Stabilizing and Rebuilding Iraq: Conditions in Iraq Are Conducive
to Fraud, Waste, and Abuse (23-APR-07, GAO-07-525T).		 
                                                                 
This testimony discusses some of the systemic conditions in Iraq 
that contribute to the fraud, waste, or abuse of U.S.-provided	 
funds. Since 2003, DOD has reported total costs of about $257.5  
billion for military operations in Iraq; these have increased	 
from about $38.8 billion in fiscal year 2003 to about $83.4	 
billion in fiscal year 2006. The largest increase has been in	 
operation and maintenance expenses, including items such as	 
support for housing, food, and services; the repair of equipment;
and transportation of people, supplies and equipment. Many of the
operation and maintenance expenses are for services. Other U.S.  
government agencies had reported obligations of $29 billion for  
Iraqi reconstruction and stabilization, as of October 2006. These
funds have been used for, among other things, infrastructure	 
repair of the electricity, oil, water, and health sectors;	 
training and equipping of the Iraqi security forces; and	 
administrative expenses. Specifically, the testimony focuses on  
(1) security, (2) management and reporting of the program to	 
train and equip Iraqi security forces, (3) contracting and	 
contract management activities, and (4) Iraqi capacity and	 
commitment to manage and fund reconstruction and security	 
efforts.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-525T					        
    ACCNO:   A68564						        
  TITLE:     Stabilizing and Rebuilding Iraq: Conditions in Iraq Are  
Conducive to Fraud, Waste, and Abuse				 
     DATE:   04/23/2007 
  SUBJECT:   Accountability					 
	     Contract oversight 				 
	     Defense capabilities				 
	     Department of Defense contractors			 
	     Federal aid to foreign countries			 
	     Federal funds					 
	     Financial management				 
	     Fraud						 
	     Program management 				 
	     Security assessments				 
	     Security policies					 
	     Training utilization				 
	     Iraq War and reconstruction			 
	     Waste, fraud, and abuse				 
	     Iraq						 

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GAO-07-525T

   

     * [1]Summary
     * [2]Transferring Additional Security Responsibilities to the Ira
     * [3]DOD Faces Weaknesses in the Program to Develop Iraqi Securit
     * [4]DOD Faces Challenges in Managing Contracts and Contractors i

          * [5]Military Commanders and Senior DOD Leaders Need to Have Visi
          * [6]DOD Needs Clear and Comprehensive Guidance and Leadership to
          * [7]DOD Needs to Address Key Contracting Issues to Promote Succe
          * [8]DOD Needs Sufficient Contract Oversight Personnel to Ensure
          * [9]Better Training of Military Commanders and Contract Oversigh

     * [10]The Iraqi Government Currently Lacks the Capacity to Sustain

          * [11]Iraq Has Difficulty Sustaining the Billions of Dollars Inves
          * [12]The Iraqi Government Faces Critical Challenges Staffing Effe
          * [13]Inability of Iraq's Ministries to Spend the 2006 Capital Bud

     * [14]Concluding Observations
     * [15]Contact and Acknowledgments
     * [16]GAO's Mission
     * [17]Obtaining Copies of GAO Reports and Testimony

          * [18]Order by Mail or Phone

     * [19]To Report Fraud, Waste, and Abuse in Federal Programs
     * [20]Congressional Relations
     * [21]Public Affairs

Testimony

Before the Subcommittee on Defense, Committee on Appropriations, House of
Representatives

United States Government Accountability Office

GAO

April 23, 2007

STABILIZING AND REBUILDING IRAQ

Conditions in Iraq Are Conducive to Fraud, Waste, and Abuse

Statement of David M. Walker
Comptroller General of the United States

A classified version of this statement was delivered to a closed session
of the Subcommittee on Defense, Committee on Appropriations, House of
Representatives on January 30, 2007.

GAO-07-525T

Mr. Chairman and Members of the Subcommittee: I appreciate the opportunity
to discuss some of the systemic conditions in Iraq that contribute to the
fraud, waste, or abuse of U.S.-provided funds. Since 2003, DOD has
reported total costs of about $257.5 billion for military operations in
Iraq; these have increased from about $38.8 billion in fiscal year 2003 to
about $83.4 billion in fiscal year 2006. The largest increase has been in
operation and maintenance expenses, including items such as support for
housing, food, and services; the repair of equipment; and transportation
of people, supplies and equipment. Many of the operation and maintenance
expenses are for services. Other U.S. government agencies had reported
obligations of $29 billion for Iraqi reconstruction and stabilization, as
of October 2006. These funds have been used for, among other things,
infrastructure repair of the electricity, oil, water, and health sectors;
training and equipping of the Iraqi security forces; and administrative
expenses. My testimony today will focus on (1) security, (2) management
and reporting of the program to train and equip Iraqi security forces, (3)
contracting and contract management activities, and (4) Iraqi capacity and
commitment to manage and fund reconstruction and security efforts. In
preparing this testimony, we relied on previously issued GAO reports and
testimonies on the security situation in Iraq, the training and equipping
of Iraqi security forces, capacity of key Iraqi ministries, the management
of contracts and contractors used to support deployed forces, and issues
related to the reconstruction of Iraq. We performed our work in accordance
with generally accepted government auditing standards.

Summary

Despite U.S. and Iraqi efforts to shift a greater share of the country's
defense on Iraqi forces, the security situation continues to deteriorate.
Poor security conditions have hindered the management of the more than $29
billion that has been obligated for reconstruction and stabilization
efforts since 2003. Although the State Department has reported that the
number of Iraqi army and police forces that has been trained and equipped
has increased from about 174,000 in July 2005 to about 323,000 in December
2006, overall security conditions in Iraq have deteriorated and grown more
complex. For example, the average number of enemy attacks rose from about
70 per day in January 2006 to a record high of about 180 per day in
October 2006, the single worst month on record. In December 2006, the
attacks averaged about 160 per day. Sectarian and militia influences in
Iraqi security forces have added to the violence. Collectively, these
conditions have hindered efforts to engage with Iraqi partners and
demonstrate the difficulty in making political and economic progress in
the absence of adequate security conditions.

