A Day Late and a Dollar Short
Total Contracts: $5,286,136,252
[Cross-posted at The Great Society]
In contravention to the previous companies chronicled, the Pasadena, California-based Parsons Corporation, founded in 1944 under the name The Ralph M. Parsons Company (RMP), is wholly owned by its roughly 9,000 employees. The company originally formed as an engineering and construction firm for "government, petrolchemical and infrastructure clients." (As a matter of fact, Ralph Parsons was among the original founders of Bechtel-McCone-Parsons Corporation in the 1930s before selling off his shares and creating RMP, says the Center for Public Integrity.) However, as the company boasts, in the last six decades Parsons has expanded to include discipline-specific areas of expertise. In 1978, the Parsons Corporation was formed as the holding company for its acquired business interests that now range from aviation to water treatment, totaling 8,000 projects worldwide ("Parsons in Iraq," page 4 from Export.gov).
Parsons touted its forty years of experience operating in the Middle East, highlighting "hydrologic surveys" in the 1960s, work on the "Baghdad South Power Plant, 14th of July Suspension Bridge and Baghdad Subway Station Designs" ("Parsons in Iraq," page 9). According to CPI, work on the Baghdad subway system was abandoned with the onslaught of the First Gulf War in 1990. Following the ejection of Saddam Hussein from Kuwait, Parsons returned to repair the facilities they had built three decades prior.
As one of four companies (Parsons lists five in their PDF) selected to dispose of captured enemy ordnances, Parsons received an $89 million contract to perform their part of the project, it announced in August 2003 ("Parsons in Iraq," pages 12-13). According to the PDF document, the job entailed seven processing sites, over 2,000 persons on staff and 103 of 166 caches "cleared."
In January 2004, Bechtel had won a two-year contract worth $1.8 billion "in partnership" with Parsons in the "second phase" of Iraqi reconstruction, reported the Boston Globe (Parsons press release). Ten days later, Stephen J. Glain reported in the Globe that a no-bid oil infrastructure contract awarded to Halliburton subsidiary, KBR, just after the invasion was "opened for competitive bids." Naturally, they started carving Iraq, creating north and south regions.
Parsons, in cooperation with Worley Group, Ltd. from Australia, won the northern contract worth $800 million ($; press release; "Parsons in Iraq," page 14). Late that month, Parsons received a contract from the Coalition Provisional Authority to restore a military base and recruiting stations in Iraq, namely the Taji base project "will include building renovation, repair of a wastewater treatment plant and installation of sewer distribution lines" (press release; "Parsons in Iraq," pages 17-18). That contract was worth, according to CPI (scroll down to May 2004 update), $31,136,252.
The company received a contract worth upto $900 million to construct "security and justice" facilities (read: prisons, police stations) and subcontracted "the majority of the work" to two British companies in March 2004 (press release; "Parsons in Iraq," pages 21, 25; for full "Subcontracting Commitments," view page 35).
Two months after the company won the "security and justice" contract, congressional Democrats issued a report that "[t]wo companies monitoring billions of dollars in Iraq reconstruction contracts have business relationships with some of the contractors they’re overseeing," wrote Larry Margask of the Associated Press on May 18, 2004 (partnership with CH2M Hill located on page 20 of "Parsons in Iraq"):
The report questioned the neutrality of Parsons and CH2M Hill, firms hired to detect fraud, waste and abuse in noncompetitive rebuilding contracts that have no cost limitations.
-Parsons is the business partner of Fluor Corp., one of the firms it oversees, in a $2.6 billion joint venture to develop oil fields in Kazakhstan. Fluor, headquartered in Aliso Viejo, Calif., announced the venture in a March 2003 news release.
The Democrats’ report also contended that actions that Parsons takes as an overseer could affect its own Iraq reconstruction projects.
Parsons and Bechtel National Inc., of Frederick, Md., have a $1.8 billion contract to rebuild Iraq’s infrastructure, including electricity and water projects. Parsons’ decisions as an overseer can affect the work available in those areas for the Parsons-Bechtel partnership, the report said.
The New York Times reported in April 2005 that the State Department issued a report which stated that Halliburton subsidiary, KBR, was experiencing "cost overruns and ‘poor performance’" on their $1.2 billion contract on oil fields in southern Iraq, and Parsons was asked to "execute some of the remaining work" (full article).
Two years ago, the United States government promised to build more than 140 badly needed health clinics in Iraq, bringing basic care to underserved areas outside the big cities. That could have done a lot of good, saving innocent Iraqi lives and building good will for the United States in places where it has grown dangerously scarce. A generous cost-plus contract was awarded to Parsons Inc., an American construction firm, to do the work, supervised by the Army Corps of Engineers.
Now, with roughly $200 million already spent and financing from Washington set to run out in less than nine months, it appears extremely unlikely that most of those clinics will ever be built. As The Washington Post reported earlier this month, the Army Corps of Engineers predicts that no more than 20 clinics will actually be completed — out of 142. (emphasis mine)
James Glanz of the New York Times noted June 20, 2006 that the contract was cancelled, so those clinics cost $10 million each. Also, 20 were constructed out of the contracted total of 142. Whip out your calculators. That’s roughly 14%. Fourteen percent of the "badly needed" health clinics. Not only that, but the contract was cost-plus. From Wikipedia:
Cost-plus pricing is often used on government contracts, and has been criticized as promoting wasteful expenditures.
Just last week, the U.S. Army cancelled Parsons’ $99.1 million contract to build a prison just 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" (emphasis mine, full article):
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. (emphasis mine)
Ohh, that pesky oversight again — dagnabbit! Though it is a day late and a dollar short with hundreds of billions already spent in Iraq, stringent congressional oversight is desperately needed.
The buildings, less than five years old, were "already crumbling into dust"! How does it crumble to dust in just a few short years? Here’s some "wild speculation," but maybe they didn’t read the directions on the bag to see that you have to add water to the cement mix. (Details, details…)
Ah, to be a kid again…
Other Posts in the Series:
"Merchants of Misery" and the "Do-Less-Than-Nothing" Congress (introduction), 04.29.06
Houston, We Have a Problem (Halliburton), 05.06.06
Friends in High Places (Bechtel), 05.20.06
Transforming Risk into Opportunity (Custer Battles), 06.03.06
The Insider (General Dynamics), 06.25.06