STATEMENT OF STUART W. BOWEN JR.
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION
UNITED STATES HOUSE OF REPRESENTATIVES
COMMITTEE ON FOREIGN AFFAIRS
Tuesday, May 22, 2007
Chairman Lantos, Ranking Member Ros-Lehtinen, and members of the Committee, thank you for this opportunity to report to you on the continuing work of the Office of the Special Inspector General for Iraq Reconstruction.
hearing poses the question, “Is Reconstruction Failing?” The short answer is
"no". Much has been
accomplished in the reconstruction and rehabilitation of countless facilities
Although there have been notable accomplishments achieved
through the use of the Iraq Relief and Reconstruction Fund, there have also been
significant shortfalls within the
The challenges to the relief and reconstruction program, documented in SIGIR’s 86 audits, 90 inspections and 13 quarterly reports, stemmed from:
· executing a reconstruction program in an unstable security environment;
· poor interagency planning and coordination, especially in the effort’s early stages;
· inconsistent and poorly managed contracting practices;
· weak program and project oversight, especially with respect to quality assurance and quality control programs; and
· insufficient systems for human capital management.
These factors have challenged all that the
I have just returned from my 16th trip to
As we execute our oversight regime, SIGIR continues to work
closely with all United States Government agencies in
SIGIR’s latest quarterly report, issued three weeks ago and
covering the first three months of 2007 – the beginning of the “surge” – highlighted
a number of important aspects of the reconstruction program. First, the
The Corps of Engineers’ Gulf Region Division continues to manage the relatively small number of remaining IRRF construction projects, valued at $4 billion, most of which are in the electrical sector. GRD expects to complete virtually all of them over the next year. The last of the IRRF money is being deobligated and reobligated by the Joint Contracting Command – Iraq/Afghanistan to facilitate completion of selected projects.
SIGIR will update its October PRT report this quarter, and next quarter, will provide a detailed review of the expanded PRT program, including an assessment of the 10 new “embedded” PRTs (EPRTs). These EPRTs are mobile units with a core civilian staff and embedded within military brigades, which gives them organic security, reduces costs, and allows them to operate in difficult environments.
The Congress approved $1.48 billion for the Economic Support
Fund as part of the FY2006 Supplemental.
The appropriation was allocated along three tracks: security ($923 million), economic ($345
million), and political ($208 million).
The PRT and Provincial Reconstruction Development Committee programs
received $470 million from the security track – or about a third of the ESF
appropriation – for program and project support. Additionally, $277 million was allocated for
infrastructure security support. One
example of a project funded in this area is the strengthening of the Al Latifya
Oil Storage Facility in
Our recent Quarterly Report underscored the current challenge in ensuring the sustainment – that is, the ongoing operation and maintenance – of IRRF projects that have already been transferred to the Iraqis. SIGIR’s latest series of inspection reports points to the continuing need to improve the asset transfer process so that Iraqi officials are prepared to sustain projects funded with billions of U.S. dollars. While the original IRRF contracts included a basic sustainment requirement, usually for 90 days, reconstruction managers soon realized that the Iraqis would need more assistance in this regard and thus reprogrammed funds to help ensure successful sustainment. SIGIR has assessed the asset-transfer process before, and our next quarterly report will contain an audit updating the progress within and continuing issues confronting the asset-transfer program.
Section Two of our latest Report contains updated reviews of
the Commander’s Emergency Response Program (CERP) and the Economic Support Fund
(ESF), both of which are important funding streams for continuing
The Coalition Provisional Authority (CPA) initiated CERP in
the summer of 2003 primarily using seized assets; some Development Fund for
SIGIR’s April report included an audit of FY2006 CERP
activity. The Congress appropriated $923
million for FY2006 CERP – of which $510 million was allocated to
SIGIR’s audit of these CERP funds found that the Multi-National Corps-Iraq (MNC-I), which is responsible for CERP oversight, had improved controls over the CERP fund since SIGIR’s FY2005 CERP review. Moreover, SIGIR confirmed that CERP funds were being used for the purposes authorized by the MNC-I Commander. But there were some concerns uncovered during the audit regarding file management and project coordination. The MNC-I concurred with SIGIR’s recommendations and is implementing changes to address them.
Capital budget execution is a serious problem within the GOI. Of the $34 billion 2006 budget, the U.S. Treasury Attaché reports that the GOI spent about $22.8 billion or 67%. Moreover, only 22% of the 2006 capital budget was spent. The Ministry of Oil, a key ministry for revenue production, reportedly spent just $90 million of its $3.5 billion 2006 capital budget. We are told by Treasury that the best performer was the Ministry of Education, which spent its entire, though admittedly small, capital budget of $15 million. The Ministry of Electricity spent a third of its capital budget in 2006, and the Ministry of Water spent just under half its allocation. By contrast, the GOI performed the simpler task of executing its budgets for salaries at a government-wide rate of 99%.
Best Use of Future Funding
In your letter, Mr. Chairman, you asked that I make
recommendations for the best use of future funding. First, as a practical matter, this is a
policy question that is better directed to the agencies managing this
policy. But I believe that it is
essential to provide more support for improving the operating capacity of
SIGIR’s work to date has identified numerous issues of concern and we have provided recommendations for improvement with which implementing agencies have generally concurred. Many of the recommendations have already been implemented resulting in improvements within the reconstruction program. As our lessons learned studies have elicited, agencies involved in future post-conflict relief and reconstruction endeavors should ensure that they have developed and coordinated sufficient execution and oversight capacity to ensure that quality projects result.