Our ongoing work has identified weaknesses in the $15.4 billion program to
support the development and sustainment of Iraqi security forces.
Sectarian divisions have eroded the dependability of many Iraqi units, and
a number of Iraqi units have refused to serve outside the areas where they
were recruited. Corruption and infiltration by militias and others loyal
to parties other than the Iraqi government have resulted in the Iraqi
security forces being part of the problem in many areas instead of the
solution. While unit-level transition readiness assessments (TRA) provide
important information on Iraqi security force capabilities, the aggregate
reports DOD provides to Congress based on these assessments do not provide
adequate information to judge the capabilities of Iraqi forces. The DOD
reports do not detail the adequacy of Iraqi security forces' manpower,
equipment, logistical support, or training and may overstate the number of
forces on duty. Congress will need additional information found in the
TRAs to assess DOD's supplemental request for funds to train and equip
Iraqi security forces. GAO has made repeated attempts to obtain U.S.
assessments of Iraqi forces without success. These data are essential for
Congress to undertake an independent and informed assessment of Iraqi
forces' capabilities, funding needs, and results. Further, DOD and MNF-I
may be unable to ensure that all of the equipment obtained for the Iraqis
reached the intended recipients. It is also unclear what accountability
measures DOD has applied to the train-and-equip program for Iraq.

DOD's heavy reliance on contractors in Iraq, its long-standing contract
and contract management problems, and poor security conditions provide
opportunities for fraud, waste, and abuse. First, military commanders and
senior DOD leaders do not have visibility over the total number of
contractors who are supporting deployed forces in Iraq. As we have noted
in the past, this limited visibility can unnecessarily increase costs to
the government. For example, at a contractor accountability task force
meeting we attended in 2006, an official from the Army Material Command
noted that an Army official estimated that about $43 million is lost every
year on free meals provided to contractor employees who also receive per
diem. Second, DOD lacks clear and comprehensive guidance and leadership
for managing and overseeing contractors. In October 2005, DOD issued, for
the first time, department-wide guidance on the use of contractors that
support deployed forces. Although this guidance is a good first step, it
does not address a number of problems we have repeatedly raised. In
October 2006, DOD established the office of the Assistant Deputy Under
Secretary of Defense for Program Support to serve as the office with
primary responsibility for contractor support issues. However, as we noted
in our December 2006 report, it is not clear to what extent this office
serves as the focal point dedicated to leading DOD's efforts to improve
its contract management and oversight. Third, key contracting issues have
prevented DOD from achieving successful acquisition outcomes. There has
been an absence of well-defined requirements, and DOD has often entered
into contract arrangements on reconstruction efforts and into contracts to
support deployed forces that have posed additional risk to the government.
Moreover, DOD does not have a sufficient number of oversight personnel,
which precludes its ability to obtain reasonable assurance that
contractors are meeting contract requirements efficiently and effectively
at each location where work is being performed. Further, a lack of
training hinders the ability of military commanders to adequately plan for
the use of contractor support and inhibits the ability of contract
oversight personnel to manage and oversee contracts and contractors in
Iraq.

Iraqi capacity and commitment to manage and fund reconstruction and
security efforts remains limited. Since 2003, the United States has
obligated about $29 billion to help Iraq rebuild its infrastructure and
develop Iraqi security forces to stabilize the country. However, key goals
have not been met. The Iraqi government has not sustained reconstruction
and security efforts, in part because Iraqi government institutions are
undeveloped and lack needed management and human resource skills according
to U.S. officials. Key ministries face challenges in staffing a competent
and non-partisan civil service, fighting corruption, and using modern
technology. The inability of the Iraqi government to spend its 2006
capital budget also increases the uncertainty that it can sustain the
rebuilding effort.

Transferring Additional Security Responsibilities to the Iraqi Government Has
Not Improved the Security Situation

Despite U.S. and Iraqi efforts to shift a greater share of the country's
defense to the Iraqi security forces, the security situation continues to
deteriorate, impeding management of the more than $29 billion obligated
for reconstruction and stabilization efforts. The desired end-state for
U.S.-stabilization operations in Iraq is a peaceful, united, stable, and
secure Iraq, well integrated into the international community, and a full
partner in the global war on terrorism. To achieve this end-state, the
United States is, among other things, (1) training and equipping Iraqi
security forces that will be capable of leading counterinsurgency
operations, and (2) transferring security responsibilities to Iraqi forces
and the Iraqi government as capabilities improve. In October 2003, the
multinational force outlined a multistep plan for transferring security
missions to Iraqi security forces. The security transition plan had the
objective of neutralizing Iraq's insurgency while developing Iraqi forces
capable of securing their country, allowing a gradual decrease in the
number of coalition forces.

From the fall of 2003 through April 2006, MNF-I revised its security
transition plan several times because the Iraqi government and security
forces proved incapable of assuming security responsibilities within the
time frames envisioned by the plans. For example, in April 2004, Iraqi
police and military units performed poorly during an escalation of
insurgent attacks against the coalition. Many Iraqi security forces around
the country collapsed, with some units abandoning their posts and
responsibilities and in some cases assisting the insurgency.

State and DOD have reported some progress in implementing the security
transition plan. The State Department has reported that the number of army
and police forces that have been trained and equipped increased from about
174,000 in July 2005 to about 323,000 in December 2006. DOD and State also
have reported progress in transferring security responsibilities to Iraqi
army units and provincial governments. The number of Iraqi army battalions
in the lead for counterinsurgency operations increased from 21 in March
2005 to 89 in October 2006. In addition, 7 Iraqi army division
headquarters and 30 brigade headquarters had assumed the lead by December
2006. Moreover, by mid-December 2006, three provincial
governments--Muthanna, Dhi Qar, and Najaf--had taken over security
responsibilities for their provinces.

However, the reported progress in transferring securing responsibilities
to Iraq has not led to improved security conditions (see fig.1). Since
June 2003, overall security conditions in Iraq have deteriorated and grown
more complex, as evidenced by the increased numbers of attacks and the
Sunni-Shi'a sectarian strife that followed the February 2006 bombing of
the Golden Mosque in Samarra. Enemy-initiated attacks against the
coalition and its Iraqi partners continued to increase through October
2006 and remain high. The average total attacks per day has increased,
rising from about 70 per day in January 2006 to a record high of about 180
per day in October 2006. These attacks have increased around major
religious and political events, including Ramadan and the elections.
Coalition forces are still the primary target of attacks, but the number
of attacks on Iraqi security forces and civilians also has increased since
2003. In October 2006, the State Department reported that the recent
increase in violence has hindered efforts to engage with Iraqi partners
and illustrates the difficulty in making political and economic progress
in the absence of adequate security conditions.

