OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

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AAAPPPRRRIIILLL222999,,,222000000666
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202

April 29, 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: Audit Report on Management of the Primary Healthcare Centers 

Construction Projects (SIGIR-06-011) 

We are providing this report for your information and use. We initiated this audit at the 

request of the U.S. Ambassador to Iraq and the Commanding General, U.S. Army Corps of 

Engineers Gulf Region Division (GRD). We provided interim information to the 

Ambassador by separate correspondence in December 2005 answering their initial questions. 

This report provides additional information on our review of the management of Primary 

Healthcare Centers construction projects. 

We considered comments from GRD, the Iraq Reconstruction Management Office, and the 

Joint Contracting Command-Iraq/Afghanistan, on a draft of this report when preparing the 

final report. 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. Clifton Spruill at (703) 343-9275, or by email 

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

Stuart W. Bowen, Jr. 

Inspector General 

cc: Distribution 
i 

Special Inspector General for Iraq Reconstruction 

SIGIR-06-011 April 29, 2006

 Management of the Primary Healthcare Centers Construction Projects 

Executive Summary 

This report discusses management of the Primary Healthcare Centers (PHC) construction 

project in response to a request by the U.S. Army Corps of Engineers Gulf Region 

Division (GRD) and the U.S. Ambassador. This report is a follow on to correspondence 

on this subject provided by the Special Inspector General for Iraq Reconstruction in 

December 2005. 

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

contract, was awarded to Parsons Delaware, Inc. Task orders 4, 11, and 12 contracted for 

the construction of 150 PHCs throughout Iraq. The total definitized cost of the 

construction was $103,538,411. In addition, the task orders provided for the purchase 

and installation of medical and dental equipment for each center. The total definitized 

cost of the equipment was $69,115,742. The contract also had an administrative task 

order, task order 7, to cover indirect costs of projects under the contract. The total 

definitized cost of task order 7 was $110,000,0001. This report addresses the combined 

definitized cost on this contract of about $243,000,000 associated with the 150 PHCs. 

Objectives. The objectives of the audit were to determine if the contractor was in 

compliance with the terms of the contract or task orders and whether the government 

representatives were complying with general legislative and regulatory guidance 

concerning contract administration and financial management. We also evaluated the 

effectiveness of the monitoring and controls in place by administrative contract officers. 

Results. As of March 6, 2006, approximately $186 million (about 77 percent of the 

definitized cost) was spent on the PHC project, over a two year period, with little 

progress made. Specifically, 8 of the 150 planned centers were descoped; 1 was placed 

under another contract vehicle; 135 were just partially constructed (with 121 

subsequently “terminated for convenience”); and only 6 were accepted as completed by 

the U.S. Army Corps of Engineers Gulf Region Division (GRD). In July 2005, in 

consultation with Iraq’s Ministry of Health (MOH), a decision was made to descope eight 

of the PHCs due to lack of progress and to reallocate funds to cover gaps in the budget 

created by MOH not being able to fulfill previous commitments to the program. 

Subsequently, in September 2005, the U.S. government took action to descope the 8 

PHCs. Another PHC was continued through direct contracting. Of the remaining 141 

PHCs, 135 are partially complete throughout Iraq. On March 3, 2006, the U.S. 

Government executed a “termination for convenience”, descoping 121 of the 135 PHCs. 

As a result, the current U.S. Government requirement is for Parsons to deliver 20 PHCs, 

including the 6 already completed, by April 3, 2006. The estimated additional cost to 

complete the 121 PHCs is approximately $36 million. However, an Iraq Reconstruction 

Management Office (IRMO) senior official stated there is currently insufficient Iraq 

Relief and Reconstruction Fund (IRRF) funding available on this contract to complete all 

of the centers. 

 

1

 We estimate that the amount of definitized cost of task order 7 associated with the PHC projects is 64 

percent or $70,400,000. 
ii 

Contractor performance and U.S. Government management actions were both factors in 

the failure to complete the PHC project as planned. According to GRD, the contractor 

lacked qualified engineering staff to supervise its design work, failed to check the 

capacity of its subcontractors to perform the required work, failed to properly supervise 

the work of its subcontractors, and failed to enforce quality assurance/quality control 

activities. On the government side we identified a lack of complete responsiveness to 

contractor requests for equitable adjustments and excusable delays based on unplanned 

site conditions, design or scope changes, or delays based on site access restrictions or 

security; high U.S. Government personnel turnover and organizational turbulence; a 

failure to follow required procedures for making contract changes; poor cost controls; 

poor cost to complete reporting; a failure to properly execute its administrative 

responsibilities; and a failure to establish an adequate quality assurance program. 

GRD provided us a lengthy description of the contractor problems it faced during the 

course of this contract. We do not dispute that there were signs of failure on the part of 

the contractor. Further, as already noted, poor contractor performance delayed 

completion of the project and escalated costs. However, this report focuses on the 

government’s contract administration because we believe that the Federal Acquisition 

Regulations, if properly followed, identify the responsibilities of each party in a contract 

and provide sufficient contract controls to ensure that the government receives the goods 

or services it seeks at a fair and equitable price. 

Management Actions. U.S. government officials have taken steps to address some of 

the issues that we have identified. 

• On July 18, 2005, Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) 

issued a “letter of concern” to Parsons stating, “This letter of concern is issued 

regarding certain shortfalls and non-compliance issues with quality, safety, 

schedule and performance criteria that must be immediately addressed and 

rectified.” The letter referred to issues raised as a result of a Project and 

Contracting Office (PCO) site visit to PHCs in the Baghdad area. 

• In the Fall of 2005, JCC-I/A assigned an overall interim unsatisfactory 

performance evaluation to the contractor because of unmet milestones, schedule 

slippages, and elusive administrative task order costs. 

• Lacking confidence in the Parsons Global Services, Inc. weekly cost 

performance reports, the contracting officer requested the monthly cost 

performance reports as prescribed by contract section 2.3.5. On October 23, 

2005, the government and Parsons agreed upon a format for the new reports. 

Subsequently, Parsons has produced monthly cost performance reports in the 

new format. 

• On October 24, 2005, the contracting officer briefed PCO and Parsons Global 

Services, Inc. that required procedures for “constructive changes” to the project 

would be enforced. The contracting officer required that future constructive 

changes be properly definitized. He also pushed the formal process to bring the 

outstanding request for equitable adjustment (REA) to resolution. On 

December 21, 2005, negotiations commenced to reconcile Parsons’ $39 million 

REA. As of February 24, 2006, 50 of 58 items had been resolved for $22 

million. An agreement was signed and the task orders were funded. The eight 

remaining items were resolved under a unilateral agreement and the contract 

modification was signed on March 17, 2006. 
iii 

• On December 21, 2005, Parsons Global Services, Inc. and the U.S. government 

commenced negotiation regarding Parsons’ submission of excusable delays. An 

agreement was reached and schedules were adjusted in February, 2006. 

• As we previously reported2, GRD-PCO and IRMO took steps late in 2005 to 

improve the quality of cost-to-complete reporting. The estimates reported in the 

December 31, 2005, Project Assessment Report for the PHC project appear 

more realistic than those previously reported. Representatives of IRMO and 

GRD-PCO stated that cost-to-complete reports are now used more effectively as 

a project management tool. 

• On February 4, 2006, GRD-PCO convened a teleconference with both U.S. 

government officials and Parsons’ representatives to determine a workable 

solution for how many PHCs should be completed by Parsons and how many 

PHCs should be descoped. The conference led to the plan where Parsons would 

complete 20 centers by April 3, 2006, and the other 121 centers would be 

descoped. According to GRD, it is exploring options to complete the remaining 

121 PHCs. 

Conclusion. Overall management of the primary healthcare centers construction projects 

could have been better executed between March 25, 2004, to early July 2005. In July 

2005, U.S. 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, there are 121 

centers that remain partially complete. However, there is also a strong commitment 

among the Iraqi and U.S government managers to complete the 121 partially completed 

centers. Both governments are developing a plan and attempting to identify the required 

funds to finalize these centers for the benefit of the Iraqi citizens. We are making 

recommendations to assist in ensuring a successful completion of this desired goal. We 

have also identified lessons learned for the improvement in managing large complex 

projects in the future. 

Recommendations. We recommend the: 

1. Director, Iraq Reconstruction Management Office, require IRMO management to: 

• Develop a Project Delivery Team to meet periodically and facilitate contract 

completion, in cooperation with JCC-I/A, GRD-PCO and Parsons. 

• Develop a plan for pursuing the funding necessary to complete the project. 

• Develop a strong program management team, in partnership with the Iraqi 

Ministry of Health, to ensure completion of the 121 remaining centers. 

2. Commanding General, Joint Contracting Command-Iraq/Afghanistan, require 

JCC-I/A management to: 

• For any future contracts awarded for completing the construction of the 

remaining centers, require that the contracting officer ensure that staff with 

delegation of responsibility is properly trained. 

 

2

 SIGIR-05-027, “Methodologies for Reporting Cost-to-Complete Estimates”, January 27, 2006. 
iv 

3. Commanding General, Gulf Region Division, require the GRD-PCO sector 

management to: 

• Require that GRD personnel, who are responsible for traveling to the 

construction sites to record the information for the daily QA reports, receive 

proper training in the performance of this function. 

• Ensure that proper reporting mechanisms are established, maintained, and 

monitored for any delegation of program management to government or nongovernment staff.

• Ensure that cost-to-complete and schedule performance reports are periodically 

validated by government managers and are reconciled to the quality assurance 

reports provided by independent staff. 

Additional Observations. During the course of our review of the management of this 

construction contract, we noted areas where “lessons learned” may improve other 

contract oversight. As such, we are providing the following suggestions: 

• Maintain a log of contracting officers and dates of service in the contract file. 

• Provide for a length of tour for government personnel that is sufficient to manage 

large and complex contracts. 

• Seek bilateral agreements with the contractor as the norm and document 

exceptions with justifications including known and accepted risk, with senior 

leadership review and approval. 

• Conduct on-site inspections of proposed construction sites before selection and 

prior to definitization of task orders to minimize unknown risks of cost and 

schedule overruns. 

• Ensure that contract performance reports include budgeted cost of work 

performed so that cost and schedule variances can be properly calculated. 

