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SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202

July 28, 2006 

MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ 

 DIRECTOR, IRAQ RECONSTRUCTION MANAGEMENT 

 OFFICE 

 COMMANDING GENERAL, JOINT CONTRACTING 

 COMMAND – IRAQ/AFGHANISTAN 

 COMMANDING GENERAL, GULF REGION DIVISION, 

 U.S. ARMY CORPS OF ENGINEERS 

SUBJECT: Review of the Medical Equipment Purchased for the Primary Healthcare 

Centers Associated with Parsons Global Services, Inc., Contract Number 

W914NS-04-D-0006, (SIGIR-06-025) 

We are providing this audit report for your information and use. We performed the audit in 

accordance with our statutory duties contained in Public Law 108-106, as amended, which 

requires that we provide for the independent and objective conduct of audits, as well as 

leadership and coordination of and recommendations on policies designed to promote 

economy, efficiency, and effectiveness in the administration of Iraq relief and reconstruction 

programs and operations and to prevent and detect waste, fraud, and abuse. 

We considered comments from the Iraq Reconstruction Management Office, the Joint 

Contracting Command-Iraq/Afghanistan, and the Gulf Region Division, U.S. Army Corps of 

Engineers on the draft of this report when preparing the final. Their comments are addressed 

in the report where applicable, and copies of their comments are included in the Management 

Comments section of this report. 

We appreciate the courtesies extended to the staff. For additional information on this report, 

please contact Mr. Joseph T. McDermott at (703) 343-7926, or by email at 

joseph.mcdermott@iraq.centcom.mil; or Mr. Cliff Spruill at (703) 343-9275, or by email at 

clifton.spruill@iraq.centcom.mil. For the report distribution, see Appendix E. 

 Stuart W. Bowen, Jr. 

 Inspector General 

cc: Distribution 
i 

Special Inspector General for Iraq Reconstruction 

SIGIR-06-025 July 28, 2006 

Review of the Medical Equipment Purchased 

for the Primary Healthcare Centers Associated with 

Parsons Global Services, Inc., Contract Number W914NS-04-D-0006 

Executive Summary 

Introduction. On March 25, 2004, contract W914NS-04-D-0006, a cost-plus award fee 

type contract, was awarded to Parsons Delaware, Inc. The executing contractor’s name 

was changed to Parsons Global Services, Inc. (Parsons) by a contract amendment on 

April 8, 2005. Under this contract Parsons was required to construct 150 Primary 

Healthcare Centers (PHCs) as well as provide and install 151 medical and dental 

equipment sets for each of the 150 PHCs as well as a medical training academy. The 

total definitized cost of the equipment was approximately $70 million. 

In April 2006, the Special Inspector General for Iraq Reconstruction (SIGIR) reported on 

the construction phase of this contract1 and issued an interim report 2 to alert responsible 

U.S. government agencies management to concerns we noted on the accountability for 

and utilization of the medical equipment shortly after this audit began. These concerns 

included: (1) the lack of written plans for the acceptance, storage, and use of the 131 

medical equipment sets to be delivered by Parsons in April 2006 that were in excess to 

the current PHC needs as a result of descoping the number of PHCs to be constructed 

from 150 to 20, and the non-construction of the medical training academy (whose 

construction was not part of the Parsons contract); (2) the need to ensure U.S. government 

accountability of the equipment upon delivery to the Iraqi Ministry of Health warehouse 

in Erbil, Iraq by Parsons; and (3) U.S. government’s inability to ensure proper protection 

and accountability of equipment to be stored in an Iraqi warehouse. 

Objectives. The main objectives of the audit were to determine whether medical 

equipment associated with Primary Healthcare Centers (PHCs), Parsons Contract 

Number W914NS-04-D-0006, were properly accounted for; and to identify the impact of 

the descoping of the PHCs construction. 

 

1

 SIGIR Audit Report on Management of the Primary Healthcare Centers Construction Projects (SIGIR06-011, April 29, 2006). 

2

 SIGIR Interim Audit Report on the Review of the Equipment Purchased for Primary Healthcare Centers 

Associated with Parsons Global Services, Contract Number W914NS-04-D-0006 (SIGIR-06-016, April 4, 

2006). 
ii 

Specifically this report addresses the following questions: 

• Where are the medical equipment sets located and which organizations maintain 

physical control of the assets? 

• How and when will the U.S. government transfer the equipment? 

• What are the “lessons learned” from the management and execution of the nonconstruction process and practices related to this contract? 

Results. Twenty of the 151 medical equipment sets procured were physically located at 

the sites of 20 PHCs that were fully or partially constructed by Parsons. Medical 

equipment sets for 6 of these PHCs were transferred on March 15, 2006, to the Iraqi 

government along with the associated PHCs. The remaining 14 medical equipment sets 

at the PHC sites are still in the custody of the U.S. government. The U.S. Army Corps of 

Engineers Gulf Region Division-Project and Contracting Office (GRD-PCO) in 

coordination with the Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) decided 

not to store any medical equipment sets in the Iraqi Ministry of Health warehouse, but to 

require Parsons to deliver all 131 extra equipment sets to the U.S. government-controlled 

warehouse located in Abu Ghraib, Iraq, which is contractor-operated by Public 

Warehousing Company (PWC) Logistics. This decision alleviated the concern raised in 

our Interim Report over security of the equipment if stored in an Iraqi warehouse. 

On May 10, 2006, we conducted a physical inventory of the medical equipment sets that 

Parsons had delivered to the PWC Logistics warehouse, and this report therefore 

discusses the number and condition of the 71 medical equipment sets we verified as being 

in the warehouse as of May 10, 2006. While, Parsons had delivered 71 full or partial 

medical equipment sets to the warehouse in Abu Ghraib as of May 10, 2006, we found 

that the U.S. government had not implemented proper accountability procedures for the 

receipt, acceptance or storage of these medical equipment sets upon arrival at the 

warehouse. Neither JCC-I/A nor GRD-PCO took appropriate actions to ensure that 

Parsons medical equipment, upon delivery to the PWC Logistics warehouse, was 

properly inventoried, inspected, receipted, and accounted for by any authorized U.S. 

government representative. 

Neither JCC-I/A nor GRD-PCO delegated receipt and acceptance authority for the 

Parsons contract to any authorized U.S. government representative. As a result no 

official U.S. government receipt, inspection and acceptance function was performed 

when the equipment arrived at the warehouse. Thus, while the U.S. government had 

physical custody over 71 full or partial PHC medical equipment sets delivered by Parsons 

to the warehouse (as of May 10, 2006); the U.S. government never established proper 

accountability for the equipment and does not fully know the type, quantities, and 

condition of equipment items that have been received. Our observation of the equipment 

in storage at PWC showed that 33 of 71 equipment sets (46 percent) received by the 

warehouse had some type of visual damage or other discrepancy noted by PWC upon 

arrival at the warehouse. It is unknown whether equipment may be damaged inside the 

crates, because they were not opened or inspected. As of June 11, 2006, the PWC 

Logistics automated warehouse system indicated that Parsons had delivered a total of 115 

full or partial medical equipment sets to the warehouse in Abu Ghraib. 

The Iraq Reconstruction Management Office (IRMO) has coordinated with JCC-I/A and 

GRD-PCO to obtain funding for and continue construction on the additional PHCs not 

completed by Parsons and intends to use the medical equipment sets in these PHCs when 

they are finally completed. IRMO expects that the medical equipment sets stored in the 

warehouse will be first allocated to these remaining PHCs upon construction completion, 
iii 

with any remaining equipment sets distributed to Iraqi health centers or hospitals as 

needed. No formal detailed written plan yet exists that lays out the specific distribution 

for all of the 131 equipment sets to be delivered to the PWC Logistics warehouse. 

This report discusses a significant lesson learned for future contract actions regarding the 

need to fully examine the impact that changes to contract terms may have on the 

operational and accountability requirements of ancillary supporting contracts. This report 

also addresses concerns over the medical equipment warranties, the training on new 

equipment provided by Parsons, and the accuracy of financial information on equipmentrelated expenditures recorded in the Corps of Engineers Financial Management System 

(CEFMS). 

Management Actions. Management has taken steps to address some of the issues that 

we have identified during this audit. Specifically: 

• On April 4, 2006, GRD-PCO in coordination with JCC-I/A made a decision not to 

have Parsons deliver any medical equipment sets to the Ministry of Health 

warehouse in Erbil, Iraq. 

• IRMO continues to coordinate with JCC-I/A and GRD-PCO to obtain funding for 

continued construction of the remaining PHCs and to develop a plan for the 

distribution of the 131 medical equipment sets to be stored in the PWC Logistics 

warehouse. 

Recommendations. 

1. We recommend that the Director, Iraq Reconstruction and Management Office 

(IRMO) continue to work with GRD-PCO to develop a comprehensive written 

utilization and transfer plan for all of the 131 medical equipment sets stored in the 

warehouse. 

2. We recommend that the Commanding General, Gulf Region Division, U.S. Army 

Corps of Engineers: 

a. In coordination with JCC-I/A, arrange for a complete inventory and inspection 

of all of the medical equipment currently stored in the PWC Logistics 

warehouse as soon as possible. A listing of missing and damaged items 

should be prepared when completed. 

b. In coordination with JCC-I/A, arrange for a knowledgeable Parsons or 

equipment manufacture representative to be present during the inspection of 

the condition of the equipment because of the sensitive and specialized nature 

of medical equipment. 

c. Arrange for the proper recording of inventoried medical equipment into the 

appropriate government property management system. 3. We also recommend that the Commanding General, Joint Contracting CommandIraq/Afghanistan (JCC-I/A): 

a. In coordination with GRD-PCO, arrange for the official inspection, inventory 

and receipt of Parsons medical equipment still being delivered to the PWC 

Logistics warehouse. 
iv 

b. In coordination with GRD-PCO, obtain the completed inventory listing of all 

medical equipment items currently stored in the PWC Logistics warehouse 

and take appropriate actions to recoup from Parsons the cost of all items found 

to be missing or damaged. 

c. In coordination with GRD-PCO, work with appropriate equipment 

manufactures and/or secondary warranty grantors to clarify the status of the 

equipment warranties. 

