First Kuwaiti General Trading & Contracting, the Kuwaiti company whose work on the massive new U.S. Embassy in Baghdad caused such a furor, is facing new problems.

The State Department earlier this month took the rare step of cancelling another U.S. embassy construction contract involving First Kuwaiti, this one in the West African nation of Gabon. The $54 million new embassy was supposed to be complete next month, but not a single permanent structure has been built, and the work was only 11 percent done.

The government's contract was actually with a U.S. firm, Rockville, Md.-based Aurora LLC. But First Kuwaiti was the major subcontractor and the financial muscle behind the all-but-dead deal.

The State Department's Bureau of Overseas Buildings Operations said in a statement that the department "took this action as a last resort in the best interest of the American taxpayer and our personnel who need a safer more secure facility as quickly as possible and believed that Aurora LLC was not going to be able to complete this contract."

Cancelling such a contract -- "termination for default" is the legal phrase -- is an extremely infrequent event, and has happened just once before in the 8 years of a worldwide embassy replacement program.  

Maureen Britell, a senior official from Aurora, told McClatchy in an e-mailed statement that the company is in talks with the government and "we are hopeful that we will either complete the project or otherwise come to a mutually-acceptable resolution that will result in the default termination being withdrawn."

Could end up in court. Stay tuned on this one....