Contracting is one of those areas that must be systemically addressed. SIGIR audits criticized contract management within the reconstruction program, particularly in its early stages; but contract management improved during the course of the program through the consolidation and streamlining processes for contract monitoring implemented by the Joint Contracting Command-Iraq/Afghanistan. As noted in our lessons learned report, recruiting and retaining sufficient numbers of trained contracting officers is essential to the success of a contingency relief and reconstruction program.
SIGIR’s reporting similarly has revealed that program and project
oversight has been a challenge in
Awards fees are better managed today as a result of a SIGIR
review in July 2005 that required managers to put in place tighter controls and
properly implement a system that appropriately rewarded only good performance. SIGIR’s October 2006 review of contractor overhead
costs also prompted more careful scrutiny of administrative task orders. SIGIR’s serial reviews of contracting in
SIGIR continues to monitor
Overview of upcoming audits, inspections, investigations.
I visited with each of SIGIR’s auditors in
SIGIR currently has 20 auditors in
· A review of LOGCAP Task Order 130 (looking at the performance of KBR’s provision of life-support services (dining, fuel, housing, etc.) to the Department of State)
The Status of Transferring IRRF Projects and
Assets to the Government of
A Review of Cost-to-Complete Reporting for
· A Review of USG Support to Iraqi Anti-Corruption Efforts
· A Fact Sheet on the USG Reconstruction Agencies’ Roles & Responsibilities
· An IRRF Financial Review of Unliquidated Obligations
· A Review of Spending of U.S. Government Funds under USAID’s Bechtel Contract
· A Review of Close-Out Procedures for IRRF Contracts
A Review Contracting in
A Review of
· A Survey of the Department of State’s IRRF Projects in Programs managed by DoS/INL
A Review of the Effectiveness of
A Review of Spending of
· A Survey of a DynCorp Contract for the Iraqi Police Training Program Support and Equipment
· A Review of the Use of Sector Project and Contracting Office Contractors (SPCOCs) in Managing Relief and Reconstruction Projects
A Review of Blackwater Contracts in
An Assessment of the Status of the Provincial
Reconstruction Teams in
A Comparative Analysis of the Air Force Center
for Environmental Excellence and Gulf Region Division of the U.S. Army Corps of
Engineers in Contracting for and Management and Administration of Projects and
SIGIR has nine inspectors on the ground in
We expect to complete up to seven more sustainment inspections this quarter. Our work plan for the following quarter anticipates a series of CERP project inspections. We are also visiting projects associated with one or more Provincial Reconstruction Teams. SIGIR expects to publish the following inspection reports this quarter:
· Al Rasheed Brigade Set
Qana’at Water Pump Station,
· Zegaton Pipeline/Canal Crossing mis-matched pipe connections
· Al Daura Power Plant
Some of these inspections will be co-inspections with personnel
from the Office of the Inspector General in
SIGIR has seven investigators on the ground in
In keeping with its mandate to provide recommendations to the Congress for improving the reconstruction program, SIGIR has produced three Lessons Learned reports and is working on a lessons-learned capping report, which will be issued at the end of the year. Our Lessons Learned reports have addressed Human Capital Management, Contracting and Procurement, and Program and Project Management.
Recommendations from each include:
· Develop a “civilian reserve corps” that would serve as reconstruction and stabilization first responders and would include a quick-reaction human resources team that pre-identifies human resources requirements for potential relief and reconstruction contingency operations.
· Charge OMB with managing the development and implementation of a uniform set of human resources rules that would apply to all federal personnel deployed for contingency operations.
Contracting and Procurement
· Explore the creation of an enhanced Contingency Federal Acquisition Regulation.
· Pre-compete and pre-qualify a diverse pool of contractors with expertise in specialized reconstruction areas
Program & Project Management
· Consider a “Goldwater-Nichols” –like reform measure to promote better coordination and integration among Defense, USAID and State, particularly with respect to contingency operations.
· Ensure that program managers integrate local populations and practices at every level of the planning and execution process.
Full copies of the lesson learned reports and their 19 cumulative recommendations are available at www.sigir.mil.
The lessons learned capping report will draw upon these and other SIGIR reports, as well as accounts by various program managers, contractors, and sector advisors in its account of how the reconstruction funds were spent and how the evolving security and policy environment affected the outcome.
This committee has asked what SIGIR would recommend on the
best use of future funding. In addition
to implementation of recommendations from our various audits and inspections, implementing
recommendations from our Lessons Learned reports could help promote improved
economy, efficiency, and effectiveness in the continuing
In preparation for our anticipated move into the new Embassy
compound this fall, SIGIR is reducing its staff footprint in
Before the expiration of our mandate, SIGIR expects to issue a number of audit and inspection reports that focus on tracking IRRF funds and review key programs under ongoing funding streams such as ESF and CERP. We expect to issue five more quarterly reports, a capping lessons learned report, and a concluding letter report. SIGIR expects that our investigative work will yield significant results over the course of this year.
In closing, permit me to say that I remain proud of the courageous
SIGIR auditors, inspectors, and investigators who continue to carry out our