Securing, Stabilizing, and Rebuilding Iraq
Key Issues for Congressional Oversight Gao ID: GAO-07-308SP January 9, 2007As the United States reviews its plans to secure, stabilize, and rebuild Iraq, GAO has enclosed a series of issue papers for Congressional consideration in developing its oversight agenda for the 110th Congress and analyzing the President's revised strategy for Iraq. These papers are based on the continuing work of the U.S. Government Accountability Office and the 67 Iraq-related reports and testimonies we have provided to the Congress since May 2003. Iraq has had three successful elections, adopted a constitution, and installed its first elected government. At the same time, since the initial ground offensive ended in 2003, the costs to secure and stabilize Iraq have grown substantially, as has the level of violence that afflicts Iraqi society. Such violence stems from an insurgency that has grown more complex and lethal over the past 3 and 1/2 years and the Sunni-Shi'a conflict, which escalated dramatically in 2006. This instability complicates meaningful political reconciliation among Iraq's religious and tribal groups, reduces the effectiveness of U.S. and Iraqi reconstruction and capacity-building efforts, and diminishes the hopes and expectations of an Iraqi people without adequate jobs, water, fuel, and electricity. Increasing Iraqi security forces and transferring security responsibilities to them have not resulted in reduced violence. Rather, attacks increased throughout 2006. Although more Iraqi troops have been trained and equipped, high absenteeism and divided loyalties have limited their overall effectiveness. At the same time, our service members are working with great courage and diligence to perform the roles the President has asked of them. Notwithstanding their noble efforts, the U.S. military has sustained significant casualties. In addition, wear and tear on military equipment and growing replacement costs have risen substantially. The resulting stress and strain on American forces have reduced troop readiness levels and the availability of reserve personnel. The U.S. rebuilding effort in Iraq has focused on helping the Iraqi government establish a sound economy with the capacity to deliver essential services. Although Iraq's economy has grown and U.S. efforts have helped restore portions of Iraq's infrastructure, the poor security environment and mismanagement have diminished the overall results of U.S. investments. Iraq will need U.S. and international support, including political and economic incentives, to strengthen its fragile government institutions, which have thus far failed to adequately deter corruption, stimulate employment, or deliver essential services.
The enclosures discuss these issues and other critical challenges that the United States and its allies face in the ongoing struggle to help the Iraqis stabilize, secure, and rebuild Iraq. Forthright answers to the oversight questions we pose herein are needed from the U.S. agencies responsible for executing the President's strategy. Congress and the American people need complete and transparent information on the progress made toward achieving U.S. security, economic, and diplomatic goals in Iraq to reasonably judge our past efforts and determine future directions. It is also important that the U.S. government account for the funds that it expended on behalf of the Iraqi government through the Development Fund for Iraq. After all, the Coalition Provisional Authority had a fiduciary responsibility to properly safeguard, use, and account for these funds. These enclosures focus on the U.S. strategy and costs of operations in Iraq; security, governance, and reconstruction issues; the readiness of U.S. military forces; and acquisition outcomes. They are based on our completed and ongoing Iraq-related work, and incorporate information from official documents and relevant officials from the various agencies involved in stabilizing and rebuilding Iraq, including the Departments of Defense, Energy, State, and the Treasury; the U.S. Agency for International Development; the Army Corps of Engineers; the multinational force; and the Defense Intelligence Agency. As part of this work, we made multiple visits to Iraq during 2006.
GAO-07-308SP, Securing, Stabilizing, and Rebuilding Iraq: Key Issues for Congressional Oversight
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Report to Congressional Leadership and Committees:
United States Government Accountability Office:
GAO:
January 2007:
Securing, Stabilizing, and Rebuilding Iraq:
Key Issues for Congressional Oversight:
Securing, Stabilizing, and Rebuilding Iraq:
GAO-07-308SP:
Contents:
Letter:
Strategy and Costs:
Enclosure I: More Comprehensive U.S. Strategy Needed to Achieve Goals
and Address Challenges in Iraq:
Enclosure II: U.S. Commitments Involve Significant Resources, but DOD
Cost Reports and Budgets Limit Transparency:
Security Conditions:
Enclosure III: Security Conditions Have Deteriorated as Iraq Has
Assumed Additional Security Responsibilities:
Enclosure IV: Assessing the Capabilities of the Iraqi Security Forces
Is Critical:
Enclosure V: DOD May Be Unable to Ensure That U.S.-Funded Equipment Has
Reached Iraqi Security Forces:
Governance Challenges:
Enclosure VI: The Iraqi Government Needs to Staff an Effective Civil
Service and Fight Corruption:
Enclosure VII: Ministry Capacity Development Efforts Need Integrated
Plan:
Enclosure VIII: Several Factors Affect Iraqi Ministry Efforts to Spend
Capital Budgets:
Enclosure IX: Iraq Owes Significant Foreign Debt and Faces Challenges
in Meeting IMF Conditions:
Reconstruction Challenges:
Enclosure X: U.S. Efforts to Restore Iraq's Oil Sector Have Been Slowed
by Major Challenges:
Enclosure XI: U.S. Efforts to Improve Iraq's Electricity Sector Have
Been Constrained by Security, Management, and Funding Challenges:
U.S. Military Readiness:
Enclosure XII: Extended Operations Have Had Significant Consequences
for the U.S. Military:
Enclosure XIII: Securing Munitions Sites and Alleviating Armor
Shortages Have Been Serious Problems:
Enclosure XIV: Deficiencies in Supply Support for U.S. Ground Forces
Have Resulted in Shortages of Critical Items:
Improving Acquisition Outcomes:
Enclosure XV: DOD Needs to Improve Its Capacity to Manage Contractors:
Objectives, Scope, and Methodology, and Staff Acknowledgments:
Enclosure XVI: Objectives, Scope, and Methodology:
Enclosure XVII: Staff Acknowledgments:
Abbreviations:
CDWG: Capacity Development Working Group:
CPA: Coalition Provisional Authority:
CSIS: Center for Strategic and International Studies:
DOD: Department of Defense:
EPSS: Electric Power Security Service:
GRD: Gulf Region Division:
GWOT: global war on terrorism:
HMMWV: High-Mobility Multipurpose Wheeled Vehicle:
IAMB: International Advisory and Monitoring Board:
IED: improvised explosive device:
IMF: International Monetary Fund:
IRMO: Iraq Reconstruction Management Office:
IRRF: Iraqi Relief and Reconstruction Fund:
ISF: Iraqi security forces:
ISFF: Iraqi Security Forces Fund:
JIEDDO: Joint Improvised Explosive Device Defeat Organization:
LOGCAP: Logistics Civil Augmentation Program:
MAT: Ministry Assistance Team:
mbpd: million barrels per day:
MNF-I: Multinational Force-Iraq:
MNSTC-I: Multinational Security Transition Command-Iraq:
mw: megawatt:
NCDP: National Capacity Development Program:
NSC: National Security Council:
NSVI: National Strategy for Victory in Iraq:
OIF: Operation Iraqi Freedom:
OMB: Office of Management and Budget:
SIB: Strategic Infrastructure Battalions:
SIGIR: Special Inspector General for Iraqi Reconstruction:
TRA: Transition Readiness Assessment:
USAID: United States Agency for International Development:
United States Government Accountability Office:
Washington, DC 20548:
January 9, 2007:
Congressional Leadership and Committees:
As the United States reviews its plans to secure, stabilize, and
rebuild Iraq, I have enclosed a series of issue papers for
consideration in developing your oversight agenda for the 110th
Congress and analyzing the President's revised strategy for Iraq. These
papers are based on the continuing work of the U.S. Government
Accountability Office and the 67 Iraq-related reports and testimonies
we have provided to the Congress since May 2003.
Iraq has had three successful elections, adopted a constitution, and
installed its first elected government. At the same time, since the
initial ground offensive ended in 2003, the costs to secure and
stabilize Iraq have grown substantially, as has the level of violence
that afflicts Iraqi society. Such violence stems from an insurgency
that has grown more complex and lethal over the past 3½ years and the
Sunni-Shi'a conflict, which escalated dramatically in 2006. This
instability complicates meaningful political reconciliation among
Iraq's religious and tribal groups, reduces the effectiveness of U.S.
and Iraqi reconstruction and capacity-building efforts, and diminishes
the hopes and expectations of an Iraqi people without adequate jobs,
water, fuel, and electricity.
Increasing Iraqi security forces and transferring security
responsibilities to them have not resulted in reduced violence. Rather,
attacks increased throughout 2006. Although more Iraqi troops have been
trained and equipped, high absenteeism and divided loyalties have
limited their overall effectiveness. At the same time, our service
members are working with great courage and diligence to perform the
roles the President has asked of them. Notwithstanding their noble
efforts, the U.S. military has sustained significant casualties. In
addition, wear and tear on military equipment and growing replacement
costs have risen substantially. The resulting stress and strain on
American forces have reduced troop readiness levels and the
availability of reserve personnel.
The U.S. rebuilding effort in Iraq has focused on helping the Iraqi
government establish a sound economy with the capacity to deliver
essential services. Although Iraq's economy has grown and U.S. efforts
have helped restore portions of Iraq's infrastructure, the poor
security environment and mismanagement have diminished the overall
results of U.S. investments. Iraq will need U.S. and international
support, including political and economic incentives, to strengthen its
fragile government institutions, which have thus far failed to
adequately deter corruption, stimulate employment, or deliver essential
services.
The enclosures that follow discuss these issues and other critical
challenges that the United States and its allies face in the ongoing
struggle to help the Iraqis stabilize, secure, and rebuild Iraq.
Forthright answers to the oversight questions we pose herein are needed
from the U.S. agencies responsible for executing the President's
strategy. Congress and the American people need complete and
transparent information on the progress made toward achieving U.S.
security, economic, and diplomatic goals in Iraq to reasonably judge
our past efforts and determine future directions.
It is also important that the U.S. government account for the funds
that it expended on behalf of the Iraqi government through the
Development Fund for Iraq. After all, the Coalition Provisional
Authority had a fiduciary responsibility to properly safeguard, use,
and account for these funds.
These enclosures focus on the U.S. strategy and costs of operations in
Iraq; security, governance, and reconstruction issues; the readiness of
U.S. military forces; and acquisition outcomes. They are based on our
completed and ongoing Iraq-related work, and incorporate information
from official documents and relevant officials from the various
agencies involved in stabilizing and rebuilding Iraq, including the
Departments of Defense, Energy, State, and the Treasury; the U.S.
Agency for International Development; the Army Corps of Engineers; the
multinational force; and the Defense Intelligence Agency. As part of
this work, we made multiple visits to Iraq during 2006. For the
enclosures that include new information, we provided copies to the
relevant agencies for advanced review and technical comments, which we
incorporated as appropriate. We conducted our review in accordance with
generally accepted government auditing standards. Enclosure XVI
contains a detailed scope and methodology.
We are sending copies of this report to Members of Congress. This
report will also be available at no charge on GAO's Web site at
[Hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact the individual listed at the end of each enclosure. Contact
points for our Offices of Congressional Relations and Public Affairs
can be found on the last page of this report. For press inquiries,
please contact Paul Anderson at (202) 512-3823. Key contributors to
this report are included in enclosure XVII.
Thank you for your time and consideration. As always, we at GAO stand
ready to assist Congress in discharging its constitutional
responsibilities for the benefit of the American people.
Signed by:
David M. Walker:
Comptroller General of the United States:
Enclosures:
List of Congressional Leadership and Committees:
The Honorable Harry Reid:
Majority Leader:
The Honorable Mitch McConnell:
Minority Leader:
United States Senate:
The Honorable Nancy Pelosi:
The Speaker of the House of Representatives:
The Honorable John A. Boehner:
Minority Leader:
House of Representatives:
The Honorable Robert C. Byrd:
The Honorable Thad Cochran:
Committee on Appropriations:
United States Senate:
The Honorable Carl Levin:
The Honorable John S. McCain:
Committee on Armed Services:
United States Senate:
The Honorable Joseph R. Biden, Jr.
The Honorable Richard G. Lugar:
Committee on Foreign Relations:
United States Senate:
The Honorable Joseph I. Lieberman:
The Honorable Susan M. Collins:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable David Obey:
Chairman:
The Honorable Jerry Lewis:
Ranking Minority Member:
Committee on Appropriations:
House of Representatives:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan L. Hunter:
Committee on Armed Services:
House of Representatives:
The Honorable Tom Lantos:
Chairman:
The Honorable Ileana Ros-Lehtinen:
Ranking Minority Member:
Committee on Foreign Affairs:
House of Representatives:
The Honorable Henry A. Waxman:
Chairman:
The Honorable Tom Davis:
Ranking Minority Member:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Christopher Shays:
Ranking Minority Member:
Subcommittee on National Security and International Relations:
Committee on Oversight and Government Reform:
House of Representatives:
[End of section]
Strategy and Costs:
Enclosure I: More Comprehensive U.S. Strategy Needed to Achieve Goals
and Address Challenges in Iraq:
Enclosure II: U.S. Commitments Involve Significant Resources, but DOD
Cost Reports and Budgets Limit Transparency:
[End of section]
Enclosure I: More Comprehensive U.S. Strategy Needed to Achieve Goals
and Address Challenges in Iraq:
Issue:
In November 2005, the National Security Council (NSC) issued the
National Strategy for Victory in Iraq (NSVI) to clarify the President's
strategy[Footnote 1] for achieving U.S. political, security, and
economic goals in Iraq. The U.S. goals included establishing a
peaceful, stable, and secure Iraq. Based on a GAO report issued in July
2006[Footnote 2] and other GAO reviews, this enclosure discusses (1)
the extent to which the NSVI and its supporting documents addressed the
six characteristics of an effective national strategy, and (2) how
security, political, and economic factors have affected the U.S.
strategy for Iraq. Congressional review of the President's 2007 plan
for Iraq should consider whether it addresses the key elements of a
sound national strategy.
Summary:
We reported in July 2006 that the NSVI was an improvement over previous
U.S. planning efforts for stabilizing and rebuilding Iraq. The
strategy's positive attributes included a clear purpose and scope and
identification of U.S. involvement in Iraq as a "vital national
interest and the central front in the war on terror." The strategy also
provided a comprehensive description of U.S. political, security, and
economic objectives in Iraq. However, the discussion of outcome-related
performance measures to assess progress in achieving these goals and
objectives was limited. Moreover, the strategy fell short in at least
three other areas. First, it only partially identified the agencies
responsible for implementing key aspects of the strategy. Second, it
did not fully address how the U.S. will integrate its goals with those
of the Iraqis and the international community, and it did not detail
Iraq's anticipated contribution to its future needs. Third, it only
partially identified the current and future costs of U.S. involvement
in Iraq, including maintaining U.S. military operations, building Iraqi
government capacity, and rebuilding critical infrastructure.
Security, political, and economic factors continue to hamper U.S.
efforts to stabilize Iraq and achieve key U.S. goals. First, the United
States and Iraq are trying to revitalize Iraq's economy and restore the
oil, electricity, and other key sectors. However, these efforts have
been impeded by security, corruption, and other challenges.
NSVI Did Not Fully Address All Key Characteristics of an Effective
National Strategy:
The NSVI aimed to improve U.S. strategic planning for Iraq; however,
the NSVI and supporting documents did not fully address all of the six
desirable characteristics of effective national strategies that GAO has
identified through its prior work.[Footnote 3] We used these six
characteristics to evaluate the strategy--that is, the NSVI and
supporting documents that Department of Defense (DOD) and Department of
State officials said encompassed the U.S. strategy for rebuilding and
stabilizing Iraq.[Footnote 4]
As figure 1 shows, the strategy generally addressed three of the six
characteristics but only partially addressed three others, limiting its
usefulness in guiding agency implementation efforts and achieving
desired results. Moreover, since the strategy was dispersed among
several documents instead of one, its effectiveness as a planning tool
for implementing agencies and informing Congress about the pace, costs,
and intended results of these efforts was limited.
Figure 1: Extent That November 2005 U.S. Strategy for Iraq Addressed
GAO's Desirable Characteristics of an Effective National Strategy:
[See PDF for image]
Signed by: GAO analysis of NSC, State, and DOD data.
[End of figure]
As shown in figure 1, the NSVI and supporting documents only partially
(1) delineated the roles and responsibilities of key U.S. government
agencies; (2) described the means by which the strategy will be
integrated among U.S. entities, the Iraqi government, and international
organizations, and the mechanisms for coordination; and (3) identified
the strategy's costs and sources of financing.
* Although the strategy partially addressed the roles and
responsibilities of specific U.S. government agencies and offices and
the process for coordination, it is not clear which agency was
responsible for implementing the overlapping activities listed under
the NSVI's eight strategic objectives. For instance, one activity was
to promote transparency in the executive, legislative, and judicial
branches of the Iraqi government; however, the NSVI and supporting
documents did not indicate which agency was responsible for
implementing this activity, or who was to be held accountable for
results. Moreover, little guidance was provided to assist implementing
agencies in resolving conflicts among themselves, as well as with other
entities.
* The NSVI and supporting documents partially addressed how the
strategy related to other international donors and Iraqi government
goals, objectives, and activities. For instance, the NSVI and
supporting documents identified the need to integrate the efforts of
the coalition, the Iraqi government, and other nations, but did not
discuss how U.S. goals and objectives would be integrated. In addition,
the strategy did not address what it expects the international
community or the Iraqi government to pay to achieve future objectives.
* The November 2005 National Strategy for Victory in Iraq and related
supporting documents did not clearly identify the costs of U.S.
military operations, including the costs to repair and replace
equipment used during operations. The strategy did not identify other
key related costs, including the costs of training, equipping, and
supporting Iraq's security forces; the costs of rebuilding,
maintaining, and protecting critical oil and electricity
infrastructure; or the costs of building management capacity in Iraq's
central ministries and 18 provincial governments. In addition to these
costs, the new Iraqi government will need significant help in building
the procurement, financial management, accountability, and other key
systems needed to govern and provide basic services to its citizens.
Security, Political, and Economic Factors Hamper Efforts to Achieve
Strategic Goals:
Our July 11, 2006, report and other GAO work show that security,
political, and economic factors have hampered and will continue to
influence U.S. efforts to stabilize Iraq and achieve key U.S. strategic
goals. First, increases in attacks against the coalition and its Iraqi
partners, growing sectarian violence, and the influence of militias
have adversely affected U.S. and Iraqi efforts to secure Baghdad and
other strategic cities. Second, sectarian control over ministries and
the lack of skilled employees hinder efforts to improve Iraq's
governance by building the capacity of ministries and reconciling
differences among sectarian interests. Third, security, corruption, and
fiscal problems limit U.S. and Iraqi plans to revitalize Iraq's economy
and restore essential services in the oil and electricity sectors.
* Overall security conditions in Iraq have continued to deteriorate and
have grown more complex despite recent progress in transferring
security responsibilities to Iraqi security forces and the Iraqi
government. The number of trained and equipped Iraqi security forces
has increased from about 174,000 in July 2005 to about 323,000 as of
December 2006, at the same time as more Iraqi army units have taken the
lead for counterinsurgency operations in specific geographic areas.
Despite this progress, however, attacks on coalition forces, Iraqi
security forces, and civilians have all increased, reaching record
highs in October 2006. Because of these conditions, the United States
could not draw down U.S. force levels in Iraq as planned in 2004 and
2006, and U.S. forces have continued to conduct combat operations in
urban areas, especially Baghdad (see encl. III).
* The U.S. government faces significant challenges in improving the
capability of national and provincial governments to provide security
and deliver services to the Iraqi people. According to State, the Iraqi
capacity for self-governance was decimated after nearly 30 years of
autocratic rule. In addition, Iraq lacked competent existing Iraqi
governmental organizations. Since 2003, the United States has provided
the Iraqis with a variety of training and technical assistance to
improve their capacity to govern. As of December 2006, we identified
more than 50 capacity development efforts led by at least 6 U.S.
agencies (see encl. VII).
* Iraq's oil production and exports have consistently fallen below U.S.
program goals. U.S. and Iraqi efforts to restore Iraq's oil sector have
been impeded by the lack of security, corruption, sustainability, and
funding challenges. The unstable security environment continues to
place workers and infrastructure at risk while protection efforts
remain insufficient. Widespread corruption and smuggling affect the
distribution of refined oil products such as gasoline. The U.S.
reconstruction program has encountered difficulty with Iraq's ability
to operate and maintain aging infrastructure. Furthermore,
uncertainties exist regarding the sources of future funding. These
challenges could make it difficult to achieve current production and
export goals, which are central to Iraq's economic development (see
encl. X).
Prior Recommendations:
In our July 2006 report, we recommended that the NSC improve the
current strategy by articulating clear roles and responsibilities,
specifying future contributions, and identifying current costs and
future resources. In addition, the United States, Iraq, and the
international community should (1) enhance support capabilities of the
Iraqi security forces, (2) improve the capabilities of the national and
provincial governments, and (3) develop a comprehensive anti-corruption
strategy. State commented that the NSVI's purpose is to provide a broad
overview of the U.S. strategy in Iraq rather than a detailed account.
GAO's analysis was not based exclusively on the NSVI but included all
key supporting documents. Consequently, GAO retained the recommendation
for a more complete and integrated strategy.
Oversight Questions:
* What is the desired end-state of U.S. involvement in Iraq? How long,
and at what cost, will it take to achieve a peaceful, stable, and
secure Iraq?
* What political and economic incentives are needed to increase
security, improve government capacity, and reduce corruption in Iraq?
* How will revised U.S. plans incorporate enhanced support for Iraqi
security forces and national and provincial governments?
* How will revised U.S. plans assist the Iraqi government in developing
a comprehensive anti-corruption strategy?
* If the President suggests a troop increase, what would be the mission
of the additional troops?
- How long would they stay?
- How would the success of the mission be measured?
- What additional costs would the United States incur?
* To what extent does the administration's revised strategy integrate
the input and resources of the Iraqi government?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or Hchristoffj@gao.govH.
[End of section]
Enclosure II: U.S. Commitments Involve Significant Resources, but DOD
Cost Reports and Budgets Limit Transparency:
Issue:
Since 2001, Congress has appropriated about $495 billion to U.S.
agencies for military and diplomatic efforts in support of the global
war on terrorism (GWOT); the majority of this amount has gone to
stabilize and rebuild Iraq. Efforts in Iraq involve various activities
such as combating insurgents, conducting civil affairs, building
capacity, reconstructing infrastructure, and training Iraqi military
forces. The Departments of Defense (DOD) and State and the U.S. Agency
for International Development, among others, play primary roles. To
date, the United States has reported substantial costs[Footnote 5] for
Iraq and can expect to incur significant costs in the foreseeable
future, requiring decision makers to consider difficult trade-offs as
the nation faces an increasing number of long-range fiscal challenges.
Funding for these efforts has been provided through annual
appropriations, as well as supplemental appropriations that are outside
the annual budget process. Moving more funding into baseline budgets,
particularly for DOD, would enable decision makers to better weigh
priorities and assess trade-offs. This enclosure describes (1) the
reported costs incurred by DOD and other U.S. agencies for military
operations, reconstruction efforts, and stabilization activities in
Iraq since 2003; and (2) the issues involved in estimating future
financial commitments related to U.S involvement.
