Stabilizing and Rebuilding Iraq: Actions Needed to Address	 
Inadequate Accountability over U.S. Efforts and Investments	 
(11-MAR-08, GAO-08-568T).					 
                                                                 
Since 2001, Congress has appropriated nearly $700 billion for the
global war on terrorism. The majority of these funds have	 
supported U.S. efforts in Iraq. Congressional oversight is	 
crucial to improve performance, ensure accountability, and	 
protect U.S. programs from fraud, waste, and abuse. Since 2003,  
GAO has issued nearly 130 Iraq-related reports and testimonies.  
This testimony addresses (1) factors contributing to poor	 
contracting outcomes and accountability, (2) long-standing issues
in the Department of Defense's (DOD) management and oversight of 
contractors supporting deployed forces, and (3) efforts to	 
improve the capacity of the Iraqi government. GAO reviewed U.S.  
agency documents and interviewed officials from State, DOD, and  
other agencies; the United Nations (UN); and the Iraqi		 
government. We also made multiple trips to Iraq.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-568T					        
    ACCNO:   A81270						        
  TITLE:     Stabilizing and Rebuilding Iraq: Actions Needed to       
Address Inadequate Accountability over U.S. Efforts and 	 
Investments							 
     DATE:   03/11/2008 
  SUBJECT:   Accountability					 
	     Contract administration				 
	     Contract oversight 				 
	     Contract performance				 
	     Defense capabilities				 
	     Department of Defense contractors			 
	     Employee training					 
	     Federal aid to foreign countries			 
	     Foreign economic assistance			 
	     Foreign governments				 
	     International relations				 
	     Iraq War and reconstruction			 
	     Military forces					 
	     Military intervention				 
	     Performance measures				 
	     Requirements definition				 
	     Strategic planning 				 
	     Training utilization				 
	     Waste, fraud, and abuse				 
	     DOD Operation Iraqi Freedom			 
	     Global War on Terrorism				 
	     Iraq						 

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GAO-08-568T

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Inadequate Accountability over U.S. Efforts and Investments' which was 
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Testimony: 

Before the Committee on Appropriations U.S. Senate: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:30 a.m. EDT: 

Tuesday, March 11, 2008: 

Stabilizing And Rebuilding Iraq: 

Actions Needed to Address Inadequate Accountability over U.S. Efforts 
and Investments: 

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

Stabilizing and Rebuilding Iraq: 

GAO-08-568T: 

GAO Highlights: 

Highlights of GAO-08-568T, a testimony before the Committee on 
Appropriations, U.S. Senate. 

Why GAO Did This Study: 

Since 2001, Congress has appropriated nearly $700 billion for the 
global war on terrorism. The majority of these funds have supported 
U.S. efforts in Iraq. Congressional oversight is crucial to improve 
performance, ensure accountability, and protect U.S. programs from 
fraud, waste, and abuse. Since 2003, GAO has issued nearly 130 Iraq-
related reports and testimonies. 

This testimony addresses (1) factors contributing to poor contracting 
outcomes and accountability, (2) long-standing issues in the Department 
of Defenseï¿½s (DOD) management and oversight of contractors supporting 
deployed forces, and (3) efforts to improve the capacity of the Iraqi 
government. GAO reviewed U.S. agency documents and interviewed 
officials from State, DOD, and other agencies; the United Nations (UN); 
and the Iraqi government. We also made multiple trips to Iraq. 

What GAO Found: 

U.S. efforts in Iraq have relied extensively on contractors to 
undertake reconstruction projects and provide support to U.S. forces. 
However, a lack of well-defined requirements, poor business 
arrangements, and inadequate oversight and accountability have 
negatively affected reconstruction and support efforts. For example, in 
a July 2007 report, GAO found that DOD completed negotiation for task 
orders on an oil contract more than 6 months after the work commenced 
and most costs were incurred. DOD paid nearly all of the $221 million 
in costs questioned by auditors. Also in July 2007, GAO found that 
unclear DOD guidance, inadequate staff, and insufficient technology 
resulted in poor accountability over more than 190,000 weapons provided 
to Iraqi forces. DOD concurred with GAOï¿½s recommendation to determine 
what DOD accountability procedures apply or should apply to the 
program. However, as of March 2008, DOD had not made a determination. 

The need to effectively manage and oversee contractors supporting 
deployed forces is equally important. DOD pays billions of dollars each 
year for contracted goods and services in locations such as Iraq and 
elsewhere. However, several long-standing and systemic problems 
continue to hinder DODï¿½s management and oversight of contractors at 
deployed locations, including the failure to follow planning guidance, 
provide an adequate number of contract oversight personnel, 
systematically collect and distribute lessons learned, and provide 
predeployment training for military commanders and contract oversight 
personnel on the use and role of contractors. GAOï¿½s work has identified 
instances where poor oversight and management of contractors led to 
negative financial and operational impacts. GAO has made a number of 
recommendations aimed at strengthening DODï¿½s management and oversight 
of contractor support at deployed locations, and the department has 
agreed to implement many of those recommendations. However, GAO has 
found that DOD has made limited progress in implementing some key 
recommendations. 

The United States has made available nearly $6 billion to rebuild 
Iraqï¿½s energy sector and $300 million to develop its government 
ministries but lacks integrated strategic plans for both efforts. 
Building the capacity of the ministries is critical to ensure that Iraq 
can effectively govern, rebuild, and stabilize the country. Rebuilding 
Iraqï¿½s energy sector is necessary to ensure that Iraq can pay for these 
tasks and provide essential services to the Iraqi people. However, in 
the absence of a comprehensive and integrated strategic plan, U.S. 
efforts to build the capacity of the Iraqi government have been 
hindered by multiple U.S. agencies pursuing individual efforts without 
overarching direction. The creation of a plan for the energy sector is 
also essential for Iraq to meet energy production and export goals. GAO 
recommended that State work with Iraqi ministries to develop an 
integrated energy plan. State commented that the Iraqi government, not 
the U.S. government, should act on GAOï¿½s recommendations. Given the 
billions of dollars provided to rebuild Iraqï¿½s energy sector and the 
limited capacity of Iraqi ministries, GAO believes that its 
recommendations are still valid. 

What GAO Recommends: 

To improve accountability and minimize opportunities for fraud, waste, 
and abuse, GAO has previously recommended that DOD adopt sound business 
processes and improve management and oversight of contractors. GAO has 
recommended that U.S. agencies work with the Iraqi government to 
develop strategic plans for key sectors. DOD and State have taken 
actions to address some, but not all, of GAOï¿½s recommendations. 

To view the full product, click on [hyperlink, http://www.gao.gov/cgi-bin/getrpt?gao-08-568T]. 
For more information, contact Joseph A. Christoff at (202) 512-8979 or 
[email protected]. 

