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October 08, 2008

Embassy-Building Schedule May Slip

We wrote a lot last year and early this year about serious problems within the State Department's embassy-building unit, the bureau of Overseas Building Operations, particularly those involving the new U.S. Embassy in Baghdad and its prime contractor, First Kuwaiti General Trading & Contracting Co. So we were eager to read a new report by the State Department's Inspector General that arrived in our email in-box this morning. (Thanks to an anonymous helper....)

The report presents a mixed picture of the state of affairs at OBO, as the bureau is known, but a couple of things jump out at us:

_ The IG report finds that State's ambitious plans to construct 150 new embassies worldwide by 2018, at a cost of $17.5 billion, may be in peril. The modern new facilities are meant to replace aging, less secure posts in the wake of the East Africa embassy bombings a decade ago.

But the report warns that "Escalating construction, commodity, labor costs, and the depreciation of the dollar threaten to prevent the attainment of that very important goal. Either the program must be scaled back, additional resources identified, or the program streteched beyond 2018." It cites an internal OBO memorandum citing a dramatic increase in the cost of overseas construction.

Since the program began in 2004, 56 new facilities have been completed, and another 34 are under construction. (Those figures are as of February 2008).

Retired Army Maj. Gen. Charles Williams, who resigned as OBO's head at the end of last year in the wake of the Embassy Baghdad problems, is given a lot of credit by State Department and congressional officials for getting so many buildings built -- and a lot of criticism for his imperious and closed management style. (More on that in a sec....).

_ The report also highlights troubles for a couple of projects we've been keeping our eye on, the new Embassy in Libreville, Gabon and a consulate in Surabaya, Indonesia. Both were being built by a Rockville, Md-based firm named Grunley-Walsh LLC in conjunction with ... you guessed it ... First Kuwaiti, the firm harshly criticized for its construction of $740 million Embassy Baghdad.

US diplomats in Gabon told the Inspector General that the "contractor, on site 11 months, had been unable to complete temporary facilities and was struggling through the rainy season." The project in Indonesia "was three months behind schedule after the U.S. contractor was sold."

This gets a bit convoluted, but as we wrote a year ago, Grunley-Walsh's international business was sold to a group that included a former senior First Kuwaiti operations manager. The outifit has since been named Aurora LLC, but employees there seem to be still using Grunley-Walsh e-mail addresses.

(Aurora bid this year to build a new U.S. mission in Dubai, but was not awarded the contract).

_ Finally, the report gives high marks to Richard Shinnick, who took over as OBO's interim director, after Gen. Williams' resignation. "He quickly corrected a number of organizational deficiencies and improved coordination and communication between regional bureaus, overseas posts, and other agencies," the 208-page document says.

There are some kind words for Williams, too, but also some implied criticism of the former director, although not by name. "The previous Director brought much needed discipline to the overseas buildings organization, but was perceived as not tolerating dissent or criticism," it says in part.

Read the whole report. I especially like the bit (Page 168) about the embassy in Freetown, Sierra Leone, which lacks a reliable water source. When crews went to drill a well, the underground aquifer shown in pre-construction reports "unfortunately ... was not found." The Embassy relies on trucked-in water to supply 6,000 gallons daily to operate chillers for the embassy's air conditioning system. OBO, in a comment on the report, said it has begun a world-wide initiative to replace some water-cooled AC chillers with air-cooled ones, and "installation is currently underway" in Freetown. 


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DP - Contact me via wstrobel@mcclatchydc.com if you have more information on the Gabon or Surabaya projects. Thanks.


Ruby, can you please elaborate on what items on Rat Pack are not true or fair?

I agree with you on OBO--they have miserably failed the taxpayers by letting these projects fall so far behind.


Just returned from one year in Surabaya, Indonesia. Not all the things posted on Rat Pack are true or fair. However there are many problems biggest of which is that no matter how bad 1ST Kuwaiti is, OBO fails to enforce oversite because they don't want to make waves because it will slow down the project even more and make them look bad. Too many thoughts to post here---Ruby

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"Nukes & Spooks" is written by McClatchy correspondents Jonathan S. Landay (national security and intelligence), Warren P. Strobel (foreign affairs and the State Department), and Nancy Youssef (Pentagon).

jon, nancy & warren

Landay, Youssef and Strobel.

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