Figure 1: Enemy-initiated Attacks Against the Coalition and Its Iraqi
Partners

Sectarian and militia influences in the Iraqi security forces contribute
to the higher levels of violence. According to portions of the January
2007 National Intelligence Estimate on Iraq that were declassified,
sectarian divisions have eroded the dependability of many Iraqi units, and
a number of Iraqi units have refused to serve outside the areas where they
were recruited. According to an August 2006 DOD report, sectarian lines
among the Iraqi security forces are drawn geographically, with Sunni,
Shi'a, or Kurdish soldiers serving primarily in units located in areas
familiar to their group. Further, according to the report, commanders at
the battalion level tend to command only soldiers of their own sectarian
or regional background. Moreover, in November 2006, the State Department
reported that corruption and infiltration by militias and others loyal to
parties other than the Iraqi government have resulted in the Iraqi
security forces being part of the problem in many areas instead of the
solution.

Because of the poor security conditions, the United States has not been
able to draw down the number of U.S. forces in Iraq as early as planned.
For example, after the increase in violence and collapse of the Iraqi
security forces during the spring of 2004, DOD decided to maintain a force
level of about 138,000 troops until at least the end of 2005, rather than
reducing the number of troops to 105,000 by May 2004, as had been
announced the prior fall. DOD reversed a decision to significantly reduce
the U.S. force level during the spring of 2006 because Iraqi and coalition
forces could not contain the rapidly escalating violence that occurred in
the summer of 2006.

DOD Faces Weaknesses in the Program to Develop Iraqi Security Forces

Our work has identified weaknesses in the $15.4 billion program to develop
Iraqi security forces. Although unit-level transition readiness
assessments provide detailed information on Iraqi security force
capabilities, the aggregate reports that DOD and State provide to Congress
do not provide the information needed to determine the complete
capabilities of the forces. Consequently, Congress will need additional
information to assess the department's supplemental request for $3.8
billion to train and equip Iraqi security forces. GAO has made repeated
attempts, without success, to obtain U.S. assessments of Iraqi forces.
These data are essential for Congress to make an independent assessment of
Iraqi forces' capabilities, needs, and results. Moreover, DOD may be
unable to fully account for weapons received by the Iraqi security forces
and has yet to clarify which accountability requirements it chose to apply
to the program.

MNF-I uses the TRA system to determine when units of the Iraqi security
forces are capable of assuming the lead for counterinsurgency operations
in specific geographic areas. The TRA is a joint assessment, prepared
monthly by the unit's coalition commander and Iraqi commander. According
to MNF-I guidance, the purpose of the TRA system is to provide commanders
with a method to consistently evaluate units; it also helps to identify
factors hindering unit progress, determine resource shortfalls, and make
resource allocation decisions. Iraqi army TRA reports contain capabilities
ratings in the areas of personnel, command and control, equipment,
sustainment/logistics, training, and leadership. Commanders use the TRA
results and their professional judgment to determine a unit's overall
readiness level. Each Iraqi army unit is assigned a readiness level of 1
through 4, with 1 the highest level a unit can achieve.

DOD and State reports provide some information on the development of Iraqi
security forces, but they do not provide detailed information on the
specific capabilities that affect the readiness levels of individual
units. For example, DOD and State provide Congress with weekly and
quarterly reports on the progress made in developing capable Iraqi
security forces and transferring security responsibilities to the Iraqi
army and the Iraqi government. This information is provided in two key
areas: (1) the number of trained and equipped forces, and (2) the number
of Iraqi army units and provincial governments that have assumed
responsibility for security of specific geographic areas.

The State Department reports that the number of trained and equipped Iraqi
security forces has increased from about 174,000 in July 2005 to about
323,000 in December 2006. However, these numbers do not provide a complete
picture of the Iraqi security forces' capabilities in part because they
may overstate the number of forces on duty. For example, Ministry of
Interior data include police who are absent without leave, but Ministry of
Defense data exclude absent personnel. In addition, poor reporting by the
Ministry of Interior makes it difficult to determine how many of the
coalition-trained police the ministry still employs or what percentage of
the 180,000 police believed to be on the payroll are coalition trained and
equipped. Moreover, the numbers do not give detailed information on the
status of equipment, personnel, training, or leadership.

We previously reported that we were working with DOD to obtain the
unit-level TRA reports because they would be useful in more fully
informing Congress about the capabilities and needs of Iraq's security
forces and in indicating how accurately DOD reports reflect the forces'
capabilities.1 According to MNF-I's Deputy Chief of Staff for Strategic
Effects, the best measure of the capabilities of Iraqi units and
improvements in the security situation comes from commanders on the ground
at the lowest level. Although unit-level TRA reports provide more detailed
information on Iraqi security forces' capabilities, DOD had not provided
GAO with these unit-level reports as of February 2007. DOD routinely
provides GAO access to the readiness levels of U.S. forces.

Additionally, DOD and MNF-I may be unable to fully account for weapons
issued to the Iraqi security forces, and DOD has not yet clarified what
accountability requirements apply to the program. According to our
preliminary analysis, as of January 2007, DOD and MNF-I may not be able to
account for Iraqi security forces' receipt of about 90,000 rifles and
80,000 pistols that were reported as issued before early October 2005.
Additionally, it is unclear at this time what accountability measures DOD
has chosen to apply to the train-and-equip program for Iraq. As part of
our ongoing work, we have asked DOD to clarify whether MNF-I and
Multi-National Security Transition Command-Iraq (MNSTC-I) must follow
accountability measures specified in DOD regulations, or whether DOD has
established other accountability measures. For example, DOD officials
expressed differing opinions on whether the DOD regulation on the Small
Arms Serialization Program, which requires the entry of small arms serial
numbers into a DOD-maintained registry, applies to U.S.-funded equipment
procured for Iraqi security forces. While it is unclear which regulations
DOD has chosen to apply, beginning in 2004, MNF-I established requirements
to control and account for equipment issued to the Iraqi security forces
by issuing a series of orders that outline procedures for its subordinate
commands. Although MNF-I took initial steps to establish property
accountability procedures, according to MNF-I officials limitations such
as the initial lack of a fully operational equipment distribution network,
staffing weaknesses, and the operational demands of equipping the Iraqi
forces during war hindered its ability to fully execute critical tasks
outlined in the property accountability orders.

1GAO, Stabilizing Iraq: An Assessment of the Security Situation,
[22]GAO-06-1094T  (Washington, D.C.: Sept. 11, 2006).

DOD Faces Challenges in Managing Contracts and Contractors in Iraq that Could
Lead to Fraud, Waste, and Abuse

While DOD relies heavily on contractors for reconstruction projects and
support to its forces in Iraq, it faces several management and oversight
challenges. First, military commanders and senior DOD officials do not
have visibility over contractors, which prevents DOD from knowing the
extent to which it is relying on contractors for support in Iraq. Second,
DOD lacks clear and comprehensive guidance and leadership for managing and
overseeing contractors. Third, key contracting issues--including unclear
requirements and not reaching agreement on key terms and conditions in a
timely manner--have prevented DOD from achieving successful acquisition
outcomes. Fourth, DOD does not have a sufficient number of oversight
personnel to ensure that the contracts that are in place are carried out
efficiently and according to the contract requirements. Finally, military
commanders and contract oversight personnel do not receive sufficient
training to effectively manage contracts and contractors in Iraq.