Summary:
As of September 30, 2006, DOD had reported costs of about $257.5
billion[Footnote 6] for military operations in Iraq. In addition, as of
October 2006, about $29 billion had been obligated for Iraqi
reconstruction and stabilization efforts. However, problems with the
processes for recording and reporting GWOT costs raise concerns that
these data may not accurately reflect the true dollar value of war-
related costs. U.S. commitments to Iraq will likely involve the
continued investment of significant resources and will depend on
several direct and indirect cost variables and, in some cases,
decisions that have yet to be made. For DOD, these include the pace and
duration of operations, redeployment and basing plans, and the amount
of equipment to be repaired or replaced. Cost variables for other U.S.
agencies include efforts to help form national and provincial
governments, develop management capacity, build capable and loyal
security forces, and undertake reconstruction activities to restore,
sustain, and protect critical infrastructure. With activities likely to
continue into the foreseeable future, decision makers will have to
carefully weigh priorities and make difficult decisions when budgeting
for future costs.
Reported Costs for Operations in Iraq Are Increasing:
Since 2003, when DOD began Operation Iraqi Freedom, DOD has reported
cumulative costs of about $257.5 billion for military operations in
Iraq. As shown in figure 1, DOD's reported costs show a steady increase
from about $38.8 billion in fiscal year 2003 to about $83.4 billion in
fiscal year 2006. The largest increase has been in operation and
maintenance expenses, including items such as support for housing,
food, and services; the repair of equipment; and transportation to move
people, supplies, and equipment. Between fiscal years 2003 and 2006,
DOD reported increases in these expenses from about $29.9 billion to
about $50 billion. According to DOD officials, some of this increase is
attributable to higher fuel costs and higher costs for contracts to
provide housing, food, and services. Reported costs for military
personnel have increased from about $8 billion in fiscal year 2003 to
about $14.1 billion in fiscal year 2006, and include military pay and
allowances for mobilized reservists, as well as special payments or
allowances, such as imminent danger pay. DOD has also reported that
costs for procurement of equipment and other items have increased from
$0.7 billion in fiscal year 2003 to about $13 billion in fiscal year
2006.
Figure 1: DOD's Reported Costs for Operation Iraqi Freedom by Fiscal
Year:
[See PDF for image]
Source: GAO analysis of DOD data.
Note: DOD spent an additional $6.1 billion for operations in Iraq that
was not included in DOD's reported costs.
[End of figure]
Other U.S. government agencies have reported obligating $29 billion for
Iraqi reconstruction and stabilization, as of October 2006. Among other
uses, these funds have been used for infrastructure repair of the
electricity, oil, water, and health sectors; training and equipping of
Iraqi security forces (military and police); and administrative
expenses. The Department of State reports that the remaining funds will
be used to sustain the infrastructure projects that are completed or
under way and to build greater capacity at the national, provincial,
and municipal levels.
Our prior work[Footnote 7] found numerous problems with DOD's processes
for recording and reporting its war-related costs, including long-
standing deficiencies in DOD's financial management systems and
business processes, the use of estimates instead of actual cost data,
and the lack of adequate supporting documentation. DOD has taken some
steps to address these issues, but problems remain. Without transparent
and accurate cost reporting, Congress and DOD will continue to not have
reliable information on how much the war is costing, sufficient details
on how appropriated funds are being spent, or the historical data
needed to consider future funding needs.
Future Iraq Costs Are Likely to Be Considerable:
U.S. military and diplomatic commitments in Iraq will continue for the
foreseeable future and are likely to be in the hundreds of billions of
dollars. The magnitude of future costs will depend on several direct
and indirect variables and, in some cases, decisions that have not been
made. DOD's future costs will likely be affected by the pace and
duration of operations, the types of facilities needed to support
troops overseas, redeployment plans, and the amount of equipment to be
repaired or replaced. Although reducing troops would appear to lower
costs, we have seen from previous operations in the Balkans and Kosovo
that costs could rise--if, for example, increased numbers of
contractors replace military personnel. If the pace of operations
remains high or troops are increased, costs for force protection, fuel,
and other items could remain high. Lastly, sustained operations will
continue to take a toll on the condition of equipment. The Army and
Marine Corps will have the largest equipment reset (repaired,
recapitalized, or replaced) costs. Although the military services are
refining estimates of overall needs, their total requirements and costs
are still unclear.
Other future costs to the U.S. government in Iraq include efforts to
help form national and provincial governments, develop management
capacity, and build capable and loyal security forces. Also, more funds
will be needed to restore, sustain, and protect infrastructure. The new
Iraqi government will need significant help in building the
procurement, financial management, and accountability systems needed to
govern and provide basic services to its citizens. The 18 provincial
governments will need assistance in building management capacity and
delivering results that make a difference in Iraqis' daily lives.
Sustaining Iraqi military and police forces of 323,000 personnel will
require the Iraqi government to spend more money on personnel,
maintenance, and equipment than originally anticipated. Also, the new
Iraqi security forces will need additional help in addressing recurring
training needs, replacing lost or stolen equipment, and developing
improved logistical and sustainment capabilities. Although most of the
early U.S. reconstruction monies for Iraq have been obligated, more
funds will be needed for remaining reconstruction needs and to restore,
sustain, and protect the infrastructure built to date.
With U.S. commitments in Iraq continuing for the foreseeable future,
requiring decision makers to make difficult decisions, we would
encourage DOD to consider moving certain costs into the baseline
budget, as it has done with Operation Noble Eagle.[Footnote 8] This
action is consistent with our prior recommendations and
testimony[Footnote 9] that, once an operation reaches a known level of
effort and costs are more predictable, more funding should be built
into the baseline budget. We note that Congress, in the John Warner
National Defense Authorization Act for Fiscal Year 2007, requires,
among other things, that the President's annual budget submitted after
fiscal year 2007 include a request for the funds for ongoing military
operations in Iraq and Afghanistan. Doing so would allow decision
makers to weigh priorities and consider trade-offs in making financial
decisions.
Prior Recommendations:
Over the years, we have made a series of recommendations to the
Secretary of Defense intended to improve the transparency and
reliability of DOD's GWOT obligation data, including recommendations
that DOD (1) revise the cost-reporting guidance so that large amounts
of reported obligations are not shown in "miscellaneous" categories,
and (2) take steps to ensure that reported GWOT obligations are
reliable. We have also recommended that DOD build more funding into the
baseline budget once an operation reaches a known level of effort and
costs are more predictable. In response, the department has implemented
many of our previous recommendations.
Oversight Questions:
* What are the key factors causing steady growth in agencies' reported
costs to address the situation in Iraq, and what steps are being taken
to control costs?
* To what extent have U.S. government agencies estimated the future
costs and financial requirements of continued efforts in Iraq?
* To what extent are improvements being made to existing accounting and
management information systems so that they will be able to provide
complete and reliable reporting on costs?
* To what extent will the unstable security environment affect
reconstruction efforts in Iraq, and what is the impact on future costs?
* What steps are U.S. government agencies taking to move some of their
more predictable costs into their baseline budgets?
* Does DOD have a valid basis for determining funding needs for Iraq?
GAO Contacts:
Sharon Pickup, Director, Defense Capabilities and Management, (202) 512-
9619 or pickups@gao.gov; and Joseph A. Christoff, Director,
International Affairs and Trade, (202) 512-8979 or
Hchristoffj@gao.govH.
[End of section]
Security Conditions:
Enclosure III: Security Conditions Have Deteriorated as Iraq Has
Assumed Additional Security Responsibilities:
Enclosure IV: Assessing the Capabilities of the Iraqi Security Forces
Is Critical:
Enclosure V: DOD May Be Unable to Ensure That U.S.-Funded Equipment Has
Reached Iraqi Security Forces:
[End of section]
Enclosure III: Security Conditions Have Deteriorated as Iraq Has
Assumed Additional Security Responsibilities:
Issue:
Since the fall of 2003, the U.S.-led multinational force in Iraq has
developed and refined a series of plans to transfer security
responsibilities to the Iraqi government and security forces, with the
intent of creating conditions that would allow a gradual drawdown of
the 140,000 U.S. military personnel in Iraq. This security transition
was to occur first in conjunction with the neutralization of Iraq's
insurgency and second with the development of Iraqi forces and
government institutions capable of securing their country. According to
the November 2005 National Strategy for Victory in Iraq, security
conditions in Iraq were expected to improve as the Iraqi government and
security forces became more capable and took the lead for security.
This enclosure provides information on (1) the evolution of the
multinational force's plan to transfer security responsibilities to the
Iraqi government and forces, and (2) whether progress in implementing
the current security transition plan has led to improved security
conditions in Iraq.
Summary:
The Multinational Force-Iraq (MNF-I) has revised its security
transition plan numerous times over the past 3 years, as Iraqi security
forces and government have not effectively taken over security
responsibilities within planned time frames.[Footnote 10] MNF-I first
revised its security transition plan in the summer of 2004 following
the collapse of Iraqi security forces during an insurgent uprising.
This collapse ensued when MNF-I transferred security responsibilities
to Iraqi forces before they were properly trained and equipped to
battle insurgents. Under the current security transition plan, MNF-I
has established partnerships with Iraqi security forces, is developing
Iraqi army units so that they can lead counterinsurgency operations,
and is assessing when to transfer security responsibilities to
provincial Iraqi governments. After provincial transitions occur, the
plan calls for MNF-I forces to move out of urban areas and assume a
supporting role.
Overall security conditions in Iraq have continued to deteriorate and
have grown more complex despite recent progress in transferring
security responsibilities to Iraqi security forces and the Iraqi
government. The number of trained and equipped Iraqi security forces
has increased from about 174,000 in July 2005 to about 323,000 in
December 2006, at the same time as more Iraqi army units have taken the
lead for counterinsurgency operations in specific geographic areas.
Despite this progress, however, attacks on coalition forces, Iraqi
security forces, and civilians have all increased, reaching record
highs in October 2006. Because of these conditions, the United States
could not draw down U.S. force levels in Iraq as planned in 2004 and
2006, and U.S. forces have continued to conduct combat operations in
urban areas, especially Baghdad.
MNF-I Revised Security Transition Plan Because Iraq Could Not
Effectively Take Over Security Responsibilities:
From the fall of 2003 through April 2006, MNF-I revised its security
transition plan a number of times because the Iraqi government and
security forces have proved incapable of assuming security
responsibilities within the time frames envisioned by the plans. For
example, in October 2003, the multinational force outlined a four-
phased plan for transferring security missions to Iraqi security forces
(see table 1). Citing the growing capability of Iraqi security forces,
MNF-I attempted to quickly shift responsibilities to them in February
2004 but did not succeed in this effort. In Baghdad, for example, the
coalition forces withdrew to bases outside of the city, giving Iraqi
forces greater responsibility for security within the city. In April
2004, however, Iraqi police and military units performed poorly during
an escalation of insurgent attacks against the coalition.[Footnote 11]
Many Iraqi security forces around the country collapsed during this
uprising, with some units abandoning their posts and responsibilities
and in some cases assisting the insurgency. Following the collapse of
Iraqi security forces, MNF-I identified a number of problems that
contributed to their poor performance, including problems in training
and equipping Iraqi forces, and revised its security transition
plan.[Footnote 12]
Table 1: MNF-I's Initial and Current Plans for Transferring Security
Responsibilities to Iraq:
Phase: Phase I;
Initial security transition plan (October 2003): Mutual support: The
multinational force establishes conditions for transferring security
responsibilities to Iraqi forces;
Current security transition plan (2005 and 2006): Partnership: MNF-I
and its major subordinate commands establish and maintain partnerships
in all Iraqi security force units, from battalion to ministerial level.
Phase: Phase II;
Initial security transition plan (October 2003): Transition to local
control: Iraqi forces in a local area assume responsibility for
security;
Current security transition plan (2005 and 2006): Iraqi army lead:
Process during which Iraqi army units progress in capability from unit
formation to the ability to conduct counterinsurgency operations in
specific geographic areas.
Phase: Phase III;
Initial security transition plan (October 2003): Transition to regional
control: Iraqi forces are responsible for larger regions;
Current security transition plan (2005 and 2006): Provincial Iraqi
control: Iraqi civil authorities satisfy the conditions required to
assume control and exercise responsibility for the security of their
respective provinces.
Phase: Phase IV;
Initial security transition plan (October 2003): Transition to
strategic over watch: Iraqi forces on a national level are capable of
maintaining a secure environment against internal and external threats,
with broad monitoring from the multinational force;
Current security transition plan (2005 and 2006): Iraqi security self-
reliance: The government of Iraq is capable of planning, conducting,
and sustaining security operations and forces through its security
ministries.
Source: GAO analysis of Combined Joint Task Force-7, DOD, and State
documents.
Note: The phases of the current security transition plan may occur at
different times throughout Iraq.
[End of table]
As shown in table 1, the current version of the security transition
plan includes four phases. During the first phase, which occurred from
2005 through 2006, MNF-I expanded the use of military, police, and
other transition teams to assist in the development of Iraqi security
forces and ministries, and its major subordinate commands established
partnerships with Iraqi military units. In the ongoing second phase,
Iraqi army lead, MNF-I is attempting to organize and develop Iraqi army
units to the point that they can assume the lead for counterinsurgency
operations. Units in the lead, however, still require MNF-I support
because they need to develop additional capabilities, particularly in
the logistics and combat support areas.[Footnote 13] For the third
phase, provincial Iraqi control, MNF-I and the Iraqi government
determine when Iraqi provinces can assume responsibility for security
based on the threat level in the province, the capabilities of the
Iraqi security forces and the provincial government, and MNF-I's
ability to respond to major threats, if needed. According to an MNF-I
official, as these conditions are met, MNF-I forces will then move out
of all urban areas and assume a supporting role.
Progress in Transferring Security Responsibilities to Iraq Has Not Led
to Improved Security Conditions:
The security situation has worsened despite progress in implementing
the current security transition plan (see fig. 1). For example, the
State Department has reported that the number of trained and equipped
army and police forces has increased from about 174,000 in July 2005 to
about 323,000 in December 2006.[Footnote 14] As we previously reported,
the number of trained and equipped security forces does not provide a
complete picture of their capabilities and may overstate the number of
forces on duty.[Footnote 15] Ministry of Interior data include police
who are absent without leave, but Ministry of Defense data exclude
absent military personnel. Moreover, according to DOD's November 2006
report to Congress, due to a lack of standardized personnel strength
reporting in the Ministry of Interior, it is unclear how many of the
coalition-trained police the ministry still employs, or what percentage
of the 180,000 police thought to be on the ministry payroll are
coalition trained and equipped.
DOD and State also have reported progress in transferring security
responsibilities to Iraqi army units and provincial governments. As
shown in figure 1, the number of Iraqi army battalions in the lead for
counterinsurgency operations has increased from 21 in March 2005 to 89
in October 2006. In addition, 7 Iraqi army division headquarters and 30
brigade headquarters had assumed the lead by December 2006. Moreover,
by mid-December 2006, three provincial governments--Muthanna, Dhi Qar,
and Najaf--had taken over security responsibilities for their
provinces. In November 2006, DOD reported that security responsibility
for up to five more provinces could transition to Iraqi government
authority by February 2007.
Figure 1: Enemy-Initiated Attacks against the Coalition and Its Iraqi
Partners Compared with Progress in Developing Iraqi Security Forces:
[See PDF for image]
Sources: Multinational Force-Iraq, DOD and State Reports, and DIA.
Notes: For the number of attacks in September 2006, an unclassified
breakout of categories is not available.
[End of figure]
As shown in figure 1, the reported progress in transferring security
responsibilities to Iraq has not led to improved security conditions.
Since June 2003, overall security conditions in Iraq have deteriorated
and grown more complex, as evidenced by the increased numbers of
attacks and more recent Sunni-Shi'a sectarian strife after the February
2006 bombing of the Golden Mosque in Samarra. Enemy-initiated attacks
against the coalition and its Iraqi partners have continued to increase
through October 2006. The average total attacks per day has increased,
rising from about 70 per day in January 2006 to about 180 per day in
October 2006. These attacks have increased around major religious and
political events, including Ramadan[Footnote 16] and elections.
Coalition forces are still the primary target of attacks, but the
number of attacks on Iraqi security forces and civilians also has
increased since 2003. In October 2006, the State Department reported
that the recent increase in violence has hindered efforts to engage
with Iraqi partners and shows the difficulty in making political and
economic progress in the absence of adequate security conditions.
Although the Iraqi government and security forces have recently made
some progress in taking on security responsibilities, they and MNF-I
have been unable to reduce the levels of violence in Iraq. Because of
these conditions, the United States has not been able to draw down the
number of U.S. forces in Iraq as early as planned. For example, after
the increase in violence and collapse of Iraqi security forces during
the spring of 2004, DOD decided to maintain a force level of about
138,000 troops until at least the end of 2005, rather than reducing the
number of troops to 105,000 by May 2004, as had been announced the
prior fall. More recently, DOD reversed a decision to significantly
reduce the U.S. force level during the spring of 2006 because Iraqi and
coalition forces could not contain the rapidly escalating violence that
occurred the following summer. After reducing the number of troops from
about 160,000 in December 2005 to about 127,000 in June 2006, the
United States increased its force level to 144,000 troops in September
and October 2006 and then reduced it to 140,000 the following
month.[Footnote 17] Moreover, rather than moving out of urban areas,
U.S. forces have continued to conduct combat operations in Baghdad and
other cities in Iraq, often in conjunction with Iraqi security forces.
Oversight Questions:
* Why have security conditions continued to deteriorate in Iraq even as
the number of trained and equipped Iraqi security forces has increased
and the Iraqi forces and government have assumed increasing
responsibility for security?
* If existing U.S. political, economic, and security measures are not
reducing violence in Iraq, what additional measures, if any, will the
administration propose to stem the violence and facilitate the
achievement of U.S. objectives, including an eventual drawdown of U.S.
forces?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or christoffj@gao.gov.
[End of section]
Enclosure IV: Assessing the Capabilities of the Iraqi Security Forces
Is Critical:
Issue:
Transferring security responsibilities to the Iraqi security forces and
provincial governments is a critical part of the U.S. government's
strategy in Iraq and key to allowing a drawdown of U.S. forces. Toward
this end, the United States has provided about $15.4 billion to train,
equip, and sustain the Iraqi army and police since 2003. However, it is
unclear whether U.S. expenditures and efforts are having their intended
effect in developing capable forces and whether additional resources
are needed. A key measure of the capabilities of Iraqi forces is the
Transition Readiness Assessment (TRA) reports prepared by coalition
advisors embedded in Iraqi units. These reports serve as the basis for
the Multinational Force-Iraq (MNF-I) determination of when a unit is
capable of leading counterinsurgency operations and can assume security
responsibilities for a specific area. This enclosure (1) assesses
limitations in Department of Defense (DOD) and State Department reports
on Iraqi security forces, and (2) discusses how unit-level TRA reports
provide more comprehensive information on Iraqi security force
capabilities.
Summary:
Although DOD and State reports indicate progress in the development of
Iraqi security forces, the aggregate nature of the reports does not
provide comprehensive information on the capabilities and needs of
individual units. As of December 2006, MNF-I had trained and equipped
approximately 323,000 Iraqi security forces, had assigned specific
areas of operations to 128 Iraqi army units, and had transferred
security responsibilities to three Iraqi provinces. However, aggregate
numbers of trained and equipped forces that are leading operations do
not provide information on the capabilities and needs of individual
units. This information is found in unit-level TRA reports. These
reports provide the coalition commander's professional judgment on an
Iraqi unit's capabilities and are based on ratings in personnel,
command and control, equipment, sustainment and logistics, training,
and leadership. To conduct future work on this issue, GAO has made
multiple requests for access to the unit-level TRA reports over the
last year. However, DOD has not yet complied with our requests. This
serves to limit congressional oversight over the progress achieved
toward a critical U.S. objective.
Reports on Iraqi Security Forces Provide Limited Assessments of
Capabilities:
DOD and State reports provide some information on the development of
Iraqi security forces, but they do not provide detailed information on
the specific capabilities that affect the readiness levels of
individual units. For example, DOD and State provide Congress with
weekly and quarterly reports on the progress made in developing capable
Iraqi security forces and transferring security responsibilities to the
Iraqi army and the Iraqi government. This information is provided in
two key areas: (1) the number of trained and equipped forces, and (2)
the number of Iraqi army units and provincial governments that have
assumed responsibility for security of specific geographic areas.
The State Department reports that the number of trained and equipped
Iraqi security forces has increased from about 174,000 in July 2005 to
about 323,000 in December 2006.[Footnote 18] DOD reports that, as of
December 5, 2006, 128 Iraqi army units--7 division headquarters, 30
brigade headquarters, and 91 battalions--have assumed the lead for
counterinsurgency operations in their areas of responsibility. In
addition, Muthanna, Dhi Qar, and Najaf provincial governments assumed
security responsibility in July, September, and December 2006,
respectively. However, these numbers do not provide a complete picture
of Iraqi security forces' capabilities in part because they may
overstate the number of forces on duty. For example, Ministry of
Interior data include police who are absent without leave, but Ministry
of Defense data exclude absent personnel. Moreover, the numbers do not
give detailed information on the status of equipment, personnel,
training, or leadership. Unit-level TRA reports provide that
information. For additional information on the limitations of DOD-and
State-reported information on the number of units trained and equipped
as well as the transfer of security responsibilities, see enclosure
III.
Transition Readiness Assessments Assess Iraqi Security Force
Capabilities:
MNF-I uses the TRA system to determine when units of the Iraqi security
forces can assume the lead for conducting security operations. The TRA
is a joint assessment, prepared monthly by the unit's coalition
commander and Iraqi commander. According to MNF-I guidance, the purpose
of the TRA system is to provide commanders with a method to
consistently evaluate units; it also helps to identify factors
hindering unit progress, determine resource shortfalls, and make
resource allocation decisions. The basic TRA reports[Footnote 19] are
used by commanders to determine when an Iraqi army unit is prepared to
assume the lead in counterinsurgency operations.
Iraqi army TRA reports contain capabilities ratings in the areas of
personnel, command and control, equipment, sustainment/logistics,
training, and leadership (see fig. 1). Commanders use the TRA results
and their professional judgment to determine a unit's overall readiness
level. Each Iraqi army unit is assigned a readiness level of 1 through
4, with 1 being the highest level a unit can achieve. Accordingly,
* level 1 units are capable of planning, executing, and sustaining
counterinsurgency operations,
* level 2 units are capable of planning, executing, and sustaining
counterinsurgency operations with Iraqi security forces or coalition
support,
* level 3 units are partially capable of conducting counterinsurgency
operations in conjunction with coalition units, and:
* level 4 units are forming or are incapable of conducting
counterinsurgency operations.
* The TRA reports also include the commanders' estimates of the number
of months needed before a unit can assume the lead for
counterinsurgency operations. DOD also reports readiness assessments
for headquarters service companies, such as engineering and signal
units that support combat units.[Footnote 20]
Figure 1: Transition Readiness Assessment (TRA) Report Form for the
Iraqi Army:
[See PDF for image]
Source: MNF-I.
[End of figure]
Finally, the TRA reports include the coalition commander's narrative
assessment of the Iraqi unit's overall readiness level, known as the
Performance Capability Assessment, which is designed to clarify the
overall TRA. The narrative assesses the Iraqi unit's leadership
capabilities, combat experience, ability to execute intelligence-based
operations, and describes any life support issues affecting the Iraqi
unit's capabilities. Commanders must explain and address any regression
in the unit's overall TRA level and list the top three issues
preventing the unit from assuming the lead for counterinsurgency
operations or advancing to the next TRA level. Remarks are intended to
provide information and details that will help to resolve the problems
that degrade the unit's status.
