Securing, Stabilizing, and Rebuilding Iraq: Key Issues for
Congressional Oversight (09-JAN-07, GAO-07-308SP).
As the United States reviews its plans to secure, stabilize, and
rebuild Iraq, GAO has enclosed a series of issue papers for
Congressional consideration in developing its oversight agenda
for the 110th Congress and analyzing the President's revised
strategy for Iraq. These papers are based on the continuing work
of the U.S. Government Accountability Office and the 67
Iraq-related reports and testimonies we have provided to the
Congress since May 2003. Iraq has had three successful elections,
adopted a constitution, and installed its first elected
government. At the same time, since the initial ground offensive
ended in 2003, the costs to secure and stabilize Iraq have grown
substantially, as has the level of violence that afflicts Iraqi
society. Such violence stems from an insurgency that has grown
more complex and lethal over the past 3 and 1/2 years and the
Sunni-Shi'a conflict, which escalated dramatically in 2006. This
instability complicates meaningful political reconciliation among
Iraq's religious and tribal groups, reduces the effectiveness of
U.S. and Iraqi reconstruction and capacity-building efforts, and
diminishes the hopes and expectations of an Iraqi people without
adequate jobs, water, fuel, and electricity. Increasing Iraqi
security forces and transferring security responsibilities to
them have not resulted in reduced violence. Rather, attacks
increased throughout 2006. Although more Iraqi troops have been
trained and equipped, high absenteeism and divided loyalties have
limited their overall effectiveness. At the same time, our
service members are working with great courage and diligence to
perform the roles the President has asked of them.
Notwithstanding their noble efforts, the U.S. military has
sustained significant casualties. In addition, wear and tear on
military equipment and growing replacement costs have risen
substantially. The resulting stress and strain on American forces
have reduced troop readiness levels and the availability of
reserve personnel. The U.S. rebuilding effort in Iraq has focused
on helping the Iraqi government establish a sound economy with
the capacity to deliver essential services. Although Iraq's
economy has grown and U.S. efforts have helped restore portions
of Iraq's infrastructure, the poor security environment and
mismanagement have diminished the overall results of U.S.
investments. Iraq will need U.S. and international support,
including political and economic incentives, to strengthen its
fragile government institutions, which have thus far failed to
adequately deter corruption, stimulate employment, or deliver
essential services.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-308SP
ACCNO: A64724
TITLE: Securing, Stabilizing, and Rebuilding Iraq: Key Issues
for Congressional Oversight
DATE: 01/09/2007
SUBJECT: Congressional oversight
Counterinsurgency
Defense capabilities
Defense cost control
Economic development
Economic stabilization
Federal aid to foreign countries
Financial management
Foreign governments
International relations
Military forces
Performance measures
Physical security
Security threats
Strategic planning
Iraq
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GAO-07-308SP
* [1]Enclosure I: More Comprehensive U.S. Strategy Needed to Achi
* [2]Enclosure II: U.S. Commitments Involve Significant Resources
* [3]Issue
* [4]Summary
* [5]NSVI Did Not Fully Address All Key Characteristics of an Eff
* [6]Security, Political, and Economic Factors Hamper Efforts to
* [7]Prior Recommendations
* [8]Oversight Questions
* [9]GAO Contact
* [10]Issue
* [11]Summary
* [12]Reported Costs for Operations in Iraq Are Increasing
* [13]Future Iraq Costs Are Likely to Be Considerable
* [14]Prior Recommendations
* [15]Oversight Questions
* [16]GAO Contacts
* [17]Enclosure III: Security Conditions Have Deteriorated as Iraq
* [18]Enclosure IV: Assessing the Capabilities of the Iraqi
Securi
* [19]Enclosure V: DOD May Be Unable to Ensure That
U.S.-Funded Eq
* [20]Issue
* [21]Summary
* [22]MNF-I Revised Security Transition Plan Because Iraq Could No
* [23]Progress in Transferring Security Responsibilities to Iraq H
* [24]Oversight Questions
* [25]GAO Contact
* [26]Issue
* [27]Summary
* [28]Reports on Iraqi Security Forces Provide Limited Assessments
* [29]Transition Readiness Assessments Assess Iraqi Security Force
* [30]Oversight Questions
* [31]GAO Contact
* [32]Issue
* [33]Summary
* [34]DOD Has Not Clarified What Accountability Requirements Apply
* [35]Despite MNF-I Accountability Orders, DOD and MNF-I May Be Un
* [36]Oversight Questions
* [37]GAO Contact
* [38]Enclosure VI: The Iraqi Government Needs to Staff an Effecti
* [39]Enclosure VII: Ministry Capacity Development Efforts
Need an
* [40]Enclosure VIII: Several Factors Affect Iraqi
Ministry Effort
* [41]Enclosures IX: Iraq Owes Significant Foreign Debt
and Faces
* [42]Issue
* [43]Summary
* [44]Iraqi Ministries Lack Trained, Nonpartisan Civil Service
* [45]Corruption Is a Key Challenge
* [46]Most Ministries Lack Technology and Face Challenges in Effec
* [47]Oversight Questions
* [48]GAO Contact
* [49]Issue
* [50]Summary
* [51]Capacity Development Efforts Lack Integrated Plan
* [52]Questions Remain about Iraqi Leadership and U.S. Agency Role
* [53]U.S. Metrics to Assess Ministerial Effectiveness Are Still B
* [54]Questions for Oversight
* [55]GAO Contact
* [56]Issue
* [57]Summary
* [58]Iraq Has Spent Little of Its Annual Capital Budget
* [59]Lack of Clear Budget and Procurement Rules Affect Ministry E
* [60]U.S. Government and Donors Have Made Efforts to Address Budg
* [61]Oversight Questions
* [62]GAO Contact
* [63]Issue
* [64]Summary
* [65]Debt Reduction Has Been Promised, with Conditions
* [66]Iraq Has Met Some IMF Targets, but Others Are More Challengi
* [67]Oversight Questions
* [68]GAO Contact
* [69]Enclosure X: U.S. Efforts to Restore Iraq's Oil Sector Have
* [70]Enclosure XI: U.S. Efforts to Improve Iraq's Electricity
Sec
* [71]Issue
* [72]Summary
* [73]Iraq's Oil Production and Exports Have Not Met U.S. Program
* [74]Security, Corruption, Sustainability, and Funding Challenges
* [75]Addressing Infrastructure Security
* [76]Combating Corruption and Smuggling
* [77]Improving Infrastructure Management and Sustainability
* [78]Developing Adequate Sources of Future Funding
* [79]Oversight Questions
* [80]GAO Contact
* [81]Issue
* [82]Summary
* [83]Restoring Iraq's Electricity Sector Has Been Difficult
* [84]Factors Hindering Efforts to Meet Electricity Needs
* [85]Addressing Infrastructure Security
* [86]Improving Infrastructure Management and Sustainability
* [87]Developing Adequate Sources of Future Funding
* [88]Oversight Questions
* [89]GAO Contact
* [90]Enclosure XII: Extended Operations Have Had Significant Cons
* [91]Enclosure XIII: Securing Munitions Sites and Alleviating
Arm
* [92]Enclosure XIV: Deficiencies in Supply Support for
U.S. Groun
* [93]Issue
* [94]Summary
* [95]Operations Have Challenged DOD's Ability to Provide Forces
* [96]DOD Faces Enlisted Personnel Recruitment and Retention Chall
* [97]DOD Policies and Guidance Have Limited the Availability of R
* [98]Ongoing Operations Are Taking a Heavy Toll on Equipment
* [99]Continuing Deployment of Ground Forces Has Affected Military
* [100]Challenges Remain in Adjusting the Composition and Size of F
* [101]Prior Recommendations
* [102]Oversight Questions
* [103]GAO Contact
* [104]Issue
* [105]Summary
* [106]U.S. Did Not Prevent Looting of Munitions Sites
* [107]Acquisition Delays and Distribution Problems Resulted in Bod
* [108]Production and Installation Problems Resulted in Shortages o
* [109]GAO Is Reviewing JIEDDO
* [110]Prior Recommendations
* [111]Oversight Questions
* [112]GAO Contacts
* [113]Issue
* [114]Summary
* [115]Inaccurate and Inadequately Funded Requirements
* [116]Inaccurate Supply Forecasts
* [117]Insufficient and Delayed Funding
* [118]Delayed Acquisition
* [119]Ineffective Distribution
* [120]DOD Actions Taken to Improve Supply Support
* [121]Prior Recommendations
* [122]Oversight Questions
* [123]GAO Contact
* [124]Enclosure XV: DOD Needs to Improve Its Capacity to Manage Co
* [125]Issue
* [126]Summary
* [127]Better Reconstruction Outcomes Require Improved Contract Man
* [128]Action Needed to Address Long-standing Problems with Managem
* [129]Prior Recommendations
* [130]Oversight Questions
* [131]GAO Contacts
* [132]Enclosure XVI: Objectives, Scope, and Methodology
* [133]Enclosure XVII: Staff Acknowledgments
* [134]Strategy and Costs
* [135]Security Conditions
* [136]Governance Challenges
* [137]Reconstruction Challenges
* [138]U.S. Military Readiness
* [139]Improving Acquisition Outcomes
* [140]GAO's Mission
* [141]Obtaining Copies of GAO Reports and Testimony
* [142]Order by Mail or Phone
* [143]To Report Fraud, Waste, and Abuse in Federal Programs
* [144]Congressional Relations
* [145]Public Affairs
* [146]PDF6-Ordering Information.pdf
* [147]Order by Mail or Phone
Contents
Letter 1
Strategy and Costs 6
Enclosure I: More Comprehensive U.S. Strategy Needed to Achieve Goals and
Address Challenges in Iraq 7
Enclosure II: U.S. Commitments Involve Significant Resources, but DOD Cost
Reports and Budgets Limit Transparency 13
Security Conditions 19
Enclosure III: Security Conditions Have Deteriorated as Iraq Has Assumed
Additional Security Responsibilities 20
Enclosure IV: Assessing the Capabilities of the Iraqi Security Forces Is
Critical 27
Enclosure V: DOD May Be Unable to Ensure That U.S.-Funded Equipment Has
Reached Iraqi Security Forces 33
Governance Challenges 40
Enclosure VI: The Iraqi Government Needs to Staff an Effective Civil
Service and Fight Corruption 41
Enclosure VII: Ministry Capacity Development Efforts Need Integrated Plan
47
Enclosure VIII: Several Factors Affect Iraqi Ministry Efforts to Spend
Capital Budgets 54
Enclosure IX: Iraq Owes Significant Foreign Debt and Faces Challenges in
Meeting IMF Conditions 59
Reconstruction Challenges 65
Enclosure X: U.S. Efforts to Restore Iraq's Oil Sector Have Been Slowed by
Major Challenges 66
Enclosure XI: U.S. Efforts to Improve Iraq's Electricity Sector Have Been
Constrained by Security, Management, and Funding Challenges 72
U.S. Military Readiness 79
Enclosure XII: Extended Operations Have Had Significant Consequences for
the U.S. Military 80
Enclosure XIII: Securing Munitions Sites and Alleviating Armor Shortages
Have Been Serious Problems 86
Enclosure XIV: Deficiencies in Supply Support for U.S. Ground Forces Have
Resulted in Shortages of Critical Items 92
Improving Acquisition Outcomes 97
Enclosure XV: DOD Needs to Improve Its Capacity to Manage Contractors 98
Objectives, Scope, and Methodology, and Staff Acknowledgments 105
Enclosure XVI: Objectives, Scope, and Methodology 106
Enclosure XVII: Staff Acknowledgments 114
Abbreviations
CDWG Capacity Development Working Group
CPA Coalition Provisional Authority
CSIS Center for Strategic and International Studies
DOD Department of Defense
EPSS Electric Power Security Service
GRD Gulf Region Division
GWOT global war on terrorism
HMMWV High-Mobility Multipurpose Wheeled Vehicle
IAMB International Advisory and Monitoring Board
IED improvised explosive device
IMF International Monetary Fund
IRMO Iraq Reconstruction Management Office
IRRF Iraqi Relief and Reconstruction Fund
ISF Iraqi security forces
ISFF Iraqi Security Forces Fund
JIEDDO Joint Improvised Explosive Device Defeat Organization
LOGCAP Logistics Civil Augmentation Program
MAT Ministry Assistance Team
mbpd million barrels per day
MNF-I Multinational Force-Iraq
MNSTC-I Multinational Security Transition Command-Iraq
mw megawatt
NCDP National Capacity Development Program
NSC National Security Council
NSVI National Strategy for Victory in Iraq
OIF Operation Iraqi Freedom
OMB Office of Management and Budget
SIB Strategic Infrastructure Battalions
SIGIR Special Inspector General for Iraqi Reconstruction
TRA Transition Readiness Assessment
USAID United States Agency for International Development
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separately.
United States Government Accountability Office
Washington, DC 20548
January 9, 2007 January 9, 2007
Congressional Leadership and Committees
As the United States reviews its plans to secure, stabilize, and rebuild
Iraq, I have enclosed a series of issue papers for consideration in
developing your oversight agenda for the 110th Congress and analyzing the
President's revised strategy for Iraq. These papers are based on the
continuing work of the U.S. Government Accountability Office and the 67
Iraq-related reports and testimonies we have provided to the Congress
since May 2003. As the United States reviews its plans to secure,
stabilize, and rebuild Iraq, I have enclosed a series of issue papers for
consideration in developing your oversight agenda for the 110th Congress
and analyzing the President's revised strategy for Iraq. These papers are
based on the continuing work of the U.S. Government Accountability Office
and the 67 Iraq-related reports and testimonies we have provided to the
Congress since May 2003.
Iraq has had three successful elections, adopted a constitution, and
installed its first elected government. At the same time, since the
initial ground offensive ended in 2003, the costs to secure and stabilize
Iraq have grown substantially, as has the level of violence that afflicts
Iraqi society. Such violence stems from an insurgency that has grown more
complex and lethal over the past 3 1/2 years and the Sunni-Shi'a conflict,
which escalated dramatically in 2006. This instability complicates
meaningful political reconciliation among Iraq's religious and tribal
groups, reduces the effectiveness of U.S. and Iraqi reconstruction and
capacity-building efforts, and diminishes the hopes and expectations of an
Iraqi people without adequate jobs, water, fuel, and electricity. Iraq has
had three successful elections, adopted a constitution, and installed its
first elected government. At the same time, since the initial ground
offensive ended in 2003, the costs to secure and stabilize Iraq have grown
substantially, as has the level of violence that afflicts Iraqi society.
Such violence stems from an insurgency that has grown more complex and
lethal over the past 3 1/2 years and the Sunni-Shi'a conflict, which
escalated dramatically in 2006. This instability complicates meaningful
political reconciliation among Iraq's religious and tribal groups, reduces
the effectiveness of U.S. and Iraqi reconstruction and capacity-building
efforts, and diminishes the hopes and expectations of an Iraqi people
without adequate jobs, water, fuel, and electricity.
Increasing Iraqi security forces and transferring security
responsibilities to them have not resulted in reduced violence. Rather,
attacks increased throughout 2006. Although more Iraqi troops have been
trained and equipped, high absenteeism and divided loyalties have limited
their overall effectiveness. At the same time, our service members are
working with great courage and diligence to perform the roles the
President has asked of them. Notwithstanding their noble efforts, the U.S.
military has sustained significant casualties. In addition, wear and tear
on military equipment and growing replacement costs have risen
substantially. The resulting stress and strain on American forces have
reduced troop readiness levels and the availability of reserve personnel.
Increasing Iraqi security forces and transferring security
responsibilities to them have not resulted in reduced violence. Rather,
attacks increased throughout 2006. Although more Iraqi troops have been
trained and equipped, high absenteeism and divided loyalties have limited
their overall effectiveness. At the same time, our service members are
working with great courage and diligence to perform the roles the
President has asked of them. Notwithstanding their noble efforts, the U.S.
military has sustained significant casualties. In addition, wear and tear
on military equipment and growing replacement costs have risen
substantially. The resulting stress and strain on American forces have
reduced troop readiness levels and the availability of reserve personnel.
The U.S. rebuilding effort in Iraq has focused on helping the Iraqi
government establish a sound economy with the capacity to deliver
essential services. Although Iraq's economy has grown and U.S. efforts
have helped restore portions of Iraq's infrastructure, the poor security
environment and mismanagement have diminished the overall results of U.S.
investments. Iraq will need U.S. and international support, including The
U.S. rebuilding effort in Iraq has focused on helping the Iraqi government
establish a sound economy with the capacity to deliver essential services.
Although Iraq's economy has grown and U.S. efforts have helped restore
portions of Iraq's infrastructure, the poor security environment and
mismanagement have diminished the overall results of U.S. investments.
Iraq will need U.S. and international support, including political and
economic incentives, to strengthen its fragile government institutions,
which have thus far failed to adequately deter corruption, stimulate
employment, or deliver essential services.
The enclosures that follow discuss these issues and other critical
challenges that the United States and its allies face in the ongoing
struggle to help the Iraqis stabilize, secure, and rebuild Iraq.
Forthright answers to the oversight questions we pose herein are needed
from the U.S. agencies responsible for executing the President's strategy.
Congress and the American people need complete and transparent information
on the progress made toward achieving U.S. security, economic, and
diplomatic goals in Iraq to reasonably judge our past efforts and
determine future directions.
It is also important that the U.S. government account for the funds that
it expended on behalf of the Iraqi government through the Development Fund
for Iraq. After all, the Coalition Provisional Authority had a fiduciary
responsibility to properly safeguard, use, and account for these funds.
These enclosures focus on the U.S. strategy and costs of operations in
Iraq; security, governance, and reconstruction issues; the readiness of
U.S. military forces; and acquisition outcomes. They are based on our
completed and ongoing Iraq-related work, and incorporate information from
official documents and relevant officials from the various agencies
involved in stabilizing and rebuilding Iraq, including the Departments of
Defense, Energy, State, and the Treasury; the U.S. Agency for
International Development; the Army Corps of Engineers; the multinational
force; and the Defense Intelligence Agency. As part of this work, we made
multiple visits to Iraq during 2006. For the enclosures that include new
information, we provided copies to the relevant agencies for advanced
review and technical comments, which we incorporated as appropriate. We
conducted our review in accordance with generally accepted government
auditing standards. Enclosure XVI contains a detailed scope and
methodology.
We are sending copies of this report to Members of Congress. This report
will also be available at no charge on GAO's Web site at
http://www.gao.gov.
If you or your staff have any questions about this report, please contact
the individual listed at the end of each enclosure. Contact points for our
Offices of Congressional Relations and Public Affairs can be found on the
last page of this report. For press inquiries, please contact Paul
Anderson at (202) 512-3823. Key contributors to this report are included
in enclosure XVII.
Thank you for your time and consideration. As always, we at GAO stand
ready to assist Congress in discharging its constitutional
responsibilities for the benefit of the American people.
David M. Walker Comptroller General of the United States
Enclosures
List of Congressional Leadership and Committees
The Honorable Harry Reid
Majority Leader
The Honorable Mitch McConnell
Minority Leader
United States Senate
The Honorable Nancy Pelosi
The Speaker of the House of Representatives
The Honorable John A. Boehner
Minority Leader
House of Representatives
The Honorable Robert C. Byrd
The Honorable Thad Cochran
Committee on Appropriations
United States Senate
The Honorable Carl Levin
The Honorable John S. McCain
Committee on Armed Services
United States Senate
The Honorable Joseph R. Biden, Jr.
The Honorable Richard G. Lugar
Committee on Foreign Relations
United States Senate
The Honorable Joseph I. Lieberman
The Honorable Susan M. Collins
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable David Obey
Chairman
The Honorable Jerry Lewis
Ranking Minority Member
Committee on Appropriations
House of Representatives
The Honorable Ike Skelton
Chairman
The Honorable Duncan L. Hunter
Committee on Armed Services
House of Representatives
The Honorable Tom Lantos
Chairman
The Honorable Ileana Ros-Lehtinen
Ranking Minority Member
Committee on Foreign Affairs
House of Representatives
The Honorable Henry A. Waxman
Chairman
The Honorable Tom Davis
Ranking Minority Member
Committee on Oversight and Government Reform
House of Representatives
The Honorable Christopher Shays
Ranking Minority Member
Subcommittee on National Security and International Relations
Committee on Oversight and Government Reform
House of Representatives
Strategy and Costs
Enclosure I: More Comprehensive U.S. Strategy Needed to Achieve Goals and
Address Challenges in Iraq
Enclosure II: U.S. Commitments Involve Significant Resources, but DOD Cost
Reports and Budgets Limit Transparency
Enclosure I: More Comprehensive U.S. Strategy Needed
to Achieve Goals and Address Challenges in Iraq
Issue
In November 2005, the National Security Council (NSC) issued the National
Strategy for Victory in Iraq (NSVI) to clarify the President's strategy^1
for achieving U.S. political, security, and economic goals in Iraq. The
U.S. goals included establishing a peaceful, stable, and secure Iraq.
Based on a GAO report issued in July 2006^2 and other GAO reviews, this
enclosure discusses (1) the extent to which the NSVI and its supporting
documents addressed the six characteristics of an effective national
strategy, and (2) how security, political, and economic factors have
affected the U.S. strategy for Iraq. Congressional review of the
President's 2007 plan for Iraq should consider whether it addresses the
key elements of a sound national strategy.
Summary
We reported in July 2006 that the NSVI was an improvement over previous
U.S. planning efforts for stabilizing and rebuilding Iraq. The strategy's
positive attributes included a clear purpose and scope and identification
of U.S. involvement in Iraq as a "vital national interest and the central
front in the war on terror." The strategy also provided a comprehensive
description of U.S. political, security, and economic objectives in Iraq.
However, the discussion of outcome-related performance measures to assess
progress in achieving these goals and objectives was limited. Moreover,
the strategy fell short in at least three other areas. First, it only
partially identified the agencies responsible for implementing key aspects
of the strategy. Second, it did not fully address how the U.S. will
integrate its goals with those of the Iraqis and the international
community, and it did not detail Iraq's anticipated contribution to its
future needs. Third, it only partially identified the current and future
costs of U.S. involvement in Iraq, including maintaining U.S. military
operations, building Iraqi government capacity, and rebuilding critical
infrastructure.
Security, political, and economic factors continue to hamper U.S. efforts
to stabilize Iraq and achieve key U.S. goals. First, the United States and
Iraq are trying to revitalize Iraq's economy and restore the oil,
electricity, and other key sectors. However, these efforts have been
impeded by security, corruption, and other challenges.
^1The NSVI and key supporting documents are collectively referred to as
the U.S. strategy for Iraq.
^2GAO, Rebuilding Iraq: More Comprehensive National Strategy Needed to
Help Achieve U.S. Goals, GAO-06-788 (Washington, D.C.: July 11, 2006).
NSVI Did Not Fully Address All Key Characteristics of an Effective
National Strategy
The NSVI aimed to improve U.S. strategic planning for Iraq; however, the
NSVI and supporting documents did not fully address all of the six
desirable characteristics of effective national strategies that GAO has
identified through its prior work.^3 We used these six characteristics to
evaluate the strategy--that is, the NSVI and supporting documents that
Department of Defense (DOD) and Department of State officials said
encompassed the U.S. strategy for rebuilding and stabilizing Iraq.^4
As figure 1 shows, the strategy generally addressed three of the six
characteristics but only partially addressed three others, limiting its
usefulness in guiding agency implementation efforts and achieving desired
results. Moreover, since the strategy was dispersed among several
documents instead of one, its effectiveness as a planning tool for
implementing agencies and informing Congress about the pace, costs, and
intended results of these efforts was limited.