Management Comments and Audit Response. We received written comments on a 

draft of this report from IRMO, JCC-I/A, and GRD. IRMO and GRD generally 

concurred with the report conclusions and recommendations. JCC-I/A did not concur 

with our recommendation involving delegation of responsibility to DCMA for 

receipt/acceptance of Parsons medical equipment delivered to the PWC Logistics 

warehouse. JCC-I/A noted that the Memorandum of Agreement between DCMA and 

JCC-I/A does not include construction contracts, thus DCMA can not be delegated the 

receipt/acceptance function for the Parsons Contract (a construction contract). JCC-I/A 

did, however, indicate that an alternative is being considered that will include the PWC 

Logistic contractor and PCO. We consider JCC-I/A’s alternative to be responsive in 

meeting the intent of the recommendation and have modified our final report 

recommendations to reflect JCC-I/A’s comments regarding the Memorandum of 

Agreement with DCMA. Management comments and responses to the draft report are 

included in the Management Comments and Audit Response section of this report. 
Table of Contents 

Executive Summary i 

Introduction 

Background 1 

Objective 3 

Findings 

Inventory of Medical Equipment Sets 4 

Physical Control and Condition of the Medical Equipment Sets 7 

Plan for Transfer of Medical Equipment Sets 20 

Conclusion and Recommendations 21 

Lessons Learned and Additional Observations 24 

Appendices 

A. Scope and Methodology 28 

B. Acronyms 32 

C. Contract History of Medical Equipment Sets 33 

D. Organizations 34 

E. Report Distribution 38 

F. Audit Team Members 40 

Management Comments 

 Iraq Reconstruction Management Office 41 

 Joint Contracting Command-Iraq/Afghanistan 43 

 Gulf Region Division, U.S. Army Corps of Engineers 45 
1

Introduction 

Background 

In November 2003, $18.6 billion was appropriated under the Emergency Supplemental 

Appropriations Act for Defense and the Reconstruction of Iraq and Afghanistan (Public 

Law 108-106). The law created the Iraq Relief and Reconstruction Fund (IRRF), 

$18.4 billion of the appropriation was designated for Iraq. Projects in the health care 

sector include nationwide hospital and clinic improvements, equipment procurement and 

modernization, and construction of a pediatric facility.

Responsible Entities. Three U.S. government organizations have responsibility for 

management of the contract: U.S. Army Corps of Engineers Gulf Region DivisionProject and Contracting Office (GRD-PCO), Iraq Reconstruction Management Office 

(IRMO), and Joint Contracting Command-Iraq/Afghanistan (JCC-I/A). However, during 

the first 21 months of the contract, the Project and Contracting Office (PCO) and the U.S. 

Army Corps of Engineers Gulf Region Division (GRD) were separate organizations. On 

December 4, 2005, the PCO was folded into the GRD. The Defense Contract 

Management Agency (DCMA) supports contract administration. For description of each 

of these organizations as well as Parsons Global Services, Inc.; Public Warehouse 

Company (PWC) Logistics; and the Abu Ghraib Warehouse, see Appendix D.

Contract W914NS-04-D-0006. The contract was awarded to Parsons Delaware, Inc., 

Pasadena, CA, on March 25, 2004. Parsons Global Services, Inc. (Parsons) is the 

overseas business segment for Parsons Delaware. The contract has a ceiling of $500 

million. The contract has thirteen task orders and contracted to upgrade 17 hospitals 

located throughout Iraq, design and construct 150 primary healthcare centers (PHC) 

located throughout Iraq, and repair three Ministry buildings in Baghdad. Contract task 

orders number 4, 11, and 12 provided for the design and construction of the 150 PHCs at 

a definitized cost of $88,468,571. In addition, the three task orders provide for the 

delivery and installation of medical and dental equipment at each center. The list of 

medical equipment to be installed at each center includes x-ray equipment, hematology 

analyzer, exam tables, patient beds, defibulator, EEG, ventilator, incubator, and other 

equipment. The list of dental equipment to be installed at each center includes dental 

chairs, lights, cabinets, instruments, supplies, and other equipment. The total definitized 

cost of the equipment for the 150 PHCs plus a medical training academy is $70,359,014. 

Medical Equipment Task Orders. The initial requirement for medical equipment sets 

for the PHCs was issued to Parsons by task order number 4 dated May 11, 2004. This 

task order was classified as a Design-Build task order that provided Parsons with a 

Limited Notice to Proceed to provide standard designs for Healthcare Centers. Included 

in this task order was a generic sample of the type and quantity of equipment to be 

provided, with specific equipment types/models and procurement method to be developed 

by the contractor (Parsons). 
2

The medical equipment sets were subject to a series of contract modifications and the 

contract was ultimately definitized on December 26, 2004, at $70,359,014 for 151 

equipment sets, as follows: 

• $18,962,505 for 42 medical equipment sets in Central Iraq (includes a medical 

training academy)

• $23,289,823 for 49 medical equipment sets in Northern Iraq

• $28,106,686 for 60 medical equipment sets in Southern Iraq

For a complete contract history of the medical equipment sets, see Appendix C. 

SIGIR Observations. The Special Inspector General for Iraq Reconstruction (SIGIR) 

has issued two audit reports on concerns with the Parsons contract for the PHCs. 

Between September 8, 2005, and March 3, 2006, the government made a series of 

decisions to issue stop work orders to Parsons that descoped the total number of PHCs to 

be completed by Parsons from 150 to 20 facilities. The causes and impact are reported in 

SIGIR’s Audit Report, Management of the Primary Healthcare Centers Construction 

Projects (SIGIR-06-011, April 29, 2006). However, the U.S. government did not reduce 

the number (151) of medical equipment sets to be procured by Parsons to correspond 

with the descoping actions. As a result Parsons procured 130 more medical equipment 

sets than required for the remaining 20 PHCs left on the contract; plus one additional 

medical equipment set for the Medical Training Academy, which was never built, for a 

total of 131 medical equipment sets requiring storage. Included in the $70,359,014 

definitized costs for the medical equipment was the requirement for Parsons to install and 

test the equipment, train clinic personnel on the use of the equipment, and provide a 12 

month warranty on the installed equipment. 

During the initial stages of this audit of the medical equipment sets, SIGIR issued Interim 

Audit Report on the Review of the Equipment Purchased for Primary Healthcare Centers 

Associated with Parsons Global Services, Contract Number W914NS-04-D-0006 (SIGIR06-016, April 4, 2006), to alert responsible U.S. government agencies of our concerns 

over certain events that were scheduled to occur before our audit was complete and our 

final report issued. These concerns included: (1) the lack of written plans for the 

acceptance, storage, and use of the 131 medical equipment sets to be delivered by Parsons 

in April 2006 that were in excess to the current PHC needs as a result of descoping the 

number of PHCs to be constructed from 150 to 20, and the non-construction of the 

medical training academy (whose construction was not part of the Parsons contract); (2) 

the need to ensure U.S. government accountability of the equipment upon delivery to the 

Iraqi Ministry of Health warehouse in Erbil, Iraq by Parsons; and (3) U.S. government’s 

inability to ensure proper protection and accountability of equipment to be stored in an 

Iraqi warehouse. 

We briefed both GRD-PCO and JCC-I/A on March 30, 2006, on our concerns and at that 

time presented them with a draft of our interim report. On April 4, 2006, (the same day 

our Interim Report was issued) GRD-PCO advised us that due to “space constraints” at 

the Erbil warehouse, all of the medical equipment would be delivered to the U.S. 

government-controlled PWC Logistics warehouse in Abu Ghraib. 
3

Objectives 

The main objectives of the audit were to determine whether medical equipment 

associated with Primary Healthcare Centers (PHCs), Parsons Contract Number W914NS04-D-0006, was properly accounted for; and to identify the impact of the descoping of 

the PHCs construction. Specifically this report addresses the following questions: 

• Where are the medical equipment sets3 located and which organizations maintain 

physical control of the assets? 

• How and when will the U.S. government transfer the equipment? 

• What are the “lessons learned” from the management and execution of the nonconstruction process and practices related to this contract? 

For a discussion of the audit scope and methodology, and a summary of prior coverage, 

see Appendix A. For definitions of the acronyms used in this report, see Appendix B. 

For the contract history of medical equipment sets, see Appendix C. For a description of 

the organizations discussed in this report, see Appendix D. For a distribution list for this 

report, see Appendix E. For a list of the audit team members, see Appendix F. 

 

3

 The SIGIR audit announcement memorandum issued on March 2, 2006, included the phrase “medical 

equipment and supplies” as part of the audit objective. However, when we started the audit we discovered 

that supplies purchased for the PHCs associated with the Parsons contract were procured under a separate 

contract that had not been awarded to Parsons. As a result we eliminated supplies from this audit objective 

and made the decision to look at the supplies procured for the PHCs as part of a separate audit. This 

separate audit was announced by SIGIR memorandum issued May 9, 2006, “Audit of Consumable Supplies 

Purchases under Contract Number W27P4B-05-A-5018 for Primary Healthcare Centers,” (Project No. 

6018). 
4

Inventory of Medical Equipment Sets 

As of May 10, 2006, the date we conducted the inventory at the PWC Logistics 

warehouse located in Abu Ghraib, Iraq, 151 medical equipment sets were procured by 

Parsons. Twenty sets were physically located at the sites of the 20 Public Healthcare 

Centers (PHCs) that were fully or partially constructed by Parsons. Of the remaining 

131, 71 full or partial sets had been delivered to the warehouse, leaving 60 distinct sets to 

be delivered by Parsons.

Parsons Procurement and Shipment of Medical Equipment 

Medical equipment items were purchased by a Parsons sub-contractor (Odell 

International LLC) and shipped to Miami, Florida, for consolidation. Once the medical 

equipment was received in Miami, another Parsons sub-contractor (Symphony Medical) 

assembled the medical equipment “sets” into a defined number of shipping crates, and 

shipped these crates by sea from Miami, Florida to either Kuwait or Aquba, Jordan. The 

equipment sets were initially stored in bonded customs warehouses in Kuwait and Jordan 

before being transported by truck to the Parsons temporary storage Hub located near the 

Baghdad International Airport (BIAP) in Iraq. From the Parsons BIAP Hub, the medical 

equipment sets were then shipped to one of the 20 PHCs under the Parsons contract (at 

the time of shipment) or to the PWC Logistics warehouse in Abu Ghraib. Figure 1 

reflects the status of Parsons’ shipments (per information provided from Parsons) as of 

April 18, 2006. 
5

Figure 1. Status of Medical Equipment Sets as of April 18, 2006 

Source: SIGIR depiction based on Parsons shipment information. The International Zone is 

located in Baghdad, Iraq. 

