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Marketplace (National Public Radio): Army Corps of Engineers cancels another deal

June 20th, 2006

KAI RYSSDAL, anchor: Not to pick on Congress, but it's going to be a busy couple of days before lawmakers get to leave town for the Fourth of July. There's a defense authorization bill yet to take care of, and the estate tax as well. But in the middle of all that, Democrats in Congress are calling for new investigations. They want a closer look at some military contracts in Iraq. And as it happens, the Pentagon's just canceled a huge rebuilding contract. MARKETPLACE's Lisa Napoli has all the details.

LISA NAPOLI reporting: Parsons is a 60-year-old engineering firm headquartered in Southern California. It held the $99 million contract to build a prison in northern Iraq. Lieutenant Colonel Stan Heath of the Army Corps of Engineers explains why the contract was scotched.

Lieutenant Colonel STAN HEATH: Quite frankly, it was the contractor's inability to complete the project within cost limitations. And the contractor's abandonment of the project is what led to the termination.

NAPOLI: Weeks ago, the Army Corps canceled another $300 million in Iraqi contracts with Parsons to build hospitals and clinics. CorpWatch executive director Pratap Chatterjee visited Parsons work sites in Iraq in April. He says the problem is bigger than just one contractor.

Mr. PRATAP CHATTERJEE: This is one example in a litany of disasters in reconstruction.

NAPOLI: Chatterjee says he isn't sure who's at fault.

Mr. CHATTERJEE: You have to ask yourself whether the company has either completely mismanaged the money or whether the US Army Corps of Engineers or USAID are properly managing the company itself.

NAPOLI: Alex Knott of the Center for Public Integrity says the government's waging a lose-lose battle.

Mr. ALEX KNOTT: They need these contracts fulfilled so that they can be successful in Iraq. But, at the same time, since it is a war zone, you have very few companies that are, first, able to do it and then, secondly, willing to do that.

NAPOLI: Lieutenant Colonel Heath of the Army Corps ducked the issue of blame. And Parsons refused comment. But a spokeswoman for the company told The New York Times Parsons had met the government's contract terms. In Los Angeles, I'm Lisa Napoli for MARKETPLACE.



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