SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION
The first democratically elected government to take office in Iraq
now faces the daunting challenges of sustaining its infrastructure,
fighting corruption, and enforcing security in an increasingly
hostile environment.
Highlights, continued
Better Coordination Needed Among
Reconstruction Agencies
In an audit of transition planning completed this quarter,
SIGIR noted that coordination among agencies managing the transition of the reconstruction program needs
improvement. IRMO has responsibility for setting priorities, coordinating among agencies, centralizing reporting,
and managing ministry advisors. It must be empowered to
do more to bring all operating agencies together to effect a
successful transition.
Capacity Building is the key to Transition
The fall of Saddam’s regime ended four decades of a statecontrolled economy, leaving local officials, many of whom
lacked experience, to manage the delivery of provincial
government services. Programs to assist these officials
in developing management skills are a priority. The PRT
program embodies this priority, helping local officials to
improve their capacities to govern by teaching them to
promote security, rule of law, political participation, and
economic development. Currently, the PRTs face serious
challenges, including security threats, insufficient staffing,
and limited resources. SIGIR has announced an audit of
the PRT program, which will examine their effectiveness.
moving toward Multilateralizing
Reconstruction
A significant development this quarter was the Iraqi
government’s request to the UN for help in securing
a financial compact with the international donor
community. Under this compact, Iraq will pledge
to implement reforms in exchange for political and
economic support. The compact’s goal is to provide a
financial framework for the transformation of Iraq’s
economy and its integration into the regional and global
economies. The compact is expected to energize the next
phase of reconstruction in Iraq.
SIGIR Audits & Inspections
Congress created SIGIR to provide independent oversight of the Iraq Relief
and Reconstruction Fund by:
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION • promoting economy, efficiency, and effectiveness in the administration
of programs and operations
• preventing and detecting waste, fraud, and abuse in such programs and
operations
• keeping the Secretary of State, Secretary of Defense, Congress, and the American taxpayers informed about problems, deficiencies, and recommendations
for corrective action relating to the administration of programs and operations
Stuart W. Bowen, Jr., was appointed Inspector General in January 2004. This past May,
the IG made his twelfth trip to Iraq to review progress on the reconstruction effort.
HIGHLIGHTS: July 2006 Quarterly and Semiannual Report
SIGIR issued 10 audits this quarter with 50 recommendations for program improvements. The audits focus on
a broad range of issues, including health care projects,
security, and anticorruption activities. SIGIR also issued
12 inspections and has now completed 56 project assessments, 96 limited on-site inspections, and 172 aerial
assessments. SIGIR found that most projects visited this
quarter showed high-quality workmanship and effective
quality-control and quality-assurance programs.
During this quarter, the U.S.
reconstruction effort in Iraq
achieved some important
milestones: production of electricity
SIGIR Investigations
output exceeding 5,000 megawatts and oil
SIGIR currently has 82 open investigations into alleged
fraud, corruption, bribery, kickbacks, and gratuities. Currently, 25 cases are awaiting prosecution at the Department of Justice. On July 7, 2006, LTC Bruce Hopfengardner agreed to plead guilty to conspiracy to commit wire
fraud and money laundering. SIGIR recently entered into
a partnership with the Federal Bureau of Investigation’s
Criminal Investigations Division to enhance investigative
operations in Iraq and the United States.
Lessons Learned Initiative
SIGIR has released the second report of its Lessons Learned
Initiative, Iraq Reconstruction: Lessons in Contracting
and Procurement, providing detailed insight into the U.S.
government’s contracting experience in Iraq. The report
presents six recommendations for improving the U.S.
government’s approach to contracting during contingency
operations. Both this report and SIGIR’s first report, Iraq
Reconstruction: Lessons in Human Capital Management, are
available at www.sigir.mil. SIGIR’s next report, Iraq Reconstruction: Lessons in Program and Project Management will
be published later this year.
TO OBTAIN A FULL REPORT
visit the SIGIR Web site www.sigir.mil • email PublicAffairs@sigir.mil call (703) 428-1100
and oil climbed above pre-war levels for
the first time in over a year, with electricity
production reaching 2.5 million barrels per
day. The watershed event of this year, however,
occurred in May, when the first permanent,
democratically-elected government of Iraq
The Baiji Power Plant is a major producer of electricity for Iraq.
took office. Iraq’s new unity government
now faces many daunting tasks, including
infrastructure, and fighting corruption.
that are tasked with building governance capacity in
Iraq’s provinces. SIGIR completed a classified audit of
infrastructure security this quarter that raised security
concerns, which are being addressed.
Midway Through the Year of Transition
Corruption Permeates Iraq
At the end of June 2006, $18.94 billion of the Iraq Relief
and Reconstruction Fund (IRRF 1 & 2) had been
obligated, and $14.85 billion had been expended. The
U.S. government’s authority to obligate the remaining
funds in the IRRF expires September 30, 2006, so any
IRRF dollars not under contract by that date will revert to
the U.S. Treasury. U.S. contracting entities in Iraq are now
focused on rapidly obligating the balance of the IRRF.