The schedule of projected future shipment dates provided to us by Parsons on April 18, 

2006, indicated that deliveries of all 131 remaining medical equipment sets to the Abu 

Ghraib warehouse would be completed by May 9, 2006. However, the equipment 

shipments were not accomplished as timely as projected by Parsons. As of May 10, 

2006, the day after all of the equipment sets were expected to be delivered to the 

warehouse per Parsons delivery schedule, a total of only 71 full or partial medical 

equipment sets had been received by the warehouse. A partial set occurs when the total 

number of crates that comprise a medical equipment “set” is not received at the 

warehouse. As of June 11, 2006, the PWC Logistics automated warehouse system 

showed that the total of full or partial medical equipment sets received by the warehouse 

increased to 115 medical equipment sets. This audit report, however, discusses the 

number and condition of the 71 medical equipment sets in the warehouse as of May 10, 

2006, the date we conducted our physical inventory of the equipment sets in the 

warehouse.
6

Medical Equipment Sets Issued to PHCs 

As of May 10, 2006, 20 of the 151 medical equipment sets procured by Parsons have 

been delivered to and are physically located at the sites of 20 PHCs that were fully or 

partially constructed by Parsons. Six of these PHCs, along with their associated medical 

equipment sets, were formally transferred to the Iraqi government on March 15, 2006. 

The remaining 14 PHCs are still in the construction process or undergoing final 

inspection prior to being formally transferred to the Iraqi government. One of the 14 

PHCs was partially destroyed, along with associated medical equipment, from an 

explosion at the site caused by insurgents. We were advised by IRMO that this PHC will 

be rebuilt. 
7

Physical Control and Condition of the Medical 

Equipment Sets 

Physical control over the total 151 medical equipment sets was divided among the Iraqi 

government, the U.S. government, and Parsons. The U.S. government had not 

implemented proper accountability procedures for the receipt, acceptance or storage of 

these medical equipment sets upon arrival at the warehouse. Neither Joint Contracting 

Command-Iraq/Afghanistan (JCC-I/A) nor Gulf Region Division-Project and Contracting 

Office (GRD-PCO) took appropriate actions to ensure that the medical equipment sets, 

upon delivery to the PWC Logistics warehouse, were properly inventoried, inspected, 

receipted, and accounted for by the Defense Contract Management Agency’s (DCMA) 

Quality Assurance Representative (QAR) assigned to the warehouse, or by any 

authorized U.S. government representative. 

Physical Control 

The Iraqi government has physical control of six medical equipment sets that were 

installed in six PHCs which were formally transferred by the U.S. government to the Iraqi 

government on March 15, 2006. 

The U.S. government currently has physical control of 14 medical equipment sets that are 

physically located at the sites of PHCs being completed under the Parsons contract. This 

includes physical control of what remains from the one equipment set located at the PHC 

site that was partially destroyed by insurgents. These 14 medical equipment sets were 

not required to be accounted for separately on U.S. government property books, but are 

included as part of the overall PHC construction site project. 

The U.S. government will have physical control of all the remaining 131 medical 

equipment sets as each is delivered to the U.S. government-controlled PWC Logistics 

warehouse in Abu Ghraib, Iraq. As of June 11, 2006, the U.S. government had physical 

control of 115 full or partial medical equipment sets delivered by Parsons to the 

warehouse. Parsons and/or a Parsons Sub-contractor have physical control of the 

remaining 16 sets of medical equipment until delivery to the warehouse. 

Lack of Inventory Procedures 

While the U.S. government has physical control of the medical equipment sets delivered 

to the PWC Logistics warehouse, neither the JCC-I/A nor the GRD-PCO took 

appropriate actions to ensure that the equipment delivered to the warehouse by Parsons 

was properly inspected, receipted for or accepted by the U.S. government. As of May 10, 

2006, the U.S. government has not officially accepted or properly accounted for any of 

the medical equipment items included in the 71 sets of medical equipment that were 

delivered to the warehouse. As a result, the U.S. government does not know: 

 what actual items of medical equipment have been delivered to the warehouse 

by Parsons 

 what equipment that should have been delivered (per shipping documents 

included with the Parsons delivery) may be missing 

 what condition the medical equipment items were in upon delivery to the 

warehouse 
8

Not knowing exactly what equipment items were received and the condition of the 

medical equipment at the time it was received by the PWC Logistics warehouse will 

make any objective determination of who has responsibility for missing or damaged 

equipment (Parsons or the U.S. government) difficult, if not impossible. 

Medical Equipment Not Properly Inspected and Accepted Upon Delivery at 

Warehouse. To date, no U.S. government representatives have performed the receipt 

and acceptance function that should have been conducted when the Parsons medical 

equipment sets arrived at the PWC Logistics warehouse. This occurred, in part, because 

both, the GRD-PCO officer in charge of the Parsons medical equipment sets remaining 

on the Parsons contract and the current JCC-I/A contracting officer for the overall 

Parsons contract, mistakenly believed that DCMA had been delegated responsibility for 

receipt and acceptance of the Parsons medical equipment deliveries to the PWC Logistics 

warehouse. However, DCMA was never delegated this receipt and acceptance function 

in the Parsons contract. 

Prior to our visit to the PWC Logistics warehouse, we discussed with the GRD-PCO 

Equipment Lead for Non-Construction (the officer in charge of the 131 remaining 

medical equipment sets) how the medical equipment going into the warehouse would be 

accounted for by the U.S. government. This individual advised us that since the PWC 

Logistics warehouse was U.S. government contractor-operated, the medical equipment 

delivered to the warehouse would be inspected and accepted by DCMA representatives 

assigned to the warehouse just like any other equipment going into the warehouse. He 

advised us that DCMA would sign the DD Form 250 (Material Inspection and Receiving 

Report), accepting the equipment. This form would then be used to record the equipment 

on the government property book. 

During our onsite review at the PWC Logistics warehouse we found that contrary to what 

we had been told by GRD-PCO, DCMA did not have the responsibility to inventory and 

receipt for Parsons PHC medical equipment sets. The DCMA Quality Assurance 

Representatives (QARs) assigned to the warehouse informed us that they normally had 

the authority/responsibility to inventory, inspect, and accept (sign the DD Form 250), on 

behalf of the U.S. government, all contractor-delivered equipment to the warehouse. The 

DCMA QARs advised us that this function is delegated to DCMA in the individual 

contracts that direct contractor shipments to the warehouse. DCMA QARs at the 

warehouse provided us an example of such a delegation in which the INSPECTION 

AND ACCEPTANCE clause of the contract contained the statement, “Inspection and 

acceptance by DCMA QAR at ABU Ghrayib (sic), Baghdad, Iraq.” However, no such 

statement referring to DCMA was included in the Parsons contract. As such, DCMA 

advised us that they were not delegated any responsibility/authority to accept or inspect 

Parsons medical equipment deliveries. DCMA told us that it was unusual for them not to 

be delegated responsibility/authority to accept warehouse deliveries, as they were 

responsible for the receipt and acceptance of almost all other contractor deliveries to the 

PWC Logistics warehouse4

. 

The requirement to include specific language in contracts administered by DCMA is 

included in JCC-I/A Letter of Instruction No. 06-08, “Contract Award Instructions to the 

Supplier”, dated March 6, 2006. This Letter of Instruction was issued to clarify the duties 

and responsibilities for Contracting Officers and DCMA Administrative Contracting 

 

4

 In subsequent discussion with the Commander, DCMA Central Iraq, we were advised that since the 

Parsons contract is a construction contract, DCMA can not be delegated the receipt/acceptance function for 

this contract. JCC-I/A in their response to the draft audit report also indicated that they can not delegate the 

receipt/acceptance function to DCMA per their Memorandum of Agreement with DCMA. 
9

Officers. This Letter of Instruction states that when a DCMA QAR is not present to act 

as receiver/acceptor of goods or services, the U.S. government receiver/acceptor must be 

notified of his duties and responsibilities for reviewing, signing and submitting the 

DD250. The Letter of Instruction states that providing written instructions detailing the 

U.S. government representative’s responsibilities is the contracting officer’s 

responsibility. In the deliveries of Parsons medical equipment to the warehouse, 

however, neither DCMA nor any other U.S. government representative was delegated 

receiver/acceptor duties or provided any instructions regarding responsibilities for 

Parsons medical equipment deliveries by the contracting officer. 

When we brought the fact that DCMA was not performing U.S. government 

receiver/acceptor duties at the warehouse for the medical equipment, to the attention of 

the current JCC-I/A Contracting Officer for the Parsons contract, the Contracting Officer 

told us he was not aware of this condition. He believed DCMA had been delegated 

responsibility for receipt and acceptance of the Parsons medical equipment deliveries to 

the PWC Logistics warehouse and was performing this duty. When we later followed up 

with the Contracting Officer to determine if he had taken any action to appoint DCMA as 

the administrative contracting officer for receipt/acceptance of Parsons medical 

equipment sets still to be delivered to the warehouse, he advised us that he had not. The 

Contracting Officer told us that after reviewing the Parsons contract files; it appeared that 

GRD-PCO was assigned administrative contracting officer duties for acceptance of goods 

related to the construction projects under the Parsons contract. However, since the 

contract terms had changed upon descoping of the contract from installing and testing the 

equipment at the PHC sites to delivering the equipment to a warehouse, the Contracting 

Officer stated the issue of who was delegated responsibility for receipt/acceptance of the 

medical equipment delivered to the warehouse was “murky.” 

It appears that when the contract terms regarding equipment changed from an “install at 

site” requirement, to a “delivery to government warehouse” requirement, no one involved 

with the contract at either JCC-I/A or GRD-PCO acted on the ramifications involved. 

Because the contract did not initially require delivery of equipment to the warehouse at 

Abu Ghraib, DCMA was not assigned (delegated) any receipt/acceptance function for the 

contract. When the contract changed to require delivery to the warehouse, JCC-I/A did 

not modify the contract to delegate the receipt/acceptance function to DCMA. The GRDPCO equipment lead for Parsons believed, however, that DCMA had the normal 

responsibility to receipt/accept for contractor equipment deliveries to the warehouse and 

assumed the Parsons medical equipment delivery to the warehouse would be handled and 

accounted for by DCMA. 

As a result of these misunderstandings, no U.S. government representative performed the 

receipt/acceptance function when Parsons medical equipment sets arrived at the PWC 

Logistics warehouse. 
10

Arrival of Parsons Medical Equipment at the Warehouse. Parsons medical 

equipment arrived at the PWC Logistics warehouse packed in wooden crates of various 

sizes, transported on open flat-bed (semi-trailer) trucks as shown in Photo 1. 

