OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

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SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202

October 24, 2007 

MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ 

 OFFICE OF THE ASSISTANT DEPUTY ASSISTANT SECRETARY 

OF THE ARMY (POLICY & PROCUREMENT)-

IRAQ/AFGHANISTAN 

 ADMINISTRATOR, U.S. AGENCY FOR INTERNATIONAL 

DEVELOPMENT 

 COMMANDING GENERAL, U.S. ARMY CORPS OF ENGINEERS 

 COMMANDING GENERAL, JOINT CONTRACTING COMMANDIRAQ/AFGHANISTAN 

 CHIEF FINANCIAL OFFICER, U.S. ARMY CORPS OF 

ENGINEERS 

 DIRECTOR, OFFICE OF ACQUISITION MANAGEMENT, 

DEPARTMENT OF STATE 

 DIRECTOR, IRAQ TRANSITION ASSISTANCE OFFICE 

 DIRECTOR, AIR FORCE CENTER FOR ENGINEERING AND THE 

ENVIRONMENT 

SUBJECT: Review of Agency Management of the Contract Closeout Process for Iraq Relief 

and Reconstruction Fund Contracts (SIGIR-07-010) 

This audit report is provided for your information and use. This report discusses our review of 

agency management of the contract closeout process for Iraq Relief and Reconstruction Fund 

Projects. 

We considered comments received on the draft of this report from the Assistant Deputy Assistant 

Secretary of the Army (Policy and Procurement) and the U.S. Army Corps of Engineers when 

preparing the final report. The comments are addressed in the report, where applicable, and the 

written responses are included in the Management Comments section of this report. 

Introduction 

In the course of implementing the $20.9 billion Iraq Relief and Reconstruction Fund (IRRF) 

program, thousands of contracts were issued for activities ranging from the purchase of supplies 

to billion-dollar construction programs. Most of the work performed under the IRRF program 

involved the use of contracts, and contract closeout is the final phase in a contract’s life cycle. 

During this phase, agencies receive and accept final delivery of services and supplies, make final 

payments to contractors, determine whether excess funds are available for deobligation and use 

elsewhere, and prepare required documentation such as the contract completion statement. The 

process also provides transparency of the decisions made and documents the history of the 

contract.
The Federal Acquisition Regulation (FAR) 4.804-5 provides financial and administrative 

requirements and timelines for closing out contracts. These requirements include deobligating 

excess funds, disposing of classified material, completing contractor’s closing statements, and 

others. Regarding timing, however, the FAR provides guidelines rather than requirements. The 

FAR states that firm-fixed-price contracts should be closed out within six months of evidence of 

physical completion, and contracts requiring settlement of indirect cost rates should be closed out 

within 36 months after the contract is physically completed. 

This review was announced as a broad review of IRRF closeout actions involving contracts and 

associated task orders, grants, and cooperative agreements to determine their compliance with 

Federal Acquisition Regulation procedures and to determine whether there were significant 

impediments to closeout actions. We subsequently deleted grants and cooperative agreements 

from our analysis since they comprised a relatively small share of IRRF awards and are not 

covered under the FAR. This report summarizes the SIGIR review of agency measures to 

manage contact closeout and future issues affecting closeout of high-value cost reimbursable 

contracts. 

Results 

The Department of Defense (DoD) and civilian agencies conducting contract activities in Iraq 

have policies and procedures for closing out contracts that support the FAR, and data indicate 

that they have closed out contracts. These agencies include: 

• U.S. Army Corps of Engineers Gulf Region Division (USACE/GRD) 

• Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) 

• Air Force Center for Engineering and the Environment (AFCEE) 

• Department of State (DoS) 

• U.S. Agency for International Development (USAID) 

When problems have arisen, agencies have responded by seeking outside help to closeout 

backlogs, hiring more staff, or providing additional training to staff. Contracts are not always 

closed out within the FAR guidelines. However, DoS, DoD and USAID contracting officials 

state that not meeting the guidelines has a limited effect as long as financial closeout 

requirements–such as settling final payments with the contractor and deobligating unneeded 

contract funds–are completed. SIGIR found that the agencies do take actions to financially 

closeout contracts and then address the less important administrative closeout tasks as time 

permits. 