[End of section] 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss the challenges the United 
States must address to successfully improve performance and ensure 
accountability over U.S. efforts to stabilize and reconstruct Iraq. In 
my statement today, I will discuss (1) factors contributing to poor 
contracting outcomes and accountability, (2) long-standing issues in 
the Department of Defense's (DOD) management and oversight of 
contractors supporting deployed forces, and (3) efforts to improve the 
capacity of the Iraqi government. 

Between fiscal years 2001 to 2008, Congress appropriated nearly $700 
billion for the global war on terrorism.[Footnote 1] The majority of 
this amount has been provided to DOD for military operations in support 
of Operation Iraqi Freedom, including the cost of equipping, 
maintaining, and supporting our deployed forces. About $45 billion was 
provided for reconstruction efforts, including rebuilding Iraq's oil 
and electricity sectors, improving its security forces, and enhancing 
Iraq's capacity to govern. Prudence with taxpayer funds and growing 
long-range fiscal challenges demand that the United States maximize its 
return on the billions of dollars invested in Iraq. Further, 
strengthening Iraq's fragile government institutions, which have thus 
far failed to adequately deter corruption, stimulate employment, or 
deliver essential services, is critical to establishing a peaceful, 
stable, and secure Iraq. 

My statement today is based upon GAO's extensive work spanning several 
years. Since 2003, we have issued nearly 130 Iraq-related reports and 
testimonies.[Footnote 2] Our work in Iraq largely has been performed 
under my authority as Comptroller General to conduct evaluations on my 
own initiative since it is a matter of broad interest to the entire 
Congress. We performed this work in accordance with generally accepted 
government auditing standards. 

I am pleased to appear with the DOD Inspector General and the Special 
Inspector General for Iraq Reconstruction. As you know, GAO and the 
inspectors general have different, but complementary, roles and 
responsibilities. GAO's broad audit authority allows it to support 
Congress through strategic analyses of issues that cut across multiple 
federal agencies and sources of funding, while the inspectors general 
focus primarily on preventing and exposing fraud, waste, and abuse in 
individual federal agency programs. The abilities of the inspectors 
general to provide in-country oversight of specific projects and 
reconstruction challenges have enabled GAO to focus on national, 
sector, and interagency issues. We and the other accountability 
organizations coordinate our oversight efforts to avoid duplication and 
leverage our resources. 

I would like to note that several of my colleagues in the 
accountability community and I have developed a definition of waste. As 
we see it, waste occurs when taxpayers do not receive reasonable value 
for their money in connection with any government-funded activity due 
to inappropriate acts or omissions by officials with control over or 
access to government resources. Most waste does not involve a violation 
of law, but it does involve mismanagement resulting from poor 
leadership or guidance; inappropriate actions or omissions, including 
the use of poor business arrangements; or inadequate oversight, often 
caused by having too-few skilled people. Our reports and testimonies 
have provided specific examples where such issues resulted in higher 
costs, schedule delays, and unmet goals. I highlight some of these in 
my testimony. Nevertheless, estimating or quantifying the financial 
impact of fraudulent, wasteful, or abusive practices is not always 
feasible or practicable. However, the inability to do so should not 
detract from the need to improve management and accountability over our 
efforts in Iraq. 

Summary: 

The United States is entering its fifth year of efforts to rebuild and 
stabilize Iraq, but these efforts have neither consistently achieved 
their desired outcomes nor done so in an economic and efficient manner. 
While the specific facts and circumstances differed, a lack of well- 
defined requirements, poor business arrangements, and inadequate 
oversight and accountability have affected reconstruction, 
stabilization, and support efforts alike. Two GAO reports issued in 
July 2007 illustrate some of these problems. In one report, we found 
that DOD completed negotiations for task orders on an oil contract more 
than 6 months after the work commenced. As a result, the contractor 
incurred almost all of its costs at the time of negotiations, which 
influenced DOD's decision to pay nearly all of the $221 million in 
costs questioned by the Defense Contract Audit Agency (DCAA). In a 
second report, we found that unclear DOD guidance, inadequate staff, 
and insufficient technology resulted in poor accountability over 
190,000 weapons provided to the Iraqi security forces. DOD concurred 
with our recommendation to identify accountability procedures for the 
program to train and equip the Iraqi security forces. However, as of 
March 2008, DOD had not developed the necessary procedures. 

Several long-standing and systemic problems continue to hinder DOD's 
management and oversight of contractors at deployed locations, 
including the failure to follow planning guidance, provide adequate 
numbers of contract oversight personnel, systematically collect and 
distribute lessons learned, and ensure predeployment training for 
military commanders and contract oversight personnel on the use and 
role of contractors. The scale of contractor support DOD relies on 
today in locations such as Iraq and elsewhere amounts to billions of 
dollars worth of goods and services each year, underscoring the need to 
effectively manage and oversee contractor efforts. The magnitude of 
this support demands that DOD ensure that military personnel have the 
guidance, resources, and training to effectively monitor contractor 
performance at deployed locations. However, our work has identified 
instances where poor oversight and management of contractors led to 
negative financial and operational impacts. We have made a number of 
recommendations aimed at strengthening DOD's management and oversight 
of contractor support at deployed locations, and the department has 
agreed to implement many of those recommendations. However, we have 
found that DOD has made limited progress implementing some key 
recommendations. 

The United States has made available nearly $6 billion to rebuild 
Iraq's energy sector and $300 million to develop its government 
ministries but lacks integrated strategic plans for both efforts. 
Building the capacity of the ministries is critical to ensure that Iraq 
can effectively assume responsibility for delivering government 
services and sustain the effort to rebuild and stabilize the country. 
Rebuilding Iraq's energy sector is necessary to ensure that Iraq can 
pay for these tasks and provide essential services to the Iraqi people. 
However, in the absence of a comprehensive and integrated strategic 
plan, U.S. efforts to build the capacity of the Iraqi government have 
been hindered by multiple U.S. agencies pursuing individual efforts 
without overarching direction. The creation of a comprehensive and 
integrated strategic plan for the energy sector is also essential for 
Iraq to identify the most pressing needs and address challenges 
affecting future development prospects. We recommended that the State 
Department work with Iraqi ministries to develop an integrated energy 
plan. State commented that the Iraqi government, not the U.S. 
government, should act on our recommendations. Given the billions of 
dollars provided to rebuild Iraq's energy sector and the limited 
capacity of Iraqi ministries, I believe that our recommendations to 
State are still valid. 

DOD and State have taken action to implement some, but not all, of our 
recommendations, increasing the risk that past mistakes or lapses in 
accountability will be repeated and undermining efforts to enable Iraq 
to assume greater responsibility for rebuilding its nation. In doing 
so, DOD and State miss opportunities to improve outcomes and enhance 
accountability. 

