Stabilizing and Rebuilding Iraq
Conditions in Iraq Are Conducive to Fraud, Waste, and Abuse Gao ID: GAO-07-525T April 23, 2007This testimony discusses some of the systemic conditions in Iraq that contribute to the fraud, waste, or abuse of U.S.-provided funds. Since 2003, DOD has reported total costs of about $257.5 billion for military operations in Iraq; these have increased 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 of people, supplies and equipment. Many of the operation and maintenance expenses are for services. Other U.S. government agencies had reported obligations of $29 billion for Iraqi reconstruction and stabilization, as of October 2006. These funds have been used for, among other things, infrastructure repair of the electricity, oil, water, and health sectors; training and equipping of the Iraqi security forces; and administrative expenses. Specifically, the testimony focuses on (1) security, (2) management and reporting of the program to train and equip Iraqi security forces, (3) contracting and contract management activities, and (4) Iraqi capacity and commitment to manage and fund reconstruction and security efforts.
Despite U.S. and Iraqi efforts to shift a greater share of the country's defense on Iraqi forces, the security situation continues to deteriorate. Poor security conditions have hindered the management of the more than $29 billion that has been obligated for reconstruction and stabilization efforts since 2003. Although the State Department has reported that the number of Iraqi army and police forces that has been trained and equipped has increased from about 174,000 in July 2005 to about 323,000 in December 2006, overall security conditions in Iraq have deteriorated and grown more complex. These conditions have hindered efforts to engage with Iraqi partners and demonstrate the difficulty in making political and economic progress in the absence of adequate security conditions. GAO's ongoing work has identified weaknesses in the $15.4 billion program to support the development and sustainment of Iraqi security forces. Sectarian divisions have eroded the dependability of many Iraqi units, and a number of Iraqi units have refused to serve outside the areas where they were recruited. Corruption and infiltration by militias and others loyal to parties other than the Iraqi government have resulted in the Iraqi security forces being part of the problem in many areas instead of the solution. While unit-level transition readiness assessments (TRA) provide important information on Iraqi security force capabilities, the aggregate reports DOD provides to Congress based on these assessments do not provide adequate information to judge the capabilities of Iraqi forces. The DOD reports do not detail the adequacy of Iraqi security forces' manpower, equipment, logistical support, or training and may overstate the number of forces on duty. Congress will need additional information found in the TRAs to assess DOD's supplemental request for funds to train and equip Iraqi security forces. DOD's heavy reliance on contractors in Iraq, its long-standing contract and contract management problems, and poor security conditions provide opportunities for fraud, waste, and abuse. First, military commanders and senior DOD leaders do not have visibility over the total number of contractors who are supporting deployed forces in Iraq. As we have noted in the past, this limited visibility can unnecessarily increase costs to the government. Second, DOD lacks clear and comprehensive guidance and leadership for managing and overseeing contractors. In October 2005, DOD issued, for the first time, department-wide guidance on the use of contractors that support deployed forces. Although this guidance is a good first step, it does not address a number of problems we have repeatedly raised. Third, key contracting issues have prevented DOD from achieving successful acquisition outcomes. There has been an absence of well-defined requirements, and DOD has often entered into contract arrangements on reconstruction efforts and into contracts to support deployed forces that have posed additional risk to the government. Further, a lack of training hinders the ability of military commanders to adequately plan for the use of contractor support and inhibits the ability of contract oversight personnel to manage and oversee contracts and contractors in Iraq. Iraqi capacity and commitment to manage and fund reconstruction and security efforts remains limited. Key ministries face challenges in staffing a competent and non-partisan civil service, fighting corruption, and using modern technology. The inability of the Iraqi government to spend its 2006 capital budget also increases the uncertainty that it can sustain the rebuilding effort.
GAO-07-525T, Stabilizing and Rebuilding Iraq: Conditions in Iraq Are Conducive to Fraud, Waste, and Abuse
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Testimony:
Before the Subcommittee on Defense, Committee on Appropriations, House
of Representatives:
United States Government Accountability Office:
GAO:
April 23, 2007:
Stabilizing And Rebuilding Iraq:
Conditions in Iraq Are Conducive to Fraud, Waste, and Abuse:
Statement of David M. Walker:
Comptroller General of the United States:
A classified version of this statement was delivered to a closed
session of the Subcommittee on Defense, Committee on Appropriations,
House of Representatives on January 30, 2007.
GAO-07-525T:
Mr. Chairman and Members of the Subcommittee:
I appreciate the opportunity to discuss some of the systemic conditions
in Iraq that contribute to the fraud, waste, or abuse of U.S.-provided
funds. Since 2003, DOD has reported total costs of about $257.5 billion
for military operations in Iraq; these have increased 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 of people, supplies and
equipment. Many of the operation and maintenance expenses are for
services. Other U.S. government agencies had reported obligations of
$29 billion for Iraqi reconstruction and stabilization, as of October
2006. These funds have been used for, among other things,
infrastructure repair of the electricity, oil, water, and health
sectors; training and equipping of the Iraqi security forces; and
administrative expenses.
My testimony today will focus on (1) security, (2) management and
reporting of the program to train and equip Iraqi security forces, (3)
contracting and contract management activities, and (4) Iraqi capacity
and commitment to manage and fund reconstruction and security efforts.
In preparing this testimony, we relied on previously issued GAO reports
and testimonies on the security situation in Iraq, the training and
equipping of Iraqi security forces, capacity of key Iraqi ministries,
the management of contracts and contractors used to support deployed
forces, and issues related to the reconstruction of Iraq. We performed
our work in accordance with generally accepted government auditing
standards.