Agency officials voiced concern in one area–closing out the large design-build infrastructure 

construction contracts in Iraq. GRD and USACE officials estimate that it could take up to fifteen 

years to fully closeout these contracts. In the past, the complicated financial and legal issues on 

similar contracts required years to closeout. This could be problematic because the agencies 

administering these contracts–USACE/GRD and JCC-I/A in Iraq–are temporary and plans to 

transition their closeout workload to other organizations have not been fully worked out. A 

transition plan is needed to ensure continuity of efforts to accomplish required closeout actions 

where long-term closeout activity is anticipated. 

2
Background 

Congress appropriated a total of $20.9 billion to the Iraq Relief and Reconstruction Fund. As of 

March 2007, approximately 97 percent of that was apportioned to DoD ($14 billion), USAID 

($4.7 billion), and DoS ($1.6 billion). Within DoD, several agencies are principally responsible 

for managing IRRF contracts; USACE’s GRD and Transatlantic Programs Center (CETAC), 

JCC-I/A, and AFCEE. USAID and DoS each manage their own IRRF contracts. We reported in 

April 2007 that most projects funded under IRRF contracts are now complete and most of the 

remaining projects are expected to be finished by the end of 2007.1 For example, as of the end 

of June 2007, 89 percent of IRRF projects in the security and justice sector and 90 percent in the 

water sector had been completed, and all IRRF-funded construction projects in the oil and gas 

sector had reached completion.2

 

U.S. agencies purchasing, constructing, or providing services with IRRF could do so through 

contracts, grants, and cooperative agreements. For the most part, DoD, DoS and to a lesser 

degree USAID have used various types of contracts to acquire goods or services. Types of 

contracts include: 

• Indefinite Delivery, Indefinite Quantity–provides for an indefinite quantity, within stated 

maximum and minimum limits, of specific supplies or services to be furnished within an 

unspecified time period. Under these contracts, task orders are issued on either a costreimbursement or fixed-price basis. 

• Cost-reimbursable–the U.S. government reimburses the contractor for all allowable, 

allocable, and reasonable contract costs. Cost-reimbursable contracts are typically used 

when the government is unable to provide sufficient information for offerors to 

accurately determine a competitive price. 

• Fixed-price–payment is made to the contractor on the basis of pre-established prices.3

Moreover, contracts may include one or more task orders which are specific orders for services 

placed against an existing contract. The task orders may be cost-reimbursable or fixed price. 

FAR Contract Closeout Requirements 

Contract closeout requirements are addressed in the FAR, section 4.804-5. The FAR identifies 

specific actions that agencies must complete, but does not prescribe specific steps to complete 

the actions nor mandate a particular structure or procedure; rather, each agency determines how 

best to accomplish closeout. According to the FAR and to DoD, DoS, and USAID contracting 

officials, the closeout process includes actions involving physical, financial, and administrative 

closeout components. Overall, the process can vary from the relatively simple and quick, in the 

case of a small procurement or fixed price contract, to the very complex and protracted, in the 

case of a multi-year cost-reimbursement arrangement. The FAR addresses requirements at the 

contract level only, and if a contract contains more than one task order, agencies can either close 

out each one separately or wait until work under all of the orders is complete. In the former case, 

the overall contract must still be closed out after the last task order has been dealt with. Closeout 

 

1

 Special Inspector General for Iraq Reconstruction, Quarterly Report to the United States Congress, April 30, 2007. 2

 Special Inspector General for Iraq Reconstruction, Quarterly Report to the United States Congress, 

 July 30, 2007. 

3 The Government Contracts Reference Book, Ralph Nash, (Second Edition), 1998. 

3
is not permitted if the contract is in litigation or under appeal, or if it has been terminated but not 

all termination actions have been completed. 

The FAR states that physical completion is the first step in the closeout process and consists of 

U.S. agency officials evaluating whether the contractor provided the goods, services and/or 

project as specified and the government has accepted them. In Iraq, for example, GRD engineers 

would determine if a construction project has been completed as specified. 