Background: 

Several entities and U.S. agencies have played important roles in U.S. 
efforts to rebuild and stabilize Iraq. From May 2003 through June 2004, 
the Coalition Provisional Authority (CPA)[Footnote 3] was responsible 
for overseeing, directing, and coordinating rebuilding efforts. After 
its dissolution, the Secretary of State assumed responsibilities for 
the supervision and general direction of reconstruction efforts in 
Iraq. DOD, including the U.S. Army Corps of Engineers, and United 
States Agency for International Development (USAID) have had 
responsibility for managing and overseeing specific reconstruction 
projects. 

Contractors have largely carried out reconstruction efforts in Iraq. 
For example, in early 2004, the CPA, through various military 
organizations, awarded seven contracts to help provide overall 
direction, coordination, and oversight of 12 large design-build 
contractors. In turn, these 12 design-build contractors were 
responsible for the design and execution of construction activities in 
various sectors such as electricity, oil, and public works and water. 

In addition, DOD has made extensive use of contractors to support its 
deployed forces. The scale of contractor support DOD relies on today in 
locations such Iraq and elsewhere amounts to billions of dollars worth 
of goods and services each year, underscoring the need to effectively 
manage and oversee contractor efforts. Contractors provide 
interpretation, intelligence analysis, and security services, as well 
as weapon systems maintenance and base operations support. The 
significance of such contracts is illustrated by the fact that the Army 
reported obligations of over $4.5 billion in fiscal year 2007 on its 
single-largest support contract, the Logistics Civil Augmentation 
Program (LOGCAP). 

The collective effort of military, civilian, and contractor personnel 
in Iraq has been complicated by the country's security environment. The 
CPA's original reconstruction plan was premised on the assumption that 
a permissive security environment would enable the United States to 
restore Iraq's essential services to prewar levels. The CPA also 
assumed that the Iraqi government and the international community would 
help finance Iraq's development and that Iraqi oil revenues could help 
pay for reconstruction costs. None of these assumptions has 
materialized. 

In February 2007, we reported that the security situation was 
continuing to deteriorate, impeding the management and execution of 
reconstruction efforts. As shown in figure 1, the security situation 
generally deteriorated through the summer of 2007, with the number of 
attacks increasing to about 180 per day in June 2007. 

Figure 1: Enemy-Initiated Attacks against the Coalition and Its Iraqi 
Partners: 

This figure is a bar graph showing enemy-initiated attacks against the 
coalition and its Iraqi partners. The X axis represents the year, and 
the Y axis represents the number of attacks. The graph is representing 
attack(s) on Iraqi security forces, attack(s) on civilians, and 
attack(s) on coalition. 

[See PDF for image] 

Source: GAO analysis of DIA-supported Multi-National Force-Iraq data, 
January 2008. 

[End of figure] 

However, since then, the number of enemy-initiated attacks has 
decreased by about two-thirds, to the levels of early 2005. 
Specifically, the average number of daily attacks decreased from about 
180 in June 2007 to about 60 in January 2008--a nearly 70 percent 
decrease--as the number of attacks against coalition forces in 
particular fell considerably. The number of attacks on Iraqi security 
forces and civilians also declined from June 2007 levels. While 
security has improved in Iraq, a permissive security environment has 
yet to be achieved. 

Poor Contracting Outcomes and Accountability Hinder U.S. Efforts in 
Iraq: 

Our work over the past 5 years has shown that one or more of the 
elements essential for achieving good acquisition outcomes--well- 
defined requirements matched with adequate resources, sound business 
arrangements, and the capacity to properly manage and oversee 
contractor performance--were often missing during specific 
reconstruction efforts, in contracts to support deployed forces, and in 
our efforts to equip Iraqi security forces. The absence of these 
elements often contributed to unmet expectations, schedule delays, or 
higher-than-necessary costs, underscoring both the need to hold 
agencies and contractors accountable for outcomes, and the challenges 
of doing so. Such issues are not unique to Iraq but reflect some of the 
long-standing and systemic issues confronting DOD. They are, however, 
magnified in a contingency situation such as Iraq or Katrina. Further, 
we found that unclear DOD guidance resulted in poor accountability over 
190,000 weapons provided to the Iraqi security forces. 

Mismatch between Requirements and Resources: 

A prerequisite to good outcomes is a match between well-defined 
requirements and available resources. Shifts in overall priorities and 
funding, even those made for good reasons, invariably have a cascading 
effect on individual contracts, making it more difficult to manage 
individual projects to successful outcomes and complicating efforts to 
hold agencies and contractors accountable. After the State Department 
assumed responsibility for U.S. reconstruction efforts in 2004, it re- 
examined the priorities and programs initiated by the CPA, with the 
objective of reprioritizing funding to key, high-impact projects. State 
increased support for security, law enforcement efforts, and oil 
infrastructure enhancements. These reallocations, affecting billions of 
dollars of planned work, led to the cancellation of some projects in 
the electricity and water sector. 

At the contract level, the lack of well-defined requirements resulted 
in schedule delays and the United States potentially paying more than 
necessary. For example, in September 2005, we reported that 
difficulties in defining the cost, schedule, and work to be performed 
on projects in Iraq's water and sanitation sector contributed to 
project delays and reduced scopes of work.[Footnote 4] We found that 
agreement between the U.S. government and contractors on the final 
cost, schedule, and scope of 18 of the 24 task orders valued at $873 
million had been delayed. These delays occurred, in part, because Iraqi 
authorities, U.S. agencies, and contractors could not agree on scopes 
of work and construction details. 

Previously, in July 2004, we reported that a disagreement between the 
LOGCAP contractor and the DCAA on how to bill for services to feed 
soldiers in Iraq involved at least $88 million in questioned 
costs.[Footnote 5] The disagreement regarded whether the government 
should be billed on the camp populations specified in the statement of 
work or on the actual head count. A clearer statement of work, coupled 
with better DOD oversight of the contract, could have prevented the 
disagreement and mitigated the government's risk of paying for more 
services than needed. 

Business Arrangements that Increased Risk: 

To award contracts and begin reconstruction efforts quickly, DOD used 
business arrangements that often increased DOD's risk of paying higher 
costs than it might have otherwise. Such arrangements often allowed 
contractors to begin work before key contract terms and conditions, 
such as the scope of the work and its price, were fully defined. For 
example, in a September 2006 report, we found that DOD contracting 
officials were less likely to remove the costs questioned by auditors 
if the contractor had already incurred these costs before the contract 
action was definitized.[Footnote 6] In contrast, in the few instances 
in which the government negotiated the terms before starting work, the 
portion of questioned costs removed from the proposal was substantial. 
For example, in three audits related to a logistics support contract, 
DCAA questioned $204 million. Since the government and the contractor 
negotiated the terms prior to the onset of the work, the contractor had 
not incurred any costs at the time of negotiations. DCAA calculated 
that $120 million of the $204 million in questioned costs were removed 
as a result of its findings. 

