Kansas’ Black & Veatch, with history of problems in Afghanistan, now has another
01/19/2013 12:00 AM
09/08/2014 6:15 PM
An American contractor that came under fire several years ago for cost overruns and delays during the construction of a major U.S.-funded power plant in Afghanistan faces renewed criticism on another, much smaller project.
Engineering firm Black & Veatch of Overland Park, Kan., had blamed a subcontractor, Symbion Power, for holdups a few years back in construction of the Tarakhil power plant near Kabul, a $300 million project plagued by so many problems that critics nicknamed it “The White Elephant of Kabul.”
Symbion denied it was responsible for delays. The subcontractor was cleared of fraud or deliberate misrepresentation last year through arbitration, which awarded Symbion $7.3 million plus interest in damages and fees from Black & Veatch.
Black & Veatch’s latest trouble in Afghanistan comes with a federal audit, published in December, that determined that the company failed to provide an installation plan for millions of dollars in electrical equipment that sat unused for months in a warehouse near the city of Kandahar.
The U.S. Agency for International Development had awarded a $3.4 million contract to Black & Veatch in 2009 to provide technical assistance, training and support to the country’s national power utility. Afghanistan ranks among the countries with the lowest energy production in the world.
Over time, Black & Veatch’s contract with USAID was modified to focus on the commercialization of the national utility, and the original contract’s value nearly doubled, according to the audit by the special inspector general for Afghanistan reconstruction.
Neither Black & Veatch nor USAID could provide evidence to auditors that the contractor had completed most of the work required, including an installation plan for the meters. But USAID paid the company in full anyway, the audit said.
Auditors reported that without an installation plan, almost $12.8 million worth of transformers, poles, wires and other equipment purchased to upgrade Afghanistan’s antiquated electrical system had been sitting in storage since at least last March. They fretted that the manufacturer’s two-year warranty on 50,000 electrical meters might expire before they were installed.
“This would leave the U.S. government with no recourse for the manufacturer to replace defective equipment under warranty,” the audit reads.
Black & Veatch said in a statement that the company was proud of the work it had done in the region.
“Our focus remains to work in close cooperation with USAID to complete closeout of the deliverables and the project,” the company said.
Asked to explain why a copy of the installation plan wasn’t provided to auditors, Black & Veatch defended itself by quoting USAID’s official comments attached to the audit, which say that the contractor did complete a plan in the form of a technical schematic for the equipment. USAID said in its comments that the contract with Black & Veatch didn’t include installation.
Auditors still hadn’t seen a copy of the installation plan by the time the audit was published. USAID said Tuesday that it was continuing to work with auditors and would give them the plan within days.
USAID told McClatchy that some of the equipment now is being used to upgrade a medium-voltage system in southern Afghanistan and will be of further use as part of a power system-improvement project, also in the south.
USAID paid Black & Veatch the maximum fee of $5.76 million for the project last July. The audit recommends that USAID seek reimbursement from Black & Veatch “to hold the contractor accountable.”
Founded in Kansas City, Mo., in 1915, Black & Veatch is one of the largest private companies in the United States. It has more than 110 offices worldwide and employs 8,000 people. In 2011, the company had revenues of $2.27 billion.
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