Update: The contracting company that built the Iraqi prison detailed in this blog has issued a statement in response to the Inspector General's audit. Scroll to the bottom of the post to see the response.
By Aram Roston, NBC News Producer
Even for troubled reconstruction efforts in Iraq, this case stands out. Sprawled out in the Iraqi desert in Diyala Province is an abandoned and incomplete prison compound built of reinforced concrete, ringed by a fence and unmanned watchtowers. It cost the U.S. government $40 million to build over three years, before the entire complex was left unattended in 2007, to the wind and sand.
"This was the worst project we've seen!" said Stuart Bowen, the Special Inspector General for Iraq Reconstruction, whose office released a report on the site, known as the Khan Bani Sa'ad Correctional Facility. Much of the anticipated reconstruction in Iraq following the 2003 U.S. invasion has been hampered by the violence of war, as well as by mismanagement and corruption, as Bowen's office and other investigations have documented in the past.
The report lays out a withering critique of what happened. It was meant to be the first phase of a 3,600-bed prison - with space for 1,800 prisoners as a first step. And it was conceived during the days of the "Coalition Provisional Authority," about a year after the U.S. invasion, when Ambassador Paul Bremer presided over the U.S. occupation.

Bowen, the IG, says the prison is a case study in what could go wrong. "It is an example of poor government oversight," he said in an interview, "inadequate contracting personnel (there were 18 different contracting officers on this in less than 2 years), and really the failure to plan."
The giant American firm that first did the contract was removed from the job in 2006 and other contractors were assigned to it after that, the report explains.

Watch Aram Roston's web-exclusive report on The Khan Bani Saad Prison in Iraq.
Finally in 2007 the entire project was canceled. But there were several big hitches, the audit reveals. One extraordinary puzzle: The prison was supposed to be for the Iraqi government to detain prisoners, but the Iraqi government simply did not want it. In 2007, according to auditors, the Iraqis made it quite clear to the U.S. Army Corps of Engineers they had no interest. "The Iraqis weren't really consulted about whether they wanted this prison," Bowen said, "and when it finally came time to give it to them they said 'no.'"
Location completely unguarded
So the U.S. stopped requiring security guards to the site in the summer of 2007. Auditors found that even $1.2 million in construction materials which were left at the site disappeared.
Once it was all over auditors found that even much of the work that was done was allegedly substandard, including "generally poor workmanship," and "potentially dangerous building columns." One case, they said one of the buildings was so shoddy it needed to be demolished. According to the audit, U.S. military authorities concur with most of the report's findings.
No one has used the compound for a year in any case, so it is little more than a ghost of a prison.

The audit recommends that the U.S. military try to work out some way the Iraqis could finally use the unfinish complex. But until that happens it will just be a "monument in the desert," as Bowen calls it.
Update, 7/29: Parsons , who had the initial contract for the prison, blamed the war and violence for the problems in construction. They issued the following statement on Monday in response to the audit:
"The Kahn Bani Sa’ad corrections facility was a uniquely difficult assignment. The facility was located in a region plagued by violent sectarian warfare, particularly during the months that Parsons was on that project. Regrettably, one of our subcontractors was shot and killed at close range while he was sitting in his office. Ultimately, the government terminated our contract before our work was completed, and Parsons demobilized from the site in June 2006. After Parsons, the U.S. Government awarded three successive contracts with different contractors to finish the work and those contractors were unsuccessful and all three experienced similar disruptive violence. According to SIGIR, in June 2007, the government decided to abandon the project because it was too dangerous. Currently, the Government of Iraq has not resumed construction or secured the site."