Report uncovers Parson Corp.’s failures in Iraq

By JOSEPH GIORDONO | STARS AND STRIPES Published: February 1, 2008

Reports issued this week by a government watchdog continue to fault the largest American construction firm in Iraq for project failures, but also gave hope that oil revenue could help the reconstruction process.

The reports are from the Special Inspector General for Iraq Reconstruction. Previous reports have outlined some of the failings of Parsons Corp.’s work in Iraq, but this quarterly report went further and examined some 200 Parsons projects in 11 major “job orders,” totaling $365 million.

The report said that eight of the 11 job orders were terminated by the U.S. government before completion, for reasons ranging from weak contract oversight and failures in reporting problems to poor supervision by the Army Corps of Engineers.

The report also called 2008 a “year of transfer” for the reconstruction program, with several important milestones to be tracked.

Three key developments are identified: the changing security situation and American troops’ roles in each province; the outcome of several Iraqi laws on provincial powers, elections and other issues; and the potential for a significant rise in national income because of oil prices and production.

According to the report, Iraq’s oil production during the last quarter averaged 2.38 million barrels a day, the highest since the war began. Prewar averages were 2.6 million barrels per day.

Increasing oil prices could mean an extra $15 billion in revenue for the country. And while the money could help reconstruction, Stuart W. Bowen Jr., who heads SIGIR, warned that it highlights the need to fight corruption with “renewed vigor.” The report also urged Iraqi legislation on how to share the money among the Iraqi people.

The Corps’ Gulf Region Division in Iraq “acknowledges the findings” of the January 2008 quarterly report, but also said “these findings are not new.”

The Corps terminated Parsons’ contract for the hospital and clinic orders in 2006, according to a statement sent to Stars and Stripes on Thursday and attributed to Lloyd Caldwell, director of programs for Gulf Region Division.

Currently, more than 90 percent of reconstruction contracts are awarded to Iraqi-owned businesses, Caldwell said.

“USACE continues to cooperate with [SIGIR] on reconstruction projects,” Caldwell said. “While SIGIR has identified instances for improved performance among all agencies, those SIGIR lessons do not characterize the success of the vast majority of projects performed in Iraq.”

As of the end of 2007, the U.S. government had appropriated $47.5 billion for reconstruction in Iraq.

The SIGIR office has itself been under scrutiny and was accused of mismanagement by former workers. A government investigation is ongoing, officials said.

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