DOD provided GAO with classified, aggregate information on overall
readiness levels for the Iraqi security forces--including an executive-
level brief--and information on units in the lead, but has not provided
unit-level reports on Iraqi forces' capabilities. According to MNF-I's
Deputy Chief of Staff for Strategic Effects, the best measure of the
capabilities of Iraqi units and improvements in the security situation
comes from commanders on the ground at the lowest level. We previously
reported that GAO was working with DOD to obtain the unit-level TRA
reports because they would be useful in more fully informing Congress
on the capabilities and needs of Iraq's security forces and in
indicating how accurately DOD reports reflect the forces' capabilities.
As of January 2007, DOD still has not provided GAO with this unit-level
TRA data.
Oversight Questions:
* Why has DOD not provided GAO and Congress with unit-level TRA
reports?
* How does DOD assess the reliability of TRA reports and ensure that
they present an accurate picture of Iraqi security forces' capabilities
and readiness?
* At what TRA rating level would Iraqi army units not require any U.S.
military support? What U.S. military support would Iraqi units still
require at TRA levels 1 and 2?
* How does DOD use unit-level TRA reports to assess shortfalls in Iraqi
capabilities? What do DOD assessments show about the developmental
needs of Iraqi security forces?
* How have changes in the TRA system and form affected the standards by
which units are assessed? Have changes been made in the degree to which
the commanders' subjective judgment is used? If so, why?
* What threat levels, if any, do commanders assess Iraqi units against
when determining a unit's overall readiness rating? Is the threat level
used consistently across all units?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or Hchristoffj@gao.govH.
[End of section]
Enclosure V: DOD May Be Unable to Ensure That U.S.-Funded Equipment Has
Reached Iraqi Security Forces:
Issue:
In the fall of 2003, the Coalition Provisional Authority and
Multinational Force-Iraq (MNF-I) shared responsibility for the U.S.-
funded train-and-equip program for Iraqi security forces, which include
military and police forces.[Footnote 21] After the collapse of Iraqi
forces in the spring of 2004, the United States restructured the
multinational force and increased resources to train and equip Iraqi
forces. Unlike traditional security assistance programs,[Footnote 22]
the train-and-equip program in Iraq operates under the authority of the
Department of Defense (DOD) and is implemented by MNF-I subordinate
commands, including the Multinational Security Transition Command-Iraq
(MNSTC-I). Since 2003, the United States has provided $15.4 billion for
Iraqi security forces and law enforcement. According to MNSTC-I
records, MNF-I has issued about 480,000 weapons, 30,000 vehicles, and
1.65 million pieces of gear (uniforms, body armor, helmets, and
footwear), among other items, to the Iraqi security forces as of
October 2006. This enclosure provides information on (1) the laws and
regulations governing property accountability that DOD may have applied
to the U.S. train-and-equip program in Iraq[Footnote 23] and (2) MNF-
I's accountability for U.S.-funded equipment that it has issued to
Iraqi security forces. We plan on issuing a final report on these and
related intelligence matters by March 2007. Our work focuses on the
accountability requirements for the transportation and distribution of
U.S.-funded equipment and did not review any requirements relevant to
the procurement of this equipment.
Summary:
Congress funded the train-and-equip program for Iraq outside
traditional security assistance programs, which, according to DOD
officials, provided DOD with a large degree of flexibility in managing
the program. Since the funding did not go through traditional security
assistance programs, the accountability requirements normally
applicable to these programs--including the registration of small arms
transferred to foreign governments--did not necessarily apply. It is
currently unclear what accountability measures, if any, DOD has chosen
to apply to the train-and-equip program for Iraq, as DOD officials have
expressed differing opinions on this matter. As part of our ongoing
work, we have asked DOD to clarify what accountability measures it has
chosen to apply to the program.
While it is unclear which regulations DOD has chosen to apply,
beginning in early 2004, MNF-I established requirements to control and
account for equipment issued to the Iraqi security forces by issuing a
series of orders that outlined procedures for its subordinate commands.
These included obtaining signed records for equipment received by Iraqi
units or individuals and recording weapons serial numbers. Although MNF-
I took initial steps to establish property accountability procedures,
limitations such as the initial lack of a fully operational equipment
distribution network, staffing weaknesses, and the operational demands
of equipping the Iraqi forces during war hindered its ability to fully
execute critical tasks outlined in the property accountability orders.
Since late 2005, MNSTC-I has taken additional steps to improve its
property accountability procedures, including establishing property
books[Footnote 24] for equipment issued to Iraqi Ministry of Defense
and Ministry of Interior forces. According to MNSTC-I officials, MNSTC-
I also recovered existing documentation for equipment previously issued
to Iraqi forces. However, according to our preliminary analysis, DOD
and MNF-I may not be able to account for Iraqi security forces' receipt
of about 90,000 rifles and about 80,000 pistols which were reported as
issued before early October 2005. Thus, DOD and MNF-I may be unable to
ensure that Iraqi military forces and police received all of the
equipment that the coalition procured or obtained for them.
DOD Has Not Clarified What Accountability Requirements Apply to the
Train-and-Equip Program for Iraq:
The train-and-equip program for Iraq received U.S. funding from sources
other than traditional security assistance programs. These funding
mechanisms, according to DOD officials, provided DOD with a large
degree of flexibility in managing the program. Congress made funds
available for developing Iraqi security forces initially through the
Iraq Relief and Reconstruction Fund (IRRF) and later through the Iraq
Security Forces Fund (ISFF).[Footnote 25] According to DOD officials,
because the funding did not go through traditional security assistance
programs, the equipment procured with these funds was not necessarily
subject to the accountability requirements that normally apply to these
programs. As specified in DOD regulations, these requirements include
procedures for storing, protecting, transporting, and registering small
arms and other sensitive items transferred to foreign governments. For
example, the Security Assistance Management Manual, which provides
guidance for traditional security assistance programs, states that the
U.S. government's responsibility for equipment intended for transfer to
a foreign government under the Foreign Military Sales program does not
cease until the recipient government's official representative assumes
final control.[Footnote 26] Other regulations referenced by the
Security Assistance Management Manual prescribe minimum standards and
criteria for the physical security of sensitive conventional arms and
require the registration of small arms transferred outside DOD
control.[Footnote 27]
It is unclear at this time what accountability measures DOD has chosen
to apply to the train-and-equip program for Iraq. For example, DOD
officials have expressed differing opinions on whether the DOD
regulation on the Small Arms Serialization Program, which requires the
entry of small arms serial numbers into a DOD-maintained registry,
applies to U.S.-funded equipment procured for Iraqi security
forces.[Footnote 28] If the regulation does apply, then MNSTC-I would
be required to provide the serial numbers of all small arms procured
for Iraqi forces to the Small Arms Serialization Program. Although the
regulation requirements are unclear, MNSTC-I has recently begun to
provide weapons serial numbers to the Small Arms Serialization Program,
according to MNSTC-I officials. As part of our ongoing work, we have
asked DOD to clarify whether MNF-I and MNSTC-I must follow
accountability measures specified in DOD regulations, or whether DOD
has established other accountability measures.
Despite MNF-I Accountability Orders, DOD and MNF-I May Be Unable to
Fully Account for Weapons Issued to Iraqi Security Forces:
While it is unclear which regulations DOD has chosen to apply, MNF-I
issued orders to its subordinate commands directing steps to account
for all equipment distributed to the Iraqi security forces.[Footnote
29] These orders tasked relevant coalition forces to collect property
accountability items, including signed hand receipts and weapons serial
numbers. For example, MNF-I and one of its subordinate commands,
Multinational Corps-Iraq (MNC-I), issued two orders in early
2004[Footnote 30] that together directed U.S. military units
responsible for issuing equipment to the Iraqi security forces to
conduct the following procedures, among others:
* record the serial numbers for all sensitive items such as weapons and
radios;
* enter relevant information onto a Department of the Army hand receipt
form and obtain signatures from receiving Iraqi security forces; and:
* submit property accountability information to MNSTC-I.
According to a former MNSTC-I official, hand receipts are critical to
maintaining property accountability because they document the
particular unit or individual that has control over a specific item.
Although MNSTC-I took initial steps to establish property
accountability procedures during 2004 and 2005, MNF-I subordinate
commands did not fully execute critical tasks outlined in the property
accountability orders due to the length of time necessary to fully
develop an equipment distribution network, staffing weaknesses, and the
operational demands of equipping the Iraqi forces during war:
* The length of time necessary to fully develop the equipment
distribution network hampered MNSTC-I's ability to collect and maintain
appropriate equipment accountability records. According to former MNSTC-
I officials, the equipment distribution network for Iraqi military
forces and police, which included national warehouses and regional
distribution centers, was initiated during 2004. MNSTC-I took initial
steps to put in place accountability procedures at the national level
warehouses located at Taji and Abu Ghraib. For example, through the
summer of 2004 and into early 2005, MNSTC-I consolidated and recorded
existing inventory and established a database to track equipment that
the national warehouses received, stored, and shipped. In addition,
regional equipment distribution centers, from which MNF-I staff and
contractors issued equipment to Iraqi units and maintained records of
issue, were established to receive equipment from the national
warehouses. These and other efforts, however, did not result in a fully
operational distribution network until mid-2005, over 1 year after MNF-
I began distributing large quantities of equipment to the Iraqi
security forces, according to former MNSTC-I officials.
* According to former MNSTC-I and other officials, staffing weaknesses
also hindered the development of property accountability procedures.
According to the former MNSTC-I commander, several months passed after
MNSTC-I's establishment before the command received the needed number
of staff. As a consequence, MNSTC-I did not have the personnel
necessary to open shipping containers and record information on
individual items distributed to Iraqi forces, according to former MNSTC-
I officials. Moreover, frequent personnel turnover contributed to
communications problems and a loss of institutional memory. For
example, some former MNSTC-I staff told us that they were not aware
that MNF-I had published a property accountability order in early 2004
for equipment issued to Iraqi security forces.
* The operational demands of equipping Iraqi forces during war--
including the need to distribute weapons rapidly to Iraqi forces
conducting combat operations--limited MNSTC-I's ability to fully comply
with accountability procedures, according to former MNSTC-I officials.
For example, during late 2004, according to the former MNSTC-I
commander, Iraqi insurgents conducted a campaign of intimidation during
which they attacked equipment convoys and killed contractors.
Due to these early limitations, MNF-I subordinate commands did not
consistently collect and maintain records of equipment issued to Iraqi
security forces. As a result, DOD and MNF-I may be unable to ensure
that all of the equipment obtained for the Iraqis reached the intended
recipients.
As MNSTC-I's organization matured, it took additional steps to improve
accountability procedures for the equipment provided to Iraqi security
forces. Since the fall of 2005, MNSTC-I has collected hand receipts for
equipment issued to Iraqi security forces, according to former and
current MNSTC-I officials. In addition, in the fall of 2005, MNSTC-I
logistics staff established separate electronic property books for the
equipment provided to Iraqi Ministry of Defense and Ministry of
Interior forces, including records for equipment previously issued to
those forces. To create the records for equipment already issued to the
Iraqis, MNSTC-I staff relied on contract and shipping records stored at
MNSTC-I, according to a former MNSTC-I official. In August 2006,
according to MNSTC-I officials, MNSTC-I logistics staff began to build
on earlier efforts to improve accountability by recovering records
maintained at the Umm Qasr port, the national warehouses at Taji and
Abu Ghraib, and the regional distribution centers. The information
collected since August 2006 includes hand receipts for many shipments,
according to MNSTC-I officials. In addition, since the spring of 2006,
MNSTC-I has been consolidating weapons serial numbers into an
electronic format. MNSTC-I officials stated that they have begun to
submit these numbers to the DOD Small Arms Serialization Program, and
are also establishing the basis for a weapons serial number registry
for the government of Iraq. MNSTC-I officials stated that as a result
of these efforts they can account for most of the weapons procured
through coalition funding channels and issued to Iraqi security force
units.
Despite the steps MNF-I has taken to improve its accountability
procedures, our preliminary analysis indicates that DOD and MNF-I may
not be able to account for a number of weapons reported as issued to
Iraqi forces. The MNSTC-I property books contain records for about
90,000 rifles and about 90,000 pistols issued to Iraqi forces as of
September 22, 2005. These numbers incorporate records MNSTC-I recently
recovered from earlier phases of the train-and-equip program for Iraq.
However, the former MNSTC-I commander reported that about 180,000
rifles and about 170,000 pistols were issued during the same time
frame. According to former and current MNSTC-I officials, weapons
obtained with non-U.S. funds may comprise a portion of the difference
between these sets of numbers. In addition, MNSTC-I continues to
recover records and may be able to account for some part of the
difference. However, based on our preliminary analysis, because DOD and
MNF-I maintained incomplete records for equipment issued to the Iraqi
security forces before the fall of 2005, the numbers reported by the
former MNSTC-I commander do not necessarily represent the weapons
received by Iraqi security forces. Rather, these numbers indicate
weapons tracked at the national warehouses and regional distribution
centers, according to former MNSTC-I officials. In addition, former MNC-
I property book officers told us they had maintained the required
records for weapons their units had issued to Iraqi forces between 2004
and 2006. However, MNF-I officials were unaware of such records when we
recently requested them. As a result, DOD and MNF-I may not be able to
account for Iraqi security forces' receipt of about 90,000 rifles and
about 80,000 pistols that were reported as issued but were not recorded
during earlier phases of the train-and-equip program for Iraq. Thus,
DOD and MNF-I may be unable to ensure that Iraqi military forces and
police received all of the equipment that the United States has
procured or obtained for them. In our ongoing review, we will continue
to assess MNF-I records for equipment distributed to Iraqi forces.
Oversight Questions:
* What are the steps being taken to ensure accountability of U.S.-
funded equipment issued to the Iraqi security forces?
* Should DOD formulate property accountability rules and regulations
that distinguish between times of peace and war?
* What is the potential for insurgents, militias, or other armed groups
to obtain U.S.-funded equipment, including weapons?
* What plans do DOD and the State Department have, if any, for
transitioning MNSTC-I to a traditional security assistance
organization?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or Hchristoffj@gao.govH.
[End of section]
Governance Challenges:
Enclosure VI: The Iraqi Government Needs to Staff an Effective Civil
Service and Fight Corruption:
Enclosure VII: Ministry Capacity Development Efforts Need an Integrated
Plan:
Enclosure VIII: Several Factors Affect Iraqi Ministry Efforts to Spend
Capital Budgets:
Enclosures IX: Iraq Owes Significant Foreign Debt and Faces Challenges
in Meeting IMF Conditions:
[End of section]
Enclosure VI: The Iraqi Government Needs to Staff an Effective Civil
Service and Fight Corruption:
Issue:
Critical to stabilizing Iraq is ensuring that the nation's central
government ministries can provide security to the country and deliver
essential government services to all citizens. The Iraqi government has
34 central government ministries that employ an estimated 2 million
government workers. The United States has multiple ongoing efforts to
strengthen key Iraqi ministries, including programs at the Ministry of
Interior and the Ministry of Defense that are implemented by the
Department of Defense (DOD). Additional efforts at civilian ministries
under the authority of the Department of State and United States Agency
for International Development (USAID) are also under way. This
enclosure is based on U.S. reports, an assessment by the World Bank,
and interviews with U.S. officials.[Footnote 31] This enclosure
discusses U.S. and international assessments of the Iraqi ministries'
capacity to (1) build and train a nonpartisan civil service, (2) fight
corruption within the ministries, and (3) use technology and
effectively manage resources. U.S. and international assessments note
that these three critical areas must be strengthened to improve the
Iraqi government's ability to provide basic services to its citizens. A
classified version of this enclosure will be available in February.
Summary:
Iraqi government institutions are undeveloped and confront significant
challenges in staffing a competent, nonpartisan civil service;
effectively fighting corruption; and using modern technology and
managing resources effectively. Ministry personnel are frequently
selected on the basis of political affiliation rather than competence
or skills, and some ministries are under the authority of political
parties hostile to the U.S. government. Also, U.S. reports cite
widespread corruption in the Iraqi government and a lack of commitment
to anti-corruption efforts within the ministries. Finally, reliance on
manual processes and antiquated technology hampers efforts to build
efficient, modern ministries. Figure 1 provides an organizational chart
of the Iraqi executive branch and ministries.
Figure 1: Iraqi Executive Branch and Ministries:
[See PDF for image]
Source: State Department.
[End of figure]
Iraqi Ministries Lack Trained, Nonpartisan Civil Service:
The Iraqi civil service remains hampered by inadequately trained staff
whose political and sectarian loyalties jeopardize the ministries'
ability to provide basic services and build credibility among Iraqi
citizens, according to U.S. government reports and international
assessments. According to U.S. officials a significant number of Iraqi
ministry staff lack adequate skills, including computer skills. A World
Bank assessment notes that political parties play a large role in
hiring decisions within the Iraqi government. Also, a U.S. report
states that the government ministries and the associated budgets are
used as sources of power for political parties with ministry positions
staffed with party cronies as a reward for political loyalty. According
to U.S. officials, patronage leads to instability in the civil service
as many staff are replaced whenever the government changes or a new
minister is named.
Some Iraqi ministries are under the authority of political parties
hostile to U.S. goals and use their positions to pursue partisan
agendas that conflict with the goal of building a government that
represents all ethnic groups. For instance, DOD reports that the
Ministry of Interior has been infiltrated by members of the Supreme
Council for Islamic Revolution in Iraq or its Badr Organization and
Muqtada al-Sadr's Mahdi Army. For example, the Mahdi Army often
operates under the authority or approval of Iraqi police to detain,
torture, and kill Sunni civilians. According to a November DOD report,
steps are being taken to address these issues. The Ministries of
Agriculture, Health, Transportation, and Tourism are led by ministers
whose allegiance is to al-Sadr. U.S. officials expressed reservations
about working in some of these ministries, noting that the
effectiveness of programs is hampered by presence of unresponsive or
anti-U.S. officials.
Corruption Is a Key Challenge:
Corruption in Iraq is reportedly widespread and poses a major challenge
to building an effective Iraqi government and could jeopardize future
flows of needed international assistance. A World Bank report notes
that corruption undermines the government's ability to make effective
use of current reconstruction assistance. A 2006 survey by Transparency
International ranked Iraq's government as the second most corrupt
government in the world. Moreover, between January 2005 and August
2006, 56 officials in Iraq's ministries were either convicted of
corruption charges or subject to arrest warrants.
According to U.S. government and World Bank reports, the reasons for
corruption in the Iraqi ministries are several, including the
following:
* The absence of an effective Iraqi banking system leaves the
government dependent on cash transactions.
* The majority of key Iraqi ministries have inadequately transparent,
obsolete, or ambiguous procurement systems.
* Key accountability institutions, such as the inspectors general who
were installed in each Iraqi ministry in 2004, lack the resources and
independence to operate effectively and consistently.
* The government has no strategy to implement training for its three
anti-corruption institutions--the Commission on Public Integrity, the
Board of Supreme Audit, and the inspectors general in each ministry.
Furthermore, Embassy Baghdad's Anticorruption Working Group attributed
poor performance by the anti-corruption institutions to the
government's lack of visible and authoritative commitment and
engagement.
Most Ministries Lack Technology and Face Challenges in Effectively
Managing Resources:
The Iraqi ministries lack adequate technology and have difficulty
managing their resources, according to U.S. officials and an
international assessment. For example, U.S. officials said that the
Ministry of Interior relies on manual processes, such as hand-written
ledgers and a cash-based payroll system, which have resulted in Iraqi
police leaving their posts to deliver paychecks to their families. U.S.
officials also said that the Iraqi ministries lack the technology to
effectively disseminate information among offices and ministries within
the Iraqi government. Finally, a U.S. contractor with a training center
in Baghdad noted that the lack of communication technology at the Iraqi
ministries increases the risk faced by staff and Iraqi trainees by
requiring them to undertake dangerous travel to the National Training
Center in Baghdad. This could be obviated through remote or offsite
training via video conferences or other computer-based training.
U.S. officials said that the Iraqi ministries have limited capability
to manage personnel, and that the Ministry of Interior has limited
control of local and provincial police and that loyalty to officials in
Baghdad is questionable. For example, the World Bank report states that
the Iraqi government pays salaries to nonexistent, or "ghost
employees," that are collected by other officials. According to U.S.
officials 20 percent to 30 percent of the Ministry of Interior staff
are "ghost employees." Also, many key ministries have been unable to
expend budget resources on capital improvements and are running large
surpluses due in part to an ineffective procurement process and the
inability to carry out fair, competitive contracting, according to U.S.
officials. Finally, U.S. officials said that the civilian ministries
need assistance developing long-term and strategic plans, including the
ability to plan for and execute capital expenditures.
Oversight Questions:
* Given the level of corruption, partisanship, and sectarian loyalties
in various ministries, what efforts are being made to ensure that U.S.
resources, equipment, and training are appropriately used and are not
used to support a single group's agenda?
* How can the United States ensure that the Iraqi government initiates
and sustains effective anti-corruption efforts within the ministries?
* Given the limited capacity of the Iraqi ministries to effectively
manage government resources, can the Iraqi government effectively
absorb significant levels of future U.S. and international assistance?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or christoffj@gao.gov.
[End of section]
Enclosure VII: Ministry Capacity Development Efforts Need Integrated
Plan:
Issue:
Developing the capacity of Iraq's national ministries to effectively
provide security and deliver essential services is critical to U.S.
efforts to help Iraq build a legitimate sustainable government.
According to U.S and Coalition Provisional Authority (CPA) assessments
and officials, years of neglect, a highly centralized decision-making
system under the former regime, and the looting of ministries in 2003
have decimated Iraq's government ministries. Since then, the United
States and other donor partners have attempted to strengthen the
ministries. Current U.S. activities include efforts targeting 10 key
civilian ministries with funding totaling about $126 million;
transition efforts at the Ministries of Defense and Interior with
funding of $43 million; and additional projects by several U.S.
agencies. This enclosure (1) assesses the status of U.S. capacity
development efforts, (2) examines overall leadership and coordination
of these efforts, and (3) describes the metrics used to assess
progress. We are continuing to review these issues and will report
further on them in the spring of 2007.
Summary:
The U.S. government lacks a plan that integrates current efforts to
improve Iraq's capacity to provide security and deliver essential
services. Although the National Strategy for Victory in Iraq and
related policy documents guide all U.S. efforts in Iraq, the United
States lacks a specific plan for its capacity development efforts that
includes milestones and agreed-upon metrics, integrates all U.S. and
coalition efforts, and incorporates Iraqi governmentwide capacity
objectives. We identified more than 50 U.S. efforts led by at least six
U.S. agencies; however, it is unclear how these efforts address core
needs and Iraqi priorities in the absence of an integrated U.S. plan.
U.S. officials note that the Iraqi government has taken an increasing
leadership role in capacity development efforts in recent months and
that coordination of U.S. efforts has improved. However, questions
still remain about the extent of Iraqi leadership and ownership of
these efforts. Moreover, it is uncertain how the U.S. will make the
transition from the temporary U.S. entities leading these efforts to
those having permanent post-conflict responsibilities. Finally, U.S.
agencies are still developing the metrics to assess progress and
effectiveness. After an initial U.S. Embassy effort was deemed
inadequate, several efforts are ongoing.
Capacity Development Efforts Lack Integrated Plan:
In its efforts to develop the capacity of Iraqi ministries, the United
States lacks a plan that includes milestones and agreed-upon metrics,
integrates all U.S. and coalition efforts, and incorporates Iraqi
governmentwide capacity objectives. Overall U.S. activities in Iraq are
guided by the April 2006 Joint Campaign Plan issued by Embassy Baghdad
and the Multinational Force-Iraq (MNF-I), the Joint Campaign Action
Plan, the National Strategy for Supporting Iraq (updated January 2006),
and Iraq's National Development Strategy 2005-2007. However, there is
no specific plan for capacity development that considers and integrates
all U.S. efforts, according to U.S. officials. A mid-2005 U.S. Embassy
assessment first identified the need for a broad, integrated approach.