Summary:
Despite U.S. and Iraqi efforts to shift a greater share of the
country's defense on Iraqi forces, the security situation continues to
deteriorate. Poor security conditions have hindered the management of
the more than $29 billion that has been obligated for reconstruction
and stabilization efforts since 2003. Although the State Department has
reported that the number of Iraqi army and police forces that has been
trained and equipped has increased from about 174,000 in July 2005 to
about 323,000 in December 2006, overall security conditions in Iraq
have deteriorated and grown more complex. For example, the average
number of enemy attacks rose from about 70 per day in January 2006 to a
record high of about 180 per day in October 2006, the single worst
month on record. In December 2006, the attacks averaged about 160 per
day. Sectarian and militia influences in Iraqi security forces have
added to the violence. Collectively, these conditions have hindered
efforts to engage with Iraqi partners and demonstrate the difficulty in
making political and economic progress in the absence of adequate
security conditions.
Our ongoing work has identified weaknesses in the $15.4 billion program
to support the development and sustainment of Iraqi security forces.
Sectarian divisions have eroded the dependability of many Iraqi units,
and a number of Iraqi units have refused to serve outside the areas
where they were recruited. Corruption and infiltration by militias and
others loyal to parties other than the Iraqi government have resulted
in the Iraqi security forces being part of the problem in many areas
instead of the solution. While unit-level transition readiness
assessments (TRA) provide important information on Iraqi security force
capabilities, the aggregate reports DOD provides to Congress based on
these assessments do not provide adequate information to judge the
capabilities of Iraqi forces. The DOD reports do not detail the
adequacy of Iraqi security forces' manpower, equipment, logistical
support, or training and may overstate the number of forces on duty.
Congress will need additional information found in the TRAs to assess
DOD's supplemental request for funds to train and equip Iraqi security
forces. GAO has made repeated attempts to obtain U.S. assessments of
Iraqi forces without success. These data are essential for Congress to
undertake an independent and informed assessment of Iraqi forces'
capabilities, funding needs, and results. Further, DOD and MNF-I may be
unable to ensure that all of the equipment obtained for the Iraqis
reached the intended recipients. It is also unclear what accountability
measures DOD has applied to the train-and-equip program for Iraq.
DOD's heavy reliance on contractors in Iraq, its long-standing contract
and contract management problems, and poor security conditions provide
opportunities for fraud, waste, and abuse. First, military commanders
and senior DOD leaders do not have visibility over the total number of
contractors who are supporting deployed forces in Iraq. As we have
noted in the past, this limited visibility can unnecessarily increase
costs to the government. For example, at a contractor accountability
task force meeting we attended in 2006, an official from the Army
Material Command noted that an Army official estimated that about $43
million is lost every year on free meals provided to contractor
employees who also receive per diem. Second, DOD lacks clear and
comprehensive guidance and leadership for managing and overseeing
contractors. In October 2005, DOD issued, for the first time,
department-wide guidance on the use of contractors that support
deployed forces. Although this guidance is a good first step, it does
not address a number of problems we have repeatedly raised. In October
2006, DOD established the office of the Assistant Deputy Under
Secretary of Defense for Program Support to serve as the office with
primary responsibility for contractor support issues. However, as we
noted in our December 2006 report, it is not clear to what extent this
office serves as the focal point dedicated to leading DOD's efforts to
improve its contract management and oversight. Third, key contracting
issues have prevented DOD from achieving successful acquisition
outcomes. There has been an absence of well-defined requirements, and
DOD has often entered into contract arrangements on reconstruction
efforts and into contracts to support deployed forces that have posed
additional risk to the government. Moreover, DOD does not have a
sufficient number of oversight personnel, which precludes its ability
to obtain reasonable assurance that contractors are meeting contract
requirements efficiently and effectively at each location where work is
being performed. Further, a lack of training hinders the ability of
military commanders to adequately plan for the use of contractor
support and inhibits the ability of contract oversight personnel to
manage and oversee contracts and contractors in Iraq.
Iraqi capacity and commitment to manage and fund reconstruction and
security efforts remains limited. Since 2003, the United States has
obligated about $29 billion to help Iraq rebuild its infrastructure and
develop Iraqi security forces to stabilize the country. However, key
goals have not been met. The Iraqi government has not sustained
reconstruction and security efforts, in part because Iraqi government
institutions are undeveloped and lack needed management and human
resource skills according to U.S. officials. Key ministries face
challenges in staffing a competent and non-partisan civil service,
fighting corruption, and using modern technology. The inability of the
Iraqi government to spend its 2006 capital budget also increases the
uncertainty that it can sustain the rebuilding effort.
Transferring Additional Security Responsibilities to the Iraqi
Government Has Not Improved the Security Situation:
Despite U.S. and Iraqi efforts to shift a greater share of the
country's defense to the Iraqi security forces, the security situation
continues to deteriorate, impeding management of the more than $29
billion obligated for reconstruction and stabilization efforts. The
desired end-state for U.S.-stabilization operations in Iraq is a
peaceful, united, stable, and secure Iraq, well integrated into the
international community, and a full partner in the global war on
terrorism. To achieve this end-state, the United States is, among other
things, (1) training and equipping Iraqi security forces that will be
capable of leading counterinsurgency operations, and (2) transferring
security responsibilities to Iraqi forces and the Iraqi government as
capabilities improve. In October 2003, the multinational force outlined
a multistep plan for transferring security missions to Iraqi security
forces. The security transition plan had the objective of neutralizing
Iraq's insurgency while developing Iraqi forces capable of securing
their country, allowing a gradual decrease in the number of coalition
forces.
From the fall of 2003 through April 2006, MNF-I revised its security
transition plan several times because the Iraqi government and security
forces proved incapable of assuming security responsibilities within
the time frames envisioned by the plans. For example, in April 2004,
Iraqi police and military units performed poorly during an escalation
of insurgent attacks against the coalition. Many Iraqi security forces
around the country collapsed, with some units abandoning their posts
and responsibilities and in some cases assisting the insurgency.
State and DOD have reported some progress in implementing the security
transition plan. The State Department has reported that the number of
army and police forces that have been trained and equipped increased
from about 174,000 in July 2005 to about 323,000 in December 2006. DOD
and State also have reported progress in transferring security
responsibilities to Iraqi army units and provincial governments. The
number of Iraqi army battalions in the lead for counterinsurgency
operations 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.