Corruption threatens to undermine Iraq’s democracy.
Iraqi officials estimate the cost of corruption at $4 billion
a year, and the Commission for Public Integrity has more
than 1,400 criminal cases, involving about $5 billion.
A poll conducted this quarter found that one-third of
Iraqis reported that they have paid bribes for products or
services this year. More resources and stronger support
will be needed for Iraq’s anticorruption entities to battle
corruption effectively. SIGIR sees positive signs in the
Iraqi Prime Minister’s recent words of support for
anticorruption efforts. Additionally, the U.S. Mission in
Iraq concurred with (and is implementing) the recommendations in SIGIR’s audit of the U.S. anticorruption
capacity-building program, which means more resources
will be devoted to this important issue.
improving security, sustaining the
Security problems Continue
Recurring violence in Iraq continues to impede reconstruction efforts, slowing progress on projects, restricting
the movement of personnel, and diverting dwindling
resources. The lethal environment limits the important
work of the U.S. Provincial Reconstruction Teams (PRTs)
Jan
4/16
2003
Jul
Coalition Land Forces
Enter Iraq
Apr
Oct
$ Billions
• Agriculture: USAID is implementing a
$107 million program for new agricultural
initiatives.
• Democracy: The U.S. continues to promote
democracy-building initiatives and to field
PRTs to help build provincial governance
capacity.
• Education: 1,544 schools have been repaired
or rehabilitated with IRRF 2 funds. The United
States has also trained more than 60,000
teachers.
• Private Sector Development: USAID-funded
projects account for nearly half of the $800
million obligated to date, with activities
focusing on economic governance and trade,
bank lending, capital markets, and microfinance activities.
PROJECTS
$1.51
APRIL 06
•As a result of U.S. projects, 16 loading docks
are now functioning at the port of Umm Qasr;
only one dock was functioning at the end of
the war.
•U.S. projects have restored commercial
operations to the three major airports in Iraq:
Baghdad, Basrah, and Mosul. Kirkuk and Erbil
airfields are also operating.
•U.S. projects have nearly completed repairs at
82 of Iraq’s railway stations. However, only a
small number of trains are operating because
of security problems.
$ Billions
COMPLETED
8798
EXPENDED
$1.74
ONGOING
JUNE 06
896
NOT STARTED
109
Sub-sector Status
$0.42
APRIL 06
EXPENDED $0.48
JUNE 06
ALLOCATED
$2.23
OBLIGATED
$2.12
Sector Status
PROJECTS
COMPLETED
278
ONGOING
179
NOT STARTED
54
ALLOCATED $0.80
OBLIGATED $0.74
AGRICULTURE, DEMOCRACY, EDUCATION,
AND PRIVATE SECTOR DEVELOPMENT
$ Billions
TRANSPORTATION &
COMMUNICATIONS
$0.82
APRIL 06
EXPENDED $1.00
JUNE 06
ALLOCATED $1.72
OBLIGATED $1.65
Oct
•Oil production spiked to a production level of
2.5 MBPD in mid-June, but decreased to 2.35
and 2.23, respectively, for the last two weeks
of the month.
•Exports averaged 1.6 MBPD for the quarter and
closed at 1.67 MBPD, slightly above the Iraqi
goal of 1.65 MBPD.
•Security problems and corruption have limited
progress on production and development in
this sector. A comprehensive petroleum law
is needed to stimulate essential foreign
investment.
PROJECTS
COMPLETED
22
ONGOING
33
NOT STARTED
2
2004
Jul
•U.S. projects have contributed 2,710 MW to
Iraq’s generation capacity, which climbed
above pre-war levels (4,500 MW) to 5,042
MW, as of June 27, 2006. Load served topped
100,000 MWh for the first time since summer
2005.
•All generation projects have been started.
More than 1/3 of distribution and
transmission projects have yet to start.
•Areas outside of Baghdad now receive more
hours of power (12.1) than before the conflict.
However, electricity hours in Baghdad still
remain below pre-war levels (8.1).
$ Billions
OIL & GAS
Apr
Sector Status
$2.03
APRIL 06
EXPENDED $2.35
JUNE 06
OBLIGATED $3.48
ALLOCATED $4.22
6/1
IRMO & PCO
Established by
NSPD-36
Apr
Jul
2005
Spring
2005
5/11
IRMO, PCO, & JCC-I
JCC-I
Established
1/29
PROJECTS
WATER
Apr
2005
Jul
COMPLETED
749
ONGOING
515
NOT STARTED
95
$0.89
APRIL 06
Jan
$ Billions
EXPENDED $1.14
JUNE 06
OBLIGATED $1.68
ALLOCATED $2.13
Oct
12/15
$0.42
APRIL 06
$ Billions
EXPENDED $0.49
JUNE 06
ALLOCATED $0.75
OBLIGATED $0.66
•More than 80% of health care projects have
been completed, but progress has been
significantly slowed by security problems and
mismanagement.
