Rebuilding Iraq
U.S. Water and Sanitation Efforts Need Improved Measures for Assessing Impact and Sustained Resources for Maintaning Facilities
Gao ID: GAO-05-872 September 7, 2005
After security conditions in Iraq began to deteriorate in June 2003, the U.S.-led Coalition Provisional Authority (CPA) included restoring essential services in Iraq, such as water and sanitation, as part of its strategy for establishing a secure, peaceful, and democratic Iraq. From 1991 to 2003, a decreasing number of Iraqis had access to safe drinking water and sanitation services, and water-borne disease rates rose. The United States has made available $2.6 billion for rebuilding the water and sanitation sector. As part of GAO's review of Iraq reconstruction under the Comptroller General's authority, we assessed U.S. activities in the water and sanitation sector, including (1) the funding and status of U.S. activities, (2) U.S. efforts to measure progress, (3) the factors affecting the implementation of reconstruction activities, and (4) the sustainability of U.S.-funded projects.
The United States has made some progress in rebuilding Iraq's water and sanitation sector. As of July 2005, State had allocated $2.6 billion; of this amount, agencies had obligated $1.8 billion and disbursed an estimated $450 million, mostly to support large-scale water and wastewater treatment projects. In addition, about $384 million in Iraqi and international funds had been obligated for the sector--about 21 percent of U.S. obligations. As of June 2005, 18 of 54 task orders for projects under five major U.S. contracts had been completed. For example, USAID's contractor repaired six sewage treatment plants, two water treatment plants, and an urban water supply in southern Iraq. State has set broad goals for providing essential services in Iraq, but the lack of sound performance data and measures for the water and sanitation sector present challenges in determining the impact of U.S. projects. State's ability to measure the provision of essential services, such as access to water and sanitation, is limited by a lack of water metering and measures of water quality in Iraq. In the absence of such measures, State tracks the number of projects started and completed, but State was unable to substantiate which projects were included in its reported numbers. Moreover, because these data do not measure the availability or quality of water and sanitation services, it is difficult to determine how U.S. efforts are contributing to the goal of improving access to essential services. However, USAID-funded surveys report that Iraqis experience low levels of access and satisfaction with water and sanitation services. These surveys demonstrate the potential for gathering data over time that could be used to gauge the progress of U.S. reconstruction efforts. Poor security and management challenges have adversely affected the U.S. water and sanitation reconstruction program, leading to project delays and increased costs. One U.S. agency estimated that the security environment has added an average of about 7 percent to its water sector project costs. Initial cost estimates of 25 to 50 percent below actual costs and delays in funding and awarding task orders also led to a reduced program scope and delays in starting projects. Other factors that impede progress and increase cost include lack of agreement on project scope, staffing turnover, inflation, unanticipated site conditions, and uncertain ownership of project sites. As of June 2005, projects costing about $52 million and turned over to Iraqi management were not operating as intended due to looting, unreliable electricity, or inadequate Iraqi staff and supplies. In March 2005, State reallocated $25 million for additional support at USAID's completed projects, and agencies have begun risk forecasting and planning to address sustainability issues. However, these efforts are in their early stages, and it is unclear if they will address the long-term ability of the Iraqi government to support, staff, and equip remaining large-scale water and sanitation projects for which the United States has obligated more than a billion dollars.
Recommendations
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GAO-05-872, Rebuilding Iraq: U.S. Water and Sanitation Efforts Need Improved Measures for Assessing Impact and Sustained Resources for Maintaning Facilities
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
September 2005:
Rebuilding Iraq:
U.S. Water and Sanitation Efforts Need Improved Measures for Assessing
Impact and Sustained Resources for Maintaining Facilities:
GAO-05-872:
GAO Highlights:
Highlights of GAO-05-872, a report to Congressional Committees:
Why GAO Did This Study:
After security conditions in Iraq began to deteriorate in June 2003,
the U.S.-led Coalition Provisional Authority (CPA) included restoring
essential services in Iraq, such as water and sanitation, as part of
its strategy for establishing a secure, peaceful, and democratic Iraq.
From 1991 to 2003, a decreasing number of Iraqis had access to safe
drinking water and sanitation services, and water-borne disease rates
rose. The United States has made available $2.6 billion for rebuilding
the water and sanitation sector.
As part of GAO‘s review of Iraq reconstruction under the Comptroller
General‘s authority, we assessed U.S. activities in the water and
sanitation sector, including (1) the funding and status of U.S.
activities, (2) U.S. efforts to measure progress, (3) the factors
affecting the implementation of reconstruction activities, and (4) the
sustainability of U.S.-funded projects.
What GAO Found:
The United States has made some progress in rebuilding Iraq‘s water and
sanitation sector. As of July 2005, State had allocated $2.6 billion;
of this amount, agencies had obligated $1.8 billion and disbursed an
estimated $450 million, mostly to support large-scale water and
wastewater treatment projects. In addition, about $384 million in Iraqi
and international funds had been obligated for the sector”about 21
percent of U.S. obligations. As of June 2005, 18 of 54 task orders for
projects under five major U.S. contracts had been completed. For
example, USAID‘s contractor repaired six sewage treatment plants, two
water treatment plants, and an urban water supply in southern Iraq.
State has set broad goals for providing essential services in Iraq, but
the lack of sound performance data and measures for the water and
sanitation sector present challenges in determining the impact of U.S.
projects. State‘s ability to measure the provision of essential
services, such as access to water and sanitation, is limited by a lack
of water metering and measures of water quality in Iraq. In the absence
of such measures, State tracks the number of projects started and
completed, but State was unable to substantiate which projects were
included in its reported numbers. Moreover, because these data do not
measure the availability or quality of water and sanitation services,
it is difficult to determine how U.S. efforts are contributing to the
goal of improving access to essential services. However, USAID-funded
surveys report that Iraqis experience low levels of access and
satisfaction with water and sanitation services. These surveys
demonstrate the potential for gathering data over time that could be
used to gauge the progress of U.S. reconstruction efforts.
Poor security and management challenges have adversely affected the
U.S. water and sanitation reconstruction program, leading to project
delays and increased costs. One U.S. agency estimated that the security
environment has added an average of about 7 percent to its water sector
project costs. Initial cost estimates of 25 to 50 percent below actual
costs and delays in funding and awarding task orders also led to a
reduced program scope and delays in starting projects. Other factors
that impede progress and increase cost include lack of agreement on
project scope, staffing turnover, inflation, unanticipated site
conditions, and uncertain ownership of project sites.
As of June 2005, projects costing about $52 million and turned over to
Iraqi management were not operating as intended due to looting,
unreliable electricity, or inadequate Iraqi staff and supplies. In
March 2005, State reallocated $25 million for additional support at
USAID‘s completed projects, and agencies have begun risk forecasting
and planning to address sustainability issues. However, these efforts
are in their early stages, and it is unclear if they will address the
long-term ability of the Iraqi government to support, staff, and equip
remaining large-scale water and sanitation projects for which the
United States has obligated more than a billion dollars.
What GAO Recommends:
We recommend that the Secretary of State (1) establish and monitor
improved indicators and measures that assess how U.S. efforts are
improving water and sanitation services in Iraq and (2) work with Iraqi
ministries to assess and obtain the resources needed to operate and
maintain facilities. State agreed with our findings and recommendations
and stated that it has begun taking steps to implement them.
www.gao.gov/cgi-bin/getrpt?GAO-05-872.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Joseph Christoff at (202)
512-8979 or christoffj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
The United States Has Completed Some Projects, but Many Large Scale
Efforts Were Delayed:
Limited Performance Data and Measurements Make It Difficult to
Determine Impact:
Security and Management Challenges Have Adversely Affected
Implementation of Water and Sanitation Projects:
Iraq's Lack of Capacity to Operate and Maintain U.S.-Funded Projects
Led to Inoperable Facilities and Greater U.S. Focus on Improving
Project Sustainability:
Conclusion:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Objectives, Scope & Methodology:
Appendix II: Comments from the Department of State:
Appendix III: Comments from the U.S. Agency for International
Development:
Appendix IV: GAO Contact and Staff Acknowledgments:
Table:
Table 1. Status of Major Contractors' Water and Sanitation Task Orders,
June 2005:
Figures:
Figure 1. Available Fiscal Year 2004 IRRF Funds Allocated for Water and
Sanitation:
Figure 2. Iraqi Satisfaction with Water Supply by Governorate, February
2005:
Figure 3. Iraqi Satisfaction with Adequacy of Sewerage and Wastewater
Disposal by Governorate, February 2005:
Abbreviations:
AIRP: Accelerated Iraq Reconstruction Program:
CERP: Commanders' Emergency Response Program:
CH2M Hill/PWI: CH2M Hill and Parsons Water Infrastructure:
CHRRP: Commanders' Humanitarian Relief and Reconstruction Program:
CPA: Coalition Provisional Authority:
DFI: Development Fund for Iraq:
DOD: Department of Defense:
FluorAMEC: Fluor (U.S. company) and AMEC (British company):
IRMO: Iraq Reconstruction and Management Office:
IRRF: Iraq Relief and Reconstruction Fund:
IRFFI: International Reconstruction Fund Facility for Iraq:
PCO: Project and Contracting Office:
PMO: Project Management Office:
UN: United Nations:
USAID: U.S. Agency for International Development:
WGI/B&V: Washington Group International/Black & Veatch:
United States Government Accountability Office:
Washington, DC 20548:
September 7, 2005:
Congressional Committees:
After security conditions in Iraq began to deteriorate in June 2003,
the U.S.-led Coalition Provisional Authority (CPA) included restoring
essential services, such as water and sanitation, as part of their
strategy for establishing a secure, peaceful, and democratic Iraq.
According to a 2003 UN/World Bank assessment,[Footnote 1] years of
conflict, international sanctions, and mismanagement by the prior
regime led to deterioration in the infrastructure providing essential
services. From 1991 to 2003, a decreasing number of Iraqis had access
to safe drinking water and sanitation, and water-borne disease rates
rose. As of July 2005, the United States had appropriated about $24
billion for relief and reconstruction in Iraq, including nearly $2.6
billion for rebuilding the water and sanitation sector.
