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Cablegate: Fao Update On Iraq Oil-for-Food Contracts

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS ROME 004975

SIPDIS


SENSITIVE

FROM FODAG

STATE FOR IO/FO - SWIGERT, IO/EDA, IO/T, IO/PHO, NEA/NGA,
PRM
USDA/FAS FOR U/S PENN, ETERPSTRA, MCHAMBLISS, RTILSWORTH AND
LSCHATZ
USAID FOR AA/DCHA WINTER, AA/ANE, D/DCHA/OFDA BMCCONNELL,
D/DCHA/FFP LANDIS

E.O. 12958: N/A
TAGS: EAID EAGR AORC PREF IZ FAO UN
SUBJECT: FAO UPDATE ON IRAQ OIL-FOR-FOOD CONTRACTS

REF: (A) STATE 304499; (B) ROME 4767,
(C) ROME 4393; (D) ROME 4366

Sensitive but unclassified - please protect accordingly.
Not suitable for Internet posting.

1. (SBU) Summary: FAO officials report that, as of
October 30, FAO has completed its work on 182 contracts
(86 percent) out of the 211 contracts that were originally
passed to FAO under Resolution 1483. With a number of
contracts very close to completion, they fully expect to
surpass the 90 percent mark by November 3. They point out
that the Office of the Iraq Program (OIP) statistics
reported ref A only count those contracts that FAO has
amended and sent to OIP, but there are an additional 61
contracts for which all possible FAO action has been
completed, but which need not or cannot be amended, for
reasons beyond FAO's control. End summary.

2. (SBU) FODAG delivered ref A demarche to FAO on October
30. In response to the information provided in ref A, the
FAO officials involved in OFF contract processing indicated
that the OIP information works off a data base that may be
misleading, and is accurate only if one considers the total
number of contracts under SC Resolution 1483 that were
actually amended by FAO.

3. (SBU) FAO offered the following accounting of the
status of contract amendments:

(a) 211 - Total number of contracts passed to FAO by OIP for
amendment under SC Resolution 1483.

(b) 121 - Number of contracts amended by FAO and sent to OIP
(57.3 percent of the total).

(c) 43 - Number of contracts closed. Closed means either
(1) by the time FAO received them all deliveries under the
contracts had been completed and contracting actions
completed, or (2) the suppliers had indicated to FAO that
they had no interest in fulfilling or ability to fulfill the
contracts. In all these cases no amendment to the existing
contract was needed or possible. FAO has informed OIP of
these contracts, but they apparently continue to appear on
the list of contracts not acted upon by FAO (20.4 percent of
the total).

(d) 9 - Number of contracts in which there is an intractable
fee dispute. These are cases in which the suppliers refuse
to agree to an amendment of their contracts reducing the
cost by 10 percent. (This was, FODAG understands, one of
the tasks set FAO in the contract amendment process.) FAO
is not in a position to proceed with these contracts because
the suppliers will not negotiate. FAO says that OIP and the
CPA have been informed of this. Contracting action cannot
take place on these contracts (4.3 percent of the total).

(e) 5 - Number of contracts rejected on technical grounds.
Four of these are for insecticides that pose environmental
or handler risk, or which are not approved for use in Iraq,
and one is for irrigation equipment. These contracts have
been discussed with the civilian advisors of the CPA and the
Iraqi Ministry of Agriculture, and FODAG understands that
these entities have agreed that the contracts should be de-
prioritized. FAO is awaiting written confirmation of this
from the CPA and has informed OIP of the circumstances
surrounding these contracts (2.4 percent of the total).

(f) 4 - Number of contracts in which FAO has been unable to
reach the suppliers. FAO indicates that none of the contact
points (phone, fax, telex, email, etc.) have worked for
these firms and FAO has been unable to proceed with contract
re-negotiation for lack of having someone with whom to
negotiate. FAO has tried to follow up through the embassies
of the countries in which the suppliers are registered, to
no avail. FAO has informed the OIP and CPA of the status of
these contracts and further action cannot be taken (1.9
percent of total).

(g) 11 - Number of contracts under active final negotiation
with the suppliers and for which amendment finalization is
expected shortly (5.2 percent).

(h) 12 - Number of contracts in which amendment discussions
are underway and FAO has asked for, and is awaiting,
supplier final terms for final negotiation of amendments.
Amendment is expected (5.7 percent).

(i) 3 - Number of contracts in which all negotiations have
been completed and FAO is awaiting supplier final signature
of amended contract (1.4 percent of total).

(j) 3 - Number of contracts for which technical
specifications are being identified by CPA and FAO technical
experts (1.4 percent of total).

4. (SBU) The sum of contracts in paragraphs b through k is
211. It is apparent that the OIP percentage cited in ref A
as representing total contract amendments completed includes
only category b. However, FAO officials maintain that this
is not an accurate representation of where the contracting
process stands. Category c is one in which no action can or
should be taken. Categories d, e, and f are ones in which
FAO cannot move forward with contract amendment. These
contracts -- for which amendment cannot be expected from FAO
for reasons beyond their contracting control -- total 61.
If one accepts that FAO has done on these contracts all that
it is able in pursuit of amendment, then they are more
appropriately placed in the "completed" column, making that
percentage, as it stands on October 30, at 86 percent (121
plus 61 out of 212 contracts).

5. (SBU) If one accepts that categories g and i are near
completion, then the total of completed contracts on
November 3 would be 196. This represents 92 percent of the
total contracts to be amended. FAO officials confirmed that
they expect to have contract action completed on 90 percent
by November 3, as they had previously indicated.

6. (SBU) Contract category h is one that FAO expects to
complete before the November 21 deadline, and it also
intends to do so with category j, assuming the necessary
information from outside bodies is available in time.

7. (SBU) Comment: FODAG hopes this accounting of FAO OFF
contract amendments under the SC Resolution 1453 helps to
keep the process of finalizing this program on track.

8. (U) Minimize considered.

HALL


NNNN
2003ROME04975 - Classification: UNCLASSIFIED

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