^3See GAO, Combating Terrorism: Evaluation of Selected Characteristics in
National Strategies Related to Terrorism, GAO-04-408T (Washington, D.C.:
Feb. 3, 2004); and Defense Management: Comprehensive Strategy and Periodic
Reporting Are Needed to Gauge Progress and Costs of DOD's Global Posture
Restructuring, GAO-06-486C (Washington, D.C.: May 26, 2006).
^4We evaluated the NSVI along with seven related classified and
unclassified supporting documents. These documents were identified by
State's Office of the Coordinator for Iraq, State's Bureau of Near Eastern
Affairs, DOD's Defense Reconstruction Support Office, and DOD's Near
Eastern South Asian Affairs office as having key details about the
strategy. The documents included (1) the National Security Presidential
Directive 36 (May 2004), (2) the MNF-I Campaign Plan (August 2004), (3)
the MNF-I/ U.S. Embassy Baghdad Joint Mission Statement on Iraq (December
2005), (4) the Multinational Corps-Iraq Operation Order 05-03 (December
2005), (5) the National Strategy for Supporting Iraq (updated January
2006), (6) State's quarterly section 2207 reports to Congress (January and
April 2006); and (7) the April 2006 Joint Campaign Plan issued by the
Chief of Mission and the Commander of the MNF-I.
Figure 1: Extent That November 2005 U.S. Strategy for Iraq Addressed GAO's
Desirable Characteristics of an Effective National Strategy
As shown in figure 1, the NSVI and supporting documents only partially (1)
delineated the roles and responsibilities of key U.S. government agencies;
(2) described the means by which the strategy will be integrated among
U.S. entities, the Iraqi government, and international organizations, and
the mechanisms for coordination; and (3) identified the strategy's costs
and sources of financing.
o Although the strategy partially addressed the roles and
responsibilities of specific U.S. government agencies and offices
and the process for coordination, it is not clear which agency was
responsible for implementing the overlapping activities listed
under the NSVI's eight strategic objectives. For instance, one
activity was to promote transparency in the executive,
legislative, and judicial branches of the Iraqi government;
however, the NSVI and supporting documents did not indicate which
agency was responsible for implementing this activity, or who was
to be held accountable for results. Moreover, little guidance was
provided to assist implementing agencies in resolving conflicts
among themselves, as well as with other entities.
o The NSVI and supporting documents partially addressed how the
strategy related to other international donors and Iraqi
government goals, objectives, and activities. For instance, the
NSVI and supporting documents identified the need to integrate the
efforts of the coalition, the Iraqi government, and other nations,
but did not discuss how U.S. goals and objectives would be
integrated. In addition, the strategy did not address what it
expects the international community or the Iraqi government to pay
to achieve future objectives.
o The November 2005 National Strategy for Victory in Iraq and
related supporting documents did not clearly identify the costs of
U.S. military operations, including the costs to repair and
replace equipment used during operations. The strategy did not
identify other key related costs, including the costs of training,
equipping, and supporting Iraq's security forces; the costs of
rebuilding, maintaining, and protecting critical oil and
electricity infrastructure; or the costs of building management
capacity in Iraq's central ministries and 18 provincial
governments. In addition to these costs, the new Iraqi government
will need significant help in building the procurement, financial
management, accountability, and other key systems needed to govern
and provide basic services to its citizens.
Security, Political, and Economic Factors Hamper Efforts to Achieve
Strategic Goals
Our July 11, 2006, report and other GAO work show that security,
political, and economic factors have hampered and will continue to
influence U.S. efforts to stabilize Iraq and achieve key U.S.
strategic goals. First, increases in attacks against the coalition
and its Iraqi partners, growing sectarian violence, and the
influence of militias have adversely affected U.S. and Iraqi
efforts to secure Baghdad and other strategic cities. Second,
sectarian control over ministries and the lack of skilled
employees hinder efforts to improve Iraq's governance by building
the capacity of ministries and reconciling differences among
sectarian interests. Third, security, corruption, and fiscal
problems limit U.S. and Iraqi plans to revitalize Iraq's economy
and restore essential services in the oil and electricity sectors.
o Overall security conditions in Iraq have continued to
deteriorate and have grown more complex despite recent progress in
transferring security responsibilities to Iraqi security forces
and the Iraqi government. The number of trained and equipped Iraqi
security forces has increased from about 174,000 in July 2005 to
about 323,000 as of December 2006, at the same time as more Iraqi
army units have taken the lead for counterinsurgency operations in
specific geographic areas. Despite this progress, however, attacks
on coalition forces, Iraqi security forces, and civilians have all
increased, reaching record highs in October 2006. Because of these
conditions, the United States could not draw down U.S. force
levels in Iraq as planned in 2004 and 2006, and U.S. forces have
continued to conduct combat operations in urban areas, especially
Baghdad (see encl. III).
o The U.S. government faces significant challenges in improving
the capability of national and provincial governments to provide
security and deliver services to the Iraqi people. According to
State, the Iraqi capacity for self-governance was decimated after
nearly 30 years of autocratic rule. In addition, Iraq lacked
competent existing Iraqi governmental organizations. Since 2003,
the United States has provided the Iraqis with a variety of
training and technical assistance to improve their capacity to
govern. As of December 2006, we identified more than 50 capacity
development efforts led by at least 6 U.S. agencies (see encl.
VII).
o Iraq's oil production and exports have consistently fallen below
U.S. program goals. U.S. and Iraqi efforts to restore Iraq's oil
sector have been impeded by the lack of security, corruption,
sustainability, and funding challenges. The unstable security
environment continues to place workers and infrastructure at risk
while protection efforts remain insufficient. Widespread
corruption and smuggling affect the distribution of refined oil
products such as gasoline. The U.S. reconstruction program has
encountered difficulty with Iraq's ability to operate and maintain
aging infrastructure. Furthermore, uncertainties exist regarding
the sources of future funding. These challenges could make it
difficult to achieve current production and export goals, which
are central to Iraq's economic development (see encl. X).
Prior Recommendations
In our July 2006 report, we recommended that the NSC improve the
current strategy by articulating clear roles and responsibilities,
specifying future contributions, and identifying current costs and
future resources. In addition, the United States, Iraq, and the
international community should (1) enhance support capabilities of
the Iraqi security forces, (2) improve the capabilities of the
national and provincial governments, and (3) develop a
comprehensive anti-corruption strategy. State commented that the
NSVI's purpose is to provide a broad overview of the U.S. strategy
in Iraq rather than a detailed account. GAO's analysis was not
based exclusively on the NSVI but included all key supporting
documents. Consequently, GAO retained the recommendation for a
more complete and integrated strategy.
Oversight Questions
o What is the desired end-state of U.S. involvement in Iraq? How
long, and at what cost, will it take to achieve a peaceful,
stable, and secure Iraq?
o What political and economic incentives are needed to increase
security, improve government capacity, and reduce corruption in
Iraq?
o How will revised U.S. plans incorporate enhanced support for
Iraqi security forces and national and provincial governments?
o How will revised U.S. plans assist the Iraqi government in
developing a comprehensive anti-corruption strategy?
o If the President suggests a troop increase, what would be the
mission of the additional troops?
o How long would they stay?
o How would the success of the mission be measured?
o What additional costs would the United States
incur?
o To what extent does the administration's revised strategy
integrate the input and resources of the Iraqi government?
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
Enclosure II: U.S. Commitments Involve Significant Resources,
but DOD Cost Reports and Budgets Limit Transparency
Issue
Since 2001, Congress has appropriated about $495 billion to U.S.
agencies for military and diplomatic efforts in support of the
global war on terrorism (GWOT); the majority of this amount has
gone to stabilize and rebuild Iraq. Efforts in Iraq involve
various activities such as combating insurgents, conducting civil
affairs, building capacity, reconstructing infrastructure, and
training Iraqi military forces. The Departments of Defense (DOD)
and State and the U.S. Agency for International Development, among
others, play primary roles. To date, the United States has
reported substantial costs^1 for Iraq and can expect to incur
significant costs in the foreseeable future, requiring decision
makers to consider difficult trade-offs as the nation faces an
increasing number of long-range fiscal challenges. Funding for
these efforts has been provided through annual appropriations, as
well as supplemental appropriations that are outside the annual
budget process. Moving more funding into baseline budgets,
particularly for DOD, would enable decision makers to better weigh
priorities and assess trade-offs. This enclosure describes (1) the
reported costs incurred by DOD and other U.S. agencies for
military operations, reconstruction efforts, and stabilization
activities in Iraq since 2003; and (2) the issues involved in
estimating future financial commitments related to U.S
involvement.
Summary
As of September 30, 2006, DOD had reported costs of about $257.5
billion^2 for military operations in Iraq. In addition, as of
October 2006, about $29 billion had been obligated for Iraqi
reconstruction and stabilization efforts. However, problems with
the processes for recording and reporting GWOT costs raise
concerns that these data may not accurately reflect the true
dollar value of war-related costs. U.S. commitments to Iraq will
likely involve the continued investment of significant resources
and will depend on several direct and indirect cost variables and,
in some cases, decisions that have yet to be made. For DOD, these
include the pace and duration of operations, redeployment and
basing plans, and the amount of equipment to be repaired or
replaced. Cost variables for other U.S. agencies include efforts
to help form national and provincial governments, develop
management capacity, build capable and loyal security forces, and
undertake reconstruction activities to restore, sustain, and
protect critical infrastructure. With activities likely to
continue into the foreseeable future, decision makers will have to
carefully weigh priorities and make difficult decisions when
budgeting for future costs.
^1For purposes of this enclosure, the term "costs" refers to the
obligations that have been incurred by U.S. agencies in Iraq. Obligations
are incurred through actions such as orders placed, contracts awarded,
services received, or similar transactions made during a given period that
will require payments during the same or a future period.
^2DOD's reported costs in Iraq do not include the costs of classified
activities.
Reported Costs for Operations in Iraq Are Increasing
Since 2003, when DOD began Operation Iraqi Freedom, DOD has
reported cumulative costs of about $257.5 billion for military
operations in Iraq. As shown in figure 1, DOD's reported costs
show a steady increase from about $38.8 billion in fiscal year
2003 to about $83.4 billion in fiscal year 2006. The largest
increase has been in operation and maintenance expenses, including
items such as support for housing, food, and services; the repair
of equipment; and transportation to move people, supplies, and
equipment. Between fiscal years 2003 and 2006, DOD reported
increases in these expenses from about $29.9 billion to about $50
billion. According to DOD officials, some of this increase is
attributable to higher fuel costs and higher costs for contracts
to provide housing, food, and services. Reported costs for
military personnel have increased from about $8 billion in fiscal
year 2003 to about $14.1 billion in fiscal year 2006, and include
military pay and allowances for mobilized reservists, as well as
special payments or allowances, such as imminent danger pay. DOD
has also reported that costs for procurement of equipment and
other items have increased from $0.7 billion in fiscal year 2003
to about $13 billion in fiscal year 2006.
Figure 1: DOD's Reported Costs for Operation Iraqi Freedom by
Fiscal Year
Note: DOD spent an additional $6.1 billion for operations in Iraq
that was not included in DOD's reported costs.
Other U.S. government agencies have reported obligating $29
billion for Iraqi reconstruction and stabilization, as of October
2006. Among other uses, these funds have been used for
infrastructure repair of the electricity, oil, water, and health
sectors; training and equipping of Iraqi security forces (military
and police); and administrative expenses. The Department of State
reports that the remaining funds will be used to sustain the
infrastructure projects that are completed or under way and to
build greater capacity at the national, provincial, and municipal
levels.
Our prior work^3 found numerous problems with DOD's processes for
recording and reporting its war-related costs, including
long-standing deficiencies in DOD's financial management systems
and business processes, the use of estimates instead of actual
cost data, and the lack of adequate supporting documentation. DOD
has taken some steps to address these issues, but problems remain.
Without transparent and accurate cost reporting, Congress and DOD
will continue to not have reliable information on how much the war
is costing, sufficient details on how appropriated funds are being
spent, or the historical data needed to consider future funding
needs.
^3For example, see GAO, Global War on Terrorism: Fiscal Year 2006
Obligation Rates Are within Funding Levels and Significant Multiyear
Procurement Funds Will Likely Remain Available for Use in Fiscal Year
2007, GAO-07-76 (Washington, D.C.: Nov. 13, 2006); and Global War on
Terrorism: DOD Needs to Improve the Reliability of Cost Data and Provide
Additional Guidance to Control Costs, GAO-05-882 (Washington, D.C.: Sept.
21, 2005).
Future Iraq Costs Are Likely to Be Considerable
U.S. military and diplomatic commitments in Iraq will continue for
the foreseeable future and are likely to be in the hundreds of
billions of dollars. The magnitude of future costs will depend on
several direct and indirect variables and, in some cases,
decisions that have not been made. DOD's future costs will likely
be affected by the pace and duration of operations, the types of
facilities needed to support troops overseas, redeployment plans,
and the amount of equipment to be repaired or replaced. Although
reducing troops would appear to lower costs, we have seen from
previous operations in the Balkans and Kosovo that costs could
rise--if, for example, increased numbers of contractors replace
military personnel. If the pace of operations remains high or
troops are increased, costs for force protection, fuel, and other
items could remain high. Lastly, sustained operations will
continue to take a toll on the condition of equipment. The Army
and Marine Corps will have the largest equipment reset (repaired,
recapitalized, or replaced) costs. Although the military services
are refining estimates of overall needs, their total requirements
and costs are still unclear.
Other future costs to the U.S. government in Iraq include efforts
to help form national and provincial governments, develop
management capacity, and build capable and loyal security forces.
Also, more funds will be needed to restore, sustain, and protect
infrastructure. The new Iraqi government will need significant
help in building the procurement, financial management, and
accountability systems needed to govern and provide basic services
to its citizens. The 18 provincial governments will need
assistance in building management capacity and delivering results
that make a difference in Iraqis' daily lives. Sustaining Iraqi
military and police forces of 323,000 personnel will require the
Iraqi government to spend more money on personnel, maintenance,
and equipment than originally anticipated. Also, the new Iraqi
security forces will need additional help in addressing recurring
training needs, replacing lost or stolen equipment, and developing
improved logistical and sustainment capabilities. Although most of
the early U.S. reconstruction monies for Iraq have been obligated,
more funds will be needed for remaining reconstruction needs and
to restore, sustain, and protect the infrastructure built to date.
With U.S. commitments in Iraq continuing for the foreseeable
future, requiring decision makers to make difficult decisions, we
would encourage DOD to consider moving certain costs into the
baseline budget, as it has done with Operation Noble Eagle.^4 This
action is consistent with our prior recommendations and
testimony^5 that, once an operation reaches a known level of
effort and costs are more predictable, more funding should be
built into the baseline budget. We note that Congress, in the John
Warner National Defense Authorization Act for Fiscal Year 2007,
requires, among other things, that the President's annual budget
submitted after fiscal year 2007 include a request for the funds
for ongoing military operations in Iraq and Afghanistan. Doing so
would allow decision makers to weigh priorities and consider
trade-offs in making financial decisions.
Prior Recommendations
Over the years, we have made a series of recommendations to the
Secretary of Defense intended to improve the transparency and
reliability of DOD's GWOT obligation data, including
recommendations that DOD (1) revise the cost-reporting guidance so
that large amounts of reported obligations are not shown in
"miscellaneous" categories, and (2) take steps to ensure that
reported GWOT obligations are reliable. We have also recommended
that DOD build more funding into the baseline budget once an
operation reaches a known level of effort and costs are more
predictable. In response, the department has implemented many of
our previous recommendations.
Oversight Questions
o What are the key factors causing steady growth in agencies'
reported costs to address the situation in Iraq, and what steps
are being taken to control costs?
o To what extent have U.S. government agencies estimated the
future costs and financial requirements of continued efforts in
Iraq?
^4This operation, which defends the U.S. homeland against terrorist
attacks, began in 2001.
^5GAO, Global War on Terrorism: Observations on Funding, Costs, and Future
Commitments, GAO-06-885T (Washington, D.C.: July 18, 2006); and Future
Years Defense Program: Actions Needed to Improve Transparency of DOD's
Projected Resource Needs, GAO-04-514 (Washington, D.C.: May 7, 2004).
o To what extent are improvements being made to existing
accounting and management information systems so that they will be
able to provide complete and reliable reporting on costs?
o To what extent will the unstable security environment affect
reconstruction efforts in Iraq, and what is the impact on future
costs?
o What steps are U.S. government agencies taking to move some of
their more predictable costs into their baseline budgets?
o Does DOD have a valid basis for determining funding needs for
Iraq?
GAO Contacts
Sharon Pickup, Director, Defense Capabilities and Management,
(202) 512-9619 or [email protected]; and Joseph A. Christoff,
Director, International Affairs and Trade, (202) 512-8979 or
[email protected].
Security Conditions
Enclosure III: Security Conditions Have Deteriorated as Iraq Has Assumed
Additional Security Responsibilities
Enclosure IV: Assessing the Capabilities of the Iraqi Security Forces Is
Critical
Enclosure V: DOD May Be Unable to Ensure That U.S.-Funded Equipment Has
Reached Iraqi Security Forces
Enclosure III: Security Conditions Have Deteriorated as Iraq Has
Assumed Additional Security Responsibilities
Issue
Since the fall of 2003, the U.S.-led multinational force in Iraq
has developed and refined a series of plans to transfer security
responsibilities to the Iraqi government and security forces, with
the intent of creating conditions that would allow a gradual
drawdown of the 140,000 U.S. military personnel in Iraq. This
security transition was to occur first in conjunction with the
neutralization of Iraq's insurgency and second with the
development of Iraqi forces and government institutions capable of
securing their country. According to the November 2005 National
Strategy for Victory in Iraq, security conditions in Iraq were
expected to improve as the Iraqi government and security forces
became more capable and took the lead for security. This enclosure
provides information on (1) the evolution of the multinational
force's plan to transfer security responsibilities to the Iraqi
government and forces, and (2) whether progress in implementing
the current security transition plan has led to improved security
conditions in Iraq.
Summary
The Multinational Force-Iraq (MNF-I) has revised its security
transition plan numerous times over the past 3 years, as Iraqi
security forces and government have not effectively taken over
security responsibilities within planned time frames.^1 MNF-I
first revised its security transition plan in the summer of 2004
following the collapse of Iraqi security forces during an
insurgent uprising. This collapse ensued when MNF-I transferred
security responsibilities to Iraqi forces before they were
properly trained and equipped to battle insurgents. Under the
current security transition plan, MNF-I has established
partnerships with Iraqi security forces, is developing Iraqi army
units so that they can lead counterinsurgency operations, and is
assessing when to transfer security responsibilities to provincial
Iraqi governments. After provincial transitions occur, the plan
calls for MNF-I forces to move out of urban areas and assume a
supporting role.
Overall security conditions in Iraq have continued to deteriorate
and have grown more complex despite recent progress in
transferring security responsibilities to Iraqi security forces
and the Iraqi government. The number of trained and equipped Iraqi
security forces has increased from about 174,000 in July 2005 to
about 323,000 in December 2006, at the same time as more Iraqi
army units have taken the lead for counterinsurgency operations in
specific geographic areas. Despite this progress, however, attacks
on coalition forces, Iraqi security forces, and civilians have all
increased, reaching record highs in October 2006. Because of these
conditions, the United States could not draw down U.S. force
levels in Iraq as planned in 2004 and 2006, and U.S. forces have
continued to conduct combat operations in urban areas, especially
Baghdad.
^1The multinational force in Iraq was known as Combined Joint Task Force-7
until May 2004.
MNF-I Revised Security Transition Plan Because Iraq Could Not
Effectively Take Over Security Responsibilities
From the fall of 2003 through April 2006, MNF-I revised its
security transition plan a number of times because the Iraqi
government and security forces have proved incapable of assuming
security responsibilities within the time frames envisioned by the
plans. For example, in October 2003, the multinational force
outlined a four-phased plan for transferring security missions to
Iraqi security forces (see table 1). Citing the growing capability
of Iraqi security forces, MNF-I attempted to quickly shift
responsibilities to them in February 2004 but did not succeed in
this effort. In Baghdad, for example, the coalition forces
withdrew to bases outside of the city, giving Iraqi forces greater
responsibility for security within the city. In April 2004,
however, Iraqi police and military units performed poorly during
an escalation of insurgent attacks against the coalition.^2 Many
Iraqi security forces around the country collapsed during this
uprising, with some units abandoning their posts and
responsibilities and in some cases assisting the insurgency.
Following the collapse of Iraqi security forces, MNF-I identified
a number of problems that contributed to their poor performance,
including problems in training and equipping Iraqi forces, and
revised its security transition plan.^3
^2In March 2004, Iraqi security forces numbered about 203,000, including
about 76,000 police, 78,000 facilities protection officers, and about
38,000 in the civilian defense corps. The Departments of State and Defense
later stopped including facilities protection officers in their count of
Iraqi security forces.
^3MNF-I first revised the security transition plan in its August 2004
campaign plan and later in the April 2006 joint MNF-I/U.S. Embassy Baghdad
Campaign Plan. Detailed information on these plans is classified. See GAO,
DOD Reports Should Link Economic, Governance, and Security Indicators to
Conditions for Stabilizing Iraq, GAO-06-152C (Washington, D.C.: Oct. 18,
2005) for classified information on MNF-I's original campaign plan; and
Plans for Stabilizing Iraq, GAO-06-673C (Washington, D.C.: July 27, 2006)
for classified information on the Joint MNF-I/U.S. Embassy Baghdad
Campaign Plan.
Table 1: MNF-I's Initial and Current Plans for Transferring Security
Responsibilities to Iraq
Initial security transition plan Current security transition
Phase (October 2003) plan (2005 and 2006)
Phase I Mutual support: The Partnership: MNF-I and its
multinational force establishes major subordinate commands
conditions for transferring establish and maintain
security responsibilities to partnerships in all Iraqi
Iraqi forces. security force units, from
battalion to ministerial level.
Phase II Transition to local control: Iraqi army lead: Process during
Iraqi forces in a local area which Iraqi army units progress
assume responsibility for in capability from unit
security. formation to the ability to
conduct counterinsurgency
operations in specific
geographic areas.
Phase III Transition to regional control: Provincial Iraqi control: Iraqi
Iraqi forces are responsible for civil authorities satisfy the
larger regions. conditions required to assume
control and exercise
responsibility for the security
of their respective provinces.
Phase IV Transition to strategic over Iraqi security self-reliance:
watch: Iraqi forces on a The government of Iraq is
national level are capable of capable of planning,
maintaining a secure environment conducting, and sustaining
against internal and external security operations and forces
threats, with broad monitoring through its security
from the multinational force. ministries.
Source: GAO analysis of Combined Joint Task Force-7, DOD, and State
documents.
Note: The phases of the current security transition plan may occur at
different times throughout Iraq.
As shown in table 1, the current version of the security transition plan
includes four phases. During the first phase, which occurred from 2005
through 2006, MNF-I expanded the use of military, police, and other
transition teams to assist in the development of Iraqi security forces and
ministries, and its major subordinate commands established partnerships
with Iraqi military units. In the ongoing second phase, Iraqi army lead,
MNF-I is attempting to organize and develop Iraqi army units to the point
that they can assume the lead for counterinsurgency operations. Units in
the lead, however, still require MNF-I support because they need to
develop additional capabilities, particularly in the logistics and combat
support areas.^4 For the third phase, provincial Iraqi control, MNF-I and
the Iraqi government determine when Iraqi provinces can assume
responsibility for security based on the threat level in the province, the
capabilities of the Iraqi security forces and the provincial government,
and MNF-I's ability to respond to major threats, if needed. According to
an MNF-I official, as these conditions are met, MNF-I forces will then
move out of all urban areas and assume a supporting role.
^4We recently reviewed U.S. efforts to assist the Iraqi Ministries of
Defense and Interior in developing support capabilities, particularly in
the areas of logistics, command and control, and intelligence. We plan to
report separately on these matters due to the sensitive nature of the
information.
