Deconstructing Reconstruction

Iraq contractors face increased scrutiny in the new Congress.

When Rep. Henry Waxman takes over the House Government Reform Committee this month, it's a sure bet that the hearing schedule is going to include some pointed inquiries into the Bush administration's reconstruction program in Iraq. The California Democrat's dogged investigations into administration operations over the last several years have earned him the enmity of many Republicans. Armed with the chairman's subpoena power, he might become more than a thorn in their side. And thanks to rules adopted by Republicans during the Clinton administration, Waxman won't need the support of other committee members to issue those subpoenas.

Dubbed "the scariest guy in town" by Time magazine in December for his tenacious approach to congressional oversight, Waxman has made no secret of his suspicions that Texas-based contractor Halliburton has been bilking the taxpayers for its work in Iraq.

More recently, Waxman leveled his sights on Parsons Corp. The California-based international engineering and management services firm has been cited by Stuart Bowen, the special inspector general for Iraq reconstruction, for delays and other problems in the construction of dozens of health care centers across Iraq, and for work so shoddy in the construction of police academy barracks that raw sewage leaked through ceilings onto recruits.

James McNulty, chairman and CEO of Parsons, doesn't dispute the problems the IG has cited with his company's work, but he says the projects have been far more difficult than anyone anticipated.

The primary reason has been the deteriorating security situation, which has made it impossible for Parsons to conduct the kind of project oversight required for meeting U.S. construction standards. The company was forced to rely on Iraqi subcontractors, who were difficult to vet and, as it turned out, not always qualified to do the work.

"When solicitations were issued, the directions, both verbal and in writing, were to assume a permissive security environment. It was anything but," says McNulty, a retired Army colonel and program manager who served two combat tours in Vietnam.

Additionally, "dysfunctional" management of the reconstruction projects by federal officials made the job far more complicated, he says. Over the 28-month period Parsons held the health care centers contract, 10 government program managers and 10 contract managers cycled through. "Their average tour of duty was six weeks to three months. Some were there for a few days," he says. "There was no consistency."

In March 2004, Parsons was told to begin designing generic health care centers (the number and location of the centers hadn't been decided). The company came up with plans for relatively simple one-story facilities, but government program managers rejected that idea and said the buildings would need to be two stories. "I don't know what the rationale was. Probably the Iraqi health ministry said, 'We want two-story buildings,' " McNulty says. Eventually, CPA provided GPS coordinates for 151 facilities. But when Parsons began researching the sites, they discovered that 40 were in impossible locations-on the site of a mosque or in the middle of a lake or in a landfill, for example. About 30 of those sites were relocated, and 10 were dropped because no appropriate location could be found, he says.

Parsons recommended building 15 facilities initially-five each in the northern, central and southern regions of Iraq, but that recommendation was rejected. Instead, the company was told to begin work on all 141 facilities at once. "That put us in a bind. We didn't have the resources or the staff to supervise 141 sites concurrently," McNulty says, so Parsons trained Iraqi supervisors. But the security situation was so dire in some places that work became all but impossible. One Iraqi supervisor, for example, was executed-shot in the head while he sat at his desk.

Parsons' experience isn't unique in Iraq. McNulty, who is generally happy to keep his employee-owned company out of the press, says he wants people to understand what Parsons was up against: "I don't know Mr. Waxman, but I want to meet him and at least tell him about Parsons." He will likely get the chance.

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