IG: Pricey new U.S. Embassy in Iraq has 'multiple' flaws

WASHINGTON -- The $736 million new U.S. Embassy in Baghdad, which American diplomats have occupied for 18 months, contains "multiple significant construction deficiencies," and the U.S. government should try to recover more than $130 million from the contractor who built it, according to a report released Thursday.

The report, by the State Department's inspector general, cites flaws in numerous systems throughout the embassy complex and says that the contractor, First Kuwaiti General Trading & Contracting Co., failed to properly design, construct and commission the largest U.S. embassy overseas.

It also cites failures by the former leadership of the State Department bureau that's responsible for constructing overseas diplomatic posts. Officials there said that those failures had been rectified, and they took issue with some aspects of the inspector general's report.

McClatchy and other news outlets have reported extensively on the troubled embassy project, which encountered delays, evidence of shoddy workmanship and allegations -- never proved -- of abusive labor practices by First Kuwaiti.

However, the inspector general's 58-page report, sent to Congress on Wednesday, is the first to confirm that the problems persisted after the embassy was occupied beginning in April 2008, and it puts a dollar figure on fixing them.

In one finding, the report says that "safe areas," used to protect staff in emergency situations, "were not constructed according to contract specifications."

In another, it says that fire protection systems were improperly designed or installed, "thereby increasing the risk that the facilities and personnel would not be adequately protected."

The audit, conducted with help from the Army Corps of Engineers, also uncovered substandard electrical wiring, roadways and walkways that are cracking, and an improper hookup between the embassy's water supply and the Baghdad city water system.

However, Rod Evans, of the State Department's Bureau of Overseas Buildings Operations, said that "nothing is impinging on the operations of the embassy."

Officials are reviewing what Evans called "deviations" from the contract specifications to determine what must be fixed, he said in a telephone interview Thursday.

Other State Department officials called the inspector general's estimate that First Kuwaiti owes the U.S. government $132 million highly speculative. They said it was doubtful that taxpayers would recover more than a small fraction of that. For its part, First Kuwaiti has asked the U.S. government for $49 million more to cover extra construction costs, they said.

There was no immediate response from First Kuwaiti, which has steadfastly defended its work in Baghdad.

The report blames many of the embassy buildings' woes on a decision by the then-head of overseas construction at the State Department, retired Army. Maj. Gen. Charles Williams, to set up a separate, secretive unit, answerable only to him, to oversee the project.

Williams retired under fire in December 2007. In comments appended to the report, Overseas Buildings Operations officials say that creating a standalone office was a mistake.

The inspector general's report also suggests that the now-defunct office and its former head, who was a personal services contractor rather than a government employee, gave First Kuwaiti preferential treatment.

The office "was managed by an individual who did not enforce contract provisions ... which resulted in many of the contract deficiencies listed," it says. The individual, identified in previous news reports as James Golden, also approved $69 million in advance payments to First Kuwaiti that weren't authorized by federal regulations, the report says.

The report acknowledges that, despite its flaws, constructing a huge new embassy complex in the middle of a war zone in 34 months "was a significant accomplishment."

Jonathan Blyth, a spokesman for the Bureau of Overseas Buildings Operations, said that under a major embassy-construction program that began in 2000, the State Department had finished an unprecedented 68 projects overseas, and had another 35 under way.

"The record is one of success," Blyth said. The approach used with the Baghdad embassy "was probably not the best approach, and one we're not going to repeat," he said.

Before Williams left office, a top aide certified that embassy construction was "substantially completed," and Williams prepared a package of documents declaring the 104-acre complex ready to be occupied.

However, Williams' replacement, Richard Shinnick, ordered a top-to-bottom review of the project after learning of concerns about the embassy's fire-safety systems.

Undersecretary of State for Management Patrick Kennedy finally signed a certificate of occupancy on April 14, 2008. That decision, the inspector general's report said, "was driven by the need to move embassy staff from trailers that had served as temporary housing into (new embassy) concrete apartments to reduce the risk from mortar attack and rocket fire."

After Kennedy's order was signed, First Kuwaiti's managing director, Wadih al Absi, called the embassy "a remarkable accomplishment for our company."

"We are proud of our record of achievement in Iraq and regard the completion of the new U.S. Embassy compound in Baghdad as an absolute success," he said.

According to a State Department cable that McClatchy obtained, the Kuwaiti government lobbied the Bush administration on behalf of First Kuwaiti, which was seeking more U.S. government work.

During a dinner in Kuwait City on Jan. 11, 2008, attended by then-President George W. Bush and Kuwait's emir, a diplomat from the emirate gave the U.S. delegation a package that included a DVD and testimonial with praise for First Kuwaiti.

"We are confident (the controversy) will not adversely affect ongoing relations between the United States and the state of Kuwait," the document said, according to the cable.


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