Military Commanders and Senior DOD Leaders Need to Have Visibility Over the
Contractors That Support Them

DOD continues to lack the capability to provide senior leaders and
military commanders with information on the totality of contractor support
to deployed forces. Without such visibility, senior leaders and military
commanders cannot develop a complete picture of the extent to which they
rely on contractors to support their operations. We first reported the
need for better visibility in 2002 during a review of the costs associated
with U.S. operations in the Balkans.2 At that time, we reported that DOD
was unaware of (1) the number of contractors operating in the Balkans, (2)
the tasks those contractors were contracted to do, and (3) the
government's obligations to those contractors under the contracts. We
noted a similar situation in 2003 in our report on DOD's use of
contractors to support deployed forces in Southwest Asia and Kosovo.3 At
that time, we reported that, although most contract oversight personnel
had visibility over the individual contracts for which they were directly
responsible, visibility of all contractor support at a specific location
was practically nonexistent at the combatant commands, component commands,
and deployed locations we visited. As a result, commanders at deployed
locations had limited visibility and understanding of all contractor
activity supporting their operations and frequently had no easy way to get
answers to questions about contractor support. This lack of visibility
inhibited the ability of commanders to resolve issues associated with
contractor support such as force protection issues and the provision of
support to the contractor personnel.

2GAO, Defense Budget: Need to Strengthen Guidance and Oversight of
Contingency Operations Costs, [23]GAO-02-450  (Washington, D.C.: May 21,
2002).

3GAO, Military Operations: Contractors Provide Vital Services to Deployed
Forces but Are Not Adequately Addressed in DOD Plans,  [24]GAO-03-695 
(Washington, D.C.: June 24, 2003).

Most recently, in our December 2006 review of DOD's use of contractors in
Iraq, we found that DOD's limited visibility unnecessarily increased
contracting costs to the government and introduced unnecessary risk.4
Without visibility over where contractors are deployed and what government
support they are entitled to, costs to the government may increase. For
example, at a contractor accountability task force meeting we attended in
2006, an Army Material Command official stated that an Army official
estimated that about $43 million is lost each year on free meals provided
to contractor employees at deployed locations who also receive a per diem
food allowance. Also, when senior military leaders began to develop a base
consolidation plan, officials were unable to determine how many
contractors were deployed and therefore ran the risk of over- or
under-building the capacity of the consolidated bases. DOD's October 2005
guidance on contractor support to deployed forces included a requirement
that the department develop or designate a joint database to maintain
by-name accountability of contractors deploying with the force and a
summary of the services or capabilities they provide. The Army has taken
the lead in this effort, and DOD recently designated a database intended
to provide improved visibility over contractors deployed to support the
military in Iraq, Afghanistan, and elsewhere.

DOD provided additional information after we briefed the House
Appropriations Committee's Subcommittee on Defense. According to DOD, in
January 2007, the department designated the Army's Synchronized
Predeployment & Operational Tracker (SPOT) as the department-wide database
to maintain by-name accountability of all contractors deploying with the
force. According to DOD the SPOT database includes approximately 50,000
contractor names. Additionally in December 2006, the Defense Federal
Acquisition Regulation Supplement was amended to require the use of the
SPOT database by contractors supporting deployed forces.

4GAO, Military Operations: High-Level DOD Action Needed to Address
Long-standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces, [25]GAO-07-145  (Washington, D.C.: Dec. 18,
2006).

DOD Needs Clear and Comprehensive Guidance and Leadership to Manage and Oversee
Contractors

Since the mid-1990s, our reports have highlighted the need for clear and
comprehensive guidance for managing and overseeing the use of contractors
who support deployed forces. For example, in assessing the Logistics Civil
Augmentation Program (LOGCAP) implementation during the Bosnian
peacekeeping mission in 1997, we identified weaknesses in the available
doctrine on how to manage contractor resources, including how to integrate
contractors with military units and what type of management and oversight
structure to establish.5 We identified similar weaknesses when we began
reviewing DOD's use of contractors in Iraq. For example, in 2003, we
reported that guidance and other oversight mechanisms varied widely at the
DOD, combatant-command, and service levels, making it difficult to manage
contractors effectively.6

Similarly, in our 2005 report on private security contractors in Iraq, we
noted that DOD had not issued any guidance to units deploying to Iraq on
how to work with or coordinate efforts with private security contractors.7
Our prior work has shown that it is important for organizations to provide
clear and complete guidance to those involved in program implementation.
In our view, establishing baseline policies for managing and overseeing
contractors would help ensure the efficient use of contractors in places
such as Iraq. DOD took a noteworthy step to address some of these issues
when it issued new guidance in 2005 on the use of contractors who support
deployed forces. However, as our December 2006 report made clear, DOD's
guidance does not address a number of problems we have repeatedly
raised--such as the need to provide adequate contract oversight personnel,
to collect and share lessons learned on the use of contractors supporting
deployed forces, or to provide DOD commanders and contract oversight
personnel with training on the use of contractors overseas before
deployment.8 After our January 30, 2007 briefing to the House
Appropriations Committee's Subcommittee on Defense, DOD provided
additional information on a new publication it was developing. The
department noted that it was developing a joint publication entitled
"Contracting and Contractor Management in Joint Operations," which it
expects to be distributed in May 2007.

5GAO, Contingency Operations: Opportunities to Improve the Logistics Civil
Augmentation Program, [26]GAO/NSIAD-97-63 (Washington, D.C.: Feb. 11,
1997).

6 [27]GAO-03-695 .

7GAO, Rebuilding Iraq: Actions Needed to Improve Use of Private Security
Providers, [28]GAO-05-737  (Washington, D.C.: July 28, 2005).

8 [29]GAO-07-145 .

In addition to the lack of clear and comprehensive guidance for managing
contract personnel, we have issued several reports highlighting the need
for DOD components to comply with departmental guidance on the use of
contractors. For example, in our June 2003 report, we noted that DOD
components were not complying with a long-standing requirement to identify
essential services provided by contractors and develop backup plans to
ensure the continuation of those services during contingency operations
should contractors become unavailable to provide those essential services.
We believe that risk is inherent when relying on contractors to support
deployed forces, and without a clear understanding of the potential
consequences of not having the essential service available, the risks
associated with the mission increase.