 

Photo 1. Parsons Medical Equipment Delivery Entering Warehouse 

 Source: Photographed by SIGIR on May 10, 2006 

The medical equipment was required to be shipped in sets, with each equipment set 

clearly marked and identified as being for a single designated PHC or for the Teaching 

Academy. However, warehouse records indicate, and our observations confirmed, that 

many equipment crates arrived at the warehouse without proper markings or 

identifications on the outside of the crates to designate which PHC the medical 

equipment set in the crate belonged to. As of May 10, 2006, PWC Logistics had set 

aside, in a separate area of the warehouse, 16 crates of medical equipment which had no 

outside markings on the crates to indicate which PHC the crates were designated for. 
11

In addition to unmarked crates, the warehouse frequently received equipment crates in 

which the crate identification number painted on the crate conflicted with the crate 

number shown on shipping documents attached to the outside of the same crate, as shown 

in Photos 2 and 3. 

 Photo 2. Number Painted on Crate Photo 3. Label Attached to Same Crate 

 Source: Photographed by SIGIR on May 10, 2006 Source: Photographed by SIGIR on May 10, 2006 

The warehouse attempted to store sets of medical equipment for the individual PHCs 

together and used yellow tape to identify separate PHC medical equipment sets as shown 

in Photo 4. However, the different and often conflicting markings on the crates made it 

difficult, if not impossible, for the warehouse personnel to always properly identify and 

store medical equipment crates with the properly designated PHC. 

Photo 4. Medical Equipment Sets Bundled by PHC with Tape 

 

 

Source: Photographed by SIGIR on May 9, 2006
12

Warehouse Accepted and Signed for Crates Only – No Content Inspection. When 

the medical equipment crates arrived at the warehouse, PWC Logistics warehouse 

personnel unloaded the crates from the delivery trucks; counted the number of crates 

received; conducted a visual inspection of the crates; and noted any visual damage to the 

outside of the crates. We observed delivery and unloading of Parsons medical equipment 

crates at the warehouse on two separate dates and on both dates we found that PWC 

Logistics personnel carefully and professionally unloaded the crates. An example of the 

unloading process is shown in Photo 5. 

Photo 5. Unloading Parsons Medical Equipment 

 Source: Photographed by SIGIR on May 9, 2006 

GRD-PCO issued instructions to PWC Logistics not to open any of the crates upon 

delivery because of concerns that opening the crates may void the medical equipment 

warranty (this issue is discussed later in this report). As a result, PWC Logistics was 

precluded from conducting an inventory of the contents of the crates. This in turn 

prevented PWC Logistics from inspecting the actual medical equipment inside the crates 

for any visual damage to the equipment itself that might have occurred during shipping. 

In verifying delivery of the medical equipment received, PWC Logistics only counted 

and receipted for the number of crates received. PWC Logistics did this by signing the 

receipt document from Eagle Global Services (a Parsons sub-contractor) that 

accompanied the equipment deliveries. On the receipt document, PWC Logistics 

annotated the date of the delivery, the actual number of crates received, and the number 

of crates received with visual damage. An example is shown in Exhibit 1. 

 
13

Exhibit 1. Example of Receipt Document Signed by PWC Logistics 

Source: PWC Logistics warehouse personnel 

The document (Exhibit 1) shows that for PHC DK#02 a total of 14 crates were to have 

been included in the medical equipment set delivery. The warehouse actually received 13 

crates, of which 12 crates were received in serviceable condition and one of the crates 
14

showed visual damage (1 DMG). The document is signed and dated by the assistant 

receiving manager for PWC Logistics, and is stamped by PWC Logistics. PWC 

Logistics, when completing the Eagle Global Logistics delivery form, only showed the 

number of crates damaged and missing, not the specific identification number of the 

crates that were damaged or missing. 

Actual Quantity and Condition of Medical Equipment Received Unknown. Because 

an inventory of the medical equipment content inside the crates has not been conducted, 

the U.S. government has no way of knowing exactly what type and quantity of medical 

equipment has actually been received into the warehouse. In addition, because no 

inspection of the equipment was done, the U.S. government does not know the actual 

condition of the equipment inside the crates. 

Medical Equipment Sets Received at Warehouse Contained Discrepancies 

What the U.S. government does know is that as of May 10, 2006, when we 

conducted our inventory at the warehouse, some 71 identified distinct sets of 

medical equipment crates designated for 71 PHCs had been received by the 

warehouse. In total, at the time of our inventory, 33 of the 71 equipment sets (46%) 

had one or more types of discrepancies noted by PWC Logistics upon arrival as 

noted below: 

 27 of 71 equipment sets (38%) had from 1 to 6 crates damaged 

 8 of the 71 equipment sets (11%) had from 1 to 4 crates missing 

 4 of the 71 equipment sets (6%) had from 1 to 6 crates more than shown 

on the delivery documents 

 1 of the 71 equipment sets (which included only one crate) was received 

with no delivery document 

 16 crates were received with no identifiable markings on the crates to 

indicate which PHC they belonged 

Condition of Damaged Crates Indicates Likelihood of Missing Equipment 

In addition to indications of damaged equipment inside the crates, many of the 

damaged crates SIGIR examined showed unmistakable signs that equipment was 

missing from the crates as shown in Photos 6 and 7. Photo 6 shows 2 crates in 

which parts of side panels are missing or broken. The inside of the crates contain 

empty spaces in which equipment was most likely packed, but presumed to be 

missing. The shrink-wrap shown in both pictures was applied after the equipment 

arrived at the warehouse by PWC Logistics to prevent additional damage and 

preclude opportunity for any pilfering at the warehouse. Photo 7 shows another 

example of a crate with part of the side panel missing, some boxes of equipment 

inside the crate, but lots of empty spaces, suggesting that other items of equipment 

that were included when the crate was packed are now missing. Other crates 

received at the warehouse, while showing no visually obvious signs of missing 

equipment, bore signs of potential tampering, as shown in Photo 8. In this example, 

the top of the crate appears to have been pried open and then improperly reattached, 

which could indicate items were removed from the crate. The U.S. government 

however, cannot know what, if any equipment is actually missing until a complete 

inventory is conducted of the contents of the crates. 
15

Photo 6. Photo 7. 

Two crates with Side Panels Missing/Busted Another Crate with Missing Panel 

Source: Photographed by SIGIR on May 9, 2006 Source: Photographed by SIGIR on May 9, 2006 

 

Photo 8. Top of Crate Pried Opened 

Source: Photographed by SIGIR on May 10, 2006 
16

Crates with No Visual Damage Noted on Receipt Documentation May Also 

Contain Damaged Equipment Other crates, besides those for which PWC 

Logistics noted visual damage during the receipt process, may also contain 

damaged equipment caused by tilting or rough handling during the delivery process. 

Because of the sensitivity of some of the medical equipment, several of the crates in 

each medical equipment set contained Tiltwatch and/or Shockwatch meters attached 

to the outside of the crates. The description of these types of meters, which were 

affixed to the medical equipment set crates we observed, are described on the 

manufacturer’s websites and appropriate brochures as follows: 

 “Tiltwatch is a state-of-the-art monitor that will indicate red if your container 

has been tilted on its side or completely upended. Tiltwatch is "carrier 

friendly" and guarantees 100% accuracy. Tiltwatch activation angle is 80 

degrees plus or minus 5% from vertical”. 

 “Shockwatch is a precision impact detection device that senses and indicates a 

magnitude of shock. If a carton bearing a Shockwatch Label is dropped or 

roughly handled, Shockwatch reacts instantly. The liquid in the tube changes 

from clear to bright red, providing indisputable evidence that excessive impact 

has occurred. Normal movement or road shock won’t activate Shockwatch - 

only the specific impact for which it was designed. Yellow Shockwatch 

labels are designed to activate when a crate weighing 100 pounds or more is 

dropped vertically from a distance of 6 to 12 inches”. 

Several of the medical equipment crates in the warehouse that were outfitted with 

Tiltwatch or Shockwatch meters (or both) were showing RED, indicating that the 

meters had been activated (tilting occurred over an 80 degree angle and/or crate was 

dropped vertically at least 6 to 12 inches), as illustrated in Photos 9 through 11. 
17

Photo 9. Photo 10. 

Tiltwatch Meter Showing “Red” Shockwatch Meter Showing “Red”

Photo 11. Both Meters Showing “Red” 

 Source: All photographed by SIGIR on May 10, 2006. 

The labels associated with the Tiltwatch and Shockwatch meters on the crates instruct that 

if RED is shown, the shipment should be accepted, a note should be made on the Bill of 

Lading (receipt document), and the items should be inspected for damage immediately. 

PWC Logistics warehouse personnel, however, following their instructions from GRDPCO not to open the crates, did not inspect equipment in crates showing RED on the 

meter. In addition, no indication was made on the signed receipt documentation (see 

Exhibit 1) indicating that crates were delivered to the warehouse with Tiltwatch and/or 

Shockwatch meters showing RED. As a result, there is no written documentation that 

indicates whether and which crates had meters showing RED upon delivery to the 

warehouse. Thus, if equipment is found to be damaged inside of the crates with RED 

meter indicators, the government may have a difficult time proving whether the damage 

occurred during shipping, which in turn may render any successful claim against Parsons 

for the damage doubtful. 
18

Medical Equipment Delivered to Warehouse Not Properly Accounted For. As stated 

earlier in this report, upon arrival at the PWC Logistics warehouse, the medical 

equipment was not inventoried, inspected, or accepted/receipted for by any U.S. 

government representative. Parsons representatives told us that upon delivery of the 

equipment to the warehouse they have complied with their contractual obligation to 

deliver the equipment to the government. Federal Acquisition Regulation clause 52.245-

5(c)(2) GOVERNMENT PROPERTY (COST-REIMBURSEMENT ...) which is 

included in the Parsons Contract W914NS-04-D-0006, states: 

Title to all property purchased by the Contractor for which the Contractor is 

entitled to be reimbursed as a direct item of cost under this contract shall pass to 

and vest in the Government upon the vendor’s delivery of such property. 

GRD-PCO told us that they have not officially accepted and receipted for the medical 

equipment delivered by Parsons to the warehouse. While it is true that the U.S. 

government has not officially accepted and receipted for the equipment on the approved 

DD Form 250 (Material Inspection and Receiving Report), the fact remains that the U.S. 

government directed Parsons to ship the medical equipment to the PWC Logistics 

warehouse and authorized PWC Logistics, who operated the warehouse on behalf of the 

U.S. government, to accept delivery of the equipment. The U.S. government thus has 

both “title to” and “physical possession of” the medical equipment delivered to the 

warehouse through this agency relationship with PWC Logistics. What the U.S. 

government does not have, however, is proper accountability for the medical equipment. 

To date, the equipment has never been inventoried and added to any U.S. government 

property book. 

