Accountable Assistance for Afghanistan" initiative is supposed to provide stringent oversight that would have discovered the overpayments, the IG said.

Officials with USAID claimed its controls already identify un-allowable costs, but the IG said the agency plans to widen the scope of its audit to catch similar costs.

It's not the first sign of trouble with the Gardez hospital. An earlier report revealed USAID started the project before finalizing plans with the Afghan government, resulting in a building much bigger than Afghanistan could afford or use.

USAID told the IG its progress on the hospital was delayed by the facility's remote location in Paktiya province and by the Taliban insurgency.

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