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

report from GRD, JCC-I/A, and IRMO. JCC-I/A and GRD concurred with our 

recommendations. GRD, however, stated that the recommendations did not offer 

significant assistance to the organization and reconstruction effort. While our 

recommendations address the need for proper training and better reporting, which are 

perennial problems in contract management, we believe they bear repeating given the 

magnitude of the problems encountered in managing this contract. GRD provided 

additional information on contractor problems and the actions it took and we added this 

information to the report. IRMO did not directly respond to our recommendations; 

instead, it stated that, with regard to the recommendations on developing project delivery 

teams and a strong program management team, that those matters are the responsibility of 

PCO. Our intent was to have the key offices involved in the project work together to 

mutually resolve problems in constructing the PHCs, regardless of who leads the effort. 

IRMO’s response underscores that at present, no one office has taken responsibility for 

this project. IRMO did not address our recommendation to develop a plan for pursuing 

the funding necessary to complete the project. 

In its written response to this report, GRD correctly noted that this audit was undertaken 

at the request of GRD-PCO and that the audit was coordinated with the U.S. Ambassador 

to Iraq and the Commander, MNF-I. We have revised the report to reflect the origin of 

the audit. GRD also provided a detailed description of the problems encountered by both 

it and the contractor during the course of the contract, which are reprinted in their entirety 

in the Management Comments section of this report. According to GRD’s description, 
v 

the contractor encountered myriad problems and, from the beginning of the project, failed 

to meet various contract requirements due to numerous significant management and 

technical shortcomings. We agree that there were early signs that the contractor would 

not or could not meet contract requirements and that these problems delayed project 

completion and escalated costs. JCC-I/A expressed these concerns to the contractor on 

several occasions in June and July 2005. However, it is the government’s responsibility 

to oversee the contract and, given that the government was aware of problems with the 

project for quite some time, we believe the effective government contract oversight was 

not provided.
Table of Contents 

Executive Summary i 

Introduction 

Background 1 

Objectives 4 

Finding 

Contract for the Primary Healthcare Centers Construction Project 5 

 

Appendices 

A. Scope and Methodology 23 

B. Status of Primary Healthcare Centers Construction 26 

C. Primary Healthcare Centers to be Completed by Parsons 31 

D. Amount Spent on Primary Healthcare Center Projects 

 as of March 6, 2006 32 

E. Acronyms 33 

F. Report Distribution 34 

G. Audit Team Members 36 

Management Comments 

 Director, Iraq Reconstruction Management Office 37 

 Commanding General, Joint Contracting Command-Iraq/Afghanistan 39 

 Commanding General, Gulf Region Division, 

 U.S. Army Corps of Engineers 40 

 
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. 

Health Care Sector. Projects in the health care sector include nationwide hospital and 

clinic improvements, equipment procurement and modernization, and construction of a 

pediatric facility. Total funds allocated to the health care sector, as of January 5, 2006, 

were $739 million. As of December 28, 2005, the total obligations were $634 million, 

and the total outlays were $344 million. 

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

Pasadena, CA, on March 25, 2004. The contract has a ceiling of $500 million. The 

contract has thirteen task orders and contracted to upgrade 17 hospitals located 

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

throughout Iraq, and repair three Ministry buildings in Baghdad. 

Contract task orders 4, 11, and 12 provided for the design and construction of the 150 

PHCs at a definitized cost of $88,468,571. Task order 4 provided for the construction of 

41 PHCs in the central region of Iraq. Task order 11 provided for the construction of 49 

PHCs in the north region. Task order 12 provided for the construction of 60 PHCs in the 

south region. There are three distinct designs of centers: Type A is the model center, 

Type B is the model center with teaching facilities, and Type C is the model center with 

emergency and labor facilities. 

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 is $69,115,742. 

Parsons Delaware, Inc. Founded in 1944, Parsons Delaware, Inc. Pasadena, CA, is a 

100 percent employee-owned company with decades of international design, 

construction, and reconstruction experience. In the Middle East, Parsons currently 

operates out of 12 offices. Their overseas business segment responsible for the contract 

is Parsons Global Services, Inc. 

 

Administrative Task Order. Task order 7 is the administrative task order (ATO) that 

accounts for the indirect costs to contract. The ATO costs include life support, security 

management, information technology, in-country project management staff, travel, 

project office, insurance, warranty, base fee, and award fee. In February, 2006, a senior 

government management official stated the expected cost of the ATO was $117 million. 
2

Organizations Responsible for Contract Management. Three organizations have 

responsibility for management of the 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 folded into the GRD. In 

addition, two companies in a joint venture, Louis Berger Group, Inc. and URS Group, 

Inc. were contracted to provide management support. 

Project and Contracting Office. National Security Presidential Directive 36, 

“United States Government Operations in Iraq,” May 11, 2004, also 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 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. 

 Sector Project and Contracting Office Contractor (SPCOC). Berger/URS, a 

joint venture between the Louis Berger Group Inc. (Washington, D.C.) and URS Group 

Inc. (San Francisco, Calif.), was awarded a contract to provide dedicated support to the 

Buildings/Education/Health Sector Program Management Office under the Coalition 

Provisional Authority Program Management Office. The SPCOC continued to provide 

support under the PCO. 

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 administer 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. 
 

3

Major events in the history of the PHC projects are listed in Table 1. 

Table 1: Chronology of PHC Construction Projects 

Date Project Event 

March 25, 2004 The Department of the Army awards the contract to Parsons 

Delaware, Inc. Task order 1 for mobilization is also awarded and 

Parsons Delaware is directed to proceed with work. 

May 11, 2004 Coalition Provisional Authority Contracting Activity issues notice to 

proceed for task orders 4, 11, and 12. 

September 18, 2004 PCO Contracting delegates contract administration authority to the 

U.S. Army Corps of Engineers. 

October 20, 2004 Task order 4 to design and construct 41 PHCs in central Iraq is 

definitized. Completion date of December 26, 2005 is established. 

October 20, 2004 Task order 11 to construct 49 PHCs in northern Iraq is definitized. 

October 20, 2004 Task order 12 to construct 60 PHCs in southern Iraq is definitized. 

January 29, 2005 Task order 7 (administrative task order) is definitized for 

$110,000,000 for indirect costs. 

January 31, 2005 Parsons Global Services, Inc. began submitting requests for equitable 

adjustments (REAs) 

June 11, 2005 JCC-I/A issues stop work order for 20 PHCs without agreement 

between Parsons Global Services, Inc. and the U.S. Government. 

June 27, 2005 JCC-I/A issues letter of concern to the contractor regarding task order 

11, PHCs in the north region. 

July 15, 2005 Parsons Global Services, Inc. provides notification of excusable 

delays. 

July 18, 2005 JCC-I/A issues letter of concern to the contractor regarding task 

orders 4, 11, and 12. 

July 23, 2005 Stop work order is lifted on 12 PHCs. 

September 8, 2005 Bilateral modifications descope nine PHCs. 

September 24, 2005 JCC-I/A assigns an overall interim performance evaluation of 

unsatisfactory to the contractor. 

December 11, 2005 Parsons Global Services, Inc. submits latest version of the REA for 

$39 million. 

December 13, 2005 JCC-I/A issues a letter of concern to Parsons Global Services, Inc. 

January 12, 2006 JCC-I/A issues a cure notice to Parsons Global Services, Inc. 

March 3, 2006 JCC-I/A issues partial terminations for convenience for task orders 4, 

11, and 12; and 121 of the PHCs are descoped. Six of the PHCs are 

complete. The U.S. Government requires Parsons Global Services, 

Inc. to complete another 14 PHCs by April 3, 2006. 

Source: SIGIR
 

4

Objectives 

The objectives of the audit were to determine if the contractor was in compliance with the 

terms of the contract or task orders and whether the government representatives were 

complying with general legislative and regulatory guidance concerning contract 

administration and financial management. We also evaluated the effectiveness of the 

monitoring and controls in place by administrative contract officers.

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

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

list of the audit team members, see Appendix G. 
 

5

Contract for the Primary Healthcare Centers 

Construction Project 

As of March 6, 2006, approximately $186 million has been spent on the Primary 

Healthcare Center project over two years, but only six centers have been accepted as 

completed by the U.S. Army Corps of Engineers Gulf Region Division (GRD). In July 

2005, in consultation with Iraq’s Ministry of Health (MOH), a decision was made to 

descope eight of the PHCs due to lack of progress and to reallocate funds to cover gaps in 

the budget created by MOH not being able to fulfill previous commitments to the 

program. Subsequently, in September 2005, the U.S. government took action to descope 

the 8 PHCs. Another PHC was continued through direct contracting. GRD officials 

report that the eight PHCs that were descoped were only in the initial stages of 

construction. Of the remaining 141 PHCs, 6 are complete and 135 are partially complete 

throughout Iraq. An IRMO senior official stated there is currently insufficient IRRF 

funding to complete them all. On March 3, 2006, the U.S. Government executed a 

termination for convenience, descoping 121 PHCs. As a result, the U.S. Government 

required Parsons Global Services, Inc. to deliver 20 PHCs, including the six already 

complete, by April 3, 2006. The estimated cost to complete the 121 unfinished PHCs is 

approximately $36 million. If the PHCs are not completed, the Iraqi people will not have 

the benefit, availability, or accessibility of the health care that was to be provided 

throughout Iraq by the centers. 

Contractor performance and U.S. Government management actions were both factors in 

the failure to complete the PHC project as planned. According to GRD, the contractor 

lacked qualified engineering staff to supervise its design work, failed to check the 

capacity of its subcontractors to perform the required work, failed to properly supervise 

the work of its subcontractors, and failed to enforce quality assurance/quality control 

activities. On the government side we identified, for example, a lack of responsiveness to 

contractor requests for various equitable adjustments and excusable delays; high U.S. 

Government personnel turnover; unilateral direction in lieu of bilateral agreement; a 

failure to follow required procedures for making constructive changes; and a failure to 

establish an adequate quality assurance program. 

