Global Policy Forum

By Griff Witte

The contractor that botched construction of a $75 million police academy in Baghdad so badly that human waste dripped from the ceilings has produced shoddy work on 13 out of 14 projects reviewed by federal auditors, the top official monitoring Iraq's reconstruction told Congress yesterday.

In a House hearing on what has gone wrong with reconstruction contracts in Iraq, Parsons Corp. quickly became the focus, taking bipartisan heat for its record of falling short on critical projects. The Pasadena, Calif., firm was supposed to build facilities at the heart of the $21 billion U.S.-led reconstruction program, including fire stations, border forts and health-care centers. But inspectors have found a litany of flaws in the firm's work. The one project reviewed by auditors that was being constructed correctly, a prison, was taken away from Parsons before its completion because of escalating costs.

In a report released yesterday, inspectors found that the Baghdad Police College posed a health risk after feces and urine leaked through the ceilings of student barracks. The facility, part of which will need to be demolished, also featured floors that heaved inches off the ground and a room where water dripped so heavily that it was known as "the rain forest."

The academy was intended as a showcase for U.S. efforts to train Iraqi recruits who eventually are expected to take control of the nation's security from the U.S. military. But lawmakers said yesterday they feared it will become a symbol of a different sort. "This is the lens through which Iraqis will now see America," Rep. Henry Waxman (D-Calif.) said. "Incompetence. Profiteering. Arrogance. And human waste oozing out of ceilings as a result."

Stuart W. Bowen Jr., special inspector general for Iraq reconstruction, said the project failed in part because Parsons had fallen down in its responsibility to manage the work. "It boils down to a lack of oversight," Bowen said. His office will go back in the coming months to review all of Parsons' work in Iraq, which totals about $1 billion.

Parsons Senior Vice President Earnest O. Robbins II acknowledged the police academy construction was unacceptable, but told congressmen that poor work by Iraqi subcontractors, tight deadlines and a deteriorating security situation were to blame. "We awarded over 1,700 subcontracts to Iraqi firms, and at the peak of construction we had over 11,000 Iraqis employed," Robbins said. "Even the day-to-day oversight of those Iraqi subcontractors was, as a result of cost and security reasons, conducted almost entirely by Iraqis hired and trained by Parsons." Robbins said the company consistently faced "a shortage of capable Iraqi managers and skilled craftsmen."

Contractors in Iraq have been a frequent target of Democratic critics in the three and a half years since the U.S. invasion, with Texas oil services giant Halliburton Co. becoming the most prominent example of what many Democrats consider war profiteering. Until now, the work of Parsons -- an employee-owned engineering and construction firm that had $3 billion in revenue last year -- had not attracted much attention. But Parsons came under fire from Republicans and Democrats alike yesterday. "On both sides of the aisle, we think this is outrageous. We want to get to the bottom of this," said Rep. Gil Gutknecht (R-Minn.).

Rep. Chris Van Hollen (D-Md.) pressed Robbins to give the government its money back. "Don't you think that Parsons, given what turned out to be a very shoddy job, should return some of its profits to the taxpayer?" Van Hollen said. "No sir, I do not," Robbins replied, explaining that it was up to the Army Corps of Engineers, which managed the contract, to determine how much profit the company makes. Parsons earns a basic profit amounting to 3 percent of its costs, but can make an additional 12 percent profit depending on its performance, Robbins said.

Robbins declined to say how much the company earned on the police academy contract but said the Corps of Engineers had deemed the company's work acceptable when construction wrapped up in the spring. Corps spokeswoman Suzanne Fournier said it had taken several months for the project's flaws to become apparent, and that Parsons has agreed to fix the problems at no additional cost. She said that work will probably be done by the end of October. Bowen told lawmakers it would be nearly impossible for the government to get a refund on the work because of the way the contract was structured.

At the beginning of the reconstruction effort, work was parceled out to some of the largest U.S. construction firms. Because of the volatility in Iraq, the government agreed to bear the risk of any surge in costs. Instead of setting contract values ahead of time, companies were given "cost-plus" contracts that reimbursed the firms for expenses and included a built-in percentage for profit. Critics have said the arrangement encouraged companies to run up their costs.

Under the contracts, the firms were expected to design electricity facilities, prisons, medical centers, water stations and other infrastructure that Iraq would need to become self-sustaining. But the companies were also asked to divide as much of the actual work as possible among Iraqi subcontractors.

Now, those original contracts are ending, even though much of the work remains undone. In some cases, the Iraqi subcontractors have been elevated to prime contractor after the U.S. firms failed to complete their assignments. Bowen said that of all the projects his office has inspected, about 70 percent have met the requirements in their contracts.