As part of GAO's review of reconstruction efforts in Iraq initiated
under the Comptroller General's authority, we examined U.S. activities
directed at rebuilding the water and sanitation sector. Specifically,
we assessed (1) the funding and status of U.S. activities, (2) U.S.
efforts to measure progress, (3) the factors affecting the
implementation of reconstruction activities, and (4) the sustainability
of U.S.-funded projects.
To accomplish our objectives, we reviewed and analyzed U.S. government
agency documents and contractor reports. We also met with officials
from the Department of State, the U.S. Agency for International
Development (USAID), the Department of Defense (DOD) Project and
Contracting Office (PCO), and contractors undertaking reconstruction
efforts. Although we did not travel to Iraq due to security concerns,
we interviewed U.S. officials based in Iraq by telephone and exchanged
information through e-mail. We also met with officials from contractors
and U.S. agencies in the United States who had returned after tours of
duty in Iraq. In addition, we reviewed U.S. government-funded surveys
that document Iraqi perceptions of the quality and quantity of water
and sanitation services. Appendix I contains a more detailed
description of our scope and methodology.
We conducted our review from September 2004 through August 2005 in
accordance with generally accepted government auditing standards.
Results in Brief:
The United States has allocated resources and made some progress in
undertaking and completing activities to rebuild Iraq's water and
sanitation infrastructure. U.S. appropriations for this sector were as
high as $4.6 billion in 2004, but this level was subsequently reduced
to $2.6 billion to address other priorities, such as improving security
and increasing employment. Of this amount, U.S. agencies had obligated
$1.8 billion and disbursed an estimated $450 million as of June 2005.
U.S. funding was not sufficient--nor was it intended--to address all of
Iraq's water and sanitation needs as identified in 2003 condition
assessments. As of June 2005, about $251 million in Iraqi funds and
$133 million in international funds had been obligated for the sector-
-about 21 percent of U.S. obligations. USAID had awarded 30 task orders
for project activities and PCO had awarded 24 task orders.[Footnote 2]
USAID's contractor had completed 18 task orders, including the repair
of six sewage treatment plants, two water treatment plants, and a
primary urban water supply in southern Iraq. However, 12 of the
completed task orders had been delayed by 6 months or more. PCO's
contractors had not completed any task orders, but they plan to
complete 9 task orders by the end of 2005 and the remaining 15 by 2008.
PCO task orders include the repair of municipal water supplies, sewage
collection systems, dams, and a major irrigation project.
It is difficult to determine the overall progress and impact of U.S.
efforts because of inadequate performance data and measures. According
to State officials, the CPA's April 2004 goal to increase potable water
to 90 percent of the population was unrealistic because it was set
without baseline data. A senior State official expects U.S. efforts to
increase water service access to about 50 or 60 percent. U.S. agencies
track progress through the numbers of projects under way and completed
and expected gains in water and sewage treatment capacity. However,
these measurements are limited in providing a complete picture of
progress and the impact of U.S. projects in improving access to water
and sanitation services. For example, although State reported that 143
projects[Footnote 3] were complete as of early July 2005, it could not
document the location, scope, and cost of these projects. Moreover,
reporting only the number of projects completed or under way provides
little information on how U.S. efforts are improving the amount and
quality of water reaching Iraqi households or their access to
sanitation services. The availability of data is limited by the lack of
water metering and water quality measurements. For example, due to
problems in the distribution network, water that is potable at the
treatment plant may be lost through leakage or contaminated by the time
it reaches users. However, a recent USAID survey found that just under
half of respondents rated their water supply as good to very good and
fewer than 20 percent rated their sewerage and wastewater disposal as
good to very good. These surveys demonstrate the potential for
gathering data to gauge the progress of U.S. reconstruction efforts.
Poor security and a variety of management challenges have affected U.S.
efforts to improve the water and sanitation sector in Iraq. Security
conditions have led to project delays and increased costs for security
services. For example, work was suspended at a sewer repair project in
central Iraq for 4 months in 2004 due to security concerns. PCO has
estimated that the deteriorated security environment has increased
water and sanitation project costs by 7 percent. In addition, PCO found
initial CPA cost estimates to be 25 to 50 percent below actual costs,
contributing to a reduced scope for the water and sanitation program.
Agency and contractor officials cited other factors that impeded
progress and increased program cost, including a lack of agreement
among U.S. agencies, contractors, and Iraqi authorities on project
issues; staffing turnover; an inflationary environment that made it
difficult for contractors to submit accurate cost estimates;
unanticipated project site conditions; and uncertain ownership of
project sites.
As of June 2005, U.S.-funded water and sanitation projects representing
about $52 million of the $200 million in completed projects were either
not operating or were operating at lower capacity. One repaired
wastewater plant was partially shut down due to the looting of key
electrical equipment. In addition, two projects lacked a reliable power
supply, one lacked sufficient staff to operate properly, and one lacked
both adequate power supply and staff. Repaired water plants in one
southern governorate lacked adequate electricity and necessary water
treatment chemicals. In late August 2004, USAID's contractor began to
identify potential sustainability problems, such as poor operations and
maintenance procedures. In late March 2005, nearly 7 months after the
initial report of these concerns, State reallocated $25 million to
USAID for up to 1 year of additional on-site operating assistance and
supplies at USAID's completed projects. In proposing the reallocation,
the U.S. embassy in Iraq stated that it was moving from the previous
model of building and turning over projects to Iraqi management toward
a "build-train-turnover" system to protect the U.S. investment in
Iraq's infrastructure. In March 2005, PCO provided $10.3 million for a
12-month capacity development initiative that includes baseline service
assessments, operations and maintenance planning and other efforts in
eight governorates. However, U.S. assistance efforts do not address the
long-term ability of the Iraqi government to support, staff, and equip
these facilities. Iraqi ministry capacity remains an obstacle to the
success of more than $1 billion in U.S. projects expected to be
complete between mid-2005 and 2008.
This report recommends that the Secretary of State should, within the
limitations and difficulties of working in an unstable security
environment, establish and implement improved indicators and measures
that assess how U.S. efforts are improving the quality and quantity of
water and sanitation services in Iraq. The report also recommends that
the Secretary work with Iraqi ministries to assess the resources needed
to operate and maintain new and repaired water and sanitation
facilities after they are turned over to Iraqi management and work with
the Iraqi government to ensure that Iraq has these resources.
In commenting on a draft of this report, the Department of State and
USAID agreed with our findings and conclusions. State concurred with
our recommendations and stated that it is taking steps to begin
implementing them. The Departments of Defense and State also provided
technical comments, which we incorporated where appropriate.
Background:
Water and sanitation services in Iraq deteriorated after the 1991 Gulf
War due to lack of maintenance, inadequate skilled manpower,
international sanctions, and war damage. In 2003, looting at the
outbreak of Operation Iraqi Freedom destroyed the equipment and
materials needed to operate water treatment and sewerage
facilities.[Footnote 4] According to the 2003 UN/World Bank Joint Iraq
Needs Assessment, Iraq produced enough water before the 1991 Gulf War
to supply more than 95 percent of urban Iraqis and 75 percent of rural
Iraqis. By 2003, these production levels had fallen to about 60 percent
and 50 percent, respectively. At both times, however, the percentage of
Iraqis actually receiving an adequate amount of potable water was much
lower due to heavy leakage and contamination from the delivery network.
The assessment also found that, although 80 percent of Baghdad's
population had sewerage access, power outages caused shutdowns and
blockages of the sewage system, leading to backups of raw sewage in the
streets. Less than 10 percent of the urban population outside Baghdad
was served by sewage systems, and rural areas and northern Iraq had no
access to piped sewerage. Diseases related to unsafe water and poor
sanitation increased significantly between 1990 and 2000. At the time
of the 2003 assessment, no sewage treatment plants were operational,
and raw sewage was discharged into rivers and waterways. Furthermore,
sewage leaked into the water network, which was too damaged to keep
contaminants out. These sources of contamination caused levels of water-
related diseases to escalate. According to a UN Children's Fund report,
the number of typhoid cases rose from 2,240 in the pre-1991 period to
27,000 in 1996.[Footnote 5]
According to the official who led the 2003 UN/World Bank assessment,
steady attrition of human and physical capital was the principal cause
of the decline in Iraq's water and sanitation services. Through most of
the 1990s, Iraq's water and sanitation sector lacked the funding,
staff, equipment, and spare parts needed to keep facilities running.
The sector did not have a steady source of operating funds, and
salaries were too low to retain trained and educated staff, many of
whom left the country. International isolation prevented exposure to
outside knowledge and the development of necessary skills and led to
spare parts shortages that made routine maintenance difficult.
Two 2003 studies, based on limited assessments extrapolated to cover
the entire country, provided cost estimates for repairing Iraq's
deteriorated water and sanitation infrastructure. The UN/World Bank
assessment estimated that more than $4 billion would be needed through
2007 to restore and expand the water and sanitation infrastructure past
pre-1991 levels. Additional capital investments of nearly $2.8 billion
would be required to increase service coverage and reduce water losses.
A USAID-funded assessment by Bechtel National, Inc., identified short-
, intermediate-, and long-term projects that could address Iraq's water
and sanitation needs at a potential cost of $6.5 billion over the next
10 to 20 years.
From May 2003 until the end of June 2004, the CPA was the UN-recognized
coalition authority led by the United States and United Kingdom that
was responsible for the temporary governance of Iraq and for
overseeing, directing, and coordinating the reconstruction effort.
Within the CPA, the Project Management Office (PMO) was established to
provide project management, prioritizing, and contract support for U.S.-
funded reconstruction projects. The CPA identified the initial U.S.
efforts for rebuilding Iraq's water and sanitation, which USAID managed
and executed with fiscal year 2003 funds. In May 2004, the President
issued a National Security Presidential Directive which stated that
after the transition of power to the Iraqi government, the State
Department would be responsible for all U.S. activities in Iraq, except
for U.S. efforts relating to security and military operations. These
efforts would be DOD's responsibility. On June 28, 2004, the CPA
transferred power to a sovereign Iraqi interim government, and the CPA
was officially dissolved.