Warranty of Equipment Delivered to Warehouse May Be in Doubt. The Parsons 

contract required that the medical equipment purchased for the PHCs include a 12-month 

warranty. We were told by GRD-PCO that this warranty takes effect upon the 

installation of the equipment in the PHCs. In fact, the reasons given by GRD-PCO for 

not opening the equipment crates upon receipt at the PWC Logistics warehouse was that 

opening the crates may void the warranty. We requested documentation to support this 

requirement in the warranty from both GRD-PCO and JCC-I/A, but neither office could 

provide us with any written documentation on this matter. 

We did note during our observations of equipment stored in the warehouse that a few 

crates were marked with a red tag, as shown in Photo 12, which warned against opening 

the crates, stating: Do Not Open; that the RFID (Radio Frequency Identification) Tag 

Inside was for Installer Only. 

 Photo 12. “Do Not Open” Tag on Crate

 Photographed by SIGIR on May 10, 2006 
19

At the time the equipment purchase was negotiated and awarded to Parsons, the 12-

month equipment warranty clause (which we believe is based on the manufacturer’s 

warranty) that was included with the equipment procurement was based on the contract 

requirement applicable at the time. Accordingly, the equipment was to have been 

delivered directly to and installed in the applicable PHC for which the equipment was 

procured. However, with the exception of the equipment for the 20 PHC s that remained 

to be completed under the Parsons contract, all of the remaining 131 medical equipment 

sets are now being delivered to the warehouse, not directly to a PHC. Most of the 

equipment will likely be stored in the non-climate controlled PWC Logistics warehouse 

for an extended period of time (at least 6 months or longer). 

Because we were not able to obtain specific warranty documentation, we were not certain 

of the impact this extended storage will have on the 12-month warranty, but we suspect 

that the delayed delivery to and installation at PHCs may modify and perhaps even 

nullify the 12-month equipment warranty provided for under the contract. A second 

implied assumption under the warranty is that the equipment is to be delivered and 

installed in new and undamaged condition. This requirement may not be met for many of 

the medical equipment items. Damage to many items has probably occurred based upon 

the visual damage noted for some shipment crates, as well as the RED Tiltwatch and/or 

Shockwatch meters alerts indicating that tipping and/or rough handling of the crates had 

occurred. 

The JCC-I/A Contracting Officer for the Parsons contract told us he is looking into the 

warranty issue, but to date does not have an answer. He advised us that he was told that a 

second warranty for the equipment has been purchased that may either extend the 

equipment warranty for another 12 months or replace the original 12-month warranty. 

The Contracting Officer, however, was unable to provide us with any documentation on 

this second warranty and indicated he was still looking into how this second medical 

equipment warranty was procured. 
20

Plan for Transfer of Medical Equipment Sets 

No formal written plan currently exists, as a result of the descoping of the PHC 

construction contract, which lays out the specific use for and dates of transfer for the 131 

equipment sets to be delivered to the PWC Logistics warehouse in Abu Ghraib, Iraq. The 

Iraq Reconstruction Management Office (IRMO), however, is attempting to obtain 

funding to continue construction on the PHCs descoped from the Parsons contract. The 

Commanding General, Multi-National Corps-Iraq, initially committed funds from the 

Commander’s Emergency Response Program (CERP) to complete construction on 

partially constructed PHCs that were descoped from the Parsons contract. However, on 

June 20, 2006, the Department of State issued a Congressional Notification advising 

Congress of the intent to obligate $62,300,000 of Iraq Relief and Reconstruction Fund 

resources from the Emergency Supplemental Appropriations Act for Defense and for the 

Reconstruction of Iraq and Afghanistan, 2004 (P.L. 108-106). The funds will be used to 

support the completion of 121 Primary Healthcare Centers across Iraq. We previously 

reported that about $36 million would be needed to complete the 121 PHCs5

. 

IRMO expects that the medical equipment sets stored in the warehouse will first be 

allocated to the PHCs to be completed, and that any remaining equipment sets will be 

distributed to current Iraqi health clinics or hospitals as needed. To date, however, IRMO 

has not developed a written plan identifying which current Iraqi health clinics or hospitals 

have need for the specific medical equipment that may become available. 

Management Actions. Management has taken steps to address some of the issues that 

we have identified during this audit. Specifically: 

• On April 4, 2006, GRD-PCO in coordination with JCC-I/A made a decision not to 

have Parsons deliver any medical equipment sets to the Ministry of Health 

warehouse in Erbil, Iraq. 

• IRMO continues to coordinate with JCC-I/A and GRD-PCO to obtain funding for 

continued construction of the remaining PHCs and to develop a plan for the 

distribution of the 131 medical equipment sets to be stored in the PWC Logistics 

warehouse. 

 

5

 SIGIR-06-011. 
21

Conclusion and Recommendations 

Conclusion 

Physical control over the medical equipment sets was divided among the Iraqi 

government, the U.S. government, and Parsons. As of May 10, 2006, the date we 

conducted the inventory at the U.S. government-controlled PWC Logistics warehouse 

located in Abu Ghraib, Iraq, 151 medical equipment sets were procured by Parsons. 

Twenty sets were physically located at the sites of the 20 Public Healthcare Centers 

(PHCs) that were fully or partially constructed by Parsons; including 6 PHCs transferred 

to the Iraqi government. Of the remaining 131, 71 full or partial sets had been delivered 

to the warehouse, leaving 60 distinct sets to be delivered by Parsons. As of June 11, 

2006, the PWC Logistics automated warehouse system indicated that Parsons had 

delivered a total of 115 full or partial medical equipment sets to the warehouse.

The U.S. government did not ensure proper accountability for medical equipment sets 

delivered to the PWC Logistics warehouse. Neither the Joint Contracting CommandIraq/Afghanistan (JCC-I/A) nor the Gulf Region Division-Project and Contracting Office 

(GRD-PCO) took appropriate actions to ensure that the equipment delivered to the 

warehouse by Parsons was properly inventoried, inspected, receipted for or accepted by 

any authorized representative of the U.S. government. As a result, the U.S. government 

does not know: 

 what actual items of medical equipment have been delivered to the warehouse 

by Parsons 

 what equipment that should have been delivered (per shipping documents 

included with the Parsons delivery) may be missing 

 what condition the medical equipment items were in upon delivery to the 

warehouse 

Not knowing exactly what equipment items were received and the condition of the 

medical equipment at the time it was received by the PWC Logistics warehouse will 

make any objective determination of who has responsibility for missing or damaged 

equipment (Parsons or the U.S. government) difficult, if not impossible. 

The failure of the U.S. government to properly perform the receipt and acceptance 

function upon the arrival of Parsons medical equipment at the warehouse occurred in part 

because neither the DCMA nor any other U.S. government representative at the 

warehouse was delegated responsibility for the receipt and acceptance of the Parsons 

medical equipment delivered to the warehouse. This condition occurred because neither 

JCC-I/A nor GRD-PCO anticpated the operational and accountability ramifications for 

the receipt and acceptance of equipment that occurred when the contract requirements 

were revised from having Parsons install the procured medical equipment in the PHCs as 

part of the construction project; to contract terms that required Parsons to deliver the 

procured medical equipment to a warehouse. 

No formal detailed written plan exists that lays out the specific use for all of the 131 

equipment sets to be delivered to the PWC Logistics warehouse. The Iraq Reconstruction 

Management Office (IRMO), however, continues to work to obtain funding so that 

construction can continue on additional PHCs not completed by Parsons. IRMO expects 

that the medical equipment sets stored in the warehouse will first be allocated to these 

remaining PHCs to be completed, with any remaining equipment sets distributed to 
22

current Iraqi health clinics or hospitals as needed. IRMO, however, has not developed a 

written plan identifying which current Iraqi health clinics or hospitals have need for the 

specific medical equipment that may become available. 

Recommendations 

1. We recommend that the Director, Iraq Reconstruction and Management Office 

(IRMO) continue to work with GRD-PCO to develop a comprehensive written 

utilization and transfer plan for all of the 131 medical equipment sets stored in the 

warehouse. 

2. We recommend that the Commanding General, Gulf Region Division, U.S. Army 

Corps of Engineers: 

a. In coordination with JCC-I/A, arrange for a complete inventory and inspection 

of all of the medical equipment currently stored in the PWC Logistics 

warehouse as soon as possible. A listing of missing and damaged items 

should be prepared when completed. 

b. In coordination with JCC-I/A, arrange for a knowledgeable Parsons or 

equipment manufacture representative to be present during the inspection of 

the condition of the equipment because of the sensitive and specialized nature 

of medical equipment. 

c. Arrange for the proper recording of inventoried medical equipment into the 

appropriate government property management system. 

 

3. We also recommend that the Commanding General, Joint Contracting CommandIraq/Afghanistan (JCC-I/A): 

a. In coordination with GRD-PCO, arrange for the official inspection, inventory 

and receipt of Parsons medical equipment still being delivered to the PWC 

Logistics warehouse. 

b. In coordination with GRD-PCO, obtain the completed inventory listing of all 

medical equipment items currently stored in the PWC Logistics warehouse 

and take appropriate actions to recoup from Parsons the cost of all items found 

to be missing or damaged. 

c. In coordination with GRD-PCO, work with appropriate equipment 

manufactures and/or secondary warranty grantors to clarify the status of the 

equipment warranties. 

Management Comments and Audit Response 

We received written comments on this report from IRMO, JCC-I/A, and GRD. IRMO 

and GRD generally concurred with the report conclusions and recommendations. JCCI/A did not concur with our recommendation involving delegation of responsibility to 

DCMA for receipt/acceptance of Parsons medical equipment delivered to the PWC 

Logistics warehouse. JCC-I/A noted that Memorandum of Agreement between DCMA 

and JCC-I/A does not include construction contracts, thus DCMA can not be delegated 

the receipt/acceptance function for the Parsons Contract (a construction contract). JCC-
23

I/A did, however, indicate that an alternative is being considered that will include the 

PWC Logistic contractor and PCO. We consider JCC-I/A’s alternative to be responsive 

in meeting the intent of the recommendation and have modified our final report 

recommendations to reflect JCC-I/A’s comments regarding the Memorandum of 

Agreement with DCMA. Management comments and responses to the draft report are 

included in the Management Comments and Audit Response section of this report. 
24

Lessons Learned and Additional Observations 

During the course of our review of the management of this contract and the associated 

property accountability issues, we noted areas where “lessons learned” may be applied to 

generally improve contract oversight. Additionally, we identified other concerns for 

management to consider. 

