Dan Frosch contributed reporting from Denver. For all Sen. Barack Obama’s success raising money and generating excitement among voters, he...

Dan Frosch contributed reporting from Denver.

For all Sen. Barack Obama’s success raising money and generating excitement among voters, he faces a daunting challenge as he prepares to claim the nomination in August: a Democratic convention effort marred by costly setbacks and embarrassing delays.

With the Denver convention less than two months away, problems range from the serious – upwardly spiraling costs on key contracts still being negotiated – to the more mundane, like the reluctance of local caterers to participate because of stringent rules on what delegates will be eating, down to the color of the food. At last count, plans to renovate the inside of the Pepsi Center for the Democrats are $6 million over budget, which may force convention planners to scale back on their original design or increase their fundraising goals.

The convention is being organized by the Democratic National Committee, which is run by Howard Dean, with his chief of staff, the Rev. Leah D. Daughtry, leading the effort. Only in the last month has the Obama campaign been able to take over management of the convention planning with the candidate claiming the nomination, and his aides are increasingly frustrated, as the event nears, at organizers who they believe spent too freely, planned too slowly and underestimated actual costs.

The Obama campaign has dispatched 10 people to Denver to help "get a handle on the budget and make hard decisions" about what has to be done and how to move forward, said Bill Burton, a campaign spokesman.

With Democrats seeking to use the convention to move past the bitterness of their bruising primary fight, the gathering in Denver on Aug. 25-29 is likely to draw intense interest as the Obama forces try to show a once-divided party rallying around the nominee. And their convention comes a week before the Minneapolis gathering of the Republicans, whose convention efforts have been much smoother.

Some of the Democratic missteps started almost immediately after planning for the event began. The Democratic National Campaign Committee turned down a chance to get cheap office space and decided to rent top-quality offices in downtown Denver at $100,000 a month, only to need less than half the space, which it then filled with rental furniture at $50,000 a month. And in a costly misstep, the Denver host committee, early on, told corporate donors that their contributions were not tax-deductible, rather than to encourage donations by saying the tax-exempt application was pending and expected to be approved.

Overly ambitious environmental goals – to turn the event into a "green" convention – have backfired as only 14 states have agreed to participate in the program. Negotiations over where to locate demonstrators remain unsettled with members of the national news media concerned about proposals to locate the demonstrators – with their loud gatherings – next to the media tent.

And then there is the food: A 28-page contract requested that caterers provide food in "at least three of the following five colors: red, green, yellow, blue/purple and white." Garnishes could not be counted toward the colors. No fried foods would be allowed. Organic and locally grown foods were mandated, and each plate had to be 50 percent fruits and vegetables. As a result, caterers are shying away.

For the Democratic party, the danger is that a poorly run convention, or one that misses the mark financially, will reflect badly on the party, and raise questions about Democratic management skills. And more worrisome for the Obama campaign is that it will be left with the bill for cost overruns or fundraising shortfalls, and that the candidate will have to compete in raising money against a convention effort desperate for cash.

Natalie Wyeth, a spokeswoman for the Democratic National Convention Committee in Denver, said the convention "is on track and we are confident that we are where are supposed to be at this point in the game." She added, "We are exactly where we intended to be at."

Wyeth also defended the party’s choice of office space, saying a cheaper alternative was rejected because it would have required extensive and costly improvements.

The Democratic convention is already running behind in its fundraising. At last count, the convention was about $11 million short of the $40.6 million needed to stage the event – even before cost overruns were taken into consideration. This has prompted local newspapers to suggest in editorials that the Obama campaign should step in and begin to raise money for the committee.

Even more, those involved in the convention preparations portray the organizers as having squandered precious time, pushing critical decision-making into the final hours when it is more difficult to keep a lid on costs. Already, plans to have two dozen parties for the 56 delegations at locations throughout Denver were canceled and merged into a single party at the city’s convention center.

"Major decisions are being settled only at the last minute," said one convention organizer, who requested anonymity because of the confidentiality of the contracting process. "These contracts should have been out and signed last March or April. We still have no agreement on the budget or the scope of the work for the build out at the Pepsi Center. There is no reason why it is so late, why important issues have not been addressed and why we are trying to figure these things out at the last minute."

The Obama campaign is keeping a watchful eye on the process.

"Though there is much very hard work ahead," said Burton, the campaign spokesman, "we are committed to having the best Democratic convention we ever had."

Part of the problem, say those close to the plans, is a clash between the Obama campaign, which is tight-fisted about its money, and the Democratic convention committee, which failed to estimate properly the costs of the convention. As the Obama campaign begins to take over in Denver it is beginning to question why the party’s estimates for construction, entertainment and other components are so at odds with what are shaping up to be the actual costs.

"We are now going into the final construction phase, and it is turning out to be much higher," said a person with knowledge of the budget, but who is not tied to either the Obama campaign or the party. "So the Obama camp is not pleased and is raising questions about where all the money had been going. And they look at the posh office space for the Democratic party staff here, which is really plush, with big-screen TVs, and they say, ‘They spent the money on that?’"

This last-minute scramble covers contracts to build the skyboxes, the podium and the news media center. The problems have forced organizers to consider – and reject – some cost-cutting proposals, like housing the media center in trailers or cutting out air-conditioning from the media tent.

The Democrats’ efforts are being ridiculed by many in Denver. City Councilman Charlie Brown, a political independent, has devoted his monthly newsletter to "Food Fight" over the color-coded rules for convention food and is concerned that plans to handle the thousands of demonstrators expected to attend have not been fully thought out.

While Brown said he expects the city will "cowboy up" and have a successful convention, the lack of resolution about key issues like the demonstrators and food are "the donkey in the room."

"We are having people say that they will be leaving town," said Brown, who fears that the city could be in a no-win situation with the demonstrators – if there is insufficient police presence, the city could be overrun by them; if the police are overly aggressive, they will be criticized for overreacting.

And caterers, expected to feed the 40,000 people coming to town, are throwing up their hands over the food requirements.

"Everything that the Democrats did got off to a late start," said Peggy Beck, a co-owner of Three Tomatoes Catering. "It was such an ordeal. We’ve jumped through hoops and hoops to bid on their stuff, and we had to have certain color food so the plates would be colorful." In the end, the parties that she had been bidding on were canceled to save money. "This was some of the silliest stuff ever," she added.

Nick Agro, head of Whirled Peas Catering, questioned whether the requirement for local organic food could meet cost constraints. "These were fantastic ideas, but I question who is willing to pay for these extra costs," Agro said. "My experience is that it is all coming together slowly."

In Denver, hotel space is also in short supply. James F. Smith, national political editor of The Boston Globe, said the Democratic party could arrange only five of the 21 rooms his newspaper had required. And those are a 35-minute drive away at the Denver International Airport, while some attendees are staying as far as 90 minutes away.

Said Smith, "This will increase the need for additional rental cars."

© The New York Times. All rights reserved. This article originally appeared in The New York Times.

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