However, the reported progress in transferring securing
responsibilities to Iraq has not led to improved security conditions
(see fig.1). Since June 2003, overall security conditions in Iraq have
deteriorated and grown more complex, as evidenced by the increased
numbers of attacks and the Sunni-Shi'a sectarian strife that followed
the February 2006 bombing of the Golden Mosque in Samarra. Enemy-
initiated attacks against the coalition and its Iraqi partners
continued to increase through October 2006 and remain high. The average
total attacks per day has increased, rising from about 70 per day in
January 2006 to a record high of about 180 per day in October 2006.
These attacks have increased around major religious and political
events, including Ramadan and the 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
illustrates the difficulty in making political and economic progress in
the absence of adequate security conditions.
Figure 1: Enemy-initiated Attacks Against the Coalition and Its Iraqi
Partners:
[See PDF for image]
Sources: Multi-National Force-Iraq, Dec. 2006.
[End of figure]
Sectarian and militia influences in the Iraqi security forces
contribute to the higher levels of violence. According to portions of
the January 2007 National Intelligence Estimate on Iraq that were
declassified, sectarian divisions have eroded the dependability of many
Iraqi units, and a number of Iraqi units have refused to serve outside
the areas where they were recruited. According to an August 2006 DOD
report, sectarian lines among the Iraqi security forces are drawn
geographically, with Sunni, Shi'a, or Kurdish soldiers serving
primarily in units located in areas familiar to their group. Further,
according to the report, commanders at the battalion level tend to
command only soldiers of their own sectarian or regional background.
Moreover, in November 2006, the State Department reported that
corruption and infiltration by militias and others loyal to parties
other than the Iraqi government have resulted in the Iraqi security
forces being part of the problem in many areas instead of the solution.
Because of the poor security 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
the 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. 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 in the summer of 2006.
DOD Faces Weaknesses in the Program to Develop Iraqi Security Forces:
Our work has identified weaknesses in the $15.4 billion program to
develop Iraqi security forces. Although unit-level transition readiness
assessments provide detailed information on Iraqi security force
capabilities, the aggregate reports that DOD and State provide to
Congress do not provide the information needed to determine the
complete capabilities of the forces. Consequently, Congress will need
additional information to assess the department's supplemental request
for $3.8 billion to train and equip Iraqi security forces. GAO has made
repeated attempts, without success, to obtain U.S. assessments of Iraqi
forces. These data are essential for Congress to make an independent
assessment of Iraqi forces' capabilities, needs, and results. Moreover,
DOD may be unable to fully account for weapons received by the Iraqi
security forces and has yet to clarify which accountability
requirements it chose to apply to the program.
MNF-I uses the TRA system to determine when units of the Iraqi security
forces are capable of assuming the lead for counterinsurgency
operations in specific geographic areas. 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. Iraqi army
TRA reports contain capabilities ratings in the areas of personnel,
command and control, equipment, sustainment/logistics, training, and
leadership. 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 the highest
level a unit can achieve.
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. However, these numbers do not provide a
complete picture of the 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. In addition,
poor reporting by the Ministry of Interior makes it difficult to
determine how many of the coalition-trained police the ministry still
employs or what percentage of the 180,000 police believed to be on the
payroll are coalition trained and equipped. Moreover, the numbers do
not give detailed information on the status of equipment, personnel,
training, or leadership.
We previously reported that we were working with DOD to obtain the unit-
level TRA reports because they would be useful in more fully informing
Congress about the capabilities and needs of Iraq's security forces and
in indicating how accurately DOD reports reflect the forces'
capabilities[Footnote 1]. 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. Although unit-level TRA reports
provide more detailed information on Iraqi security forces'
capabilities, DOD had not provided GAO with these unit-level reports as
of February 2007. DOD routinely provides GAO access to the readiness
levels of U.S. forces.
Additionally, DOD and MNF-I may be unable to fully account for weapons
issued to the Iraqi security forces, and DOD has not yet clarified what
accountability requirements apply to the program. According to our
preliminary analysis, as of January 2007, DOD and MNF-I may not be able
to account for Iraqi security forces' receipt of about 90,000 rifles
and 80,000 pistols that were reported as issued before early October
2005. Additionally, it is unclear at this time what accountability
measures DOD has chosen to apply to the train-and-equip program for
Iraq. As part of our ongoing work, we have asked DOD to clarify whether
MNF-I and Multi-National Security Transition Command-Iraq (MNSTC-I)
must follow accountability measures specified in DOD regulations, or
whether DOD has established other accountability measures. For example,
DOD officials 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.
While it is unclear which regulations DOD has chosen to apply,
beginning in 2004, MNF-I established requirements to control and
account for equipment issued to the Iraqi security forces by issuing a
series of orders that outline procedures for its subordinate commands.
Although MNF-I took initial steps to establish property accountability
procedures, according to MNF-I officials 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.
DOD Faces Challenges in Managing Contracts and Contractors in Iraq that
Could Lead to Fraud, Waste, and Abuse:
While DOD relies heavily on contractors for reconstruction projects and
support to its forces in Iraq, it faces several management and
oversight challenges. First, military commanders and senior DOD
officials do not have visibility over contractors, which prevents DOD
from knowing the extent to which it is relying on contractors for
support in Iraq. Second, DOD lacks clear and comprehensive guidance and
leadership for managing and overseeing contractors. Third, key
contracting issues--including unclear requirements and not reaching
agreement on key terms and conditions in a timely manner--have
prevented DOD from achieving successful acquisition outcomes. Fourth,
DOD does not have a sufficient number of oversight personnel to ensure
that the contracts that are in place are carried out efficiently and
according to the contract requirements. Finally, military commanders
and contract oversight personnel do not receive sufficient training to
effectively manage contracts and contractors in Iraq.