In other reports, we highlighted our concerns over DOD's planning for the
use of contractor support in Iraq--including the need to comply with
guidance to identify operational requirements early in the planning
process.9 When contractors are involved in planning efforts early and
given adequate time to plan and prepare to accomplish their assigned
missions, the quality of the contractor's services improves and contract
costs may be lowered. DOD's October 2005 guidance on the use of contractor
support to deployed forces went a long way to consolidate existing policy
and provide guidance on a wide range of contractor issues. However, as of
December 2006, we found little evidence that DOD components were
implementing that guidance, in part because no individual within DOD was
responsible for reviewing DOD and service efforts to ensure that the
guidance was being consistently implemented.

We have made a number of recommendations for DOD to take steps to
establish clear leadership and accountability for contractor support
issues. For example, in our 2005 report on LOGCAP, we recommended that DOD
designate a LOGCAP coordinator with the authority to participate in
deliberations and advocate for the most effective and efficient use of the
LOGCAP contract. Similarly, in our second comprehensive review of
contractors on the battlefield in 2006, we recommended that DOD appoint a
focal point within the Office of the Under Secretary of Defense for
Acquisition, Technology, and Logistics--at a sufficiently senior level and
with the appropriate resources--to lead DOD's efforts to improve its
contract management and oversight. DOD generally agreed with these
recommendations. In October 2006, DOD established the office of the
Assistant Deputy Under Secretary of Defense for Program Support to serve
as the office of primary responsibility for contractor support issues.
However, as we noted in our December 2006 report, it is not clear to what
extent this office would serve as the focal point dedicated to leading
DOD's efforts to improve its contract management and oversight.

9GAO, Military Operations: DOD's Extensive Use of Logistics Support
Contracts Requires Strengthened Oversight, [30]GAO-04-854  (Washington,
D.C.: July 19, 2004).

DOD Needs to Address Key Contracting Issues to Promote Successful Acquisition
Outcomes

DOD needs to address long-standing contracting issues related to
acquisition outcomes. Two of the key factors that promote successful
acquisition outcomes are (1) clearly defined requirements and (2) timely
agreement on a contract's key terms and conditions, such as the scope and
cost. The absence of well-defined requirements and clearly understood
objectives complicates efforts to hold DOD and contractors accountable for
poor acquisition outcomes.

Further, in Iraq, DOD's contracts were often cost- reimbursable contracts,
which allow the contractor to be reimbursed for reasonable, allowable, and
allocable costs to the extent prescribed in the contracts. When
cost-reimbursable contracts such as those used in the reconstruction of
Iraq and the support contracts for deployed forces (e.g. LOGCAP) are not
effectively managed and given sufficient oversight, the government's risk
is likely to increase. For example, we have reported that poorly written
statements of work, which included vague or ill-defined requirements, can
lead the contractor to take excessive steps to ensure customer
satisfaction and result in additional costs to the government. Similarly,
we have reported that contract customers need to conduct periodic reviews
of services provided under cost-reimbursable contracts to ensure that
services provided are supplied at an appropriate level. Without such a
review, the government is at risk of paying for services it no longer
needs. For example, the command in Iraq lowered the cost of the LOGCAP
contract by $108 million dollars by reducing services and eliminating
unneeded dining facilities and laundries.

A prerequisite to achieving good acquisition outcomes is a match between
well-defined requirements and available resources. U.S. reconstruction
goals were based on assumptions about the money and time needed, which
have proven unfounded. U.S. funding was not meant to rebuild Iraq's entire
infrastructure but rather to lay the groundwork for a longer-term
reconstruction effort that anticipated significant assistance from
international donors.

To provide that foundation, the Coalition Provisional Authority (CPA)
allocated $18.4 billion in fiscal year 2004 reconstruction funds among
various projects in each reconstruction sector, such as oil, electricity,
and water and sanitation.10 Almost immediately after the CPA dissolved,
the Department of State reprioritized funding for projects that would not
begin until mid to late 2005 and used those funds to target high-impact
projects. By July 2005, the State Department had conducted a series of
funding reallocations to address new priorities, including increasing
support for security and law enforcement efforts and oil infrastructure
enhancements. One of the consequences of these reallocations was to reduce
funding for the water and sanitation sector by about 44 percent, from $4.6
billion to $2.6 billion. One reallocation of $1.9 billion in September
2004 led the Project and Contracting Office to cancel some projects, most
of which were planned to start in mid-2005. Changes, even those made for
good reasons, make it more difficult to manage individual projects to
successful outcomes.

Further, such changes invariably have a cascading effect on individual
contracts. To produce desired outcomes within available funding and
required time frames, DOD and its contractors need to have a clear
understanding of reconstruction objectives and how they translate into the
terms and conditions of a contract: what goods or services are needed,
when they are needed, the level of performance or quality desired, and
what the cost will be. When such requirements were not clear, DOD often
entered into contract arrangements on reconstruction efforts that posed
additional risks, such as authorizing contractors to begin work before key
terms, conditions such as the work to be performed, and projected costs
were fully defined.11 For example, we found that, as of March 2004, about
$1.8 billion had been obligated on reconstruction contract actions without
DOD and the contractors reaching an agreement on the final scope and cost
of the work.

10From April 2003 to June 28, 2004, the CPA served as Iraq's interim
government and was responsible for overseeing, directing, coordinating,
and approving rebuilding efforts. With the establishment of Iraq's interim
government, the CPA ceased to exist and its responsibilities were
transferred to the Iraqi government or to other U.S. agencies. The
Department of State is now responsible for overseeing U.S. efforts to
rebuild Iraq.

11GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and
Management Challenges, [31]GAO-04-605 (Washington, D.C.: Jun. 1, 2004).

In September 2006, we issued a report on how DOD addressed issues raised
by the Defense Contract Audit Agency (DCAA) in its audits of Iraq-related
contract costs.12 We noted that, in cases where DOD authorized contractors
to begin work before reaching agreement on the scope or price, DOD
contracting officials were less likely to remove costs from a contractor's
proposal when DCAA raised questions about them if the contractor had
already incurred those costs. For example, of the 18 audit reports we
reviewed, DCAA issued 11 reports on contract actions where more than 180
days had elapsed between the beginning of the period of performance to
final negotiations. For nine of these audits, the period of performance
DOD initially authorized for each contract action concluded before final
negotiations took place. In one case, DCAA questioned $84 million in its
audit of a task order proposal for an oil mission. In this case, the
contractor did not submit a proposal to DOD until a year after the work
was authorized, and DOD and the contractor did not negotiate the final
terms of the task order until more than a year after the contractor had
completed the work. In the final negotiation documentation, the DOD
contracting official stated that the payment of incurred costs is required
for cost-type contracts, if there are no unusual circumstances. In
contrast, in the few audit reports we reviewed in which the government
negotiated the terms before starting work, we found that the portion of
questioned costs removed from the proposal was substantial.

