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The Builder Who Bombed in Iraq
Battered Over Failed Projects, Parsons's CEO Fires Back at Government Critics

By Griff Witte
Washington Post Staff Writer
Friday, December 22, 2006

Until this year, Parsons Corp. was about as quiet as a $3 billion engineering and construction firm with 12,000 employees could be. That's the way the firm's chief executive for the past decade -- a soft-spoken, white-haired Army veteran named James F. McNulty -- liked it.

But Iraq has changed everything.

Parsons has been reproved in recent federal audits for completing just a small fraction of the 150 primary health clinics originally planned to be built in Iraq and for building a police academy so flawed that human waste rained from the ceilings. For this, it has taken bipartisan hits on Capitol Hill, where its name is now whispered by war critics in the same breath as that perennial boogeyman, Halliburton.

Sick of taking blame, McNulty, 64, is speaking out about what went wrong with his firm's work and what he regards as the problems with how the United States uses private contractors in Iraq.

In a recent interview at the firm's Washington offices, one of a series he has given, McNulty said the government handed Parsons an impossible task by setting unrealistically high expectations for how much could be built while under-funding its efforts. McNulty said the company repeatedly pleaded with the government to either provide enough money to get the job done or scale back its goals, but said its entreaties were ignored.

"The entire reconstruction effort was much too ambitious," McNulty said. For instance, he said, his firm wanted to build a small number of clinics, some in each of three regions of the country, rather than try to do all 150 at once. "If we had built five in each region, we could have at least understood what problems we were going to face in building them," he said. "And we probably would have had 15 darn good clinics up a lot faster."

McNulty, a West Point graduate who served two tours in Vietnam during a 24-year Army career, also suggested the government needed to rethink its heavy dependence on the private sector for reconstruction, security and support in a combat environment.

The comments are unusual for the leader of a firm that makes much of its money doing work for the government. Then again, few have been battered as badly as Parsons, an employee-owned, California-based company with a six-decade track record. Since the spring, when news of the stumbling health clinic program first broke, the company's performance has been derided in the press and put under the microscope at congressional hearings. At a hearing in September, Rep. Henry A. Waxman (D-Calif.) spoke of a $75 million police academy that Parsons was responsible for but that went badly awry: "This is the lens through which Iraqis will now see America. Incompetence. Profiteering. Arrogance. And human waste oozing out of ceilings as a result."

At the same hearing, Stuart W. Bowen Jr., special inspector general for Iraq reconstruction, said 13 out of 14 Parsons projects that his office examined were flawed.

While Bowen's reports have spread the blame for the failed projects between Parsons and the government, one of the firm's customers in Iraq, the Army Corps of Engineers, has pointed responsibility squarely at its contractor.

"We had hundreds and hundreds of projects completed at the same time by other contractors. Parsons just wasn't able to meet their schedules," said Michael Fallon, a corps official who directed reconstruction programs in Iraq.

Fallon said that with the money Parsons was given to build health clinics -- roughly $200 million -- it should have been able to complete its work. The government insisted on 150 clinics, produced on an accelerated schedule, because "the country of Iraq needed health care in a hurry," Fallon said. Parsons says it finished 20 clinics before being terminated from the contract, though the corps insists just seven are operational.

"I don't know how much they understood what they were getting into," Fallon said.

McNulty contends the company was misled. Parsons had worked in Bosnia, Kosovo and Kuwait, and it was prepared for a similar security situation in postwar Iraq. The firm won eight reconstruction contracts, worth $1.7 billion, with a hope that those contracts would serve as a bridge to more work as the country blossomed under new leadership. "All the contractors were told to assume, and this is a quote, a 'permissive security environment.' That means to me you're going to be able to move around the country," he said.

Instead, the company's expatriate employees were virtual prisoners of the heavily fortified, U.S.-run Green Zone. At most sites, it was too dangerous for Parsons's expatriates. The company had to train Iraqis to oversee construction carried out by Iraqi subcontractors. Many were inexperienced firms that found themselves targeted by insurgents. Parsons subcontractors were kidnapped, killed by roadside bombs and assassinated in their offices. McNulty declined to answer questions about violence against expatriate Parsons employees until after they are all out of Iraq.

"You would have 500 workers on the site, and then one kidnapping or one bombing later, you would have no people out there for a week or two," McNulty said.

Meanwhile, McNulty said the company was not getting the help it needed from the government. U.S. officials initially gave the company coordinates for building clinics that turned out to be locations at the bottom of a lake or on top of a mosque. As U.S. officials rotated in and out of Baghdad, priorities shifted. "We couldn't get anybody to really make any decisions," he said.

Those factors took a toll on the company's timelines. But Jon C. Bowersox, who oversaw health care projects for the U.S. Embassy from late 2005 until mid-2006, said the company was not transparent about its problems. "They were giving [the government] very optimistic completion dates," Bowersox said. Clinics that were supposedly 90 percent complete proved to be far from it, he said, although added that he does not blame Parsons entirely.

"The real take-home message is you can't do construction in the midst of a civil war," he said.

McNulty said he would like to see the government rethink how it handles reconstruction in a combat zone. In Iraq, the government oversees the work, but contractors handle both the construction and security at work sites. In future conflicts, he said, he would like to see the U.S. military or an international force at least take over security, and perhaps the construction work itself.

Parsons, meanwhile, is not through with Iraq just yet. The company boasts it has completed more than a thousand projects there, and is still wrapping up others.

McNulty said the criticism Parsons received has been "a huge morale problem" for employees who served in Iraq. He has personally been under intense pressure to explain the company's performance to potential clients and to the public. But he said the firm continues to rack up contracts even as it comes under assault.

"We've lost no business over it," McNulty said. "In fact, the very people who are criticizing us are giving us more work."

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