Multiple U.S. agencies had been conducting capacity development efforts
since 2003 at individual ministries; however, most of these efforts
focused on helping Iraqi officials assume responsibility for sustaining
new and restored infrastructure. (Fig. 1 illustrates U.S. capacity
development efforts in Iraq since 2003.) In June 2004, CPA reported
that all Iraqi ministries had graduated and were capable of managing
the Iraqi government.
Figure 1: Key U.S. Efforts to Improve Iraqi Ministerial Capacity:
[See PDF for image]
Source: GAO analysis of relevant documents and interviews with U.S.
government officials.
[End of figure]
The mid-2005 assessment and subsequent reviews by the State Department
concluded, however, that a broader, Iraqi-led capacity development
program with an integrated approach was needed to strengthen the
ministries. The embassy conceived a National Capacity Development
Program (NCDP) in late 2005. The program called for the U.S. Embassy to
assess the current capacity of the ministries in conjunction with the
Iraqi government, identify core needs, and work with the Iraqi
government to develop a governmentwide strategy. The Multinational
Security Transition Command-Iraq (MNSTC-I) assumed responsibility for
capacity development at the Ministries of Defense and Interior. Plans
to integrate capacity development efforts at the security and civilian
ministries for core common needs, such as budgeting, are ongoing.
As of December 2006, we identified more than 50 capacity development
efforts led by at least six U.S. agencies, including 18 programs
launched under the NCDP. However, it is unclear how these efforts are
addressing core needs and Iraqi priorities in the absence of an
integrated U.S. plan. The State Department's Iraq Reconstruction
Management Office (IRMO) coordinates the overall effort, which targets
10 key civilian ministries, and is spending $61.5 million for short-
term projects, such as providing English-language training for Iraqi
officials, developing a new media center for the Prime Minister's
office, and adding budget and procurement components to Iraq's
financial management information system, which the U.S. Agency for
International Development (USAID) is responsible for implementing.
USAID is also implementing a $65 million medium-term effort initially
focused on training the Iraqi civil service. A range of U.S. Army Corps
of Engineers projects also currently provide capacity development and
technical training at six ministries, including the Ministries of
Electricity and Oil. According to U.S. officials and documents, IRMO
has begun to identify all U.S. capacity development efforts to develop
a comprehensive plan.
The Iraqi government has not developed a governmentwide plan for
capacity development that includes core objectives and appropriate
benchmarks to measure progress. According to IRMO officials, the U.S.
government worked with Iraqis to incorporate Iraq's priorities into
current capacity development efforts and to validate these efforts.
Nonetheless, a governmentwide capacity development plan for Iraq does
not exist. USAID is responsible for helping the government of Iraq to
create this plan as part of its longer-term work to strengthen key
public administration functions. It is uncertain if the plan will be
developed. The contractor responsible for helping with the plan stated
that the lack of a central coordinating entity for the government of
Iraq, combined with a lack of access at certain ministries, could
hamper U.S. efforts. Moreover, only a few ministries, including the
Ministries of Defense and Interior, have developed action plans to
address core needs and priorities.
Questions Remain about Iraqi Leadership and U.S. Agency Roles and
Responsibilities:
Questions remain about the extent of Iraqi government leadership and
ownership in current capacity development efforts. To ensure Iraqi
ownership, a representative from the Iraq Ministry of Planning was to
lead the overall effort as chair of the multinational Capacity
Development Working Group formed in late 2005 to guide overall efforts.
According to IRMO officials, the Iraqi government has become
increasingly involved since the permanent government was finalized in
May 2006. However, a representative from the Ministry of Planning did
not attend any working group meetings until October 2006, according to
U.S. officials.
In addition, Ministry Assistance Teams (MAT), comprised of
representatives from the Iraqi ministries, the U.S. government, and
donor partners, were to create capacity development action plans and to
guide and monitor efforts. However, one U.S. official stated that the
MATs were largely a planning concept. Other officials noted that Iraqi
participation in the MATs was uncertain, as in some cases U.S. advisers
completed work that was to be done by Iraqi counterparts. Another
official told GAO that membership on the MATs is informal and ad hoc,
with relevant representatives participating as needed to address
specific issues.
All U.S. capacity development efforts are being coordinated by a joint
U.S. government task force. According to U.S. officials, early meetings
of the task force involved information sharing rather than
coordination. However, U.S. officials stated that the current
objectives of the task force include identifying issues, critical
paths, and potential overlap in U.S. capacity development efforts.
Meetings held since the beginning of November 2006 have helped clarify
questions between USAID and IRMO on project-specific issues. Although
coordination mechanisms exist, the U.S. agencies' roles and
responsibilities for capacity development and for transition to normal
post-conflict operations are uncertain:
* IRMO was established as a temporary organization by National Security
Presidential Directive 36 in May 2004 and has responsibility for
coordination, policy direction, and short-term capacity development
efforts. U.S. officials questioned whether IRMO, as coordinator of all
U.S. capacity development efforts, should also be implementing
programs. In addition, one of IRMO's short-term projects includes
providing training on principles of transparent procurement to Iraqi
government officials. USAID has also delivered procurement training to
Iraqi government officials through its efforts to train the Iraqi civil
service, according to a high-level contractor. According to a senior
State Department official, although IRMO was expected to cease
operations in 2007, it is likely that its authority is going to be
extended. However, it is unclear how IRMO will transition
responsibility for capacity development to USAID when it eventually
ceases operations.
* MNSTC-I is a temporary organization with more than 130 personnel and
contractors that is responsible for leading capacity development at the
Ministries of Defense and Interior. However, it is unclear how it will
transition these efforts to an embassy-run post-conflict security
assistance effort and a civilian-led rule of law program. According to
a senior State Department official, U.S. support for the Ministry of
Interior is scheduled to transition to State in fiscal year 2007.
U.S. Metrics to Assess Ministerial Effectiveness Are Still Being
Developed:
U.S. government agencies have developed multiple tools to assess
capacity and measure progress at the Iraqi ministries. For example,
IRMO developed an initial set of metrics in late 2005 to assess six
core functions common to 10 key civilian ministries and 2 security
ministries. However, the government of Iraq did not participate in
developing these metrics, according to an embassy document. U.S.
officials also noted that these metrics were not based on
internationally accepted approaches for measuring capacity. The metrics
were dropped in early 2006 after they were deemed insufficient for
their purpose at certain ministries, according to some U.S. government
officials.
Since then, at least three separate sets of metrics have been initiated
or are under development. First, in mid-2006, MNF-I began monthly
assessments of the capacity of the security ministries to perform nine
key functions, such as planning, logistics, and budgeting. Second, IRMO
completed a baseline assessment of the key civilian ministries in
August 2006, using a new, more detailed ministry capacity assessment
that gauges nine core functions, such as the ability to plan and to
stem corruption. Third, USAID is developing a ministry self-assessment
tool that will help determine Iraqi needs and how USAID will address
these needs in its medium-term programs. The assessment also could
inform an overall capacity development plan for the government of Iraq.
Questions for Oversight:
* What progress has been made in developing an overall integrated plan
for capacity development in conjunction with the government of Iraq and
the international community?
* To what extent have U.S. efforts to improve Iraq's capacity to
provide essential services incorporated lessons learned that have been
cited by the World Bank and other international development
organizations, such as the need to establish host-nation ownership?
* How are IRMO, USAID, and DOD clarifying their roles and
responsibilities in Iraqi capacity development efforts? What are they
doing to ensure there are no gaps or duplicative efforts in the U.S.
program?
* How are U.S. agencies developing, coordinating, and reporting metrics
for assessing the effectiveness of U.S. assistance to Iraq's
ministries? How is the U.S. government validating the usefulness of its
capacity development metrics?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or christoffj@gao.gov.
[End of section]
Enclosure VIII: Several Factors Affect Iraqi Ministry Efforts to Spend
Capital Budgets:
Issue:
When the Iraqi government assumed control over its finances in 2004, it
became responsible for determining how more than $25 billion annually
in government revenues would be collected and spent to rebuild the
country and operate the government. However, the government faces
difficulties in spending budgeted funds for capital goods and projects
in the security, oil, and electricity sectors. In this enclosure, we
discuss (1) the factors affecting the Iraqi ministries' efforts to
spend approved budgets, and (2) U.S. government efforts to address
Iraq's budget execution problems.
Summary:
Sound government budgeting practices can help determine the priorities
of the new government, provide transparency on government operations,
and help decision makers weigh competing demands for limited resources.
However, unclear budgeting and procurement rules have affected Iraq's
efforts to spend capital budgets effectively and efficiently. The
inability to spend the money raises serious questions for the
government, which has to demonstrate to citizens who are skeptical that
it can improve basic services and make a difference in their daily
lives. The U.S. government has launched a series of initiatives in
conjunction with other donors to address this issue and improve
ministry budget execution.
Iraq Has Spent Little of Its Annual Capital Budget:
As of August 2006, the government of Iraq had spent, on average, 8
percent of its annual capital goods budget and 14 percent of its annual
capital projects budget. Iraq's fiscal year begins on January 1 of each
year. Some of the weakest spending occurs at the Ministry of Oil, which
relies on damaged and outdated infrastructure to produce the oil that
provides nearly all of the country's revenues (see table 1).
Table 1: 2006 Annual Iraq Budget and Actual Expenditures through August
2006:
Dollars in millions.
Ministry: Finance;
2006 Annual Budget: Capital goods: $10;
2006 Annual Budget: Capital projects: $33;
2006 Annual Budget: Total budget: $16,506;
Expenditures through August 2006: Capital goods: $1;
Expenditures through August 2006: Capital projects: $74;
Expenditures through August 2006: Total budget: $8,895.
Ministry: Planning;
2006 Annual Budget: Capital goods: 4;
2006 Annual Budget: Capital projects: 27;
2006 Annual Budget: Total budget: 55;
Expenditures through August 2006: Capital goods: 0.4;
Expenditures through August 2006: Capital projects: 3;
Expenditures through August 2006: Total budget: 9.
Ministry: Interior;
2006 Annual Budget: Capital goods: 233;
2006 Annual Budget: Capital projects: 27;
2006 Annual Budget: Total budget: 1,919;
Expenditures through August 2006: Capital goods: 25;
Expenditures through August 2006: Capital projects: 0.2;
Expenditures through August 2006: Total budget: 958.
Ministry: Defense;
2006 Annual Budget: Capital goods: 864;
2006 Annual Budget: Capital projects: 33;
2006 Annual Budget: Total budget: 3,443;
Expenditures through August 2006: Capital goods: 12;
Expenditures through August 2006: Capital projects: 0.0;
Expenditures through August 2006: Total budget: 831.
Ministry: Oil;
2006 Annual Budget: Capital goods: 2;
2006 Annual Budget: Capital projects: 3,533;
2006 Annual Budget: Total budget: 3,590;
Expenditures through August 2006: Capital goods: 0.4;
Expenditures through August 2006: Capital projects: 4;
Expenditures through August 2006: Total budget: 40.
Ministry: Electricity;
2006 Annual Budget: Capital goods: 4;
2006 Annual Budget: Capital projects: 767;
2006 Annual Budget: Total budget: 840;
Expenditures through August 2006: Capital goods: 0.3;
Expenditures through August 2006: Capital projects: 267;
Expenditures through August 2006: Total budget: 279.
Ministry: Water;
2006 Annual Budget: Capital goods: 0.2;
2006 Annual Budget: Capital projects: 200;
2006 Annual Budget: Total budget: 259;
Expenditures through August 2006: Capital goods: 0.0;
Expenditures through August 2006: Capital projects: 49;
Expenditures through August 2006: Total budget: 78.
Ministry: Justice;
2006 Annual Budget: Capital goods: 3;
2006 Annual Budget: Capital projects: 10;
2006 Annual Budget: Total budget: 74;
Expenditures through August 2006: Capital goods: 2;
Expenditures through August 2006: Capital projects: 0.2;
Expenditures through August 2006: Total budget: 34.
Ministry: Others;
2006 Annual Budget: Capital goods: 272;
2006 Annual Budget: Capital projects: 1,552;
2006 Annual Budget: Total budget: 7,290;
Expenditures through August 2006: Capital goods: 77;
Expenditures through August 2006: Capital projects: 480;
Expenditures through August 2006: Total budget: 3,501.
Total;
2006 Annual Budget: Capital goods: $1,392;
2006 Annual Budget: Capital projects: $6,181;
2006 Annual Budget: Total budget: $33,975;
Expenditures through August 2006: Capital goods: $117 (8.4%);
Expenditures through August 2006: Capital projects: $877 (14.2%);
Expenditures through August 2006: Total budget: $14,623(43%).
Source: GAO analysis of Iraqi budget data.
[End of table]
Since most of the $34.5 billion in reconstruction funds provided
between fiscal year 2003 and 2006 have been obligated, unexpended Iraqi
funds represent an important source of additional financing. The
capital goods budgets of the Interior and Defense ministries were
intended for the purchase of weapons, ammunition, and vehicles, among
other items. However, as of August 2006, Interior and Defense had spent
only about 11 percent and 1 percent, respectively, of these budgeted
funds. The Ministry of Oil's $3.5 billion 2006 capital project's budget
targeted key enhancements to the country's oil production,
distribution, and export facilities. As of August 2006, the ministry
had spent less than 1 percent of these budgeted funds.
Lack of Clear Budget and Procurement Rules Affect Ministry Efforts to
Spend Budgets:
According to U.S. officials, Iraq lacks the clearly defined and
consistently applied budget and procurement rules that are needed for
effective budget planning and implementation. The Iraqi ministries are
guided by complex and conflicting sets of laws and regulations,
including those implemented under Saddam Hussein, the Coalition
Provisional Authority (CPA), and by the current government. According
to State officials, the lack of agreed-upon procurement and budgeting
rules causes confusion among ministry officials and creates
opportunities for corruption and mismanagement.
The World Bank and U.S. Treasury also identified the following budget
and financial management problems:
* Ministries do not submit budget execution reports on a timely or
complete basis. The Kurdistan Regional Government receives block grants
from the central government but does not provide budget execution
reports to the central government.
* Reconciliation of government accounts is impossible because the
government lacks consolidated information on the balances in government
bank accounts or on the exact number of these accounts.
* Donor-financed expenditures take place directly with ministries and
outside the budget process. As a result, the Ministry of Finance has
limited information on the activities of Iraq's donors.
* Provincial governments do not provide an accounting of the funds they
receive ($2 billion in 2006 and slated to increase to $2.9 billion in
2007).
The World Bank also found that Iraq's procurement procedures and
practices are not in line with generally accepted public procurement
practices, such as effective bid protest mechanisms and transparency on
final contract awards.[Footnote 32]
U.S. Government and Donors Have Made Efforts to Address Budget
Execution Challenges:
The U.S. government, World Bank, and International Monetary Fund (IMF)
have taken steps to address some of the existing deficiencies in
ministry budget planning and execution. U.S. government officials
stated that reform of budget and procurement processes is urgently
needed but would be challenging due to the cultural resistance to
change within the ministries.
The U.S. Embassy has formed a "budget execution" task force charged
with mapping out current ministry budgeting and procurement procedures
to help ministry officials and external parties understand how their
budgets are planned and implemented. This task force will identify the
"rules of the road" for key agencies and help them streamline budget
procedures. Treasury and the U.S. Agency for International Development
(USAID) are also working with the Ministry of Finance to implement a
state-of-the-art financial management information system to provide it
with more complete and timely information on ministry budgets.
The United States, World Bank, IMF, and other donors are also planning
additional steps to strengthen Iraq's budget and procurement processes.
First, the United States and other donors are training Ministry of
Finance staff on budget preparation and execution. Second, according to
U.S. officials, the IMF and World Bank helped implement a new budget
classification system that is being used for the 2007 budget. This is
an important step since it creates an accounting system for the entire
government and provides a sound basis for budgeting and planning. (See
enclosure X on Iraq's debt and progress in meeting international
economic milestones). Third, the World Bank recommends bringing all
donor projects into the budget by means of a unified reporting
framework and reflecting this information in the Donor Assistance
Database, a database of donor commitments and projects.
Over the longer term, the World Bank recommends that Iraq's budget
include all of the government's significant revenues and expenditures-
-including the full economic costs of the oil subsidies, which are
currently excluded. The Bank also recommended that the international
donor community help the Ministry of Finance, inspector general
offices, and Board of Supreme Audit provide greater oversight of
budgeted and expended funds.
Oversight Questions:
* What are the key challenges that Iraq's government faces in planning
and managing budgets and procurement in the near term and in the
future?
* What strategy guides U.S. efforts to build Iraqi ministry capacity to
plan and execute budgets? Are the roles and responsibilities of the
various U.S. agencies, international donors, and Iraqi ministries
involved in these budget execution efforts clearly defined?
* What types of assistance has the United States provided to improve
ministry capacity to plan and implement budgets. What is the impact of
this assistance?
* Given the large unspent capital budgets, why should additional U.S.
reconstruction assistance be provided to Iraq?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or christoffj@gao.gov.
[End of section]
Enclosure IX: Iraq Owes Significant Foreign Debt and Faces Challenges
in Meeting IMF Conditions:
Issue:
Iraq has significant foreign debt remaining from the Saddam Hussein
regime, which presents financial challenges for Iraq's reconstruction
and economic development. Although Iraq has negotiated some debt
restructuring under an IMF reform program, implementing these reforms
is challenging and, as of December 2006, has not been wholly
successful. Nonetheless, Iraq's progress in economic development is
tied to the reforms and the debt reduction they secure. This enclosure
describes (1) the nature and extent of Iraq's debt and (2) challenges
that Iraq faces in implementing economic reforms to secure additional
debt restructuring.
Summary:
The United States has led efforts to forgive Iraq's bilateral debt and
to secure greater debt relief and foreign assistance in exchange for
political and economic reforms. At the end of 2004, Iraq owed about
$120 billion to foreign creditors--an amount almost five times the size
of its economy. The country owed about $36 billion to official
creditors that were members of the Paris Club, a group of 19 creditor
nations that includes the United States. In 2004, Paris Club members
made a commitment to forgive 80 percent of that debt. As part of this
effort, the United States forgave all of Iraq's outstanding debt ($4.1
billion). However, the majority of Iraq's debt--about $69 billion--is
owed to non-Paris Club countries, particularly those in the Persian
Gulf region, such as Saudi Arabia. Negotiations with non-Paris Club
countries are ongoing. Iraq's foreign debt at the end of 2006 is
estimated at about $89 billion--almost twice the size of its economy.
As a condition of Paris Club debt relief, Iraq agreed to follow a
reform program developed by the International Monetary Fund (IMF). The
IMF program stipulates a series of reforms that Iraq must undertake to
qualify for debt relief and access to IMF funds. The reforms are
intended to help Iraq restructure its economy, spark economic
development, and attract investment. However, some of these reforms are
challenging to implement due to the difficult security situation in
Iraq and the government's relative inexperience. In addition, the Iraqi
government has not been able to complete all of the reforms stipulated
under the IMF agreement, such as completing a census of government
employees. The IMF, however, allowed Iraq to reschedule implementation
of the reforms.
Debt Reduction Has Been Promised, with Conditions:
After Saddam Hussein's regime fell in 2003, Iraq's international
creditors sought payment on the nearly $120 billion in outstanding debt
owed them. This outstanding debt was nearly five times the size of
Iraq's economy in 2004 and was believed to inhibit Iraq's ability to
attract the investment needed to finance its economic reconstruction.
Figure 1 shows that official Paris Club creditors--including the United
States, United Kingdom, France, Japan, Russia, and 14 other countries-
-accounted for about $36 billion (30 percent) of Iraq's total foreign
debt in 2004. However, the largest amount (about $62 billion) was owed
to non-Paris Club bilateral creditors, particularly Persian Gulf states
such as Saudi Arabia and Kuwait.[Footnote 33] The remaining debt was
held by private creditors and multinational creditors.
Figure 1: Change in Iraq's Debt, 2004 to 2006:
[See PDF for image]
Source: GAO analysis of International Monetary Fund and U.S. Treasury
data.
Note: Summations may differ from totals due to rounding. Non-Paris Club
official creditor debt is based on estimates since it has not been
reconciled. The estimate of this debt for 2004 was made by the IMF,
while the estimate for 2006 was provided by the U.S. Treasury
Department.
[End of figure]
Iraq has engaged its creditors in negotiations to restructure and
forgive portions of its foreign debt.[Footnote 34] Paris Club official
creditors agreed to reduce Iraq's outstanding debt by 80 percent over
three phases, one of the largest debt reductions ever agreed to by the
Paris Club creditors. The United States, a member of the Paris Club,
forgave all of Iraq's outstanding debt ($4.1 billion) in December 2004.
Iraq received the first 30-percent tranche when it agreed to an IMF
Emergency Post-Conflict Assistance program in November 2004. The second
30-percent tranche took effect in December 2005 when Iraq agreed to a
stand-by arrangement with the IMF. Iraq will receive the remaining 20-
percent reduction following satisfactory performance for 3 years under
the IMF reform program. Iraq cleared its arrears with the IMF and World
Bank in 2004. By the end of July 2006, Iraq had settled almost $20
billion in private creditor claims, receiving overall (private) debt
reduction of more than 80 percent. The Iraq Minister of Finance stated
that the pace and scale of the commercial debt restructuring program
was unprecedented.
However, even with Paris Club, private, and multilateral debt
reductions, at the end of 2006, Iraq will still owe foreign creditors
about $89 billion--almost twice the size of its economy. In addition,
Iraq owes an additional $31 billion in compensation claims for damages
and losses resulting from Iraq's invasion and occupation of Kuwait in
1990. Iraq is continuing to negotiate with other countries outside the
Paris Club, including its largest creditors from the Persian Gulf
region and China. It is unclear whether certain economic or political
conditions may be requested by creditors to forgive or restructure this
outstanding debt. U.S. government officials stated that political
factors, not progress on the IMF program, will ultimately determine the
degree to which Iraq succeeds in negotiating debt relief on the amounts
owed to the Gulf states. Given the large share of Iraq's outstanding
debt, these negotiations and their outcome represent an important
factor that could affect Iraq's reconstruction and economic development
efforts. As part of a larger effort to assist Iraq's economic
development, the United States is strongly supporting efforts by the
U.N. and Iraq to create an "International Compact for Iraq." The
compact is aimed at providing greater debt relief and foreign
assistance in exchange for political and economic reforms. However,
this initiative, launched in the fall of 2006, is still being
negotiated.
Iraq Has Met Some IMF Targets, but Others Are More Challenging:
To achieve debt restructuring, Iraq agreed to implement IMF conditions
that stipulate specific economic reforms and milestones that the
government needs to meet. The central objective of these reforms is to
maintain macroeconomic stability with sustainable growth over the
medium term. These conditions are contained in the IMF stand-by
arrangement, which was approved in December 2005 and in subsequent
reviews of the stand-by arrangement in July 2006. They include a wide
range of reforms such as reducing the subsidies on petroleum products
(e.g., raising prices of gasoline, kerosene, and similar products),
limiting the budget deficit, and developing financial systems and
audits that adhere to international standards.
The new Iraqi government affirmed its commitment to the IMF program
that had been agreed to by the transitional government. However, due to
the delay in forming a permanent government and the inherent challenges
in implementing economic reforms in the midst of an active insurgency,
the government did not meet all its commitments, according to the IMF.
Table 1 provides a selective list of conditions for Iraq and their
status.