To replace the CPA's PMO, the Presidential Directive established two
temporary offices: (1) the Iraq Reconstruction and Management Office
(IRMO) to facilitate the transition of reconstruction projects to Iraq
and (2) PCO to facilitate acquisition and project management support
for U.S.-funded reconstruction projects in various sectors, including
water and sanitation. IRMO is a State Department organization
responsible for strategic planning and for prioritizing requirements,
monitoring spending, and coordinating with the military commander. Iraq-
based personnel from both offices are under the authority of the U.S.
chief of mission in Baghdad, although the U.S. Department of the Army
funds, staffs, and oversees the operations of the PCO.
USAID and PCO administer the large-scale projects funded in fiscal year
2004. USAID and PMO awarded five contracts representing the majority of
U.S. funds obligated for water and sanitation reconstruction to three
firms. USAID awarded the first of these contracts to Bechtel National,
Inc. in April 2003 with fiscal year 2003 funds for work across multiple
reconstruction sectors. In January 2004, USAID awarded a second,
competitively bid, multi-sector reconstruction contract to Bechtel with
fiscal year 2004 funds. In March 2004, PMO used fiscal year 2004
appropriated funds to competitively award three contracts for water and
sanitation reconstruction. PMO awarded one contract for improving water
resources nationwide to a joint venture between the U.S. companies
Washington Group International and Black & Veatch (WGI/B&V). PMO
awarded two other contracts to a joint venture between the U.S. firm
Fluor and the British company AMEC (FluorAMEC), one each for public
works projects in northern and southern Iraq. PMO also awarded a
contract in March 2004 to a joint venture between CH2M Hill and Parsons
Water Infrastructure (CH2M Hill/PWI) for program management services
for water sector activities. For PCO activities, CH2M Hill/PWI performs
such duties as developing project task orders, preparing government
cost estimates, and preparing reports on water sector status.
The United States Has Completed Some Projects, but Many Large Scale
Efforts Were Delayed:
As of July 2005, State Department reallocations to other priorities in
Iraq had reduced funding designated for water and sanitation by almost
half, to about $2.6 billion, of which U.S. agencies had obligated about
$1.8 billion and disbursed an estimated $450 million. International and
Iraqi funds allocated for this sector totaled at least $384 million.
Most U.S. obligations have gone to long-term, large-scale water and
wastewater treatment projects that can take months or years to
complete. As of June 2005, USAID's contractor had completed 18 task
orders, although with many delays. USAID and PCO expect to complete an
additional 36 task orders from 2005 through 2008.
State Reallocated a Portion of Its Water and Sanitation Funds to
Address Other Iraq Needs:
At its highest level, total U.S. appropriated funding for
reconstruction of Iraq's water and sanitation sector was about $4.6
billion; however, by July 2005, State Department reallocations had
reduced funding to about $2.6 billion, a 44 percent decrease. As of the
end of June 2005, agencies had obligated $1.8 billion and disbursed an
estimated $450 million.[Footnote 6] Even at the level of $4.6 billion,
U.S. funding would not have been sufficient--nor was it intended--to
address all of Iraq's water and sanitation needs as identified by the
UN/World Bank and Bechtel assessments. After State's reallocations,
U.S. obligations are almost five times greater than Iraqi and
international obligations for rebuilding Iraq's water and sanitation
sector.
Congress initially appropriated funding for Iraq reconstruction in
fiscal year 2003, and in fiscal year 2004, appropriated an additional,
larger amount. In April 2003, Congress passed the Emergency Wartime
Supplemental Appropriations Act.[Footnote 7] This legislation created
the Iraq Relief and Reconstruction Fund (IRRF) and appropriated about
$2.48 billion in fiscal year 2003 funds to the Fund for reconstruction
activities in multiple sectors. Of this amount, as of June 2005, USAID
had obligated approximately $270 million to water and sanitation
projects. In November 2003, Congress enacted an additional emergency
wartime supplemental act, in which $18.4 billion was provided for the
IRRF.[Footnote 8] From this $18.4 billion, Congress specifically
allocated about $4.33 billion for reconstruction of Iraq's water and
sanitation sector. However, the Act also permitted limited reallocation
of fiscal year 2004 IRRF funds with congressional notification. This
$270 million in fiscal year 2003 funds and $4.33 billion in fiscal year
2004 funds total the peak U.S. appropriation for the water and
sanitation sector of $4.6 billion.
As of July 5, 2005, the State Department had conducted a series of
fiscal year 2004 IRRF reallocations to address other priorities,
thereby reducing total IRRF funding for water and sanitation by about
44 percent, from $4.6 billion to $2.6 billion. The single largest
reduction occurred in September 2004, when State shifted $1.9 billion
in fiscal year 2004 IRRF funds from water and sanitation to increase
support for security and law enforcement, oil infrastructure
enhancements, economic development, debt forgiveness, Iraqi employment,
and democracy and governance. Although State's September 2004
reallocation did not cause cancellation of any water sector projects
already in progress, PCO cancelled some projects--most of which were
planned to start in mid-2005. Over the next 9 months, State made
additional reallocations, transferring a total of $160 million in
fiscal year 2004 IRRF water and sanitation funds to support efforts
such as job creation and electrical distribution. Figure 1 shows the
overall reduction in available fiscal year 2004 IRRF funds allocated
for water and sanitation. As of June 2005, U.S. agencies had obligated
$1.8 billion of the reduced total of $2.6 billion. Of the allocated
amount, about $450 million--17 percent--had been disbursed.
Figure 1: Available Fiscal Year 2004 IRRF Funds Allocated for Water and
Sanitation:
[See PDF for image]
[End of figure]
According to a senior PCO official, U.S. funding was not meant to
rebuild Iraq's entire infrastructure but to lay the groundwork for a
longer-term reconstruction effort with anticipated significant
assistance from international donors. As of the end of June 2005, at
least $384 million in Iraqi and international funds had been obligated
for rebuilding Iraq's water and sanitation sector, slightly more than
21 percent of the $1.8 billion in U.S. obligations. Iraqi funding
includes at least $239 million from the Development Fund for Iraq (DFI)
and about $12 million in seized assets from the former regime.[Footnote
9] In addition, the International Reconstruction Fund Facility for Iraq
obligated about $133 million in international donations for water and
sanitation projects as of May 2005. [Footnote 10]
Funding Has Been Directed Primarily to Large-Scale Efforts that Are in
Progress:
Water and sanitation construction projects funded by U.S. agencies in
Iraq generally fall into two categories: large-scale projects and
smaller-scale, quick-impact projects.[Footnote 11] As of June 2005,
five contracts issued by USAID and PCO, representing about 73 percent
of all U.S. water and sanitation obligations, supported a variety of
large-scale efforts that mostly remain in progress. By the end of June,
USAID and PCO contractors had completed 18 of their 54 task orders for
large-scale projects; however, these completed projects experienced
delays. Smaller-scale, quick-impact efforts are typically less complex,
less costly, and have received a smaller share of available U.S. funds.
These projects are designed to address local needs and create
employment. Iraqi funds have also been used for other water and
sanitation projects.
Some Large-Scale Water and Sanitation Projects Have Been Completed but
Delayed; Others Are Under Way:
As of June 2005, U.S. agencies had obligated about $1.3 billion of the
total $1.8 billion in available U.S. appropriated funding for large-
scale water and sanitation projects performed by USAID contractor
Bechtel and PCO contractors WGI/B&V and FluorAMEC. Some task orders
have been completed, but most work is still in progress. Table 1 shows
the status of these contracts as of June 2005.
Table 1: Status of Major Contractors' Water and Sanitation Task Orders,
June 2005:
USAID:
Contract: Bechtel Phase I;
Date of Contract: 4/17/03;
Total Task Orders[A]: 17;
Task Orders in Progress[A]: 0;
Completed Task Orders: 17;
Obligations for Task Orders in Progress: $0;
Obligations for Completed Task Orders: $199 million.
Contract: Bechtel Phase II;
Date of Contract: 1/05/04;
Total Task Orders[A]: 13;
Task Orders in Progress[A]: 12;
Completed Task Orders: 1;
Obligations for Task Orders in Progress: $365 million;
Obligations for Completed Task Orders: $0.7 million.
PCO:
Contract: WGI/B&V;
Date of Contract: 3/11/04;
Total Task Orders[A]: 10;
Task Orders in Progress[A]: 10;
Completed Task Orders: 0;
Obligations for Task Orders in Progress: $234 million[B];
Obligations for Completed Task Orders: $0.
Contract: FluorAMEC - North and South Contracts;
Date of Contract: 3/23/04;
Total Task Orders[A]: 14;
Task Orders in Progress[A]: 14;
Completed Task Orders: 0;
Obligations for Task Orders in Progress: $639 million[C];
Obligations for Completed Task Orders: $0.
Totals;
Total Task Orders[A]: 54;
Task Orders in Progress[A]: 36;
Completed Task Orders: 18;
Obligations for Task Orders in Progress: $1.2 billion;
Obligations for Completed Task Orders: $200 million.
Sources: USAID, PCO, and contractor reporting.
[A] Excludes 2 cancelled USAID Phase I task orders, 3 USAID Phase I
task orders that were combined with other task orders in Phase I or
Phase II, 2 cancelled PCO task orders and 3 PCO mobilization task
orders.
[B] Includes task orders awarded with both U.S. appropriations ($169
million) and DFI funds ($65 million).
[C] Includes task orders awarded with both U.S. appropriations ($566
million) and DFI funds ($73 million).
Note: Numbers may not add due to rounding. Status information is as of
the end of June 2005; funding information is as of the end of March
2005 for USAID and end of June for PCO.
[End of table]
As of June 2005, Bechtel had completed 18 of its total 30 task orders,
but most of these completed task orders experienced delays. Large-scale
efforts completed by Bechtel included the repair of six sewage
treatment plants, two water treatment plants, and the primary water
supply for a city in southern Iraq. Bechtel has completed one task
order under its Phase II contract, a design task costing about
$700,000. Twelve task orders remain under the second Bechtel contract,
including water treatment plants, sewer line construction, and a rural
water supply project. Six of these task orders are expected to be
completed in 2005 and six in 2006. Although USAID/Bechtel has completed
18 task orders, all 17 completed Phase I task orders were delayed
beyond the original completion date by between 1 and 13 months. Twelve
were delayed by 6 months or more.