Lessons Learned 

This report discusses a significant lesson learned for future contract actions regarding the 

need to fully examine the impact that changes to contract terms may have on operational 

and accountability requirements. 

In this particular instance, a contract was initially written as a construction contract with 

the requirement that equipment related to the operation of the construction project (a 

Primary Healthcare Center) be procured and installed as part of the construction project. 

JCC-I/A, operating under their normal contracting officer procedures for construction 

contracts, assigned/delegated to GRD-PCO the normal contract administration duties 

relating to the monitoring of the construction project. However, when the construction 

portion of the contract was descoped, the contract terms relating to the installation of the 

equipment as part of the construction project were changed. Under the revised contract 

terms, the Contractor was no longer required to install the procured equipment as part of 

the construction project, but was instead required to deliver the equipment to a 

warehouse. At this point the normal delegated contract administration functions 

performed by GRD-PCO at the construction site no longer applied. However, neither the 

Contracting Officer assigned to JCC-I/A nor the non-construction equipment lead officerin-charge assigned to GRD-PCO appeared to be cognizant of the implications this change 

would have on the receipt/acceptance function for the equipment delivered to the 

warehouse. 

DCMA had Quality Assurance Representatives (QARs) assigned to the warehouse to 

which the Contractor was now required to deliver the equipment. The DCMA QARs at 

the warehouse told us that they had the function to receipt/accept for almost all 

contractor-delivered equipment to the warehouse, but that this function had to be 

specifically noted in the contracts. Contracts that required contractors to deliver 

equipment to the warehouse almost always included an Inspection and Acceptance 

Clause in the contract that delegated to DCMA the receipt/acceptance function. The 

responsibility to include such a clause in contracts is stated in JCC-I/A Letter of 

Instruction No. 06-08, Subject: “Contract Award Instructions to the Supplier,” dated 

March 6, 2006. This Letter of Instruction, issued to clarify the duties and responsibilities 

of Contracting Officers and DCMA Administrative Contracting Officers, states that: 

• when a DCMA QAR is not present to act as receiver/acceptor of goods or 

services, the U.S. government receiver/acceptor must be notified of his duties and 

responsibilities for reviewing, signing and submitting the DD250 

• providing written instructions detailing the U.S. government representative’s 

responsibilities is the contracting officer’s responsibility 
25

In this instance, however, when the contract terms changed to require delivery of 

equipment to the warehouse, the Contracting Officer did not also include a clause in the 

revised contract giving DCMA delegated authority to perform the receipt/acceptance 

function at the warehouse for the delivery of equipment under this contract. In addition, 

no other U.S. government office, such as GRD-PCO, was specifically assigned the 

receipt/acceptance function for this contract when the contract terms were changed. 

The result, as noted in this report, was that no U.S. government receipt/acceptance was 

performed when equipment was delivered to the warehouse by the contractor in 

accordance with the revised contract requirements. Similarly, there were no inspections 

of the delivered goods to isolate whether items were missing or damaged during the 

shipment process, or after delivery to the warehouse. 

Additional Observations 

During the audit we noted two other conditions and concerns relating to medical 

equipment procured under the Parsons Contract that were outside the scope of our initial 

audit objectives. These conditions and concerns relate to the training provided by 

Parsons on the new medical equipment and the expenditure data reflected in the Corps of 

Engineers Financial Management System (CEFMS) reports for medical equipment 

purchases. 

Training on New Equipment Not Accomplished as Initially Envisioned. As part of 

the overall medical equipment procurement, the contract required that Parsons train PHC 

equipment operators on the medical equipment procured. The contract itself does not 

state any number of days for the new equipment training, but the IRMO Senior Health 

Advisor to Iraq told us the training on the new equipment was initially envisioned as 

lasting for 15 days, then was cut-back to 10 days, and finally reduced to just 3 days of 

training - which was the amount of training conducted for the equipment operators of the 

20 PHCs remaining on the Parsons contract. The Senior Health Advisor told us that the 

cut-back in the number of training days was made without input from IRMO and that 

Iraqi Ministry of Health officials have remarked that three days of new equipment 

training was not enough to ensure PHC employees fully understood how to operate the 

new medical equipment. 

Parsons will conduct no new equipment training for the 131 medical sets to be delivered 

to the Abu Ghraib warehouse. Since this training was included in the overall costs for the 

procurement of the equipment, we asked the JCC-I/A Contracting Officer about how 

equipment costs will be adjusted to account for the training not being conducted. The 

Contracting Officer advised us that even though the equipment costs (which included 

costs for training) were definitized at a set total amount, the contract remains a cost-plus 

type contract and Parsons can not bill for any costs not actually incurred. 

During our review, we did not see any Parsons invoices in which equipment training 

costs have been separately identified, so we were unable to confirm whether or not 

Parsons will separately bill the U.S. government for new equipment training. 
26

Equipment Cost Information from the Corps of Engineers Financial Management 

System (CEFMS). Reports generated from the U.S. Army Corps of Engineers Financial 

Management System (CEFMS) show that Parsons was paid award fees on procured 

equipment, when in fact no such award fees should have been paid. While we did not 

audit the CEFMS, we did attempt to use information maintained in CEFMS to obtain 

reports on what billings, obligations and expenditures were made against the Parsons 

contract relating to the Parsons medical equipment purchases. We discovered that the 

financial information in CEFMS was incorrect and that, as a result, the CEFMS financial 

reports could not be relied upon for our purposes. For example, while we know from 

reviewing the contract, that no equipment award fees relating to the Primary Healthcare 

Centers (PHC) medical equipment had been authorized for Parsons, CEFMS reports 

reflected that $3,229,778.38 had been expended for PHC equipment award fees as of 

March 12, 2006. To determine if Parsons had billed for and been paid by the U.S. 

government for unauthorized award fees, we reviewed a limited sample of Parsons 

invoices and associated DD Forms 250, Material Inspection and Receiving Reports, 

prepared by GRD-PCO. 

We found that Parsons had not billed for award fees. The Parsons invoices that we 

examined showed that Parsons billed for medical equipment costs in accordance with the 

requirements specified in the contract. GRD-PCO Health Project personnel, however, in 

preparing the DD Form 250, improperly made pen and ink changes to the Parsons backup 

documents included with Parsons invoices. These changes had the effect of redirecting 

billings from equipment cost CLINs (Contract Line Item Numbers) to equipment award 

fees CLINs. Two examples of these types of changes are shown in Exhibits 2 and 3. 

 

 Exhibit 2. Parsons Invoice Voucher Number 24 with Pen and Ink Changes 

 Source: DD Form 250, Material Inspection and Receiving Report, in PCO files 

 

 Exhibit 3. Parsons Invoice Voucher Number 20 with Pen and Ink Changes 

Source: DD Form 250, Material Inspection and Receiving Report, in PCO files 
27

Exhibits 2 and 3 are part of the backup documentation included by Parsons in their 

invoices submitted to the U.S. government for payment. In both examples, the Parsons 

invoices correctly reflected billings as being for the cost of medical equipment procured 

(CLIN 0003 – Cost for Equipment). During the process of signing the DD Form 250, it 

appears that GRD-PCO Health Project personnel, who reviewed and signed the DD Form 

250 authorizing payment, made a pen and ink alteration which changed the billing CLIN 

number from 0003 (Cost for Equipment) to 0003AB (Award Fee for Equipment). This 

had the effect of moving the cost of the amount billed from “equipment cost” to 

“equipment award fee cost.” The total from these two examples reflect an improper 

increase in charges of $233,933.13 to equipment award fees and an improper reduction of 

$233,933.13 to actual equipment procurement costs. It appears that the information in 

these altered backup documents was what was posted to CEFMS, thus causing the 

incorrect and unreliable information we noted in the CEFMS financial reports. 

The specific reasons for the improper changes as well as the overall impact of improper 

inputs to CEFMS are considered beyond the specific scope of this audit and thus were not 

pursued at this time by SIGIR. 
28

Appendix A. Scope and Methodology 

We initiated this audit (Project No. 6013) in March 2006, to determine whether medical 

equipment associated with Primary Healthcare Centers (PHCs), Parsons Contract 

Number W914NS-04-D-0006, were properly accounted for; and to identify the impact of 

the descoping of the PHCs construction, including whether the government 

representatives are complying with general legislative and regulatory guidance 

concerning contract administration and property accountability related to the medical 

equipment purchased under the contract. We also evaluated the effectiveness of the 

monitoring and controls in place by the Iraq Reconstruction Management Office (IRMO), 

U.S. Army Corps of Engineers Gulf Region Division-Project and Contracting Office 

(GRD-PCO), Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) and the Defense 

Contract Management Agency (DCMA). 

Our audit announcement memorandum issued on March 2, 2006, included the phrase 

“medical equipment and supplies” as part of the audit objective. However, when we 

started the audit we discovered that supplies purchased for the PHCs associated with the 

Parsons contract were procured under a separate contract that had not been awarded to 

Parsons. As a result we eliminated “supplies” from this audit objective and made the 

decision to look at the supplies procured for the PHCs as part of a separate audit. This 

separate audit was announced by SIGIR memorandum issued May 9, 2006, “Audit of 

Consumable Supplies Purchases under Contract Number W27P4B-05-A-5018 for 

Primary Healthcare Centers,” (Project No. 6018). 

To gain an understanding of each organization’s operations and processes for executing 

the medical equipment requirements of the contract and equipment accountability 

requirements, we interviewed contract and property management personnel from IRMO; 

GRD-PCO; JCC-I/A; DCMA; the contractor, Parsons Global Systems, Inc; and Public 

Warehousing Company (PWC) Logistics, the U.S. government contractor for the 

warehouse in Abu Ghraib, Iraq. We also reviewed organization charts and websites to 

obtain background information and to determine responsibilities. 

To determine if the contractor was in compliance with the terms of the contract and task 

orders relating to the medical equipment, we reviewed the basic contract, modifications, 

and task orders to determine the contractual requirements. We also interviewed 

management at Parsons Global Systems, Inc., as well as appropriate personnel at IRMO, 

GRD-PCO, JCC-I/A, DCMA, and PWC Logistics. 

 

To determine whether government representatives are complying with general legislative 

and regulatory guidance concerning contract administration and property accountability, 

we reviewed the relevant sections of the Federal Acquisition Regulation. We reviewed 

available agency procedures that described the methodology, responsibilities, and 

documentation standards for contract administration and property accountability. We 

also interviewed key personnel at IRMO, GRD-PCO, JCC-I/A, and DCMA regarding the 

procedures. 

