Law waived to allow Kuwaiti firm to build U.S. embassy in Iraq

WASHINGTON — Even as bombings and insurgent attacks turned Baghdad into the epicenter of Iraq's civil war, the State Department pushed hard to have a new, highly secure U.S. Embassy built there in just two years, documents reviewed by McClatchy Newspapers show.

When it solicited bids in 2005, the office that oversees embassy construction received only one proposal for the project, from J.A. Jones International of Charlotte, N.C., according to the documents.

J.A. Jones' bid was rejected because it failed to meet the original completion deadline of June 2007, was more than twice the estimated cost and would have required a so-called "cost plus" contract, the documents show.

The State Department's Bureau of Overseas Building Operations (OBO) then waived a law that requires open and competitive bidding. It awarded a sole-source contract for the unclassified portions of the new embassy complex to a Kuwait-based firm, First Kuwaiti General Trading & Contracting Co.

The waiver described First Kuwaiti as "capable of completing the design and construction in accordance with the required schedule, budget and performance parameters."

Instead, the embassy construction has missed several deadlines; numerous problems have emerged, including faulty firefighting and electrical systems; and the project is the subject of a criminal investigation.

Patrick Kennedy, the State Department's director of management policy, said this week that First Kuwaiti was chosen because it offered a fixed-price contract, in which cost overruns aren't passed on to the government.

"The only company in the end that would offer us a firm fixed-price (contract) was First Kuwaiti. The decision was made, and I believe rightly so, that firm fixed-price is the best protection for the American taxpayer," Kennedy said. "If an American company had bid a firm fixed-price, they might or they might not have won."

But the documents also make clear that OBO and its director, retired Army Maj. Gen. Charles Williams, who signed the waiver that allowed First Kuwaiti to win the contract, were in a hurry to get the project underway.

"Your assistance in issuing these awards immediately will be most appreciated and help us to maintain our aggressive completion schedule," said a July 29, 2005, memo to Cathy Reed of the Iraq Project Construction Office from OBO's James L. Golden.

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