We subsequently issued a report in July 2007 that focused on the U.S. 
Army Corps of Engineers' $2.5 billion contract to Kellogg Brown & Root 
to restore Iraq's oil infrastructure and ensure an adequate fuel supply 
within Iraq.[Footnote 7] DCAA reviewed the contract's 10 task orders 
and questioned $221 million in contractor costs. While DOD considered 
DCAA's audit findings and performed additional analysis, the lack of 
timely negotiations contributed significantly to DOD's decision on how 
to address the questioned costs. In this case, all 10 task orders were 
negotiated more than 180 days after the work commenced and the 
contractor had incurred almost all its costs at the time of 
negotiations. These circumstances influenced DOD's decision to pay 
nearly all of the $221 million in questioned costs. 

Poor Management and Oversight of Contractor Performance: 

Managing contractors in an unstable contracting environment means 
greater attention to oversight, which relies on having a capable 
government workforce. Having personnel who are trained to conduct 
oversight and who are held accountable for their responsibilities is 
essential for effective oversight of contractors. If oversight is not 
conducted, not sufficient, or not well documented, DOD is at risk of 
being unable to identify and correct poor contractor performance. On 
multiple occasions, we and others have reported on deficiencies in 
DOD's oversight; for example: 

* In December 2006, we reported that DOD did not have sufficient 
numbers of contractor oversight personnel at deployed locations, which 
limited its ability to obtain reasonable assurance that contractors 
were meeting contract requirements efficiently and 
effectively.[Footnote 8] 

* In October 2007, the report of the Commission on Army Acquisition and 
Program Management in Expeditionary Operations stated that the Army 
lacked the leadership and military and civilian personnel to provide 
sufficient contracting support to either expeditionary or peacetime 
missions. According to the Commission, Army contracting personnel 
experienced a 600-percent increase in their workload and were 
performing more complex tasks, while the number of Army civilians and 
military in the contracting workforce had remained stagnant or 
declined. As a result, the Commission found that the vital task of 
postaward contract management was rarely being done. It recommended 
that the Army increase the number of civilian and military personnel in 
its contracting workforce by 1,400 individuals. 

* Our recent analysis of five types of vehicles presented to the Army 
as ready for acceptance from July 2006 through May 2007 found that 18 
to 31 percent of the vehicles failed government inspection.[Footnote 9] 
Some equipment presented to the Army failed inspection multiple times, 
sometimes for the same deficiency. Rework on equipment that failed 
inspections since May 2005 wasted $4.2 million. 

Such issues are not unique to Iraq but often reflect the long-standing 
and systemic issues DOD faces. Since 1992, we have identified DOD 
contract management to be high risk due to its vulnerabilities to 
fraud, waste, abuse, and mismanagement. In a report issued in July 
2006, we concluded that, because awards to contractors were large and 
growing, DOD would continue to be vulnerable to contracting fraud, 
waste or misuse of taxpayer dollars, and abuse.[Footnote 10] 

Insufficient Accountability over U.S.-Funded Equipment Provided to 
Iraqi Security Forces: 

In July 2007, we reported that DOD could not fully account for Iraqi 
security forces' receipt of U.S.-provided equipment.[Footnote 11] Three 
factors contributed to this lapse in accountability. First, DOD had not 
specified which DOD equipment accountability[Footnote 12] procedures, 
if any, applied to the train-and-equip program for Iraq. Congress 
funded the train-and-equip program for Iraq outside traditional 
security assistance programs, which, according to DOD officials, 
allowed DOD a large degree of flexibility in managing the program. 
These officials stated that, since the funding did not go through 
traditional security assistance programs, the DOD accountability 
requirements normally applicable to these programs did not apply. For 
example, under traditional security assistance programs, DOD 
regulations specify accountability procedures for storing, protecting, 
transporting, and registering small arms and other sensitive items 
transferred to foreign governments. 

Second, DOD did not maintain a centralized record of all equipment 
distributed to the Iraqi security forces from June 2004 until December 
2005. At that time, DOD established a consolidated property book system 
to track the issuance of equipment to the Iraqi security forces and was 
attempting to recover past records. Our analysis found a discrepancy of 
at least 190,000 weapons between data reported by the former 
Multinational Security Transition Command-Iraq (MNSTC-I) commander and 
the property books (see figure 2). Former DOD officials stated that 
this lapse was due to an insufficient number of staff and the lack of a 
fully operational network to distribute equipment, among other reasons. 

Figure 2: Discrepancies of MNSTC-I Reports of Selected Equipment Issued 
to Iraqi Security Forces, June 2004 through September 2005: 

This figure is a bar graph representing discrepancies of MNSTC-I 
reports of selected equipment issued to Iraqi security forces, June 
2004 through September 2005. The X axis represents the type of 
equipment, and the Y axis represents the number of times. One bar 
represents "reported by former MNSTC-I commander," and the other 
represents "reported by MNSTC-I property book."

[See PDF for image] 

Source: GAO analysis of data reported by the former MNSTC-I commander 
and MNSTC-I property book records. 

[End of figure] 

Third, since the beginning of the program, DOD has not consistently 
collected supporting documents that confirm when the equipment was 
received, the quantities of equipment delivered, or the Iraqi units 
receiving the equipment. Since June 2006, the command has placed 
greater emphasis on collecting this documentation. However, our review 
of the 2007 property books found continuing problems with missing and 
incomplete records. Further, the property books consist of extensive 
electronic spreadsheets, which are an inefficient data management tool 
given the large amount of data and limited personnel available to 
maintain the system. 

In our July 2007 report, we recommended that the Secretary of Defense 
(1) determine which DOD accountability procedures apply or should apply 
to the program, and (2) after defining the required accountability 
procedures, ensure that sufficient staff, functioning distribution 
networks, standard operating procedures, and proper technology are 
available to meet the new requirements. DOD concurred with our 
recommendations but, as of March 3, 2008, had not determined which 
accountability procedures apply to the program. 

Long-standing Problems Hinder DOD's Management and Oversight of 
Contractors Supporting Deployed Forces: 

Several long-standing and systemic problems continue to hinder DOD's 
management and oversight of contractors at deployed locations, 
including the failure to follow planning guidance, an inadequate number 
of military and civilian contract oversight personnel, failure to 
systematically collect and distribute lessons learned, and the lack of 
comprehensive training for military commanders and contract oversight 
personnel. The recurring nature of these issues underscores the need 
for DOD leadership to ensure implementation of and compliance with 
existing guidance within the department. In prior reports, we made a 
number of recommendations aimed at strengthening DOD's management and 
oversight of contractor support at deployed locations, and the 
department has agreed to implement many of those recommendations. 
However, our prior work has found that DOD has made limited progress 
implementing some key recommendations. Our work on contracts to support 
deployed forces in Iraq has identified instances where poor oversight 
and management of contractors led to negative financial and operational 
impacts. 