Progress in Transferring Security Responsibilities to Iraq Has Not Led to
Improved Security Conditions
The security situation has worsened despite progress in implementing the
current security transition plan (see fig. 1). For example, the State
Department has reported that the number of trained and equipped army and
police forces has increased from about 174,000 in July 2005 to about
323,000 in December 2006.^5 As we previously reported, the number of
trained and equipped security forces does not provide a complete picture
of their capabilities and may overstate the number of forces on duty.^6
Ministry of Interior data include police who are absent without leave, but
Ministry of Defense data exclude absent military personnel. Moreover,
according to DOD's November 2006 report to Congress, due to a lack of
standardized personnel strength reporting in the Ministry of Interior, it
is unclear how many of the coalition-trained police the ministry still
employs, or what percentage of the 180,000 police thought to be on the
ministry payroll are coalition trained and equipped.
DOD and State also have reported progress in transferring security
responsibilities to Iraqi army units and provincial governments. As shown
in figure 1, the number of Iraqi army battalions in the lead for
counterinsurgency operations has increased from 21 in March 2005 to 89 in
October 2006. In addition, 7 Iraqi army division headquarters and 30
brigade headquarters had assumed the lead by December 2006. Moreover, by
mid-December 2006, three provincial governments--Muthanna, Dhi Qar, and
Najaf--had taken over security responsibilities for their provinces. In
November 2006, DOD reported that security responsibility for up to five
more provinces could transition to Iraqi government authority by February
2007.
^5The United States had set a goal of training and equipping about 325,000
Iraqi security forces by December 2006. This figure consists of 137,000
military personnel under the Ministry of Defense and 188,000 Ministry of
Interior police and other forces. According to DOD and MNF-I reports, the
Prime Minister of Iraq has announced initiatives to man combat units at
110 percent of their authorization levels and to expand the size of the
army. If implemented, these moves would raise the end strength of Iraqi
security forces to about 362,000 and would extend the training and
equipping of Iraqi forces through January 2008.
^6GAO, Stabilizing Iraq: An Assessment of the Security Situation,
GAO-06-1094T (Washington, D.C.: Sept. 11, 2006); and Rebuilding Iraq:
Preliminary Observations on Challenges in Transferring Security
Responsibilities to Iraqi Military and Police, GAO-05-431T (Washington,
D.C.: Mar. 14, 2005).
Figure 1: Enemy-Initiated Attacks against the Coalition and Its Iraqi
Partners Compared with Progress in Developing Iraqi Security Forces
Notes: For the number of attacks in September 2006, an unclassified
breakout of categories is not available.
As shown in figure 1, the reported progress in transferring security
responsibilities to Iraq has not led to improved security conditions.
Since June 2003, overall security conditions in Iraq have deteriorated and
grown more complex, as evidenced by the increased numbers of attacks and
more recent Sunni-Shi'a sectarian strife after the February 2006 bombing
of the Golden Mosque in Samarra. Enemy-initiated attacks against the
coalition and its Iraqi partners have continued to increase through
October 2006. The average total attacks per day has increased, rising from
about 70 per day in January 2006 to about 180 per day in October 2006.
These attacks have increased around major religious and political events,
including Ramadan^7 and elections. Coalition forces are still the primary
target of attacks, but the number of attacks on Iraqi security forces and
civilians also has increased since 2003. In October 2006, the State
Department reported that the recent increase in violence has hindered
efforts to engage with Iraqi partners and shows the difficulty in making
political and economic progress in the absence of adequate security
conditions.
Although the Iraqi government and security forces have recently made some
progress in taking on security responsibilities, they and MNF-I have been
unable to reduce the levels of violence in Iraq. Because of these
conditions, the United States has not been able to draw down the number of
U.S. forces in Iraq as early as planned. For example, after the increase
in violence and collapse of Iraqi security forces during the spring of
2004, DOD decided to maintain a force level of about 138,000 troops until
at least the end of 2005, rather than reducing the number of troops to
105,000 by May 2004, as had been announced the prior fall. More recently,
DOD reversed a decision to significantly reduce the U.S. force level
during the spring of 2006 because Iraqi and coalition forces could not
contain the rapidly escalating violence that occurred the following
summer. After reducing the number of troops from about 160,000 in December
2005 to about 127,000 in June 2006, the United States increased its force
level to 144,000 troops in September and October 2006 and then reduced it
to 140,000 the following month.^8 Moreover, rather than moving out of
urban areas, U.S. forces have continued to conduct combat operations in
Baghdad and other cities in Iraq, often in conjunction with Iraqi security
forces.
^7Ramadan is the ninth month of the Islamic calendar. Over the past 4
years, Ramadan began about October 27, 2003; October 16, 2004; October 5,
2005; and September 24, 2006.
^8U.S. force levels for 2005 and 2006 came from Brookings Institution,
Iraq Index: Tracking Variables of Reconstruction & Security in Post-Saddam
Iraq (Washington, D.C: Dec. 21, 2006).
Oversight Questions
o Why have security conditions continued to deteriorate in Iraq
even as the number of trained and equipped Iraqi security forces
has increased and the Iraqi forces and government have assumed
increasing responsibility for security?
o If existing U.S. political, economic, and security measures are
not reducing violence in Iraq, what additional measures, if any,
will the administration propose to stem the violence and
facilitate the achievement of U.S. objectives, including an
eventual drawdown of U.S. forces?
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
Enclosure IV: Assessing the Capabilities of the Iraqi Security
Forces Is Critical
Issue
Transferring security responsibilities to the Iraqi security
forces and provincial governments is a critical part of the U.S.
government's strategy in Iraq and key to allowing a drawdown of
U.S. forces. Toward this end, the United States has provided about
$15.4 billion to train, equip, and sustain the Iraqi army and
police since 2003. However, it is unclear whether U.S.
expenditures and efforts are having their intended effect in
developing capable forces and whether additional resources are
needed. A key measure of the capabilities of Iraqi forces is the
Transition Readiness Assessment (TRA) reports prepared by
coalition advisors embedded in Iraqi units. These reports serve as
the basis for the Multinational Force-Iraq (MNF-I) determination
of when a unit is capable of leading counterinsurgency operations
and can assume security responsibilities for a specific area. This
enclosure (1) assesses limitations in Department of Defense (DOD)
and State Department reports on Iraqi security forces, and (2)
discusses how unit-level TRA reports provide more comprehensive
information on Iraqi security force capabilities.
Summary
Although DOD and State reports indicate progress in the
development of Iraqi security forces, the aggregate nature of the
reports does not provide comprehensive information on the
capabilities and needs of individual units. As of December 2006,
MNF-I had trained and equipped approximately 323,000 Iraqi
security forces, had assigned specific areas of operations to 128
Iraqi army units, and had transferred security responsibilities to
three Iraqi provinces. However, aggregate numbers of trained and
equipped forces that are leading operations do not provide
information on the capabilities and needs of individual units.
This information is found in unit-level TRA reports. These reports
provide the coalition commander's professional judgment on an
Iraqi unit's capabilities and are based on ratings in personnel,
command and control, equipment, sustainment and logistics,
training, and leadership. To conduct future work on this issue,
GAO has made multiple requests for access to the unit-level TRA
reports over the last year. However, DOD has not yet complied with
our requests. This serves to limit congressional oversight over
the progress achieved toward a critical U.S. objective.
Reports on Iraqi Security Forces Provide Limited Assessments of
Capabilities
DOD and State reports provide some information on the development
of Iraqi security forces, but they do not provide detailed
information on the specific capabilities that affect the readiness
levels of individual units. For example, DOD and State provide
Congress with weekly and quarterly reports on the progress made in
developing capable Iraqi security forces and transferring security
responsibilities to the Iraqi army and the Iraqi government. This
information is provided in two key areas: (1) the number of
trained and equipped forces, and (2) the number of Iraqi army
units and provincial governments that have assumed responsibility
for security of specific geographic areas.
The State Department reports that the number of trained and
equipped Iraqi security forces has increased from about 174,000 in
July 2005 to about 323,000 in December 2006.^1 DOD reports that,
as of December 5, 2006, 128 Iraqi army units--7 division
headquarters, 30 brigade headquarters, and 91 battalions--have
assumed the lead for counterinsurgency operations in their areas
of responsibility. In addition, Muthanna, Dhi Qar, and Najaf
provincial governments assumed security responsibility in July,
September, and December 2006, respectively. However, these numbers
do not provide a complete picture of Iraqi security forces'
capabilities in part because they may overstate the number of
forces on duty. For example, Ministry of Interior data include
police who are absent without leave, but Ministry of Defense data
exclude absent personnel. Moreover, the numbers do not give
detailed information on the status of equipment, personnel,
training, or leadership. Unit-level TRA reports provide that
information. For additional information on the limitations of DOD-
and State-reported information on the number of units trained and
equipped as well as the transfer of security responsibilities, see
enclosure III.
Transition Readiness Assessments Assess Iraqi Security Force
Capabilities
MNF-I uses the TRA system to determine when units of the Iraqi
security forces can assume the lead for conducting security
operations. The TRA is a joint assessment, prepared monthly by the
unit's coalition commander and Iraqi commander. According to MNF-I
guidance, the purpose of the TRA system is to provide commanders
with a method to consistently evaluate units; it also helps to
identify factors hindering unit progress, determine resource
shortfalls, and make resource allocation decisions. The basic TRA
reports^2 are used by commanders to determine when an Iraqi army
unit is prepared to assume the lead in counterinsurgency
operations.
Iraqi army TRA reports contain capabilities ratings in the areas
of personnel, command and control, equipment,
sustainment/logistics, training, and leadership (see fig. 1).
Commanders use the TRA results and their professional judgment to
determine a unit's overall readiness level. Each Iraqi army unit
is assigned a readiness level of 1 through 4, with 1 being the
highest level a unit can achieve. Accordingly,
o level 1 units are capable of planning, executing, and sustaining
counterinsurgency operations,
o level 2 units are capable of planning, executing, and sustaining
counterinsurgency operations with Iraqi security forces or
coalition support,
o level 3 units are partially capable of conducting
counterinsurgency operations in conjunction with coalition units,
and
o level 4 units are forming or are incapable of conducting
counterinsurgency operations.
The TRA reports also include the commanders' estimates of the
number of months needed before a unit can assume the lead for
counterinsurgency operations. DOD also reports readiness
assessments for headquarters service companies, such as
engineering and signal units that support combat units.^3
^1The 2006 number includes special operations forces and support forces.
^2The Iraqi army, national police, Department of Border Enforcement, and
strategic infrastructure battalions use the basic TRA format. MNF-I
assesses the capability of Iraqi police to perform law enforcement
operations using a different TRA report.
^3Headquarters service companies are rated levels 1 through 4 based on
their ability to provide combat support and combat service support to
units.
Figure 1: Transition Readiness Assessment (TRA) Report Form for the Iraqi
Army
Finally, the TRA reports include the coalition commander's narrative
assessment of the Iraqi unit's overall readiness level, known as the
Performance Capability Assessment, which is designed to clarify the
overall TRA. The narrative assesses the Iraqi unit's leadership
capabilities, combat experience, ability to execute intelligence-based
operations, and describes any life support issues affecting the Iraqi
unit's capabilities. Commanders must explain and address any regression in
the unit's overall TRA level and list the top three issues preventing the
unit from assuming the lead for counterinsurgency operations or advancing
to the next TRA level. Remarks are intended to provide information and
details that will help to resolve the problems that degrade the unit's
status.
DOD provided GAO with classified, aggregate information on overall
readiness levels for the Iraqi security forces--including an
executive-level brief--and information on units in the lead, but has not
provided unit-level reports on Iraqi forces' capabilities. According to
MNF-I's Deputy Chief of Staff for Strategic Effects, the best measure of
the capabilities of Iraqi units and improvements in the security situation
comes from commanders on the ground at the lowest level. We previously
reported that GAO was working with DOD to obtain the unit-level TRA
reports because they would be useful in more fully informing Congress on
the capabilities and needs of Iraq's security forces and in indicating how
accurately DOD reports reflect the forces' capabilities. As of January
2007, DOD still has not provided GAO with this unit-level TRA data.
Oversight Questions
o Why has DOD not provided GAO and Congress with unit-level TRA
reports?
o How does DOD assess the reliability of TRA reports and ensure
that they present an accurate picture of Iraqi security forces'
capabilities and readiness?
o At what TRA rating level would Iraqi army units not require any
U.S. military support? What U.S. military support would Iraqi
units still require at TRA levels 1 and 2?
o How does DOD use unit-level TRA reports to assess shortfalls in
Iraqi capabilities? What do DOD assessments show about the
developmental needs of Iraqi security forces?
o How have changes in the TRA system and form affected the
standards by which units are assessed? Have changes been made in
the degree to which the commanders' subjective judgment is used?
If so, why?
o What threat levels, if any, do commanders assess Iraqi units
against when determining a unit's overall readiness rating? Is the
threat level used consistently across all units?
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
Enclosure V: DOD May Be Unable to Ensure That U.S.-Funded
Equipment Has Reached Iraqi Security Forces
Issue
In the fall of 2003, the Coalition Provisional Authority and
Multinational Force-Iraq (MNF-I) shared responsibility for the
U.S.-funded train-and-equip program for Iraqi security forces,
which include military and police forces.^1 After the collapse of
Iraqi forces in the spring of 2004, the United States restructured
the multinational force and increased resources to train and equip
Iraqi forces. Unlike traditional security assistance programs,^2
the train-and-equip program in Iraq operates under the authority
of the Department of Defense (DOD) and is implemented by MNF-I
subordinate commands, including the Multinational Security
Transition Command-Iraq (MNSTC-I). Since 2003, the United States
has provided $15.4 billion for Iraqi security forces and law
enforcement. According to MNSTC-I records, MNF-I has issued about
480,000 weapons, 30,000 vehicles, and 1.65 million pieces of gear
(uniforms, body armor, helmets, and footwear), among other items,
to the Iraqi security forces as of October 2006. This enclosure
provides information on (1) the laws and regulations governing
property accountability that DOD may have applied to the U.S.
train-and-equip program in Iraq^3 and (2) MNF-I's accountability
for U.S.-funded equipment that it has issued to Iraqi security
forces. We plan on issuing a final report on these and related
intelligence matters by March 2007. Our work focuses on the
accountability requirements for the transportation and
distribution of U.S.-funded equipment and did not review any
requirements relevant to the procurement of this equipment.
Summary
Congress funded the train-and-equip program for Iraq outside
traditional security assistance programs, which, according to DOD
officials, provided DOD with a large degree of flexibility in
managing the program. Since the funding did not go through
traditional security assistance programs, the accountability
requirements normally applicable to these programs--including the
registration of small arms transferred to foreign governments--did
not necessarily apply. It is currently unclear what accountability
measures, if any, DOD has chosen to apply to the train-and-equip
program for Iraq, as DOD officials have expressed differing
opinions on this matter. As part of our ongoing work, we have
asked DOD to clarify what accountability measures it has chosen to
apply to the program.
While it is unclear which regulations DOD has chosen to apply,
beginning in early 2004, MNF-I established requirements to control
and account for equipment issued to the Iraqi security forces by
issuing a series of orders that outlined procedures for its
subordinate commands. These included obtaining signed records for
equipment received by Iraqi units or individuals and recording
weapons serial numbers. Although MNF-I took initial steps to
establish property accountability procedures, limitations such as
the initial lack of a fully operational equipment distribution
network, staffing weaknesses, and the operational demands of
equipping the Iraqi forces during war hindered its ability to
fully execute critical tasks outlined in the property
accountability orders. Since late 2005, MNSTC-I has taken
additional steps to improve its property accountability
procedures, including establishing property books^4 for equipment
issued to Iraqi Ministry of Defense and Ministry of Interior
forces. According to MNSTC-I officials, MNSTC-I also recovered
existing documentation for equipment previously issued to Iraqi
forces. However, according to our preliminary analysis, DOD and
MNF-I may not be able to account for Iraqi security forces'
receipt of about 90,000 rifles and about 80,000 pistols which were
reported as issued before early October 2005. Thus, DOD and MNF-I
may be unable to ensure that Iraqi military forces and police
received all of the equipment that the coalition procured or
obtained for them.
DOD Has Not Clarified What Accountability Requirements Apply to
the Train-and-Equip Program for Iraq
The train-and-equip program for Iraq received U.S. funding from
sources other than traditional security assistance programs. These
funding mechanisms, according to DOD officials, provided DOD with
a large degree of flexibility in managing the program. Congress
made funds available for developing Iraqi security forces
initially through the Iraq Relief and Reconstruction Fund (IRRF)
and later through the Iraq Security Forces Fund (ISFF).^5
According to DOD officials, because the funding did not go through
traditional security assistance programs, the equipment procured
with these funds was not necessarily subject to the accountability
requirements that normally apply to these programs. As specified
in DOD regulations, these requirements include procedures for
storing, protecting, transporting, and registering small arms and
other sensitive items transferred to foreign governments. For
example, the Security Assistance Management Manual, which provides
guidance for traditional security assistance programs, states that
the U.S. government's responsibility for equipment intended for
transfer to a foreign government under the Foreign Military Sales
program does not cease until the recipient government's official
representative assumes final control.^6 Other regulations
referenced by the Security Assistance Management Manual prescribe
minimum standards and criteria for the physical security of
sensitive conventional arms and require the registration of small
arms transferred outside DOD control.^7
It is unclear at this time what accountability measures DOD has
chosen to apply to the train-and-equip program for Iraq. For
example, DOD officials have expressed differing opinions on
whether the DOD regulation on the Small Arms Serialization
Program, which requires the entry of small arms serial numbers
into a DOD-maintained registry, applies to U.S.-funded equipment
procured for Iraqi security forces.^8 If the regulation does
apply, then MNSTC-I would be required to provide the serial
numbers of all small arms procured for Iraqi forces to the Small
Arms Serialization Program. Although the regulation requirements
are unclear, MNSTC-I has recently begun to provide weapons serial
numbers to the Small Arms Serialization Program, according to
MNSTC-I officials. As part of our ongoing work, we have asked DOD
to clarify whether MNF-I and MNSTC-I must follow accountability
measures specified in DOD regulations, or whether DOD has
established other accountability measures.
Despite MNF-I Accountability Orders, DOD and MNF-I May Be Unable
to Fully Account for Weapons Issued to Iraqi Security Forces
While it is unclear which regulations DOD has chosen to apply,
MNF-I issued orders to its subordinate commands directing steps to
account for all equipment distributed to the Iraqi security
forces.^9 These orders tasked relevant coalition forces to collect
property accountability items, including signed hand receipts and
weapons serial numbers. For example, MNF-I and one of its
subordinate commands, Multinational Corps-Iraq (MNC-I), issued two
orders in early 2004^10 that together directed U.S. military units
responsible for issuing equipment to the Iraqi security forces to
conduct the following procedures, among others:
o record the serial numbers for all sensitive items such as
weapons and radios;
o enter relevant information onto a Department of the Army hand
receipt form and obtain signatures from receiving Iraqi security
forces; and
o submit property accountability information to MNSTC-I.
According to a former MNSTC-I official, hand receipts are critical
to maintaining property accountability because they document the
particular unit or individual that has control over a specific
item.
Although MNSTC-I took initial steps to establish property
accountability procedures during 2004 and 2005, MNF-I subordinate
commands did not fully execute critical tasks outlined in the
property accountability orders due to the length of time necessary
to fully develop an equipment distribution network, staffing
weaknesses, and the operational demands of equipping the Iraqi
forces during war:
o The length of time necessary to fully develop the equipment
distribution network hampered MNSTC-I's ability to collect and
maintain appropriate equipment accountability records. According
to former MNSTC-I officials, the equipment distribution network
for Iraqi military forces and police, which included national
warehouses and regional distribution centers, was initiated during
2004. MNSTC-I took initial steps to put in place accountability
procedures at the national level warehouses located at Taji and
Abu Ghraib. For example, through the summer of 2004 and into early
2005, MNSTC-I consolidated and recorded existing inventory and
established a database to track equipment that the national
warehouses received, stored, and shipped. In addition, regional
equipment distribution centers, from which MNF-I staff and
contractors issued equipment to Iraqi units and maintained records
of issue, were established to receive equipment from the national
warehouses. These and other efforts, however, did not result in a
fully operational distribution network until mid-2005, over 1 year
after MNF-I began distributing large quantities of equipment to
the Iraqi security forces, according to former MNSTC-I officials.
o According to former MNSTC-I and other officials, staffing
weaknesses also hindered the development of property
accountability procedures. According to the former MNSTC-I
commander, several months passed after MNSTC-I's establishment
before the command received the needed number of staff. As a
consequence, MNSTC-I did not have the personnel necessary to open
shipping containers and record information on individual items
distributed to Iraqi forces, according to former MNSTC-I
officials. Moreover, frequent personnel turnover contributed to
communications problems and a loss of institutional memory. For
example, some former MNSTC-I staff told us that they were not
aware that MNF-I had published a property accountability order in
early 2004 for equipment issued to Iraqi security forces.
o The operational demands of equipping Iraqi forces during
war--including the need to distribute weapons rapidly to Iraqi
forces conducting combat operations--limited MNSTC-I's ability to
fully comply with accountability procedures, according to former
MNSTC-I officials. For example, during late 2004, according to the
former MNSTC-I commander, Iraqi insurgents conducted a campaign of
intimidation during which they attacked equipment convoys and
killed contractors.
Due to these early limitations, MNF-I subordinate commands did not
consistently collect and maintain records of equipment issued to
Iraqi security forces. As a result, DOD and MNF-I may be unable to
ensure that all of the equipment obtained for the Iraqis reached
the intended recipients.
As MNSTC-I's organization matured, it took additional steps to
improve accountability procedures for the equipment provided to
Iraqi security forces. Since the fall of 2005, MNSTC-I has
collected hand receipts for equipment issued to Iraqi security
forces, according to former and current MNSTC-I officials. In
addition, in the fall of 2005, MNSTC-I logistics staff established
separate electronic property books for the equipment provided to
Iraqi Ministry of Defense and Ministry of Interior forces,
including records for equipment previously issued to those forces.
To create the records for equipment already issued to the Iraqis,
MNSTC-I staff relied on contract and shipping records stored at
MNSTC-I, according to a former MNSTC-I official. In August 2006,
according to MNSTC-I officials, MNSTC-I logistics staff began to
build on earlier efforts to improve accountability by recovering
records maintained at the Umm Qasr port, the national warehouses
at Taji and Abu Ghraib, and the regional distribution centers. The
information collected since August 2006 includes hand receipts for
many shipments, according to MNSTC-I officials. In addition, since
the spring of 2006, MNSTC-I has been consolidating weapons serial
numbers into an electronic format. MNSTC-I officials stated that
they have begun to submit these numbers to the DOD Small Arms
Serialization Program, and are also establishing the basis for a
weapons serial number registry for the government of Iraq. MNSTC-I
officials stated that as a result of these efforts they can
account for most of the weapons procured through coalition funding
channels and issued to Iraqi security force units.