To evaluate the adequacy of the receipt, storage, and accountability procedures for 

medical equipment delivered to the PWC Logistics warehouse, we visited the warehouse 

in Abu Ghraib, Iraq, on May 9 and 10, 2006. While on-site, we observed two deliveries 

(one each day) of Parsons medical equipment to the warehouse and evaluated the 

procedures used by the warehouse to inspect, receipt for, unload, and store the crates 

containing medical equipment. We examined the paperwork used by the PWC Logistics 
29

warehouse personnel to document receipt of equipment and enter receipts into the PWC 

Logistics automated warehouse system. We observed the condition of the Parsons 

medical equipment crates stored in the warehouse, conducted an inventory of the 

equipment sets in the warehouse, and reconciled our inventory results to warehouse 

records. We observed the physical security procedures in place at the warehouse 

compound, to include observations of pat-down searches made of all non-U.S. employees 

exiting the warehouse buildings. We discussed warehouse receipt, issue, storage, 

documentation, and physical security issues with PWC Logistics representatives, DCMA 

representatives assigned to the warehouse, and the U.S. military Officer-In-Charge of the 

warehouse. We obtained access to the PWC Logistics automated warehouse system and 

conducted several retrievals from the system relating to medical equipment receipts and 

inventory balances. We documented many of our observations at the warehouse with 

digital pictures and videos. 

To determine the condition of the medical equipment stored in the warehouse we 

physically observed the equipment stored in the warehouse and noted instances of 

damaged crates and crates on which tilt or shock meters showed RED. 

To determine which entity had physical control over the medical equipment and its 

location, we determined as of May 10, 2006, what equipment was in the warehouse under 

U.S. government control, what equipment was at the PHC locations controlled by the Iraq 

or U.S. governments, and what equipment the contractor was still responsible for 

delivering to the U.S. government. 

To determine whether property transfer plans had been developed we interviewed the 

Senior Health Advisor, IRMO, as to what plans had been developed and requested copies 

of any written transfer plans that were developed. 

We performed this audit from March 2006, through June 2006, in accordance with 

generally accepted government auditing standards. 

Use of Computer-Processed Data. We reviewed cost-to-complete reports that were 

compiled in Excel spreadsheets based on data taken from reports run in the U.S. Army 

Corps of Engineers Financial Management System (CEFMS). While we did not audit 

CEFMS during this audit6

, we did conduct a sample review of invoice-related 

transactions and found the information in CEFMS to be unreliable due to input errors. 

This is discussed in the Additional Observations section of this report. We also reviewed 

receipt, shipment, and inventory data available in the PWC Logistics automated 

warehouse system (called Exceed). We did not audit the PWC Logistics Exceed system 

and express no opinion on the reliability of the data in the Exceed system. 

Prior Coverage. 

Special Inspector General for Iraq Reconstruction (SIGIR). Reports issued by the 

Office of the Special Inspector General for Iraq Reconstruction can be accessed on its 

website http://www.sigir.mil. 

SIGIR Interim Audit Report Number SIGIR-06-016, dated April 4, 2006, “Review of the 

Equipment Purchased for Primary Healthcare Centers Associated with Parsons Global 

 

6

 For more information on the reliability of data drawn from CEFMS, see GAO report 01-89 “Significant 

Weaknesses in Corps of Engineers’ Computer Controls”, October, 2000, and GAO follow-up report 02-589 

“Corps of Engineers Making Improvements But Weaknesses Continue”, June, 2002. 
30

Services, Contract Number W914NS-04-D-0006” was issued to alert management to our 

concerns that certain planned events may have on the accountability for and utilization of 

the medical equipment and to provide management timely information on these potential 

events and the opportunity to take corrective actions to reduce the risk of accountability 

shortfalls associated with these events. These concerns included (i) the need to prepare 

alternative plans for the utilization of 131 medical equipment sets to be delivered by 

Parsons that were excess to current PHC needs, (ii) the need to ensure U.S. government 

accountability of the equipment upon delivery to the Iraqi Ministry of Health warehouse 

in Erbil, Iraq, and (iii) US Government’s inability to ensure proper protection and 

accountability of equipment to be stored in an Iraqi warehouse. 

SIGIR Audit Report Number SIGIR-06-011, dated April 29, 2006, “Audit Report on 

Management of the Primary Healthcare Centers Construction Projects” concluded overall 

that management of the primary healthcare centers construction projects could have been 

better executed between March 25, 2004, and early July 2005. In July 2005, government 

management recognized the PHC construction program was in trouble and started a series 

of actions which eventually led to a reduction in the number of centers to be delivered 

from the 150 to 20. Unfortunately, as a result, we reported that there were 121 centers 

that remained partially complete. However, there was also a strong commitment among 

the Iraqi and U.S government managers to complete the 121 partially completed centers. 

Both governments were developing a plan and attempting to identify the required funds 

to finalize these centers for the benefit of the Iraqi citizens. 

SIGIR Audit Report Number SIGIR-05-027, dated January 27, 2006, “Methodologies for 

Reporting Cost-to-Complete Estimates”, concluded GRD-PCO, MNSTC-I, and USAID 

failed to estimate and report reliable and transparent cost-to-complete information for the 

IRRF projects we reviewed. MNSTC-I did not submit a report for the 

September 30, 2005, PAR, and GRD-PCO and USAID submitted reports with errors that 

were significant enough to undermine users’ confidence in the reporting. 

SIGIR Audit Report Number SIGIR-05-021, dated October 24, 2005, “Management of 

Iraq Relief and Reconstruction Fund Programs: Cost-to-Complete Estimate Reporting”, 

concluded the three organizations responsible for IRRF projects – PCO, USAID, and the 

MNSTC-I – have been required, since January 2004, to report cost-to-complete 

information for their IRRF projects in quarterly reports to the Congress. However, these 

organizations did not begin providing reasonably comprehensive cost-to-complete data to 

IRMO until the summer of 2005. 

Government Accountability Office Report Number GAO-06-428T, dated February 8, 

2006, “Rebuilding Iraq: Stabilization, Reconstruction, and Financing Challenges” 

concluded that the United States faces three key challenges in rebuilding and stabilizing 

Iraq: the deteriorated security situation, inadequate performance data and measures, and 

Iraq’s inability to sustain projects. 

U.S. Agency for International Development (USAID) Inspector General Audit Report 

Number E-267-002-P dated February 28, 2005, “Audit of USAID/Iraq’s Health System 

Strengthening Contract Activities.” The USAID Regional Inspector General in Baghdad, 

Iraq conducted this audit to determine whether activities under USAID/Iraq’s Health 

System Strengthening Contract (the contract) had achieved their intended outputs. The 

audit found that activities under the contract did not achieve their intended outputs. Based 

on review of documentation on file at the Mission and furnished by the contractor, 60 

percent of the activities (28 of 47) did not achieve their intended outputs. This occurred, 

in part, because the contractor did not effectively manage its program to ensure that 

activities were completed as scheduled and produced deliverables which strengthened the 
31

Iraqi Ministry of Health. In addition, a reduction in the contract’s cost ceiling in January 

2004 prompted the contractor to cancel or curtail a number of its activities, including 

some that were scheduled to be carried out prior to the reduction, which the Mission 

expected to be completed.
32

Appendix B. Acronyms 

CEFMS U.S. Army Corps of Engineers Financial Management System 

CERP Commander’s Emergency Response Program 

DCMA Defense Contract Management Agency 

GRD-PCO Gulf Region Division - Project and Contracting Office 

IRMO Iraq Reconstruction Management Office 

JCC-I/A Joint Contracting Command – Iraq/Afghanistan 

PHC Primary Healthcare Center 

PWC Public Warehousing Company 

QAR Quality Assurance Representative 

TO Task Order 
33

Appendix C. Contract History of Medical 

Equipment Sets 

• The initial requirement for medical equipment sets for the PHCs was issued to 

Parsons by Task Order (TO) #4 dated May 11, 2004. TO #4 was a Design-Build 

TO that provided Parsons with a Limited Notice to Proceed to provide standard 

designs for Health Care Clinics of three distinct designs as follows:

o Option 1 – Model Clinic

o Option 2 – Model Clinic with Teaching Facilities 

o Option 3 – Model clinic Emergency and Labor Facilities

Included in this TO was a generic sample of the type and quantity of equipment to 

be provided, with specific equipment types/models and procurement method to be 

developed by the contractor (Parsons). The TO required the contractor bid the 

equipment items as optional Contractor Line Item Numbers (CLINs) within their 

proposal and indicated that upon completion of the evaluation, the government 

will make a decision as to how the equipment items will be procured. 

• Modification #02 dated June 20, 2004, to TO#4 required the contractor to provide 

a price proposal for an attached generic list of medical and dental furnishings and 

equipment for the PHCs and added funding in the amount $50,000,000 for the 

equipment CLINs. This Modification stated that the equipment items will be bid 

as an option that can be exercised at the Government’s discretion.

• Modification #04 dated July 27, 2004, to TO#4 increased funding for medical and 

dental furnishings and equipment optional CLINs by $25,000,000 for a new 

funding total of $75,000,000.

• Modification #08 dated September 23, 2004, to TO#4 removed the generic 

equipment lists included in modifications #02 and #04 in their entirety and 

replaced with detailed medical equipment lists identified as List A and List B 

which showed the equipment required for each type of PHC. These lists included 

equipment for 150 PHCs broken out as follows:

o 110 Type A (Standard model clinics)

o 21 Type B (Clinic with teaching facility)

o 19 Type C (Clinic with emergency and labor facilities)

This modification also required the contractor to provide a cost proposal for the 

equipment lists not later than October 21, 2004. 

• Modification #12 dated October 20, 2004, to TO#4 definitized the design and 

construction work for 41 PHCs located in Central Iraq and states the remaining 

109 PHCs will be definitized in TOs #11 and #12. This modification stated that 

definitization negotiations for the equipment CLINs would be completed at a later 

date.

• TOs #11 and #12 both dated October 20, 2004, were issued for construction of 49 

PHCs in Northern Iraq and 60 PHCs in Southern Iraq respectively. Both TOs 

stated that definitization related to equipment would occur at a later date.
34

• Modification #13 dated December 7, 2004, to TO #4 gave the contractor the 

Notice to Proceed on the purchase of medical equipment with a Not To Exceed 

(NTE) amount of $50,000,000. This modification, while not specifically stating 

so, references a Purchase Request and Comment that appeared to add medical 

equipment for a Teaching Academy, thus increasing the total number of medical 

equipment sets to be purchased to 151.

