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Iraq Contractor's Work Is Further Criticized
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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.