Despite the steps MNF-I has taken to improve its accountability
procedures, our preliminary analysis indicates that DOD and MNF-I
may not be able to account for a number of weapons reported as
issued to Iraqi forces. The MNSTC-I property books contain records
for about 90,000 rifles and about 90,000 pistols issued to Iraqi
forces as of September 22, 2005. These numbers incorporate records
MNSTC-I recently recovered from earlier phases of the
train-and-equip program for Iraq. However, the former MNSTC-I
commander reported that about 180,000 rifles and about 170,000
pistols were issued during the same time frame. According to
former and current MNSTC-I officials, weapons obtained with
non-U.S. funds may comprise a portion of the difference between
these sets of numbers. In addition, MNSTC-I continues to recover
records and may be able to account for some part of the
difference. However, based on our preliminary analysis, because
DOD and MNF-I maintained incomplete records for equipment issued
to the Iraqi security forces before the fall of 2005, the numbers
reported by the former MNSTC-I commander do not necessarily
represent the weapons received by Iraqi security forces. Rather,
these numbers indicate weapons tracked at the national warehouses
and regional distribution centers, according to former MNSTC-I
officials. In addition, former MNC-I property book officers told
us they had maintained the required records for weapons their
units had issued to Iraqi forces between 2004 and 2006. However,
MNF-I officials were unaware of such records when we recently
requested them. As a result, DOD and MNF-I may not be able to
account for Iraqi security forces' receipt of about 90,000 rifles
and about 80,000 pistols that were reported as issued but were not
recorded during earlier phases of the train-and-equip program for
Iraq. Thus, DOD and MNF-I may be unable to ensure that Iraqi
military forces and police received all of the equipment that the
United States has procured or obtained for them. In our ongoing
review, we will continue to assess MNF-I records for equipment
distributed to Iraqi forces.
Oversight Questions
o What are the steps being taken to ensure accountability of
U.S.-funded equipment issued to the Iraqi security forces?
o Should DOD formulate property accountability rules and
regulations that distinguish between times of peace and war?
o What is the potential for insurgents, militias, or other armed
groups to obtain U.S.-funded equipment, including weapons?
o What plans do DOD and the State Department have, if any, for
transitioning MNSTC-I to a traditional security assistance
organization?
^1The Coalition Provisional Authority was the U.N.-recognized authority
led by the United States and the United Kingdom that was responsible for
the temporary governance of Iraq. Multinational Force-Iraq was known as
Combined Joint Task Force-7 until May 2004.
^2Traditional security assistance programs operate under State Department
authority and are managed in country by the Department of Defense through
security assistance organizations under the direction and supervision of
the Chief of the U.S. Diplomatic Mission.
^3DOD defines accountability as the obligation imposed by law, lawful
order, or regulation, accepted by an organization or person for keeping
accurate records, to ensure control of property, documents or funds, with
or without physical possession (DODI 5000.64, Accountability and
Management of DoD-Owned Equipment and Other Accountable Property, E2.2).
^4A property book is a formal set of property accounting records and
files.
^5See Emergency Supplemental Appropriations Act for Defense and for the
Reconstruction of Iraq and Afghanistan, 2004, P.L. 108-106; Emergency
Supplemental Appropriations Act for Defense, the Global War on Terror, and
Tsunami Relief, 2005, P.L. 109-13; Emergency Supplemental Appropriations
Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006,
P.L. 109-234; Department of Defense Appropriations Act, 2007, P.L.
109-289.
^6See DOD 5105.38-M, Security Assistance Management Manual, C7.5. The
Foreign Military Sales program is a traditional security assistance
program where eligible recipient governments purchase from the U.S.
government defense articles, services, or training, often using grants
provided under the Foreign Military Financing program.
^7DOD 5100.76-M, Physical Security of Sensitive Conventional Arms,
Ammunition, and Explosives, C1.1.1; DOD 4000.25-M, Defense Logistics
Management System, C18.7.4.3; and DOD 4000.25-2-M, Military Standard
Transaction Reporting and Accounting Procedures, C12.7.4.3.
^8DOD 4000.25-2-M, Military Standard Transaction Reporting and Accounting
Procedures, C12.7.4.3; DOD 4000.25-M, Defense Logistics Management System,
C18.7.4.3.
^9According to former and current MNSTC-I officials, MNF-I has issued
equipment from a variety of sources. The equipment includes items procured
with funds from the United States, Iraq, and other coalition countries, as
well as weapons captured since the start of Operation Iraqi Freedom and
then redistributed to Iraqi forces.
^10MNF-I Directive 04-015, OST Supply and Equipment Distribution Guidance
(May 2004); MNC-I FRAGO 155 [12 June 2004 DTU] to MNC-I OPORD 04-01, Iraqi
Security Force Property Accountability Requirements (June 2004).
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
Governance Challenges
Enclosure VI: The Iraqi Government Needs to Staff an Effective Civil Service
and Fight Corruption
Enclosure VII: Ministry Capacity Development Efforts Need an Integrated Plan
Enclosure VIII: Several Factors Affect Iraqi Ministry Efforts to Spend
Capital Budgets
Enclosures IX: Iraq Owes Significant Foreign Debt and Faces Challenges in
Meeting IMF Conditions
Enclosure VI: The Iraqi Government Needs to Staff an Effective Civil
Service and Fight Corruption
Issue
Critical to stabilizing Iraq is ensuring that the nation's central
government ministries can provide security to the country and
deliver essential government services to all citizens. The Iraqi
government has 34 central government ministries that employ an
estimated 2 million government workers. The United States has
multiple ongoing efforts to strengthen key Iraqi ministries,
including programs at the Ministry of Interior and the Ministry of
Defense that are implemented by the Department of Defense (DOD).
Additional efforts at civilian ministries under the authority of
the Department of State and United States Agency for International
Development (USAID) are also under way. This enclosure is based on
U.S. reports, an assessment by the World Bank, and interviews with
U.S. officials.^1 This enclosure discusses U.S. and international
assessments of the Iraqi ministries' capacity to (1) build and
train a nonpartisan civil service, (2) fight corruption within the
ministries, and (3) use technology and effectively manage
resources. U.S. and international assessments note that these
three critical areas must be strengthened to improve the Iraqi
government's ability to provide basic services to its citizens. A
classified version of this enclosure will be available in
February.
Summary
Iraqi government institutions are undeveloped and confront
significant challenges in staffing a competent, nonpartisan civil
service; effectively fighting corruption; and using modern
technology and managing resources effectively. Ministry personnel
are frequently selected on the basis of political affiliation
rather than competence or skills, and some ministries are under
the authority of political parties hostile to the U.S. government.
Also, U.S. reports cite widespread corruption in the Iraqi
government and a lack of commitment to anti-corruption efforts
within the ministries. Finally, reliance on manual processes and
antiquated technology hampers efforts to build efficient, modern
ministries. Figure 1 provides an organizational chart of the Iraqi
executive branch and ministries.
^1See Department of Defense, Measuring Stability and Security in Iraq
(Washington, D.C.: August 2006 and November 2006); Department of State,
Survey of Anticorruption Programs Embassy Baghdad, Iraq (Washington, D.C.:
August 2006); The World Bank, Briefing Book for the Government of Iraq
Part 1: Key Policy Issues (Washington, D.C.: July 2006).
Figure 1: Iraqi Executive Branch and Ministries
Iraqi Ministries Lack Trained, Nonpartisan Civil Service
The Iraqi civil service remains hampered by inadequately trained staff
whose political and sectarian loyalties jeopardize the ministries' ability
to provide basic services and build credibility among Iraqi citizens,
according to U.S. government reports and international assessments.
According to U.S. officials a significant number of Iraqi ministry staff
lack adequate skills, including computer skills. A World Bank assessment
notes that political parties play a large role in hiring decisions within
the Iraqi government. Also, a U.S. report states that the government
ministries and the associated budgets are used as sources of power for
political parties with ministry positions staffed with party cronies as a
reward for political loyalty. According to U.S. officials, patronage leads
to instability in the civil service as many staff are replaced whenever
the government changes or a new minister is named.
Some Iraqi ministries are under the authority of political parties hostile
to U.S. goals and use their positions to pursue partisan agendas that
conflict with the goal of building a government that represents all ethnic
groups. For instance, DOD reports that the Ministry of Interior has been
infiltrated by members of the Supreme Council for Islamic Revolution in
Iraq or its Badr Organization and Muqtada al-Sadr's Mahdi Army. For
example, the Mahdi Army often operates under the authority or approval of
Iraqi police to detain, torture, and kill Sunni civilians. According to a
November DOD report, steps are being taken to address these issues. The
Ministries of Agriculture, Health, Transportation, and Tourism are led by
ministers whose allegiance is to al-Sadr. U.S. officials expressed
reservations about working in some of these ministries, noting that the
effectiveness of programs is hampered by presence of unresponsive or
anti-U.S. officials.
Corruption Is a Key Challenge
Corruption in Iraq is reportedly widespread and poses a major challenge to
building an effective Iraqi government and could jeopardize future flows
of needed international assistance. A World Bank report notes that
corruption undermines the government's ability to make effective use of
current reconstruction assistance. A 2006 survey by Transparency
International ranked Iraq's government as the second most corrupt
government in the world. Moreover, between January 2005 and August 2006,
56 officials in Iraq's ministries were either convicted of corruption
charges or subject to arrest warrants.
According to U.S. government and World Bank reports, the reasons for
corruption in the Iraqi ministries are several, including the following:
o The absence of an effective Iraqi banking system leaves the
government dependent on cash transactions.
o The majority of key Iraqi ministries have inadequately
transparent, obsolete, or ambiguous procurement systems.
o Key accountability institutions, such as the inspectors general
who were installed in each Iraqi ministry in 2004, lack the
resources and independence to operate effectively and
consistently.
o The government has no strategy to implement training for its
three anti-corruption institutions--the Commission on Public
Integrity, the Board of Supreme Audit, and the inspectors general
in each ministry.
Furthermore, Embassy Baghdad's Anticorruption Working Group
attributed poor performance by the anti-corruption institutions to
the government's lack of visible and authoritative commitment and
engagement.
Most Ministries Lack Technology and Face Challenges in Effectively
Managing Resources
The Iraqi ministries lack adequate technology and have difficulty
managing their resources, according to U.S. officials and an
international assessment. For example, U.S. officials said that
the Ministry of Interior relies on manual processes, such as
hand-written ledgers and a cash-based payroll system, which have
resulted in Iraqi police leaving their posts to deliver paychecks
to their families. U.S. officials also said that the Iraqi
ministries lack the technology to effectively disseminate
information among offices and ministries within the Iraqi
government. Finally, a U.S. contractor with a training center in
Baghdad noted that the lack of communication technology at the
Iraqi ministries increases the risk faced by staff and Iraqi
trainees by requiring them to undertake dangerous travel to the
National Training Center in Baghdad. This could be obviated
through remote or offsite training via video conferences or other
computer-based training.
U.S. officials said that the Iraqi ministries have limited
capability to manage personnel, and that the Ministry of Interior
has limited control of local and provincial police and that
loyalty to officials in Baghdad is questionable. For example, the
World Bank report states that the Iraqi government pays salaries
to nonexistent, or "ghost employees," that are collected by other
officials. According to U.S. officials 20 percent to 30 percent of
the Ministry of Interior staff are "ghost employees." Also, many
key ministries have been unable to expend budget resources on
capital improvements and are running large surpluses due in part
to an ineffective procurement process and the inability to carry
out fair, competitive contracting, according to U.S. officials.
Finally, U.S. officials said that the civilian ministries need
assistance developing long-term and strategic plans, including the
ability to plan for and execute capital expenditures.
Oversight Questions
o Given the level of corruption, partisanship, and sectarian
loyalties in various ministries, what efforts are being made to
ensure that U.S. resources, equipment, and training are
appropriately used and are not used to support a single group's
agenda?
o How can the United States ensure that the Iraqi government
initiates and sustains effective anti-corruption efforts within
the ministries?
o Given the limited capacity of the Iraqi ministries to
effectively manage government resources, can the Iraqi government
effectively absorb significant levels of future U.S. and
international assistance?
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
Enclosure VII: Ministry Capacity Development Efforts Need
Integrated Plan
Issue
Developing the capacity of Iraq's national ministries to
effectively provide security and deliver essential services is
critical to U.S. efforts to help Iraq build a legitimate
sustainable government. According to U.S and Coalition Provisional
Authority (CPA) assessments and officials, years of neglect, a
highly centralized decision-making system under the former regime,
and the looting of ministries in 2003 have decimated Iraq's
government ministries. Since then, the United States and other
donor partners have attempted to strengthen the ministries.
Current U.S. activities include efforts targeting 10 key civilian
ministries with funding totaling about $126 million; transition
efforts at the Ministries of Defense and Interior with funding of
$43 million; and additional projects by several U.S. agencies.
This enclosure (1) assesses the status of U.S. capacity
development efforts, (2) examines overall leadership and
coordination of these efforts, and (3) describes the metrics used
to assess progress. We are continuing to review these issues and
will report further on them in the spring of 2007.
Summary
The U.S. government lacks a plan that integrates current efforts
to improve Iraq's capacity to provide security and deliver
essential services. Although the National Strategy for Victory in
Iraq and related policy documents guide all U.S. efforts in Iraq,
the United States lacks a specific plan for its capacity
development efforts that includes milestones and agreed-upon
metrics, integrates all U.S. and coalition efforts, and
incorporates Iraqi governmentwide capacity objectives. We
identified more than 50 U.S. efforts led by at least six U.S.
agencies; however, it is unclear how these efforts address core
needs and Iraqi priorities in the absence of an integrated U.S.
plan. U.S. officials note that the Iraqi government has taken an
increasing leadership role in capacity development efforts in
recent months and that coordination of U.S. efforts has improved.
However, questions still remain about the extent of Iraqi
leadership and ownership of these efforts. Moreover, it is
uncertain how the U.S. will make the transition from the temporary
U.S. entities leading these efforts to those having permanent
post-conflict responsibilities. Finally, U.S. agencies are still
developing the metrics to assess progress and effectiveness. After
an initial U.S. Embassy effort was deemed inadequate, several
efforts are ongoing.
Capacity Development Efforts Lack Integrated Plan
In its efforts to develop the capacity of Iraqi ministries, the
United States lacks a plan that includes milestones and
agreed-upon metrics, integrates all U.S. and coalition efforts,
and incorporates Iraqi governmentwide capacity objectives. Overall
U.S. activities in Iraq are guided by the April 2006 Joint
Campaign Plan issued by Embassy Baghdad and the Multinational
Force-Iraq (MNF-I), the Joint Campaign Action Plan, the National
Strategy for Supporting Iraq (updated January 2006), and Iraq's
National Development Strategy 2005-2007. However, there is no
specific plan for capacity development that considers and
integrates all U.S. efforts, according to U.S. officials. A
mid-2005 U.S. Embassy assessment first identified the need for a
broad, integrated approach. Multiple U.S. agencies had been
conducting capacity development efforts since 2003 at individual
ministries; however, most of these efforts focused on helping
Iraqi officials assume responsibility for sustaining new and
restored infrastructure. (Fig. 1 illustrates U.S. capacity
development efforts in Iraq since 2003.) In June 2004, CPA
reported that all Iraqi ministries had graduated and were capable
of managing the Iraqi government.
Figure 1: Key U.S. Efforts to Improve Iraqi Ministerial Capacity
The mid-2005 assessment and subsequent reviews by the State Department
concluded, however, that a broader, Iraqi-led capacity development program
with an integrated approach was needed to strengthen the ministries. The
embassy conceived a National Capacity Development Program (NCDP) in late
2005. The program called for the U.S. Embassy to assess the current
capacity of the ministries in conjunction with the Iraqi government,
identify core needs, and work with the Iraqi government to develop a
governmentwide strategy. The Multinational Security Transition
Command-Iraq (MNSTC-I) assumed responsibility for capacity development at
the Ministries of Defense and Interior. Plans to integrate capacity
development efforts at the security and civilian ministries for core
common needs, such as budgeting, are ongoing.
As of December 2006, we identified more than 50 capacity development
efforts led by at least six U.S. agencies, including 18 programs launched
under the NCDP. However, it is unclear how these efforts are addressing
core needs and Iraqi priorities in the absence of an integrated U.S. plan.
The State Department's Iraq Reconstruction Management Office (IRMO)
coordinates the overall effort, which targets 10 key civilian ministries,
and is spending $61.5 million for short-term projects, such as providing
English-language training for Iraqi officials, developing a new media
center for the Prime Minister's office, and adding budget and procurement
components to Iraq's financial management information system, which the
U.S. Agency for International Development (USAID) is responsible for
implementing. USAID is also implementing a $65 million medium-term effort
initially focused on training the Iraqi civil service. A range of U.S.
Army Corps of Engineers projects also currently provide capacity
development and technical training at six ministries, including the
Ministries of Electricity and Oil. According to U.S. officials and
documents, IRMO has begun to identify all U.S. capacity development
efforts to develop a comprehensive plan.
The Iraqi government has not developed a governmentwide plan for capacity
development that includes core objectives and appropriate benchmarks to
measure progress. According to IRMO officials, the U.S. government worked
with Iraqis to incorporate Iraq's priorities into current capacity
development efforts and to validate these efforts. Nonetheless, a
governmentwide capacity development plan for Iraq does not exist. USAID is
responsible for helping the government of Iraq to create this plan as part
of its longer-term work to strengthen key public administration functions.
It is uncertain if the plan will be developed. The contractor responsible
for helping with the plan stated that the lack of a central coordinating
entity for the government of Iraq, combined with a lack of access at
certain ministries, could hamper U.S. efforts. Moreover, only a few
ministries, including the Ministries of Defense and Interior, have
developed action plans to address core needs and priorities.
Questions Remain about Iraqi Leadership and U.S. Agency Roles and
Responsibilities
Questions remain about the extent of Iraqi government leadership and
ownership in current capacity development efforts. To ensure Iraqi
ownership, a representative from the Iraq Ministry of Planning was to lead
the overall effort as chair of the multinational Capacity Development
Working Group formed in late 2005 to guide overall efforts. According to
IRMO officials, the Iraqi government has become increasingly involved
since the permanent government was finalized in May 2006. However, a
representative from the Ministry of Planning did not attend any working
group meetings until October 2006, according to U.S. officials.
In addition, Ministry Assistance Teams (MAT), comprised of representatives
from the Iraqi ministries, the U.S. government, and donor partners, were
to create capacity development action plans and to guide and monitor
efforts. However, one U.S. official stated that the MATs were largely a
planning concept. Other officials noted that Iraqi participation in the
MATs was uncertain, as in some cases U.S. advisers completed work that was
to be done by Iraqi counterparts. Another official told GAO that
membership on the MATs is informal and ad hoc, with relevant
representatives participating as needed to address specific issues.
All U.S. capacity development efforts are being coordinated by a joint
U.S. government task force. According to U.S. officials, early meetings of
the task force involved information sharing rather than coordination.
However, U.S. officials stated that the current objectives of the task
force include identifying issues, critical paths, and potential overlap in
U.S. capacity development efforts. Meetings held since the beginning of
November 2006 have helped clarify questions between USAID and IRMO on
project-specific issues. Although coordination mechanisms exist, the U.S.
agencies' roles and responsibilities for capacity development and for
transition to normal post-conflict operations are uncertain:
o IRMO was established as a temporary organization by National
Security Presidential Directive 36 in May 2004 and has
responsibility for coordination, policy direction, and short-term
capacity development efforts. U.S. officials questioned whether
IRMO, as coordinator of all U.S. capacity development efforts,
should also be implementing programs. In addition, one of IRMO's
short-term projects includes providing training on principles of
transparent procurement to Iraqi government officials. USAID has
also delivered procurement training to Iraqi government officials
through its efforts to train the Iraqi civil service, according to
a high-level contractor. According to a senior State Department
official, although IRMO was expected to cease operations in 2007,
it is likely that its authority is going to be extended. However,
it is unclear how IRMO will transition responsibility for capacity
development to USAID when it eventually ceases operations.
o MNSTC-I is a temporary organization with more than 130 personnel
and contractors that is responsible for leading capacity
development at the Ministries of Defense and Interior. However, it
is unclear how it will transition these efforts to an embassy-run
post-conflict security assistance effort and a civilian-led rule
of law program. According to a senior State Department official,
U.S. support for the Ministry of Interior is scheduled to
transition to State in fiscal year 2007.
U.S. Metrics to Assess Ministerial Effectiveness Are Still Being
Developed
U.S. government agencies have developed multiple tools to assess
capacity and measure progress at the Iraqi ministries. For
example, IRMO developed an initial set of metrics in late 2005 to
assess six core functions common to 10 key civilian ministries and
2 security ministries. However, the government of Iraq did not
participate in developing these metrics, according to an embassy
document. U.S. officials also noted that these metrics were not
based on internationally accepted approaches for measuring
capacity. The metrics were dropped in early 2006 after they were
deemed insufficient for their purpose at certain ministries,
according to some U.S. government officials.
Since then, at least three separate sets of metrics have been
initiated or are under development. First, in mid-2006, MNF-I
began monthly assessments of the capacity of the security
ministries to perform nine key functions, such as planning,
logistics, and budgeting. Second, IRMO completed a baseline
assessment of the key civilian ministries in August 2006, using a
new, more detailed ministry capacity assessment that gauges nine
core functions, such as the ability to plan and to stem
corruption. Third, USAID is developing a ministry self-assessment
tool that will help determine Iraqi needs and how USAID will
address these needs in its medium-term programs. The assessment
also could inform an overall capacity development plan for the
government of Iraq.'
Questions for Oversight
o What progress has been made in developing an overall integrated
plan for capacity development in conjunction with the government
of Iraq and the international community?
o To what extent have U.S. efforts to improve Iraq's capacity to
provide essential services incorporated lessons learned that have
been cited by the World Bank and other international development
organizations, such as the need to establish host-nation
ownership?
o How are IRMO, USAID, and DOD clarifying their roles and
responsibilities in Iraqi capacity development efforts? What are
they doing to ensure there are no gaps or duplicative efforts in
the U.S. program?
o How are U.S. agencies developing, coordinating, and reporting
metrics for assessing the effectiveness of U.S. assistance to
Iraq's ministries? How is the U.S. government validating the
usefulness of its capacity development metrics?
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
Enclosure VIII: Several Factors Affect Iraqi Ministry Efforts to
Spend Capital Budgets
Issue
When the Iraqi government assumed control over its finances in
2004, it became responsible for determining how more than $25
billion annually in government revenues would be collected and
spent to rebuild the country and operate the government. However,
the government faces difficulties in spending budgeted funds for
capital goods and projects in the security, oil, and electricity
sectors. In this enclosure, we discuss (1) the factors affecting
the Iraqi ministries' efforts to spend approved budgets, and (2)
U.S. government efforts to address Iraq's budget execution
problems.
Summary
Sound government budgeting practices can help determine the
priorities of the new government, provide transparency on
government operations, and help decision makers weigh competing
demands for limited resources. However, unclear budgeting and
procurement rules have affected Iraq's efforts to spend capital
budgets effectively and efficiently. The inability to spend the
money raises serious questions for the government, which has to
demonstrate to citizens who are skeptical that it can improve
basic services and make a difference in their daily lives. The
U.S. government has launched a series of initiatives in
conjunction with other donors to address this issue and improve
ministry budget execution.
Iraq Has Spent Little of Its Annual Capital Budget
As of August 2006, the government of Iraq had spent, on average, 8
percent of its annual capital goods budget and 14 percent of its
annual capital projects budget. Iraq's fiscal year begins on
January 1 of each year. Some of the weakest spending occurs at the
Ministry of Oil, which relies on damaged and outdated
infrastructure to produce the oil that provides nearly all of the
country's revenues (see table 1).
Table 1: 2006 Annual Iraq Budget and Actual Expenditures through
August 2006
Dollars in millions
Expenditures through August
2006 Annual Budget 2006
Capital Capital Total Capital Capital
Ministry goods projects budget goods projects Total budget
Finance $10 $33 $16,506 $1 $74 $8,895
Planning 4 27 55 0.4 3 9
Interior 233 27 1,919 25 0.2 958
Defense 864 33 3,443 12 0.0 831
Oil 2 3,533 3,590 0.4 4 40
Electricity 4 767 840 0.3 267 279
Water 0.2 200 259 0.0 49 78
Justice 3 10 74 2 0.2 34
Others 272 1,552 7,290 77 480 3,501
Total $1,392 $6,181 $33,975 $117 $877(14.2%) $14,623(43%)
(8.4%)
Source: GAO analysis of Iraqi budget data.