DOD Needs Sufficient Contract Oversight Personnel to Ensure that Contract
Requirements Are Met Effectively and Efficiently

An unstable contracting environment--when contract requirements are in a
state of flux--requires greater attention to oversight, which in turn
relies on a capable government workforce. Having personnel who are trained
to conduct oversight and held accountable for their oversight
responsibilities is essential for effective oversight of contractors. If
surveillance is not conducted, not sufficient, or not well documented, DOD
is at risk of being unable to identify and correct poor contractor
performance in a timely manner and potentially paying too much for the
services it receives.

On multiple occasions, we and others have reported on deficiencies in
DOD's oversight. For example, our June 2004 report found that early
contract administration challenges were caused, in part, by the lack of
personnel.13 In addition, the Special Inspector General noted that, with
regard to the CPA, gaps existed in the experience levels of those hired
and the quality and depth of their experiences relative to their assigned
jobs. Similarly, in 2004, an interagency assessment team found that the
number of contracting personnel was insufficient to handle the increased
workload. In part, the CPA's decision to award seven contracts in early
2004 to help better coordinate and manage the fiscal year 2004
reconstruction efforts recognized this shortfall. As a result, DOD is in
the position of relying on contractors to help manage and oversee the work
of other contractors.

12GAO, Iraq Contract Costs: DOD Consideration of Defense Contract Audit
Agency's Findings, GAO-06-1132 (Washington, D.C.: Sep. 25, 2006).

13 [32]GAO-04-605 .

More recently, in December 2006, we reported that DOD does not have
sufficient numbers of contractor oversight personnel at deployed
locations, which limits its ability to obtain a reasonable assurance that
contractors are meeting contract requirements efficiently and
effectively.14 Although we could find no DOD guidelines on the appropriate
number of personnel needed to oversee and manage DOD contracts at a
deployed location, several contract oversight personnel stated that DOD
does not have adequate personnel at deployed locations to effectively
oversee and manage contractors. For example, an Army official acknowledged
that the Army is struggling to find the capacity and expertise to provide
the contracting support needed in Iraq. In addition, officials responsible
for contracting with MNF-I stated that they did not have enough contract
oversight personnel and quality assurance representatives to allow MNF-I
to reduce the Army's use of the LOGCAP contract by awarding more
sustainment contracts for base operations support in Iraq. Furthermore, a
LOGCAP program official noted that, if adequate staffing had been in
place, the Army could have realized substantial savings on the LOGCAP
contract through more effective reviews of new requirements. Finally, the
contracting officer's representative for an intelligence support contract
in Iraq stated that he was also unable to visit all of the locations that
he was responsible for overseeing. At the locations he did visit, he was
able to work with the contractor to improve the project's efficiency.
However, because he was not able to visit all of the locations at which
the contractor provided services in Iraq, he was unable to duplicate those
efficiencies at all the locations in Iraq where the contractor provided
support.

The inability of contract oversight personnel to visit all the locations
they are responsible for can also create problems for units that face
difficulties resolving contractor performance issues at those locations.
For example, officials from a brigade support battalion stated that they
had several concerns with the performance of a contractor that provided
maintenance for the brigade's mine-clearing equipment. These concerns
included delays in obtaining spare parts and a disagreement over the
contractor's obligation to provide support in more austere locations in
Iraq. According to the officials, their efforts to resolve these problems
in a timely manner were hindered because the contracting officer's
representative was located in Baghdad while the unit was stationed in
western Iraq. In other instances, some contract oversight personnel may
not even reside within the theater of operations. For example, we found
the Defense Contract Management Agency's (DCMA) legal personnel
responsible for LOGCAP in Iraq were stationed in Germany, while other
LOGCAP contract oversight personnel were stationed in the United States.
According to a senior DCMA official in Iraq, relying on support from
contract oversight personnel outside the theater of operations makes
resolving contractor performance issues more difficult for military
commanders in Iraq, who are operating under the demands and higher
operational tempo of a contingency operation in a deployed location.

14 [33]GAO-07-145 .

Better Training of Military Commanders and Contract Oversight Personnel Is
Essential

Since the mid-1990s, our work has shown the need for better pre-deployment
training for military commanders and contract oversight personnel on the
use of contractor support. Training is essential for military commanders
because of their responsibility for identifying and validating
requirements to be addressed by the contractor. In addition, commanders
are responsible for evaluating the contractor's performance and ensuring
the contract is used economically and efficiently. Similarly, training is
essential for DOD contract oversight personnel who monitor the
contractor's performance for the contracting officer.

As we reported in 2003, military commanders and contract management and
oversight personnel we met in the Balkans and throughout Southwest Asia
frequently cited the need for better preparatory training.15 Additionally,
in our 2004 review of logistics support contracts, we reported that many
individuals using logistics support contracts such as LOGCAP were unaware
that they had any contract management or oversight roles.16 Army customers
stated that they knew nothing about LOGCAP before their deployment and
that they had received no pre-deployment training regarding their roles
and responsibilities in ensuring that the contract was used economically
and efficiently. In our December 2006 report, we noted that many officials
responsible for contract management and oversight in Iraq stated that they
received little or no training on the use of contractors prior to their
deployment, which led to confusion over their roles and
responsibilities.17 For example, in several instances, military commanders
attempted to direct (or ran the risk of directing) a contractor to perform
work outside the contract's scope, even though commanders are not
authorized to do so. Such cases can result in increased costs to the
government.

15 [34]GAO-03-695 .

16 [35]GAO-04-854 .

Over the years, we have made several recommendations to DOD intended to
strengthen this training. Some of our recommendations were aimed at
improving the training of military personnel on the use of contractor
support at deployed locations, while others focused on training regarding
specific contracts, such as LOGCAP. Our recommendations have sought to
ensure that military personnel deploying overseas have a clear
understanding of the role of contractors and the support the military
provides to them. DOD has agreed with most of our recommendations.
However, we continue to find little evidence that DOD has improved
training for military personnel on the use of contractors prior to their
deployment.

DOD provided additional information after we briefed the House
Appropriations Committee's Subcommittee on Defense. DOD advised us that
they had established a contingency contracting training program at the
Defense Acquisition University. While this is a good first step, we would
note that according to the course description, the course is intended for
contracting professionals. As we noted, we believe that there is a need to
provide training for those personnel who are not contracting professionals
such as commanders and others who are likely to work with contractor
employees on a daily bases, but are not contracting professionals.

