Army Cancels Contract for Iraqi Prison
By JAMES GLANZ
Published: June 20, 2006
BAGHDAD, Iraq, June 19 — The Army Corps of Engineers said Monday that it had
canceled a $99.1 million contract with Parsons, one of the largest companies
working in Iraq, to build a prison north of Baghdad after the firm fell more
than two years behind schedule, threatened to go millions of dollars over
budget and essentially abandoned the construction site.
The move is another harsh rebuke for Parsons, only weeks after the corps
canceled more than $300 million of the company's contracts to build and
refurbish hospitals and clinics across Iraq. A federal oversight office had
found that some of the clinics were little more than empty shells and that
only 20 of 150 called for in the contract would be completed without new
But the prison, originally scheduled to be completed this month, appears to
be the largest single rebuilding project canceled for failing to achieve its
goals under the $45 billion American rebuilding program for Iraq. The corps
said Parsons officials had recently estimated that it could not be completed
before September 2008, and would cost an additional $13.5 million.
"I have other contractors that hold to their schedules," said Maj. Gen.
William H. McCoy Jr., commander of the corps' Gulf Region Division. "And
when they hold to their schedules, there's no problem."
In the case of the prison contract, General McCoy said, "I've got to stop
The corps says it intends to complete 3,700 rebuilding projects. But that
number is much smaller than once planned and there is no independent overall
assessment of their success. For example, among the water and sanitation
projects, only 49 of the 136 projects originally envisioned are expected to
be completed, according to Stuart W. Bowen Jr., who leads the office of the
Special Inspector General for Iraq Reconstruction, an independent federal
The move over the prison contract pushes further into the open a series of
bitter disagreements between Parsons and the corps over who is ultimately
responsible for the failure of its rebuilding projects. When a senior
Parsons official was informed by telephone that General McCoy had released
word of the cancellation, the official replied, "He would, wouldn't he?"
The official referred a reporter to Parsons corporate headquarters in the
United States for permission to conduct an interview for attribution about
the development. But the request was turned down, and the company released a
brief statement through a spokeswoman instead.
"Parsons performed our work in Iraq in conformance with the contract terms
and the direction given to us by the U.S. government," said the spokeswoman,
Erin Kuhlman, by e-mail. "We're extremely proud of our dedicated employees
who have performed very well under extremely difficult and dangerous
Another corps official, Col. Andrew Q. Knapp, said that even the new
September 2008 completion date cited by Parsons was not realistic because
the company had stopped working on the site two months ago. "So the date's
kind of meaningless," Colonel Knapp said.
The company declined to clarify why it had stopped the work.
The largest single project previously canceled in Iraq appears to have been
a $75.7 million dollar contract that called for KBR, formerly Kellogg Brown
& Root, to restore a set of oil pipelines across the Tigris River.
The loss of business for Parsons in Iraq may not be over. General McCoy said
a broad review of Parsons' work in Iraq had turned up problems in sector
after sector. According to news releases on the Parsons Web site, the
company has received contracts worth as much as $4 billion in Iraq.
Parsons' contracts with the corps called for building and refurbishing
scores of police stations, border forts, fire stations, courthouses, prisons
and Iraqi government buildings. "We found overruns in almost every case,"
General McCoy said.
Corps officials also said that they had asked the company to explain delays
and overruns on another prison project, south of Nasiriya, for which it has
an $82.7 million contract.
Mr. Bowen, the inspector general, said after he issued a pair of scathing
reports on the clinics that he intended to review all of the Parsons work in
Iraq. Mr. Bowen's reports said the $243 million program to build 150 clinics
would complete only 20 unless new financing were found.
In some cases, the reports found, the clinics were little more than empty
shells of uneven bricks and concrete that were already crumbling into dust.
But those reports focused much of their criticism on what they called the
failure of the corps to exercise proper oversight of the work.
Shortly after those reports were issued, General McCoy canceled the clinics
contract, and shortly thereafter voided a $70 million Parsons project to
refurbish 20 hospitals in Iraq. General McCoy said Sunday that he had found
$62 million in his budget to finish the remaining clinics by letting
construction contracts directly to Iraqi companies.
The general said he would also contract directly with Iraqi companies to
finish the 1,800-inmate prison, the Khan Bani Saad Correctional Facility.
Colonel Knapp said that about 40 percent of the project had been completed
and that what was in place appeared to be sound.
"It's just primarily cost and schedule," Colonel Knapp said of the reasons
for canceling the Parsons prison contract. "There's an urgent need for
prisons right now for the country of Iraq, and it's simply not getting there
An inspection team led by Mr. Bowen visited the Nasiriya prison project in
May and found that the workmanship was good but that the construction
schedule had slipped by nearly a year for reasons no one there could
explain. General McCoy said he was aware of Mr. Bowen's findings and asked
the company for an explanation.
"We've given them about 10 days to come back to us," General McCoy said.