Since most of the $34.5 billion in reconstruction funds provided
between fiscal year 2003 and 2006 have been obligated, unexpended
Iraqi funds represent an important source of additional financing.
The capital goods budgets of the Interior and Defense ministries
were intended for the purchase of weapons, ammunition, and
vehicles, among other items. However, as of August 2006, Interior
and Defense had spent only about 11 percent and 1 percent,
respectively, of these budgeted funds. The Ministry of Oil's $3.5
billion 2006 capital project's budget targeted key enhancements to
the country's oil production, distribution, and export facilities.
As of August 2006, the ministry had spent less than 1 percent of
these budgeted funds.
Lack of Clear Budget and Procurement Rules Affect Ministry Efforts
to Spend Budgets
According to U.S. officials, Iraq lacks the clearly defined and
consistently applied budget and procurement rules that are needed
for effective budget planning and implementation. The Iraqi
ministries are guided by complex and conflicting sets of laws and
regulations, including those implemented under Saddam Hussein, the
Coalition Provisional Authority (CPA), and by the current
government. According to State officials, the lack of agreed-upon
procurement and budgeting rules causes confusion among ministry
officials and creates opportunities for corruption and
mismanagement.
The World Bank and U.S. Treasury also identified the following
budget and financial management problems:
o Ministries do not submit budget execution reports on a timely or
complete basis. The Kurdistan Regional Government receives block
grants from the central government but does not provide budget
execution reports to the central government.
o Reconciliation of government accounts is impossible because the
government lacks consolidated information on the balances in
government bank accounts or on the exact number of these accounts.
o Donor-financed expenditures take place directly with ministries
and outside the budget process. As a result, the Ministry of
Finance has limited information on the activities of Iraq's
donors.
o Provincial governments do not provide an accounting of the funds
they receive ($2 billion in 2006 and slated to increase to $2.9
billion in 2007).
The World Bank also found that Iraq's procurement procedures and
practices are not in line with generally accepted public
procurement practices, such as effective bid protest mechanisms
and transparency on final contract awards.^1
U.S. Government and Donors Have Made Efforts to Address Budget
Execution Challenges
The U.S. government, World Bank, and International Monetary Fund
(IMF) have taken steps to address some of the existing
deficiencies in ministry budget planning and execution. U.S.
government officials stated that reform of budget and procurement
processes is urgently needed but would be challenging due to the
cultural resistance to change within the ministries.
The U.S. Embassy has formed a "budget execution" task force
charged with mapping out current ministry budgeting and
procurement procedures to help ministry officials and external
parties understand how their budgets are planned and implemented.
This task force will identify the "rules of the road" for key
agencies and help them streamline budget procedures. Treasury and
the U.S. Agency for International Development (USAID) are also
working with the Ministry of Finance to implement a
state-of-the-art financial management information system to
provide it with more complete and timely information on ministry
budgets.
^1World Bank, IRAQ: Operation Procurement Review (June 2005).
The United States, World Bank, IMF, and other donors are also
planning additional steps to strengthen Iraq's budget and
procurement processes. First, the United States and other donors
are training Ministry of Finance staff on budget preparation and
execution. Second, according to U.S. officials, the IMF and World
Bank helped implement a new budget classification system that is
being used for the 2007 budget. This is an important step since it
creates an accounting system for the entire government and
provides a sound basis for budgeting and planning. (See enclosure
X on Iraq's debt and progress in meeting international economic
milestones). Third, the World Bank recommends bringing all donor
projects into the budget by means of a unified reporting framework
and reflecting this information in the Donor Assistance Database,
a database of donor commitments and projects.
Over the longer term, the World Bank recommends that Iraq's budget
include all of the government's significant revenues and
expenditures--including the full economic costs of the oil
subsidies, which are currently excluded. The Bank also recommended
that the international donor community help the Ministry of
Finance, inspector general offices, and Board of Supreme Audit
provide greater oversight of budgeted and expended funds.
Oversight Questions
o What are the key challenges that Iraq's government faces in
planning and managing budgets and procurement in the near term and
in the future?
o What strategy guides U.S. efforts to build Iraqi ministry
capacity to plan and execute budgets? Are the roles and
responsibilities of the various U.S. agencies, international
donors, and Iraqi ministries involved in these budget execution
efforts clearly defined?
o What types of assistance has the United States provided to
improve ministry capacity to plan and implement budgets. What is
the impact of this assistance?
o Given the large unspent capital budgets, why should additional
U.S. reconstruction assistance be provided to Iraq?
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
Enclosure IX: Iraq Owes Significant Foreign Debt and Faces
Challenges in Meeting IMF Conditions
Issue
Iraq has significant foreign debt remaining from the Saddam
Hussein regime, which presents financial challenges for Iraq's
reconstruction and economic development. Although Iraq has
negotiated some debt restructuring under an IMF reform program,
implementing these reforms is challenging and, as of December
2006, has not been wholly successful. Nonetheless, Iraq's progress
in economic development is tied to the reforms and the debt
reduction they secure. This enclosure describes (1) the nature and
extent of Iraq's debt and (2) challenges that Iraq faces in
implementing economic reforms to secure additional debt
restructuring.
Summary
The United States has led efforts to forgive Iraq's bilateral debt
and to secure greater debt relief and foreign assistance in
exchange for political and economic reforms. At the end of 2004,
Iraq owed about $120 billion to foreign creditors--an amount
almost five times the size of its economy. The country owed about
$36 billion to official creditors that were members of the Paris
Club, a group of 19 creditor nations that includes the United
States. In 2004, Paris Club members made a commitment to forgive
80 percent of that debt. As part of this effort, the United States
forgave all of Iraq's outstanding debt ($4.1 billion). However,
the majority of Iraq's debt--about $69 billion--is owed to
non-Paris Club countries, particularly those in the Persian Gulf
region, such as Saudi Arabia. Negotiations with non-Paris Club
countries are ongoing. Iraq's foreign debt at the end of 2006 is
estimated at about $89 billion--almost twice the size of its
economy.
As a condition of Paris Club debt relief, Iraq agreed to follow a
reform program developed by the International Monetary Fund (IMF).
The IMF program stipulates a series of reforms that Iraq must
undertake to qualify for debt relief and access to IMF funds. The
reforms are intended to help Iraq restructure its economy, spark
economic development, and attract investment. However, some of
these reforms are challenging to implement due to the difficult
security situation in Iraq and the government's relative
inexperience. In addition, the Iraqi government has not been able
to complete all of the reforms stipulated under the IMF agreement,
such as completing a census of government employees. The IMF,
however, allowed Iraq to reschedule implementation of the reforms.
Debt Reduction Has Been Promised, with Conditions
After Saddam Hussein's regime fell in 2003, Iraq's international
creditors sought payment on the nearly $120 billion in outstanding
debt owed them. This outstanding debt was nearly five times the
size of Iraq's economy in 2004 and was believed to inhibit Iraq's
ability to attract the investment needed to finance its economic
reconstruction. Figure 1 shows that official Paris Club
creditors--including the United States, United Kingdom, France,
Japan, Russia, and 14 other countries--accounted for about $36
billion (30 percent) of Iraq's total foreign debt in 2004.
However, the largest amount (about $62 billion) was owed to
non-Paris Club bilateral creditors, particularly Persian Gulf
states such as Saudi Arabia and Kuwait.^1 The remaining debt was
held by private creditors and multinational creditors.
Figure 1: Change in Iraq's Debt, 2004 to 2006
Note: Summations may differ from totals due to rounding. Non-Paris Club
official creditor debt is based on estimates since it has not been
reconciled. The estimate of this debt for 2004 was made by the IMF, while
the estimate for 2006 was provided by the U.S. Treasury Department.
^1Most of the debt to Persian Gulf states is for financial assistance
offered to the former Saddam Hussein regime during the 1980-1988 Iraq-Iran
war.
Iraq has engaged its creditors in negotiations to restructure and forgive
portions of its foreign debt.^2 Paris Club official creditors agreed to
reduce Iraq's outstanding debt by 80 percent over three phases, one of the
largest debt reductions ever agreed to by the Paris Club creditors. The
United States, a member of the Paris Club, forgave all of Iraq's
outstanding debt ($4.1 billion) in December 2004. Iraq received the first
30-percent tranche when it agreed to an IMF Emergency Post-Conflict
Assistance program in November 2004. The second 30-percent tranche took
effect in December 2005 when Iraq agreed to a stand-by arrangement with
the IMF. Iraq will receive the remaining 20-percent reduction following
satisfactory performance for 3 years under the IMF reform program. Iraq
cleared its arrears with the IMF and World Bank in 2004. By the end of
July 2006, Iraq had settled almost $20 billion in private creditor claims,
receiving overall (private) debt reduction of more than 80 percent. The
Iraq Minister of Finance stated that the pace and scale of the commercial
debt restructuring program was unprecedented.
However, even with Paris Club, private, and multilateral debt reductions,
at the end of 2006, Iraq will still owe foreign creditors about $89
billion--almost twice the size of its economy. In addition, Iraq owes an
additional $31 billion in compensation claims for damages and losses
resulting from Iraq's invasion and occupation of Kuwait in 1990. Iraq is
continuing to negotiate with other countries outside the Paris Club,
including its largest creditors from the Persian Gulf region and China. It
is unclear whether certain economic or political conditions may be
requested by creditors to forgive or restructure this outstanding debt.
U.S. government officials stated that political factors, not progress on
the IMF program, will ultimately determine the degree to which Iraq
succeeds in negotiating debt relief on the amounts owed to the Gulf
states. Given the large share of Iraq's outstanding debt, these
negotiations and their outcome represent an important factor that could
affect Iraq's reconstruction and economic development efforts. As part of
a larger effort to assist Iraq's economic development, the United States
is strongly supporting efforts by the U.N. and Iraq to create an
"International Compact for Iraq." The compact is aimed at providing
greater debt relief and foreign assistance in exchange for political and
economic reforms. However, this initiative, launched in the fall of 2006,
is still being negotiated.
^2In 1990, the United Nations (UN) imposed economic sanctions on Iraq
following the invasion of Kuwait. The Iraqi government subsequently
defaulted on its debts to the United States and other international
creditors. Following the end of major combat operations in May 2003, the
UN lifted sanctions and sheltered Iraq from certain debt claims. UN
Security Council Resolution 1483 decided that, until December 31, 2007,
Iraqi petroleum, natural gas, and petroleum products shall generally be
immune from legal proceedings against them.
Iraq Has Met Some IMF Targets, but Others Are More Challenging
To achieve debt restructuring, Iraq agreed to implement IMF conditions
that stipulate specific economic reforms and milestones that the
government needs to meet. The central objective of these reforms is to
maintain macroeconomic stability with sustainable growth over the medium
term. These conditions are contained in the IMF stand-by arrangement,
which was approved in December 2005 and in subsequent reviews of the
stand-by arrangement in July 2006. They include a wide range of reforms
such as reducing the subsidies on petroleum products (e.g., raising prices
of gasoline, kerosene, and similar products), limiting the budget deficit,
and developing financial systems and audits that adhere to international
standards.
The new Iraqi government affirmed its commitment to the IMF program that
had been agreed to by the transitional government. However, due to the
delay in forming a permanent government and the inherent challenges in
implementing economic reforms in the midst of an active insurgency, the
government did not meet all its commitments, according to the IMF. Table 1
provides a selective list of conditions for Iraq and their status.
Table 1: Status of Selected IMF Conditions for Iraq Debt Restructuring
IMF condition Status
Government budget deficit Iraq has maintained a budget surplus, due in
maintained below specific part to the lack of spending by certain
levels ministries of their capital budgets (see
enclosure 8).
Ceiling on government Iraq has reached the agreed-upon ceiling for the
imports of petroleum cost of these imports ($2.8 billion in 2006) and
products has requested a waiver from the IMF to import
more. Since refinery capacity remains limited,
this will likely be a problem in the future. The
government committed to allow private imports of
diesel, kerosene, and other fuel products to
increase supplies and allow prices to rise to
neighboring country levels (see enclosure 10).
Reduced subsidies on The government has increased prices on fuel
petroleum products products twice--once in 2005 and again in June
(gasoline, LPG, kerosene, 2006--to keep them roughly in line with the IMF
diesel) program. For example, the price of kerosene was
increased from $0.01 to $0.19 per gallon and the
price of gasoline from $0.05 to $0.40 per gallon
in June 2006. Further price increases are
necessary to reduce price differentials with
neighboring countries, but domestic fuel prices
may still remain below prices in neighboring
countries, according to the World Bank.
Adoption of a government Scheduled for completion June 30, 2006, this
budget classification and condition was rescheduled for December 31, 2006.
chart of accounts in line According to U.S. officials, Iraq completed this
with IMF standards condition. It is critical because it creates an
accounting basis for the entire government and
facilitates budgeting and planning.
Complete a census of all Scheduled for completion June 30, 2006, this
public service employees condition was rescheduled for December 31, 2006.
(including the military) Because wages and pensions account for 28
percent of the operational budget, the
government needs an accurate employee count.
Source: International Monetary Fund.
As the government seeks to implement the IMF reform program, it faces
several challenges. Oil production and exports have been below expected
levels, making overall economic expansion and job creation dependent on
growth in the non-oil sectors of the economy. Inflation of approximately
50 to 60 percent in 2006 and increases in the prices of basic necessities
such as food, fuel and electricity continue to be growing concerns.
Corruption and lost oil revenues account for more than a billion dollars
per year in lost government revenue, according to a 2006 report by the
Ministry of Oil Inspector General. Unemployment, estimated at 25 percent
to 40 percent in 2005 and even higher in 2006, contributes to the
country's instability. Over the medium term--even with debt
restructuring--Iraq will still have significant outstanding debt and
accumulating interest. Without growth in oil revenues, the IMF notes that
Iraq may need additional external financial assistance when the
restructured loans become due.
Oversight Questions
o What is the status of efforts to restructure Iraq's remaining
foreign debt? Does it present challenges for Iraq's reconstruction
and economic development?
o What types of conditions are Persian Gulf creditor nations
seeking with Iraq to restructure or forgive outstanding debt?
o How will the International Compact with Iraq help secure
additional debt relief?
o Are the pace and substance of IMF-required reforms realistic,
given the security and political situation in Iraq?
o In what areas can the U.S. government provide additional
technical assistance to help Iraq meet its IMF reform goals?
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
Reconstruction Challenges
Enclosure X: U.S. Efforts to Restore Iraq's Oil Sector Have Been Slowed by
Major Challenges
Enclosure XI: U.S. Efforts to Improve Iraq's Electricity Sector Have Been
Constrained by Security, Management, and Funding Challenges
Enclosure X: U.S. Efforts to Restore Iraq�s Oil Sector Have Been
Slowed by Major Challenges
Issue
Iraq's oil reserves, estimated at 115 billion barrels, are the
third largest in the world. The oil sector currently accounts for
about two-thirds of Iraq's gross domestic product and over 90
percent of exports and revenues. However, Iraq's oil wells and
associated infrastructure have deteriorated due to years of
neglect, mismanagement, and international sanctions. Considerable
looting after Operation Iraqi Freedom, the government of Iraq's
reluctance or inability to approve equipment replacement or
rehabilitation of oil field construction projects, and continued
attacks on crude and refined-product pipelines also have
contributed to Iraq's reduced oil production and export
capacities. As of October 2006, the U.S. government allocated
about $1.7 billion in Iraq Relief and Reconstruction Funds (IRRF)
for the Iraqi oil sector, of which about $1.6 billion has been
obligated and $1.1 billion disbursed.^1 In this enclosure, we
discuss (1) the status of efforts to meet U.S. goals for Iraq's
oil sector and (2) key challenges the United States faces in
improving Iraq's oil sector.
Summary
Iraq's oil production and exports have consistently fallen below
U.S. program goals. U.S. and Iraqi efforts to restore Iraq's oil
sector have been impeded by the lack of security, corruption,
sustainability, and funding challenges. The unstable security
environment continues to place workers and infrastructure at risk
while protection efforts remain insufficient. Widespread
corruption and smuggling affect the distribution of refined oil
products, such as gasoline. The U.S. reconstruction program has
encountered difficulty with Iraq's ability to operate and maintain
aging infrastructure. Further, uncertainties exist regarding the
sources of future funding. These challenges could make it
difficult to achieve current production and export goals, which
are central to Iraq's government revenues and economic
development.
Iraq�s Oil Production and Exports Have Not Met U.S. Program Goals
U.S.-funded projects have focused on restoring Iraq's oil
production infrastructure, improving refining and export capacity,
and providing training for operations and maintenance. As of
December 11, 2006, the Army Corps of Engineers Gulf Region
Division reported completing 97 of 182 planned projects and is
expected to complete the others by July 2007. These projects are
intended to help improve Iraq's oil production infrastructure,
refinery, and export capacity.
Despite U.S. efforts, Iraq's oil production and exports have
consistently fallen below their respective program goals. After
initially rebounding in 2003, oil production and exports averaged,
respectively, 2.1 million and 1.5 million barrels per day (mbpd)
in 2006. U.S. program goals are to reach an average production
capacity of 3 mbpd and export levels of 2.2 mbpd.^2 Despite not
meeting U.S. production and export goals, export revenue has
generally grown as world prices for crude oil have risen.
^1Department of State, Quarterly Update to Congress; 2207 Report
(Washington, D.C.: Oct. 2006).
Figure 1: Iraqi Oil Production, Export, and Revenue, June 2003 through
November 2006
^2According to State Department officials, the U.S. goals differ from the
government of Iraq's official production goal of 2.5 mbpd and the
International Monetary Fund (IMF) target of 2.3 mbpd (annual average).
Security, Corruption, Sustainability, and Funding Challenges Hinder
Efforts to Improve Iraq's Oil Infrastructure
The U.S. government and Iraq face several key challenges in improving
Iraq's oil sector.
Addressing Infrastructure Security
Security conditions have affected Iraq's oil production and have, in part,
led to project delays and increased costs. Insurgents have destroyed key
oil infrastructure, threatened workers, compromised the transport of
materials, and hindered project completion and repairs by preventing
access to work sites. U.S. officials reported that major oil pipelines in
the north continue to be sabotaged, shutting down oil exports and
resulting in lost revenues. Pipe line repair crews are overwhelmed by the
amount of work and unable to make rapid repairs.
The U.S. government has developed a number of initiatives to protect the
oil infrastructure and transfer this responsibility to the Iraqi
government.^3 Such efforts include improving the capabilities of
infrastructure protection forces such as the Oil Protection Force, a
protection force for static infrastructure sites. The U.S. military, with
the assistance of other coalition forces, is also working to improve the
capabilities of the Strategic Infrastructure Battalions (SIB). However,
according to U.S. officials, some units are of questionable capability and
loyalty. According to U.S. government officials and a recent Center for
Strategic and International Studies report,^4 such security forces are
underpaid, underequipped, poorly led, and of questionable quality.
Additional information on the effectiveness and quality of the SIBs is
classified.
^3The Special Inspector General for Iraq Reconstruction, Unclassified
Summary of SIGIR's Review of Efforts to Increase Iraq's Capability to
Protect Its Energy Infrastructure, SIGIR-06-038 (Arlington, Va.: Sept. 27,
2006).
^4Anthony Cordesman, Center for Strategic and International Studies, Iraqi
Force Development and the Challenge of Civil War: The Critical Problems
and Failures the U.S. Must Address if Iraqi Forces Are to Eventually Do
the Job, (Washington, D.C.: Nov. 30, 2006).
Combating Corruption and Smuggling
U.S. and international officials note that corruption in Iraq's oil sector
is pervasive. In 2006, the World Bank and Ministry of Oil's Inspector
General estimated that millions of dollars of government revenue is lost
each year to oil smuggling or diversion of refined products. According to
State Department officials and reports, about 10 percent to 30 percent of
refined fuels is diverted to the black market or is smuggled out of Iraq
and sold for a profit. According to U.S. Embassy documents, the insurgency
has been partly funded by corrupt activities within Iraq and from skimming
profits from black marketers.
In addition, Iraq lacks fully functioning meters to measure oil production
and exports. In 1996, the United Nations (UN) first cited the lack of oil
metering during the time Iraq was under UN sanctions. In addition, in
2004, the International Advisory and Monitoring Board for the Development
Fund for Iraq recommended that metering equipment be expeditiously
installed. According to the Ministry of Oil and the International Advisory
and Monitoring Board (IAMB), an absence of functioning meters precludes
control over the distribution and sale of crude and refined products. The
U.S. government is currently taking steps to replace old and broken meters
at the Al-Basra export terminal, Iraq's major oil export terminal. This
project is scheduled for completion in April 2007.
Improving Infrastructure Management and Sustainability
Problems in managing key oil projects have also led to delays. U.S. agency
and contractor officials have cited difficulties in initially defining the
scope, schedule, and cost of oil projects, as well as completing projects.
The Ministry of Oil has had difficulty operating and maintaining its aging
infrastructure, including some refineries originally constructed in the
1950s, 1960s, and 1970s. The ministry will have difficulty maintaining
future production levels unless it initiates an ambitious rehabilitation
program, according to State's Iraq Reconstruction Management Office
(IRMO). Iraq's refineries are inefficient in their yield; for every barrel
of crude oil sent to refineries only about half a barrel of refined fuel
products is produced, according to IRMO. U.S. officials report that the
sector's rebuilding efforts continue to be impeded by the lack of modern
technology; qualified staff and expertise at the field, plant, and
ministry level; an effective inventory control system for spare parts
within the oil sector's 14 operating companies; and difficulties in
spending budgets for equipment upgrades and replacements (see related
brief on budget execution). The U.S. government has provided additional
training and management assistance in response to these needs.
Developing Adequate Sources of Future Funding
According to U.S. and foreign officials, the ability and willingness of
the Iraqi government to fund improvements in its oil sector remain
uncertain for a number of reasons:
o Iraq lacks effective procurement, budgeting, and financial
management systems to execute budgets efficiently, ensure
transparency of oil revenues, and ensure the accountability of
Iraqi ministry and plant managers. As of August 2006, the Ministry
of Oil had spent only 0.1 percent of its $3.5 billion capital
budget, according to U.S. government reporting.
o Current government subsidies have kept prices for refined oil
products low and constrain opportunities for growth and
investment. U.S. and international officials report that Iraq's
low domestic fuel prices have stimulated black market activities
and fuel smuggling out of the country; inadequate funding for
maintenance and refinery upgrades; and domestic overconsumption.
According to U.S. and international officials, the Iraqi budget is
directly affected, since state-owned refineries cover less than
half the domestic demand, and the Iraqi government has to import
the rest at world market prices.
o Iraq lacks a clear legal and fiscal framework to attract foreign
investment. According to U.S. officials, until a new hydrocarbon
law is passed, uncertainties exist surrounding the enforceability
of contracts, how future oil revenues will be distributed, and
what authority, if any, regional governments will have in signing
oil exploration contracts with foreign firms. In addition,
according to State officials, implementing regulations have yet to
be issued for Iraq's Fuel Import Liberalization Law passed in
early September 2006. These regulations could allow the private
sector to import and distribute some refined products at market
prices.
Oversight Questions
o What is the Ministry of Oil's current strategy for meeting
Iraq's growing fuel needs, and what assistance is the U.S.
government planning to provide to help implement this strategy?
o To what extent will an adequate fuel supply for electricity
generation be included in Ministry of Oil planning?
o What is the status of actions to ensure adequate security and
maintenance of facilities built or renovated with U.S. funding?
o How effective have U.S. efforts been in transferring
responsibility for operations and maintenance of U.S. oil projects
to the Iraqi government? How are these efforts integrated among
U.S. agencies and the international community?
o What U.S. efforts will help ensure that Iraq develops an
adequate legal and regulatory framework to provide transparency
and accountability of current and future oil revenues?