Military Commanders and Senior DOD Leaders Need to Have Visibility Over
the Contractors That Support Them:
DOD continues to lack the capability to provide senior leaders and
military commanders with information on the totality of contractor
support to deployed forces. Without such visibility, senior leaders and
military commanders cannot develop a complete picture of the extent to
which they rely on contractors to support their operations. We first
reported the need for better visibility in 2002 during a review of the
costs associated with U.S. operations in the Balkans.[Footnote 2] At
that time, we reported that DOD was unaware of (1) the number of
contractors operating in the Balkans, (2) the tasks those contractors
were contracted to do, and (3) the government's obligations to those
contractors under the contracts. We noted a similar situation in 2003
in our report on DOD's use of contractors to support deployed forces in
Southwest Asia and Kosovo.[Footnote 3] At that time, we reported that,
although most contract oversight personnel had visibility over the
individual contracts for which they were directly responsible,
visibility of all contractor support at a specific location was
practically nonexistent at the combatant commands, component commands,
and deployed locations we visited. As a result, commanders at deployed
locations had limited visibility and understanding of all contractor
activity supporting their operations and frequently had no easy way to
get answers to questions about contractor support. This lack of
visibility inhibited the ability of commanders to resolve issues
associated with contractor support such as force protection issues and
the provision of support to the contractor personnel.
Most recently, in our December 2006 review of DOD's use of contractors
in Iraq, we found that DOD's limited visibility unnecessarily increased
contracting costs to the government and introduced unnecessary
risk.[Footnote 4] Without visibility over where contractors are
deployed and what government support they are entitled to, costs to the
government may increase. For example, at a contractor accountability
task force meeting we attended in 2006, an Army Material Command
official stated that an Army official estimated that about $43 million
is lost each year on free meals provided to contractor employees at
deployed locations who also receive a per diem food allowance. Also,
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. DOD's October 2005 guidance on
contractor support to deployed forces included a requirement that the
department develop or designate a joint database to maintain by-name
accountability of contractors deploying with the force and a summary of
the services or capabilities they provide. The Army has taken the lead
in this effort, and DOD recently designated a database intended to
provide improved visibility over contractors deployed to support the
military in Iraq, Afghanistan, and elsewhere.
DOD provided additional information after we briefed the House
Appropriations Committee's Subcommittee on Defense. According to DOD,
in January 2007, the department designated the Army's Synchronized
Predeployment & Operational Tracker (SPOT) as the department-wide
database to maintain by-name accountability of all contractors
deploying with the force. According to DOD the SPOT database includes
approximately 50,000 contractor names. Additionally in December 2006,
the Defense Federal Acquisition Regulation Supplement was amended to
require the use of the SPOT database by contractors supporting deployed
forces.
DOD Needs Clear and Comprehensive Guidance and Leadership to Manage and
Oversee Contractors:
Since the mid-1990s, our reports have highlighted the need for clear
and comprehensive guidance for managing and overseeing the use of
contractors who support deployed forces. For example, in assessing the
Logistics Civil Augmentation Program (LOGCAP) implementation during the
Bosnian peacekeeping mission in 1997, we identified weaknesses in the
available doctrine on how to manage contractor resources, including how
to integrate contractors with military units and what type of
management and oversight structure to establish.[Footnote 5] We
identified similar weaknesses when we began reviewing DOD's use of
contractors in Iraq. For example, in 2003, we reported that guidance
and other oversight mechanisms varied widely at the DOD, combatant-
command, and service levels, making it difficult to manage contractors
effectively.[Footnote 6]
Similarly, in our 2005 report on private security contractors in Iraq,
we noted that DOD had not issued any guidance to units deploying to
Iraq on how to work with or coordinate efforts with private security
contractors.[Footnote 7] Our prior work has shown that it is important
for organizations to provide clear and complete guidance to those
involved in program implementation. In our view, establishing baseline
policies for managing and overseeing contractors would help ensure the
efficient use of contractors in places such as Iraq. DOD took a
noteworthy step to address some of these issues when it issued new
guidance in 2005 on the use of contractors who support deployed forces.
However, as our December 2006 report made clear, DOD's guidance does
not address a number of problems we have repeatedly raised--such as the
need to provide adequate contract oversight personnel, to collect and
share lessons learned on the use of contractors supporting deployed
forces, or to provide DOD commanders and contract oversight personnel
with training on the use of contractors overseas before
deployment.[Footnote 8] After our January 30, 2007 briefing to the
House Appropriations Committee's Subcommittee on Defense, DOD provided
additional information on a new publication it was developing. The
department noted that it was developing a joint publication entitled
"Contracting and Contractor Management in Joint Operations," which it
expects to be distributed in May 2007.
In addition to the lack of clear and comprehensive guidance for
managing contract personnel, we have issued several reports
highlighting the need for DOD components to comply with departmental
guidance on the use of contractors. For example, in our June 2003
report, we noted that DOD components were not complying with a long-
standing requirement to identify essential services provided by
contractors and develop backup plans to ensure the continuation of
those services during contingency operations should contractors become
unavailable to provide those essential services. We believe that risk
is inherent when relying on contractors to support deployed forces, and
without a clear understanding of the potential consequences of not
having the essential service available, the risks associated with the
mission increase.
In other reports, we highlighted our concerns over DOD's planning for
the use of contractor support in Iraq--including the need to comply
with guidance to identify operational requirements early in the
planning process.[Footnote 9] When contractors are involved in planning
efforts early and given adequate time to plan and prepare to accomplish
their assigned missions, the quality of the contractor's services
improves and contract costs may be lowered. DOD's October 2005 guidance
on the use of contractor support to deployed forces went a long way to
consolidate existing policy and provide guidance on a wide range of
contractor issues. However, as of December 2006, we found little
evidence that DOD components were implementing that guidance, in part
because no individual within DOD was responsible for reviewing DOD and
service efforts to ensure that the guidance was being consistently
implemented.