In a written response to this report, GRD provided a lengthy description of the contractor 

problems it faced during the course of this contract. We do not dispute that there were 

signs of failure on the part of the contractor. However, this report focuses on the 

government’s contract administration because we believe that the Federal Acquisition 

Regulations, if properly followed, identify the responsibilities of each party in a contract, 

and provide sufficient contract controls to ensure that the government receives the goods 

or services it seeks at a fair and equitable price. We acknowledge that contractor 

problems delayed completion of the project, escalated costs, and reduced the number of 

PHCs ultimately completed, but that should not have resulted in the complete expenditure 

of program funding with little to show for the effort. 

Government Contract Administration

Quality contracts derive from good contracting practices throughout the life of a contract. 

Creating a quality contract begins before the contract is issued with a well written 

statement of work that describes in detail the customer’s requirement, and includes a 

thorough review of contractor technical proposals submitted in response to the statement 
 

6

of work, and a carefully prepared independent government cost estimate that provides a 

sound basis for evaluating proposals. After the contract is awarded quality-building 

activities include appropriate numbers of trained contracting personnel to oversee 

contracting activities, and quality assurance/quality control programs. The quality of a 

contract derives from the totality of all the activities, rather than any individual activity. 

Overall, we found weaknesses in a large number of contract activities related to the 

Primary Healthcare contract. These include a lack of complete responsiveness to 

contractor requests for equitable adjustments and excusable delays based on unplanned 

site conditions, design or scope changes, or delays based on site access restrictions or 

security; high U.S. Government personnel turnover and organizational turbulence; 

unilateral direction in lieu of bilateral agreement; a failure to follow required procedures 

for making constructive changes; poor cost controls; poor cost to complete reporting; a 

failure to properly execute its administrative responsibilities; and a failure to establish an 

adequate quality assurance program. Some of these problems are related to, and 

compounded by, failings on the part of the contractor. However, taken together, we 

believe these problems significantly weakened the government’s oversight and control of 

the primary healthcare clinic project and contributed to the poor outcome. 

Turnover of Government Personnel. SIGIR has previously reported the effect that 

high staff turnover had on the U.S. reconstruction effort.3 According to the report, high 

staff turnover and the lack of information exchange among reconstruction personnel as 

they arrived and departed complicated the development and execution of the 

reconstruction program. The PHC project management experienced high turnover of 

government personnel throughout the two years of the project in its contracting, 

administrative contracting, and program management offices. While the effect of this 

turnover on the project is difficult to quantify, in a draft memorandum (dated December 

18, 2005) addressing the contractor’s performance, GRD states that the significant 

turnover of personnel in support of the contract contributed significantly to a perception 

of inexperience and unresponsiveness. 

JCC-I/A does not maintain a log of service dates for its contracting officers. However, 

we requested from JCC-I/A a list of contracting officers who served on the project and 

their dates of service. JCC-I/A provided a list comprising eight different names pulled 

from signatures on the modifications to the contract. The agency contracting official who 

provided the list stated that exact dates of service are unknown. Additionally, there have 

been at least six program managers. 

The agency contracting official did not know why there was high turnover in the 

contracting officer position for the PHC contract. He stated that he believed it was 

mostly due to military rotations. A typical rotation is four months for Air Force 

personnel; six months for Navy personnel; and six months to a year for Army personnel. 

There were also five PCO sector government leads from September 2004 to the present. 

In June 2005, a senior GRD official stated that GRD was understaffed and had high 

turnover. 

As stated earlier, the effects of high turnover are difficult to quantify. Government 

officials from JCC-I/A and GRD-PCO stated that there can be positive effects of 

turnover, as new personnel often bring different experience and different skills to the 

project. Also, new personnel may have objectivity about the project that long-tenured 

team members lack. However, a JCC-I/A official stated that the negative aspect of high 

turnover is that the new personnel are not familiar with the history of the project and must 

 

3

 Iraq Reconstruction: Lessons Learned in Human Capital Management; SIGIR, January 2006. 
 

7

take time to learn it. A GRD-PCO official stated that a new sector lead would bring a 

different vision, a different set of priorities, and a different tolerance for risk. A senior 

Parsons Global Services, Inc. management official stated that conflicts between the 

government and the contractor are more difficult to resolve when new personnel have to 

be educated about the issues involved. He stated that sometimes issues were close to 

resolution when new government personnel arrived and changed the criteria. 

In a draft report, GRD acknowledged that there has been significant organizational 

restructuring during the term of the contract. Organizational changes have evolved from 

the Project Management Office to the PCO; to PCO, the Joint Contracting CommandIraq/Afghanistan and GRD working together; and to a combined PCO-GRD working 

with a contracting officer in JCC-I/A. According to the draft report, “...this turbulence 

contributed significantly to a perception of inexperience and unresponsiveness.”

Unilateral Direction. During the course of the contract GRD-PCO program 

management directed critical actions without achieving bilateral agreement with the 

contractor. In four significant instances the government directed actions that were not 

agreed to by the contractor, that lead to problems in execution and cost increases. These 

included: 

• The contractor’s initial estimate for project duration was to complete all 150 

PHCs in two years. The government unilaterally directed them to finish in one 

year. On September 20, 2004, the contractor submitted a revised schedule that 

met the government’s requirements. The unilateral direction by the government 

relating to the schedule created greater risk that the scheduled completion date 

would not be achieved. 

• Upon receipt of the government’s unilateral decision to complete all work in one 

year, the contractor submitted an estimate of $133 million for their overhead to 

cover the increased management required to expedite construction. The 

government unilaterally decreased their overhead to $110 million. Unilateral 

direction by the government regarding the ATO created greater risk that the 

funding would be insufficient to effectively complete the project. 

• Parson’s submitted their original construction concept to build regionally in order 

to mass their supervisory capabilities. The government unilaterally directed them 

to begin all 150 PHCs simultaneously. 

• At the time of the design concept, no sites for the PHCs had been selected. PCO 

and the Iraqi Ministries worked together to select the construction site properties, 

but some sites required remediation work in excess of what was anticipated. For 

example, some sites were below grade and required that water and sewage be 

pumped out. The contractor rejected at least 50 sites as unsuitable. However, the 

U.S. Government unilaterally directed Parsons to remediate some sites anyway, 

because the Iraqi Health Ministry insisted on locating a center on a particular 

property. Unilateral direction by the U.S. government to remediate properties in 

unsuitable condition created greater risk of schedule slippage and higher costs for 

the project. The following pictures show two of the sites selected for construction 

of PHCs. 
 

8

Sample construction sites provided by the Iraqi Ministry of Health 

Site prior to remediation by Parsons 

Site after remediation 

Site prior to remediation by Parsons 

Site after remediation by Parsons 

It required extensive draining and 

fill. 
 

9

 

Responsiveness of U.S. Government. Throughout the contract, but especially since 

February 2005, Parsons Global Services, Inc. has submitted requested equitable 

adjustments (REA) and excusable delay notices based on unplanned site conditions, 

design or scope changes, or delays based on site access restrictions or security. Until 

October 2005, neither agency contracting officials nor the program management team 

were effectively responsive to the requests. 

Over the course of the project, government representatives directed numerous 

undefinitized constructive changes and unauthorized contract actions that were outside 

the scope of work (see “Constructive Changes” section below). Parsons Global Services, 

Inc. requested equitable adjustment that would allow submission of invoices for the work 

that was the result of these changes. According to GRD, the government team engaged 

the contractor early on to determine additional costs required to complete and redefinitize the contract. GRD reported that the government addressed the contractor’s 

request for cost adjustment in February 2005 and issued a contract modification that the 

contractor refused to sign due to a disagreement on the computation of the base and 

award fee, not on the adjustment to the construction cost. GRD also said that in the 

spring and summer of 2005 the government team and the contractor met on several 

occasions and reached agreement on several occasions; however, in each instance the 

contractor’s team refused to honor the agreements reached. As a result, the unauthorized 

constructive changes continued. A program manager stated he thought the REA had been 

settled at the end of June 2005, and was surprised to later find it was still unresolved. We 

believe, in part, that turnover of personnel was a significant cause for the lack of action 

on the REA. 

Finally, on October 24, 2005, the contracting officer briefed PCO and the contractor and 

required future scope changes be properly definitized before the additional work was 

started. He also commenced a formal process to bring the outstanding REA to resolution. 

On December 21, 2005, negotiations commenced to reconcile Parsons’ $39 million REA. 

As of February 24, 2006, 50 of 58 items had been resolved for $22 million. An 

agreement was signed and the task orders were funded. The eight remaining items were 

resolved under a unilateral agreement and the contract modification was signed on 

March 17, 2006. An agency contracting official stated that relatively small items were 

allowed to accumulate to where the REA became a major item. The government’s 

unresponsiveness on the REA impeded decision-making because the true costs of the 

project remained uncertain. The unresolved REA made cost-to-complete estimates more 

difficult and added greater uncertainty to funding decisions. 

On July 15, 2005, Parsons Global Services, Inc. issued a memorandum to the 

administrative contracting officer at U.S. Army Corps of Engineers Gulf Region Division 

notifying the U.S. government of excusable delays on task orders 4, 11, and 12. 

However, according to GRD the contractor did not submit a request for excusable delay 

until approximately October 2005. Federal Acquisition Regulation (FAR) 52.249-14 

states that, “the Contractor shall not be in default because of any failure to perform this 

contract under its terms if the failure arises beyond the control and without the fault or 

negligence of the Contractor.” Examples of causes include acts of God or of the public 

enemy and acts of the Government in either its sovereign or contractual capacity. Section 

(c) of the FAR 52.249-14 states, “the Contracting Officer shall ascertain the facts and 

extent of the failure. If the Contracting Officer determines that any failure to perform 

results from one or more of the causes above, the delivery schedule shall be revised, 

subject to the rights of the Government under the termination clause of this contract.” 
 

10

Parsons listed 35 cases of delays. All except four cases were acts of the Government, 

including a stop work order issued June 11, 2005, for twenty sites. The stop work order 

was lifted six weeks later on July 23, 2005 for twelve of the sites. Some examples of the 

excusable delays submitted by Parsons are listed in Table 2. 

Table 2: Excusable Delays 

Governorate 

Location of PHC 

Description Days of 

Work Lost 

Al Anbar Contractor was unable to access site due to 

insurgent activities, road closure by MultiNational Force-Iraq, and opposition to 

construction by local residents. 

53 

Naynawa Threats from insurgents prevented work June 1-7 

and June 21-30. 