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
Enclosure XI: U.S. Efforts to Improve Iraq�s Electricity Sector
Have Been Constrained by Security, Management, and Funding
Challenges
Issue
Iraq's electricity infrastructure has deteriorated due to years of
neglect during the previous regime, international sanctions, and
the destruction caused by conflict, looting, and vandalism. An
inadequate and unreliable supply of electricity affects both
public perceptions of the government's ability to deliver basic
services and the productivity of Iraq's oil sector, which is
crucial to rebuilding the economy. As of October 2006, the U.S.
government allocated about $4.2 billion of the Iraq Relief and
Reconstruction Fund (IRRF) to Iraq's electricity sector; almost
$2.7 billion of this amount has been disbursed.^1 In this
enclosure, we discuss (1) the status of efforts to meet U.S. goals
for Iraq's electricity sector and (2) the key challenges the U.S.
faces in improving Iraq's electricity sector.
Summary
In 2006, electricity reached 4,317 megawatt (mw) peak generation
capacity per day but continued to fall short of the U.S. goal of
6,000 mw. Production was also outpaced by increasing demand, which
has averaged about 8,210 mw per day. The Ministry of Electricity's
2006-2015 master plan aims to rehabilitate and expand the national
grid and will require substantial funding of about $27 billion. If
this plan is implemented, the ministry estimates that Iraq will be
able to meet projected demand for electricity in 2009.
U.S. and Iraqi efforts to restore Iraq's electricity sector have
been impeded by security, infrastructure management and
sustainability, and funding challenges. The unstable security
environment continues to put electrical workers and infrastructure
at risk and protection efforts have been insufficient. It is also
unclear whether Iraq can or will adequately manage and sustain
U.S. projects, given inadequacies in operations and maintenance
and an uncertain fuel supply. Further, uncertainties exist
regarding the sources of future funds for the Iraqi electricity
sector. These challenges could make it difficult to achieve an
effective and efficient Iraqi electrical grid.
Restoring Iraq�s Electricity Sector Has Been Difficult
U.S. efforts focus on restoring or constructing generation,
transmission, distribution, and automated monitoring and control
system projects. As of December 2006, the Army Corps of Engineers
Gulf Region Division (GRD) reported that 293 of its 523 planned
projects had been completed and that it is expected to complete
most of the others by the end of 2007. The U.S. Agency for
International Development (USAID) reported completing all of its
29 projects. According to the State Department, as IRRF projects
are completed, efforts are increasingly shifting from building
large, U.S.-funded infrastructure projects to better protecting,
maintaining, and sustaining the current infrastructure.
Despite these gains, Iraq's electrical supply has not met initial
program goals, remains unreliable, and is not meeting growing
demand. While completed U.S. projects have added an estimated
2,093 mw^2 of new and rehabilitated generation capacity, U.S.
efforts have not met the program goal of 6,000 mw established by
the Coalition Provisional Authority (CPA) in 2004. Peak generation
for 2006 averaged 4,317 mw per day, slightly above the prewar
levels of 4,200 mw. Moreover, electricity supply across the nation
continues to be unreliable. From July through September 2006, the
nation averaged 11.1 hours, with Baghdad averaging 6.2 hours of
power per day. Demand has also exceeded supply. In 2006, demand
averaged 8,210 mw^3 per day and reached a peak of 9,622 mw^4
during the week of August 21, 2006 (see fig. 1). According to the
U.S. government, the growth in demand for electricity has been
stimulated by government energy subsidies and a surge in consumer
purchases of appliances and electronics.
^1U.S. Department of State, Quarterly Update to Congress; 2207 Report
(Washington, D.C., October 2006). Funds were appropriated to the Iraq
Relief and Reconstruction Fund in the Emergency Wartime Supplemental
Appropriations Act, 2003, P.L. 108-11, and the Emergency Supplemental
Appropriations Act for Defense and for the Reconstruction of Iraq and
Afghanistan, 2004, P.L. 108-106.
^2A megawatt is a measure of the rate at which electric energy can be
transferred and is used as a measure of electric generation capacity. One
megawatt equals 1 million watts.
^3This number is equal to 164,939 megawatt hours and is calculated by
multiplying 8,210 megawatts by 20.09 hours.
^4This number is equal to 193,306 megawatt hours and is calculated by
multiplying 9,622 megawatts by 20.09 hours.
Figure 1: Peak Electricity Produced and Demand in Iraq, May 2005-November
2006
In November 2006, the Ministry of Electricity presented an ambitious
master plan for 2006 to 2015 to rehabilitate and expand the national grid;
the plan will require substantial funding of about $27 billion. If this
plan is implemented, the ministry estimates that Iraq will be able to meet
its projected demand for electricity in 2009.
Factors Hindering Efforts to Meet Electricity Needs
The U.S. government and Iraq face key challenges in meeting Iraq's
electricity needs.
Addressing Infrastructure Security
The deteriorating security environment continues to pose a serious
challenge to Iraq's electricity system,^5 leading, in part, to project
delays and increased costs for security services. Electrical workers and
infrastructure are inadequately protected and are subject to targeted
attacks. The security situation also makes it difficult to get workers,
parts, and equipment to sites. Moreover, looting and vandalism have
continued since 2003, and major electrical transmission and fuel lines
have been repeatedly sabotaged, cutting power to other parts of the
country. According to Ministry of Electricity and U.S. officials, workers
are frequently intimidated by anti-Iraqi forces, and have difficulty
repairing downed lines.
In an effort to stop the sabotage, the ministry contracted with tribal
chiefs to protect the transmission lines running through their areas,
paying them about $60 to $100 per kilometer, according to State's Iraq
Reconstruction Management Office (IRMO). However, in October 2006, IRMO
officials reported that this scheme was flawed and did not result in
improved infrastructure protection.
The U.S. government has developed other initiatives to better protect
energy infrastructure.^6 The United States has trained and equipped the
Electrical Power Security Service (EPSS) and the Strategic Infrastructure
Battalions (SIB) and partnered these security services with coalition
forces. However, a U.S. official stated that the EPSS effort was
unsuccessful and that some of the SIB units have questionable capability
and loyalty. According to a U.S. government official and a recent Center
for Strategic and International Studies report,^7 these security forces
have been underpaid, underequipped, and poorly led, and are of
questionable quality. Additional information on the status of the SIBs is
classified.
^5MNF-I attack data on infrastructure are classified. The Iraq
Reconstruction and Management Office (IRMO) has worked with the Ministry
of Electricity to improve its infrastructure attack data, but it is not
always feasible to distinguish between attacks, weather events, and
equipment failures, according to IRMO officials.
^6The Special Inspector General for Iraq Reconstruction (SIGIR),
Unclassified Summary of SIGIR's Review of Efforts to Increase Iraq's
Capability to Protect Its Energy Infrastructure, SIGIR-06-038 (Washington,
D.C., Sept. 27, 2006).
^7Anthony Cordesman, Center for Strategic and International Studies, Iraqi
Force Development and the Challenge of Civil War: The Critical Problems
and Failures the U.S. Must Address if Iraqi Forces Are to Eventually Do
the Job (Washington, D.C., Nov. 30, 2006).
Improving Infrastructure Management and Sustainability
The U.S. reconstruction program has encountered difficulties with Iraq's
ability to sustain new and rehabilitated infrastructure and address fuel
requirements. Iraq's electricity sector suffers from deteriorated,
outdated, and inefficient infrastructure resulting from two decades of
underinvestment in operations and maintenance, replacement, and expansion.
This weakened infrastructure has led to unplanned outages.^8
The rebuilding of the electricity sector has been slowed by the lack of
training to enhance the skills of plant workers, inadequate spare parts,
and an ineffective asset management and parts inventory system. Moreover,
plants are sometimes operated beyond their recommended limits and use
poor-quality fuels that rapidly deteriorate parts, involve longer
maintenance downtimes, and increase pollution. According to U.S.
government officials, Iraq needs to develop cleaner and more reliable
sources of natural gas for its generators and to formulate an integrated
fuel strategy to address these needs. Currently, Iraq's fuel supply does
not meet demand and its quality is inconsistent.
For example, of the 35 natural gas turbines the U.S. government installed
in power generation plants, 16 are using diesel, crude, or heavy fuel oil
due to the lack of natural gas and lighter fuels. As a result, maintenance
cycles are reportedly three times as frequent and three times as costly.
Poor-quality fuels also decrease the power output of the turbines by up to
50 percent and can result in equipment failure and damage, according to
U.S. and Iraqi power plant officials. The U.S. government also estimates
that Iraq is flaring enough natural gas to generate at least 4,000 mw of
electrical power. Because of natural gas shortages, diesel has to be
imported at a cost of about $1.2 billion a year, thus straining economic
resources.
The U.S. government is providing assistance to address these shortfalls
through long-term operations and maintenance programs for thermal and gas
turbine power plants and through other initiatives to help the ministry
develop a sound operations and maintenance program.
^8Also, Iraq continues to lack an automated control system that would
decrease reliance on manual operators and help alert operators of
imbalances in power transmission. According to the State Department, the
United States is funding improvements that will help increase the current
system's reliability.
Developing Adequate Sources of Future Funding
Despite the Ministry of Electricity's recent development of a 10-year
master plan, Iraq's ability to fund improvements in its electricity sector
remains uncertain.
o According to a World Bank assessment, Iraq lacks an adequate
legal and regulatory framework and the procurement, budgeting, and
financial management systems to execute budgets efficiently and
ensure accountability at government ministries.
o Iraq's electricity tariff, one of the lowest in the world, is
below the cost of delivery and makes it difficult for Iraq to
finance the improvements it needs to make. Moreover, Iraq's cost
recovery is low due to inadequate metering, billing, and illegal
taps into the system.
o The ministry faces uncertainty regarding future donor
commitments, although some future international support is
expected to come through an International Compact launched in July
2006. Under the compact, Iraq would undertake economic, political,
and security reforms to receive increased support from the
international community. Donors have yet to agree on this compact.
Oversight Questions
o What is the Ministry of Electricity's strategy for meeting
Iraq's growing future electrical needs, and what assistance is the
U.S. government providing to help implement this strategy?
o What is the status of actions taken to ensure adequate security
and maintenance for transmission lines and facilities built or
renovated with U.S funding?
o How effective have U.S. efforts been in transferring
responsibility for operations and maintenance efforts for U.S.
electricity projects to the Iraqi government? How are these
efforts integrated among U.S. agencies and with international
efforts? How is success measured?
o What efforts are needed to ensure an adequate fuel supply for
electricity generation in Iraq? How are the needs of the
electricity sector integrated into Ministry of Oil planning?
o Why did the United States purchase natural gas turbines to
generate electricity when the necessary supply of natural gas was
not assured in Iraq?
GAO Contact
Joseph A. Christoff, Director, International Affairs and Trade,
(202) 512-8979 or [email protected].
U.S. Military Readiness
Enclosure XII: Extended Operations Have Had Significant Consequences for the
U.S. Military
Enclosure XIII: Securing Munitions Sites and Alleviating Armor Shortages
Have Been Serious Problems
Enclosure XIV: Deficiencies in Supply Support for U.S. Ground Forces Have
Resulted in Shortages of Critical Items
Enclosure XII: Extended Operations Have Had Significant Consequences
for the U.S. Military
Issue
Since September 11, 2001, U.S. military forces have experienced a
high pace of operations to support homeland security missions,
Operation Enduring Freedom in Afghanistan, and various combat and
counterinsurgency operations in Iraq. These operations have
required many units and personnel to deploy for multiple tours of
duty and, in some cases, to remain for extended tours. The
Department of Defense (DOD) faces significant challenges in
maintaining readiness for overseas and homeland missions and
sustaining rotational deployments of duty, especially if the
duration and intensity of current operations continue at the
present pace. Pursuant to a congressional mandate, we are
examining readiness issues, including DOD's ability to support
ongoing operations as well as other commitments. This enclosure
highlights some of the consequences that extended operations have
had on the U.S. military regarding personnel, equipment, and
training. It also discusses some of the challenges DOD faces as it
adjusts the composition and size of its forces.
Summary
Although DOD has overcome difficult challenges in maintaining a
high pace of operations over the past 5 years, extended operations
in Iraq and elsewhere have had significant consequences for the
U.S. military. Our work on personnel, equipment, and training
issues has found problems with (1) DOD's ability to provide active
and reserve forces, especially for some skills; (2) the
recruitment and retention of personnel to fill shortages of
critical positions, including those requiring the ability to speak
foreign languages such as Arabic; (3) policies and guidance
affecting the availability of reserve personnel; (4) heavy wear
and tear on equipment, as well as equipment shortages in the
reserve components; and (5) the effects of continued deployment of
U.S. ground forces on military training. In addition, extended
operations present challenges in determining the adjustments
needed to the size and composition of the Army to meet both near-
and long-term requirements.^1
Operations Have Challenged DOD�s Ability to Provide Forces
Ongoing operations in Iraq have challenged DOD's ability to supply
active and reserve forces that are ready to deploy, particularly
with regard to the Army and Marine Corps. Although the Army's goal
is to deploy active personnel only 1 of every 3 years, many
soldiers have deployed more frequently, and some personnel are
preparing for their third rotations to Iraq. Active Marine Corps
personnel are also deploying more frequently than the goals
established by Marine Corps leaders. Moreover, ongoing operations
have created a particularly high demand for certain combat support
and combat service support skills, such as engineering, civil
affairs, transportation, and military police. With limits placed
on the availability of reserve component members with these skills
(see discussion below), DOD is increasingly turning to the Navy
and Air Force to help meet requirements for certain types of
forces needed to support ground operations. The longer operations
in Iraq continue, the greater the likelihood DOD will face
increasing challenges in identifying sufficient numbers of such
skilled personnel.
DOD Faces Enlisted Personnel Recruitment and Retention Challenges
Operations in Iraq have contributed to the U.S. military's
significant challenge in recruiting and retaining hundreds of
thousands of service members each year. While the services have
generally met their aggregate recruiting and retention goals, DOD
has had problems recruiting and retaining sufficient numbers of
individuals with the right skills and knowledge. Over 40 percent
of DOD's 1,484 occupational specialties were consistently
underfilled for fiscal years 2000 through 2005, raising concerns
about the military's ability to meet all of its missions. For
example, during fiscal year 2003 when the Iraq war began, DOD was
unable to fill almost 103,000 positions in consistently
underfilled occupations; this number grew to 112,000 unfilled
positions by 2005. Many of these consistently underfilled
occupations are in critical areas, such as health care, human
intelligence collection, and explosive ordnance disposal.
DOD Policies and Guidance Have Limited the Availability of Reserve
Forces
DOD has recognized that the department cannot execute major
military operations without significant participation from its
reserve components. However, its current mobilization and
deployment policies and guidance restrict flexibility in staffing
long-term operations such as the global war on terrorism. After
September 11, 2001, DOD issued a series of policies and guidance
to guide the use of reserves for the global war on terrorism in
order to limit deployments and help sustain the all-volunteer
force. Most significantly, it limited the services to one
involuntary mobilization of their reserve component members for
the global war on terrorism and limited reserve component
mobilizations to Iraq and Afghanistan to 12 months "on the ground"
in the U.S. Central Command area of operations, plus additional
time for mobilization and demobilization activities. Thus, under
the current policy, reserve component members who were
involuntarily mobilized for operations related to the global war
on terrorism cannot be involuntarily mobilized for the ongoing
operation now referred to as "the long war." As additional
personnel have been involuntarily mobilized, the services have
come to rely more heavily on active forces, repeat volunteers, and
new recruits to meet their sourcing requirements.
Ongoing Operations Are Taking a Heavy Toll on Equipment
Ongoing military operations in Iraq are inflicting heavy wear and
tear on equipment. Some equipment items used by U.S. forces are
more than 20 years old, and harsh combat and environmental
conditions over time have further exacerbated equipment condition
problems. The Army and the Marine Corps have initiated programs to
reset (repair or replace) equipment and are likely to incur large
expenditures in the future. We are currently assessing these
programs, including the extent to which the services are tracking
reset costs and the extent to which their reset plans maintain
unit equipment readiness while meeting ongoing operational
requirements.
In addition, the Army National Guard and Army Reserve have
transferred large quantities of equipment to deploying units, an
approach that has contributed to growing equipment shortages in
nondeployed units. Also, reserve units have left large quantities
of equipment overseas, and DOD has not yet developed plans to
replace the equipment. The Army National Guard reports that its
nondeployed units have less than one-third of their required
equipment, and the Army Reserve reports that its units have about
half of the modern equipment they need to deploy. These shortages
also could adversely affect reserve units' ability to perform
homeland defense missions and provide support to civil authorities
in the event of natural disasters or terrorist attacks.
Continuing Deployment of Ground Forces Has Affected Military
Training
The continuing deployment of ground forces to support ongoing
operations has affected military training. The military services
have been focused on preparing units to assume missions and to
operate in conditions specific to Iraq and Afghanistan, with less
time available to prepare for other wartime and homeland defense
missions. In addition, personnel and units are being asked to
perform missions or functions different from those they were
designed for and are being retrained accordingly. For example,
field artillery units have been used to perform some military
police duties and therefore spend time training for these missions
before deploying. To support deploying units, units that remain
behind must give up personnel and equipment, thus limiting their
ability to train as a unit or to train on certain equipment that
they might be required to operate once deployed. Also, units are
faced with replacing officer and senior enlisted personnel pulled
to serve as trainers for Iraqi and Afghani security forces.
Challenges Remain in Adjusting the Composition and Size of Forces
Ongoing operations have raised questions about whether DOD has
adequately reassessed and adjusted the size and composition of its
forces, particularly with regard to the Army. Although the Army
has begun to adjust its force structure, significant challenges
remain. For example, in 2004, the Army began to implement a $52.5
billion initiative throughout the active and reserve components to
establish modular brigades that are intended to be more readily
deployable to overseas operations such as Iraq than their
predecessor units, which were designed for Cold War postures. The
Army's goal of establishing fully capable modular units will be
difficult given long-standing equipment and personnel shortfalls,
particularly while the Army is also managing the training and
deployment of forces to Iraq.
Further, to help support operations in Iraq, the Army has made
some adjustments in its active-reserve mix to establish additional
units that are in high demand. The Marine Corps has made similar
changes. However, the Office of the Secretary of Defense had not
conducted a recent comprehensive data-driven analysis to assess
the number of active personnel needed by the services to implement
the defense strategy and to provide needed capabilities within
acceptable levels of risk.
Prior Recommendations
In prior reports, we have made numerous recommendations addressing
the military issues covered in this paper, including the
following:
o With regard to the recruitment and retention of enlisted
personnel, we recommended that DOD develop a management action
plan to help components identify and address the causes of their
recruiting and retention challenges.^2 DOD partially concurred
with this recommendation.
o As the result of our work on the availability of reserve forces,
we recommended that DOD develop a strategic framework that sets
human capital goals concerning the availability of its reserve
component forces to meet the longer-term requirements of the
global war on terrorism under various mobilization authorities and
identify personnel policies that should be linked within the
context of the strategic framework.^3 DOD partially concurred with
this recommendation.
o In our work on Army National Guard equipment readiness, we
recommended that the Army develop and submit to Congress a plan
and funding strategy that addresses the equipment needs of the
Army National Guard for the global war on terrorism and addresses
how the Army will transition from short-term equipping measures to
long-term equipping solutions.^4 DOD agreed with this
recommendation.
o In reporting on the Army's modularity program, we recommended
that the Army develop and provide the Secretary of Defense and
Congress with a comprehensive plan for assessing the Army's
progress toward achieving the benefits of modularity. We
recommended the plan include specific, quantifiable performance
metrics to measure progress toward meeting the goals and
objectives established in the Army Campaign Plan.^5 DOD agreed to
develop expanded performance metrics.
Oversight Questions
o To what extent has DOD evaluated its ability to support any
adjustments in troop levels in the administration's revised
strategy, including the availability of personnel, equipment and
training necessary if the strategy calls for increases?
o What options are available to DOD for making more personnel,
including both active duty and reserve personnel, available for
future rotations while sustaining an all-volunteer force?
o To what extent have DOD components developed a management action
plan to identify and address the causes of their recruiting and
retention challenges?
o To what extent will equipment reset plans maintain unit
equipment readiness while meeting ongoing operational
requirements?
o What is the state of readiness of our armed forces? To what
extent has DOD evaluated whether units are ready and trained to
respond to operations other than Iraq or Afghanistan?
o Are the Army and Marine Corps appropriately sized, with the
right composition and mix of units and personnel skills, to
support ongoing operations, while remaining prepared for missions
that could arise at home or abroad?
^1For further information on the issues discussed in this enclosure, see
GAO, Military Personnel: DOD Needs Action Plan to Address Personnel
Recruitment and Retention Challenges, GAO-06-134 (Washington, D.C.: Nov.
17, 2005); Military Personnel: Reserve Components Need Guidance to
Accurately and Consistently Account for Volunteers on Active Duty for
Operational Support, GAO-07-93 (Washington, D.C.: Oct. 31, 2006); Reserve
Forces: Army National Guard and Army Reserve Readiness for 21st Century
Challenges, GAO-06-1109T (Washington, D.C., Sept. 21, 2006); Force
Structure: DOD Needs to Integrate Data into Its Force Identification
Process and Examine Options to Meet Requirements for High-Demand Support
Forces, GAO-06-962 (Washington, D.C.: Sept. 5, 2006); Defense Logistics:
Preliminary Observations on Equipment Reset Challenges and Issues for the
Army and Marine Corps, GAO-06-604T (Washington, D.C.: Mar. 30, 2006);
Military Training: Funding Requests for Joint Urban Operations Training
and Facilities Should Be Based on Sound Strategy and Requirements,
GAO-06-193 (Washington, D.C.: Dec. 8, 2005); Military Personnel: DOD Needs
to Address Long-Term Reserve Force Availability and Related Mobilization
and Demobilization Issues, GAO-04-1031 (Washington, D.C.: Sept. 15, 2004);
Homeland Defense: DOD Needs to Assess the Structure of U.S. Forces for
Domestic Military Missions, GAO-03-670 (Washington, D.C.: July 11, 2003);
Force Structure: Army Needs to Provide DOD and Congress More Visibility
Regarding Modular Force Capabilities and Implementation Plans, GAO-06-745
(Washington, D.C.: Sept. 6, 2006); and Reserve Forces: Plans Needed to
Improve Army National Guard Equipment Readiness and Better Integrate Guard
into Army Force Transformation Initiatives, GAO-06-111 (Washington, D.C.:
Oct. 4, 2005.)
^2GAO-06-134.
^3GAO-04-1031.
^4GAO-06-111.
^5GAO-06-745.
GAO Contact
Henry L. Hinton, Jr., Managing Director, Defense Capabilities and
Management, (202) 512-4300 or [email protected].
Enclosure XIII: Securing Munitions Sites and Alleviating Armor
Shortages Have Been Serious Problems
Issue
U.S. ground forces in Iraq have come under frequent and deadly
attacks from insurgents using weapons such as improvised explosive
devices (IED), mortars, and rocket launchers. IEDs, in particular,
have emerged as the number one threat against U.S. forces.
Insurgents have made many IEDs from munitions looted from storage
sites in Iraq. This enclosure discusses (1) the security provided
by U.S. forces over conventional munitions storage sites in Iraq
and (2) the challenges the Department of Defense (DOD) has faced
in meeting increased requirements for body and truck armor to
protect U.S. ground forces.
Summary
As a result of the overwhelming size and number of conventional
munitions storage sites in Iraq, combined with prewar planning
assumptions that proved to be invalid, U.S. forces did not
adequately secure those sites and looting was widespread. Despite
the potential risk posed by unsecured sites, DOD's actions in
response to lessons learned during Operation Iraqi Freedom (OIF)
have focused on countering IEDs and not on the strategic
implications of munitions sites for future operations.^1
Efforts to protect U.S. ground forces with increased body and
truck armor have been characterized by shortages and delays, which
have reduced operational capabilities and forced combat commanders
to accept additional risk in completing their missions.^2 We are
currently reviewing force protection measures, including body
armor, for current operations, as well as the organization and
management of the Joint IED Defeat Organization (JIEDDO), which
was established in January 2006 with a mission of countering the
IED threat.