DOD Has Not Followed Long-standing Planning Guidance Regarding the Use 
of Contractors to Support Deployed Forces: 

Our work has shown that DOD has not followed long-standing planning 
guidance, particularly by not adequately factoring the use and role of 
contractors into its planning. For example, DOD guidance stresses the 
importance of fully integrating into logistics plans and orders the 
logistics functions performed by contractors along with those performed 
by military and government personnel. However, we noted in our 2003 
report that the operations plan for the war in Iraq contained limited 
information on contractor support.[Footnote 13] Similarly, DOD policy 
requires planning for contractor-provided services during crisis 
situations to provide a reasonable assurance of the continuation of 
services and to prepare a contingency plan for obtaining services from 
alternate sources if needed. Our review found that essential contractor 
services for deployed troops had not been identified and backup 
planning was not being done. Without firm plans, there is no assurance 
that the personnel needed to provide essential services will be 
available when needed. 

In addition, we reported in 2004 that the Army did not follow its 
planning guidance when deciding to use the Army's LOGCAP 
contract.[Footnote 14] Army guidance stresses the need for the clear 
identification of requirements and the development of a comprehensive 
statement of work early in the contingency planning process. Because 
this Army guidance was not followed, the plan to support the troops in 
Iraq was not comprehensive and was revised seven times in less than 1 
year, generating a significant amount of rework that would have been 
avoided had the planning guidance been followed. 

We have also found that DOD has not reviewed contractor support to 
identify the essential services provided and the department lacked 
visibility over the totality of contractor support to deployed forces. 
This information is essential in incorporating contractor support into 
planning efforts. For example, senior military commanders in Iraq 
stated that, when they began to develop a base consolidation plan for 
Iraq, they had no source to draw upon to determine how many contractors 
were on each installation. 

DOD has taken some actions to address this challenge. For example, DOD 
is developing a database of contractors who deploy with U.S. forces. 
According to senior DOD officials familiar with the database, as of 
February 2008, the database had about 80,000 records. DOD is working 
with State to include new DOD contractors, including private security 
contractors, in the database. This effort responds to recommendations 
we made in 2003 and 2006 to enhance the department's visibility over 
contractors in locations such as Iraq and Afghanistan.[Footnote 15] 

In addition, Joint Contracting Command Iraq/Afghanistan has created the 
Theater Business Clearance process that reviews and approves all 
contracts for work in Iraq or Afghanistan. Joint Contracting Command 
Iraq/Afghanistan officials stated that this has helped military 
commanders know ahead of time when contractors are coming to work on 
their bases and to ensure sufficient facilities are available for them. 
According to senior DOD officials, DOD is also developing a cadre of 
contracting planners to ensure that contractor support is included in 
combatant commanders' planning. 

DOD Lacks Adequate Numbers of Trained Contract Oversight Personnel: 

Having the right people with the right skills to oversee contractor 
performance is crucial to ensuring that DOD receives the best value for 
the billions of dollars spent each year on contractor-provided services 
to support deployed forces. However, several reviews by GAO and other 
organizations have consistently found deficiencies in DOD's oversight 
of contractors due to an inadequate number of trained military and 
civilian personnel to carry out these duties. 

Such concerns are not new, and we continue to find that poor oversight 
contributes to poor outcomes and wasted resources. For example, we 
reported in 2004 that DOD did not always have enough contract oversight 
personnel in place to manage and oversee its logistics support 
contracts such as LOGCAP and the Air Force Contract Augmentation 
Program (AFCAP). As a result, the Defense Contract Management Agency 
(DCMA) was unable to account for $2 million worth of tools that had 
been purchased using the AFCAP contract. In 2006, a LOGCAP Program 
Office official stated that the office did not prepare to hire 
additional contract oversight personnel in anticipation of an increased 
use of LOGCAP services due to Operation Iraqi Freedom. According to the 
official, if adequate staffing had been in place early, the Army could 
have realized substantial savings through more effective reviews of the 
increasing volume of LOGCAP requirements. 

In January 2008, we reported that the Army was inadequately staffed to 
conduct oversight of an equipment maintenance contract in Kuwait, a 
contract with cumulative obligations of more than $500 
million.[Footnote 16] Vacant oversight personnel positions included a 
quality assurance specialist, a property administrator, and two quality 
assurance inspectors. According to Army officials, such shortfalls 
meant that surveillance was not being performed sufficiently, and the 
Army was less able to identify trends in contractor performance and 
begin corrective action. For example, a review of property 
accountability reports found that the contractor reported a total of 
$2.4 million in government-furnished property; however, two of the 
eight property listings alone totaled more than $2 million. Without 
adequate oversight of government property, the Army cannot be certain 
that duplicate supplies have not been ordered and that government 
property is not misplaced or misused. 

DOD has taken some actions to address the challenge of a less-than- 
adequate number of contract oversight personnel. For example, in 
February 2007, the Deputy Assistant Secretary of the Army (Policy and 
Procurement) issued guidance that required, among other actions, 
contracting officers to ensure that a quality assurance surveillance 
plan be prepared and implemented for service contracts exceeding 
$2,500. Joint Contracting Command Iraq/Afghanistan officials stated 
that they are in the process of adding about 39 personnel to provide 
additional contractor oversight. Similarly, DCMA has deployed 100 more 
personnel and plans to deploy another 150 to provide contract oversight 
and administration to both ongoing and future contracts in Iraq. DCMA 
is providing oversight for DOD's private security contracts and other 
theater-wide contracts. Additionally, senior DOD officials stated that 
the department has created a task force to address the recommendations 
of the October 2007 report by the Commission on Army Acquisition and 
Program Management in Expeditionary Operations. 

DOD Does Not Systematically Collect and Distribute Lessons Learned: 

DOD does not systematically ensure that lessons learned regarding the 
use of contractors to support deployed forces are shared with military 
personnel at deployed locations. Although DOD has a policy requiring 
the collection and distribution of lessons learned to the maximum 
extent possible, we found in our previous work that, with regard to 
contractor support to deployed forces, no procedures were in place to 
ensure lessons learned were being collected and distributed. For 
example, the Army regulation that establishes policies, 
responsibilities, and procedures for the implementation of the LOGCAP 
program makes customers that receive services under the LOGCAP contract 
responsible for collecting lessons learned. However, we have repeatedly 
found that DOD is not systematically collecting and sharing lessons 
learned on the use of contractors to support the deployed forces. We 
have made several recommendations in the past that DOD implement a 
department-wide lessons learned program for contractor support to 
deployed forces. However, we have previously reported that DOD has not 
established any procedures to systematically do this. We also found a 
failure to share best practices and lessons learned between units as 
one redeploys and the other deploys to replace it. As a result, new 
units essentially start at ground zero, having to resolve a number of 
difficulties until they understand contractor roles and 
responsibilities. 