17 

Naynawa Gunfight between Multi-National Force-Iraq and 

insurgents in the area prevented workers from 

accessing the site June 7, 18, 22, 24, 25, 27-30. 

9 

Suleimaniya Roads were closed in and around the northern 

cities due to visiting dignitaries and the insurgent 

activity that often accompanies such visits. The 

carpenter was unable to travel through the areas 

and get to the site, June 15-17. 

3 

For several months the U.S. government did not respond to the excusable delay issue or 

revise the schedule. According to GRD, even though it was aware of the contractor’s 

problems through the memorandum sent to the ACO, it was not required to respond until 

the contractor submitted its formal request for an excusable delay. The issues were 

finally resolved and the schedule was adjusted in February 2006. While GRD may be 

correct that it was not required to respond, its failure to promptly address the issue 

resulted in the contractor being unable to work consistently for months under a schedule 

that did not provide for the conditions beyond the contractor’s control. The lack of 

government responsiveness created greater risk that the construction would not be 

completed in a cost-efficient way. 

Constructive Changes. Government personnel failed to follow required procedures for 

making constructive changes to the PHC project. PCO Standard Operating Procedure 

CN-121 provides guidance regarding procedures to follow for making constructive 

changes to a project. A constructive change is a written or oral order (which includes 

directions, instructions, interpretations, or determinations) from the contracting officer or 

the administrative contracting officer (ACO), or actions or inactions on the part of the 

government that causes a change in the specifications, or method or manner of 

performance, things to be provided by the government, or direction to accelerate the 

work. 

As prescribed in section 6.2.3 of the Standard Operating Procedure, if the change requires 

engineering, the ACO shall send the basic change document to the SPCOC requesting the 

design work, and upon receipt of revised drawings, issue a request for proposal, negotiate 

the change, request funds, receive certification of funds, and issue the modification. 

Section 6.1.8 states that, “if an audit is required, the contracting officer or ACO shall 
 

11

request the local Defense Contract Audit Agency (DCAA) to audit the contractor’s 

proposal with respect to the reasonableness of its costs and pricing.” Guidance for 

keeping a record is provided in Section 6.1.9 which states in part, “Upon execution of the 

modification, a complete copy of the modification package shall be maintained by the 

contracting officer and the ACO.” Section 6.1.10 provides the instruction as to what a 

package will contain, at a minimum, nine specific documents, including the basic change 

document, the independent government estimate, the request for proposal, and the 

modification document. 

U.S. government personnel directed constructive changes to the project without following 

proper procedures. The changes were made to the project, but the changes were not 

properly definitized in a modification to the contract. The direction to make constructive 

changes occurred over a period of months until October 2005, when the contracting 

officer demanded proper definitization for future changes. 

GRD pointed out in its written comments to this report that the contractor also failed to 

seek approval of additional work before its execution and, as a result, performed the work 

at its own risk. The contract allows the contractor to incur cost increases at each PHC of 

up to 50 percent of the PHC construction budget before having to notify the government. 

According to GRD, both the government and the contractor worked under this guidance 

through October 2005. Up to the fall of 2005, the additional cost identified by the 

contractor varied between $18 million and $25 million. However, the contractor 

surprised the government when it submitted a request for equitable adjustment for $39 

million. 

JCC-I/A does not have a record of who directed the undefinitized constructive changes. 

An agency contracting official stated that it may have been personnel from PCO, GRD, 

Berger/URS or someone else. The contracting officer also may have participated in the 

direction; however, the agency contracting official stated that at least some of the changes 

were likely directed by individuals acting outside the scope of their authority. An agency 

contracting official stated that most of the changes were probably necessary due to the 

poor conditions at the work sites. The official stated that a few of the cases had to be 

completed immediately due to safety reasons, such as filling a ditch to prevent children 

from falling in. However, most of the cases should have been properly definitized before 

the work commenced. The costs of the constructive changes accumulated, and in 

December 2005, Parsons Global Services, Inc. submitted an REA for $39 million. 

An agency contracting official stated that the practice of making constructive changes 

without following formal procedures meant that it was hard for the government to get a 

good deal regarding cost. Program managers did not have the opportunity to make good 

decisions about size and volume that could have saved the government money. 

Cost Performance Reports. Section 2.3.1 of the contract requires the contractor to 

establish and implement an Integrated Contract Management Control System (CMCS) for 

the contract. The system should include systems for financial management, scheduling, 

documents control, and status reporting components. Section 2.3.5 of the contract states, 

“Unless otherwise specified, the reports generated by CMCS will be transmitted monthly 

on or about the fifth calendar day of each month...” The section also states, “The 

Contractor shall be responsible for providing electronic export files compatible with 

government management systems to digitally support communication, design, 

construction scheduling, financial tracking, purchasing, invoicing and other program 

management requirements.” 
 

12

In an earlier audit report4

, DCAA reported that Parsons Global Services, Inc. was not in 

compliance with the terms of section 2.3.5 of the contract because the contractor was 

providing weekly rather than monthly cost performance reports. As DCAA reported, 

providing weekly reports do not allow enough time to properly close the books and 

records, which casts doubt as to the reliability of the data in the submitted reports. 

DCAA recommends twenty days to properly close the books. In addition, the costs 

associated with closing the books and producing a report weekly is significantly higher 

than the costs of closing and reporting on a monthly basis. Also, the reports were in a 

format that did not report current costs. 

Government project management accepted the weekly reports from Parsons for 18 

months. Then, the contracting officer requested monthly reports in a different format 

because he did not have confidence in the financial data that was presented and the 

information that was provided was not helpful. The original contract was not specific as 

to format, and a format for the monthly reports was not agreed upon until October 23, 

2005. Parsons subsequently began producing the monthly reports in the agreed upon 

format which included current costs. However, a management official familiar with the 

reports stated that he did not find the monthly reports very useful because the data was 

too old by the time he received the report. 

In its written comments on a draft of this report, GRD reiterated that during weekly 

meetings it advised the contractor that its cost reporting was confusing and did not 

provide a complete depiction of what was actually occurring. The contractor was 

requested to provide actual cost of work performed and budgeted cost of work performed 

in order for the information to be useful. According to GRD, the contractor advised the 

government and the contracting officer on several occasions that this was not part of its 

Statement of Work and did not proceed as requested. 

We also analyzed the format of the monthly cost performance reports. We found the 

report provides cost data for the current period and for cumulative to date. Each section 

reports budget cost of work scheduled and actual cost of work performed. The cost 

variance is calculated as the difference between the two numbers. However, this 

calculation is incorrect. Cost variance represents the difference between budgeted cost of 

work performed and actual cost of work performed. The budgeted cost of work 

performed is not provided in the report and the cost variance is not correctly calculated. 

In addition, the report does not include the schedule variance, which is calculated by 

subtracting the budget cost of the work scheduled from the budget cost of work 

performed. The current report is not useful for financial tracking and construction 

scheduling as prescribed by contract section 2.3.5. 

Because the contract was not specific as to data requirements for the cost performance 

reports and because the government did not require Parsons to produce monthly cost 

performance reports prescribed by the contract, IRRF funds were spent to produce reports 

of little value to management. As a result, the government’s ability to effectively manage 

the project was diminished.

 

4

 DCAA Audit Report No. 2131-2005N17760002, “Report on Audit of the Cost and Schedule Performance 

Reporting for the Six Months ended June 30, 2005 for Task Order Nos. 1 through 13 Under Contract No. 

W914NS-04-D-0006”, November 30, 2005. 
 

13

Cost-to-Complete Reporting. As we previously reported, GRD-PCO is required by 

Public Law 108-106 to report the cost-to-complete estimates on a quarterly basis. 

However, GRD-PCO did not report cost-to-complete estimates until June 2005. 5 GRDPCO began to submit monthly cost-to-complete reports to IRMO, and then submitted the 

quarterly reports starting with the quarter ending September 30, 2005. However, key 

amounts for the PHC project as reported in the cost-to-complete reports do not appear to 

accurately reflect the financial reality of the project. 

In cost-to-complete reporting, the authorized amount is the amount budgeted for the 

project; the estimate-at-completion (EAC) is the total cost to complete the project; the 

variance is the difference between the authorized amount and the EAC; the cumulative 

expenditures is the total amount spent on the project; and the cost-to-complete is the 

difference between the EAC and the cumulative expenditures. Table 3 summarizes the 

cost-to-complete reporting for the PHC project, task orders 4, 11, and 12. 

Table 3: Cost-to-Complete Reporting, Task Orders 4, 11, 12 

Report 

(A) 

Authorized 

Amount 

(B) 

Estimate-atCompletion 

(A-B) 

Variance 

(C) 

Cumulative 

Expenditures 

(B-C) 

Cost-toComplete 

June 2005 152,102,465 136,747,663 15,354,802 20,678,925 $116,068,738

July 2005 141,925,733 140,000,000 1,925,733 21,528,155 $118,471,845

August 2005 141,520,270 133,560,359 7,959,911 27,268,437 $106,291,922

Sept. 30, 2005 141,520,270 133,560,359 7,959,911 31,625,998 $101,934,361

Nov. 2005 135,231,372 149,150,771 (13,919,399) 42,418,854 $106,731,917

Dec. 31, 2005 135,231,732 149,200,000 (13,968,268) 57,566,346 $91,633,654

Table 4 summarizes the cost-to-complete reporting for the administrative task order 

(ATO), task order 7. 

Table 4: Cost-to-Complete Reporting, Task Order 7 

Report 

(A) 

Authorized 

Amount 

(B) 

Estimate-atCompletion 

(A-B) 

Variance 

(C) 

Cumulative 

Expenditures 

(B-C) 

Cost-toComplete 

June 2005 98,800,360 125,000,000 (26,199,640) 37,215,732 $87,784,268

July 2005 98,800,360 115,000,000 (16,199,640) 49,790,417 $65,209,583

August 2005 98,787,644 115,000,000 (16,212,356) 52,722,870 $62,277,130

Sept. 30, 2005 98,787,644 115,000,000 (16,212,356) 66,411,338 $48,588,662

Nov. 2005 97,838,029 125,000,000 (27,161,971) 74,595,338 $50,404,662

Dec. 31, 2005 103,038,029 119,700,000 (16,661,971) 80,455,262 $39,244,738

 

5

 SIGIR-05-027, “Methodologies for Reporting Cost-to-Complete Estimates”, January 27, 2006. 
 

