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Privatizing of Walter Reed scrutinized

Some say move added to problems

Lieutenant General Kevin Kiley and Major General George Weightman at a House subcommittee hearing earlier this week at Walter Reed Army Medical Center in Washington.

WASHINGTON -- The scandal over treatment of outpatients at Walter Reed Army Medical Center has focused attention on the Army's decision to privatize the facilities-support workforce at the hospital, a move commanders say left the building maintenance crew understaffed.

Some Democratic lawmakers have questioned the decision to hire IAP Worldwide Services, a contractor with connections to the Bush administration and to KBR, a Halliburton subsidiary.

Last year, IAP won a $120 million contract to maintain and operate Walter Reed facilities. The decision reversed a 2004 finding by the Army that it would be more cost-effective to keep the work in-house.

After IAP protested, Army auditors ruled that the cost estimates offered by in-house federal workers were too low. They had to submit a new bid, which added 23 employees and $16 million to their cost, according to the Army.

Last week, the American Federation of Government Employees, the largest federal workers union, blamed pressure on the Army from the White House's Office of Management and Budget for the decision to privatize its civilian workforce.

"Left to its own devices, the Army would likely have suspended this privatization effort," said John Gage, president of the organization. "However, the political pressure from OMB left Army officials with no choice but to go forward, even if that resulted in unsatisfactory care to the nation's veterans."

The Army selected IAP for the five-year deal in January 2006, but IAP did not take over management until last month. During that period, the number of facilities management workers at Walter Reed dropped from about 180 to 100, and the hospital found it hard to hire replacements.

Major General George Weightman, who was Walter Reed's commander until he was relieved last week, testified last week that the privatization -- in combination with a decision by the Pentagon in 2005 to close Walter Reed by 2011 -- "absolutely" contributed to the problems.

IAP said in a statement it has "responded with a sense of urgency to address maintenance concerns throughout the [Walter Reed] complex."

Senator Barbara Mikulski, Democrat of Maryland, charged that the Bush administration had unfairly blamed federal workers for problems "that are a direct result of the Bush administration's contracting out policy."

The White House did not respond to a request for comment.

IAP, based in Cape Canaveral, has provided such services to the government as delivering ice in the Gulf Coast after Hurricane Katrina and helping maintain Afghanistan's air traffic control system. In 2006, the firm had $393 million in military contracts, according to Pentagon data.

IAP is owned by Cerberus Capital Management LP, an asset-management firm chaired by John Snow, former Treasury secretary . The company is headed by two former high-ranking executives of KBR, formerly known as Kellogg Brown & Root.

Al Neffgen, IAP's chief executive, was chief operating officer for a KBR division before joining IAP in 2004. IAP's president, Dave Swindle, is a former KBR vice president.

The company has worked at Walter Reed since 2003, providing housekeepers, computer analysts, and clerks under a Treasury contract.

In a separate development, Representative Harry Mitchell, Democrat of Arizona, said yesterday that the mold-covered walls, rodent infestations, and other problems uncovered recently at Walter Reed reveal "a catastrophic failure of leadership" by the Bush administration.

In the Democrats' weekly radio address, Mitchell said Congress is acting quickly to hold the administration accountable for underfunding and mismanaging the veterans healthcare system.

Mitchell's comments come after a week of congressional hearings on reports of shoddy outpatient healthcare at Walter Reed.

Army and administration officials have said they are working to fix the problems . Caseworkers, financial specialists, and others have been added to work with injured soldiers' families.

Mitchell said the Bush administration has tried to care for veterans "on the cheap."

Democrats have provided about $3.5 billion above the president's budget request in the emergency war funding bill, which House members will vote on soon, to deal with the health care problems faced by veterans, he said.

Material from the Associated Press was included in this report.