PCO contractors WGI/B&V and FluorAMEC were awarded contracts nearly 1
year after the initial Bechtel contract, and they had not completed any
of their 24 task orders as of June 2005. The contractors expect to
complete 9 task orders by the end of 2005, 10 in 2006, 4 in 2007, and 1
in 2008. WGI/B&V's task orders include four dam facilities and a major
irrigation project; FluorAMEC's include several municipal water
supplies and three sewage collection systems. PCO contractors have also
faced some delays in completing work under the task orders.
U.S. Funds Small-Scale, Quick-Impact Projects:
U.S. agencies have also undertaken small-scale, quick-impact water and
sanitation projects. DOD, State, and PCO have conducted this work under
the following three programs:
* Under the Commanders' Emergency Response Program (CERP), military
commanders have undertaken urgent humanitarian relief and
reconstruction projects in Iraqi communities in their areas of
responsibility. Agency data as of June 30, 2005 indicated that about
$56.1 million in Iraqi and fiscal year 2004 U.S. funds had been
obligated to more than 2,800 CERP water and sanitation projects. CERP
projects have helped to repair and augment water and sanitation systems
and include canal cleanups, well construction, and water purification.
* State established the Commanders' Humanitarian Relief and
Reconstruction Program (CHRRP) in September 2004 with $86 million in
response to the perceived effectiveness of the CERP, according to a
senior State official. A major CHRRP initiative was to connect large
water and sewer infrastructure projects to homes in central Iraq.
Agency data as of June 30, 2005 indicated that about $74.3 million in
fiscal year 2004 U.S. funds had been obligated for 60 CHRRP water and
sanitation projects in central Iraq. Other planned projects include
rehabilitation of irrigation canals and procurement of landfill
equipment.
* PCO has provided funds for contracting directly with Iraqi
construction firms to conduct small water system repairs. According to
PCO reporting from April 2005, PCO has budgeted about $70 million for
this effort and plans to undertake 145 projects.
USAID also has funded small-scale, quick-impact water and sanitation
projects. According to our analysis of USAID and contractor data, more
than 1,900 projects with an average value of about $100,000 had been
funded as of May 2005. These projects include neighborhood trash
cleanups, provision of irrigation pumps, sewer cleanouts, and
installation of potable water networks. USAID has implemented this work
through contracting partners and nongovernmental organizations. The
goals of USAID's quick-impact projects include employing Iraqis and
satisfying local needs as identified by community members.
Additional Water and Sanitation Projects Have Been Funded from Iraqi
Revenues:
In April 2004, the CPA created the Accelerated Iraq Reconstruction
Program (AIRP), which, as of mid-June 2005, included 125 quick-impact
and large-scale projects funded with a total of $211 million in Iraqi
DFI funds. The AIRP is a "legacy" program of DFI-funded projects that
CPA had awarded but not completed before its dissolution in June 2004.
PCO administers the AIRP on behalf of the State Department. Although
AIRP includes nearly 25 times as many quick-impact water sector
projects as it does large-scale water sector projects, the larger
projects have received nearly twice as much funding.[Footnote 12] As of
June 2005, Iraqi contractors had received about $73 million in DFI
obligations for 120 water and sanitation projects under the AIRP, and
PCO contractors WGI/B&V and FluorAMEC had received about $139 million
for 5 projects. The cost of AIRP projects done by Iraqi contractors
ranges considerably, with the lowest at $5,000, the highest at $5.6
million, and the median at $250,000. AIRP projects were developed
through consultations with Iraqi governors, engineering teams, and
members of local councils, who were asked to identify quick-impact
projects that would benefit the local population.
Limited Performance Data and Measurements Make It Difficult to
Determine Impact:
State has set broad goals for providing essential services in Iraq, but
the lack of sound performance data and measures for the water and
sanitation sector present challenges in determining the impact of U.S.
projects. State's ability to measure the provision of essential
services, such as access to water and sanitation, is limited by a lack
of water metering and measures of water quality in Iraq. In the absence
of such measures, State tracks the number of projects started and
completed, but State was unable to substantiate which projects were
included in its reported numbers. Moreover, because these data do not
measure the availability or quality of water and sanitation services,
it is difficult to determine how U.S. efforts are contributing to the
goal of improving access to essential services. However, USAID-funded
surveys demonstrate the potential for gathering data over time that
could be used to gauge progress of U.S. reconstruction efforts. These
surveys report that Iraqis experience low levels of access and
satisfaction with water and sanitation services.
U.S. Goals for Improving Iraq's Water and Sanitation Sector Are Broad:
In April 2004, the CPA strategic plan quantified targets for increasing
Iraqi access to water and sanitation services. The CPA's goals at that
time were to increase potable water access to 90 percent of Iraqis, to
increase sewerage access to 15 percent of Iraqis, and to reduce water
losses from 60 percent to 40 percent. The CPA expected that these
targets would be met at the completion of PMO projects in 2 to 3 years.
According to State and IRMO officials, however, the CPA goals were
unrealistic because they were set without having baseline data on the
condition of Iraq's water and sanitation infrastructure and the lack of
water metering. According to a State official, the baseline data is not
reliable, even if it is available.
State assumed responsibility for managing the U.S. reconstruction
effort following the CPA's dissolution and the transfer of power to an
interim Iraqi government. The Iraq Reconstruction and Management Office
(IRMO), a temporary office within the State Department, is responsible
for strategic planning, setting priorities, and monitoring spending.
State has set forth seven strategic objectives for Iraq reconstruction
in the national security strategy for Iraq. One of these objectives is
providing essential services, such as water and sanitation, but details
of the water and sanitation objectives are classified. A senior IRMO
official expected completion of the U.S. program to increase water
access to about 50 or 60 percent of the Iraqi population, far less than
the 90 percent CPA initially outlined.
Challenges in Measuring Water and Sanitation Access and Quality:
The absence of water metering in Iraq greatly hinders the ability of
the United States to assess progress toward the broader goal of
providing essential services and improving Iraq's water and sanitation
sector. Iraq does not have a comprehensive system of area meters or
residential meters that would help determine how much water in the
distribution network reaches intended users. Water distribution
networks are subject to some water loss or undocumented water usage,
which can occur through leakage, unmetered but legitimate use such as
in government buildings, or illegal connections. PCO and State
officials have estimated water losses in Iraq to be about 60 percent
for the country as a whole. By comparison, a 1991 survey cited by the
World Health Organization found losses of 25 to 45 percent in
developing countries. In the absence of metering, it is difficult to
quantify the amount of water reaching users.
Data on treatment capacity and sanitation access do not encompass
quality measures and also hinder U.S. ability to gauge progress toward
its goal of providing essential services. For example, because of
problems with the distribution network, water that is potable at the
treatment plants may be contaminated by the time it reaches users.
According to the PCO water sector lead, potable water and sewage lines
in Iraq are sometimes adjacent to each other, allowing leaking sewage
to enter the water mains when there is insufficient pressure in the
lines. Furthermore, while Iraqis in some urban areas may be connected
to a public sewer, according to a recent report,[Footnote 13] the
sewage network may not be sufficient to safely transport waste away
from the home and streets.
In the absence of metering and quality measures, State and other U.S.
agencies track reconstruction progress using other performance data,
but these data have limitations. State tracks and reports the number of
projects in progress and the number of projects completed. As of July
3, 2005, State reported that 143 projects were complete. However, State
could not document the location, scope, or cost of the projects
included in this reporting, thereby limiting an evaluation of the
significance of completed projects. We also could not reconcile State's
figures with other data from PCO and USAID. For example, as of June 28,
2005, PCO reported that it had completed 43 small projects, and USAID
reported the completion of 18 larger-scale task orders and many more
small projects. It is unclear how many projects may be included in
these task orders. Furthermore, even if these data could be
substantiated and reconciled, this type of reporting does not provide
information on how U.S. efforts are improving Iraqi access to water and
sanitation services or the quality of those services.
Increases in water treatment capacity may help gauge progress, but this
measure also has limitations when it comes to understanding the level
of access provided. Currently, PCO expects to provide just over a
million cubic meters per day of additional water treatment capacity as
part of the PCO reconstruction program. PCO has estimated the number of
expected beneficiaries from the added capacity by dividing the
increased capacity by the estimated volume of water used by the average
Iraqi. Although PCO uses what it believes is a conservative demand
estimate that attempts to take into account water losses, plant
efficiency, and industrial usage, the actual ultimate benefit to Iraqis
is uncertain.
Surveys Can Provide Information on Access to Water and Sanitation
Services and Satisfaction with Service Quality:
USAID has funded four Iraq Quality of Life Survey Reports through its
Local Governance Program that provide important information about the
level of access to water and sanitation services and Iraqi satisfaction
with those services.[Footnote 14] Contractors, working with local
Iraqis as survey enumerators, surveyed Iraqis about a number of issues,
including their access to and satisfaction with essential services.
Although certain areas could not be surveyed due to security
constraints, the survey reports provide data for each of Iraq's 18
governorates, as well as nationwide data.
The most recent survey report, completed in February 2005, found that
just under half of respondents rated their level of water supply as
good to very good. Fewer than 20 percent of respondents rated the
quality of sewerage and wastewater disposal as good to very good.
Governorates in southern Iraq in particular showed particularly low
levels of satisfaction with the water supply. See figures 2 and 3 for
the most recent survey data on satisfaction with water supply and
adequacy of sewerage and wastewater disposal at the governorate
level.[Footnote 15]
Figure 2: Iraqi Satisfaction with Water Supply by Governorate, February
2005:
[See PDF for image]
[End of figure]
Figure 3: Iraqi Satisfaction with Adequacy of Sewerage and Wastewater
Disposal by Governorate, February 2005:
[See PDF for image]
[End of figure]
These data provide insight into Iraqi satisfaction with the level of
access to water and sanitation services and demonstrate the potential
for gathering data over time that could be used to gauge progress of
U.S. reconstruction efforts. In commenting on our July 2005 report on
Iraq reconstruction, the State Department stated that it has not
allocated money for satisfaction surveys because the surveys are
expensive and difficult and dangerous to complete in a wartime
environment.[Footnote 16] In contrast, USAID has included surveys as
part of the agency's efforts to assess the quality of a variety of
essential services provided to the Iraqi people. USAID has completed
four surveys since October 2003 and intends to continue periodic
surveys.