17GAO-07-145.

The Iraqi Government Currently Lacks the Capacity to Sustain and Continue
Reconstruction and Security Efforts

Since 2003, the United States has obligated about $29 billion to help Iraq
rebuild its infrastructure and develop Iraqi security forces to stabilize
the country. However, key goals have not been met and the Iraqi government
has not sustained these efforts, in part because of the lack of management
and human resource skills in Iraq's key ministries. According to U.S.
officials, the inability of the Iraqi government to spend its 2006 capital
budget also increases the uncertainty that it can sustain the rebuilding
effort.

Iraq Has Difficulty Sustaining the Billions of Dollars Invested in
Infrastructure and Security

The United States has obligated about $14 billion to restore essential
services such as oil, electricity, and water, and more than $15 billion to
train, equip, and sustain Iraqi security forces. Reconstruction has
focused on projects such as repairing oil facilities, increasing
electricity generating capacity, and restoring water treatment plants. For
example, the U.S. Army Corps of Engineers reported that it had completed
293 of 523 planned electrical projects, including the installation of 35
natural gas turbines in Iraqi power generation plants. Stabilization
efforts have focused on MNF-I training and equipping approximately 323,000
Iraqi security forces. To help sustain these forces, MNF-I is assisting
Iraq's Ministries of Defense and Interior in funding and building
logistics systems for the military and police. The military logistics
system includes a national depot, regional logistics centers, and garrison
support units. The draft logistics plan for the police called for a system
of warehouses to perform maintenance on equipment and distribution centers
to dispense supplies.

The United States has spent billions of dollars rebuilding the
infrastructure and developing Iraqi security forces. However, the Iraqi
government has had difficulty operating and sustaining the aging oil
infrastructure, maintaining the new and rehabilitated power generation
facilities, and developing and sustaining the logistics systems for the
Ministries of Defense and Interior. The coalition provides the critical
support necessary for the ministries to carry out their security
responsibilities. As of December 2006, neither ministry was
self-sufficient in logistics, command and control, or intelligence. For
example:

           o Iraq's oil production and exports have consistently fallen below
           their respective program goals. In 2006, oil production averaged
           2.1 million barrels per day, compared with the U.S. goal of 3.0
           million barrels per day. The Ministry of Oil has had difficulty
           operating and maintaining the refineries. According to U.S.
           officials, Iraq lacks qualified staff and expertise at the field,
           plant, and ministry level, as well as an effective inventory
           control system for spare parts. According to State, the Ministry
           of Oil will have difficulty maintaining future production levels
           unless it initiates an ambitious rehabilitation program. In
           addition, oil smuggling and theft of refined oil products have
           cost Iraq substantial resources.
           o In 2006, electrical output reached 4,317 megawatts of peak
           generation per day, falling short of the U.S. goal of 6,000
           megawatts. Prewar electrical output averaged 4,200 megawatts per
           day. Production also was outpaced by increasing demand, which has
           averaged about 8,210 megawatts per day. The Iraqi government has
           had difficulty sustaining the existing facilities. Problems
           include the lack of training, inadequate spare parts, and an
           ineffective asset management and parts inventory system. Moreover,
           plants are sometimes operated beyond their recommended limits,
           resulting in longer downtimes for maintenance. In addition, major
           transmission lines have been repeatedly sabotaged and repair
           workers have been intimidated by anti-Iraqi forces.
           o As of December 2006, the coalition was providing significant
           levels of support to the Iraqi military because the Ministry of
           Defense could not fully supply its forces with adequate life
           support, fuel, uniforms, building supplies, ammunition, vehicle
           maintenance and spare parts, or medical supplies. In addition, the
           ministry was not able to run its communications networks on its
           own or independently acquire communications equipment.
           Furthermore, the Ministry will likely lack a comprehensive plan
           for its intelligence structure until December 2007. Although the
           coalition plans to begin turning over certain support functions to
           ministerial control in the spring of 2007, it is unlikely that the
           Ministry of Defense will achieve complete self-sufficiency in
           logistics, command and control, or intelligence before mid-2008.
           o The Ministry of Interior also receives critical support from the
           coalition and is not self-sufficient in logistics, command and
           control, or intelligence. Because the ministry is unable to
           provide maintenance for vehicles of the national police, the
           coalition has let several contracts to train Iraqi mechanics,
           provide spare parts to contractors, and repair police vehicles. In
           addition, the ministry is not able to self-sufficiently operate or
           maintain its communications networks. Furthermore, the coalition
           estimates that, if the security environment in Baghdad improves,
           the ministry's intelligence organization will be self-sufficient
           by mid-2008. However, if this self-sufficiency depends on improved
           security, there may be cause for concern, given that the average
           total attacks per day have increased, rising from about 70 per day
           in January 2006 to a record high of about 180 per day in October
           2006. Although the coalition plans to begin turning over certain
           support functions to ministerial control in the spring of 2007, it
           is unlikely that the Ministry of Interior will achieve complete
           self-sufficiency in logistics, command and control, or
           intelligence before mid 2008.
		   
		   The Iraqi Government Faces Critical Challenges Staffing Effective
		   Civil Service, Fighting Corruption, and Managing Resources

           Iraqi government institutions are undeveloped and confront
           significant challenges in staffing a competent, non-partisan civil
           service; effectively fighting corruption; using modern technology;
           and managing resources effectively. Figure 2 provides an
           organizational chart of the Iraqi executive branch and ministries.

Figure 2: Iraqi Executive Branch and Ministries

The Iraqi civil service remains hampered by inadequately trained or
unskilled staff whose political and sectarian loyalties jeopardize the
ministries' ability to provide basic services and build credibility among
Iraqi citizens, according to U.S. government reports and international
assessments. A U.S. report states that the government ministries and the
associated budgets are used as sources of power for political parties with
ministry positions staffed with party cronies as a reward for political
loyalty.18 According to U.S. officials, patronage leads to staff
instability as many are replaced when the government changes or a new
minister is named. Some Iraqi ministries, including the Ministries of
Interior, Agriculture, Health, Transportation, and Tourism, are led by
ministers whose allegiance is to political parties hostile to U.S. goals.
These ministers use their positions to pursue partisan agendas that
conflict with the goal of building a government that represents all ethnic
groups. U.S. officials have expressed reservations about working in some
of these ministries, noting that the effectiveness of programs is hampered
by the presence of unresponsive or anti-U.S. officials.