DOD Does Not Adequately Train Military Commanders and Contract 
Oversight Personnel: 

DOD does not routinely incorporate information about contractor support 
for deployed forces in its predeployment training of military 
personnel, despite the long-standing recognition of the need to provide 
such information. Our work has shown the need for better predeployment 
training of military commanders since the mid-1990s. DOD policy states 
that personnel should receive timely and effective training to ensure 
they have the knowledge and tools necessary to accomplish their 
missions. 

We have made several recommendations that DOD improve its contractor 
support-related training. In each instance, DOD concurred with our 
recommendation. However, our previous work has found limited evidence 
that improvements have been made in terms of how DOD trains military 
commanders and contract oversight personnel on the use of contractors 
to support forces prior to deployment. We have found that limited or no 
predeployment training on the use of contractor support has caused a 
variety of problems for military commanders in deployed locations. 

* As we reported in 2006, several military commanders with limited or 
no predeployment training stated that they were not able to adequately 
plan for the use of those contractors.[Footnote 17] According to the 
commanders, their predeployment training provided them with 
insufficient information on how much support contractors would be 
providing in Iraq. The commanders were therefore surprised by the 
substantial number of personnel they had to use to perform missions 
such as on-base escorts for third-country and host-country nationals, 
convoy security, and other force protection support to contractors. 

* We have found instances in which limited or no predeployment training 
for military commanders on the use of contractor support to deployed 
forces resulted in confusion about their roles and responsibilities in 
managing contractors. In some cases, concerns rose over the potential 
for military commanders to direct contractors to perform work outside 
the scope of the contract, which they lack the authority to do. As Army 
guidance makes clear, this can result in modifications to the contract 
that would involve additional costs and, in some cases, be in violation 
of competition requirements. For example, in 2006, a contractor stated 
that he was instructed by a military commander to release equipment the 
contractor was maintaining even though this action was not within the 
scope of the contract. The issue ultimately had to be resolved by the 
contracting officer. 

* In a 2005 report on the use of private security contractors in 
Iraq,[Footnote 18] we found that commanders received no training or 
guidance on how to work with private security providers in Iraq. To 
highlight the lack of training and guidance, representatives from one 
unit stated they did not know private security providers were in their 
battle space until the providers called for assistance.[Footnote 19] 

We also found that contract oversight personnel such as contracting 
officers' representatives continue to receive limited or no 
predeployment training regarding their roles and responsibilities in 
monitoring contractor performance. Contracting officers' 
representatives are typically drawn from units receiving contractor- 
provided services and are not normally contracting specialists. 
However, DOD's acquisition regulations require that contracting 
officer's representatives be qualified through training and experience 
commensurate with their delegated responsibilities. 

We have found that limited or no predeployment training of contract 
oversight personnel has caused a variety of problems in deployed 
locations. 

* The lack of training can affect the quality of service that 
contractors are providing at deployed locations. In a December 2006 
report, officials from a corps support group in Iraq stated that, until 
they were able to get a properly trained contracting officer's 
representative in place, they experienced numerous problems regarding 
the quality of food service LOGCAP provided. 

* The lack of sufficient training also can lead to the inefficient use 
of military personnel. In the 2006 report, officials with a Stryker 
brigade stated that a lack of training hindered their ability to 
resolve staffing issues with a contractor conducting background 
screenings of third-country and host-country nationals. In this case, 
shortages of contractor-provided screeners forced the brigade to use 
its own intelligence personnel to conduct screenings. As a result, 
those personnel were not available for their primary intelligence- 
gathering responsibilities. 

DOD and its components have made some improvements in providing 
training to military commanders and contract oversight personnel on the 
use of contractors to support deployed forces prior to their 
deployment. In DOD's response to our 2006 report, the Director of 
Defense Procurement and Acquisition Policy stated that the Army is 
making changes to its logistics training programs that would 
incorporate contracting officers' representatives training into its 
basic and advanced training for its ordnance, transportation, and 
quartermaster corps.[Footnote 20] 

In addition, the Defense Acquisition University has updated its 
contingency contracting course to include a lesson on contractors 
accompanying the force. DCMA is adding personnel to assist in the 
training and managing of contracting officers' representatives. 
However, training of military commanders and contract oversight 
personnel remains a challenge. For example, the 2007 report of the 
Commission on Army Acquisition and Program Management in Expeditionary 
Operations found that combatant commands do not recognize the 
significance of contracts and contractors in expeditionary operations. 
The report concluded that the Army needs to educate and train 
commanders on the important operational role of contracting. 

Lack of Adequate Strategic Planning Impedes U.S. Efforts to Develop 
Capacity in Iraqi Ministries and Improve Outcomes in Iraq's Energy 
Sector: 

U.S. efforts to increase the Iraqi government's capacity to invest in 
its own rebuilding are undermined by strategic planning shortfalls in 
two critical areas--developing the capacity of the Iraqi ministries to 
effectively execute their responsibilities and integrating oil and 
electricity development into a unified plan. In the energy sector, 
developing a comprehensive and integrated strategic plan is essential 
to meeting energy production and export goals, which in turn will help 
Iraq meet its future financial needs. In both cases, U.S. assistance in 
developing these plans will help ensure that future U.S. expenditures 
in rebuilding Iraq will result in long-term benefits. 

Department of State Has Not Developed a Comprehensive and Integrated 
Strategy to Develop Transparent and Accountable Iraqi Ministries: 

U.S. efforts to strengthen Iraqi ministries lack a strategic plan to 
integrate efforts, address challenges within the ministries, and set 
clear priorities.[Footnote 21] Over the past 4 years, U.S. efforts to 
help build the capacity of the Iraqi national government have been 
characterized by multiple U.S. agencies leading individual efforts, 
without overarching direction from a lead entity that integrates their 
efforts, and shifting time frames and priorities in response to 
deteriorating security and the reorganization of the U.S. mission in 
Iraq. Consequently, U.S. efforts to date have not resulted in key Iraqi 
ministries having the capacity to effectively govern and assume 
increasing responsibility for operating, maintaining, and further 
investing in reconstruction projects. 

The Iraqi ministries also face several challenges that pose a risk to 
their success and long-term sustainability.[Footnote 22] First, our 
October 2007 report found that Iraqi ministries lack personnel with key 
skills, such as budgeting and procurement. Second, sectarian influence 
over ministry leadership and staff complicated efforts to build a 
professional and nonaligned civil service. Third, pervasive corruption 
in the Iraqi ministries impeded the effectiveness of U.S. efforts. 
Fourth, poor security limited U.S. advisors' access to their Iraqi 
counterparts, preventing ministry staff from attending planned training 
sessions and contributing to the exodus of skilled professionals to 
other countries. 