Security and Management Challenges Have Adversely Affected
Implementation of Water and Sanitation Projects:
Poor security and a variety of management challenges have adversely
affected the implementation of the U.S. water and sanitation
reconstruction program in Iraq. Security conditions have led to project
delays and increased costs for security services. Management challenges
such as low initial cost estimates and delays in funding and awarding
task orders have also led to the reduced scope of the water and
sanitation program and delays in starting projects. In addition, U.S.
agency and contractor officials have cited difficulties in initially
defining project scope, schedule, and cost, as well as concerns with
project execution, as further impeding progress and increasing program
costs. These difficulties include lack of agreement among U.S.
agencies, contractors, and Iraqi authorities; high staffing turnover;
an inflationary environment that makes it difficult to submit accurate
pricing; unanticipated project site conditions; and uncertain ownership
of project sites.
Poor Security Conditions Have Slowed Reconstruction and Increased
Costs:
According to agency officials and documentation, the ongoing insurgency
in Iraq has delayed the U.S. water and sanitation reconstruction
program and increased its cost. Attacks, threats, and intimidation
against project contractors and subcontractors have led to temporary
project shutdowns and disrupted the movement of materials and personnel
to and from project sites. The amount of work included in some projects
has also decreased due to the poor security conditions.
Although it is difficult to quantify the costs in time and money
resulting from poor security conditions, agency and contractor
documents and interviews with agency officials cite numerous security-
related issues that have resulted in delays in the design and execution
of projects and reduced scopes of work.[Footnote 17] For example:
* Security conditions have limited the ability of contractors to get to
project sites and perform site assessments, thus delaying project
design. At one project site in northern Iraq, for instance, the
contractor cancelled its assessment when its convoy came under attack.
* Work at a wastewater plant in central Iraq was halted for
approximately 2 months in early 2005 because insurgent threats drove
subcontractors away and made the work too hazardous to perform.
* Work was suspended at another sewer repair project in central Iraq
from early August to early November 2004, and PCO reported that a
sanitation project in central Iraq was halted for the entire month of
March 2005 due to poor security conditions.
* At the time of the Iraqi national election in January, project sites
in Iraq were shut down for at least 3 days.
* Iraqi employees and subcontractors working on water and sanitation
projects countrywide have been subject to hostility, violence, and
intimidation. At one project, a lead employee received a life-
threatening e-mail. The employee was subsequently chased by two armed
men and fled the country. The balance of the 12-member team refused to
go back to the site for some time. At another location in northern
Iraq, a subcontractor withdrew from the job site after receiving
threats. It took nearly 2 months for a qualified replacement
subcontractor to begin work.
* A wastewater plant project in central Iraq was subject to looting and
to attacks with improvised explosive devices. Iraqi employees sabotaged
this plant in November 2004 to protest U.S. operations in Fallujah by
walking off the job and leaving the plant running. The untended plant
stagnated, leading to damaged equipment and the need for a substantial
clean-up operation. As of July 2005, this plant remains closed.
* Insurgents have destroyed deliveries of needed materials to job
sites. At one water project in southern Iraq, death threats against key
employees have delayed construction and deliveries to the project site.
The same site was subjected to threats of violence and extortion
attempts by local tribesmen.
* USAID greatly reduced the scope of work for two pump station projects
due to security concerns and lack of site access permission from the
Iraqi ministry. In April 2005, the contractor reported that these
projects would be limited to design work, minor repairs, and delivery
of equipment, instead of the originally planned full construction. U.S
officials stated that Iraqi ministries would complete construction
using materials provided by the United States.
Poor security conditions also have increased the cost of providing
security services for contractors and sites. For example, when a
project is shut down or delayed due to security conditions, the fixed
costs of contractor camps and salaries continue to accrue even though
contractors in the field are unable to continue their work. USAID, PCO,
and GAO have each quantified some aspect of increased security
requirements affecting reconstruction costs; however, none has
quantified a cost estimate for the water sector as a whole. The USAID
Inspector General found that costs for security subcontractors as a
percentage of the costs for USAID's reconstruction effort in multiple
sectors went from 4.2 percent of contractor billings between March 2003
and February 2004 to 22.3 percent between March and December 2004.
Based on an analysis of a sample of water projects, PCO estimated that
the deteriorated security environment added about 7 percent to project
costs in the water sector. We have also analyzed the security expenses
of multiple reconstruction contracts and found that cost to obtain
private security providers and security-related equipment accounted for
more than 15 percent of contract costs on 8 of the 15 reconstruction
contracts analyzed.[Footnote 18]
Management Challenges Have Adversely Affected Project Implementation:
Several management challenges in executing water and sanitation
projects have resulted in reduced scopes of work, project delays, and
increased costs. Factors affecting the scope and pace of reconstruction
have included understated initial cost estimates and delays in
receiving allocated funding and awarding task orders. U.S. agencies and
contractors have also faced difficulties in completing scopes of work,
finalizing associated costs, and executing projects in an unpredictable
environment. These difficulties include lack of agreement among U.S.
agencies, contractors, and Iraqi authorities; staff turnover; an
inflationary environment that makes it difficult to submit accurate
pricing; unanticipated project site conditions; and uncertain ownership
of project sites.
Underestimated Costs and Funding Delays:
According to PCO, initial assessments prepared by the CPA
underestimated project costs and contributed to reductions in the scope
of U.S. reconstruction efforts. These initial assessments gave rough
budget estimates for repairing or constructing water and sanitation
facilities and, according to PCO, assumed more benign operating
conditions. The CPA relied on these estimates in putting together its
proposed list of 137 projects to be executed with the original fiscal
year 2004 IRRF allocation of $4.33 billion. Because the estimates were
low, the $4.33 billion allocation was never sufficient to complete the
original CPA list of projects. According to a senior PCO official,
these estimates were usually very low in comparison to the estimates
that contractors developed after more thorough field assessments of
project sites. In general, PCO found these initial estimates to be 25
to 50 percent below actual costs. According to a PCO water sector
official, the low estimates meant that the PCO construction program was
underfunded from the start.
Contractors and agency officials cited delays in receiving funding as
challenges to awarding and completing task orders and staying within
budgets. PCO reported that the receipt of fiscal year 2005 funding for
the sector was delayed by at least 3 months, affecting its ability to
award projects in a timely manner. In addition, according to a PCO
official, as of June 2005, PCO had not yet received the apportionment
for two task orders awarded in January 2005. These task orders are not
only delayed and limited in the amount of work that can be done, but
they are still accruing overhead costs that may put the projects over
budget. One contractor stated that increased overhead costs resulted
from delays in receiving task orders from the government immediately
after contract award and again following the June 2004 dissolution of
the CPA. PCO contractors WGI/B&V and FluorAMEC stated that they began
mobilizing staff after receiving their contracts in March 2004 based on
the expectation that they would receive close to their maximum contract
awards totaling $1.7 billion.[Footnote 19] As of June 2005, PCO had
obligated about $873 million in task orders to these
contractors.[Footnote 20] Because of the lower amount of funding,
mobilized staff who were no longer needed were withdrawn from Iraq.
Challenges in Finalizing Work Terms and Costs and Executing Projects:
Following the award of task orders, PCO projects have been subject to
delays in the process of developing a final cost, schedule, and scope
of work, a process called definitization, and in overall project
execution. For 18 of the 24 PCO task orders, the time from initial
issuance of a task order to definitization has ranged from 6 to 10
months, with the scope of one task issued in June 2004 for work in Al
Anbar province still not finalized as of June 2005. The Federal
Acquisition Regulation states that the process should be completed
within 6 months of signing the contract, or before completion of 40
percent of the work to be performed, although a contracting officer may
extend this time in extreme cases and according to agency
procedures.[Footnote 21] Without a definitized task order, DOD may
generally obligate only up to 50 percent of the project's negotiated
overall ceiling price.[Footnote 22] PCO has made some funds available
to its contractors prior to definitization, enabling limited efforts
such as planning and defining the scope of work. However, if the
definitization process does not keep pace with the cost of these
preliminary efforts, a project may come to a halt once these limited
funds are exhausted. Agency and contractor officials cited the
following factors as affecting both the definitization process and the
overall pace and cost of the U.S. water and sanitation reconstruction
effort:
* Lack of agreement between U.S. agencies and Iraqi authorities: Agency
and contractor officials and reports have cited difficulty in getting
agreement among Iraqi authorities, U.S. agencies, and contractors on
scopes of work and construction details. For example, at one site,
Iraqi officials wanted to repair a water treatment plant whereas the
U.S. agency had planned to replace it. At another site, local
authorities disagreed with the pipe specified for a particular project.
Another project was delayed when local Iraqi officials insisted on
using brick instead of concrete block for construction. At a wastewater
project, local officials wanted a certain type of sewer design that
increased the project's cost. In addition, U.S. agencies and Iraqi
staff have had to overcome security and communication constraints to
coordinate agreement on the scope of work. For example, one PCO
official stated that only half of the Iraqis invited to a scheduled
project meeting were able to attend--the others were absent due to the
danger of traveling, being stopped in traffic, or for other reasons.
* Frequent Staff Turnover: One PCO contractor cited discontinuity in
key U.S. government contacts, such as new contracting officers rotating
in and out of Iraq, as disrupting both cost and schedule. New
contracting officers had to be brought up to speed on work and issues
and would sometimes ask the contractor to resubmit information in
formats different from those previously required. A PCO official agreed
that turnover in contract staff impacted project progress, and another
noted that the contracting office in Iraq lacked sufficient staff and
equipment, including computers, contract-writing software, and filing
cabinets. This official also noted that some of the staff assigned as
contracting officers lacked experience with the type of projects PCO
awarded.
* Unpredictable costs: According to PCO officials, inflation in Iraq
has led to a situation where local labor and materials are in high
demand and short supply. Contractors have stated that the number of
qualified Iraqi contractors capable of undertaking some reconstruction
work is limited. Additionally, PCO officials noted that inflation in
the cost of labor and basic materials such as concrete and pipe had
raised projected project costs. For example, a U.S. contractor cited
increases in the cost of camps, transportation, and specialized labor
such as experts in unexploded ordnance investigation and disposal. The
contractor expected costs to increase because the demand for these
specialized services likely exceeded the supply.
* Poor site conditions: Contractors found some project sites inadequate
or unusable. For example, one proposed site in northern Iraq for a new
water treatment plant was flooded as a result of a break in a nearby
irrigation dike. The project was delayed while the site was drained.