Once a contract has been physically completed, contracting officials can begin to address the 

financial and administrative components of closeout. Financial closeout encompasses all 

monetary matters. For example, the FAR states that the contract administration office must 

determine if a contract audit has been completed, if a final contractor’s invoice has been 

submitted, and if excess funds have been deobligated. With cost- reimbursable contracts, this 

includes addressing issues raised in financial audits of contractors’ costs. To illustrate, for DoD 

cost-reimbursable contracts, the Defense Contract Audit Agency (DCAA) conducts annual audits 

of companies that hold government contracts to determine if the companies’ charges are 

acceptable and in accordance with contract terms, the FAR, and Cost Accounting Standards. If 

contractors do not provide required information on time, the annual audits of the company can be 

delayed, resulting in delay of final financial closeout for the company’s contracts. It is DoD’s 

policy to financially closeout each task order, although it is not required by the FAR to do so. 

Once all task orders are completed, DoD then financially closes out the entire contract, making 

final payments on the prime contract and deobligating funds if applicable.4 

The FAR also prescribes actions that must be completed to administratively closeout a contract. 

Actions include, for example, disposing of classified information and preparing a contractor’s 

closing statement. Once all required financial and administrative actions are finished, the 

contracting officer administering the contract must ensure that a contract completion statement is 

prepared which includes information such as the contractor name and address and voucher 

number and date if final payment has been made. The FAR further requires that agencies must 

prescribe procedures for the handling, storing and disposing of contract files and also provides 

retention periods by type of document; for example, agencies must maintain construction 

contracts valued at over $2,000 for six years and three months after final payment. 

Regarding the timing of closeouts, the FAR provides timelines for when contracts “should” be 

closed out. According to the Federal Acquisition Regulation Drafting Guide, use of the term 

“should” indicates “an expected course of action or policy to be followed unless inappropriate 

for a particular circumstance”. Thus, the FAR stipulates that for those contracts using simplified 

acquisition procedures for contracts under a specified dollar threshold,5

 the contract should be 

considered closed when the contracting officer receives evidence of receipt of property and final 

payment. Fixed-price contracts should be closed within six months after the date on which the 

officer receives evidence of physical completion. Cost-reimbursable contracts, which are more 

complicated, should be closed 36 months after physical completion. 

 

4

 The USAID official in charge of deobligating funds stated that his agency will de-obligate prior to final audit, 

leaving a small amount available for contingencies. An official in the Army’s office of the Assistant Secretary for 

Acquisition, Logistics and Technology said the Army does not deobligate funds until final audits have been 

completed. 

5

 The FAR defines simple acquisition procedures as those policies and procedures for the acquisition of supplies and 

services, including construction, research and development, and commercial items, where the aggregate amount 

does not exceed the simplified acquisition threshold. For contingency operations, the FAR defines this threshold as 

$1 million for a contract to be awarded and performed, or a purchase to be made, outside the United States. 

4
Agency Measures to Manage Contract Closeout 

To varying degrees, DoD agencies, DoS and USAID have established contract closeout policies 

and procedures in addition to those provided in the FAR, and have data systems that are able to 

track if closeouts are being conducted in a timely manner. Moreover, GRD, JCC-I/A and USAID 

have taken specific actions to address problems in closing out their Iraq contract portfolios. 

Defense Contract Management Agency (DCMA) and other DoD, DoS and USAID contracting 

officials stated, however, that not finalizing all the paperwork to administratively closeout 

contracts according to FAR guidelines would have limited adverse impact if financial closeout 

requirements–such as providing or receiving final payments to the contractor and deobligating 

funds not necessary for completion–are completed. These officials also informed us that 

financial issues are performed even if a contract has not been administratively closed out. 

Financial Closeout Viewed as Most Critical Closeout Element 

Contracting officials with whom we met generally agreed that completing all the financial 

closeout requirements were the most critical aspect of contract closeout and that these actions 

could and are being accomplished without fully closing out a contract administratively. One 

such financial requirement that agencies independently address is deobligating funds no longer 

needed to complete the contract. To illustrate, the USAID official responsible for deobligating 

funds informed us that he reviews the need for and if applicable deobligates funds before an 

award is closed out. DCMA officials noted that after addressing financial closeout issues and 

turning over projects to the customer, they will assess the risk in not completing the 

administrative portion of closeout. If it is not critical to do so and they have more important 

work to conduct, they will place the administrative portion of closeout on hold. A DCMA 

division director noted that as a result, some contracts sit without being administratively closed 

out for years and this has no materiel impact. This opinion was echoed by CETAC’s Director of 