Table 1: Status of Selected IMF Conditions for Iraq Debt Restructuring:
IMF condition: Government budget deficit maintained below specific
levels;
Status: Iraq has maintained a budget surplus, due in part to the lack
of spending by certain ministries of their capital budgets (see
enclosure 8).
IMF condition: Ceiling on government imports of petroleum products;
Status: Iraq has reached the agreed-upon ceiling for the cost of these
imports ($2.8 billion in 2006) and has requested a waiver from the IMF
to import more. Since refinery capacity remains limited, this will
likely be a problem in the future. The government committed to allow
private imports of diesel, kerosene, and other fuel products to
increase supplies and allow prices to rise to neighboring country
levels (see enclosure 10).
IMF condition: Reduced subsidies on petroleum products (gasoline, LPG,
kerosene, diesel);
Status: The government has increased prices on fuel products twice--
once in 2005 and again in June 2006--to keep them roughly in line with
the IMF program. For example, the price of kerosene was increased from
$0.01 to $0.19 per gallon and the price of gasoline from $0.05 to $0.40
per gallon in June 2006. Further price increases are necessary to
reduce price differentials with neighboring countries, but domestic
fuel prices may still remain below prices in neighboring countries,
according to the World Bank.
IMF condition: Adoption of a government budget classification and chart
of accounts in line with IMF standards;
Status: Scheduled for completion June 30, 2006, this condition was
rescheduled for December 31, 2006. According to U.S. officials, Iraq
completed this condition. It is critical because it creates an
accounting basis for the entire government and facilitates budgeting
and planning.
IMF condition: Complete a census of all public service employees
(including the military);
Status: Scheduled for completion June 30, 2006, this condition was
rescheduled for December 31, 2006. Because wages and pensions account
for 28 percent of the operational budget, the government needs an
accurate employee count.
Source: International Monetary Fund.
[End of table]
As the government seeks to implement the IMF reform program, it faces
several challenges. Oil production and exports have been below expected
levels, making overall economic expansion and job creation dependent on
growth in the non-oil sectors of the economy. Inflation of
approximately 50 to 60 percent in 2006 and increases in the prices of
basic necessities such as food, fuel and electricity continue to be
growing concerns. Corruption and lost oil revenues account for more
than a billion dollars per year in lost government revenue, according
to a 2006 report by the Ministry of Oil Inspector General.
Unemployment, estimated at 25 percent to 40 percent in 2005 and even
higher in 2006, contributes to the country's instability. Over the
medium term--even with debt restructuring--Iraq will still have
significant outstanding debt and accumulating interest. Without growth
in oil revenues, the IMF notes that Iraq may need additional external
financial assistance when the restructured loans become due.
Oversight Questions:
* What is the status of efforts to restructure Iraq's remaining foreign
debt? Does it present challenges for Iraq's reconstruction and economic
development?
* What types of conditions are Persian Gulf creditor nations seeking
with Iraq to restructure or forgive outstanding debt?
* How will the International Compact with Iraq help secure additional
debt relief?
* Are the pace and substance of IMF-required reforms realistic, given
the security and political situation in Iraq?
* In what areas can the U.S. government provide additional technical
assistance to help Iraq meet its IMF reform goals?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or Hchristoffj@gao.govH.
[End of section]
Reconstruction Challenges:
Enclosure X: U.S. Efforts to Restore Iraq's Oil Sector Have Been Slowed
by Major Challenges:
Enclosure XI: U.S. Efforts to Improve Iraq's Electricity Sector Have
Been Constrained by Security, Management, and Funding Challenges:
[End of section]
Enclosure X: U.S. Efforts to Restore Iraq's Oil Sector Have Been Slowed
by Major Challenges:
Issue:
Iraq's oil reserves, estimated at 115 billion barrels, are the third
largest in the world. The oil sector currently accounts for about two-
thirds of Iraq's gross domestic product and over 90 percent of exports
and revenues. However, Iraq's oil wells and associated infrastructure
have deteriorated due to years of neglect, mismanagement, and
international sanctions. Considerable looting after Operation Iraqi
Freedom, the government of Iraq's reluctance or inability to approve
equipment replacement or rehabilitation of oil field construction
projects, and continued attacks on crude and refined-product pipelines
also have contributed to Iraq's reduced oil production and export
capacities. As of October 2006, the U.S. government allocated about
$1.7 billion in Iraq Relief and Reconstruction Funds (IRRF) for the
Iraqi oil sector, of which about $1.6 billion has been obligated and
$1.1 billion disbursed.[Footnote 35] In this enclosure, we discuss (1)
the status of efforts to meet U.S. goals for Iraq's oil sector and (2)
key challenges the United States faces in improving Iraq's oil sector.
Summary:
Iraq's oil production and exports have consistently fallen below U.S.
program goals. U.S. and Iraqi efforts to restore Iraq's oil sector have
been impeded by the lack of security, corruption, sustainability, and
funding challenges. The unstable security environment continues to
place workers and infrastructure at risk while protection efforts
remain insufficient. Widespread corruption and smuggling affect the
distribution of refined oil products, such as gasoline. The U.S.
reconstruction program has encountered difficulty with Iraq's ability
to operate and maintain aging infrastructure. Further, uncertainties
exist regarding the sources of future funding. These challenges could
make it difficult to achieve current production and export goals, which
are central to Iraq's government revenues and economic development.
Iraq's Oil Production and Exports Have Not Met U.S. Program Goals:
U.S.-funded projects have focused on restoring Iraq's oil production
infrastructure, improving refining and export capacity, and providing
training for operations and maintenance. As of December 11, 2006, the
Army Corps of Engineers Gulf Region Division reported completing 97 of
182 planned projects and is expected to complete the others by July
2007. These projects are intended to help improve Iraq's oil production
infrastructure, refinery, and export capacity.
Despite U.S. efforts, Iraq's oil production and exports have
consistently fallen below their respective program goals. After
initially rebounding in 2003, oil production and exports averaged,
respectively, 2.1 million and 1.5 million barrels per day (mbpd) in
2006. U.S. program goals are to reach an average production capacity of
3 mbpd and export levels of 2.2 mbpd.[Footnote 36] Despite not meeting
U.S. production and export goals, export revenue has generally grown as
world prices for crude oil have risen.
Figure 1: Iraqi Oil Production, Export, and Revenue, June 2003 through
November 2006:
[See PDF for image]
Source: Iraq Ministry of Oil data.
[End of figure]
Security, Corruption, Sustainability, and Funding Challenges Hinder
Efforts to Improve Iraq's Oil Infrastructure:
The U.S. government and Iraq face several key challenges in improving
Iraq's oil sector.
Addressing Infrastructure Security:
Security conditions have affected Iraq's oil production and have, in
part, led to project delays and increased costs. Insurgents have
destroyed key oil infrastructure, threatened workers, compromised the
transport of materials, and hindered project completion and repairs by
preventing access to work sites. U.S. officials reported that major oil
pipelines in the north continue to be sabotaged, shutting down oil
exports and resulting in lost revenues. Pipe line repair crews are
overwhelmed by the amount of work and unable to make rapid repairs.
The U.S. government has developed a number of initiatives to protect
the oil infrastructure and transfer this responsibility to the Iraqi
government.[Footnote 37] Such efforts include improving the
capabilities of infrastructure protection forces such as the Oil
Protection Force, a protection force for static infrastructure sites.
The U.S. military, with the assistance of other coalition forces, is
also working to improve the capabilities of the Strategic
Infrastructure Battalions (SIB). However, according to U.S. officials,
some units are of questionable capability and loyalty. According to
U.S. government officials and a recent Center for Strategic and
International Studies report[Footnote 38], such security forces are
underpaid, underequipped, poorly led, and of questionable quality.
Additional information on the effectiveness and quality of the SIBs is
classified.
Combating Corruption and Smuggling:
U.S. and international officials note that corruption in Iraq's oil
sector is pervasive. In 2006, the World Bank and Ministry of Oil's
Inspector General estimated that millions of dollars of government
revenue is lost each year to oil smuggling or diversion of refined
products. According to State Department officials and reports, about 10
percent to 30 percent of refined fuels is diverted to the black market
or is smuggled out of Iraq and sold for a profit. According to U.S.
Embassy documents, the insurgency has been partly funded by corrupt
activities within Iraq and from skimming profits from black marketers.
In addition, Iraq lacks fully functioning meters to measure oil
production and exports. In 1996, the United Nations (UN) first cited
the lack of oil metering during the time Iraq was under UN sanctions.
In addition, in 2004, the International Advisory and Monitoring Board
for the Development Fund for Iraq recommended that metering equipment
be expeditiously installed. According to the Ministry of Oil and the
International Advisory and Monitoring Board (IAMB), an absence of
functioning meters precludes control over the distribution and sale of
crude and refined products. The U.S. government is currently taking
steps to replace old and broken meters at the Al-Basra export terminal,
Iraq's major oil export terminal. This project is scheduled for
completion in April 2007.
Improving Infrastructure Management and Sustainability:
Problems in managing key oil projects have also led to delays. U.S.
agency and contractor officials have cited difficulties in initially
defining the scope, schedule, and cost of oil projects, as well as
completing projects. The Ministry of Oil has had difficulty operating
and maintaining its aging infrastructure, including some refineries
originally constructed in the 1950s, 1960s, and 1970s. The ministry
will have difficulty maintaining future production levels unless it
initiates an ambitious rehabilitation program, according to State's
Iraq Reconstruction Management Office (IRMO). Iraq's refineries are
inefficient in their yield; for every barrel of crude oil sent to
refineries only about half a barrel of refined fuel products is
produced, according to IRMO. U.S. officials report that the sector's
rebuilding efforts continue to be impeded by the lack of modern
technology; qualified staff and expertise at the field, plant, and
ministry level; an effective inventory control system for spare parts
within the oil sector's 14 operating companies; and difficulties in
spending budgets for equipment upgrades and replacements (see related
brief on budget execution). The U.S. government has provided additional
training and management assistance in response to these needs.
Developing Adequate Sources of Future Funding:
According to U.S. and foreign officials, the ability and willingness of
the Iraqi government to fund improvements in its oil sector remain
uncertain for a number of reasons:
* Iraq lacks effective procurement, budgeting, and financial management
systems to execute budgets efficiently, ensure transparency of oil
revenues, and ensure the accountability of Iraqi ministry and plant
managers. As of August 2006, the Ministry of Oil had spent only 0.1
percent of its $3.5 billion capital budget, according to U.S.
government reporting.
* Current government subsidies have kept prices for refined oil
products low and constrain opportunities for growth and investment.
U.S. and international officials report that Iraq's low domestic fuel
prices have stimulated black market activities and fuel smuggling out
of the country; inadequate funding for maintenance and refinery
upgrades; and domestic overconsumption. According to U.S. and
international officials, the Iraqi budget is directly affected, since
state-owned refineries cover less than half the domestic demand, and
the Iraqi government has to import the rest at world market prices.
* Iraq lacks a clear legal and fiscal framework to attract foreign
investment. According to U.S. officials, until a new hydrocarbon law is
passed, uncertainties exist surrounding the enforceability of
contracts, how future oil revenues will be distributed, and what
authority, if any, regional governments will have in signing oil
exploration contracts with foreign firms. In addition, according to
State officials, implementing regulations have yet to be issued for
Iraq's Fuel Import Liberalization Law passed in early September 2006.
These regulations could allow the private sector to import and
distribute some refined products at market prices.
Oversight Questions:
* What is the Ministry of Oil's current strategy for meeting Iraq's
growing fuel needs, and what assistance is the U.S. government planning
to provide to help implement this strategy?
* To what extent will an adequate fuel supply for electricity
generation be included in Ministry of Oil planning?
* What is the status of actions to ensure adequate security and
maintenance of facilities built or renovated with U.S. funding?
* How effective have U.S. efforts been in transferring responsibility
for operations and maintenance of U.S. oil projects to the Iraqi
government? How are these efforts integrated among U.S. agencies and
the international community?
* What U.S. efforts will help ensure that Iraq develops an adequate
legal and regulatory framework to provide transparency and
accountability of current and future oil revenues?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or christoffj@gao.gov.
[End of section]
Enclosure XI: U.S. Efforts to Improve Iraq's Electricity Sector Have
Been Constrained by Security, Management, and Funding Challenges:
Issue:
Iraq's electricity infrastructure has deteriorated due to years of
neglect during the previous regime, international sanctions, and the
destruction caused by conflict, looting, and vandalism. An inadequate
and unreliable supply of electricity affects both public perceptions of
the government's ability to deliver basic services and the productivity
of Iraq's oil sector, which is crucial to rebuilding the economy. As of
October 2006, the U.S. government allocated about $4.2 billion of the
Iraq Relief and Reconstruction Fund (IRRF) to Iraq's electricity
sector; almost $2.7 billion of this amount has been disbursed.[Footnote
39] In this enclosure, we discuss (1) the status of efforts to meet
U.S. goals for Iraq's electricity sector and (2) the key challenges the
U.S. faces in improving Iraq's electricity sector.
Summary:
In 2006, electricity reached 4,317 megawatt (mw) peak generation
capacity per day but continued to fall short of the U.S. goal of 6,000
mw. Production was also outpaced by increasing demand, which has
averaged about 8,210 mw per day. The Ministry of Electricity's 2006-
2015 master plan aims to rehabilitate and expand the national grid and
will require substantial funding of about $27 billion. If this plan is
implemented, the ministry estimates that Iraq will be able to meet
projected demand for electricity in 2009.
U.S. and Iraqi efforts to restore Iraq's electricity sector have been
impeded by security, infrastructure management and sustainability, and
funding challenges. The unstable security environment continues to put
electrical workers and infrastructure at risk and protection efforts
have been insufficient. It is also unclear whether Iraq can or will
adequately manage and sustain U.S. projects, given inadequacies in
operations and maintenance and an uncertain fuel supply. Further,
uncertainties exist regarding the sources of future funds for the Iraqi
electricity sector. These challenges could make it difficult to achieve
an effective and efficient Iraqi electrical grid.
Restoring Iraq's Electricity Sector Has Been Difficult:
U.S. efforts focus on restoring or constructing generation,
transmission, distribution, and automated monitoring and control system
projects. As of December 2006, the Army Corps of Engineers Gulf Region
Division (GRD) reported that 293 of its 523 planned projects had been
completed and that it is expected to complete most of the others by the
end of 2007. The U.S. Agency for International Development (USAID)
reported completing all of its 29 projects. According to the State
Department, as IRRF projects are completed, efforts are increasingly
shifting from building large, U.S.-funded infrastructure projects to
better protecting, maintaining, and sustaining the current
infrastructure.
Despite these gains, Iraq's electrical supply has not met initial
program goals, remains unreliable, and is not meeting growing demand.
While completed U.S. projects have added an estimated 2,093 mw[Footnote
40] of new and rehabilitated generation capacity, U.S. efforts have not
met the program goal of 6,000 mw established by the Coalition
Provisional Authority (CPA) in 2004. Peak generation for 2006 averaged
4,317 mw per day, slightly above the prewar levels of 4,200 mw.
Moreover, electricity supply across the nation continues to be
unreliable. From July through September 2006, the nation averaged 11.1
hours, with Baghdad averaging 6.2 hours of power per day. Demand has
also exceeded supply. In 2006, demand averaged 8,210 mw[Footnote 41]
per day and reached a peak of 9,622 mw[Footnote 42] during the week of
August 21, 2006 (see fig. 1). According to the U.S. government, the
growth in demand for electricity has been stimulated by government
energy subsidies and a surge in consumer purchases of appliances and
electronics.
Figure 1: Peak Electricity Produced and Demand in Iraq, May 2005-
November 2006:
[See PDF for image]
Source: Iraq Ministry of Electricity data.
[End of figure]
In November 2006, the Ministry of Electricity presented an ambitious
master plan for 2006 to 2015 to rehabilitate and expand the national
grid; the plan will require substantial funding of about $27 billion.
If this plan is implemented, the ministry estimates that Iraq will be
able to meet its projected demand for electricity in 2009.
Factors Hindering Efforts to Meet Electricity Needs:
The U.S. government and Iraq face key challenges in meeting Iraq's
electricity needs.
Addressing Infrastructure Security:
The deteriorating security environment continues to pose a serious
challenge to Iraq's electricity system,[Footnote 43] leading, in part,
to project delays and increased costs for security services. Electrical
workers and infrastructure are inadequately protected and are subject
to targeted attacks. The security situation also makes it difficult to
get workers, parts, and equipment to sites. Moreover, looting and
vandalism have continued since 2003, and major electrical transmission
and fuel lines have been repeatedly sabotaged, cutting power to other
parts of the country. According to Ministry of Electricity and U.S.
officials, workers are frequently intimidated by anti-Iraqi forces, and
have difficulty repairing downed lines.
In an effort to stop the sabotage, the ministry contracted with tribal
chiefs to protect the transmission lines running through their areas,
paying them about $60 to $100 per kilometer, according to State's Iraq
Reconstruction Management Office (IRMO). However, in October 2006, IRMO
officials reported that this scheme was flawed and did not result in
improved infrastructure protection.
The U.S. government has developed other initiatives to better protect
energy infrastructure.[Footnote 44] The United States has trained and
equipped the Electrical Power Security Service (EPSS) and the Strategic
Infrastructure Battalions (SIB) and partnered these security services
with coalition forces. However, a U.S. official stated that the EPSS
effort was unsuccessful and that some of the SIB units have
questionable capability and loyalty. According to a U.S. government
official and a recent Center for Strategic and International Studies
report,[Footnote 45] these security forces have been underpaid,
underequipped, and poorly led, and are of questionable quality.
Additional information on the status of the SIBs is classified.
Improving Infrastructure Management and Sustainability:
The U.S. reconstruction program has encountered difficulties with
Iraq's ability to sustain new and rehabilitated infrastructure and
address fuel requirements. Iraq's electricity sector suffers from
deteriorated, outdated, and inefficient infrastructure resulting from
two decades of underinvestment in operations and maintenance,
replacement, and expansion. This weakened infrastructure has led to
unplanned outages.[Footnote 46]
The rebuilding of the electricity sector has been slowed by the lack of
training to enhance the skills of plant workers, inadequate spare
parts, and an ineffective asset management and parts inventory system.
Moreover, plants are sometimes operated beyond their recommended limits
and use poor-quality fuels that rapidly deteriorate parts, involve
longer maintenance downtimes, and increase pollution. According to U.S.
government officials, Iraq needs to develop cleaner and more reliable
sources of natural gas for its generators and to formulate an
integrated fuel strategy to address these needs. Currently, Iraq's fuel
supply does not meet demand and its quality is inconsistent.
For example, of the 35 natural gas turbines the U.S. government
installed in power generation plants, 16 are using diesel, crude, or
heavy fuel oil due to the lack of natural gas and lighter fuels. As a
result, maintenance cycles are reportedly three times as frequent and
three times as costly. Poor-quality fuels also decrease the power
output of the turbines by up to 50 percent and can result in equipment
failure and damage, according to U.S. and Iraqi power plant officials.
The U.S. government also estimates that Iraq is flaring enough natural
gas to generate at least 4,000 mw of electrical power. Because of
natural gas shortages, diesel has to be imported at a cost of about
$1.2 billion a year, thus straining economic resources.
The U.S. government is providing assistance to address these shortfalls
through long-term operations and maintenance programs for thermal and
gas turbine power plants and through other initiatives to help the
ministry develop a sound operations and maintenance program.
Developing Adequate Sources of Future Funding:
Despite the Ministry of Electricity's recent development of a 10-year
master plan, Iraq's ability to fund improvements in its electricity
sector remains uncertain.
* According to a World Bank assessment, Iraq lacks an adequate legal
and regulatory framework and the procurement, budgeting, and financial
management systems to execute budgets efficiently and ensure
accountability at government ministries.
* Iraq's electricity tariff, one of the lowest in the world, is below
the cost of delivery and makes it difficult for Iraq to finance the
improvements it needs to make. Moreover, Iraq's cost recovery is low
due to inadequate metering, billing, and illegal taps into the system.
* The ministry faces uncertainty regarding future donor commitments,
although some future international support is expected to come through
an International Compact launched in July 2006. Under the compact, Iraq
would undertake economic, political, and security reforms to receive
increased support from the international community. Donors have yet to
agree on this compact.
Oversight Questions:
* What is the Ministry of Electricity's strategy for meeting Iraq's
growing future electrical needs, and what assistance is the U.S.
government providing to help implement this strategy?
* What is the status of actions taken to ensure adequate security and
maintenance for transmission lines and facilities built or renovated
with U.S funding?
* How effective have U.S. efforts been in transferring responsibility
for operations and maintenance efforts for U.S. electricity projects to
the Iraqi government? How are these efforts integrated among U.S.
agencies and with international efforts? How is success measured?
* What efforts are needed to ensure an adequate fuel supply for
electricity generation in Iraq? How are the needs of the electricity
sector integrated into Ministry of Oil planning?
* Why did the United States purchase natural gas turbines to generate
electricity when the necessary supply of natural gas was not assured in
Iraq?
GAO Contact:
Joseph A. Christoff, Director, International Affairs and Trade, (202)
512-8979 or Hchristoffj@gao.govH.
[End of section]
U.S. Military Readiness:
Enclosure XII: Extended Operations Have Had Significant Consequences
for the U.S. Military:
Enclosure XIII: Securing Munitions Sites and Alleviating Armor
Shortages Have Been Serious Problems:
Enclosure XIV: Deficiencies in Supply Support for U.S. Ground Forces
Have Resulted in Shortages of Critical Items:
[End of section]
Enclosure XII: Extended Operations Have Had Significant Consequences
for the U.S. Military:
Issue:
Since September 11, 2001, U.S. military forces have experienced a high
pace of operations to support homeland security missions, Operation
Enduring Freedom in Afghanistan, and various combat and
counterinsurgency operations in Iraq. These operations have required
many units and personnel to deploy for multiple tours of duty and, in
some cases, to remain for extended tours. The Department of Defense
(DOD) faces significant challenges in maintaining readiness for
overseas and homeland missions and sustaining rotational deployments of
duty, especially if the duration and intensity of current operations
continue at the present pace. Pursuant to a congressional mandate, we
are examining readiness issues, including DOD's ability to support
ongoing operations as well as other commitments. This enclosure
highlights some of the consequences that extended operations have had
on the U.S. military regarding personnel, equipment, and training. It
also discusses some of the challenges DOD faces as it adjusts the
composition and size of its forces.
Summary:
Although DOD has overcome difficult challenges in maintaining a high
pace of operations over the past 5 years, extended operations in Iraq
and elsewhere have had significant consequences for the U.S. military.
Our work on personnel, equipment, and training issues has found
problems with (1) DOD's ability to provide active and reserve forces,
especially for some skills; (2) the recruitment and retention of
personnel to fill shortages of critical positions, including those
requiring the ability to speak foreign languages such as Arabic; (3)
policies and guidance affecting the availability of reserve personnel;
(4) heavy wear and tear on equipment, as well as equipment shortages in
the reserve components; and (5) the effects of continued deployment of
U.S. ground forces on military training. In addition, extended
operations present challenges in determining the adjustments needed to
the size and composition of the Army to meet both near-and long-term
requirements.[Footnote 47]
Operations Have Challenged DOD's Ability to Provide Forces:
Ongoing operations in Iraq have challenged DOD's ability to supply
active and reserve forces that are ready to deploy, particularly with
regard to the Army and Marine Corps. Although the Army's goal is to
deploy active personnel only 1 of every 3 years, many soldiers have
deployed more frequently, and some personnel are preparing for their
third rotations to Iraq. Active Marine Corps personnel are also
deploying more frequently than the goals established by Marine Corps
leaders. Moreover, ongoing operations have created a particularly high
demand for certain combat support and combat service support skills,
such as engineering, civil affairs, transportation, and military
police. With limits placed on the availability of reserve component
members with these skills (see discussion below), DOD is increasingly
turning to the Navy and Air Force to help meet requirements for certain
types of forces needed to support ground operations. The longer
operations in Iraq continue, the greater the likelihood DOD will face
increasing challenges in identifying sufficient numbers of such skilled
personnel.