14

The cost-to-complete reporting for the PHC project is not consistent with information 

known to the government at the time of the reporting. GRD-PCO management knew at 

least by March 2005 that the project was experiencing schedule slippage. On July 15, 

2005, Parsons submitted the notice of excusable delay. Eight of the centers were 

descoped on September 8, 2005; another was continued through direct contracting. 

These actions should have decreased the total cost of the project; however, the REA was 

accumulating and was unresolved. Also, on September 10, 2005, JCC-I/A issued a letter 

of intent to issue an interim performance rating of unsatisfactory to Parsons Global 

Services, Inc. The letter stated “Parsons Global Services has failed to effectively manage 

the schedule of Primary Healthcare Center Construction with Task Order 4 resulting in 

severe delays in delivery of facilities.” The letter made the same statement for task 

orders 11 and 12. 

On September 24, 2005, JCC-I/A issued the interim performance rating of unsatisfactory 

to Parsons stating, in part, “Our confidence in your ability to meet the critical 

construction milestones and then project completion dates jeopardizes our ability to 

ensure the project budget can support the multiple delays in meeting PHC construction 

milestones.” Despite this, in the September 30, 2005, Project Assessment Report, GRDPCO reported the direct costs of the project would be $8 million below the budgeted 

amount. The EAC for the ATO was reported as holding steady at $115,000,000. 

In its written comments to a draft of this report, GRD said that its estimate-at-completion 

and its cost-to-complete estimate were developed based on site construction data on hand 

and contractor-provided cost information. The estimates-at-completion provided in 

August and September 2005 were based on written assurances by the contractor that all 

additional project costs had been accounted for. The estimate-at-completion was adjusted 

as soon as the government learned of the magnitude of the potential request for equitable 

adjustment amount. Similarly, the $115 million government ATO estimate-atcompletion was based on the repetitive assurances and commitments received from the 

contractor regarding completing the project by March 2006 for an ATO cost of $110 

million. GRD officials, however, could not explain their continued use of contractor cost 

data given their acknowledged lack of confidence in that data. 

As we previously reported, IRMO and GRD-PCO took action late in 2005 to improve the 

quality of the cost-to-complete reporting. Those actions seemed to be effective because 

the cost-to-complete reports for November and December reported a more realistic 

picture of the project. The EACs for the PHC task orders and for the ATO were both 

significantly higher than previously reported. The variance for the PHC task orders was 

changed to almost negative $14 million. 

The failure of GRD-PCO to effectively report cost-to-complete estimates as prescribed 

by Public Law 108-106 undermined project management’s ability to make critical 

financial decisions relating to the project. The failure created greater risk that 

management would not have the funds to complete the project. 
 

15

Contract Administration. GRD did not effectively execute its administrative 

contracting officer (ACO) responsibilities. On September 18, 2004, contract 

administration for task order 4 was delegated to GRD. PCO delegated a list of contract 

administration functions that are found in FAR 42.302(a). The list comprised 56 

functions, including: 

 

• Perform production support, surveillance, and status reporting, including timely 

reporting of potential and actual slippages in contract delivery schedules. 

• Ensure contractor compliance with contractual quality assurance requirements. 

• Perform engineering surveillance to assess compliance with contractual terms 

for schedule, cost, and technical performance in the areas of design, 

development, and production. 

• Review engineering change proposals for proper classification, and when 

required, for need, technical adequacy of design, producibility and impact on 

quality, reliability, schedule, and cost; submit comments to the contracting 

office. 

• Ensure timely submission of required reports. 

 

GRD receives a fee for services of four percent of the construction billings. However, a 

senior contracting official stated that GRD did not effectively execute its ACO functions 

on the contract for much of the first year. Other government officials noted the ACOs’ 

lack of responsiveness. E-mail correspondence documented the difficulties that JCC-I/A 

had in getting GRD to properly carry out their ACO responsibilities. 

For example, on July 24, 2005, a SIGIR auditor working on a previous audit6

 asked the 

contracting officer assigned to task order 12 of the PHC contract via e-mail if action had 

been taken by the contracting officer to notify GRD that they are not performing their 

required ACO duties. The contracting officer responded, To date, I have sent several 

emails, made numerous phone calls and have met with GRD on more than 6 occasions to 

address the lack of ACO support...I am now been offered ACO support from 2 of the 3 

districts, however, I have not seen the ACO’s warrants.

On August 3, 2005, the same contracting officer sent an e-mail to various GRD personnel 

to determine if the ACO authority for the task orders had been re-delegated to the 

regional ACOs. Referencing the Parsons Global Services, Inc. contract and another 

contract, he wrote, Progress on these contracts has been seriously impeded due to a lack 

of consistent ACO support. I’d like to work with you to get your support as ACO’s on all 

of these Task Orders. Is there something I need to do to get you, or someone in your 

office, ACO authority from GRD? After repeated attempts, I’ve been unsuccessful so far, 

but maybe you will have better luck. Please let me know if there is anything I can do to 

help get GRD to formally re-delegate ACO authority on these task orders. 

The next day, again in e-mail, the contracting officer lamented the lack of responsiveness 

to his query: So far I’ve received two negative replies. Does anyone have any feedback 

on this? How are we going to get this issue resolved? Am I talking to the wrong 

audience entirely? There are numerous ACO Actions in the pipeline and I am looking for 

 

6

 SIGIR Report No. SIGIR-05-013, “Controls Over Equipment Acquired by Security Contractors”, 

September 9, 2005. 
 

16

GRX ACO’s to handle them. We’re paying GRD 4% on almost $740 million in contracts 

and I’d like to know where my ACO support is for that kind of money! 

Quality Assurance. Among the functions delegated to GRD, as administrative 

contracting officer authority, is to ensure contractor compliance with contractual quality 

assurance (QA) requirements. FAR section 46.104 identifies the administrative 

contracting office responsibilities for QA. The regulation states the office shall, among 

other things: 

• develop and apply efficient procedures for performing Government contract 

quality assurance actions under the contract in accordance with the written 

direction from the contracting office 

• perform all actions necessary to verify whether the supplies or services conform 

to contract quality requirements 

• maintain, as part of the performance records of the contract, suitable records 

reflecting 

o the nature of Government contract quality assurance actions, including, 

when appropriate, the number of observations made and the number and 

type of defects 

o decisions regarding the acceptability of the products, the processes, and 

the requirements, as well as action to correct defects 

GRD inspectors visit sites and prepare daily QA reports based on observations and tests. 

A QA report should be filed for each site visit. The Gulf Region North District quality 

assurance plan recognizes the difficulty of providing quality assurance services in a war 

zone. The plan states that the extent of quality assurance activities that can be performed 

at a site may be limited due to complexity of construction, site accessibility, duration of 

construction, security, and scope of the Corps of Engineers oversight responsibilities. 

During our audit, we selected a judgmental sample of ten PHC projects from each of the 

three districts. We analyzed the QA reports from the thirty sites to determine the number 

of reports filed and the quality of the reports. Table 5 displays the PHC sites in the 

sample and the number of the QA reports filed, listing the sites by fewest reports to most. 
 

17

Table 5: Daily Quality Assurance Reports 

Project Name Project ID GRD 

Region 

Number 

of QA 

Reports 

Percent 

Complete 

PHC TYPE A AT AL AQEEL / QADHA' AL ZUBAIR 11856 SOUTH 0 65% 

PHC TYPE A AT HAI AL JAMI'A (NEAR UROBA) 11913 SOUTH 5 85% 

PHC TYPE A AT QADHA' AL HINDIYA 11888 SOUTH 6 53% 

PHC TYPE A AT QADHA'AL HINDIYA SAYID HUSSEIN AL JANIB 

AL KABEER 11853 SOUTH 7 57% 

PHC TYPE A AT HAI KINDA 11897 SOUTH 7 86% 

PHC TYPE C AT AL MANSOORIYA 11885 NORTH 11 44% 

PHC TYPE B AT Al ISKAN 11887 SOUTH 12 66% 

PHC TYPE A AT NAHRAWAN 19846 NORTH 12 90% 

PHC TYPE A AT AL KHALIS 11871 NORTH 14 55% 

PHC TYPE C AT AL BADEER 11918 SOUTH 27 44% 

PHC TYPE A AT HAI AL WIHDA 11920 SOUTH 33 46% 

PHC TYPE B AT AL JADIDA 11917 SOUTH 37 47% 

PHC TYPE A AT AL QASIM 11813 SOUTH 61 67% 

PHC TYPE A AT QALAWA 11928 NORTH 75 59% 

PHC TYPE A AT HADEETHA 11810 CENTRAL 81 40% 

PHC TYPE C AT AL FALLUJA / AL KARMA 11806 CENTRAL 155 70% 

PHC TYPE C AT BNASLAWA 11879 NORTH 161 65% 

PHC TYPE B AT BRAYETI 11880 NORTH 164 76% 

PHC TYPE A AL ZAFARANIA 11840 CENTRAL 165 50% 

PHC TYPE A AT AL HADHAR 11819 CENTRAL 254 81% 

PHC TYPE A AT Hai Alhajjaj (TBD) 11936 NORTH 265 53% 

PHC TYPE A AT HAI ALASRA WA AL MAFQOODEEN 11940 NORTH 308 53% 

PHC TYPE B AT SHAIKH OMAR 11851 CENTRAL 310 72% 

PHC TYPE C AT SAMEEL 11867 NORTH 312 70% 

PHC TYPE A AT AL SALAM 11827 CENTRAL 317 92% 

PHC TYPE A AT AL SHA'AB 1 11847 CENTRAL 340 95% 

PHC TYPE A AT 14 TAMMOOZ 11835 CENTRAL 347 85% 

PHC TYPE C AT ZUMMAR 11904 NORTH 356 92% 

PHC TYPE B AT FAMILY MEDICINE, AL THUBBAT 11845 CENTRAL 397 67% 

PHC TYPE A AT AL MASHTAL 11841 CENTRAL 403 99% 

Source: U.S. Army Corps of Engineers, Resident Management System 

Table 5 shows that the range in the number of QA reports per project listed is from zero 

reports to 403 reports. Twelve of the sites have fewer than 50 reports filed over the 

course of a year. GRD can not effectively perform its quality assurance function and 

monitor safety with so few site visits. 
 

