Builders of Baghdad Embassy strike again — in Saudi Arabia

McClatchy NewspapersMarch 3, 2010 

WASHINGTON — Another State Department construction project has gone awry, and once again the builders of the troubled U.S. Embassy compound in Baghdad are involved. This time, the problem is in Saudi Arabia.

According to officials and documents obtained by McClatchy, work has ground to a halt on the new, $122 million U.S. consulate in Jeddah, the Red Sea port, amid allegations of unsafe practices, poor labor conditions and feuding between the two companies responsible for the project.

In a Feb. 17 letter, obtained by McClatchy, the State Department threatened to terminate the contract and throw the companies off the site this month. The consulate is supposed to be ready by July, but is only 52 percent complete.

First Kuwaiti Trading & Contracting Co. is building the consulate under a subcontract from Aurora LLC of Rockville, Md. State Department officials have previously told McClatchy that they suspect Aurora was established as a U.S. front company to give First Kuwaiti access to the lucrative embassy construction business.

Aurora officials have denied the charge, and now the two companies appear to be at loggerheads.

The two firms have gotten in trouble more than once.

First Kuwaiti built the $736 million embassy in Baghdad well behind schedule. Last October, the State Department's Inspector General reported that the embassy has "multiple significant construction deficiencies" and recommended that the government try to recover more than $130 million from First Kuwaiti.

A year ago, the State Department terminated Aurora's and First Kuwaiti's work on a third troubled embassy project, this one in the West African nation of Gabon. Aurora currently is barred from bidding on new work.

First Kuwaiti didn't respond to a request for comment through its public relations firm. Maureen Britell, an Aurora official, referred questions to the State Department.

The consulate in Jeddah, Saudi Arabia's second-largest city, is part of a 10-year-old, multibillion-dollar program to build safer and more secure diplomatic outposts. Terrorists attacked the existing consulate in December 2004, killing four local employees and a contract guard.

State Department officials insist that the overall construction program has gone well, with 69 installations completed. Groundbreaking for the 100th new facility is due later this month.

However, the department's decision to do business with First Kuwaiti, first in Baghdad and then in three more contracts awarded in 2006 and 2007, has proved costly.

Individuals connected with the Jeddah project described the problems there on condition of anonymity, saying they feared retribution for disclosing them.

They said that First Kuwaiti has tried repeatedly to exert control over the project, ignoring instructions from Aurora. Under U.S. law, however, U.S. companies normally must have the lead role in building American embassies.

Aurora and the State Department's overseas buildings office have cited First Kuwaiti with numerous health and safety violations, the officials said.

On Feb. 8, Aurora ordered First Kuwaiti to shut down the site due to a water supply problem that affected the flow to flush toilets and taps for laborers to wash before eating or praying, a violation of health guidelines.

Four days earlier, Aurora had warned of dangerous electrical hook-ups by First Kuwaiti, including ungrounded power generators, that risked injury or death of site workers, said the individuals, who have direct knowledge of the Jeddah project.

Jonathan Blyth, a spokesman for the State Department buildings office, told McClatchy that the office recently sent a senior staff member to Jeddah to evaluate construction progress, and that led to the Feb. 17 letter.

"Progress on the site had come to a virtual standstill," Blyth said.

It remains unclear whether Aurora and First Kuwaiti can come up with a plan by March 11 to finish the Jeddah consulate, the State Department deadline. One option, officials said, is bringing in a third company, Saudi-based Al Saad General Contracting, which built Jeddah's lavish Red Sea Mall.

The State Department's inspector general plans to audit the Jeddah construction, officials said.

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Check out McClatchy's national security blog: Nukes & Spooks

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