• Definitization of the medical equipment costs occurred on December 26, 2004, at 

$70,359,014 for 151 medical equipment sets, by Modification #14 to TO#4 and 

Modifications #01 to TOs #11 and #12 as follows: 

o $18,962,505 for 42 medical equipment sets in Central Iraq (includes a 

medical training academy)

o $23,289,823 for 49 medical equipment sets in Northern Iraq

o $28,106,686 for 60 medical equipment sets in Southern Iraq

The TOs stated that the definitized amount included estimated cost and fee 

associated with the purchase, logistical effort, installation and testing of 

equipment, training of clinic personnel and 12-month warranty. The TOs also 

contained an agreement on payment for the medical equipment which stated 

payment would be made as follows: 

o 30% of cost paid upon placement of the equipment order 

o 50% of cost paid upon shipment of the equipment 

o 10% of cost paid at time of product installation or delivery 

o 10% of costs paid upon acceptance by Project and Contracting Office 

(PCO) 

• On September 8, 2005, modification was issued that formalized a stop work order 

on construction of 8 PHCs. This stop work is for construction only, no change 

made to medical equipment purchases.

• On October 22, 2005, Contractor was issued a stop work order on construction of 

1 PHC.

• On February 16, 2006, Contractor was issued a stop work order on construction of 

20 more PHCs. No change to the medical equipment purchases.
35

• On March 3, 2006, Contractor was issued a stop work order on construction of an 

additional 101 PHCs, leaving only 20 PHCs remaining for construction. The TOs 

directing the stop work stated that Parsons shall coordinate with the Project and 

Contracting Office (PCO) to deliver previously purchased and shipped medical 

and collateral equipment for the terminated PHCs. The TOs also required Parsons 

to provide close-out documents to include:

o Warranty Information and Mechanical equipment serial numbers for all 

purchased equipment (2 sets)

o List of supplies for material and equipment (2 sets)

o Master set – medical equipment training manuals A-B-C (1 set)

o Medical Equipment Turnover/Commissioning manuals (2 sets)

o Preventative maintenance plan (2 sets)

o List of purchase equipment/materials (2 sets) 
36

 Appendix D. Organizations 

Organizations Responsible for Contract Management. Three organizations have 

responsibility for management of the Parsons contract: U.S. Army Corps of Engineers 

Gulf Region Division-Project and Contracting Office (GRD-PCO), Iraq Reconstruction 

Management Office (IRMO), and Joint Contracting Command-Iraq/Afghanistan (JCCI/A). However, during the first 21 months of the contract, the Project and Contracting 

Office (PCO) and the U.S. Army Corps of Engineers Gulf Region Division (GRD) were 

separate organizations. On December 4, 2005, the PCO was merged GRD to form GRDPCO. 

Project and Contracting Office (PCO) . National Security Presidential 

Directive 36, “United States Government Operations in Iraq,” May 11, 2004, established 

the PCO and directed the PCO to provide acquisition and project management support for 

activities in Iraq. On June 22, 2004, the Deputy Secretary of Defense established the 

PCO within the Department of the Army and directed the PCO to provide support for all 

activities associated with financial, program, and project management for both 

construction and non-construction IRRF activities. 

U.S. Army Corps of Engineers Gulf Region Division (GRD). GRD provides 

engineering services in the Iraq combat theater to Multi-National Force-Iraq and the Iraqi 

government with planning, design, and construction management support for military and 

civil infrastructure construction. PCO delegated contract administration for contract 

W914NS-04-D-0006 to the U.S. Army Corps of Engineers, Gulf Region CentralBaghdad on September 18, 2004. On the same day, PCO delegated administrative 

contracting officer (ACO) authority to the Director of Contracting, U.S. Army Corps of 

Engineers, Gulf Region Central-Baghdad. 

Iraq Reconstruction Management Office (IRMO). The Iraq Reconstruction 

Management Office has the responsibility to approve contracts. National Security 

Presidential Directive 36, “United States Government Operations in Iraq,” May 11, 2004, 

established the IRMO within the Department of State and directed that organization to 

facilitate the transition in Iraq. IRMO reports to the Chief of Mission in Iraq. 

 Joint Contracting Command-Iraq/Afghanistan (JCC-I/A). The head of 

contracting activity, JCC-I has the responsibility to award and negotiate contracts. The 

JCC-I was established in 2004 to consolidate contracting activities and reports through 

the Deputy Assistant Secretary of the Army (Policy and Procurement) to the Assistant 

Secretary of the Army for Acquisition, Logistics, and Technology. JCC-I/A mission in 

Iraq is to provide responsive operational contracting support to the Chief of Mission and 

Multi-National Forces - Iraq to efficiently acquire vital supplies, services and 

construction in support of the Coalition Forces and the relief and reconstruction of Iraq. 

Other Organizations Discussed in this Report

Defense Contract Management Agency (DCMA). DCMA is an independent 

combat support agency within the Department of Defense (DoD) which supports contract 

administration through-out DoD. At the Abu Ghraib warehouse DCMA had Quality 

Assurance Representative (QARs), assigned full-time to the warehouse, who had the 

receipt/acceptance responsibility for contractor deliveries to the warehouse for those 
37

contracts that DCMA was delegated administrative contracting receipt/acceptance 

authority. 

Parsons Global Services, Inc. Parsons is the company awarded Contract 

Number W914NS-04-D-0006 that is discussed in this report. According to the Parsons 

web site: 

Founded in 1944, Parsons is one of the largest 100% employeeowned engineering and construction companies in the United 

States, with revenues exceeding $3 billion in 2005. We surmount 

the toughest logistical challenges and deliver landmark designbuild projects across the globe. Parsons provides facility and 

infrastructure solutions through superior program management 

and technology-based approaches. Our ability to plan, design, 

construct, and operate diverse facilities and infrastructure 

systems has satisfied both government and industrial clients' 

needs for over 60 years. Our 10,000 employee-owners, located 

worldwide, team with customers and stakeholders while 

providing dependable services. We measure our success one 

project at a time by exceeding expectations and satisfying our 

customers.

Public Warehousing Company (PWC) Logistics. Public Warehousing 

Company (PWC) Logistics is the contractor that operates the U.S. government controlled 

warehouse in Abu Ghraib, Iraq. According to their web site, the PWC Group was 

established in 1979 and provides leading edge supply chain, e-commerce, customs, price 

research and decision support solutions to private and public sector entities worldwide. 

PWC is publicly traded and is currently listed on the Kuwait Stock Exchange with a 

market capitalization of 350 Million US Dollars. 

Abu Ghraib, Warehouse. The Abu Ghraib warehouse is a GRD-PCO controlled 

PWC Logistics contractor operated warehouse complex located in a self-contained 

compound (former Iraq T55 Tank Factory) in Abu Ghraib, Iraq. The warehouse has the 

mission to support GRD-PCO logistics mission to receive, store, and ship nonreconstruction materials throughout Iraq. The warehouse complex has approximately 

750,000 sq/ft of warehouse floor space and 2,300,000 sq/ft of improved outside staging 

area. 
38

Appendix E. Report Distribution 

Department of State 

Secretary of State 

Senior Advisor to the Secretary and Coordinator for Iraq 

U.S. Ambassador to Iraq 

Director, Iraq Reconstruction Management Office 

Mission Director-Iraq, U.S. Agency for International Development 

Inspector General, Department of State 

Department of Defense 

Secretary of Defense 

Deputy Secretary of Defense 

Director, Defense Reconstruction Support Office 

Under Secretary of Defense (Comptroller)/Chief Financial Officer 

 Deputy Chief Financial Officer 

 Deputy Comptroller (Program/Budget) 

Inspector General, Department of Defense 

Director, Defense Contract Audit Agency 

Director, Defense Finance and Accounting Service 

Director, Defense Contract Management Agency 

Department of the Army 

Assistant Secretary of the Army for Acquisition, Logistics, and Technology 

Principal Deputy to the Assistant Secretary of the Army for Acquisition, 

Logistics, and Technology 

Deputy Assistant Secretary of the Army (Policy and Procurement) 

Director, Project and Contracting Office 

Commanding General, Joint Contracting Command-Iraq/Afghanistan 

Assistant Secretary of the Army for Financial Management and Comptroller 

Chief of Engineers and Commander, U.S. Army Corps of Engineers 

 Commanding General, Gulf Region Division 

Auditor General of the Army 

U.S. Central Command

Commanding General, Multi-National Force-Iraq 

Commanding General, Multi-National Security Transition Command-Iraq 

Commander, Joint Area Support Group-Central 

Other Federal Government Organizations 

Director, Office of Management and Budget 

Comptroller General of the United States 

Inspector General, Department of the Treasury 

Inspector General, Department of Commerce 

Inspector General, Department of Health and Human Services 

Inspector General, U.S. Agency for International Development 

President, Overseas Private Investment Corporation 

President, U.S. Institute for Peace 
39

Congressional Committees and Subcommittees, Chairman and 

Ranking Minority Member 

U.S. Senate 

Senate Committee on Appropriations 

Subcommittee on Defense 

Subcommittee on State, Foreign Operations and Related Programs 

Senate Committee on Armed Services 

Senate Committee on Foreign Relations 

Subcommittee on International Operations and Terrorism 

Subcommittee on Near Eastern and South Asian Affairs 

Senate Committee on Homeland Security and Governmental Affairs 

Subcommittee on Federal Financial Management, Government Information and 

International Security 

Subcommittee on Oversight of Government Management, the Federal 

Workforce, and the District of Columbia 

U.S. House of Representatives 

House Committee on Appropriations 

Subcommittee on Defense 

Subcommittee on Foreign Operations, Export Financing and Related Programs 

Subcommittee on Science, State, Justice and Commerce and Related Agencies 

House Committee on Armed Services 

House Committee on Government Reform 

Subcommittee on Management, Finance and Accountability 

Subcommittee on National Security, Emerging Threats and International 

Relations 

House Committee on International Relations 

Subcommittee on Middle East and Central Asia 

 

 
40

Appendix F. Audit Team Members 

This report was prepared and the audit conducted under the direction of Joseph T. 

McDermott, Assistant Inspector General for Audit, Office of the Special Inspector 

General for Iraq Reconstruction. The staff members who contributed to the report 

include: 

Wilson D. Haigler, Jr 

James B. Pollard 

Ronald Lee Rembold 

William E. Shimp 

Frank W. Slayton 

Clifton E. Spruill 

Jack A. Van Meter 
41

Management Comments 

Iraq Reconstruction Management Office 
42
43

Management Comments 

Joint Contracting Command-Iraq/Afghanistan 
44
45

Management Comments 

Gulf Region Division, U.S. Army Corps of 

Engineers 
46
47
48