18

Also, there was a disparity among the three districts regarding the number of QA reports 

that were filed. Nine of the twelve sites with fewer than 50 reports are in the South 

district. The most QA reports filed for any South district site in the sample is 61. Five of 

the top six sites with the most QA reports filed are in the Central district. The South 

district was not as responsible about filing QA reports as the other two districts. 

In addition, the quality of the QA reports varied greatly. GRD’s Resident Management 

System (RMS) identifies eleven questions that should be answered in the daily QA 

report, along with general remarks. The questions include, among others: 

• What work activities were being performed? 

• How did security issues affect jobsite activities? 

• What Contractors were on the jobsite today? 

• What equipment was being used? 

We found that some QA reports in our sample answered the questions and were well 

written. Others were not complete. For example, we found 26 QA reports filed for the 

site in Al Tamoz in January and February of 2005 that identified the number of workers 

at the site, but failed to answer any of the questions or provide any information about 

what work was done. The October 27, 2005, QA report for the PHC at Al Hai Al 

Askaryin identified the work performed as “Contractor installing form work for first floor 

slab and tie beams.” However, the report did not list any workers at the site and failed to 

answer any other required questions. A GRD official knowledgeable about the QA 

process stated that some individuals responsible for traveling to the sites and completing 

the reports were working without having been trained about how to properly complete the 

report. 

According to GRD, the Iraq reconstruction environment and span of control does not 

provide ideal conditions for U.S. government or military personnel to visit every project 

as frequently as desired or required. For example, the Army Corps of Engineers’ Gulf 

Region South is responsible for 58 PHC construction projects in addition to 

approximately 350 other projects ongoing during the review period. Gulf Region South 

employs fewer than 40 U.S. Government and/or military field engineers and construction 

inspectors. Furthermore, security issues and limited personnel security detail assets 

preclude regular and frequent site visits. Finally, many of the PHCs are located in 

restricted areas, such as Basrah City, where U.S. Government personnel are either not 

allowed or have limited access based on the ever-changing political or security climate. 

Therefore, GRD believes that having fewer than 50 quality assurance reports is not only 

unremarkable but, in many cases, the norm. GRD also stated that our analysis only 

looked at RMS data to determine the progress or quality of the structures under 

construction. However, GRD claims that many daily QA reports were not entered in 

RMS because either local nationals wrote the reports but did not have access to RMS or 

field offices experienced problems accessing RMS due to poor communications links. 

While accurate and complete RMS record keeping and QA logs are important, this 

information represents only a portion of the overall QA assessment and monitoring that 

occurs to ensure project construction meets specifications and standards. 

GRD also reports that it took action to compensate for the shortage of qualified U.S. 

Government personnel. For example, the Gulf Region South hired about 115 Iraqi 

engineers to provide daily or almost daily QA project site visits. These engineers 

required QA training, which is an ongoing process. However, Iraqi engineers do not 
 

19

have access to the RMS system and cannot enter QA reports. Instead, they provide 

written or oral input to the resident engineers. 

GRD did not consistently file daily QA reports and the quality of those filed was 

sometimes poor. Overall, the GRD QA reports did not adequately document the work at 

the sites, which limited their usefulness to management. 

Milestone data. GRD failed to consistently report accurate milestone data in RMS. The 

RMS system identifies 28 milestones for a construction project. The milestones include, 

among others: 

• contract award 

• contractor proposal submission 

• definitization 

• pre-construction meeting 

• construction start date 

• construction completion 

• transfer document date 

We reviewed the project milestone data in the February 25, 2006, RMS report. Some 

required information is missing or illogical for some of the sites. For example, a preconstruction meeting is required for each construction site. However, of 144 PHC sites 

listed in the February 25, 2006, RMS report, 53 were missing dates for the preconstruction meeting. 

We also found that 44 of the 144 PHCs were reported as having an actual start date that 

was earlier than the notice-to-proceed date. This is illogical since construction should not 

begin until the notice-to-proceed is issued. 

The missing and illogical information in the RMS system regarding the PHCs 

undermines management’s confidence in the data and inhibits effective strategic 

management. 

Contractor Performance

Our original draft report did not discuss in detail the contractor’s performance. We could 

not achieve our first objective because our access to program management records and 

key U.S. government agency personnel was restricted, thus effectively limiting our scope. 

However, GRD provided a multi-page letter on areas where it believes the contractor was 

not in compliance with the terms of the contract and this letter is included in its entirety 

in the Management Comments section of this report. We believe that there are areas 

where contractor failings created program delays, escalated costs, and affected the 

ultimate contract accomplishments. Regardless of contractor performance issues, 

however, we believe that the overriding question is how the U.S. government lost control 

of the project and its ability to enforce schedule and quality requirements. Consequently, 

this was the focus of our review. 
 

20

Management Actions 

U.S. government officials have taken steps to address some of the issues that we have 

identified: 

• On July 18, 2005, JCC-I/A issued a “letter of concern” to Parsons Global 

Services, Inc. stating “This letter of concern is issued regarding certain 

shortfalls and non-compliance issues with quality, safety, schedule and 

performance criteria that must be immediately addressed and rectified.” The 

letter referred to issues raised as a result of a PCO site visit to PHCs in the 

Baghdad area. 

• In the Fall of 2005, JCC-I/A assigned an overall interim unsatisfactory 

performance evaluation to the contractor because of unmet milestones, schedule 

slippages, and elusive administrative task order costs.

• Lacking confidence in Parsons Global Services, Inc. weekly cost performance 

reports, the contracting officer requested the monthly cost performance reports 

as prescribed by contract section 2.3.5. On October 23, 2005, the government 

and Parsons agreed upon a format for the new reports. Subsequently, Parsons 

has produced monthly cost performance reports in the new format. 

• On October 24, 2005, the contracting officer briefed PCO and Parsons Global 

Services, Inc. that required procedures for constructive changes to the project 

would be enforced. The contractor officer required that future constructive 

changes be properly definitized. He also pushed the formal process to bring the 

outstanding REA to resolution. On December 21, 2005, negotiations 

commenced to reconcile Parsons’ $39 million REA. As of February 24, 2006, 

50 of 58 items had been resolved for $22 million. An agreement was signed 

and the task orders were funded. The eight remaining items were resolved 

under a unilateral agreement and the contract modification was signed on March 

17, 2006. 

• On December 21, 2005, Parsons Global Services, Inc. and the U.S. Government 

commenced negotiation regarding Parsons submission of excusable delays. An 

agreement was reached and schedules were adjusted in February, 2006. 

• As we previously reported, GRD-PCO and IRMO took steps late in 2005 to 

improve the quality of cost-to-complete reporting. The amounts reported in the 

December 31, 2005 Project Assessment Report for the PHC project appear more 

realistic than those previously reported. Representatives of IRMO and GRDPCO stated that cost-to-complete reports are now used more effectively as a 

project management tool. 

• On February 4, 2006, GRD-PCO convened a teleconference, with both U.S. 

government officials and Parsons’ representatives to determine a workable 

solution for how many PHCs should be completed and how many PHCs should 

be descoped. The conference led to the plan where Parsons would complete 20 

centers by April 3, 2006, and the other 121 centers would be descoped. 

According to GRD, it is exploring options to complete the remaining 121 PHCs. 

For a list of the 20 PHCs to be completed by Parsons see Appendix C. 
 

21

Conclusion 

Overall management of the primary healthcare centers construction projects could have 

been better executed between March 25, 2004, to early July 2005. In July 2005, U.S. 

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 original plan of 150 to down to 20. This leaves 121 centers that 

remain partially complete. However, there is also a strong commitment among the Iraqi 

and U.S government managers to complete the 121 partially completed centers. Both 

governments are developing a plan and attempting to identify the required funds to 

finalize these centers for the benefit of the Iraqi citizens. We are making 

recommendations to assist in ensuring a successful completion of this desired goal. We 

have also identified lessons learned for the improvement in managing large complex 

projects in the future. 

Recommendations, Management Comments and Audit 

Response 

We recommend the: 

1. Director, Iraq Reconstruction Management Office, require IRMO management to: 

• Develop a Project Delivery Team to meet periodically and facilitate project 

completion, in cooperation with JCC-I/A, GRD-PCO, and Parsons. 

• Develop a plan for pursuing the funding necessary to complete the project. 

• Develop a strong program management team, in partnership with the Iraqi 

Ministry of Health, to ensure successful completion of the 121 remaining 

centers. 

2. Commanding General, Joint Contracting Command – Iraq/Afghanistan, require 

JCCI-I/A management to: 

• For any future contracts awarded for completing the construction of the 

remaining centers, require that the contracting officer ensure that staff with 

delegation of responsibility is properly trained. 

3. Commanding General, Gulf Region Division, require the GRD-PCO sector 

management to: 

• Require that GRD personnel who are responsible for traveling to the 

construction sites to record the information for the daily QA reports receive 

proper training in the performance of this function. 

• Ensure that proper reporting mechanisms are established, maintained, and 

monitored for any delegation of program management to government or nongovernment staff.

• Ensure that cost-to-complete and schedule performance reports are periodically 

validated by government managers and are reconciled to the quality assurance 

reports provided by independent staff. 
 

22

Additional Observations. During the course of our review of the management of this 

construction contract, we noted areas where “lessons learned” may improve other 

contract oversight. As such, we are providing the following suggestions: 

• Maintain a log of contracting officers and dates of service in the contract file. 

• Provide for a length of tour for government personnel that is sufficient to manage 

large and complex contracts. 

• Seek bilateral agreements with the contractor as the norm and document 

exceptions with justifications including known and accepted risk, with senior 

leadership review and approval. 

• Conduct on-site inspections of proposed construction sites before selection and 

prior to definitization of task orders to minimize unknown risks of cost and 

schedule overruns. 

• Ensure that contract performance reports include budgeted cost of work 

performed so that cost and schedule variances can be properly calculated. 