We have made a number of recommendations for DOD to take steps to
establish clear leadership and accountability for contractor support
issues. For example, in our 2005 report on LOGCAP, we recommended that
DOD designate a LOGCAP coordinator with the authority to participate in
deliberations and advocate for the most effective and efficient use of
the LOGCAP contract. Similarly, in our second comprehensive review of
contractors on the battlefield in 2006, we recommended that DOD appoint
a focal point within the Office of the Under Secretary of Defense for
Acquisition, Technology, and Logistics--at a sufficiently senior level
and with the appropriate resources--to lead DOD's efforts to improve
its contract management and oversight. DOD generally agreed with these
recommendations. In October 2006, DOD established the office of the
Assistant Deputy Under Secretary of Defense for Program Support to
serve as the office of primary responsibility for contractor support
issues. However, as we noted in our December 2006 report, it is not
clear to what extent this office would serve as the focal point
dedicated to leading DOD's efforts to improve its contract management
and oversight.
DOD Needs to Address Key Contracting Issues to Promote Successful
Acquisition Outcomes:
DOD needs to address long-standing contracting issues related to
acquisition outcomes. Two of the key factors that promote successful
acquisition outcomes are (1) clearly defined requirements and (2)
timely agreement on a contract's key terms and conditions, such as the
scope and cost. The absence of well-defined requirements and clearly
understood objectives complicates efforts to hold DOD and contractors
accountable for poor acquisition outcomes.
Further, in Iraq, DOD's contracts were often cost-reimbursable
contracts, which allow the contractor to be reimbursed for reasonable,
allowable, and allocable costs to the extent prescribed in the
contracts. When cost-reimbursable contracts such as those used in the
reconstruction of Iraq and the support contracts for deployed forces
(e.g. LOGCAP) are not effectively managed and given sufficient
oversight, the government's risk is likely to increase. For example, we
have reported that poorly written statements of work, which included
vague or ill-defined requirements, can lead the contractor to take
excessive steps to ensure customer satisfaction and result in
additional costs to the government. Similarly, we have reported that
contract customers need to conduct periodic reviews of services
provided under cost-reimbursable contracts to ensure that services
provided are supplied at an appropriate level. Without such a review,
the government is at risk of paying for services it no longer needs.
For example, the command in Iraq lowered the cost of the LOGCAP
contract by $108 million dollars by reducing services and eliminating
unneeded dining facilities and laundries.
A prerequisite to achieving good acquisition outcomes is a match
between well-defined requirements and available resources. U.S.
reconstruction goals were based on assumptions about the money and time
needed, which have proven unfounded. U.S. funding was not meant to
rebuild Iraq's entire infrastructure but rather to lay the groundwork
for a longer-term reconstruction effort that anticipated significant
assistance from international donors.
To provide that foundation, the Coalition Provisional Authority (CPA)
allocated $18.4 billion in fiscal year 2004 reconstruction funds among
various projects in each reconstruction sector, such as oil,
electricity, and water and sanitation.[Footnote 10] Almost immediately
after the CPA dissolved, the Department of State reprioritized funding
for projects that would not begin until mid to late 2005 and used those
funds to target high-impact projects. By July 2005, the State
Department had conducted a series of funding reallocations to address
new priorities, including increasing support for security and law
enforcement efforts and oil infrastructure enhancements. One of the
consequences of these reallocations was to reduce funding for the water
and sanitation sector by about 44 percent, from $4.6 billion to $2.6
billion. One reallocation of $1.9 billion in September 2004 led the
Project and Contracting Office to cancel some projects, most of which
were planned to start in mid-2005. Changes, even those made for good
reasons, make it more difficult to manage individual projects to
successful outcomes.
Further, such changes 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 have a clear
understanding of reconstruction objectives and how they translate into
the terms and conditions of a contract: what goods or services are
needed, when they are needed, the level of performance or quality
desired, and what the cost will be. When such requirements were not
clear, DOD often entered into contract arrangements on reconstruction
efforts that posed additional risks, such as authorizing contractors to
begin work before key terms, conditions such as the work to be
performed, and projected costs were fully defined.[Footnote 11] For
example, we found that, as of March 2004, about $1.8 billion had been
obligated on reconstruction contract actions without DOD and the
contractors reaching an agreement on the final scope and cost of the
work.
In September 2006, we issued a report on how DOD addressed issues
raised by the Defense Contract Audit Agency (DCAA) in its audits of
Iraq-related contract costs.[Footnote 12] We noted that, in cases where
DOD authorized contractors to begin work before reaching agreement on
the scope or price, DOD contracting officials were less likely to
remove costs from a contractor's proposal when DCAA raised questions
about them if the contractor had already incurred those costs. For
example, of the 18 audit reports we reviewed, DCAA issued 11 reports on
contract actions where more than 180 days had elapsed between the
beginning of the period of performance to final negotiations. For nine
of these audits, the period of performance DOD initially authorized for
each contract action concluded before final negotiations took place. In
one case, DCAA questioned $84 million in its audit of a task order
proposal for an oil mission. In this case, the contractor did not
submit a proposal to DOD until a year after the work was authorized,
and DOD and the contractor did not negotiate the final terms of the
task order until more than a year after the contractor had completed
the work. In the final negotiation documentation, the DOD contracting
official stated that the payment of incurred costs is required for cost-
type contracts, if there are no unusual circumstances. In contrast, in
the few audit reports we reviewed in which the government negotiated
the terms before starting work, we found that the portion of questioned
costs removed from the proposal was substantial.
DOD Needs Sufficient Contract Oversight Personnel to Ensure that
Contract Requirements Are Met Effectively and Efficiently:
An unstable contracting environment--when contract requirements are in
a state of flux--requires greater attention to oversight, which in turn
relies on a capable government workforce. Having personnel who are
trained to conduct oversight and held accountable for their oversight
responsibilities is essential for effective oversight of contractors.
If surveillance is not conducted, not sufficient, or not well
documented, DOD is at risk of being unable to identify and correct poor
contractor performance in a timely manner and potentially paying too
much for the services it receives.