DOD Faces Enlisted Personnel Recruitment and Retention Challenges:
Operations in Iraq have contributed to the U.S. military's significant
challenge in recruiting and retaining hundreds of thousands of service
members each year. While the services have generally met their
aggregate recruiting and retention goals, DOD has had problems
recruiting and retaining sufficient numbers of individuals with the
right skills and knowledge. Over 40 percent of DOD's 1,484 occupational
specialties were consistently underfilled for fiscal years 2000 through
2005, raising concerns about the military's ability to meet all of its
missions. For example, during fiscal year 2003 when the Iraq war began,
DOD was unable to fill almost 103,000 positions in consistently
underfilled occupations; this number grew to 112,000 unfilled positions
by 2005. Many of these consistently underfilled occupations are in
critical areas, such as health care, human intelligence collection, and
explosive ordnance disposal.
DOD Policies and Guidance Have Limited the Availability of Reserve
Forces:
DOD has recognized that the department cannot execute major military
operations without significant participation from its reserve
components. However, its current mobilization and deployment policies
and guidance restrict flexibility in staffing long-term operations such
as the global war on terrorism. After September 11, 2001, DOD issued a
series of policies and guidance to guide the use of reserves for the
global war on terrorism in order to limit deployments and help sustain
the all-volunteer force. Most significantly, it limited the services to
one involuntary mobilization of their reserve component members for the
global war on terrorism and limited reserve component mobilizations to
Iraq and Afghanistan to 12 months "on the ground" in the U.S. Central
Command area of operations, plus additional time for mobilization and
demobilization activities. Thus, under the current policy, reserve
component members who were involuntarily mobilized for operations
related to the global war on terrorism cannot be involuntarily
mobilized for the ongoing operation now referred to as "the long war."
As additional personnel have been involuntarily mobilized, the services
have come to rely more heavily on active forces, repeat volunteers, and
new recruits to meet their sourcing requirements.
Ongoing Operations Are Taking a Heavy Toll on Equipment:
Ongoing military operations in Iraq are inflicting heavy wear and tear
on equipment. Some equipment items used by U.S. forces are more than 20
years old, and harsh combat and environmental conditions over time have
further exacerbated equipment condition problems. The Army and the
Marine Corps have initiated programs to reset (repair or replace)
equipment and are likely to incur large expenditures in the future. We
are currently assessing these programs, including the extent to which
the services are tracking reset costs and the extent to which their
reset plans maintain unit equipment readiness while meeting ongoing
operational requirements.
In addition, the Army National Guard and Army Reserve have transferred
large quantities of equipment to deploying units, an approach that has
contributed to growing equipment shortages in nondeployed units. Also,
reserve units have left large quantities of equipment overseas, and DOD
has not yet developed plans to replace the equipment. The Army National
Guard reports that its nondeployed units have less than one-third of
their required equipment, and the Army Reserve reports that its units
have about half of the modern equipment they need to deploy. These
shortages also could adversely affect reserve units' ability to perform
homeland defense missions and provide support to civil authorities in
the event of natural disasters or terrorist attacks.
Continuing Deployment of Ground Forces Has Affected Military Training:
The continuing deployment of ground forces to support ongoing
operations has affected military training. The military services have
been focused on preparing units to assume missions and to operate in
conditions specific to Iraq and Afghanistan, with less time available
to prepare for other wartime and homeland defense missions. In
addition, personnel and units are being asked to perform missions or
functions different from those they were designed for and are being
retrained accordingly. For example, field artillery units have been
used to perform some military police duties and therefore spend time
training for these missions before deploying. To support deploying
units, units that remain behind must give up personnel and equipment,
thus limiting their ability to train as a unit or to train on certain
equipment that they might be required to operate once deployed. Also,
units are faced with replacing officer and senior enlisted personnel
pulled to serve as trainers for Iraqi and Afghani security forces.
Challenges Remain in Adjusting the Composition and Size of Forces:
Ongoing operations have raised questions about whether DOD has
adequately reassessed and adjusted the size and composition of its
forces, particularly with regard to the Army. Although the Army has
begun to adjust its force structure, significant challenges remain. For
example, in 2004, the Army began to implement a $52.5 billion
initiative throughout the active and reserve components to establish
modular brigades that are intended to be more readily deployable to
overseas operations such as Iraq than their predecessor units, which
were designed for Cold War postures. The Army's goal of establishing
fully capable modular units will be difficult given long-standing
equipment and personnel shortfalls, particularly while the Army is also
managing the training and deployment of forces to Iraq.
Further, to help support operations in Iraq, the Army has made some
adjustments in its active-reserve mix to establish additional units
that are in high demand. The Marine Corps has made similar changes.
However, the Office of the Secretary of Defense had not conducted a
recent comprehensive data-driven analysis to assess the number of
active personnel needed by the services to implement the defense
strategy and to provide needed capabilities within acceptable levels of
risk.
Prior Recommendations:
In prior reports, we have made numerous recommendations addressing the
military issues covered in this paper, including the following:
* With regard to the recruitment and retention of enlisted personnel,
we recommended that DOD develop a management action plan to help
components identify and address the causes of their recruiting and
retention challenges.[Footnote 48] DOD partially concurred with this
recommendation.
* As the result of our work on the availability of reserve forces, we
recommended that DOD develop a strategic framework that sets human
capital goals concerning the availability of its reserve component
forces to meet the longer-term requirements of the global war on
terrorism under various mobilization authorities and identify personnel
policies that should be linked within the context of the strategic
framework.[Footnote 49] DOD partially concurred with this
recommendation.
* In our work on Army National Guard equipment readiness, we
recommended that the Army develop and submit to Congress a plan and
funding strategy that addresses the equipment needs of the Army
National Guard for the global war on terrorism and addresses how the
Army will transition from short-term equipping measures to long-term
equipping solutions.[Footnote 50] DOD agreed with this recommendation.
* In reporting on the Army's modularity program, we recommended that
the Army develop and provide the Secretary of Defense and Congress with
a comprehensive plan for assessing the Army's progress toward achieving
the benefits of modularity. We recommended the plan include specific,
quantifiable performance metrics to measure progress toward meeting the
goals and objectives established in the Army Campaign Plan.[Footnote
51] DOD agreed to develop expanded performance metrics.
Oversight Questions:
* To what extent has DOD evaluated its ability to support any
adjustments in troop levels in the administration's revised strategy,
including the availability of personnel, equipment and training
necessary if the strategy calls for increases?
* What options are available to DOD for making more personnel,
including both active duty and reserve personnel, available for future
rotations while sustaining an all-volunteer force?
* To what extent have DOD components developed a management action plan
to identify and address the causes of their recruiting and retention
challenges?
* To what extent will equipment reset plans maintain unit equipment
readiness while meeting ongoing operational requirements?
* What is the state of readiness of our armed forces? To what extent
has DOD evaluated whether units are ready and trained to respond to
operations other than Iraq or Afghanistan?
* Are the Army and Marine Corps appropriately sized, with the right
composition and mix of units and personnel skills, to support ongoing
operations, while remaining prepared for missions that could arise at
home or abroad?
GAO Contact:
Henry L. Hinton, Jr., Managing Director, Defense Capabilities and
Management, (202) 512-4300 or hintonh@gao.gov.
[End of section]
Enclosure XIII: Securing Munitions Sites and Alleviating Armor
Shortages Have Been Serious Problems:
Issue:
U.S. ground forces in Iraq have come under frequent and deadly attacks
from insurgents using weapons such as improvised explosive devices
(IED), mortars, and rocket launchers. IEDs, in particular, have emerged
as the number one threat against U.S. forces. Insurgents have made many
IEDs from munitions looted from storage sites in Iraq. This enclosure
discusses (1) the security provided by U.S. forces over conventional
munitions storage sites in Iraq and (2) the challenges the Department
of Defense (DOD) has faced in meeting increased requirements for body
and truck armor to protect U.S. ground forces.
Summary:
As a result of the overwhelming size and number of conventional
munitions storage sites in Iraq, combined with prewar planning
assumptions that proved to be invalid, U.S. forces did not adequately
secure those sites and looting was widespread. Despite the potential
risk posed by unsecured sites, DOD's actions in response to lessons
learned during Operation Iraqi Freedom (OIF) have focused on countering
IEDs and not on the strategic implications of munitions sites for
future operations.[Footnote 52]
Efforts to protect U.S. ground forces with increased body and truck
armor have been characterized by shortages and delays, which have
reduced operational capabilities and forced combat commanders to accept
additional risk in completing their missions.[Footnote 53] We are
currently reviewing force protection measures, including body armor,
for current operations, as well as the organization and management of
the Joint IED Defeat Organization (JIEDDO), which was established in
January 2006 with a mission of countering the IED threat.
U.S. Did Not Prevent Looting of Munitions Sites:
A fundamental gap existed between OIF war plan assumptions and the
experiences of U.S. and coalition forces in Iraq, contributing to an
insufficient number of troops on the ground to prevent the widespread
looting of conventional munitions storage sites. Looted munitions have
emerged as a continuing asymmetric threat to U.S. and coalition forces.
The human, strategic, and financial costs of the failure to provide
sufficient troops on the ground have been high, since IEDs made from
looted explosives have caused about half of all U.S. combat fatalities
and casualties in Iraq and have killed hundreds of Iraqis. In addition,
unsecured conventional munitions sites have helped sustain insurgent
groups and threatened the achievement of the OIF strategic goal of
creating a stable Iraqi nation.
DOD's actions have primarily focused on countering IEDs and not on the
security of conventional munitions storage sites as a strategic
planning and priority-setting consideration for future operations.
Although good first steps, these actions do not address what we believe
is a critical OIF lesson learned: If not secured during initial combat
operations, an adversary's conventional munitions storage sites can
represent an asymmetric threat to U.S. forces that remain in country.
Acquisition Delays and Distribution Problems Resulted in Body Armor
Shortages:
DOD faced challenges in supplying sufficient quantities of body armor
to meet the requirements for U.S. military forces in Iraq. Temporary
shortages of body armor occurred because of acquisition delays related
to the lack of key materials and distribution problems in theater.
Increasing military requirements for body armor exceeded the
manufacturer's capacity to produce enough of the Army's new Interceptor
body armor,[Footnote 54] particularly after October 2003, when U.S.
Central Command required body armor for all U.S. personnel in its area
of responsibility. Before that, the Army required body armor for all
soldiers in Iraq but not for all U.S. personnel. As a result of the
shortages, many individuals purchased body armor that was available in
the private sector with their own funds.
According to the Defense Logistics Agency, the organization that
manages body armor for the Army, the shortfall in vests and ceramic
plates was due to the lack of Kevlar (a type of fiber) for
manufacturing the vests and a lack of material for manufacturing the
plates. Attempts to accelerate the fielding of the new armor had some
success but also created additional logistics problems, including the
inaccurate reporting of on-hand quantities.
We are currently reviewing force protection measures, including body
armor requirements, testing, and oversight, for current operations.
Production and Installation Problems Resulted in Shortages of Army and
Marine Truck Armor:
DOD also faced the challenge of supplying sufficient amounts of armor
for Army and Marine Corps trucks. U.S. military forces in Iraq have
experienced shortages of truck armor due to problems with production
and installation of armor kits. Although the Army first identified a
requirement for 3,780 truck armor kits for five types of
trucks[Footnote 55] in November 2003, it did not produce all of the
kits until February 2005 and did not install the kits to meet the
initial requirement until May 2005--18 months after the requirement was
identified. Requirements continued to increase after May 2005, but the
time lag to meet them lessened. A number of factors contributed to the
time needed to provide truck armor to deployed Army troops. As a
result, troops were placed at greater risk as they conducted wartime
operations in vehicles not equipped with the preferred level of
protection. For example, the Army missed a valuable opportunity to have
substantial numbers of truck armor kits available for OIF by not fully
capitalizing on approved requirements for these kits established in
1996. In addition, production time lengthened because contracts were
awarded for amounts less than total requirements due to increasing
needs for truck armor and inadequate funding. Sufficient documentation
was lacking to determine why funding was not available when needed,
limiting effective oversight over funding decisions. Material shortages
and limited kit installation rates also affected the availability of
truck armor.
The Marine Corps also experienced shortages of truck armor during OIF.
The Marine Corps belatedly met requirements for the production and
installation of add-on truck armor in September 2004--8 months after
the requirements were identified. Two factors affected the timely
production and installation of Marine Corps truck armor. First, the
lack of a synchronized approach between the Marine Corps and the Army
resulted in the Marine Corps identifying its truck armor requirements
and seeking armor solutions 2 months after the Army. This delay may
have limited the Marine Corps' ability to field interim armor that met
IED protection requirements and may have contributed to delays in
providing add-on truck armor to deployed Marine Corps forces. The
Marine Corps did not officially identify a requirement for truck armor
and did not begin seeking out armor materials from industry until
January 2004--2 months after the Army began its truck armor program in
November 2003. According to Marine Corps officials, the armor-grade
steel needed for sufficient IED protection was not available from
suppliers in time to meet the Marine Corps' deployment timeline of
March 2004. As a result, the Marine Corps fielded the interim armor
with only limited IED protection. Second, mission needs restricted the
rate at which the Marine Corps could replace its interim armor with add-
on armor and install integrated armor.
DOD has taken actions to improve the timely availability of truck
armor. For example, the Army is developing a long-term armoring plan to
improve the availability of truck armor for future operations. The
Marine Corps increased the rate of installation for integrated armor by
expanding its armor installation capacity. The Marine Corps is also
taking longer-term actions, such as developing a plan to address the
availability of truck armor for future operations.
GAO Is Reviewing JIEDDO:
In response to Senate Report 109-292, we have initiated a review of
JIEDDO. The objectives of our ongoing review are to determine (1)
whether JIEDDO's overall management and organizational structure,
including funding, personnel, and strategic planning processes,
effectively support its mission; (2) the challenges, if any, that
affect JIEDDO's ability to quickly and effectively identify, develop,
test, and support technology and training solutions; and (3) the level
of coordination that exists between JIEDDO and other DOD and non-DOD
organizations to leverage existing capabilities and prevent duplication
of efforts.
Prior Recommendations:
In December 2006, we recommended that the Chairman of the Joint Staff
conduct a theaterwide survey and risk assessment regarding unsecured
conventional munitions in Iraq and incorporate conventional munitions
storage site security as a strategic planning factor into all levels of
planning policy and guidance, including joint doctrine, instructions,
manuals, and other directives.[Footnote 56] DOD partially concurred
with our recommendations.
In prior reports, we have recommended actions to ensure funding needs
for urgent wartime requirements are identified quickly, requests for
funding are well documented, and funding decisions are based on risk
and an assessment of the highest priority requirements. For example, in
March 2006, we recommended that the Army establish a process to
document and communicate all urgent wartime funding requirements for
supplies and equipment at the time they are identified and the
disposition of funding decisions.[Footnote 57] DOD concurred with the
intent of the recommendation. More recently, we have recommended
actions to ensure that the services make informed and coordinated
decisions about what materiel solutions are developed and procured to
address common urgent wartime requirements.[Footnote 58] DOD generally
agreed with these recommendations.
Oversight Questions:
* Has DOD conducted a theaterwide survey and risk assessment regarding
unsecured conventional munitions storage sites in Iraq? Has DOD
developed a risk mitigation strategy for unsecured sites in Iraq?
* Has DOD incorporated the security of conventional munitions storage
sites as a strategic planning factor into all levels of planning policy
and guidance?
* Is the supply chain adequately supporting the troops' needs for body
armor and truck armor during combat operations? Are the Army and Marine
Corps coordinating the requirements, testing, and production of body
armor and evaluating its effectiveness in the field?
* Is JIEDDO structured to effectively accomplish its mission and
account for its expenditures?
* What steps has DOD taken to stay abreast of evolving force protection
threats and to identify and employ appropriate mitigation measures?
GAO Contacts:
Davi M. D'Agostino, Director, Defense Capabilities and Management,
(202) 512-5431 or dagostinod@gao.gov; and William M. Solis, Director,
Defense Capabilities and Management, (202) 512-8365 or solisw@gao.gov.
[End of section]
Enclosure XIV: Deficiencies in Supply Support for U.S. Ground Forces
Have Resulted in Shortages of Critical Items:
Issue:
To support Operation Iraqi Freedom (OIF), the Department of Defense
(DOD) undertook a massive logistics effort, moving millions of tons of
cargo, including critical equipment, spare parts, and other supplies
several thousand miles to the Persian Gulf. This effort began in late
2001, accelerated in the fall of 2002 just before major combat
operations were launched in March 2003, and continues today as U.S.
forces undertake stabilization efforts in Iraq. However, U.S. forces
have still experienced shortages of critical supply items. This
enclosure discusses (1) systemic deficiencies in DOD's supply support
for U.S. ground forces during OIF and (2) actions DOD has taken to
improve supply support.
Summary:
OIF tested the DOD logistics system and the industry's capability to
meet rapidly increasing demands, and in many instances the supply chain
failed to respond quickly enough to meet the needs of modern warfare.
In prior reports, we have reported on shortages of critical
items[Footnote 59] and the systemic deficiencies in supply support that
led to these shortages. These deficiencies included (1) inaccurate and
inadequately funded Army war reserve requirements, (2) inaccurate
supply forecasts, (3) insufficient and delayed funding, (4) delayed
acquisition, and (5) ineffective distribution.[Footnote 60] DOD
developed short-term solutions to manage item shortages during OIF, and
DOD and the services have begun to undertake systemic, long-term
changes to fix some of the supply problems identified.
Inaccurate and Inadequately Funded Requirements:
The Army's out-of-date and inadequately funded war reserve requirements
for spare parts negatively affected the availability of armored vehicle
track shoes, lithium batteries, and tires. At the time of our April
2005 report, the Army had not conducted annual updates to its war
reserve requirements since 1999. In addition, Army war reserve
requirements had not been fully funded for many years, indicating that
the Army had made a risk management decision not to fund war reserves.
This decision forced war reserve managers to prioritize the use of
available funding, which meant that some items had no war reserve to
support initial operations. In our March 2006 report on Army truck
armor, we similarly found that the Army made a decision not to fund
prior requirements for truck armor identified in 1996; thus, the Army
did not have a significant number of add-on armor kits available when
the need for them arose in Iraq.
Inaccurate Supply Forecasts:
DOD was unable to accurately forecast supply requirements for armored
vehicle track shoes, lithium batteries, Meals-Ready-to-Eat, and tires.
The Army's computer models for forecasting item demand did not have the
capability to switch to a wartime forecasting mode as required.
Further, the Defense Logistics Agency's model was not effective for all
supply items. As a result, item managers had to manually develop
forecasts for OIF, but they did not always have sufficient or timely
information on estimated deployment sizes or the duration of
operations. In some cases, they underestimated the actual demand, which
resulted in supply shortages during operations.
Insufficient and Delayed Funding:
In April 2005, we reported that delays in funding impeded the
availability of armored vehicle track shoes, lithium batteries, and
tires. Specifically, during OIF, the Army Materiel Command asked for
additional funding to support forecasted OIF requirements but did not
receive these funds in a timely manner. In March 2006, we similarly
reported that funding was not always available to award truck armor
contracts when requirements were identified. As a result, production
time lengthened because contracts were awarded for amounts less than
total requirements. In all of the cases we reported, sufficient
documentation was lacking to determine why funding was not available
when needed, thus limiting effective oversight over funding decisions.
Delayed Acquisition:
Problems with delayed acquisition led to several shortages of critical
supply and equipment items. For example, in April 2005, we reported
that a lack of key materials and long production lead-times resulted in
shortages of body armor and lithium batteries. Similarly, in March and
June 2006, we reported that shortages of key materials, such as steel,
negatively affected the availability of Army and Marine Corps truck
armor kits. In addition to these shortages, in April 2005, we reported
that DOD's decision not to maximize available production capacity
adversely affected the availability of up-armored High-Mobility Multi-
Purpose Wheeled Vehicles (HMMWV) and add-on armor kits. The acquisition
challenges we reported impeded DOD's ability to quickly respond to
rapidly increasing demands, resulting in equipment items not being
available to warfighters when needed.
Ineffective Distribution:
As a result of an ineffective joint distribution system during OIF, DOD
was unable to distribute sufficient quantities of four items we
reported on in April 2005--assault amphibian vehicle generators, body
armor, Meals-Ready-to-Eat, and tires. Among the problems we identified
with theater distribution were (1) conflicting doctrine, or military
principles, defining the authority of the geographic combatant
commander to synchronize the distribution of supplies from the United
States to the theater; (2) improper packaging of air shipments from the
United States, which forced personnel in theater to spend extra time
opening and sorting shipments; (3) insufficient transportation
equipment and supply personnel in theater; and (4) the inability of
logistics information systems to support the requisition and shipment
of supplies into and throughout Iraq. To address OIF distribution
problems, DOD established a deployment and distribution operations
center in Kuwait to coordinate the arrival of supplies in theater and
consolidated air cargo pallets for shipment to a single supply support
activity. According to DOD, these two initiatives improved the flow of
supplies into and around the OIF theater.
DOD Actions Taken to Improve Supply Support:
DOD, the services, and the defense agencies have taken actions to
improve supply availability. Many short-term solutions to lessen the
impact of supply shortages were instituted during combat operations.
For example, as a result of the lithium battery shortage, the Joint
Staff developed the "critical few list" to improve the availability of
items that the services and combatant commands report as critical to
their worldwide operations. DOD is also beginning to make systemic,
long-term changes to correct some of its supply problems. One of the
more notable is that the Secretary of Defense designated the U.S.
Transportation Command as responsible for improving distribution. With
the encouragement of the Office of Management and Budget, DOD has also
developed a plan to improve supply chain management. The plan focuses
on three areas--forecasting requirements, materiel distribution, and
asset visibility. We have previously reported on DOD's efforts to
improve supply distribution and supply chain management.[Footnote 61]
Prior Recommendations:
We have made a number of prior recommendations aimed at improving the
effectiveness of DOD's supply system in supporting deployed forces for
contingency operations. For example, we have made recommendations to
improve the accuracy of war reserve requirements, support prewar
planning through supply forecasting, minimize future acquisition
delays, and improve supply distribution. DOD agreed with the intent of
the recommendations and cited actions it had taken or was taking to
eliminate supply chain deficiencies. However, it did not clearly
identify timelines for fully implementing most of these
recommendations, and we subsequently modified our recommendations to
require that DOD specify when actions will be completed.
Oversight Questions:
* What actions has DOD taken to improve the accuracy of war reserve
requirements and wartime supply requirements?
* To what extent has DOD funded its war reserve and other equipment
requirements, and what are the operational impacts of any unfunded
requirements?
* What actions has DOD taken to improve the timely availability of
funding for wartime supply needs and emerging equipment requirements?
* What actions has DOD taken to assess the industrial base's capacity
to meet increasing wartime supply and equipment needs and to minimize
acquisition delays?
* What actions have DOD and the U.S. Transportation Command implemented
to improve theater distribution during wartime?
GAO Contact:
William M. Solis, Director, Defense Capabilities and Management, (202)
512-8365 or Hsolisw@gao.govH.
