Place the bacon in a large pan over medium high heat. Cook until crispy, about 4-5 minutes. Remove the bacon from the pan and drain on paper towels.
Leave 2 tablespoons of bacon fat in the pan; discard the rest of the fat.
Add the flour, then whisk until combined, about 30 seconds.
Pour in the water and whisk until smooth and just thickened.
Add the milk and whisk until combined.
Stir in the pasta, salt, garlic powder, onion powder, smoked paprika and pepper, then bring the mixture to a simmer.
Cook for 10-12 minutes, stirring occasionally, until pasta is done.
Turn the heat to low, then stir in the cheddar cheese. Keep stirring until the sauce is smooth. If you need to thin the sauce, add more milk, 1 tablespoon at a time, until desired consistency is reached.
Stir in half of the bacon.
Sprinkle the remaining bacon over the top, along with the parsley. Serve immediately.