One contractor had to redesign a proposed project when it found newly
constructed houses and a school near the proposed project's right of
way. Contractors also encountered unanticipated sewer blockages and
additional treatment equipment requiring repair.
* Unclear site ownership: Unclear ownership has delayed projects. In
some cases, Iraqi ministries have proposed sites where contractors
subsequently found squatters with competing property claims. In these
situations, U.S. contractors halted work until the ministry could
provide a usable site. For example, a water treatment plant in central
Iraq was delayed until a junkyard and squatters were removed. In
southern Iraq in March 2005, a PCO contractor was working to relocate
families living in water pump stations. A landfill project in central
Iraq encountered site selection difficulties stemming from both unclear
land ownership and environmental concerns. Two proposed sites had
ownership issues, and the third proposed site was environmentally
infeasible due to a high groundwater level. USAID cancelled the
project, estimated to cost $20 million if completed, as a result of
these site issues. In all, about $4.1 million was budgeted for this
project as of June 2005. These funds include costs to design the
landfill for the ultimately unusable site, but were also used for
equipment that will be stored and used at other projects.
Iraq's Lack of Capacity to Operate and Maintain U.S.-Funded Projects
Led to Inoperable Facilities and Greater U.S. Focus on Improving
Project Sustainability:
As of June 2005, U.S.-funded water and sanitation projects representing
about $52 million of the approximately $200 million in completed
projects were either not operating or were operating at lower capacity.
In late August 2004, U.S. contractors and agencies identified several
areas in which Iraqi capacity to maintain and operate reconstructed
facilities needed improvement. U.S. concerns included problems with
staffing, unreliable power to run treatment plants, insufficient spare
parts, and poor operations and maintenance procedures. In late March
2005, State allocated $25 million for up to 1 year of additional on
site operations assistance and supply procurement at USAID's completed
projects. In addition, U.S. agencies have begun risk forecasting and
interagency planning efforts to address current and potential problem
areas. However, the large-scale construction projects yet to be
completed remain at risk due to staff and resource shortages.
Completed Projects Lack the Resources to Operate at Intended Capacity:
As of June 2005, USAID's contractor Bechtel had completed approximately
$200 million in projects under its two contracts; however, projects
costing about $52 million could not be commissioned or their capacity
had been diminished due to the theft of key equipment, inadequate Iraqi
staff, or inadequate supplies of electricity and treatment chemicals.
For example, one wastewater plant repaired at a cost of $5.8 million
was partially shut down due to the theft of key electrical equipment
from the plant. Two wastewater treatment plants costing about $11
million lacked reliable supplies of electricity and diesel fuel for
generators. These two plants had lacked these supplies since December
2004. An additional two wastewater plants, for which about $24 million
had been obligated, lacked adequate Iraqi staff to function
continuously or had inadequate supplies of reliable electricity.
Finally, all the water plants repaired in one southern Iraq governorate
lacked the water treatment chemicals and supplies needed for proper
operation. The United States obligated $10.4 million for repairs to
these plants in southern Iraq.
U.S. Agencies Included Training and Capacity Development Requirements
in Contracts and Identified Sustainability Issues:
The United States incorporated training programs and capacity
development into its reconstruction program beginning in 2003. USAID's
Phase I reconstruction contract required Bechtel to involve government
ministries in implementing reconstruction projects and to provide
technical assistance and training to build Iraqi capacity. In addition,
PCO contract provisions require WGI/B&V and FluorAMEC to provide
operations and maintenance training and manuals and be available for
additional support for 90 days following project completion. PCO also
awarded two task orders that more explicitly include capacity
development efforts. In July 2004, PCO awarded a task order for water
conservation and network repair to address the numerous leaks in Iraq's
water mains. As part of this effort, the contractor is surveying
training needs, providing on-the-job and classroom training to Iraqi
ministry staff, and improving management tools and systems. In January
2005, PCO awarded another task order to provide systems development,
professional mentoring, and technical training to the Iraqi Ministry of
Municipalities and Public Works in eight governorates.
Bechtel began to report concerns about institutional strengthening in
Iraq beginning in August 2004 and provided a detailed assessment of the
issue in December 2004. In August 2004, Bechtel noted to USAID that the
sustainability of water projects was a critical concern in its
reconstruction efforts. In December 2004, Bechtel submitted a paper to
USAID that provided detailed information on areas it considered crucial
to ensuring the sustainability of water and sanitation projects being
completed under its Phase I contract. These include:
* Staffing: Bechtel estimated that water and wastewater plants had only
about one third of the staff needed. These plants lacked the staff to
operate 24 hours per day and were shut down at night. Day staff
included a significant number of temporary employees and "day laborers."
* Lack of electrical power and diesel fuel: The unreliable Iraqi
electrical grid required some plants to run on backup generators.
However, generators needed diesel fuel to power them, and the fuel was
not always available.
* Spare parts: Bechtel's Phase I contract with USAID did not provide
funding for spare parts for rehabilitated plants. Without these spares
or the funds to buy them, Iraqi staff would likely have to cannibalize
parts of the facility, borrowing parts from one machine to repair
others.
* Poor operating practices: Equipment was not being operated or
maintained correctly. For example, filters were not cleaned, and
chlorine and alum dosing equipment was available but not used.
* Lack of maintenance programs: Iraqi staff did not undertake repairs
until a situation became critical. One facility, a key pumping station
for a city in southern Iraq, had to be taken completely offline to
allow for repairs.
In early 2005, a working group of State, USAID, PCO, and U.S. Army
Corps of Engineers officials assessed operations and maintenance
problems in the water sector. According to the group, much of the Iraqi
workforce was comprised of day laborers with little operations
capability, and operations managers were often political appointees
with little or no water sector experience. According to the working
group's assessment, most water and sewage treatment plants were the
joint responsibility of the Ministry of Municipalities and Public Works
and the local municipalities or governorates, which complicated the
division of responsibility for the plants. Further, procurement and
supply issues led to severe capacity limitations due to shortages of
electricity, diesel fuel, and chemical supplies.
U.S Agencies Have Increased Efforts to Support Iraqi Operations and
Management, but Future Sustainability Is Unclear:
In response to problems with completed water and sanitation projects,
U.S. agencies undertook efforts to provide additional support for Iraqi
operations and management. First, State increased funds to support the
operation of water and sanitation facilities after their turnover to
Iraqi authorities. In late March 2005, nearly 7 months after the
initial USAID contractor report of sustainability concerns, State
reallocated funding from an electrical generation project and provided
$25 million to USAID to support the operations, maintenance, and
logistics at USAID's recently completed water and sanitation projects
for up to 1 year. According to USAID, Bechtel will hire local Iraqi
companies to provide these services. In proposing the reallocation, the
U.S. embassy in Iraq noted that it was moving from the previous model
of building projects and turning them over to Iraqi management toward a
"build-train-turnover" system to protect the U.S. investment in Iraq's
infrastructure. State has not committed funds for similar support at
other USAID and PCO water and sanitation projects.
Second, in March 2005, PCO provided $10.3 million to CH2M Hill/PWI for
a capacity development initiative, a 12-month effort in eight
governorates that will include workshops, courses, and hands-on
training. Areas addressed will include baseline service assessments,
operations and maintenance planning and budgeting, project management,
planning and design, finance and administration, water quality, and
communications. The initiative also requires CH2M Hill/PWI to work with
Iraqi ministry staff on management efforts such as strategic planning,
facility design processes and standards, and international donor
coordination.
Third, in April 2005, PCO began using a formal risk matrix to evaluate
the potential risk of failure for strategic and high-cost projects
after their handover to Iraqi management and to direct support to where
it is needed. Prior to project completion, PCO's sector contractors
will assess five factors and calculate a score that estimates the
probability a reconstruction project will not function as intended. Two
of the five factors are the quality of PCO's construction activities
and the completion of PCO's required operations and maintenance
training and documentation. PCO officials consider these factors to be
under their direct influence and therefore the least susceptible to
failure. According to PCO officials, the remaining three factors
present the greater risks: (1) the ability and commitment of Iraqi
facility operators and management to perform required operations and
maintenance procedures, (2) management support of operations and
maintenance efforts, and (3) adequate funding and direction from Iraqi
ministries. PCO has not set a threshold score whereby a high risk
factor would delay the handover.
Finally, in May 2005, State/IRMO, USAID, PCO, and the U.S. Army Corps
of Engineers formed an interagency working group to identify ways of
addressing Iraq's capacity development needs. The working group is in
its early stages, and it is unknown what direction their
recommendations may take. PCO has identified potential future steps:
(1) provide a year of additional operations and maintenance support
similar to what USAID will provide for its Phase I projects, (2) expand
its training effort with the Iraqi Ministry of Municipalities and
Public Works to all Iraqi governorates, and (3) extend the capacity
development initiative beyond the 12 months currently planned.
Despite these efforts, the long-term outlook for sustaining
reconstructed Iraqi facilities remains unclear. USAID's $25 million
program provides initial support for capacity development, but many of
these efforts are in their early stages. In addition, facilities at
risk of failure could still be handed over to Iraqi management. The
initial U.S. experience with projects completed under USAID's Phase I
contract and PCO's risk assessment have shown that Iraqi ministry
capacity remains an obstacle to program success. U.S. agencies have
obligated about $1.2 billion in U.S. appropriated funds for projects
they expect to complete between mid-2005 and 2008. These projects will
require more trained staff, skilled managers, spare parts, and supplies
to function effectively.
Conclusion:
The United States has obligated about $1.8 billion in appropriated
funds to restore Iraq's water and sanitation infrastructure and has
made some progress in a challenging security environment. However, it
is difficult to determine the overall progress and impact of U.S.
efforts because of limited performance data and measurements. These
limited performance data and measurements in turn make it difficult to
assess the effectiveness of U.S. water and sanitation reconstruction
efforts. State has primarily reported on the numbers of projects
completed and the expected capacity of reconstructed treatment plants.
