Global Policy Forum

Parsons, Military Wasted Millions


By Tony Capaccio

July 28, 2008

Parsons Corp., one of the largest construction contractors in Iraq, and the Pentagon wasted millions of U.S. tax dollars because of poor oversight and building practices, the Special Inspector General for Iraq Reconstruction said in a new report. Parsons completed only about one-third of the construction contracts required to build border forts, prisons, correctional facilities and courthouses under a contract worth as much as $900 million, the report said. Parsons received $333 million for individual construction jobs, or task orders, including $142 million for contracts that were eventually canceled. The Parsons contract "entailed the most waste of tax dollars'' of the reviews of Iraq reconstruction contracts conducted so far, Inspector General Stuart Bowen said in a statement e-mailed in response to questions about his report.

A Parsons spokeswoman said the company did the best it could under difficult conditions. The audit is the latest to look at Parsons as part of a congressionally mandated review of projects by specific U.S. contractors paid in part from $50 billion of U.S. taxpayer reconstruction funds in the aftermath of the 2003 U.S.-led invasion to oust Iraqi dictator Saddam Hussein. The Parsons contract was closed out in August 2006.

Auditors "identified significant weaknesses in the U.S. government's oversight of the contract," Bowen said in his report, released today. "These weaknesses created an environment that was conducive to waste and inefficiency, as evidenced by the large number of project terminations and cancellations."

66 Percent Canceled

The audit says 34 percent of the jobs were completed and 66 percent were canceled. The canceled jobs accounted for 43 percent, or $142 million, of what the government paid out on the contract. The review identified "multiple instances in which contracts were later awarded" to other contractors to fix Parsons' work, Bowen wrote in the report. Bowen's previous audits accused Parsons of sloppy construction and poor management of its Iraqi subcontractors, including $186 million to build public health clinics, $72.5 million for a police academy in Baghdad and $3 million to renovate the Iraqi Security Forces Civil Defense headquarters.

In the latest review, the files examined by Bowen's auditors indicated cases where the U.S. military didn't cite reasons for the cancellations, or referred to concerns over slow progress or ``general dissatisfaction'' with Parsons' performance.

Completed Work

Bowen did say said that, in general, the projects Parsons completed "resulted in material improvements in Iraqi security and justice infrastructure, including new or reconstructed border control facilities, courts, fire stations and military academies." Erin Kuhlman, a spokeswoman for closely held Pasadena, California-based Parsons, noted that portion of Bowen's report.

"Although we certainly would have wished for a better work environment and a better outcome in some cases, we did our best under extraordinarily difficult circumstances,'' she said."Had security conditions been more stable, we would have accomplished even more.". Still, Bowen wrote, some of the projects canceled "had significant construction deficiencies, some of which were not corrected by Parsons.''

Corrections Facility

One example is $40 million spent on the partly completed Kahn Bani Sa'ad Corrections facility. The U.S. terminated Parsons' role in June 2006 because it failed to complete its work on schedule, after paying the company $31 million. A second contractor was hired and paid $9 million to fix "defective work" and finish the project, but that job was terminated in June 2007 by the U.S., citing security concerns.

The facility was transferred to the Iraqi government in August 2007, which has no plans to use it, Bowen wrote. The U.S. Army Corps of Engineers said it had many "construction deficiencies," according to the report. "At this point, the entire amount disbursed for this project may ultimately be wasted because the government of Iraq currently has no plans for completing or using this facility," Bowen wrote.

Kuhlman said the Kahn Bani project was a "uniquely difficult assignment" because the facility was in a region "plagued by violent sectarian warfare, particularly in the months that Parsons was on the project." she said.

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