Squabbles stalled Walter Reed maintenance contract for years

WASHINGTON -- An Army contract to privatize maintenance at Walter Reed Medical Center was delayed more than three years amid bureaucratic bickering and legal squabbles that led to staff shortages and a hospital in disarray as the number of severely wounded soldiers was rising rapidly.

Documents from the investigative and auditing arm of Congress map a trail of bid, rebid, protests, and appeals between 2003, when Walter Reed was first selected for outsourcing, and 2006, when a five-year, $120 million contract was finally awarded.

The disputes involved hospital management, the Pentagon, Congress, and IAP Worldwide Services Inc., which has powerful political connections and is the only private bidder to handle maintenance, security, public works, and management of military personnel.

While medical care was not directly affected, needed repairs went undone as the nonmedical staff shrank from almost 300 to fewer than 50 in the last year and hospital officials were unable to find enough skilled replacements.

An investigative series by the Washington Post last month sparked a furor on Capitol Hill after it detailed poor conditions at the 98-year-old hospital in northwest Washington and substandard services for patients. Three top-ranking military officials, including the secretary of the Army, were ousted in part for what critics said was the Pentagon's mismanaged effort to reduce costs and improve efficiency at the Army's premier military hospital while the nation was at war.

IAP is owned by a New York hedge fund whose board is chaired by former Treasury secretary John Snow, and it is led by former executives of Kellogg, Brown, and Root, the subsidiary spun off by Texas-based Halliburton Inc., the oil services firm once run by Vice President Dick Cheney.

IAP finally got the job in November 2006, but further delays caused by the Army and Congress delayed work until Feb. 4, two weeks before the Post series and two years after the number of patients at the hospital hit a record 900.

"The Army unfortunately did not devote sufficient resources to the upfront planning part of this, and when you do that, you suffer every step of the way," said Paul Denett, administrator for federal procurement policy at the Office of Management and Budget, the White House unit that prepares the president's budget and oversees government contracts.

The contract includes management of Building 18, which houses soldiers with minor injuries and was highlighted in the Post series as symptomatic of substandard conditions: black mold on the walls of patient rooms, rodent and cockroach infestation, and shoddy mattresses.

The building's 54 rooms are now vacant. Interior work cannot be started until a badly damaged roof is repaired, Walter Reed officials said.