However, these data do not provide information on the scope and cost of
individual projects nor do they indicate how much clean water is
reaching intended users as a result of these projects. Information on
access to water and its quality is difficult to obtain in an insecure
environment and without water metering facilities. However, opinion
surveys assessing Iraqis' access and satisfaction with water and
sanitation services have the potential for providing important data to
measure the impact of U.S. reconstruction efforts. Moreover, the United
States has funded most water and sanitation reconstruction assistance
in Iraq to date. As a result, progress and benefits measured through
the use of surveys and other data collection methods are more easily
attributed to U.S. efforts.
Iraqis have been unable to operate and maintain U.S.-funded water and
sanitation facilities due to a lack of reliable power, trained Iraqi
staff, and required chemicals and supplies. In response, U.S. agencies
have taken initial steps to improve Iraqi capacity to operate and
maintain water and sanitation facilities. However, these efforts are
just beginning. It is unclear whether the Iraqis will be able to
maintain and operate both completed projects and projects expected to
be completed through 2008 for which the U.S. has obligated more than a
billion dollars. Without assurance that Iraqis have adequate resources
to maintain and operate completed projects, the U.S. water and
sanitation reconstruction program risks expending program funds on
projects with limited long-term impact.
Recommendations for Executive Action:
To more accurately report the results of U.S. reconstruction efforts in
water and sanitation, we recommend that the Secretary of State
establish indicators and measures to assess how the U.S. efforts are
improving the quality and quantity of water and sanitation services in
Iraq. For example, State could include information on project scope and
cost in its reporting on numbers of projects under way and completed.
State could also include surveys that measure Iraqis' access to water
and sanitation facilities and their satisfaction with these services in
selected geographic areas that are served by larger-scale U.S.
reconstruction efforts. Efforts to develop performance measures should
take into account the challenges in collecting data in a difficult
security environment.
To help ensure that projects funded by U.S. appropriations operate at
their intended capacity and provide benefits to the Iraqi people after
their completion, we recommend that the Secretary of State work with
Iraqi ministries to assess the resources needed to operate and maintain
new and repaired water and sanitation facilities before they are turned
over to Iraqi management and, afterwards, work with the Iraqi
government to ensure that Iraq has these resources.
Agency Comments:
We provided a draft of this report to the Departments of Defense and
State and the U.S. Agency for International Development.
The Department of State provided written comments, which are reprinted
in appendix II. State agreed with our recommendations and stated that
it is refining its performance metrics and working with the Iraqi
government to assess the resources needed to sustain water and
sanitation facilities. State also endorsed our main findings and
provided additional comments to elaborate on its water and sanitation
efforts in Iraq. State also provided technical comments, which we
incorporated where appropriate.
The U.S. Agency for International Development also provided a written
response, which is reprinted in appendix III. The agency stated that it
is pleased that the report prominently mentions the importance of
operations and maintenance in the water sector. USAID added that the
report contributes to the discussion of next steps in Iraq
reconstruction by clarifying the economic and social context of the
management of public utilities in Iraq.
The Department of Defense did not provide written comments on our
report; however, it provided technical comments, which we incorporated
where appropriate.
We are sending copies of this report to interested congressional
committees. We will also make copies available to others on request. In
addition, this report is available on GAO's Web site at
http://www.gao.gov. If you or your staff have any questions, please
contact me at (202) 512-8979 or christoffj@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Key contributors to this report are
listed in appendix IV.
Signed by:
Joseph A. Christoff:
Director, International Affairs and Trade:
List of Committees:
The Honorable Thad Cochran:
Chairman:
The Honorable Robert C. Byrd:
Ranking Minority Member:
Committee on Appropriations:
United States Senate:
The Honorable Mitch McConnell:
Chairman:
The Honorable Patrick J. Leahy:
Ranking Minority Member:
Subcommittee on State, Foreign Operations, and Related Programs:
Committee on Appropriations:
United States Senate:
The Honorable Ted Stevens:
Chairman:
The Honorable Daniel K. Inouye:
Ranking Minority Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable John Warner:
Chairman:
The Honorable Carl Levin:
Ranking Minority Member:
Committee on Armed Services:
United States Senate:
The Honorable Richard G. Lugar:
Chairman:
The Honorable Joseph R. Biden, Jr.:
Ranking Minority Member:
Committee on Foreign Relations:
United States Senate:
The Honorable Susan M. Collins:
Chairman:
The Honorable Joseph I. Lieberman:
Ranking Minority Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable C. W. Bill Young:
Chairman:
The Honorable John P. Murtha:
Ranking Minority Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
The Honorable Jim Kolbe:
Chairman:
The Honorable Nita M. Lowey:
Ranking Minority Member:
Subcommittee on Foreign Operations, Export Financing, and Related
Programs:
Committee on Appropriations:
House of Representatives:
The Honorable Duncan L. Hunter:
Chairman:
The Honorable Ike Skelton:
Ranking Minority Member:
Committee on Armed Services:
House of Representatives:
The Honorable Tom Davis:
Chairman:
The Honorable Henry A. Waxman:
Ranking Minority Member:
Committee on Government Reform:
House of Representatives:
The Honorable Christopher Shays:
Chairman:
Subcommittee on National Security, Emerging Threats, and International
Relations:
Committee on Government Reform:
House of Representatives:
The Honorable Henry J. Hyde:
Chairman:
The Honorable Tom Lantos:
Ranking Minority Member:
Committee on International Relations:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope & Methodology:
As part of GAO's review of reconstruction efforts in Iraq initiated
under the Comptroller General's authority, we examined U.S. activities
directed at rebuilding the water and sanitation sector. Specifically,
we assessed (1) the funding and status of U.S. activities, (2) U.S.
efforts to measure progress, (3) the factors affecting the
implementation of reconstruction activities, and (4) the sustainability
of U.S.-funded projects. To accomplish our objectives, we relied
primarily on U.S. agency and contractor reporting. We also met with
agency and contractor officials in the United States. Although we did
not travel to Iraq, we interviewed U.S. officials based in Iraq by
telephone, exchanged information through email, and met with contractor
officials in the United States who had spent time in Iraq. We also
reviewed U.S. government-funded surveys that document Iraqi perceptions
of the quality and quantity of water and sanitation services.
In assessing resources supporting the reconstruction of Iraq, we
focused on the sources and uses of U.S., Iraqi, and international
funding. U.S. agencies provided us with electronic data files for
appropriated funds, the Development Fund for Iraq (DFI), vested assets,
and seized assets. These files generally included objective or project
descriptions with allocated, obligated, and disbursed amounts. We
assigned each of the funding line items to broad categories based on
the descriptive information available in the data files. To assign the
data to a category, we relied on project descriptions from agency data
files.
In addressing the amount of U.S. funds that have been appropriated,
obligated, and disbursed for the Iraq reconstruction effort, we
collected funding information from contractors, the Department of
Defense (DOD), including the Project and Contracting Office (PCO);
Department of State; and the U.S. Agency for International Development
(USAID). Data for U.S. appropriated funds are as of end June 2005. We
also reviewed Special Inspector General for Iraq Reconstruction
reports, and Office of Management and Budget documents. Although we
have not audited the funding data and are not expressing our opinion on
them, we discussed the sources and limitations of the data with the
appropriate officials and checked them, when possible, with other
information sources. We determined that the data were sufficiently
reliable for characterizing water and sanitation projects. To address
international assistance for rebuilding Iraq, we collected and analyzed
information provided by the State Department's Bureau of Economic and
Business Affairs. We also collected and reviewed reporting documents
from the International Reconstruction Fund Facility for Iraq (IRFFI).
To assess the reliability of the data on the pledges, commitments, and
deposits made by international donors, we interviewed officials at
State who are responsible for monitoring data provided by the IRFFI and
donor nations. We determined that the data on donor commitments and
deposits made to the IRFFI were sufficiently reliable for the purposes
of reporting at the aggregate level.
To determine the status of U.S. activities in the water and sanitation
sector, we reviewed documents obtained from the former CPA, the State
Department, PCO, USAID, and agency contractors. Specifically, we
reviewed contracts, task orders, status reports, and planning documents
prepared by USAID, the former CPA, State, PCO, and contractors. We also
interviewed USAID, State, and PCO officials and their contractor
representatives. We focused on the five major USAID and PCO contracts
for water and sanitation implemented by U.S. contractors because they
received the majority of U.S. appropriated funds. We report progress
data as of the end of June 2005. Funding data for the major contracts
has been reported as of the end of March for USAID contracts and end of
June for PCO contracts.
To assess U.S. efforts to measure progress we reviewed planning
documents from the CPA and State, and agency reporting documents from
PCO, USAID, and State. We also contacted agency officials for
clarification of some of this data and further information in
evaluating its effectiveness in determining the impact of the U.S.
program. We reviewed the methodology of the Iraq Quality of Life Survey
and contacted contractor officials to review the methodology and survey
limitations. The USAID contractor did not conduct cross-checks for the
internal consistency of responses on water supply, but the satisfaction
data reported in the survey are analogous to the findings on access
reported in the earlier UN/World Bank and USAID/Bechtel assessments. We
determined that the survey data was sufficiently reliable to report in
the quartile bands used in this report.
To determine the factors affecting the implementation of reconstruction
activities, we reviewed contractor and agency reporting and interviewed
agency officials in the United States and Iraq. Specifically, we
reviewed agency and contractor reports, and we interviewed USAID,
State, and PCO officials and contractor representatives in the United
States and in Iraq. We reviewed the data for discrepancies, interviewed
officials familiar with the data collection, and determined that the
information from these sources was sufficiently reliable to meet our
reporting objectives.
To determine the sustainability of U.S.-funded projects, we reviewed
agency contracts, contractor reporting, and agency reporting.
Specifically, we reviewed USAID, PCO, and contractor reports, and we
interviewed USAID, State, and PCO officials and contractor
representatives in the United States and in Iraq. We determined that
the information from these sources was sufficiently corroborated and
reliable to meet our reporting objectives.
We conducted our review from September 2004 through August 2005 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of State:
United States Department of State:
Assistant Secretary and Chief Financial Officer:
Washington, D. C. 20520:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
SEP 6 2005:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report, "REBUILDING
IRAQ: U.S. Water and Sanitation Efforts Need Improved Measures for
Assessing Impact and Sustained Resources for Maintaining Facilities,"
GAO Job Code 320316.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact Tom
Gramaglia, Desk Officer, Bureau of Near Eastern Affairs, at (202) 647-
4065.