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

report from GRD, JCC-I/A, and IRMO. JCC-I/A and GRD concurred with our 

recommendations. GRD, however, stated that the recommendations did not offer 

significant assistance to the organization and reconstruction effort. While our 

recommendations address the need for proper training and better reporting, which are 

perennial problems in contract management, we believe they bear repeating given the 

magnitude of the problems encountered in managing this contract. GRD provided 

additional information on contractor problems and the actions it took and, we added this 

information to the report. IRMO did not directly respond to our recommendations; 

instead, it stated that, with regard to the recommendations on developing project delivery 

teams and a strong program management team, that those matters are the responsibility of 

PCO. Our intent was to have the key offices involved in the project work together to 

mutually resolve problems in constructing the PHCs, regardless of who leads the effort. 

IRMO’s response underscores that at present, no one office has taken responsibility for 

this project. IRMO did not address our recommendation to develop a plan for pursuing 

the funding necessary to complete the project. 

 

In its written response to this report, GRD correctly noted that this audit was undertaken 

at the request of GRD-PCO and that the audit was coordinated with the U.S. Ambassador 

to Iraq and the Commander, MNF-I. We have revised the report to reflect the origin of 

the audit. GRD also provided a detailed description of the problems encountered by both 

it and the contractor during the course of the contract, which are reprinted in their entirety 

in the Management Comments section of this report. According to GRD’s description, 

the contractor encountered myriad of problems and, from the beginning of the project, 

failed to meet various contract requirements due to numerous significant management 

and technical shortcomings. We agree that there were early signs that the contractor 

would not or could not meet contract requirements and that these problems delayed 

project completion and escalated costs. JCC-I/A expressed these concerns to the 

contractor on several occasions in June and July 2005. However, it is the government’s 

responsibility to oversee the contract and, given that the government was aware of 

problems with the project for quite some time, we believe the effective government 

contract oversight was not provided. 
 

23

Appendix A. Scope and Methodology 

We initiated this audit in December 2005 (Project No. SIGIR-2005-26) to determine 

whether the contractor is in compliance with the terms of the contract and whether the 

government representatives are complying with general legislative and regulatory 

guidance concerning contract administration and financial management. We also 

evaluated the effectiveness of the monitoring and controls in place by administrative 

contract officers. This audit report is the first in a series of reviews that will focus on 

specific IRRF reconstruction projects. 

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

the contract, we interviewed management personnel from IRMO, GRD-PCO, JCC-I/A, 

and the contractor, Parsons Global Services, Inc. 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 or task 

orders, we reviewed the basic contract, modifications, and task orders. We interviewed 

audit personnel at DCAA and reviewed the relevant DCAA audit report. We analyzed 

reports submitted by the contractor. We also interviewed management at Parsons as well 

as key personnel at IRMO, GRD-PCO, and JCC-I/A. However, SIGIR’s direct access to 

available program management records was limited by internal GRD records 

management deliberations. In our view, this affected our ability to independently 

complete this objective. However, we used other information available and readily 

provided to us by GRD and other U.S. Government agency officials which clearly 

showed the overall extent of the contractor’s failure to deliver to the terms of the contract. 

Further, the contractor was cooperative in meeting with SIGIR, discussing contract status, 

and timely providing requested information. 

 

To determine whether government representatives were complying with general 

legislative and regulatory guidance concerning contract administration and financial 

management, we reviewed the relevant sections of the FAR. We reviewed available 

procedures that described the methodology, responsibilities, and documentation standards 

for contract administration and financial management. We also interviewed key 

personnel at IRMO, GRD-PCO, and JCC-I/A regarding the procedures. 

To evaluate the effectiveness of the monitoring and controls in place by administrative 

contracting officers, we obtained data from RMS regarding construction site visits and 

quality assurance. We judgmentally selected ten sites from each of the three districts. 

We analyzed the data to determine the frequency of visits by GRD personnel to the 

construction sites and the quality of the reports. In addition, we interviewed key 

personnel at IRMO, GRD-PCO, JCC-I/A, and Parsons Global Services, Inc. 

We also analyzed the quarterly and monthly cost-to-complete reports compiled by GRDPCO to determine if the reports provided accurate and useful information to management 

regarding the PHC project. 

We also met with the JCC-I/A property administrator regarding the custody and location 

of the medical equipment for the PHCs. Issues relating to the equipment will be 

reviewed by SIGIR in a follow-up audit. 
 

24

We performed this audit from December 2005 through March 2006, in accordance with 

generally accepted government auditing standards. Our audit was limited because the 

GRD-PCO did not provide access to the electronic files under the Facilities and 

Transportation sector folder which contained relevant documents to the PHC projects. 

Inspection Reports. For specific report information about five PHCs in the North 

district, see SIGIR inspection report “Primary Healthcare Centers Numbered: KE-01 

(SIGIR PA-06-043); KE-02 (SIGIR PA-06-042); KE-03 (SIGIR PA-06-046); KE-04 

(SIGIR PA-06-045); and KE-05 (SIGIR PA-06-044) Kirkuk, Iraq”. 

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). The CEFMS was designed 

as a single entry system so the transactions update, in real time, the general ledger and 

subsidiary ledgers. In CEFMS, as in other financial accounting systems, general ledger 

amounts should be in agreement with and supported by subsidiary ledgers and 

transactions detail amounts. We did not audit CEFMS7

. 

We also reviewed PHC project data taken from the Resident Management System 

(RMS), which is used by GRD. RMS is a quality management and contract 

administration system designed by Resident Engineer to help his staff complete their 

mission. The system provides an efficient method to plan, accomplish, and control 

contract management by integrating job specific requirements, corporate technical 

knowledge, and management policies. We did not audit RMS. 

The physical percent complete data for the 141 PHCs listed in Appendix B was pulled 

from the Iraq Reconstruction Management System (IRMS). IRMS is a master data base 

that is the system of choice by IRMO. IRMS is the interagency solution not only for 

reporting the total U.S. government effort, but also for providing MNF-I field 

commanders with situational awareness of relief and reconstruction efforts in their areas 

of operation. The results of a SIGIR audit of IRMS, can be reviewed in SIGIR report 

number SIGIR 06-001, “Management of Iraq Relief and Reconstruction Fund Program - 

Evolution of the Iraq Reconstruction Management System”, which will be issued soon. 

Prior Coverage. 

Special Inspector General for Iraq Reconstruction (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. 

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 

 

7

 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. 
 

25

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. 

Audit Report Number SIGIR-05-011, dated July 26, 2005, “Cost-to-Complete Estimates 

and Financial Reporting for the Management of the Iraq Relief and Reconstruction 

Fund”, included a review of PCO’s input to the April 2005 Section 2207 Report and 

found that PCO did not provide cost-to-complete information to IRMO for the Section 

2207 Report. PCO maintained that (1) project data was not sufficiently mature to 

develop reasonable estimates at completion; an (2) they could not consolidate 

information from their management information systems because they were not 

integrated. 

Government Accountability Office (GAO): 

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. 

Report Number GAO-04-605, dated June, 2004, “Rebuilding Iraq: Fiscal Year 2003 

Contract Award Procedures and Management Challenges” concluded that agencies 

generally complied with applicable laws and regulations governing competition when 

using sole-source or limited competition approaches to award new contracts for 

reconstruction. They did not always comply with competition requirements, however, in 

issuing task orders under existing contracts. 
 

26

Appendix B. Status of Primary Healthcare 

Centers Construction

 

