U.S. Says Contractor Made Little Progress on Iraq Projects

By Dana Hedgpeth and Amit R. Paley
Washington Post Staff Writers
Monday, July 28, 2008

The U.S. government paid a California contractor $142 million to build prisons, fire stations and police facilities in Iraq that it never built or finished, according to audits by a watchdog office.

The Special Inspector General for Iraq Reconstruction (SIGIR) said Parsons of Pasadena, Calif., received the money, part of a total of $333 million but only completed about one-third of the projects, which also included courthouses and border control stations. The inspector general's office is expected to release two detailed audits today, evaluating Parsons's work on the contract, which is worth up to $900 million.

"Far less was accomplished under this contract than originally planned," the inspector general wrote. "Millions of dollars in waste are likely associated with incomplete, terminated and abandoned projects under this contract." Auditors did not give a dollar figure of how much had potentially been wasted, but they said Parsons got about 10 percent -- or $11.3 million -- of the $108 million of award fees it could have received.

Parsons said in a written statement yesterday that it had "some serious reservations about the conclusions" in the audits, saying the company was hindered by the violent and unstable security situation in Iraq. One of Parsons's subcontractors was shot and killed at close range while in his office, the company said.

Parsons's work is emblematic of other troubles in the $50 billion U.S. reconstruction effort, in which there have been widespread problems of contractors doing poor work, being late and overspending on projects. Those issues combined with bad record-keeping, lack of oversight by overworked government managers, and high personnel turnover for both the government and contractors in an unstable war zone have created millions of dollars in waste, according to the Iraq inspector general. But SIGIR conceded that Parsons's "failure to complete some of the work was understandable because of its complex nature and unstable security environment."

The office, which is charged with finding waste, fraud and abuse in U.S. spending, said a contract of Parsons's size should have had 50 to 60 contracting officers and specialists working on it, but it only had 10.

Parsons won its lucrative deal in 2004 to do security and justice work in Iraq, as part of a dozen other big reconstruction deals. Of 53 construction projects in the Parsons contract, only 18 were completed.

Auditors gave Parsons a scathing report on one of its biggest projects -- a multimillion-dollar prison in Diyala that was to house 1,800 inmates and help alleviate overcrowded facilities -- calling it a failure and wasteful. The U.S. government fired Parsons from the prison contract two years ago, saying it was late and over budget. It paid Parsons $31 million, and then paid other contractors $9 million to keep working on the project.

But now the prison -- known as Kahn Bani Sa'ad Correctional Facility -- sits unfinished and dilapidated. Local residents have derisively nicknamed it "the whale." At one of the buildings, the second floor is without a roof. Gray cement walls jut up in the sky. There is no plumbing or electricity. Windows have not been put in, and walls are unpainted. Roads in the complex remain unpaved.

Al al-Mayahi, who said he was one of the subcontractors on the project, said that when the floors began to collapse because of poor materials used in their construction, the Americans refused to pay one of the Iraqi contractors on the deal and the man fled. In the past two years, al Mayahi said, nothing's been done on the project. "I'm disappointed with this entire project," said al Mayahi, who said he was also owed money on the project.

About 400 Iraqi soldiers have been camped out at the site for about a week to prepare for a major military operation in Diyala, according to Lt. Col. Ali al-Suaidi. He was horrified at the state of the building.

The U.S. government says it turned the project over to the Iraqis in August 2007, but a spokeswoman for the Iraqi Justice Ministry said yesterday that it was not under their control.

"It hasn't been completed yet for it to be handed over to us," said spokeswoman Fayhaa Khudir.

The Iraq inspector general said "at this point the entire amount disbursed for this project may ultimately be wasted because the Government of Iraq currently has no plan for completing or using this facility."

Paley reported from Baghdad, and a special correspondent in Diyala province contributed to this report.

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