Chairman Lynch Urges State Department to Recover Millions Wasted by Contractor Hired to Construct New U.S. Embassy
Washington, D.C. (Apr. 27, 2022)—Rep. Stephen F. Lynch, Chairman of the Subcommittee on National Security, sent a letter to the U.S. Department of State, urging the Department to take action to recover millions of taxpayer dollars wasted by Caddell Construction Co., LLC during construction of a New Embassy Compound (NEC) in Ashgabat, Turkmenistan.
“As a major contractor responsible for constructing U.S. diplomatic facilities around the world in furtherance of our national security and foreign policy interests, Caddell must be held accountable for its own errors, or the American people will pay the price,” Chairman Lynch wrote.
In September 2014, the State Department awarded Caddell a $196 million contract to design and construct the NEC in Ashgabat, Turkmenistan. Although the NEC was initially expected to be completed in July 2018 at a cost of $196 million, seven years later, the NEC remains unfinished, and the total cost of the project has ballooned to more than $430 million.
The Subcommittee has obtained correspondence indicating that the Department notified Caddell in February 2021 that the company is liable, or at least partially liable, for having failed to obtain the necessary building permits with the Government of Turkmenistan prior to beginning construction on the NEC. This resulted in significant construction delays and the Department incurred an estimated $95 to $125 million in additional costs as a result.
Despite the Department’s past assertions that it planned to recover these funds during ongoing construction and cost negotiations with Caddell, it recently issued a modification to the original contract, which authorized Caddell to resume construction on the NEC without reaching any resolution about the company’s financial liability.
“To protect American taxpayers, the Department must take immediate action to recover from Caddell the $95 million to $125 million in additional costs that it now expects to incur in order to complete the NEC due to Caddell’s failure to obtain the required construction permits from the Government of Turkmenistan,” Chairman Lynch wrote. “While I am sympathetic to the Department’s legitimate interest in completing the Ashgabat NEC project as soon as possible, the Department’s handling of the ongoing dispute has ceded significant negotiating leverage to Caddell and may complicate the Department’s ability to recover these funds.”
The absence of a fully functioning NEC has negatively affected U.S. diplomatic operations and the safety and security of U.S. embassy staff in Turkmenistan. In 2014, the State Department warned that it had “significant security concerns” with the existing embassy layout due “due to the scattered locations of current facilities and the country’s proximity to regions of instability and violence.” The current facility is also prone to overcrowding, which has required employees to work in confined and poorly ventilated spaces throughout the coronavirus pandemic. The facility also does not meet current security standards and has limited space for personnel to discuss classified information.
In his letter, Chairman Lynch asked the Department to confirm that it plans to hold Caddell financially responsible for having failed to obtain the necessary permits prior to beginning construction on the NEC. The letter also requested that the Department inform the Subcommittee about the amount it intends to recover.
Click here to read the letter to U.S. Department of State.