PHC Physical Percent Complete

6%

29%

38%

23%

4%

Less Than 40% Complete

9

Between 41 and 50% Complete

43

Between 51 and 75% Complete

58

Between 75 and 99% Complete

34

100% Complete

6

As of 3 March 2006
 

27

PHC Model Type Description Number Proposed 

PHC Type A: Model Center 102

PHC Type B: Model Center with Teaching Facilities 20

PHC Type C: Model Center Emergency and Labor Facilities 19

Project Name 

Physical 

% 

Complete

TYPE A MODEL CENTERS 

 PHC Type A at Al Guyara Sector 56 100% 

 PHC Type A at Al Huriya 100% 

 PHC Type A at Al Husseniya 100% 

 PHC Type A at Al Mashtal 100% 

 PHC Type A at Al Thalith, Madinat Al Sadr, Sector 46 100% 

 PHC Type A at Al Falluja / Al JghefiI 99% 

 PHC Type A at Al Rasheed 99% 

 PHC Type A at Al Tahaddi 99% 

 PHC Type A at Al Tooz 99% 

 PHC Type A at Al Nahrawan 98% 

 PHC Type A at Tikrit 97% 

 PHC Type A at Al Noor 95% 

 PHC Type A at Al Sha'ab 1 95% 

 PHC Type A at Hai Babil 95% 

 PHC Type A at Qadha' Al Aziziya 95% 

 PHC Type A at Al Mahmoudiya 94% 

 PHC Type A at Al Salam 92% 

 PHC Type A at Al Sha'ab 2 90% 

 PHC Type A at Hai Ur 90% 

 PHC Type A at Nahrawan 90% 

 PHC Type A at 14 Tammooz 85% 

 PHC Type A at Al Ameen 85% 

 PHC Type A at Beji 85% 

 PHC Type A at Hai Al Imam 85% 

 PHC Type A at Al Armooshiya 83% 

 PHC Type A at Al Razi / Tikreet 83% 

 PHC Type A at Al Sharqat / Hajeel Al Kabeer 83% 

 PHC Type A at Hai Kinda 83% 

 PHC Type A at Ibn Rushid 83% 

 PHC Type A at Hai Al Jam'Ia (Near Uroba) 82% 

 PHC Type A at Al Hadhar 80% 

 PHC Type A at Al Washhash 80% 

 PHC Type A at Hai Nablus 80% 

 PHC Type A at Al Hadi 77% 

 PHC Type A at Al I'lam 76% 

 PHC Type A at Hai Al Asra 76% 

 PHC Type A at Al Door 75% 

 PHC Type A at Al Mahallabiya 75% 
 

28

Project Name 

Physical 

% 

Complete

 PHC Type A at Al Midhatiya 75% 

 PHC Type A at Bahdeenan 75% 

 PHC Type A at Heet / Hai Al Bakr 75% 

 PHC Type A at Ainkawa 74% 

 PHC Type A at Al Mahaweel 73% 

 PHC Type A at Sarawran 73% 

 PHC Type A at Ayn Tamr 72% 

 PHC Type A at Qaraqejeen 70% 

 PHC Type A at Al Haidariya (Hai Al Askari) 68% 

 PHC Type A at Hanjeerok 68% 

 PHC Type A at Harem 68% 

 PHC Type A at Al Kifil 67% 

 PHC Type A at Al Qasim 67% 

 PHC Type A at Al Sadis Sector 72 64% 

 PHC Type A at Al Aqeel / Qadha' Al Zubair 63% 

 PHC Type A at Al Kut (Zayn Al Qaws) 63% 

 PHC Type A at Al Thani, Madinat Al Sadr Sector 29 62% 

 PHC Type A at Al Mishraq 60% 

 PHC Type A at Hai Al Hussien 60% 

 PHC Type A at Hai Al Intisar 60% 

 PHC Type A at Hai Al Meelad 60% 

 PHC Type A at Hai Al Shuhada' 60% 

 PHC Type A at Khormal 60% 

 PHC Type A at Qal'at Sukkar 58% 

 PHC Type A at Shiqaq Hai Musalla* 58% 

 PHC Type A at Al Wihda / Talla'afer 57% 

 PHC Type A at Ashti Koyseneeq 57% 

 PHC Type A at Hai Al Jamaheer 57% 

 PHC Type A at Hai Mansoor 57% 

 PHC Type A AT Halabjay Taza 57% 

 PHC Type A at Qadha'Al Hinidiya Sayid Husseon Al Janib Al Kabeer 57% 

 PHC Type A at Qalawa 57% 

 PHC Type A at Al Jazeera / Albo Ubeid 56% 

 PHC Type A at Al Sabi', Madinat Al Sadr Sector 15 55% 

 PHC Type A at Cham Chamal 55% 

 PHC Type A at Hai Al Wasity* 55% 

 PHC Type A at Al Khalis 53% 

 PHC Type A at Hai Alasra Wa Al Mafqoodeen* 53% 

 PHC Type A at Hai Alhajjaj (TBD)* 53% 

 PHC Type A at Qadha' Al Hindiya 53% 

 PHC Type A at Hai Al Askari Near Al Wafa' 52% 

 PHC Type A at Qadha' Badra 51% 

 PHC Type A at Al Karrada Al Awal 50% 

 PHC Type A at Al Khaleej Al Arabi 50% 

 PHC Type A at Hai Al Muhandiseen 50% 
 

29

Project Name 

Physical 

% 

Complete

 PHC Type A at Janeena 50% 

 PHC Type A at Qadha' Al Khidhir 50% 

 PHC Type A at Al Rifa'ee 48% 

 PHC Type A at Hai Al Nida' 48% 

 PHC Type A at Al Nasr 46% 

 PHC Type A at Hai Al Wihda 46% 

 PHC Type A at Al Zahrawi / Nahiat Um Qasr 44% 

 PHC Type A at Al Duwaya 43% 

 PHC Type A at Al Qurna 43% 

 PHC Type A at Al Risala 43% 

 PHC Type A at Suq Al Shyookh / Al Zahra 43% 

 PHC Type A at Al Shannafiya 42% 

 PHC Type A at Al Gharraf 41% 

 PHC Type A at Al Awal Al Mad'in 40% 

 PHC Type A at Hadeetha 40% 

 PHC Type A at Qadha' Al Majar Al Kabeer 40% 

 PHC Type A at Sayyid Dakheel Al Moosawi 40% 

 PHC Type A at Al Tahrir 36% 

 PHC Type A at Qadha'rama 30% 

 PHC Type A at Jalowla' 28% 

TYPE B MODEL CENTERS 

 PHC Type B at Hai Al Asatiha 87% 

 PHC Type B at Al Hibna 85% 

 PHC Type B AT Brayeti 76% 

 PHC Type B at Barzan 75% 

 PHC Type B at Shaikh Omar 72% 

 PHC Type B at Al Haidariya 68% 

 PHC Type B at Family Medicine, Al Thubbat 67% 

 PHC Type B at Hai Al Wafa' 66% 

 PHC Type B at 17 Tammooz 61% 

 PHC Type B at Hai Al Adala, (New Per DG) 58% 

 PHC Type B at Al Falluja / Al Jghefi 51% 

 PHC Type B at Hai Al Husein 50% 

 PHC Type B at Hai Al Mustafa 48% 

 PHC Type B at Al Jadida 47% 

 PHC Type B at Door Al Naft 44% 

 PHC Type B at Mawkee Kul Yat Al Tib Al Kadema 44% 

 PHC Type B at Hai Tis'een* 42% 

 PHC Type B at Al Jami'a / Family Medicine 40% 

 PHC Type B at Sirchanar 14% 

 PHC Type B at Somer 12% 

TYPE C MODEL CENTERS 

 PHC Type C at Zummar 92% 

 PHC Type C at Qadha'al Hindiya Al Khayrat 73% 

 PHC Type C at Al Falluja / Al Karma 70% 
 

30

Project Name 

Physical 

% 

Complete

 PHC Type C at Al Qosh 70% 

 PHC Type C at Khan Dhari 70% 

 PHC Type C at Sameel 70% 

 PHC Type C at Bnaslawa 65% 

 PHC Type C at Ghammas 50% 

 PHC Type C at Jisir Diyala 50% 

 PHC Type C at Abdalla Hashim / Qadha' Al Madina 47% 

 PHC Type C at Bani Sa'ad 45% 

 PHC Type C at Al Badeer 44% 

 PHC Type C at Al Mansooriya 44% 

 PHC Type C at Suq Sha'alan 40% 

 PHC Type C at Sheikh Sa'ad 37% 

 PHC Type C at Qadha' Ali Al Sharji 32% 

 PHC Type C at Al Warka' 30% 

 PHC Type C at Al Wajihiya 15% 

 PHC Type C at Al Atheem 9% 

* Reviewed in SIGIR Inspection Report “Primary Healthcare Centers Numbered KE-01 

(SIGIR PA-06-043); KE-02 (SIGIR PA-06-042); KE-03 (SIGIR PA-06-046); KE-04 

(SIGIR PA-06-045); and KE-05 (SIGIR PA-06-044) Kirkuk, Iraq”. 
 

31

Appendix C. Primary Healthcare Centers to be 

Completed by Parsons

20 SITES TO BE COMPLETED 

(Listed approximately by the most complete to the least complete)

Count ID Project Name URI1 GRX2

1 WA 07 Construct PHC Type A at Qadha' Al Aziziya 11914 GRS3

2 SD 05 Construct PHC Type A at Tikrit 11925 GRN4

3 SD 08 Construct PHC Type A at Al Tooz 11934 GRN 

4 AN 06 Construct PHC Type A at Al Jazeera / Albo Ubeid 11809 GRC5

5 BK 05 Construct PHC Type B at Al Hibna 11823 GRC 

6 BK 06 Construct PHC Type A at Al Huriya 11824 GRC 

7 BK 08 Construct PHC Type A at Al Tahaddi 11826 GRC 

8 BK 09 Construct PHC Type A at Al Salam 11827 GRC 

9 BK 11 Construct PHC Type A at Al Rasheed 11829 GRC 

10 BK 14 Construct PHC Type A at Al Noor 11832 GRC 

11 BR 02 Construct PHC Type A at 14 Tammooz 11835 GRC 

12 BR 04 Construct PHC Type A at Al Thalith, Madinat Al Sadr, Sector 46 11837 GRC 

13 BR 05 Construct PHC Type A at Al Guyara Sector 56 11838 GRC 

14 BR 08 Construct PHC Type A at Al Mashtal 11841 GRC 

15 BR 10 Construct PHC Type A at Al Husseniya 11843 GRC 

16 BR 13 Construct PHC Type A at Hai Babil 11846 GRC 

17 BR 14 Construct PHC Type A at Al Sha'ab 1 11847 GRC 

18 NF 01 Construct PHC Type A at Hai Kinda 11897 GRS 

19 NA 05 Construct PHC Type A at Al Nahrawan 11906 GRN 

20 NF 06 Construct PHC Type A at Hai Al Jam'Ia (Near Uroba) 11913 GRS 

 

1

 URI: Universal Reference Identifier 

2

 GRX: Gulf Region Division District 3

 GRS: Gulf Region South District 

4

 GRN: Gulf Region North District 

5

 GRC: Gulf Region Central District 
 

32

Appendix D. Amount Spent on Primary 

Healthcare Center Projects as of March 6, 2006 

Item Amount

Construction $65,687,306

Non-construction $52,198,443

Primary Healthcare Centers portion of the 

administrative task order $60,511,811*

U.S. Army Corps of Engineers Gulf Region 

Division fees $2,619,805*

Sector Project and Contracting Office 

Contractor $4,800,000*

Total Costs $185,817,365

* Note: Over $65.5 million was for management and administrative costs. 
 

33

Appendix E. Acronyms 

ACO Administrative Contracting Officer 

CEFMS U.S. Army Corps of Engineers Financial Management System 

DCAA Defense Contract Audit Agency 

EAC Estimate at Completion 

FAR Federal Acquisition Regulation 

GRD U.S. Army Corps of Engineers Gulf Region Division 

IRMS Iraq Reconstruction Management System 

IRRF Iraq Relief and Reconstruction Fund 

JCC-I/A Joint Contracting Command-Iraq/Afghanistan 

PCO Project and Contracting Office 

PHC Primary Healthcare Center 

QA Quality Assurance 

REA Request for Equitable Adjustment 

RMS Resident Management System 

SPCOC Sector Project and Contracting Office Contractor 
 

34

Appendix F. 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 
 

35

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 
 

36

Appendix G. Audit Team Members 

This report was prepared and the review was 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: 

John Morrell 

Jim Pollard 

William Shimp 

Cliff Spruill 
 

37

Management Comments 

Director, Iraq Reconstruction Management Office 
 

38
 

39

Management Comments 

Joint Contracting Command-Iraq/Afghanistan 
 

40

Management Comments 

Gulf Region Division, U.S. Army Corps of 

Engineers 
 

41
 

42
 

43
 

44
 

45
 

46
 

47
 

48
 

49
 

50
 

51
 

52
 

53
 

54
 

55
 

56
57