U.S. Did Not Prevent Looting of Munitions Sites
A fundamental gap existed between OIF war plan assumptions and the
experiences of U.S. and coalition forces in Iraq, contributing to
an insufficient number of troops on the ground to prevent the
widespread looting of conventional munitions storage sites. Looted
munitions have emerged as a continuing asymmetric threat to U.S.
and coalition forces. The human, strategic, and financial costs of
the failure to provide sufficient troops on the ground have been
high, since IEDs made from looted explosives have caused about
half of all U.S. combat fatalities and casualties in Iraq and have
killed hundreds of Iraqis. In addition, unsecured conventional
munitions sites have helped sustain insurgent groups and
threatened the achievement of the OIF strategic goal of creating a
stable Iraqi nation.
DOD's actions have primarily focused on countering IEDs and not on
the security of conventional munitions storage sites as a
strategic planning and priority-setting consideration for future
operations. Although good first steps, these actions do not
address what we believe is a critical OIF lesson learned: If not
secured during initial combat operations, an adversary's
conventional munitions storage sites can represent an asymmetric
threat to U.S. forces that remain in country.
Acquisition Delays and Distribution Problems Resulted in Body
Armor Shortages
DOD faced challenges in supplying sufficient quantities of body
armor to meet the requirements for U.S. military forces in Iraq.
Temporary shortages of body armor occurred because of acquisition
delays related to the lack of key materials and distribution
problems in theater. Increasing military requirements for body
armor exceeded the manufacturer's capacity to produce enough of
the Army's new Interceptor body armor,^3 particularly after
October 2003, when U.S. Central Command required body armor for
all U.S. personnel in its area of responsibility. Before that, the
Army required body armor for all soldiers in Iraq but not for all
U.S. personnel. As a result of the shortages, many individuals
purchased body armor that was available in the private sector with
their own funds.
According to the Defense Logistics Agency, the organization that
manages body armor for the Army, the shortfall in vests and
ceramic plates was due to the lack of Kevlar (a type of fiber) for
manufacturing the vests and a lack of material for manufacturing
the plates. Attempts to accelerate the fielding of the new armor
had some success but also created additional logistics problems,
including the inaccurate reporting of on-hand quantities.
We are currently reviewing force protection measures, including
body armor requirements, testing, and oversight, for current
operations.
Production and Installation Problems Resulted in Shortages of
Army and Marine Truck Armor
DOD also faced the challenge of supplying sufficient amounts of
armor for Army and Marine Corps trucks. U.S. military forces in
Iraq have experienced shortages of truck armor due to problems
with production and installation of armor kits. Although the Army
first identified a requirement for 3,780 truck armor kits for five
types of trucks^4 in November 2003, it did not produce all of the
kits until February 2005 and did not install the kits to meet the
initial requirement until May 2005--18 months after the
requirement was identified. Requirements continued to increase
after May 2005, but the time lag to meet them lessened. A number
of factors contributed to the time needed to provide truck armor
to deployed Army troops. As a result, troops were placed at
greater risk as they conducted wartime operations in vehicles not
equipped with the preferred level of protection. For example, the
Army missed a valuable opportunity to have substantial numbers of
truck armor kits available for OIF by not fully capitalizing on
approved requirements for these kits established in 1996. In
addition, production time lengthened because contracts were
awarded for amounts less than total requirements due to increasing
needs for truck armor and inadequate funding. Sufficient
documentation was lacking to determine why funding was not
available when needed, limiting effective oversight over funding
decisions. Material shortages and limited kit installation rates
also affected the availability of truck armor.
The Marine Corps also experienced shortages of truck armor during
OIF. The Marine Corps belatedly met requirements for the
production and installation of add-on truck armor in September
2004--8 months after the requirements were identified. Two factors
affected the timely production and installation of Marine Corps
truck armor. First, the lack of a synchronized approach between
the Marine Corps and the Army resulted in the Marine Corps
identifying its truck armor requirements and seeking armor
solutions 2 months after the Army. This delay may have limited the
Marine Corps' ability to field interim armor that met IED
protection requirements and may have contributed to delays in
providing add-on truck armor to deployed Marine Corps forces. The
Marine Corps did not officially identify a requirement for truck
armor and did not begin seeking out armor materials from industry
until January 2004--2 months after the Army began its truck armor
program in November 2003. According to Marine Corps officials, the
armor-grade steel needed for sufficient IED protection was not
available from suppliers in time to meet the Marine Corps'
deployment timeline of March 2004. As a result, the Marine Corps
fielded the interim armor with only limited IED protection.
Second, mission needs restricted the rate at which the Marine
Corps could replace its interim armor with add-on armor and
install integrated armor.
DOD has taken actions to improve the timely availability of truck
armor. For example, the Army is developing a long-term armoring
plan to improve the availability of truck armor for future
operations. The Marine Corps increased the rate of installation
for integrated armor by expanding its armor installation capacity.
The Marine Corps is also taking longer-term actions, such as
developing a plan to address the availability of truck armor for
future operations.
GAO Is Reviewing JIEDDO
In response to Senate Report 109-292, we have initiated a review
of JIEDDO. The objectives of our ongoing review are to determine
(1) whether JIEDDO's overall management and organizational
structure, including funding, personnel, and strategic planning
processes, effectively support its mission; (2) the challenges, if
any, that affect JIEDDO's ability to quickly and effectively
identify, develop, test, and support technology and training
solutions; and (3) the level of coordination that exists between
JIEDDO and other DOD and non-DOD organizations to leverage
existing capabilities and prevent duplication of efforts.
Prior Recommendations
In December 2006, we recommended that the Chairman of the Joint
Staff conduct a theaterwide survey and risk assessment regarding
unsecured conventional munitions in Iraq and incorporate
conventional munitions storage site security as a strategic
planning factor into all levels of planning policy and guidance,
including joint doctrine, instructions, manuals, and other
directives.^5 DOD partially concurred with our recommendations.
In prior reports, we have recommended actions to ensure funding
needs for urgent wartime requirements are identified quickly,
requests for funding are well documented, and funding decisions
are based on risk and an assessment of the highest priority
requirements. For example, in March 2006, we recommended that the
Army establish a process to document and communicate all urgent
wartime funding requirements for supplies and equipment at the
time they are identified and the disposition of funding
decisions.^6 DOD concurred with the intent of the recommendation.
More recently, we have recommended actions to ensure that the
services make informed and coordinated decisions about what
materiel solutions are developed and procured to address common
urgent wartime requirements.^7 DOD generally agreed with these
recommendations.
Oversight Questions
o Has DOD conducted a theaterwide survey and risk assessment
regarding unsecured conventional munitions storage sites in Iraq?
Has DOD developed a risk mitigation strategy for unsecured sites
in Iraq?
o Has DOD incorporated the security of conventional munitions
storage sites as a strategic planning factor into all levels of
planning policy and guidance?
o Is the supply chain adequately supporting the troops' needs for
body armor and truck armor during combat operations? Are the Army
and Marine Corps coordinating the requirements, testing, and
production of body armor and evaluating its effectiveness in the
field?
o Is JIEDDO structured to effectively accomplish its mission and
account for its expenditures?
o What steps has DOD taken to stay abreast of evolving force
protection threats and to identify and employ appropriate
mitigation measures?
^1These issues are discussed in a classified GAO report, Operation Iraqi
Freedom: DOD Should Apply Lessons Learned Concerning the Need for Security
over Conventional Munitions Storage Sites to Future Operations Planning,
GAO-07-71C (Washington, D.C.: December 20, 2006). We plan to issue an
unclassified version of this report in January 2007.
^2For further information on these issues, see GAO, Defense Logistics:
Actions Needed to Improve the Availability of Critical Items during
Current and Future Operations, GAO-05-275 (Washington, D.C.: Apr. 8,
2005); Defense Logistics: Several Factors Limited the Production and
Installation of Army Truck Armor during Current Wartime Operations,
GAO-06-160 (Washington, D.C.: Mar. 22, 2006); and Defense Logistics: Lack
of a Synchronized Approach between the Marine Corps and Army Affected the
Timely Production and Installation of Marine Corps Truck Armor, GAO-06-274
(Washington, D.C.: June 22, 2006).
^3The Interceptor body armor is designed to provide protection against
rifle rounds through the combined use of ceramic tiles and polyethylene
fiber.
^4This requirement excludes tanker trucks. The completion of armor kit
installation for tankers was expected by January 2007.
^5GAO-07-71C.
^6GAO-06-160.
^7GAO-06-274.
GAO Contacts
Davi M. D'Agostino, Director, Defense Capabilities and Management,
(202) 512-5431 or [email protected]; and William M. Solis,
Director, Defense Capabilities and Management, (202) 512-8365 or
[email protected].
Enclosure XIV: Deficiencies in Supply Support for U.S. Ground
Forces Have Resulted in Shortages of Critical Items
Issue
To support Operation Iraqi Freedom (OIF), the Department of
Defense (DOD) undertook a massive logistics effort, moving
millions of tons of cargo, including critical equipment, spare
parts, and other supplies several thousand miles to the Persian
Gulf. This effort began in late 2001, accelerated in the fall of
2002 just before major combat operations were launched in March
2003, and continues today as U.S. forces undertake stabilization
efforts in Iraq. However, U.S. forces have still experienced
shortages of critical supply items. This enclosure discusses (1)
systemic deficiencies in DOD's supply support for U.S. ground
forces during OIF and (2) actions DOD has taken to improve supply
support.
Summary
OIF tested the DOD logistics system and the industry's capability
to meet rapidly increasing demands, and in many instances the
supply chain failed to respond quickly enough to meet the needs of
modern warfare. In prior reports, we have reported on shortages of
critical items^1 and the systemic deficiencies in supply support
that led to these shortages. These deficiencies included (1)
inaccurate and inadequately funded Army war reserve requirements,
(2) inaccurate supply forecasts, (3) insufficient and delayed
funding, (4) delayed acquisition, and (5) ineffective
distribution.^2 DOD developed short-term solutions to manage item
shortages during OIF, and DOD and the services have begun to
undertake systemic, long-term changes to fix some of the supply
problems identified.
Inaccurate and Inadequately Funded Requirements
The Army's out-of-date and inadequately funded war reserve
requirements for spare parts negatively affected the availability
of armored vehicle track shoes, lithium batteries, and tires. At
the time of our April 2005 report, the Army had not conducted
annual updates to its war reserve requirements since 1999. In
addition, Army war reserve requirements had not been fully funded
for many years, indicating that the Army had made a risk
management decision not to fund war reserves. This decision forced
war reserve managers to prioritize the use of available funding,
which meant that some items had no war reserve to support initial
operations. In our March 2006 report on Army truck armor, we
similarly found that the Army made a decision not to fund prior
requirements for truck armor identified in 1996; thus, the Army
did not have a significant number of add-on armor kits available
when the need for them arose in Iraq.
Inaccurate Supply Forecasts
DOD was unable to accurately forecast supply requirements for
armored vehicle track shoes, lithium batteries,
Meals-Ready-to-Eat, and tires. The Army's computer models for
forecasting item demand did not have the capability to switch to a
wartime forecasting mode as required. Further, the Defense
Logistics Agency's model was not effective for all supply items.
As a result, item managers had to manually develop forecasts for
OIF, but they did not always have sufficient or timely information
on estimated deployment sizes or the duration of operations. In
some cases, they underestimated the actual demand, which resulted
in supply shortages during operations.
Insufficient and Delayed Funding
In April 2005, we reported that delays in funding impeded the
availability of armored vehicle track shoes, lithium batteries,
and tires. Specifically, during OIF, the Army Materiel Command
asked for additional funding to support forecasted OIF
requirements but did not receive these funds in a timely manner.
In March 2006, we similarly reported that funding was not always
available to award truck armor contracts when requirements were
identified. As a result, production time lengthened because
contracts were awarded for amounts less than total requirements.
In all of the cases we reported, sufficient documentation was
lacking to determine why funding was not available when needed,
thus limiting effective oversight over funding decisions.
Delayed Acquisition
Problems with delayed acquisition led to several shortages of
critical supply and equipment items. For example, in April 2005,
we reported that a lack of key materials and long production
lead-times resulted in shortages of body armor and lithium
batteries. Similarly, in March and June 2006, we reported that
shortages of key materials, such as steel, negatively affected the
availability of Army and Marine Corps truck armor kits. In
addition to these shortages, in April 2005, we reported that DOD's
decision not to maximize available production capacity adversely
affected the availability of up-armored High-Mobility
Multi-Purpose Wheeled Vehicles (HMMWV) and add-on armor kits. The
acquisition challenges we reported impeded DOD's ability to
quickly respond to rapidly increasing demands, resulting in
equipment items not being available to warfighters when needed.
Ineffective Distribution
As a result of an ineffective joint distribution system during
OIF, DOD was unable to distribute sufficient quantities of four
items we reported on in April 2005--assault amphibian vehicle
generators, body armor, Meals-Ready-to-Eat, and tires. Among the
problems we identified with theater distribution were (1)
conflicting doctrine, or military principles, defining the
authority of the geographic combatant commander to synchronize the
distribution of supplies from the United States to the theater;
(2) improper packaging of air shipments from the United States,
which forced personnel in theater to spend extra time opening and
sorting shipments; (3) insufficient transportation equipment and
supply personnel in theater; and (4) the inability of logistics
information systems to support the requisition and shipment of
supplies into and throughout Iraq. To address OIF distribution
problems, DOD established a deployment and distribution operations
center in Kuwait to coordinate the arrival of supplies in theater
and consolidated air cargo pallets for shipment to a single supply
support activity. According to DOD, these two initiatives improved
the flow of supplies into and around the OIF theater.
DOD Actions Taken to Improve Supply Support
DOD, the services, and the defense agencies have taken actions to
improve supply availability. Many short-term solutions to lessen
the impact of supply shortages were instituted during combat
operations. For example, as a result of the lithium battery
shortage, the Joint Staff developed the "critical few list" to
improve the availability of items that the services and combatant
commands report as critical to their worldwide operations. DOD is
also beginning to make systemic, long-term changes to correct some
of its supply problems. One of the more notable is that the
Secretary of Defense designated the U.S. Transportation Command as
responsible for improving distribution. With the encouragement of
the Office of Management and Budget, DOD has also developed a plan
to improve supply chain management. The plan focuses on three
areas--forecasting requirements, materiel distribution, and asset
visibility. We have previously reported on DOD's efforts to
improve supply distribution and supply chain management.^3
Prior Recommendations
We have made a number of prior recommendations aimed at improving
the effectiveness of DOD's supply system in supporting deployed
forces for contingency operations. For example, we have made
recommendations to improve the accuracy of war reserve
requirements, support prewar planning through supply forecasting,
minimize future acquisition delays, and improve supply
distribution. DOD agreed with the intent of the recommendations
and cited actions it had taken or was taking to eliminate supply
chain deficiencies. However, it did not clearly identify timelines
for fully implementing most of these recommendations, and we
subsequently modified our recommendations to require that DOD
specify when actions will be completed.
Oversight Questions
o What actions has DOD taken to improve the accuracy of war
reserve requirements and wartime supply requirements?
o To what extent has DOD funded its war reserve and other
equipment requirements, and what are the operational impacts of
any unfunded requirements?
o What actions has DOD taken to improve the timely availability of
funding for wartime supply needs and emerging equipment
requirements?
o What actions has DOD taken to assess the industrial base's
capacity to meet increasing wartime supply and equipment needs and
to minimize acquisition delays?
o What actions have DOD and the U.S. Transportation Command
implemented to improve theater distribution during wartime?
^1Items we reviewed included lithium batteries, tires, vehicle track
shoes, add-on body armor, Meals-Ready-to-Eat, up-armored High-Mobility
Multi-Purpose Wheeled Vehicles (HMMWV) and kits, and vehicle generators.
We have also reviewed delays in the production and installation of Army
and Marine Corps truck armor.
^2For further information on issues discussed in this enclosure, see GAO,
Defense Logistics: Actions Needed to Improve the Availability of Critical
Items during Current and Future Operations, GAO-05-275 (Washington, D.C.:
Apr. 8, 2005); Defense Logistics: Several Factors Limited the Production
and Installation of Army Truck Armor during Current Wartime Operations,
GAO-06-160 (Washington, D.C.: Mar. 22, 2006); and Defense Logistics: Lack
of a Synchronized Approach between the Marine Corps and Army Affected the
Timely Production and Installation of Marine Corps Truck Armor, GAO-06-274
(Washington, D.C.: June 22, 2006).
^3GAO, Defense Logistics: DOD Has Begun to Improve Supply Distribution
Operations, but Further Actions Are Needed to Sustain These Efforts,
GAO-05-775 (Washington, D.C.: Aug. 11, 2005); DOD's High-Risk Areas:
High-Level Commitment and Oversight Needed for DOD Supply Chain Plan to
Succeed, GAO-06-113T (Washington, D.C.: Oct. 6, 2005); and DOD's High-Risk
Areas: Challenges Remain to Achieving and Demonstrating Progress in Supply
Chain Management, GAO-06-983T (Washington, D.C.: July 25, 2006).
GAO Contact
William M. Solis, Director, Defense Capabilities and Management,
(202) 512-8365 or [email protected].
Improving Acquisition Outcomes
Enclosure XV: DOD Needs to Improve Its Capacity to Manage Contractors
Enclosure XV: DOD Needs to Improve Its Capacity to Manage
Contractors
Issue
The Department of Defense (DOD) has relied extensively on
contractors to undertake major reconstruction projects and provide
logistical support to its troops in Iraq. For example, DOD has
responsibility for a significant portion of the more than $30
billion in appropriated reconstruction funds and has awarded and
managed many of the large reconstruction contracts, such as the
contracts to rebuild Iraq's oil, water, and electrical
infrastructure, and to train and equip Iraqi security forces.
Further, U.S. military forces in Iraq have used contractors to a
far greater extent than in prior operations to provide
interpreters and intelligence analysts, as well as more
traditional services such as weapons systems maintenance and base
operations support. The Army alone estimates that almost 60,000
contractor employees currently support ongoing military operations
in Southwest Asia and has spent about $15.4 billion on its single
largest support contract--the Logistics Civil Augmentation Program
(LOGCAP)--between 2001 and 2004. These contracts are often
cost-plus type contracts, which allow the contractor to be
reimbursed for reasonable, allowable, and allocable costs to the
extent prescribed in the contracts. This enclosure discusses
actions needed to improve (1) DOD's reconstruction outcomes and
(2) its use of logistics support contractors.
Summary
The United States has made significant investments through
reconstruction and logistics support contracts, but this
investment has not always resulted in the desired outcomes. Many
reconstruction projects have fallen short of expectations, and DOD
has yet to resolve long-standing challenges in its management and
oversight of contractors in deployed locations. These challenges
often reflect shortcomings in DOD's capacity to manage contractor
efforts, including having sufficiently focused leadership,
guidance, a match between requirements and resources, sound
acquisition approaches, and an adequate number of trained
contracting and oversight personnel. Further, because information
on the number of contractor employees and the services they
provide is not aggregated within DOD or its components, DOD cannot
develop a complete picture of the extent to which it relies on
contractors to support its operations. With about 29 percent of
DOD's planned construction work remaining and the need for
continued logistical support for deployed forces, it is essential
to improve DOD's capacity to manage its contractors if the
department is to increase its return on its investment.
Better Reconstruction Outcomes Require Improved Contract
Management
Amid some signs of progress, the United States and its coalition
partners face numerous political, security, and economic
challenges in rebuilding Iraq. Within this environment, many
reconstruction projects have fallen short of expectations,
resulting in increased costs, schedule delays, and reduced scopes
of work. These outcomes have contributed to the inability of the
United States to fully meet its goals with respect to oil,
electricity, and water sectors. Poor acquisition outcomes are not
unique to Iraq, and the contracting challenges are emblematic of
systemic issues faced by DOD. In fact, GAO designated DOD's
contract management activities as a high-risk area more than a
decade ago. In our January 2005 report, we noted that DOD needed
to use sound business practices when buying goods and services and
have the right skills and capabilities in its acquisition
workforce to properly manage these acquisitions.^1
A prerequisite to having good outcomes is a match between
well-defined requirements and available resources. Shifts in
priorities and funding invariably have a cascading effect on
individual contracts. To produce desired outcomes within available
funding and required time frames, DOD and its contractors need to
clearly understand reconstruction objectives and how they
translate into the contract's terms and conditions: the goods or
services needed, the level of performance or quality desired, the
schedule, and the cost. When such requirements were not clear, DOD
often entered into contract arrangements that posed additional
risks. In June 2004, we reported that DOD often authorized
contractors to begin work before key terms and conditions,
including the work to be performed and its projected costs, were
fully defined.^2 In September 2006, we reported that, under this
approach, DOD contracting officials were less likely to remove the
costs questioned by auditors if the contractor had incurred these
costs before reaching agreement on the work's scope and price.^3
In one case, the Defense Contract Audit Agency questioned $84
million in an audit of a task order for an oil mission. In this
case, the contractor did not submit a proposal until a year after
the work was authorized, and DOD and the contractor did not
negotiate the final terms of the contract until more than a year
after the contractor had completed the work. The absence of
well-defined requirements and clearly understood objectives
complicates efforts to hold DOD and contractors accountable for
poor acquisition outcomes.
An unstable contracting environment--when wants, needs, and
contract requirements are in flux--also requires greater attention
to oversight, which relies on a capable government workforce.
However, the Special Inspector General for Iraq Reconstruction
found that one of the Coalition Provisional Authority's (CPA)
critical shortcomings in personnel was the inadequate link between
position requirements and necessary skills. Similarly, in January
2004, an interagency assessment team found that the number of
contracting personnel was insufficient to handle the increased
workload expected with the influx of fiscal year 2004 funding. In
part, the CPA's decision to award seven contracts in early 2004 to
help better coordinate and manage the fiscal year 2004
reconstruction efforts recognized this shortfall. As a result,
however, DOD is relying on contractors to help manage and oversee
other contractors.
DOD's lack of capacity contributed to challenges in using
interagency contracting vehicles.^4 In certain instances, rather
than develop and award its own contracts, DOD used contracts
already awarded by other agencies. While this practice may improve
efficiency and timeliness, these contracts need to be effectively
managed and their use requires a higher than usual degree of
business acumen and flexibility on part of the workforce. During
the initial stages of reconstruction, we and the DOD Inspector
General found instances in which DOD improperly used interagency
contracts. For example, we found that the lack of effective
management controls, including insufficient oversight and a lack
of adequate training, led to breakdowns in the issuance and
administration of task orders for interrogation and other services
by the Department of the Interior on behalf of DOD.^5 Similarly,
the Inspector General found that a DOD component circumvented
contracting rules when awarding contracts on behalf of the CPA by
using the General Services Administration's federal supply
schedule, in part due to DOD's failure to plan for the acquisition
support the CPA needed to perform its mission.
The need to award contracts and begin reconstruction efforts
quickly also contributed to DOD using other than full and open
competition during the initial stages of reconstruction. While
full and open competition can be a tool to mitigate acquisition
risks, DOD officials had only a relatively short time--often only
weeks--to award the first major reconstruction contracts. We
recently reported that available data indicate that between
October 1, 2003, through March 31, 2006, the vast majority of
DOD's contract obligations were on competed contracts.^6
To improve its capacity to plan and award contracts and manage
contractor performance, DOD has merged the Project and Contracting
Office with the U.S. Army Corps of Engineers' Gulf Region
Division. Additionally, DOD established the Joint Contracting
Command-Iraq to consolidate and prioritize contracting activities
and resolve contracting issues, among other things. In some
sectors, DOD has attempted to directly contract with Iraqi firms,
rather than rely on the large U.S. design-build contracts that it
had awarded in early 2004. Although DOD expects this approach will
reduce costs, it will likely increase the administrative and
oversight burden on DOD's acquisition workforce. Overall, about 29
percent of DOD's planned construction program was incomplete as of
October 2006.