[End of section]
Improving Acquisition Outcomes:
Enclosure XV: DOD Needs to Improve Its Capacity to Manage Contractors:
[End of section]
Enclosure XV: DOD Needs to Improve Its Capacity to Manage Contractors:
Issue:
The Department of Defense (DOD) has relied extensively on contractors
to undertake major reconstruction projects and provide logistical
support to its troops in Iraq. For example, DOD has responsibility for
a significant portion of the more than $30 billion in appropriated
reconstruction funds and has awarded and managed many of the large
reconstruction contracts, such as the contracts to rebuild Iraq's oil,
water, and electrical infrastructure, and to train and equip Iraqi
security forces. Further, U.S. military forces in Iraq have used
contractors to a far greater extent than in prior operations to provide
interpreters and intelligence analysts, as well as more traditional
services such as weapons systems maintenance and base operations
support. The Army alone estimates that almost 60,000 contractor
employees currently support ongoing military operations in Southwest
Asia and has spent about $15.4 billion on its single largest support
contract--the Logistics Civil Augmentation Program (LOGCAP)--between
2001 and 2004. These contracts are often cost-plus type contracts,
which allow the contractor to be reimbursed for reasonable, allowable,
and allocable costs to the extent prescribed in the contracts. This
enclosure discusses actions needed to improve (1) DOD's reconstruction
outcomes and (2) its use of logistics support contractors.
Summary:
The United States has made significant investments through
reconstruction and logistics support contracts, but this investment has
not always resulted in the desired outcomes. Many reconstruction
projects have fallen short of expectations, and DOD has yet to resolve
long-standing challenges in its management and oversight of contractors
in deployed locations. These challenges often reflect shortcomings in
DOD's capacity to manage contractor efforts, including having
sufficiently focused leadership, guidance, a match between requirements
and resources, sound acquisition approaches, and an adequate number of
trained contracting and oversight personnel. Further, because
information on the number of contractor employees and the services they
provide is not aggregated within DOD or its components, DOD cannot
develop a complete picture of the extent to which it relies on
contractors to support its operations. With about 29 percent of DOD's
planned construction work remaining and the need for continued
logistical support for deployed forces, it is essential to improve
DOD's capacity to manage its contractors if the department is to
increase its return on its investment.
Better Reconstruction Outcomes Require Improved Contract Management:
Amid some signs of progress, the United States and its coalition
partners face numerous political, security, and economic challenges in
rebuilding Iraq. Within this environment, many reconstruction projects
have fallen short of expectations, resulting in increased costs,
schedule delays, and reduced scopes of work. These outcomes have
contributed to the inability of the United States to fully meet its
goals with respect to oil, electricity, and water sectors. Poor
acquisition outcomes are not unique to Iraq, and the contracting
challenges are emblematic of systemic issues faced by DOD. In fact, GAO
designated DOD's contract management activities as a high-risk area
more than a decade ago. In our January 2005 report, we noted that DOD
needed to use sound business practices when buying goods and services
and have the right skills and capabilities in its acquisition workforce
to properly manage these acquisitions.[Footnote 62]
A prerequisite to having good outcomes is a match between well-defined
requirements and available resources. Shifts in priorities and funding
invariably have a cascading effect on individual contracts. To produce
desired outcomes within available funding and required time frames, DOD
and its contractors need to clearly understand reconstruction
objectives and how they translate into the contract's terms and
conditions: the goods or services needed, the level of performance or
quality desired, the schedule, and the cost. When such requirements
were not clear, DOD often entered into contract arrangements that posed
additional risks. In June 2004, we reported that DOD often authorized
contractors to begin work before key terms and conditions, including
the work to be performed and its projected costs, were fully
defined.[Footnote 63] In September 2006, we reported that, under this
approach, DOD contracting officials were less likely to remove the
costs questioned by auditors if the contractor had incurred these costs
before reaching agreement on the work's scope and price.[Footnote 64]
In one case, the Defense Contract Audit Agency questioned $84 million
in an audit of a task order for an oil mission. In this case, the
contractor did not submit a proposal until a year after the work was
authorized, and DOD and the contractor did not negotiate the final
terms of the contract until more than a year after the contractor had
completed the work. The absence of well-defined requirements and
clearly understood objectives complicates efforts to hold DOD and
contractors accountable for poor acquisition outcomes.
An unstable contracting environment--when wants, needs, and contract
requirements are in flux--also requires greater attention to oversight,
which relies on a capable government workforce. However, the Special
Inspector General for Iraq Reconstruction found that one of the
Coalition Provisional Authority's (CPA) critical shortcomings in
personnel was the inadequate link between position requirements and
necessary skills. Similarly, in January 2004, an interagency assessment
team found that the number of contracting personnel was insufficient to
handle the increased workload expected with the influx of fiscal year
2004 funding. In part, the CPA's decision to award seven contracts in
early 2004 to help better coordinate and manage the fiscal year 2004
reconstruction efforts recognized this shortfall. As a result, however,
DOD is relying on contractors to help manage and oversee other
contractors.
DOD's lack of capacity contributed to challenges in using interagency
contracting vehicles.[Footnote 65] In certain instances, rather than
develop and award its own contracts, DOD used contracts already awarded
by other agencies. While this practice may improve efficiency and
timeliness, these contracts need to be effectively managed and their
use requires a higher than usual degree of business acumen and
flexibility on part of the workforce. During the initial stages of
reconstruction, we and the DOD Inspector General found instances in
which DOD improperly used interagency contracts. For example, we found
that the lack of effective management controls, including insufficient
oversight and a lack of adequate training, led to breakdowns in the
issuance and administration of task orders for interrogation and other
services by the Department of the Interior on behalf of DOD.[Footnote
66] Similarly, the Inspector General found that a DOD component
circumvented contracting rules when awarding contracts on behalf of the
CPA by using the General Services Administration's federal supply
schedule, in part due to DOD's failure to plan for the acquisition
support the CPA needed to perform its mission.
The need to award contracts and begin reconstruction efforts quickly
also contributed to DOD using other than full and open competition
during the initial stages of reconstruction. While full and open
competition can be a tool to mitigate acquisition risks, DOD officials
had only a relatively short time--often only weeks--to award the first
major reconstruction contracts. We recently reported that available
data indicate that between October 1, 2003, through March 31, 2006, the
vast majority of DOD's contract obligations were on competed
contracts.[Footnote 67]
To improve its capacity to plan and award contracts and manage
contractor performance, DOD has merged the Project and Contracting
Office with the U.S. Army Corps of Engineers' Gulf Region Division.
Additionally, DOD established the Joint Contracting Command-Iraq to
consolidate and prioritize contracting activities and resolve
contracting issues, among other things. In some sectors, DOD has
attempted to directly contract with Iraqi firms, rather than rely on
the large U.S. design-build contracts that it had awarded in early
2004. Although DOD expects this approach will reduce costs, it will
likely increase the administrative and oversight burden on DOD's
acquisition workforce. Overall, about 29 percent of DOD's planned
construction program was incomplete as of October 2006.
Action Needed to Address Long-standing Problems with Management and
Oversight of Military Support Contractors:
DOD has long used contractors to provide supplies and services to
deployed forces, but the scale of contractor support that DOD relies on
in locations such as Iraq has increased considerably from prior
operations. Since 1997, we have reported on DOD's management and
training shortcomings related to contractors supporting deployed
forces, including the lack of senior DOD leadership, the lack of
visibility and knowledge of the number of contractors and the services
they provide, and an inadequate number of trained personnel to ensure
the efficient and effective use of contractor resources.
We recently found these long-standing problems continue to hinder DOD's
management and oversight of support contractors.[Footnote 68] For
example, despite DOD actions to improve its guidance on the use of
contractors to support deployed forces, we found few measures had been
taken by the relevant office within the Office of the Secretary of
Defense to ensure that DOD components complied with this guidance.
Similarly, despite facing many of the same difficulties in managing and
overseeing contractors in Iraq as it faced in prior operations, no
organization within DOD or its components is responsible for
systematically collecting and sharing institutional knowledge regarding
using support contractors. As a result, new units deploying to Iraq run
the risk of repeating past mistakes. DOD has recently established an
office to address contractor support issues, but the office's specific
roles and responsibilities have not yet been clearly defined.
Further, because information on the number of contractor employees or
the services they provide is not aggregated by any organization within
DOD or its components, senior leaders and military commanders cannot
develop a complete picture of the extent to which they rely on
contractors to support their operations. For example, when senior
military leaders began to develop a base consolidation plan, officials
were unable to determine how many contractors were deployed and
therefore ran the risk of over-or under-building the capacity of the
consolidated bases. Having limited visibility can also unnecessarily
increase contracting costs to the government. For example, an Army
official estimated that about $43 million is lost every year on free
meals provided to contractor employees at deployed locations who also
receive a per diem food allowance.
Additionally, DOD does not have sufficient numbers of contractor
oversight personnel at deployed locations, precluding its ability to
obtain reasonable assurance that contractors are meeting contract
requirements efficiently and effectively. An Army official acknowledged
that the Army is struggling to find the capacity and expertise to
provide the contracting support needed in Iraq. A LOGCAP program
official noted that, if adequate staffing had been in place, the Army
could have realized substantial savings on the LOGCAP contract through
more effective reviews of new requirements. DOD is also at risk of
being unable to monitor and assess contractor performance. A Defense
Contract Management Agency official responsible for overseeing the
LOGCAP contractor's performance at 27 locations noted that he was
unable to visit all of those locations during his 6-month tour to
determine the extent to which the contractor was meeting the contract's
requirements.
Military personnel continue to receive limited or no training on the
use of contractor support as part of their predeployment training. The
lack of training hinders commanders' ability to adequately plan for the
use of contractor support and inhibits the ability of contract
oversight personnel to manage and oversee contractors in deployed
locations. Limited or no training also can lead to confusion regarding
roles and responsibilities military commanders have in overseeing
contractors at deployed locations. For example, in several instances,
military commanders attempted to direct or ran the risk of directing a
contractor to perform work outside the scope of the contract, even
though commanders are not authorized to do so and such cases can result
in increased costs to the government.
Prior Recommendations:
We have made several recommendations to improve DOD acquisition
outcomes, including those intended to assure that adequate acquisition
staff and other resources are available to support future operations,
to emphasize the need to define contract requirements in a timely
manner, to improve the management of interagency contracting, and to
resolve long-standing issues with regard to the management and use of
support contractors. DOD has generally agreed with our recommendations
and has actions under way to address them.
Oversight Questions:
* What steps is DOD taking to ensure it has the capacity and knowledge
to successfully execute remaining reconstruction efforts?
* What actions has DOD taken to ensure that its business arrangements,
including its use of contracts awarded by other agencies, result in the
acquisition of goods and services in an appropriate, timely, and cost-
effective manner?
* To what extent is DOD improving its ability to identify the number of
contractor employees and the types of services they provide as it
considers how to support deployed forces in Iraq?
* What steps is DOD taking to ensure that contractor support training
is consistently provided to deployed forces?
* What actions has DOD taken to ensure that it has a sufficient number
of trained contracting and contract management personnel in place in
Iraq?
* What can be done to establish contracting arrangements in advance to
support future contingency operations?
* What limitations should be placed on the role that contractors play
in conflict zones?
GAO Contacts:
John P. Hutton, Acting Director, Acquisition and Sourcing Management,
(202) 512-4841 or Hhuttonj@gao.govH; and William M. Solis, Director,
Defense Capabilities and Management, (202) 512-8365 or
Hsolisw@gao.govH.
[End of section]
Objectives, Scope, and Methodology, and Staff Acknowledgments:
Enclosure XVI: Objectives, Scope, and Methodology:
Enclosure XVII: Staff Acknowledgments:
[End of section]
Enclosure XVI: Objectives, Scope, and Methodology:
To monitor U.S. efforts in Iraq, we focused on (1) the U.S. strategy
and costs of operations in Iraq, (2) security issues, (3) governance
challenges, (4) reconstruction challenges, (5) U.S. military readiness,
and (6) acquisition outcomes. Our analysis is based on completed and
ongoing work. As part of this work, we made multiple visits to Iraq
during 2006. For the enclosures that include new information, we
provided copies to the relevant agencies for advanced review and
technical comments, which we incorporated as appropriate. We conducted
our review in accordance with generally accepted government auditing
standards. The information on foreign law in this report does not
reflect our independent legal analysis, but it is based on interviews
and secondary sources.
Strategy and Costs:
We examined (1) the U.S. strategy in Iraq, and (2) U.S. resource
commitments in Iraq.
To assess the U.S. strategy in Iraq, we obtained and analyzed records,
reports, and data from U.S. government and military officials in
Washington, D.C., and Baghdad, Iraq. We also examined the reports of
other oversight entities that performed internal control and management
reviews. We assessed the strategy using the six desirable
characteristics of an effective national strategy developed in previous
GAO work. National strategies with these characteristics offer
policymakers and implementing agencies a management tool that can help
ensure accountability and more effective results. The six
characteristics are (1) a clear purpose, scope, methodology; (2) a
detailed discussion of the problems, risks, and threats the strategy
intends to address; (3) the desired goals and objectives, and outcome-
related performance measures; (4) a description of the U.S. resources
needed to implement the strategy; (5) a clear delineation of the U.S.
government roles, responsibilities, and mechanisms for coordination;
and (6) a description of how the strategy is integrated internally
among U.S. agencies and externally with the Iraqi government and
international organizations. We evaluated the National Strategy for
Victory in Iraq (NSVI) alone and in conjunction with seven related
classified and unclassified supporting documents that Department of
State (State) and Department of Defense (DOD) officials said
encompassed the U.S. strategy.
To describe U.S. resource commitments in Iraq, we reviewed prior GAO
products examining the reported obligations and funding for military
operations in support of the global war on terrorism (GWOT). We also
reviewed DOD's reported obligations as of September 2006. In our prior
work, we compared supplemental and annual appropriations identified for
GWOT to the military services' reported obligations and cost
projections and examined the extent to which DOD has taken steps to
improve its cost-reporting procedures and the reliability of its
reported GWOT obligation data. To compare the military services'
reported obligations against available funding appropriated for GWOT,
we analyzed copies of DOD's monthly Supplemental and Cost of War
Execution Report and reviewed applicable supplemental and annual
appropriations and DOD reports on the transfer of funds between various
appropriation accounts. We also interviewed key officials from the
Office of the Under Secretary of Defense (Comptroller) and the Army,
Navy, Marine Corps, and Air Force to determine if their projected GWOT
obligations are within funding levels. As previously reported, we found
the data in DOD's monthly Supplemental and Cost of War Execution Report
to be of questionable reliability. Consequently, we are unable to
ensure that DOD's reported obligations for GWOT are complete, reliable,
and accurate, and they should therefore be considered approximations.
In addition, DOD has acknowledged that systemic weaknesses with its
financial management systems and business operations continue to impair
its financial information. To examine the steps DOD has taken to
improve the reliability of its reported GWOT obligations, we
interviewed key officials from the DOD Comptroller and the Army, Navy,
Marine Corps, and Air Force to determine the extent to which our
previous recommendations have been implemented. We also reviewed any
new guidance issued by DOD regarding the analysis and reporting of
obligations for contingencies. In addition, we performed limited
testing of the reported GWOT obligations for military personnel and
discussed with DOD and military service financial managers their
specific processes and procedures used to ensure that reported GWOT
obligation data provided by the subordinate commands are accurate and
reliable.
Security Conditions:
To address security issues, we focused on (1) trends in security
conditions in Iraq and in Multinational Force-Iraq's (MNF-I) plans for
transferring security responsibilities to the Iraqi government and
security forces, (2) how MNF-I measures the capabilities of the Iraqi
security forces, and (3) accountability procedures for U.S.-funded
equipment provided to the Iraqi security forces. Although we reviewed
classified documents during our completed and ongoing Iraq security
engagements, the information in this report is based on unclassified
documents only.
To provide information on areas (1) and (2), we relied extensively on a
number of prior GAO reports.[Footnote 69] Where appropriate, we updated
data on security trends and progress in developing Iraqi security
forces and transferring security responsibilities to them. To update
data on trends in the security situation, we obtained and assessed MNF-
I data on enemy-initiated attacks against the coalition and its Iraqi
partners from the Defense Intelligence Agency. We determined that the
data were sufficiently reliable for establishing general trends in the
number of attacks. To assess and update data on progress in developing
Iraqi security forces, we reviewed DOD and State reports, transcripts
of MNF-I and U.S. Embassy press conferences, and MNF-I guidance on
Iraqi readiness assessments.
To address accountability for U.S.-funded equipment provided to the
Iraq security forces, we reviewed (1) the laws and regulations
governing property accountability for U.S.-funded equipment that DOD
has applied to the U.S. train-and-equip program for Iraq, and (2) MNF-
I's accountability for U.S.-funded equipment that it has issued to
Iraqi security forces.
To examine the laws and regulations that govern property
accountability, we reviewed relevant legislation appropriating funds to
train and equip the Iraqi security forces, pertinent DOD regulations,
and relevant U.S. military orders. We interviewed officials from State
and DOD, including the DOD Office of the Secretary of Defense, Deputy
Undersecretary of Defense (Logistics and Material Readiness); Defense
Security and Cooperation Agency; the Defense Logistics Agency; Tank-
automotive and Armaments Command; and Defense Reconstruction and
Support Office. We did not review individual contracts to determine
whether they contained equipment accountability provisions.
To review MNF-I's accountability for U.S.-funded equipment that it has
issued to Iraqi security forces, we reviewed documentation and
interviewed current and former officials of the U.S. Central Command
(CENTCOM), MNF-I, and Multinational Security Transition Command-Iraq
(MNSTC-I) in Baghdad, Iraq; Tampa, Florida; Washington, D.C; and Fort
Leavenworth, Kansas. To provide our preliminary observations on the
amount of equipment reported by MNF-I as issued to the Iraqi security
forces, we interviewed key officials to gain an understanding of the
MNSTC-I property book data and information reported by the former MNSTC-
I commander. We determined that the property books, as of October 2006,
were sufficiently reliable for the purposes of our report. We did not
assess the reliability of the commander's data. According to former
MNSTC-I officials, the data represent equipment tracked at the national
warehouses or the regional distribution centers. Based on interviews
with current and former MNSTC-I officials, we noted the weaknesses in
the data and determined that the data were sufficiently reliable for
the purposes of our report.
Governance Challenges:
To address governance issues, we examined (1) U.S. and international
assessments of Iraq's ministries, (2) the status of ministry capacity
development efforts, (3) the factors affecting Iraqi ministry efforts
to spend capital budgets, and (4) Iraq's foreign debt and the
challenges it faces in meeting International Monetary Fund (IMF)
conditions.
To describe U.S. and international assessments of Iraq's ministries, we
reviewed official reports, such as Measuring Stability and Security in
Iraq (Department of Defense), Survey of Anticorruption Programs
(Department of State), and Briefing Book for the Government of Iraq
(World Bank). We interviewed officials from the Departments of State
and Defense, the U.S. Agency for International Development (USAID), and
the World Bank about the status of Iraq's ministries and the challenges
they face. We also discussed the status of Iraq's ministries with U.S.
officials at the U.S. Embassy in Iraq.
To address U.S. efforts to build Iraq ministry capacity, we reviewed
U.S. documents, such as the Iraq Reconstruction Management Office
(IRMO) Weekly Status Reports, contracts and statements of work for
capacity development efforts, reports to Congress pursuant to Section
1227 (c) of the National Defense Authorization Act for fiscal year
2006, and multiple U.S. briefings and status reports about U.S.
capacity development efforts and coordination. We interviewed U.S.
officials from the Departments of State, Defense, Justice, and the
Treasury and USAID who are responsible for implementing capacity
development programs. We discussed with them (1) coordination among
their agencies and (2) their roles. We interviewed officials of the
World Bank and the United Nations about lessons learned from
international capacity building and their current program efforts in
Iraq. We identified and reviewed the various approaches to assessing
ministry capacity used by USAID, State, and Defense.
To address the factors affecting Iraqi ministry efforts to spend
capital budgets, we reviewed budget expenditure reports of Iraqi
Ministries prepared by the Department of the Treasury. We compiled
these data to provide summary data. We also discussed these data with
U.S. Treasury officials in the United States and Iraq. We also reviewed
IMF and World Bank documents on developments in Iraq. We interviewed
officials from the Departments of State, IRMO, USAID, and the World
Bank about issues related to budget execution.
To identify oversight questions related to Iraq's foreign debt and the
challenges it faces in meeting IMF conditions, we examined documents
from the IMF (including Iraq's stand-by arrangement), the Paris Club of
international creditors, and relevant U.S. agencies and international
organizations. To determine the amount of outstanding debt in 2004
(prior to debt restructuring) and 2006, we used official IMF estimates
of Iraq's external debt. Since the IMF estimates for 2006 included debt
restructuring by non-Paris Club official creditors that had not been
completed, we used the IMF estimate from 2004 for these countries.
Reconstruction Challenges:
To address reconstruction challenges, we examined (1) U.S. efforts to
restore Iraq's oil sector, and (2) U.S. efforts to improve Iraq's
electricity sector.
To determine the progress made in restoring oil and electricity, we
reviewed weekly and daily status reports prepared by U.S. agencies,
including the Army Corps of Engineers, State, and IRMO. We compiled
these data and analyzed the results to provide summary data. To discuss
progress in improving the electricity sector, we also met with U.S.,
Iraqi, and United Nations (UN) officials at a November 2006 electricity
conference sponsored by the UN Development Program at the Dead Sea,
Jordan. To determine the effect of Iraq's security environment on the
U.S. rebuilding program, we interviewed Army Corps of Engineers,
Defense, State, USAID, and Department of Energy officials in the United
States and Iraq. We also obtained documents from State and Defense on
security issues and funding. To help assess U.S. oversight of the
program, we interviewed U.S. agency officials in the United States and
Iraq and reviewed management reports used to help monitor progress,
including the Corps' Sector Consolidated Results Updated Meeting
reports for the oil and electricity sectors.
U.S. Military Readiness:
To address the impact of U.S. operations on U.S. force readiness, we
examined (1) the impact of extended operations in Iraq on the U.S.
military, (2) munitions security and protection of U.S. ground forces,
and (3) supply support for U.S. ground forces.
To discuss the impact of extended operations on the U.S. military, we
relied extensively on a number of prior GAO products addressing
personnel, force structure, equipment, training, and other Iraq-related
military issues. These products, which are cited in Encl. XII, provide
detailed information on our scope and methodology.
To assess the security provided by DOD over conventional munitions
storage sites captured in Iraq, we reviewed DOD, Joint Staff, and
service policies, guidance, procedures, and plans. We obtained
documentation and interviewed officials from the U.S. Joint Forces
Command; the U.S. Central Command, U.S. Army Forces Command; Third
Army, which is also known as the U.S. Army Central and Coalition Forces
Land Component Command; Joint Improvised Explosive Device (IED) Defeat
Task Force; Defense Intelligence Agency; National Geospatial-
Intelligence Agency; National Ground Intelligence Center; and Central
Intelligence Agency. In addition, we interviewed previous command
officers and active duty personnel who served as operational war
planners prior to Operation Iraqi Freedom (OIF). Finally, we reviewed
various iterations of operational plans and stability plans prepared by
U.S. Central Command and the Coalition Forces Land Component Command.
To assess DOD's actions to mitigate risks associated with an
adversary's conventional munitions storage sites for future operations
based on OIF lessons learned, we examined joint staff and service-
specific lessons learned reports. We also reviewed joint doctrine and
multiservice doctrines, tactics, techniques, and procedures, and the
Joint IED Defeat handbook to determine how those documents address the
security of conventional munitions storage sites.
