Parsons Corp. Goes Back to School in the Big Easy

Parsons Corporation is a worldwide construction and engineering firm. Over the past few years, Parsons has been heavily criticized for its reconstruction work in Iraq, where it has undertaken hundreds of projects worth a total of $1-2 billion. For example, the April 2006 report of the Special Inspector General for Iraq Reconstruction (SIGIR) reviewed the company's contract to construct primary healthcare centers (PHCs) throughout Iraq, finding that progress on the project, on which $186 million was spent over two years, "failed to meet expectations." SIGIR's September 2006 report, which reviewed the construction of a police college in Baghdad, noted several significant deficiencies, including leaking waste materials and poor construction management.

To be fair, Parsons alone shouldn't shoulder the blame. The U.S. government bears some responsibility for its unrealistic rebuilding goals, and the worsening security situation in Iraq immensely complicates the jobs of Parsons' workers, whose lives are in constant danger. However, the Army was apparently troubled enough by Parsons' performance to formally ask the company in March 2007 to show cause why it should not be proposed for debarment. According to SIGIR, Parsons' response is currently under review by the Army Suspension and Debarment Office.

The company's difficulties in Iraq are affecting it here at home. People who follow the news from Iraq now get worried when Parsons shows up in their neck of the woods to embark on a major construction project. A case in point is New Orleans, where Parsons was selected last year to participate in the School Facilities Master Plan for Orleans Parish, an ambitious program to "create a new generation of schools in New Orleans," as the project's web site proclaims. Parsons is among a team of consultants that will chart the future course of public education in the Hurricane Katrina-ravaged city, deciding such vital matters as how many schools are needed, where they will be located, which ones will be repaired, and which ones will have to be demolished.

Among the tasks Parsons is handling in Iraq is the rebuilding and refurbishing of schools. However, with the notable exception of the Baghdad police college, this aspect of Parsons' work seems to be free of criticism (at least by SIGIR). Nonetheless, New Orleanians are still wary. A source told POGO that some of the schools being considered for demolition are historic buildings, while others are not damaged enough to warrant knocking them down and disrupting communities. Plus, there is a prevailing mood down there that sees the overhaul of New Orleans' public school system as further evidence their city is up for grabs by the outside business interests that rushed in after the flood waters receded.

The sensitive nature of the Parsons situation in New Orleans raises important contracting issues. Should the problems Parsons is having in Iraq be taken into consideration by contracting officials before awarding contracts? How should it be weighted in determining whether Parsons is a responsible contractor? Does a contracting officer's reliance on disputed SIGIR allegations to deny contracts to Parsons amount to a de facto debarment? Lastly, if the Army ultimately decides to debar Parsons, should New Orleans and others follow suit?