While recognizing these challenges, U.S. efforts to help build the 
capacity of the Iraqi ministry suffered from the lack of coordination 
and shifting priorities. First, no single agency was in charge of 
leading U.S. ministry capacity development efforts. State, DOD, and 
USAID have led separate efforts at Iraqi ministries, investing about 
$169 million in funds in 2005 and 2006 for these efforts. As of mid- 
2007, State and USAID were providing 169 capacity development advisors 
to 10 key civilian ministries; DOD was providing 215 to the Ministries 
of Defense and Interior. Although State took steps to improve 
coordination in early 2007, coordination between the agencies remains 
problematic. For example, although State, USAID, and DOD tried to 
develop a common set of metrics to measure ministry capacity in 2005, 
the agencies have now developed separate sets of metrics. 

Second, the focus of U.S. capacity development efforts had shifted from 
long-term institution-building projects, such as helping the Iraqi 
government develop its own capacity development strategy, to an 
immediate effort to help Iraqi ministries overcome their inability to 
spend their capital budgets and deliver essential services to the Iraqi 
people. However, as we reported in January 2008, it is unclear if Iraq 
is spending its $10.1 billion capital budget since U.S. and Iraqi 
reports show widely disparate rates for Iraqi government spending in 
2007.[Footnote 23] Citing unofficial Ministry of Finance data, the 
administration's September 2007 Benchmark Assessment Report stated that 
the Iraqi ministries had spent 24 percent of their capital projects 
budgets, as of July 15, 2007. The report concluded that, compared with 
2006, the government of Iraq was becoming more effective in spending 
its capital projects budget. However, the administration's report is 
not consistent with Iraq's official expenditure reports, which show 
that the central ministries had spent only 4.4 percent of their 
investment budget, as of August 2007. The lack of consistent and timely 
expenditure data limits transparency over Iraq's execution of $10.1 
billion 2007 budget for capital projects and reconstruction. The most 
recent expenditure data show a capital expenditure rate of 7 percent 
for the central ministries, as of November 2007. 

The U.S. government is beginning to develop a comprehensive and 
integrated strategy for U.S. capacity development efforts in Iraq, 
although agencies have been implementing separate programs since 2003. 
GAO's previous analyses of U.S. multiagency national strategies 
demonstrate that such a strategy should integrate the efforts of the 
involved agencies with the priorities of the Iraqi government, and 
include a clear purpose and scope; a delineation of U.S. roles, 
responsibilities, and coordination with other donors, including the 
United Nations; desired goals and objectives; performance measures; and 
a description of benefits and costs. U.S. efforts to develop Iraqi 
ministry capacity have included some but not all of these components. 
For example, agencies are working to clarify roles and 
responsibilities. However, U.S. efforts lack clear ties to Iraqi- 
identified priorities at all ministries and information on how 
resources will be targeted to achieve the desired end-state. 

In October 2007, we recommended that State, in consultation with the 
Iraqi government, complete a comprehensive and integrated strategy for 
U.S. capacity development efforts. State recognized the value of an 
integrated strategy but stated that it may hinder efforts to tailor 
capacity development efforts to the priorities of each ministry. GAO's 
recommendation does not preclude tailoring capacity development efforts 
to meet each ministry's unique needs. A strategy ensures that a U.S.- 
funded program has consistent overall goals, clear leadership and 
roles, and risks that are assessed. 

Similarly, in January 2008, we recommended that to help ensure more 
accurate reporting of the government of Iraq's spending of its capital 
projects budget, the Secretary of the Treasury work with the government 
of Iraq to ensure the reporting of accurate and reliable expenditure 
data. The Department of the Treasury agreed with our recommendation to 
ensure accurate and reliable reporting of Iraqi expenditure data and is 
working to implement it. 

Lack of Adequate Strategic Planning Impedes U.S. and Iraqi Efforts to 
Restore Iraq's Energy Sectors: 

Despite the United States' investment of about $6 billion to rebuild 
Iraq's oil and electricity sectors, production in both sectors has 
consistently fallen below U.S. program goals of 3 million barrels per 
day and 6,000 megawatts of electrical peak generation capacity. As we 
reported in May 2007, it is difficult to identify the most pressing 
future funding needs, key rebuilding priorities, and existing 
vulnerabilities and risks within the sectors given the absence of an 
overarching strategic plan that comprehensively assesses the 
requirements of the energy sector as a whole.[Footnote 24] While the 
Iraqi government has crafted a multiyear strategic plan for Iraq's 
electricity sector, no such plan exists for the oil sector. Given the 
highly interdependent nature of the oil and electricity sectors, such a 
plan would help identify the most pressing needs for the entire energy 
sector and help overcome the daunting challenges affecting future 
development prospects. 

As shown in figure 3, Iraq's oil production and exports, despite recent 
improvements, continue to fall below U.S. goals. As of December 2007, 
Iraq produced about 2.5 million barrels of oil per day and exported 
nearly 2.0 million barrels per day, compared with the U.S. goals of 3.0 
million barrels and 2.2 million barrels, respectively.[Footnote 25] 

Figure 3: Oil Production, Exports, and U.S. Goals, June 2003 to 
December 2007: 

This figure is a combination bar and line graph showing oil production, 
exports, and U.S. goals, June 2003 through December 2007. The X axis 
represents the year and month, and the Y axis represents the millions 
of barrels per day. The lines represent the production capacity goal 
and export goal. The bars represent the production for domestic use, 
and the production exported. 

[See PDF for image] 

Source: GAO analysis of Iraq Ministry of Oil data collected by State 
Department. 

Note: Production capacity differs from actual production. Production 
capacity is the maximum amount of production a country can maintain 
over a period of time. Since Iraq has been trying to increase its 
production of crude oil, we use actual production as an indicator of 
Iraq's production capacity. 

[End of figure] 

In addition, U.S. goals for electricity remain unmet. The problem is 
compounded by increasing demand that outstrips supply. As of February 
2008, demand for electricity was twice as high as the supply. In 
addition, available power in Baghdad was 9 hours per day, compared with 
17 hours per day in Basra. As we previously reported in May 2007, one 
of the challenges in developing the electricity sector was the U.S. 
government's decision to install natural gas turbine engines despite 
the absence of a natural gas distribution network. Of the 35 engines 
installed, 16 were using diesel or crude oil rather than natural gas. 
As a result, maintenance was three times as costly and electricity 
generated decreased by 50 percent. 

Billions of dollars are still needed to rebuild, maintain, and secure 
Iraq's oil and electricity infrastructure, underscoring the need for 
sound strategic planning. The Ministry of Electricity's 2006-2015 
Electricity Master Plan estimates that $27 billion will be needed to 
reach its goal of providing reliable electricity across Iraq by 2015. 
According to DOD, investment in Iraq's oil sector is "woefully short" 
of the absolute minimum required to sustain current production, and 
additional foreign and private investment is needed. Moreover, U.S. 
officials and industry experts estimate that Iraq would need $20 
billion to $30 billion over the next several years to reach and sustain 
a crude oil production capacity of 5 million barrels per day. 