On multiple occasions, we and others have reported on deficiencies in
DOD's oversight. For example, our June 2004 report found that early
contract administration challenges were caused, in part, by the lack of
personnel.[Footnote 13] In addition, the Special Inspector General
noted that, with regard to the CPA, gaps existed in the experience
levels of those hired and the quality and depth of their experiences
relative to their assigned jobs. Similarly, in 2004, an interagency
assessment team found that the number of contracting personnel was
insufficient to handle the increased workload. 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, DOD is in the position of
relying on contractors to help manage and oversee the work of other
contractors.
More recently, in December 2006, we reported that DOD does not have
sufficient numbers of contractor oversight personnel at deployed
locations, which limits its ability to obtain a reasonable assurance
that contractors are meeting contract requirements efficiently and
effectively.[Footnote 14] Although we could find no DOD guidelines on
the appropriate number of personnel needed to oversee and manage DOD
contracts at a deployed location, several contract oversight personnel
stated that DOD does not have adequate personnel at deployed locations
to effectively oversee and manage contractors. For example, an Army
official acknowledged that the Army is struggling to find the capacity
and expertise to provide the contracting support needed in Iraq. In
addition, officials responsible for contracting with MNF-I stated that
they did not have enough contract oversight personnel and quality
assurance representatives to allow MNF-I to reduce the Army's use of
the LOGCAP contract by awarding more sustainment contracts for base
operations support in Iraq. Furthermore, 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. Finally, the contracting
officer's representative for an intelligence support contract in Iraq
stated that he was also unable to visit all of the locations that he
was responsible for overseeing. At the locations he did visit, he was
able to work with the contractor to improve the project's efficiency.
However, because he was not able to visit all of the locations at which
the contractor provided services in Iraq, he was unable to duplicate
those efficiencies at all the locations in Iraq where the contractor
provided support.
The inability of contract oversight personnel to visit all the
locations they are responsible for can also create problems for units
that face difficulties resolving contractor performance issues at those
locations. For example, officials from a brigade support battalion
stated that they had several concerns with the performance of a
contractor that provided maintenance for the brigade's mine-clearing
equipment. These concerns included delays in obtaining spare parts and
a disagreement over the contractor's obligation to provide support in
more austere locations in Iraq. According to the officials, their
efforts to resolve these problems in a timely manner were hindered
because the contracting officer's representative was located in Baghdad
while the unit was stationed in western Iraq. In other instances, some
contract oversight personnel may not even reside within the theater of
operations. For example, we found the Defense Contract Management
Agency's (DCMA) legal personnel responsible for LOGCAP in Iraq were
stationed in Germany, while other LOGCAP contract oversight personnel
were stationed in the United States. According to a senior DCMA
official in Iraq, relying on support from contract oversight personnel
outside the theater of operations makes resolving contractor
performance issues more difficult for military commanders in Iraq, who
are operating under the demands and higher operational tempo of a
contingency operation in a deployed location.
Better Training of Military Commanders and Contract Oversight Personnel
Is Essential:
Since the mid-1990s, our work has shown the need for better pre-
deployment training for military commanders and contract oversight
personnel on the use of contractor support. Training is essential for
military commanders because of their responsibility for identifying and
validating requirements to be addressed by the contractor. In addition,
commanders are responsible for evaluating the contractor's performance
and ensuring the contract is used economically and efficiently.
Similarly, training is essential for DOD contract oversight personnel
who monitor the contractor's performance for the contracting officer.
As we reported in 2003, military commanders and contract management and
oversight personnel we met in the Balkans and throughout Southwest Asia
frequently cited the need for better preparatory training.[Footnote 15]
Additionally, in our 2004 review of logistics support contracts, we
reported that many individuals using logistics support contracts such
as LOGCAP were unaware that they had any contract management or
oversight roles.[Footnote 16] Army customers stated that they knew
nothing about LOGCAP before their deployment and that they had received
no pre-deployment training regarding their roles and responsibilities
in ensuring that the contract was used economically and efficiently. In
our December 2006 report, we noted that many officials responsible for
contract management and oversight in Iraq stated that they received
little or no training on the use of contractors prior to their
deployment, which led to confusion over their roles and
responsibilities.[Footnote 17] For example, in several instances,
military commanders attempted to direct (or ran the risk of directing)
a contractor to perform work outside the contract's scope, even though
commanders are not authorized to do so. Such cases can result in
increased costs to the government.
Over the years, we have made several recommendations to DOD intended to
strengthen this training. Some of our recommendations were aimed at
improving the training of military personnel on the use of contractor
support at deployed locations, while others focused on training
regarding specific contracts, such as LOGCAP. Our recommendations have
sought to ensure that military personnel deploying overseas have a
clear understanding of the role of contractors and the support the
military provides to them. DOD has agreed with most of our
recommendations. However, we continue to find little evidence that DOD
has improved training for military personnel on the use of contractors
prior to their deployment.
DOD provided additional information after we briefed the House
Appropriations Committee's Subcommittee on Defense. DOD advised us that
they had established a contingency contracting training program at the
Defense Acquisition University. While this is a good first step, we
would note that according to the course description, the course is
intended for contracting professionals. As we noted, we believe that
there is a need to provide training for those personnel who are not
contracting professionals such as commanders and others who are likely
to work with contractor employees on a daily bases, but are not
contracting professionals.
The Iraqi Government Currently Lacks the Capacity to Sustain and
Continue Reconstruction and Security Efforts:
Since 2003, the United States has obligated about $29 billion to help
Iraq rebuild its infrastructure and develop Iraqi security forces to
stabilize the country. However, key goals have not been met and the
Iraqi government has not sustained these efforts, in part because of
the lack of management and human resource skills in Iraq's key
ministries. According to U.S. officials, the inability of the Iraqi
government to spend its 2006 capital budget also increases the
uncertainty that it can sustain the rebuilding effort.