To address protection of U.S. ground forces in Iraq, we focused on the
availability of body armor and truck armor to meet requirements. Our
methodology for evaluating the supply of body armor--one of nine supply
items we selected for detailed case studies--is discussed in the
section below on supply support for U.S. ground forces. To examine the
availability of truck armor, we focused on medium and heavy tactical
trucks used by Army and Marine Corps forces in the U.S. Central Command
area of responsibility, which included those in Iraq and Afghanistan.
To identify the extent to which truck armor was produced and installed
to meet identified requirements, we visited numerous DOD, Army, and
Marine Corps organizations to obtain data on the requirements, funding,
production, and installation of truck armor kits. We considered the
armor requirement as met for each type of truck when the quantity of
armor kits produced and installed onto vehicles equaled the
requirement. Based on the information gathered, we identified factors
that affected the time to provide truck armor kits to deployed forces.
We also identified DOD's, the Army's, and the Marine Corps' short-term
and long-term efforts to improve the availability of truck armor.
To assess supply support for U.S. ground forces, we developed detailed
case studies of nine supply items that were reported to be in short
supply during OIF between October 2002 and September 2004. To identify
the extent and impact of supply shortages, we visited numerous DOD
logistics organizations to obtain data on the production, availability,
and distribution of supply items at the national level. We interviewed
members of units that had returned from the theater to determine the
extent and impact of item shortages on their operations. We identified
deficiencies that affected the availability of two or more of the case
study items. We worked with DOD logistics agencies, operational units,
and service and geographic commands to evaluate the significance of
these deficiencies. We also identified DOD's and the military services'
short-term and long-term efforts to address these shortages. Our
methodology for assessing supply support of truck armor is discussed in
the section above on protection of U.S. forces. To assess DOD's
progress in resolving supply distribution deficiencies, we reviewed
DOD's organizational structure, transformation strategy, and major
initiatives to improve the distribution system, including the U.S.
Transportation Command's progress in implementing its responsibilities
as DOD's "distribution process owner" and the extent to which DOD's
logistics transformation strategy provides a framework for guiding and
synchronizing distribution improvement efforts. We obtained information
on five initiatives that DOD highlighted as major efforts to resolve
distribution problems. We also reviewed DOD's plan to address long-term
systemic weaknesses in supply chain management.
Improving Acquisition Outcomes:
To examine efforts to improve acquisition outcomes, we relied primarily
on our completed and ongoing reviews of efforts to rebuild Iraq that we
have undertaken since 2003, as well as our work related to selected DOD
contract management issues. We also reviewed audit reports and lessons
learned reports issued by the Special Inspector General for Iraq
Reconstruction and work completed by the Inspector General, Department
of Defense. To determine the extent to which DOD has improved its
management and oversight of contractors supporting deployed forces, we
met with DOD and military department officials and reviewed changes to
key policies and guidance. We visited selected DOD components and
military commands in the United States and held discussions with
military commanders, staff officers, and other officials that had
deployed to Iraq or elsewhere in Southwest Asia during the 2003-2006
time frame to discuss their experiences and the challenges they faced
managing and overseeing contractors in a deployed location. We also
traveled to Southwest Asia, including Iraq, to meet with combat units
and to discuss the use of contractor support with military and
installation commanders and other military personnel. We also met with
26 U.S. and foreign contractors who provide support to DOD in Southwest
Asia to discuss contracting and contract management issues.
[End of section]
Enclosure XVII: Staff Acknowledgments:
Key contributors to this report include Nanette Barton, Ann Borseth,
David Bruno, Donna Byers, Dan Cain, Joseph A. Christoff, Carole Coffey,
Lynn Cothern, Tracey Cross, Davi D'Agostino, Tim DiNapoli, Mike Ferren,
Rich Geiger, Tom Gosling, Whitney Havens, Lisa Helmer, Patrick Hickey,
Henry L. Hinton Jr., Rhonda Horried, John Hutton, Mike Kennedy, Bruce
Kutnick, Steve Lord, Judy McCloskey, Tet Miyabara, Kate Monahan, Dave
Moser, Mary Moutsos, Ken Patton, Sharon Pickup, Jason Pogacnik, Jim
Reynolds, Donna Rogers, Cary Russell, Dave Schmitt, Amy Sheller,
William Solis, Lorelei St. James, Janet St. Laurent, Derek Stewart,
John Van Schaik, and Tim Wedding.
Ben Atwater, Rob Ball, Leslie Bharadwaja, Michael Derr, Susan Ditto,
George Duncan, Etana Finkler, Muriel Forster, Brent Helt, Wesley
Johnson, Hynek Kalkus, Andy Marek, Jim Michels, Don Morrison, Marc
Schwartz, Michael Simon, Jena Sinkfield, Cynthia Taylor, Gergana
Trainor, Kristy Williams, Wilda Wong, and Tony Wysocki provided
technical assistance.
FOOTNOTES
[1] The NSVI and key supporting documents are collectively referred to
as the U.S. strategy for Iraq.
[2] GAO, Rebuilding Iraq: More Comprehensive National Strategy Needed
to Help Achieve U.S. Goals, HGAO-06-788 H(Washington, D.C.: July 11,
2006).
[3] See GAO, Combating Terrorism: Evaluation of Selected
Characteristics in National Strategies Related to Terrorism, HGAO-04-
408T H(Washington, D.C.: Feb. 3, 2004); and Defense Management:
Comprehensive Strategy and Periodic Reporting Are Needed to Gauge
Progress and Costs of DOD's Global Posture Restructuring, HGAO-06-486C
H(Washington, D.C.: May 26, 2006).
[4] We evaluated the NSVI along with seven related classified and
unclassified supporting documents. These documents were identified by
State's Office of the Coordinator for Iraq, State's Bureau of Near
Eastern Affairs, DOD's Defense Reconstruction Support Office, and DOD's
Near Eastern South Asian Affairs office as having key details about the
strategy. The documents included (1) the National Security Presidential
Directive 36 (May 2004), (2) the MNF-I Campaign Plan (August 2004), (3)
the MNF-I/ U.S. Embassy Baghdad Joint Mission Statement on Iraq
(December 2005), (4) the Multinational Corps-Iraq Operation Order 05-03
(December 2005), (5) the National Strategy for Supporting Iraq (updated
January 2006), (6) State's quarterly section 2207 reports to Congress
(January and April 2006); and (7) the April 2006 Joint Campaign Plan
issued by the Chief of Mission and the Commander of the MNF-I.
[5] For purposes of this enclosure, the term "costs" refers to the
obligations that have been incurred by U.S. agencies in Iraq.
Obligations are incurred through actions such as orders placed,
contracts awarded, services received, or similar transactions made
during a given period that will require payments during the same or a
future period.
[6] DOD's reported costs in Iraq do not include the costs of classified
activities.
[7] For example, see GAO, Global War on Terrorism: Fiscal Year 2006
Obligation Rates Are within Funding Levels and Significant Multiyear
Procurement Funds Will Likely Remain Available for Use in Fiscal Year
2007, HGAO-07-76 H(Washington, D.C.: Nov. 13, 2006); and Global War on
Terrorism: DOD Needs to Improve the Reliability of Cost Data and
Provide Additional Guidance to Control Costs, HGAO-05-882 H(Washington,
D.C.: Sept. 21, 2005).
[8] This operation, which defends the U.S. homeland against terrorist
attacks, began in 2001.
[9] GAO, Global War on Terrorism: Observations on Funding, Costs, and
Future Commitments, HGAO-06-885T H(Washington, D.C.: July 18, 2006);
and Future Years Defense Program: Actions Needed to Improve
Transparency of DOD's Projected Resource Needs, HGAO-04-514
H(Washington, D.C.: May 7, 2004).
[10] The multinational force in Iraq was known as Combined Joint Task
Force-7 until May 2004.
[11] In March 2004, Iraqi security forces numbered about 203,000,
including about 76,000 police, 78,000 facilities protection officers,
and about 38,000 in the civilian defense corps. The Departments of
State and Defense later stopped including facilities protection
officers in their count of Iraqi security forces.
[12] MNF-I first revised the security transition plan in its August
2004 campaign plan and later in the April 2006 joint MNF-I/U.S. Embassy
Baghdad Campaign Plan. Detailed information on these plans is
classified. See GAO, DOD Reports Should Link Economic, Governance, and
Security Indicators to Conditions for Stabilizing Iraq, HGAO-06-152C
H(Washington, D.C.: Oct. 18, 2005) for classified information on MNF-
I's original campaign plan; and Plans for Stabilizing Iraq, HGAO-06-
673C H(Washington, D.C.: July 27, 2006) for classified information on
the Joint MNF-I/U.S. Embassy Baghdad Campaign Plan.
[13] We recently reviewed U.S. efforts to assist the Iraqi Ministries
of Defense and Interior in developing support capabilities,
particularly in the areas of logistics, command and control, and
intelligence. We plan to report separately on these matters due to the
sensitive nature of the information.
[14] The United States had set a goal of training and equipping about
325,000 Iraqi security forces by December 2006. This figure consists of
137,000 military personnel under the Ministry of Defense and 188,000
Ministry of Interior police and other forces. According to DOD and MNF-
I reports, the Prime Minister of Iraq has announced initiatives to man
combat units at 110 percent of their authorization levels and to expand
the size of the army. If implemented, these moves would raise the end
strength of Iraqi security forces to about 362,000 and would extend the
training and equipping of Iraqi forces through January 2008.
[15] GAO, Stabilizing Iraq: An Assessment of the Security Situation,
HGAO-06-1094T H(Washington, D.C.: Sept. 11, 2006); and Rebuilding Iraq:
Preliminary Observations on Challenges in Transferring Security
Responsibilities to Iraqi Military and Police, HGAO-05-431T
H(Washington, D.C.: Mar. 14, 2005).
[16] Ramadan is the ninth month of the Islamic calendar. Over the past
4 years, Ramadan began about October 27, 2003; October 16, 2004;
October 5, 2005; and September 24, 2006.
[17] U.S. force levels for 2005 and 2006 came from Brookings
Institution, Iraq Index: Tracking Variables of Reconstruction &
Security in Post-Saddam Iraq (Washington, D.C: Dec. 21, 2006).
[18] The 2006 number includes special operations forces and support
forces.
[19] The Iraqi army, national police, Department of Border Enforcement,
and strategic infrastructure battalions use the basic TRA format. MNF-
I assesses the capability of Iraqi police to perform law enforcement
operations using a different TRA report.
[20] Headquarters service companies are rated levels 1 through 4 based
on their ability to provide combat support and combat service support
to units.
[21] The Coalition Provisional Authority was the U.N.-recognized
authority led by the United States and the United Kingdom that was
responsible for the temporary governance of Iraq. Multinational Force-
Iraq was known as Combined Joint Task Force-7 until May 2004.
[22] Traditional security assistance programs operate under State
Department authority and are managed in country by the Department of
Defense through security assistance organizations under the direction
and supervision of the Chief of the U.S. Diplomatic Mission.
[23] DOD defines accountability as the obligation imposed by law,
lawful order, or regulation, accepted by an organization or person for
keeping accurate records, to ensure control of property, documents or
funds, with or without physical possession (DODI 5000.64,
Accountability and Management of DoD-Owned Equipment and Other
Accountable Property, E2.2).
[24] A property book is a formal set of property accounting records and
files.
[25] See Emergency Supplemental Appropriations Act for Defense and for
the Reconstruction of Iraq and Afghanistan, 2004, P.L. 108-106;
Emergency Supplemental Appropriations Act for Defense, the Global War
on Terror, and Tsunami Relief, 2005, P.L. 109-13; Emergency
Supplemental Appropriations Act for Defense, the Global War on Terror,
and Hurricane Recovery, 2006, P.L. 109-234; Department of Defense
Appropriations Act, 2007, P.L. 109-289.
[26] See DOD 5105.38-M, Security Assistance Management Manual, C7.5.
The Foreign Military Sales program is a traditional security assistance
program where eligible recipient governments purchase from the U.S.
government defense articles, services, or training, often using grants
provided under the Foreign Military Financing program.
[27] DOD 5100.76-M, Physical Security of Sensitive Conventional Arms,
Ammunition, and Explosives, C1.1.1; DOD 4000.25-M, Defense Logistics
Management System, C18.7.4.3; and DOD 4000.25-2-M, Military Standard
Transaction Reporting and Accounting Procedures, C12.7.4.3.
[28] DOD 4000.25-2-M, Military Standard Transaction Reporting and
Accounting Procedures, C12.7.4.3; DOD 4000.25-M, Defense Logistics
Management System, C18.7.4.3.
[29] According to former and current MNSTC-I officials, MNF-I has
issued equipment from a variety of sources. The equipment includes
items procured with funds from the United States, Iraq, and other
coalition countries, as well as weapons captured since the start of
Operation Iraqi Freedom and then redistributed to Iraqi forces.
[30] MNF-I Directive 04-015, OST Supply and Equipment Distribution
Guidance (May 2004); MNC-I FRAGO 155 [12 June 2004 DTU] to MNC-I OPORD
04-01, Iraqi Security Force Property Accountability Requirements (June
2004).
[31] See Department of Defense, Measuring Stability and Security in
Iraq (Washington, D.C.: August 2006 and November 2006); Department of
State, Survey of Anticorruption Programs Embassy Baghdad, Iraq
(Washington, D.C.: August 2006); The World Bank, Briefing Book for the
Government of Iraq Part 1: Key Policy Issues (Washington, D.C.: July
2006).
[32] World Bank, IRAQ: Operation Procurement Review (June 2005).
[33] Most of the debt to Persian Gulf states is for financial
assistance offered to the former Saddam Hussein regime during the 1980-
1988 Iraq-Iran war.
[34] In 1990, the United Nations (UN) imposed economic sanctions on
Iraq following the invasion of Kuwait. The Iraqi government
subsequently defaulted on its debts to the United States and other
international creditors. Following the end of major combat operations
in May 2003, the UN lifted sanctions and sheltered Iraq from certain
debt claims. UN Security Council Resolution 1483 decided that, until
December 31, 2007, Iraqi petroleum, natural gas, and petroleum products
shall generally be immune from legal proceedings against them.
[35] Department of State, Quarterly Update to Congress; 2207 Report
(Washington, D.C.: Oct. 2006).
[36] According to State Department officials, the U.S. goals differ
from the government of Iraq's official production goal of 2.5 mbpd and
the International Monetary Fund (IMF) target of 2.3 mbpd (annual
average).
[37] The Special Inspector General for Iraq Reconstruction,
Unclassified Summary of SIGIR's Review of Efforts to Increase Iraq's
Capability to Protect Its Energy Infrastructure, SIGIR-06-038
(Arlington, Va.: Sept. 27, 2006).
[38] Anthony Cordesman, Center for Strategic and International Studies,
Iraqi Force Development and the Challenge of Civil War: The Critical
Problems and Failures the U.S. Must Address if Iraqi Forces Are to
Eventually Do the Job, (Washington, D.C.: Nov. 30, 2006).
[39] U.S. Department of State, Quarterly Update to Congress; 2207
Report (Washington, D.C., October 2006). Funds were appropriated to the
Iraq Relief and Reconstruction Fund in the Emergency Wartime
Supplemental Appropriations Act, 2003, P.L. 108-11, and the Emergency
Supplemental Appropriations Act for Defense and for the Reconstruction
of Iraq and Afghanistan, 2004, P.L. 108-106.
[40] A megawatt is a measure of the rate at which electric energy can
be transferred and is used as a measure of electric generation
capacity. One megawatt equals 1 million watts.
[41] This number is equal to 164,939 megawatt hours and is calculated
by multiplying 8,210 megawatts by 20.09 hours.
[42] This number is equal to 193,306 megawatt hours and is calculated
by multiplying 9,622 megawatts by 20.09 hours.
[43] MNF-I attack data on infrastructure are classified. The Iraq
Reconstruction and Management Office (IRMO) has worked with the
Ministry of Electricity to improve its infrastructure attack data, but
it is not always feasible to distinguish between attacks, weather
events, and equipment failures, according to IRMO officials.
[44] The Special Inspector General for Iraq Reconstruction (SIGIR),
Unclassified Summary of SIGIR's Review of Efforts to Increase Iraq's
Capability to Protect Its Energy Infrastructure, SIGIR-06-038
(Washington, D.C., Sept. 27, 2006).
[45] Anthony Cordesman, Center for Strategic and International Studies,
Iraqi Force Development and the Challenge of Civil War: The Critical
Problems and Failures the U.S. Must Address if Iraqi Forces Are to
Eventually Do the Job (Washington, D.C., Nov. 30, 2006).
[46] Also, Iraq continues to lack an automated control system that
would decrease reliance on manual operators and help alert operators of
imbalances in power transmission. According to the State Department,
the United States is funding improvements that will help increase the
current system's reliability.
[47] For further information on the issues discussed in this enclosure,
see GAO, Military Personnel: DOD Needs Action Plan to Address Personnel
Recruitment and Retention Challenges, HGAO-06-134 H(Washington, D.C.:
Nov. 17, 2005); Military Personnel: Reserve Components Need Guidance to
Accurately and Consistently Account for Volunteers on Active Duty for
Operational Support, HGAO-07-93 H(Washington, D.C.: Oct. 31, 2006);
Reserve Forces: Army National Guard and Army Reserve Readiness for 21st
Century Challenges, HGAO-06-1109T H(Washington, D.C., Sept. 21, 2006);
Force Structure: DOD Needs to Integrate Data into Its Force
Identification Process and Examine Options to Meet Requirements for
High-Demand Support Forces, HGAO-06-962 H(Washington, D.C.: Sept. 5,
2006); Defense Logistics: Preliminary Observations on Equipment Reset
Challenges and Issues for the Army and Marine Corps, HGAO-06-604T
H(Washington, D.C.: Mar. 30, 2006); Military Training: Funding Requests
for Joint Urban Operations Training and Facilities Should Be Based on
Sound Strategy and Requirements, HGAO-06-193 H(Washington, D.C.: Dec.
8, 2005); Military Personnel: DOD Needs to Address Long-Term Reserve
Force Availability and Related Mobilization and Demobilization Issues,
HGAO-04-1031 H(Washington, D.C.: Sept. 15, 2004); Homeland Defense: DOD
Needs to Assess the Structure of U.S. Forces for Domestic Military
Missions, HGAO-03-670 H(Washington, D.C.: July 11, 2003); Force
Structure: Army Needs to Provide DOD and Congress More Visibility
Regarding Modular Force Capabilities and Implementation Plans, HGAO-06-
745 H(Washington, D.C.: Sept. 6, 2006); and Reserve Forces: Plans
Needed to Improve Army National Guard Equipment Readiness and Better
Integrate Guard into Army Force Transformation Initiatives, HGAO-06-111
H(Washington, D.C.: Oct. 4, 2005.)
[48] HGAO-06-134H.
[49] HGAO-04-1031H.
[50] HGAO-06-111H.
[51] HGAO-06-745H.
[52] These issues are discussed in a classified GAO report, Operation
Iraqi Freedom: DOD Should Apply Lessons Learned Concerning the Need for
Security over Conventional Munitions Storage Sites to Future Operations
Planning, HGAO-07-71C H(Washington, D.C.: December 20, 2006). We plan
to issue an unclassified version of this report in January 2007.
[53] For further information on these issues, see GAO, Defense
Logistics: Actions Needed to Improve the Availability of Critical Items
during Current and Future Operations, HGAO-05-275 H(Washington, D.C.:
Apr. 8, 2005); Defense Logistics: Several Factors Limited the
Production and Installation of Army Truck Armor during Current Wartime
Operations, HGAO-06-160 H(Washington, D.C.: Mar. 22, 2006); and Defense
Logistics: Lack of a Synchronized Approach between the Marine Corps and
Army Affected the Timely Production and Installation of Marine Corps
Truck Armor, HGAO-06-274 H(Washington, D.C.: June 22, 2006).
[54] The Interceptor body armor is designed to provide protection
against rifle rounds through the combined use of ceramic tiles and
polyethylene fiber.
[55] This requirement excludes tanker trucks. The completion of armor
kit installation for tankers was expected by January 2007.
[56] HGAO-07-71CH.
[57] HGAO-06-160H.
[58] HGAO-06-274H.
[59] Items we reviewed included lithium batteries, tires, vehicle track
shoes, add-on body armor, Meals-Ready-to-Eat, up-armored High-Mobility
Multi-Purpose Wheeled Vehicles (HMMWV) and kits, and vehicle
generators. We have also reviewed delays in the production and
installation of Army and Marine Corps truck armor.
[60] For further information on issues discussed in this enclosure, see
GAO, Defense Logistics: Actions Needed to Improve the Availability of
Critical Items during Current and Future Operations, HGAO-05-275
H(Washington, D.C.: Apr. 8, 2005); Defense Logistics: Several Factors
Limited the Production and Installation of Army Truck Armor during
Current Wartime Operations, HGAO-06-160 H(Washington, D.C.: Mar. 22,
2006); and Defense Logistics: Lack of a Synchronized Approach between
the Marine Corps and Army Affected the Timely Production and
Installation of Marine Corps Truck Armor, HGAO-06-274 H(Washington,
D.C.: June 22, 2006).
[61] GAO, Defense Logistics: DOD Has Begun to Improve Supply
Distribution Operations, but Further Actions Are Needed to Sustain
These Efforts, HGAO-05-775 H(Washington, D.C.: Aug. 11, 2005); DOD's
High-Risk Areas: High-Level Commitment and Oversight Needed for DOD
Supply Chain Plan to Succeed, HGAO-06-113T H(Washington, D.C.: Oct. 6,
2005); and DOD's High-Risk Areas: Challenges Remain to Achieving and
Demonstrating Progress in Supply Chain Management, HGAO-06-983T
H(Washington, D.C.: July 25, 2006).
[62] GAO, High-Risk Series: An Update, HGAO-05-207 H(Washington, D.C.:
January 2005).
[63] GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures
and Management Challenges, HGAO-04-605 H(Washington, D.C.: June 1,
2004).
[64] GAO, Rebuilding Iraq: Continued Progress Requires Overcoming
Contract Management Challenges, HGAO-06-1130T H(Washington, D.C.: Sept.
28, 2006); and Iraq Contract Costs: DOD Consideration of Defense
Contract Audit Agency's Findings, HGAO-06-1132 H(Washington, D.C.:
Sept. 25, 2006).
[65] GAO identified management of interagency contracting a high-risk
area in January 2005. See HGAO-05-207H.
[66] GAO, Interagency Contracting: Problems with DOD's and Interior's
Orders to Support Military Operations, HGAO-05-201 H(Washington, D.C.:
Apr. 29, 2005).
[67] GAO, Rebuilding Iraq: Status of Competition for Iraq
Reconstruction Contracts, HGAO-07-40 H(Washington, D.C.: Oct. 6, 2006).
[68] GAO, Military Operations: High-Level DOD Action Needed to Address
Long-standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces, HGAO-07-145 H(Washington, D.C.: Dec. 18,
2006).
[69] GAO, Stabilizing Iraq: An Assessment of the Security Situation,
HGAO-06-1094T H(Washington, D.C.: Sept. 11, 2006); Rebuilding Iraq:
Preliminary Observations on Challenges in Transferring Security
Responsibilities to Iraqi Military and Police, HGAO-05-431T
H(Washington, D.C.: Mar. 14, 2005); and Rebuilding Iraq: Resource,
Security, Governance, Essential Services, and Oversight Issues, HGAO-04-
902R H(Washington, D.C.: June 28, 2004).
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