Corruption in Iraq is reportedly widespread and also poses a major
challenge to building an effective Iraqi government. Corruption
jeopardizes future flows of needed international assistance and reportedly
undermines the government's ability to make effective use of current
reconstruction assistance. According to U.S. government and World Bank
reports, there are several reasons for corruption in Iraq. The reasons,
among others, include (1) an ineffective banking system that leaves the
government dependent on cash transactions; (2) nontransparent, obsolete
ministry procurement systems; and (3) ineffective, inadequately resourced
accountability institutions, such as the ministries' inspectors general.

GAO and the inspectors general are working with Iraq's accountability
organizations--the Board of Supreme Audit, Commission on Public Integrity,
and inspectors general of the ministries--to strengthen their
capabilities.

The Iraqi ministries lack adequate information technology and have
difficulty managing their resources, according to U.S. officials and an
international assessment, further contributing to the corruption problem.
For example, U.S. officials said that the Ministry of Interior relies on
manual processes such as hand-written ledgers and a cash-based payroll
system that has resulted in Iraqi police leaving their posts to deliver
cash to their families. U.S. officials also estimated that 20 to 30
percent of the Ministry of Interior personnel are "ghost employees"--
nonexistent staff paid salaries that are collected by other officials.

18See Department of Defense, Measuring Stability and Security in Iraq
(Washington, D.C.: August 2006).

Inability of Iraq's Ministries to Spend the 2006 Capital Budget Creates Further
Uncertainty about Sustaining Efforts

Sound government budgeting practices can help determine the priorities of
the new government, provide transparency on government operations, and
help decision makers weigh competing demands for limited resources.
However, unclear budgeting and procurement rules have affected Iraq's
efforts to spend capital budgets effectively and efficiently according, to
U.S. officials. The inability to spend the money raises serious questions
for the government, which has to demonstrate to skeptical citizens that it
can improve basic services and make a difference in their daily lives. The
U.S. government has launched a series of initiatives in conjunction with
other donors to address this issue and improve the Iraqi government's
budget execution.

As of August 2006, the government of Iraq had spent, on average, 8 percent
of its annual capital goods budget and 14 percent of its annual capital
projects budget.19 Some of the weakest spending occurs at the Ministry of
Oil, which relies on damaged and outdated infrastructure to produce the
oil that provides nearly all of the country's revenues. The Ministry of
Oil's $3.5 billion 2006 capital project's budget targeted key enhancements
to the country's oil production, distribution, and export facilities.
However, as of August 2006, the ministry had spent less than 1 percent of
these budgeted funds. Moreover, Interior and Defense had only spent about
11 and 1 percent, respectively, of their capital goods budget, which
include funds for the purchase of weapons, ammunition, and vehicles, among
other items. According to U.S. officials, Iraq lacks clearly defined and
consistently applied budget and procurement rules needed for effective
budget planning and implementation. The ministries have multiple rules and
regulations promulgated under the former regime, the CPA, and the current
government. The lack of procurement and budgeting rules creates
opportunities for corruption and mismanagement. Table 1 provides further
information on the Iraqi ministries efforts to spend their capital
budgets.

19Iraq's fiscal year begins on January 1 of each year.

Table 1: 2006 Annual Iraq Budget and Actual Expenditures through August
2006

Millions of dollars                                                        
                                                  Expenditures through August
                       2006 Annual Budget                    2006
                Capital                    Total   Capital   Capital    Total 
Ministry       goods Capital projects  budget     goods  projects   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  $14,623 
                                                    (8.4%)                    
                                                             (14.2%)  (43.0%) 

Source: GAO analysis of Iraqi budget data.

Concluding Observations

As I have discussed in my statement today, a number of conditions exist in
Iraq that have led or will lead to fraud, waste, and abuse of U.S funds
and will affect the U.S. effort to achieve our security, economic, and
diplomatic goals in Iraq. Addressing these problems will require complete
and transparent information on the progress made to reasonably judge our
past efforts and determine future directions. This includes more accurate,
reliable, and comprehensive information on the cost of the war, the
capabilities of Iraqi security forces, and the results of U.S. efforts to
build the managerial capacity of the Iraqi ministries.

Furthermore, given DOD's heavy and increasing reliance on contractors in
Iraq and elsewhere, and the risks this reliance entails, it may be
appropriate to ask if DOD has become too reliant on contractors to provide
essential services. Moreover, given the pace of activities during
contingency operations, it is essential that DOD and other government
agencies engage, as early as possible, in (1) identifying potential
support requirements, (2) locating contractors capable of providing
support and negotiating with contractors to provide this support in a
timely and cost-effective manner, and (3) planning for additional military
and civilian personnel to oversee and manage this increase in contractor
activities.

Mr. Chairman and members of the committee, this concludes my statement. I
will be happy to answer any questions you may have.

Contact and Acknowledgments

For questions regarding this testimony, please call Joseph A. Christoff,
Director, International Affairs and Trade, at (202) 512-8979; John Hutton,
Acting Director, Acquisition and Sourcing Management, at (202) 512-4841;
or William Solis, Director, Defense Capabilities and Management, at (202)
512-8365.

Other key contributors to this statement Nanette Barton, Dan Cain, Carole
Coffey, Allisa Czyz, Tim DiNapoli, Mattias Fenton, Whitney Havens, Patrick
Hickey, Wesley Johnson, Hynek Kalkus, Judy McCloskey, Tet Miyabara, James
A. Reynolds, Chris Turner, and Marilyn Wasleski.

(320481)

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References

Visible links
  22. http://www.gao.gov/cgi-bin/getrpt?GAO-06-1094T
  23. http://www.gao.gov/cgi-bin/getrpt?GAO-02-450
  24. http://www.gao.gov/cgi-bin/getrpt?GAO-03-695
  25. http://www.gao.gov/cgi-bin/getrpt?GAO-07-145
  26. http://www.gao.gov/cgi-bin/getrpt?GAO/NSIAD-97-63
  27. http://www.gao.gov/cgi-bin/getrpt?GAO-03-695
  28. http://www.gao.gov/cgi-bin/getrpt?GAO-05-737
  29. http://www.gao.gov/cgi-bin/getrpt?GAO-07-145
  30. http://www.gao.gov/cgi-bin/getrpt?GAO-04-854
  31. http://www.gao.gov/cgi-bin/getrpt?GAO-04-605
  32. http://www.gao.gov/cgi-bin/getrpt?GAO-04-605
  33. http://www.gao.gov/cgi-bin/getrpt?GAO-07-145
  34. http://www.gao.gov/cgi-bin/getrpt?GAO-03-695
  35. http://www.gao.gov/cgi-bin/getrpt?GAO-04-854
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