Iraq Has Difficulty Sustaining the Billions of Dollars Invested in
Infrastructure and Security:
The United States has obligated about $14 billion to restore essential
services such as oil, electricity, and water, and more than $15 billion
to train, equip, and sustain Iraqi security forces. Reconstruction has
focused on projects such as repairing oil facilities, increasing
electricity generating capacity, and restoring water treatment plants.
For example, the U.S. Army Corps of Engineers reported that it had
completed 293 of 523 planned electrical projects, including the
installation of 35 natural gas turbines in Iraqi power generation
plants. Stabilization efforts have focused on MNF-I training and
equipping approximately 323,000 Iraqi security forces. To help sustain
these forces, MNF-I is assisting Iraq's Ministries of Defense and
Interior in funding and building logistics systems for the military and
police. The military logistics system includes a national depot,
regional logistics centers, and garrison support units. The draft
logistics plan for the police called for a system of warehouses to
perform maintenance on equipment and distribution centers to dispense
supplies.
The United States has spent billions of dollars rebuilding the
infrastructure and developing Iraqi security forces. However, the Iraqi
government has had difficulty operating and sustaining the aging oil
infrastructure, maintaining the new and rehabilitated power generation
facilities, and developing and sustaining the logistics systems for the
Ministries of Defense and Interior. The coalition provides the critical
support necessary for the ministries to carry out their security
responsibilities. As of December 2006, neither ministry was self-
sufficient in logistics, command and control, or intelligence. For
example:
* Iraq's oil production and exports have consistently fallen below
their respective program goals. In 2006, oil production averaged 2.1
million barrels per day, compared with the U.S. goal of 3.0 million
barrels per day. The Ministry of Oil has had difficulty operating and
maintaining the refineries. According to U.S. officials, Iraq lacks
qualified staff and expertise at the field, plant, and ministry level,
as well as an effective inventory control system for spare parts.
According to State, the Ministry of Oil will have difficulty
maintaining future production levels unless it initiates an ambitious
rehabilitation program. In addition, oil smuggling and theft of refined
oil products have cost Iraq substantial resources.
* In 2006, electrical output reached 4,317 megawatts of peak generation
per day, falling short of the U.S. goal of 6,000 megawatts. Prewar
electrical output averaged 4,200 megawatts per day. Production also was
outpaced by increasing demand, which has averaged about 8,210 megawatts
per day. The Iraqi government has had difficulty sustaining the
existing facilities. Problems include the lack of training, inadequate
spare parts, and an ineffective asset management and parts inventory
system. Moreover, plants are sometimes operated beyond their
recommended limits, resulting in longer downtimes for maintenance. In
addition, major transmission lines have been repeatedly sabotaged and
repair workers have been intimidated by anti-Iraqi forces.
* As of December 2006, the coalition was providing significant levels
of support to the Iraqi military because the Ministry of Defense could
not fully supply its forces with adequate life support, fuel, uniforms,
building supplies, ammunition, vehicle maintenance and spare parts, or
medical supplies. In addition, the ministry was not able to run its
communications networks on its own or independently acquire
communications equipment. Furthermore, the Ministry will likely lack a
comprehensive plan for its intelligence structure until December 2007.
Although the coalition plans to begin turning over certain support
functions to ministerial control in the spring of 2007, it is unlikely
that the Ministry of Defense will achieve complete self-sufficiency in
logistics, command and control, or intelligence before mid-2008.
* The Ministry of Interior also receives critical support from the
coalition and is not self-sufficient in logistics, command and control,
or intelligence. Because the ministry is unable to provide maintenance
for vehicles of the national police, the coalition has let several
contracts to train Iraqi mechanics, provide spare parts to contractors,
and repair police vehicles. In addition, the ministry is not able to
self-sufficiently operate or maintain its communications networks.
Furthermore, the coalition estimates that, if the security environment
in Baghdad improves, the ministry's intelligence organization will be
self-sufficient by mid-2008. However, if this self-sufficiency depends
on improved security, there may be cause for concern, given that the
average total attacks per day have increased, rising from about 70 per
day in January 2006 to a record high of about 180 per day in October
2006. Although the coalition plans to begin turning over certain
support functions to ministerial control in the spring of 2007, it is
unlikely that the Ministry of Interior will achieve complete self-
sufficiency in logistics, command and control, or intelligence before
mid 2008.
The Iraqi Government Faces Critical Challenges Staffing Effective Civil
Service, Fighting Corruption, and Managing Resources:
Iraqi government institutions are undeveloped and confront significant
challenges in staffing a competent, non-partisan civil service;
effectively fighting corruption; using modern technology; and managing
resources effectively. Figure 2 provides an organizational chart of the
Iraqi executive branch and ministries.
Figure 2: Iraqi Executive Branch and Ministries:
[See PDF for image]
Source: State Department.
[End of figure]
The Iraqi civil service remains hampered by inadequately trained or
unskilled 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. 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.[Footnote 18] According to U.S.
officials, patronage leads to staff instability as many are replaced
when the government changes or a new minister is named. Some Iraqi
ministries, including the Ministries of Interior, Agriculture, Health,
Transportation, and Tourism, are led by ministers whose allegiance is
to political parties hostile to U.S. goals. These ministers use their
positions to pursue partisan agendas that conflict with the goal of
building a government that represents all ethnic groups. U.S. officials
have expressed reservations about working in some of these ministries,
noting that the effectiveness of programs is hampered by the presence
of unresponsive or anti-U.S. officials.
Corruption in Iraq is reportedly widespread and also poses a major
challenge to building an effective Iraqi government. Corruption
jeopardizes future flows of needed international assistance and
reportedly undermines the government's ability to make effective use of
current reconstruction assistance. According to U.S. government and
World Bank reports, there are several reasons for corruption in Iraq.
The reasons, among others, include (1) an ineffective banking system
that leaves the government dependent on cash transactions; (2)
nontransparent, obsolete ministry procurement systems; and (3)
ineffective, inadequately resourced accountability institutions, such
as the ministries' inspectors general.