Sincerely,
Signed by:
Sid Kaplan (Acting):
cc: GAO - Michael Simon;
NEA - David Welch;
State/OIG - Mark Duda:
Department of State Comments on GAO Draft Report REBUILDING IRAQ: U.S.
Water and Sanitation Efforts Need Improved Measures for Assessing
Impact and Sustained Resources for Maintaining Facilities (GAO-05-872,
GAO Code 320316):
Thank you for the opportunity to comment on your draft report entitled
"REBUILDING IRAQ: U.S. Water and Sanitation Efforts Need Improved
Measures for Assessing Impact and Sustained Resources for Maintaining
Facilities."
The Department of State welcomes the GAO report on the U.S.
reconstruction program in Iraq's water and sanitation sector and
endorses its main findings. Over the past several months, the staff of
the Iraq office in the Department's Bureau of Near Eastern Affairs
(NEA/I) worked closely with the GAO team to assist in the latter's
efforts to evaluate our progress in this sector. We are grateful for
the cooperative relationship that resulted between the GAO team and
NEA/I.
The Iraq Relief and Reconstruction Funds ($20.9 billion) are designed
to assist in the emergence of an independent, stable, and prosperous
Iraq, with a freely-elected representative government, at peace with
its neighbors, whose people can enjoy the freedoms denied under Saddam
Hussein while benefiting from the rewards of a market economy. This
strategy requires assistance to help Iraq develop the capability to
provide for its own security, improve its economy and begin to
establish justice and the rule of law.
In the water and sanitation sector, the U.S. reconstruction program
includes the following activities:
* We are completing water treatment plants and sewage treatment plants
to benefit millions of Iraqis, and we have begun training Iraqis to
operate and maintain them. For example, USAID has completed
rehabilitation or expansion on 5 large-scale water treatment plants and
14 compact water treatment plants.
* Prior to reconstruction, over 70% of all sewage flowed untreated into
rivers and streets. USAID has rehabilitated all three sewage treatment
plants in Baghdad and plants in Hillah, Najaf, Diwaniyah and Basrah,
benefiting millions of Iraqis. We are also rehabilitating a major
sewage treatment plant in Karbala.
* USAID's Rural Water Supply Initiative will provide wells, treatment
plants, or storage facilities for 550,000 Iraqis living in rural areas
where water is scarce or brackish.
* The U.S. is assisting Iraq's development of a national plan for the
management of water resources for consumption, irrigation,
hydroelectric power generation, and restoration of the Iraqi marshes,
which were deliberately drained by Saddam.
* Capacity development of the Iraqi water ministries is a priority.
USAID has commenced a training program in operations and maintenance of
reconstructed water treatment plants; in addition, the Department of
Defense's Projects and Contracting Office has commenced two capacity
development programs for ministry and plant personnel.
Despite our progress in the water and sanitation sector, we agree with
the GAO's recommendations and have already begun to implement them:
Recommendation #1: The State Department is currently refining
performance metrics in the water and sanitation, as well as other
sectors, to track reconstruction progress in greater detail and
accuracy. We are implementing several metrics especially related to how
our projects affect the Iraqi population (such as access to potable
water).
Recommendation #2: The State Department is currently working with the
Iraqi government to assess the additional resources needed to operate
and maintain water and sanitation facilities that have been constructed
or repaired by the U.S.
As the GAO report illustrates, poor security, inflation, unanticipated
site conditions, uncertain ownership of project sites and other factors
have adversely affected the U.S. water and sanitation reconstruction
program. Despite these challenges, the Department of State is committed
to working closely with the Iraqi government for successful and
sustainable implementation of the program.
[End of section]
Appendix III: Comments from the U.S. Agency for International
Development:
USAID:
FROM THE AMERICAN PEOPLE:
August 30, 2005:
Mr. Joseph A. Christoff:
Director, International Affairs and Trade:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548:
Dear Mr. Christoff:
Thank you for this opportunity to provide the U.S. Agency for
International Development's (USAID) formal response to the draft GAO
report entitled Rebuilding Iraq: U.S. Water and Sanitation Efforts Need
Improved Measures for Assessing Impact and Sustained Resources for
Maintaining Facilities [GAO-05-872].
USAID is pleased that the report prominently mentions the importance of
operations and maintenance (O&M) in the water sector. The resources
required for O&M are indicative of the challenge of reconstruction in
any country. The GAO report contributes to the discussion of next steps
in Iraq reconstruction by clarifying the economic and social context
around the management of Iraqi public utilities.
We appreciate this opportunity to respond to the GAO draft report and
for the courtesies extended by your staff in the conduct of this
review.
Sincerely,
Signed by:
Steven G. Wisecarver:
Acting Assistant Administrator:
Bureau for Management:
U.S. Agency for International Development:
Office of Iraq Reconstruction:
1300 Pennsylvannia Ave. N.W.:
Washington DC 20523:
Tel: 202-712-0448:
Fax 202-216-3872:
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Joseph A. Christoff, Director (202) 512-8979:
Staff Acknowledgments:
John Hutton (Assistant Director), Monica Brym, Aniruddha Dasgupta,
Charles D. Groves, B. Patrick Hickey, Sarah Lynch, Michael Simon, and
Audrey Solis made key contributions to this report. Sharron Candon,
Lynn Cothern, Martin De Alteriis, Judy McCloskey, and Judith Williams
provided technical assistance.
FOOTNOTES
[1] United Nations Development Group and World Bank Group, United
Nations/World Bank Joint Iraq Needs Assessment (October 2003).
[2] Task orders are placed against established contracts for the
performance of tasks during the period of the contracts.
[3] We could not determine which of these projects were included in the
task orders reported by contractors.
[4] United Nations Development Group and World Bank Group, United
Nations/World Bank Joint Iraq Needs Assessment (October 2003).
Operation Iraqi Freedom largely spared water and wastewater treatment
plants; however, water networks were seriously damaged. Baghdad's water
network in particular was subject to severe bomb damage, causing acute
water shortages that led residents to tap the network illegally.
[5] UN Children's Fund, The Situation of Children in Iraq: An
Assessment Based on the United Nations Convention on the Rights of the
Child (New York: Reprinted March 2003).
[6] The disbursement figure for water and sanitation activities is
estimated due to limitations in agency reporting. For example, water
and other reconstruction activities under USAID's Local Governance
Program are reported in the democracy category, and DOD's reporting on
some smaller programs stops at the obligation level.
[7] Congress enacted Public Law 108-11, the Emergency Wartime
Supplemental Appropriations Act, 2003 on April 16, 2003.
[8] Congress enacted Public Law 108-106, the Emergency Supplemental
Appropriations Act for Defense and for the Reconstruction of Iraq and
Afghanistan, 2004, on November 6, 2003.
[9] According to UN Security Council Resolution 1483, the funds
deposited into the DFI were to be used to meet the costs of Iraqi
civilian administration, humanitarian needs, infrastructure repairs,
economic reconstruction, and other purposes benefiting the people of
Iraq. The CPA used the term "allocation" to reflect DFI obligations. We
used the term "obligations" for consistency of reporting. The 2005
budgets for the Iraqi Ministries of Municipalities and Public Works,
and of Water Resources also included funding for capital project costs;
however, we were unable to determine the extent to which these funds
have been made available.
[10] The International Reconstruction Fund Facility for Iraq comprises
two trust funds into which donors can make contributions--the World
Bank Iraq Trust Fund and the UN Development Group Iraq Trust Fund.
Members of the international community have also made bilateral
donations for rebuilding Iraq. As we reported in June 2004, the United
States had been working with the Iraqis to develop a database for
tracking all bilateral commitments made to reconstruction activities in
Iraq. One year later, this database for tracking all donor assistance
projects in Iraq remains under development with U.S. and UN assistance
and has been transferred to the Iraqis.
[11] According to PCO reporting, in addition to obligating funds to
water and sanitation construction projects, PCO has obligated about
$127 million to nonconstruction activities in the sector as of June 26,
2005. These activities include procurement of trash trailers, sewage
trucks, and generators.
[12] According to a PCO official, after the dissolution of the CPA, the
United States, per agreement with the Iraqi Finance Minister, manages
the AIRP projects but may not award new ones.
[13] Iraq Ministry of Planning and Development Cooperation and UN
Development Program, Iraq Living Conditions Survey 2004 (Baghdad, Iraq:
April 2005).
[14] Survey reports are dated October-November 2003, June 2004,
September 2004, and February 2005.
[15] The USAID contractor reported a good overall response rate to the
survey. However, response rates per governorate and per question were
not provided, and sampling errors were not calculated, so the margin of
error for the responses is unknown. In addition, the responses were not
weighted by governorate, although the samples by governorate were not
strictly proportional. For example, while Baghdad contains about a
third of Iraq's urban population, its sample represented only about a
quarter of the entire sample for Iraq. As a result, it is possible that
responses from some governorates are more influential than responses
from others.
[16] GAO, Rebuilding Iraq: Status of Funding and Reconstruction
Efforts, GAO-05-876 (Washington, D.C.: July 28, 2005).
[17] While it is apparent from these and other examples that security
has affected the progress of reconstruction, it is not always possible
to separate delays and cost increases caused by poor security
conditions from delays and cost increases caused by other factors. For
example, USAID task order amendments list the reasons why a job's
schedule is being extended, but several factors may be cited as part of
the same extension request. One project in southern Iraq received a 75-
day extension due to delays in awarding subcontracts and receiving
permits from highway department, issues with relocating illegal
roadside markets, as well as deterioration in the overall security
situation.
[18] GAO, Rebuilding Iraq: Actions Needed to Improve Use of Private
Security Providers, GAO-05-737 (Washington, D.C.: July 28, 2005).
[19] The three PCO contracts had ceiling values of $500 million, $600
million, and $600 million.
[20] This figure includes obligations from appropriated funds and from
the DFI.
[21] Federal Acquisition Regulations 16.603-2. To meet urgent
operational needs, as is the case in Iraq's reconstruction, agencies
may authorize contractors to begin work before contracts or task orders
have been definitized--that is, before key terms and conditions,
including price, have been defined and agreed upon. While this approach
allows agencies to initiate work quickly, it also can result in
potentially significant additional costs and risks for the government.
[22] See 10 U.S.C. § 2326; Defense Federal Acquisition Regulations
Supplement subpart 217.74.
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