We recommended that the Secretary of State, in conjunction with 
relevant U.S. agencies and international donors, work with Iraqi 
ministries to develop an integrated energy strategy. State commented, 
however, that the Iraqi government, not the U.S. government, is 
responsible for taking action on GAO's recommendations. We believe that 
the recommendations are still valid given the billions of dollars made 
available for Iraq's energy sector, the limited capacity of the Iraqi 
ministries, and the U.S. government's influence in overseeing Iraq's 
rebuilding efforts. 

Conclusion: 

U.S. efforts in Iraq are expansive: combating insurgents, training 
local security forces, shaping government institutions, reconstructing 
infrastructure, and enhancing public services. These efforts 
demonstrate a substantial commitment to most aspects of nation 
building. However, nation building is costly, particularly in the 
absence of a permissive security environment. Since 2001, Congress has 
appropriated about $700 billion for military and diplomatic activities 
in support of the global war on terrorism; the majority of this amount 
has supported U.S. actions in Iraq. This large expenditure of resources 
and the enormous task at hand heightens the levels of risk and offers 
the potential for fraud, waste, abuse, and corruption. 

But, as GAO's audits point out, these risks are further heightened when 
U.S. programs lack sound strategic planning, well-defined requirements, 
adequate oversight and accountability, and sufficient training for 
personnel. Future investments in Iraq will require decision makers not 
only to assess the outcomes achieved thus far but also the outcomes 
that could have been achieved with more efficient and effective use of 
appropriated dollars. It will also require decision makers to consider 
difficult trade-offs as the nation faces increasing fiscal challenges 
on the home front. Nonetheless, continuing oversight by Congress and 
the accountability organizations is needed to ensure that opportunities 
for waste, fraud, abuse, and corruption are minimized. 

In prior reports, GAO recommended that, to improve accountability and 
minimize opportunities for fraud, waste, and abuse of U.S. funds, (1) 
DOD adopt sound business processes in its acquisition strategies, such 
as definitizing contracts in a timely fashion and strengthening 
accountability procedures; (2) DOD leadership ensure implementation of 
and compliance with existing guidance to improve its management and 
oversight of contractors supporting deployed forces; and (3) U.S. 
agencies work with Iraq to develop strategic plans for key sectors. 

DOD and State have taken action to implement some, but not all, of our 
recommendations. Given the billions of dollars that the United States 
has spent in Iraq to help rebuild its infrastructure, improve security, 
support our forces, and improve the capacity of the ministries, I 
believe our recommendations, if fully implemented, would improve 
accountability and outcomes. Whether they are fully implemented, 
however, will depend on the leadership at each agency to set the 
appropriate tone, ensure that existing guidance is effectively 
implemented, take actions to prevent mistakes from being repeated, and 
seize opportunities to ensure that the efforts to help rebuild and 
stabilize Iraq achieve their intended results. 

Mr. Chairman, this concludes my statement. I would be pleased to answer 
questions that you or other Members have at this time. 

GAO Contact and Staff Acknowledgments: 

For questions regarding this testimony please call Joseph A. Christoff, 
Director, International Affairs and Trade, on (202) 512-8979. Other key 
contributors to this statement include David Bruno, Carole Coffey, Lynn 
Cothern, Howard Cott, Timothy DiNapoli, Matthew E. Helm, Bruce Kutnick, 
Tetsuo Miyabara, Judith McCloskey, Kathleen Monahan, and James 
Reynolds. 

Footnotes: 

[1] This figure includes military appropriations for Operation Noble 
Eagle, Operation Enduring Freedom, and Operation Iraqi Freedom, as well 
as stabilization and reconstruction appropriations for Iraq and 
Afghanistan. 

[2] To see GAO reports on Iraq, click on [hyperlink, 
http://GAO.gov/docsearch/featured/oif.html]. 

[3] Established in May 2003 and led by the United States and the United 
Kingdom, the CPA was the United Nations-recognized coalition authority 
responsible for the temporary governance of Iraq. 

[4] GAO, Rebuilding Iraq: U.S. Water and Sanitation Efforts Need 
Improved Measures for Assessing Impact and Sustained Resources for 
Maintaining Facilities, GAO-05-872 (Washington, D.C.: Sept. 7, 2005). 

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

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

[7] GAO, Defense Contract Management: DOD's Lack of Adherence to Key 
Contracting Principles on Iraq Oil Contract Put Government Interests at 
Risk, GAO-07-839 (Washington, D.C.: July 31, 2007). 

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

[9] GAO, Defense Logistics: The Army Needs to Implement an Effective 
Management and Oversight Plan for the Equipment Maintenance Contract in 
Kuwait, GAO-08-316R (Washington, D.C.: Jan. 22, 2008). 

[10] GAO, Contract Management: DOD Vulnerabilities to Contracting 
Fraud, Waste, and Abuse, GAO-06-838R (Washington, D.C.: July 7, 2006). 

[11] GAO, Stabilizing Iraq: DOD Cannot Ensure That U.S.-Funded 
Equipment Has Reached Iraqi Security Forces, GAO-07-711 (Washington, 
D.C.: July 31, 2007). 

[12] DOD defines accountability as the obligation imposed by law, 
lawful order, or regulation accepted by an organization or person for 
keeping accurate records, to ensure control of property, documents, or 
funds, with or without physical possession. 

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

[14] GAO-04-854. 

[15] GAO-07-145. 

[16] GAO-08-316R. 

[17] GAO-07-145. 

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

[19] In response to an incident in September 2007 in which 17 Iraqis 
died, the Department of State and DOD signed a memorandum of agreement 
in December 2007 outlining actions needed to improve oversight of 
private security contractors. GAO is currently reviewing U.S. agencies' 
use of private security contractors in Iraq. 

[20] GAO-07-145. 

[21] To help Iraq develop the capability of its ministries, the United 
States has provided about $300 million between fiscal years 2005 to 
2007. 

[22] GAO, Stabilizing and Rebuilding Iraq: U.S. Ministry Capacity 
Development Efforts Need an Overall Integrated Strategy to Guide 
Efforts and Manage Risk, GAO-08-117 (Washington, D.C.: Oct. 1, 2007). 

[23] GAO, Iraq Reconstruction: Better Data Needed to Assess Iraq's 
Budget Execution, GAO-08-153 (Washington, D.C.: Jan. 15, 2008). 

[24] GAO, Rebuilding Iraq: Integrated Strategic Plan Needed to Help 
Restore Iraq's Oil and Electricity Sectors, GAO-07-677 (Washington, 
D.C.: May 15, 2007). 

[25] According to State, revenues generated from Iraqi oil exports 
increased from $31 billion in 2006 to $41 billion in 2007 (Iraq Weekly 
Status Report, Feb. 6, 2008). 

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