GAO and the inspectors general are working with Iraq's accountability
organizations--the Board of Supreme Audit, Commission on Public
Integrity, and inspectors general of the ministries--to strengthen
their capabilities.
The Iraqi ministries lack adequate information technology and have
difficulty managing their resources, according to U.S. officials and an
international assessment, further contributing to the corruption
problem. 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 that has resulted in Iraqi police leaving their
posts to deliver cash to their families. U.S. officials also estimated
that 20 to 30 percent of the Ministry of Interior personnel are "ghost
employees"--nonexistent staff paid salaries that are collected by other
officials.
Inability of Iraq's Ministries to Spend the 2006 Capital Budget Creates
Further Uncertainty about Sustaining Efforts:
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 according,
to U.S. officials. The inability to spend the money raises serious
questions for the government, which has to demonstrate to skeptical
citizens 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 the Iraqi government's budget execution.
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.[Footnote 19] 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. 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. However, as of August
2006, the ministry had spent less than 1 percent of these budgeted
funds. Moreover, Interior and Defense had only spent about 11 and 1
percent, respectively, of their capital goods budget, which include
funds for the purchase of weapons, ammunition, and vehicles, among
other items. According to U.S. officials, Iraq lacks clearly defined
and consistently applied budget and procurement rules needed for
effective budget planning and implementation. The ministries have
multiple rules and regulations promulgated under the former regime, the
CPA, and the current government. The lack of procurement and budgeting
rules creates opportunities for corruption and mismanagement. Table 1
provides further information on the Iraqi ministries efforts to spend
their capital budgets.
Table 1: 2006 Annual Iraq Budget and Actual Expenditures through August
2006:
Millions of dollars.
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; (43.0%).
Source: GAO analysis of Iraqi budget data.
[End of table]
Concluding Observations:
As I have discussed in my statement today, a number of conditions exist
in Iraq that have led or will lead to fraud, waste, and abuse of U.S
funds and will affect the U.S. effort to achieve our security,
economic, and diplomatic goals in Iraq. Addressing these problems will
require complete and transparent information on the progress made to
reasonably judge our past efforts and determine future directions. This
includes more accurate, reliable, and comprehensive information on the
cost of the war, the capabilities of Iraqi security forces, and the
results of U.S. efforts to build the managerial capacity of the Iraqi
ministries.
Furthermore, given DOD's heavy and increasing reliance on contractors
in Iraq and elsewhere, and the risks this reliance entails, it may be
appropriate to ask if DOD has become too reliant on contractors to
provide essential services. Moreover, given the pace of activities
during contingency operations, it is essential that DOD and other
government agencies engage, as early as possible, in (1) identifying
potential support requirements, (2) locating contractors capable of
providing support and negotiating with contractors to provide this
support in a timely and cost-effective manner, and (3) planning for
additional military and civilian personnel to oversee and manage this
increase in contractor activities.
Mr. Chairman and members of the committee, this concludes my statement.
I will be happy to answer any questions you may have.
Contact and Acknowledgments:
For questions regarding this testimony, please call Joseph A.
Christoff, Director, International Affairs and Trade, at (202) 512-
8979; John Hutton, Acting Director, Acquisition and Sourcing
Management, at (202) 512-4841; or William Solis, Director, Defense
Capabilities and Management, at (202) 512-8365.
Other key contributors to this statement Nanette Barton, Dan Cain,
Carole Coffey, Allisa Czyz, Tim DiNapoli, Mattias Fenton, Whitney
Havens, Patrick Hickey, Wesley Johnson, Hynek Kalkus, Judy McCloskey,
Tet Miyabara, James A. Reynolds, Chris Turner, and Marilyn Wasleski.
FOOTNOTES
[1] GAO, Stabilizing Iraq: An Assessment of the Security Situation, GAO-
06-1094T (Washington, D.C.: Sept. 11, 2006).
[2] GAO, Defense Budget: Need to Strengthen Guidance and Oversight of
Contingency Operations Costs, GAO-02-450 (Washington, D.C.: May 21,
2002).
[3] GAO, Military Operations: Contractors Provide Vital Services to
Deployed Forces but Are Not Adequately Addressed in DOD Plans, GAO-03-
695 (Washington, D.C.: June 24, 2003).
[4] GAO, Military Operations: High-Level DOD Action Needed to Address
Long-standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces, GAO-07-145 (Washington, D.C.: Dec. 18,
2006).
[5] GAO, Contingency Operations: Opportunities to Improve the Logistics
Civil Augmentation Program, GAO/NSIAD-97-63 (Washington, D.C.: Feb. 11,
1997).
[6] GAO-03-695.
[7] GAO, Rebuilding Iraq: Actions Needed to Improve Use of Private
Security Providers, GAO-05-737 (Washington, D.C.: July 28, 2005).
[8] GAO-07-145.
[9] GAO, Military Operations: DOD's Extensive Use of Logistics Support
Contracts Requires Strengthened Oversight, GAO-04-854 (Washington,
D.C.: July 19, 2004).
[10] From April 2003 to June 28, 2004, the CPA served as Iraq's interim
government and was responsible for overseeing, directing, coordinating,
and approving rebuilding efforts. With the establishment of Iraq's
interim government, the CPA ceased to exist and its responsibilities
were transferred to the Iraqi government or to other U.S. agencies. The
Department of State is now responsible for overseeing U.S. efforts to
rebuild Iraq.
[11] GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures
and Management Challenges, GAO-04-605 (Washington, D.C.: Jun. 1, 2004).
[12] GAO, Iraq Contract Costs: DOD Consideration of Defense Contract
Audit Agency's Findings, GAO-06-1132 (Washington, D.C.: Sep. 25, 2006).
[13] GAO-04-605.
[14] GAO-07-145.
[15] GAO-03-695.
[16] GAO-04-854.
[17] GAO-07-145.
[18] See Department of Defense, Measuring Stability and Security in
Iraq (Washington, D.C.: August 2006).
[19] Iraq's fiscal year begins on January 1 of each year.
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