Action Needed to Address Long-standing Problems with Management
and Oversight of Military Support Contractors
DOD has long used contractors to provide supplies and services to
deployed forces, but the scale of contractor support that DOD
relies on in locations such as Iraq has increased considerably
from prior operations. Since 1997, we have reported on DOD's
management and training shortcomings related to contractors
supporting deployed forces, including the lack of senior DOD
leadership, the lack of visibility and knowledge of the number of
contractors and the services they provide, and an inadequate
number of trained personnel to ensure the efficient and effective
use of contractor resources.
We recently found these long-standing problems continue to hinder
DOD's management and oversight of support contractors.^7 For
example, despite DOD actions to improve its guidance on the use of
contractors to support deployed forces, we found few measures had
been taken by the relevant office within the Office of the
Secretary of Defense to ensure that DOD components complied with
this guidance. Similarly, despite facing many of the same
difficulties in managing and overseeing contractors in Iraq as it
faced in prior operations, no organization within DOD or its
components is responsible for systematically collecting and
sharing institutional knowledge regarding using support
contractors. As a result, new units deploying to Iraq run the risk
of repeating past mistakes. DOD has recently established an office
to address contractor support issues, but the office's specific
roles and responsibilities have not yet been clearly defined.
Further, because information on the number of contractor employees
or the services they provide is not aggregated by any organization
within DOD or its components, senior leaders and military
commanders cannot develop a complete picture of the extent to
which they rely on contractors to support their operations. For
example, when senior military leaders began to develop a base
consolidation plan, officials were unable to determine how many
contractors were deployed and therefore ran the risk of over- or
under-building the capacity of the consolidated bases. Having
limited visibility can also unnecessarily increase contracting
costs to the government. For example, an Army official estimated
that about $43 million is lost every year on free meals provided
to contractor employees at deployed locations who also receive a
per diem food allowance.
Additionally, DOD does not have sufficient numbers of contractor
oversight personnel at deployed locations, precluding its ability
to obtain reasonable assurance that contractors are meeting
contract requirements efficiently and effectively. An Army
official acknowledged that the Army is struggling to find the
capacity and expertise to provide the contracting support needed
in Iraq. A LOGCAP program official noted that, if adequate
staffing had been in place, the Army could have realized
substantial savings on the LOGCAP contract through more effective
reviews of new requirements. DOD is also at risk of being unable
to monitor and assess contractor performance. A Defense Contract
Management Agency official responsible for overseeing the LOGCAP
contractor's performance at 27 locations noted that he was unable
to visit all of those locations during his 6-month tour to
determine the extent to which the contractor was meeting the
contract's requirements.
Military personnel continue to receive limited or no training on
the use of contractor support as part of their predeployment
training. The lack of training hinders commanders' ability to
adequately plan for the use of contractor support and inhibits the
ability of contract oversight personnel to manage and oversee
contractors in deployed locations. Limited or no training also can
lead to confusion regarding roles and responsibilities military
commanders have in overseeing contractors at deployed locations.
For example, in several instances, military commanders attempted
to direct or ran the risk of directing a contractor to perform
work outside the scope of the contract, even though commanders are
not authorized to do so and such cases can result in increased
costs to the government.
Prior Recommendations
We have made several recommendations to improve DOD acquisition
outcomes, including those intended to assure that adequate
acquisition staff and other resources are available to support
future operations, to emphasize the need to define contract
requirements in a timely manner, to improve the management of
interagency contracting, and to resolve long-standing issues with
regard to the management and use of support contractors. DOD has
generally agreed with our recommendations and has actions under
way to address them.
Oversight Questions
o What steps is DOD taking to ensure it has the capacity and
knowledge to successfully execute remaining reconstruction
efforts?
o What actions has DOD taken to ensure that its business
arrangements, including its use of contracts awarded by other
agencies, result in the acquisition of goods and services in an
appropriate, timely, and cost-effective manner?
o To what extent is DOD improving its ability to identify the
number of contractor employees and the types of services they
provide as it considers how to support deployed forces in Iraq?
o What steps is DOD taking to ensure that contractor support
training is consistently provided to deployed forces?
o What actions has DOD taken to ensure that it has a sufficient
number of trained contracting and contract management personnel in
place in Iraq?
o What can be done to establish contracting arrangements in
advance to support future contingency operations?
o What limitations should be placed on the role that contractors
play in conflict zones?
^1GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January
2005).
^2GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and
Management Challenges, GAO-04-605 (Washington, D.C.: June 1, 2004).
^3GAO, Rebuilding Iraq: Continued Progress Requires Overcoming Contract
Management Challenges, GAO-06-1130T (Washington, D.C.: Sept. 28, 2006);
and Iraq Contract Costs: DOD Consideration of Defense Contract Audit
Agency's Findings, GAO-06-1132 (Washington, D.C.: Sept. 25, 2006).
^4GAO identified management of interagency contracting a high-risk area in
January 2005. See GAO-05-207.
^5GAO, Interagency Contracting: Problems with DOD's and Interior's Orders
^6GAO, Rebuilding Iraq: Status of Competition for Iraq Reconstruction
Contracts, GAO-07-40 (Washington, D.C.: Oct. 6, 2006).
^7GAO, Military Operations: High-Level DOD Action Needed to Address
Long-standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces, GAO-07-145 (Washington, D.C.: Dec. 18, 2006).
GAO Contacts
John P. Hutton, Acting Director, Acquisition and Sourcing
Management, (202) 512-4841 or [email protected]; and William M.
Solis, Director, Defense Capabilities and Management, (202)
512-8365 or [email protected].
Objectives, Scope, and Methodology, and Staff Acknowledgments
Enclosure XVI: Objectives, Scope, and Methodology
Enclosure XVII: Staff Acknowledgments
Enclosure XVI: Objectives, Scope, and Methodology
To monitor U.S. efforts in Iraq, we focused on (1) the U.S.
strategy and costs of operations in Iraq, (2) security issues, (3)
governance challenges, (4) reconstruction challenges, (5) U.S.
military readiness, and (6) acquisition outcomes. Our analysis is
based on completed and ongoing work. As part of this work, we made
multiple visits to Iraq during 2006. For the enclosures that
include new information, we provided copies to the relevant
agencies for advanced review and technical comments, which we
incorporated as appropriate. We conducted our review in accordance
with generally accepted government auditing standards. The
information on foreign law in this report does not reflect our
independent legal analysis, but it is based on interviews and
secondary sources.
Strategy and Costs
We examined (1) the U.S. strategy in Iraq, and (2) U.S. resource
commitments in Iraq.
To assess the U.S. strategy in Iraq, we obtained and analyzed
records, reports, and data from U.S. government and military
officials in Washington, D.C., and Baghdad, Iraq. We also examined
the reports of other oversight entities that performed internal
control and management reviews. We assessed the strategy using the
six desirable characteristics of an effective national strategy
developed in previous GAO work. National strategies with these
characteristics offer policymakers and implementing agencies a
management tool that can help ensure accountability and more
effective results. The six characteristics are (1) a clear
purpose, scope, methodology; (2) a detailed discussion of the
problems, risks, and threats the strategy intends to address; (3)
the desired goals and objectives, and outcome-related performance
measures; (4) a description of the U.S. resources needed to
implement the strategy; (5) a clear delineation of the U.S.
government roles, responsibilities, and mechanisms for
coordination; and (6) a description of how the strategy is
integrated internally among U.S. agencies and externally with the
Iraqi government and international organizations. We evaluated the
National Strategy for Victory in Iraq (NSVI) alone and in
conjunction with seven related classified and unclassified
supporting documents that Department of State (State) and
Department of Defense (DOD) officials said encompassed the U.S.
strategy.
To describe U.S. resource commitments in Iraq, we reviewed prior
GAO products examining the reported obligations and funding for
military operations in support of the global war on terrorism
(GWOT). We also reviewed DOD's reported obligations as of
September 2006. In our prior work, we compared supplemental and
annual appropriations identified for GWOT to the military
services' reported obligations and cost projections and examined
the extent to which DOD has taken steps to improve its
cost-reporting procedures and the reliability of its reported GWOT
obligation data. To compare the military services' reported
obligations against available funding appropriated for GWOT, we
analyzed copies of DOD's monthly Supplemental and Cost of War
Execution Report and reviewed applicable supplemental and annual
appropriations and DOD reports on the transfer of funds between
various appropriation accounts. We also interviewed key officials
from the Office of the Under Secretary of Defense (Comptroller)
and the Army, Navy, Marine Corps, and Air Force to determine if
their projected GWOT obligations are within funding levels. As
previously reported, we found the data in DOD's monthly
Supplemental and Cost of War Execution Report to be of
questionable reliability. Consequently, we are unable to ensure
that DOD's reported obligations for GWOT are complete, reliable,
and accurate, and they should therefore be considered
approximations. In addition, DOD has acknowledged that systemic
weaknesses with its financial management systems and business
operations continue to impair its financial information. To
examine the steps DOD has taken to improve the reliability of its
reported GWOT obligations, we interviewed key officials from the
DOD Comptroller and the Army, Navy, Marine Corps, and Air Force to
determine the extent to which our previous recommendations have
been implemented. We also reviewed any new guidance issued by DOD
regarding the analysis and reporting of obligations for
contingencies. In addition, we performed limited testing of the
reported GWOT obligations for military personnel and discussed
with DOD and military service financial managers their specific
processes and procedures used to ensure that reported GWOT
obligation data provided by the subordinate commands are accurate
and reliable.
Security Conditions
To address security issues, we focused on (1) trends in security
conditions in Iraq and in Multinational Force-Iraq's (MNF-I) plans
for transferring security responsibilities to the Iraqi government
and security forces, (2) how MNF-I measures the capabilities of
the Iraqi security forces, and (3) accountability procedures for
U.S.-funded equipment provided to the Iraqi security forces.
Although we reviewed classified documents during our completed and
ongoing Iraq security engagements, the information in this report
is based on unclassified documents only.
To provide information on areas (1) and (2), we relied extensively
on a number of prior GAO reports.^1 Where appropriate, we updated
data on security trends and progress in developing Iraqi security
forces and transferring security responsibilities to them. To
update data on trends in the security situation, we obtained and
assessed MNF-I data on enemy-initiated attacks against the
coalition and its Iraqi partners from the Defense Intelligence
Agency. We determined that the data were sufficiently reliable for
establishing general trends in the number of attacks. To assess
and update data on progress in developing Iraqi security forces,
we reviewed DOD and State reports, transcripts of MNF-I and U.S.
Embassy press conferences, and MNF-I guidance on Iraqi readiness
assessments.
To address accountability for U.S.-funded equipment provided to
the Iraq security forces, we reviewed (1) the laws and regulations
governing property accountability for U.S.-funded equipment that
DOD has applied to the U.S. train-and-equip program for Iraq, and
(2) MNF-I's accountability for U.S.-funded equipment that it has
issued to Iraqi security forces.
To examine the laws and regulations that govern property
accountability, we reviewed relevant legislation appropriating
funds to train and equip the Iraqi security forces, pertinent DOD
regulations, and relevant U.S. military orders. We interviewed
officials from State and DOD, including the DOD Office of the
Secretary of Defense, Deputy Undersecretary of Defense (Logistics
and Material Readiness); Defense Security and Cooperation Agency;
the Defense Logistics Agency; Tank-automotive and Armaments
Command; and Defense Reconstruction and Support Office. We did not
review individual contracts to determine whether they contained
equipment accountability provisions.
To review MNF-I's accountability for U.S.-funded equipment that it
has issued to Iraqi security forces, we reviewed documentation and
interviewed current and former officials of the U.S. Central
Command (CENTCOM), MNF-I, and Multinational Security Transition
Command-Iraq (MNSTC-I) in Baghdad, Iraq; Tampa, Florida;
Washington, D.C.; and Fort Leavenworth, Kansas. To provide our
preliminary observations on the amount of equipment reported by
MNF-I as issued to the Iraqi security forces, we interviewed key
officials to gain an understanding of the MNSTC-I property book
data and information reported by the former MNSTC-I commander. We
determined that the property books, as of October 2006, were
sufficiently reliable for the purposes of our report. We did not
assess the reliability of the commander's data. According to
former MNSTC-I officials, the data represent equipment tracked at
the national warehouses or the regional distribution centers.
Based on interviews with current and former MNSTC-I officials, we
noted the weaknesses in the data and determined that the data were
sufficiently reliable for the purposes of our report.
Governance Challenges
To address governance issues, we examined (1) U.S. and
international assessments of Iraq's ministries, (2) the status of
ministry capacity development efforts, (3) the factors affecting
Iraqi ministry efforts to spend capital budgets, and (4) Iraq's
foreign debt and the challenges it faces in meeting International
Monetary Fund (IMF) conditions.
To describe U.S. and international assessments of Iraq's
ministries, we reviewed official reports, such as Measuring
Stability and Security in Iraq (Department of Defense), Survey of
Anticorruption Programs (Department of State), and Briefing Book
for the Government of Iraq (World Bank). We interviewed officials
from the Departments of State and Defense, the U.S. Agency for
International Development (USAID), and the World Bank about the
status of Iraq's ministries and the challenges they face. We also
discussed the status of Iraq's ministries with U.S. officials at
the U.S. Embassy in Iraq.
To address U.S. efforts to build Iraq ministry capacity, we
reviewed U.S. documents, such as the Iraq Reconstruction
Management Office (IRMO) Weekly Status Reports, contracts and
statements of work for capacity development efforts, reports to
Congress pursuant to Section 1227 (c) of the National Defense
Authorization Act for fiscal year 2006, and multiple U.S.
briefings and status reports about U.S. capacity development
efforts and coordination. We interviewed U.S. officials from the
Departments of State, Defense, Justice, and the Treasury and USAID
who are responsible for implementing capacity development
programs. We discussed with them (1) coordination among their
agencies and (2) their roles. We interviewed officials of the
World Bank and the United Nations about lessons learned from
international capacity building and their current program efforts
in Iraq. We identified and reviewed the various approaches to
assessing ministry capacity used by USAID, State, and Defense.
To address the factors affecting Iraqi ministry efforts to spend
capital budgets, we reviewed budget expenditure reports of Iraqi
Ministries prepared by the Department of the Treasury. We compiled
these data to provide summary data. We also discussed these data
with U.S. Treasury officials in the United States and Iraq. We
also reviewed IMF and World Bank documents on developments in
Iraq. We interviewed officials from the Departments of State,
IRMO, USAID, and the World Bank about issues related to budget
execution.
To identify oversight questions related to Iraq's foreign debt and
the challenges it faces in meeting IMF conditions, we examined
documents from the IMF (including Iraq's stand-by arrangement),
the Paris Club of international creditors, and relevant U.S.
agencies and international organizations. To determine the amount
of outstanding debt in 2004 (prior to debt restructuring) and
2006, we used official IMF estimates of Iraq's external debt.
Since the IMF estimates for 2006 included debt restructuring by
non-Paris Club official creditors that had not been completed, we
used the IMF estimate from 2004 for these countries.
Reconstruction Challenges
To address reconstruction challenges, we examined (1) U.S. efforts
to restore Iraq's oil sector, and (2) U.S. efforts to improve
Iraq's electricity sector.
To determine the progress made in restoring oil and electricity,
we reviewed weekly and daily status reports prepared by U.S.
agencies, including the Army Corps of Engineers, State, and IRMO.
We compiled these data and analyzed the results to provide summary
data. To discuss progress in improving the electricity sector, we
also met with U.S., Iraqi, and United Nations (UN) officials at a
November 2006 electricity conference sponsored by the UN
Development Program at the Dead Sea, Jordan. To determine the
effect of Iraq's security environment on the U.S. rebuilding
program, we interviewed Army Corps of Engineers, Defense, State,
USAID, and Department of Energy officials in the United States and
Iraq. We also obtained documents from State and Defense on
security issues and funding. To help assess U.S. oversight of the
program, we interviewed U.S. agency officials in the United States
and Iraq and reviewed management reports used to help monitor
progress, including the Corps' Sector Consolidated Results Updated
Meeting reports for the oil and electricity sectors.
U.S. Military Readiness
To address the impact of U.S. operations on U.S. force readiness,
we examined (1) the impact of extended operations in Iraq on the
U.S. military, (2) munitions security and protection of U.S.
ground forces, and (3) supply support for U.S. ground forces.
To discuss the impact of extended operations on the U.S. military,
we relied extensively on a number of prior GAO products addressing
personnel, force structure, equipment, training, and other
Iraq-related military issues. These products, which are cited in
Encl. XII, provide detailed information on our scope and
methodology.
To assess the security provided by DOD over conventional munitions
storage sites captured in Iraq, we reviewed DOD, Joint Staff, and
service policies, guidance, procedures, and plans. We obtained
documentation and interviewed officials from the U.S. Joint Forces
Command; the U.S. Central Command, U.S. Army Forces Command; Third
Army, which is also known as the U.S. Army Central and Coalition
Forces Land Component Command; Joint Improvised Explosive Device
(IED) Defeat Task Force; Defense Intelligence Agency; National
Geospatial-Intelligence Agency; National Ground Intelligence
Center; and Central Intelligence Agency. In addition, we
interviewed previous command officers and active duty personnel
who served as operational war planners prior to Operation Iraqi
Freedom (OIF). Finally, we reviewed various iterations of
operational plans and stability plans prepared by U.S. Central
Command and the Coalition Forces Land Component Command. To assess
DOD's actions to mitigate risks associated with an adversary's
conventional munitions storage sites for future operations based
on OIF lessons learned, we examined joint staff and
service-specific lessons learned reports. We also reviewed joint
doctrine and multiservice doctrines, tactics, techniques, and
procedures, and the Joint IED Defeat handbook to determine how
those documents address the security of conventional munitions
storage sites.
To address protection of U.S. ground forces in Iraq, we focused on
the availability of body armor and truck armor to meet
requirements. Our methodology for evaluating the supply of body
armor--one of nine supply items we selected for detailed case
studies--is discussed in the section below on supply support for
U.S. ground forces. To examine the availability of truck armor, we
focused on medium and heavy tactical trucks used by Army and
Marine Corps forces in the U.S. Central Command area of
responsibility, which included those in Iraq and Afghanistan. To
identify the extent to which truck armor was produced and
installed to meet identified requirements, we visited numerous
DOD, Army, and Marine Corps organizations to obtain data on the
requirements, funding, production, and installation of truck armor
kits. We considered the armor requirement as met for each type of
truck when the quantity of armor kits produced and installed onto
vehicles equaled the requirement. Based on the information
gathered, we identified factors that affected the time to provide
truck armor kits to deployed forces. We also identified DOD's, the
Army's, and the Marine Corps' short-term and long-term efforts to
improve the availability of truck armor.
To assess supply support for U.S. ground forces, we developed
detailed case studies of nine supply items that were reported to
be in short supply during OIF between October 2002 and September
2004. To identify the extent and impact of supply shortages, we
visited numerous DOD logistics organizations to obtain data on the
production, availability, and distribution of supply items at the
national level. We interviewed members of units that had returned
from the theater to determine the extent and impact of item
shortages on their operations. We identified deficiencies that
affected the availability of two or more of the case study items.
We worked with DOD logistics agencies, operational units, and
service and geographic commands to evaluate the significance of
these deficiencies. We also identified DOD's and the military
services' short-term and long-term efforts to address these
shortages. Our methodology for assessing supply support of truck
armor is discussed in the section above on protection of U.S.
forces. To assess DOD's progress in resolving supply distribution
deficiencies, we reviewed DOD's organizational structure,
transformation strategy, and major initiatives to improve the
distribution system, including the U.S. Transportation Command's
progress in implementing its responsibilities as DOD's
"distribution process owner" and the extent to which DOD's
logistics transformation strategy provides a framework for guiding
and synchronizing distribution improvement efforts. We obtained
information on five initiatives that DOD highlighted as major
efforts to resolve distribution problems. We also reviewed DOD's
plan to address long-term systemic weaknesses in supply chain
management.
Improving Acquisition Outcomes
To examine efforts to improve acquisition outcomes, we relied
primarily on our completed and ongoing reviews of efforts to
rebuild Iraq that we have undertaken since 2003, as well as our
work related to selected DOD contract management issues. We also
reviewed audit reports and lessons learned reports issued by the
Special Inspector General for Iraq Reconstruction and work
completed by the Inspector General, Department of Defense. To
determine the extent to which DOD has improved its management and
oversight of contractors supporting deployed forces, we met with
DOD and military department officials and reviewed changes to key
policies and guidance. We visited selected DOD components and
military commands in the United States and held discussions with
military commanders, staff officers, and other officials that had
deployed to Iraq or elsewhere in Southwest Asia during the
2003-2006 time frame to discuss their experiences and the
challenges they faced managing and overseeing contractors in a
deployed location. We also traveled to Southwest Asia, including
Iraq, to meet with combat units and to discuss the use of
contractor support with military and installation commanders and
other military personnel. We also met with 26 U.S. and foreign
contractors who provide support to DOD in Southwest Asia to
discuss contracting and contract management issues.
^1GAO, Stabilizing Iraq: An Assessment of the Security Situation,
GAO-06-1094T (Washington, D.C.: Sept. 11, 2006); Rebuilding Iraq:
Preliminary Observations on Challenges in Transferring Security
Responsibilities to Iraqi Military and Police, GAO-05-431T (Washington,
D.C.: Mar. 14, 2005); and Rebuilding Iraq: Resource, Security, Governance,
Essential Services, and Oversight Issues, GAO-04-902R (Washington, D.C.:
June 28, 2004).
Enclosure XVII: Staff Acknowledgments
Key contributors to this report include Nanette Barton, Ann
Borseth, David Bruno, Donna Byers, Dan Cain, Joseph A. Christoff,
Carole Coffey, Lynn Cothern, Tracey Cross, Davi D'Agostino, Tim
DiNapoli, Mike Ferren, Rich Geiger, Tom Gosling, Whitney Havens,
Lisa Helmer, Patrick Hickey, Henry L. Hinton Jr., Rhonda Horried,
John Hutton, Mike Kennedy, Bruce Kutnick, Steve Lord, Judy
McCloskey, Tet Miyabara, Kate Monahan, Dave Moser, Mary Moutsos,
Ken Patton, Sharon Pickup, Jason Pogacnik, Jim Reynolds, Donna
Rogers, Cary Russell, Dave Schmitt, Amy Sheller, William Solis,
Lorelei St. James, Janet St. Laurent, Derek Stewart, John Van
Schaik, and Tim Wedding.
Ben Atwater, Rob Ball, Leslie Bharadwaja, Michael Derr, Susan
Ditto, George Duncan, Etana Finkler, Muriel Forster, Brent Helt,
Wesley Johnson, Hynek Kalkus, Andy Marek, Jim Michels, Don
Morrison, Marc Schwartz, Michael Simon, Jena Sinkfield, Cynthia
Taylor, Gergana Trainor, Kristy Williams, Wilda Wong, and Tony
Wysocki provided technical assistance.
(320472)
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Report to Congressional Leadership and Committees
United States Government Accountability Office
GAO
January 2007
SECURING, STABILIZING, AND REBUILDING IRAQ
Key Issues for Congressional Oversight
GAO-07-308SP
This report was reissued on January 24, 2007, to reflect a change in the
total for capital project expenditures in table 1 on page 55 to read $877
million and not $87 million.
Securing, Stabilizing, and Rebuilding Iraq
*** End of document. ***