•The construction of primary health care centers has fallen far short of original goals.
•USAID’s non-construction activities in this
sector are projected to be completed during
the next quarter. Vaccination programs have
been highly successful.
Sector Status
PROJECTS
COMPLETED
653
ONGOING
138
NOT STARTED
4
HEALTH CARE
4/22
5/3
5/20
JULY 2006
QUARTERLY AND
SEMIANNUAL REPORT
COMPLETED
1,278
ONGOING
156
NOT STARTED
65
Jul
$ Billions
EXPENDED $5.41
JUNE 06
12
9
44
Electricity
23
35
Security
& Justice
Reconstruction
Management (1%)
% of $18.44 Billion
Source: DoS Iraq Weekly Status Report, 06/28/06
Sector Shares of IRRF Funds
Figure x-x
Source: DoS Iraq Weekly
Status
06/28/06
IRRF Sector
SharesReport,
Pie.ai
Agriculture, Democracy,
Education, & Private Sector
Development
Water 12
Oil & Gas
Transportation &
Communications
Health Care
% of $18.44 Billion
SECTOR SHARES OF IRRF FUNDS
•More than 268,000 military and police
personnel have been trained, equipped, and
fielded. Activities are increasingly focused
on improving Iraqi logistical capabilities and
leadership.
•More than 1,200 security facilities have been
completed to date, including police and fire
stations.
•85% of IRRF funding for this sector has been
expended; the Emergency Supplemental
Appropriations for FY 2006 provided an additional $3 billion to the Iraq Security Forces
Fund (ISFF).
Sector Status
PROJECTS
$5.20
APRIL 06
ALLOCATED $6.38
OBLIGATED $6.15
Iraq's Parliament Meets for First Time
Unity Government Formed
SECURITY & JUSTICE
2006
Apr
69% of
IRRF 2
Expended
6/30
$3 billion for
ISFF in
P.L. 109-234
6/15
Jul
Jawad al-Maliki Selected as Iraq's
First Constitutional Prime Minister
Constitutionally Based
Elections for Assembly
Constitutional
Referendum
10/15
PCO Merged
under GRD
12/5
•1.1 million more people gained
access to clean water as a result of U.S.
projects this quarter.
•5.1 million more people have access
to sanitation services as a result of U.S.
projects.
•A GAO audit noted the challenge of
sustaining U.S. projects in the water sector.
In response, the U.S. initiated a new $110
million sustainment program for this sector.
Sector Status
Jan
4/28
Apr
2006
50% of IRRF 2 Expended
11/1
Jan
www.sigir.mil
email: PublicAffairs@sigir.mil
(703) 428-1100
Oct
Khalilzad
Appointed
U.S. Ambassador
to Iraq
6/21
Iraqi Transitional
Government Formed
First Democratic
Elections in Iraq
1/30
MNSTC-I (Multi-National Security
Transition Command–Iraq) Established
Iraqi Interim Government
Announced
Transitional
Administrative
Law (TAL) Signed
3/8
Oct.
2004
Transfer of
SIGIR
Sovereignty; Created
CPA Dissolves
(PCO replaces
PMO)
6/28
Winter
2004
Jan
$5.7 billion
for the ISFF in P.L. 109-13
Third Major
Reprogramming
of IRRF 2
Second Major
Reprogramming
of IRRF 2
First Major
Reprogramming
of IRRF 2
Fall
2004
Oct
Sector Status
PROJECTS
COMPLETED
287
ONGOING
131
NOT STARTED
178
ELECTRICITY
5/11
First DoS Section 2207 Report
1/5
March 2004
Jul
2004
Large-scale
Design-Build
Contracts Awarded
Apr
USACE
Gulf Region
Division
Activated
1/25
CPA-IG
Appointed
1/20
Jan
Madrid
Donors
Conference
Program
Management
Office (PMO)
Created
8/15
Jan
IRRF 2
Established under
P.L. 108-106 $18.44B
11/6
C PA
De-Ba’athification Order
Issued and Iraq Army Disbanded
5/16
Liberation Day
4/9
ORHA Mobilizes
to Kuwait
3/21
6/15
CPA Program
Review Board
Created
CPA
Created by
CENTCOM
4/16
ORHA
Established
under NSPD-24
3/16
10/23-24
Oct
IRAQ RECONSTRUCTION SECTOR ACTIVITY
Jan
Other
1/20
DFI
Created under
UN Res. 1483
5/22
Jul
2003
IRRF 1
Established under
P.L. 108-11 $2.48B
ORHA
Apr
Organizational
Funding
PRE-WAR
PLANNING
2002
2002
Oct
Oct
IRAQ RECONSTRUCTION TIMELINE
SI GI R
SPECIAL INSPEC TO R GENER AL FOR IR AQ RECONSTRUC TION