Contracting. He stated that as long as a contract is financially closed out, the remaining closeout 

activities are viewed as low-priority formalities when compared to other contract-management 

responsibilities, to be accomplished only as time permits. Nevertheless, a separate SIGIR review 

recently found that while each agency has policies and procedures in place to monitor obligations 

and to conduct at least annual reviews of unliquidated obligations to determine if they can be 

deobligated, the comprehensiveness and documentation of these reviews varied. Our review 

identified opportunities to improve the completion and documentation of such reviews which 

should facilitate ongoing monitoring of future deobligation decisions.6

GRD Management of Contract Closeout 

GRD developed Iraq specific closeout directives, increased staff training to improve its 

performance in closing out contracts, and tracks closeout status through a variety of data 

systems. In October 2006, GRD prepared a closeout Standard Operating Procedure and Users 

Guide. The guide lays out the process and responsibilities of contract management personnel. 

The guide addresses how to complete actions such as making final payments, completing DoD 

contract closeout forms, and archiving files. The instructions include specific steps in inputting 

data into the USACE Resident Management System (RMS) which is used to monitor the weekly 

closeout status of task orders which have been completed and are therefore ready to be closed 

out. 

 

6 Controls Over Unliquidated Obligations in the Iraq Relief and Reconstruction Fund, ( SIGIR-09- , September 

2007) 

5
In addition to developing directives, USACE/CETAC sent a training team to Baghdad to address 

concerns that GRD contracting staff often came from other U.S. agencies and were unfamiliar 

with USACE policies. As a result of this identified deficiency, CETAC now provides predeployment training which addresses closeouts with all new GRD contracting staff. 

GRD tracks contract closeout status in a number of systems and primarily by individual project 

or task order rather than by contract. GRD in Iraq tracks the “closeout” status of each project in 

the Iraq Reconstruction Management System, which in this case signifies when a specific project 

has been completed and transferred to the Iraqi’s. However, no actual contractual closeout as 

defined in the FAR occurs at that level. CETAC, does however, track GRD closeouts by task 

order in USACE’s RMS Contract Closeout Report which reported that as of April 10, 2007 GRD 

had closed 1,930 of 2,586 completed task orders. While GRD does contractually closeout 

individual task orders, the report does not address the status of the prime contract under which 

the task order was issued. Working through the designated chain of command, we relayed our 

concerns with GRD officials that the different data provided did not clearly relate projects to task 

orders and contracts. In response, GRD provided more comprehensive contract level data from 

the RMS system. Nevertheless, USACE’s Deputy Principal Assistant Responsible for 

Contracting stated that the only way they have of determining when a contract is complete and 

ready for closeout is by talking with a Contracting Officer who is responsible for initiating the 

closeout action. 

JCC-I/A Management of Contract Closeout 

JCC-I/A has issued closeout guidance, sought assistance when faced with a backlog of contracts 

to closeout, and maintains comprehensive databases on the status of its contracts. To provide 

guidance, JCC-I/A developed a closeout memo for cost-reimbursement contracts. The memo 

discusses required steps such as initiating the DoD Contract Closeout Checklist and issues such 

as ensuring that contractor submitted vouchers do not involve claims for direct costs incurred 

after the project completion date. 

Regarding efforts to improve the management of closeout activities, in November 2004, DCMA 

was asked to assist in closing out a backlog of JCC-I/A’s Development Fund for Iraq funded 

contracts. DCMA’s Chief of Contingency Operations informed us that by December 2006 

DCMA closed out about 11,000 contracts and set up procedures for JCC-I/A to better manage 

contracts such as in deobligating funds. DCMA officials stated that JCC-I/A is now fully staffed 

and capable of managing its own closeout effort. Moreover, in April 2006, GRD and JCC-I/A 

signed a Memorandum of Agreement that detailed their respective closeout roles in contracts 

they jointly manage. In these cases, GRD assumes construction-management authority and is 

assigned closeout responsibilities in areas such as accepting or rejecting final construction and 

completing contract files to send to JCC-I/A. JCC-I/A, on the other hand, takes responsibility for 

archiving contract files. 

JCC-I/A monitors contracts in its Access Contract Database. The database reported that, as of 

March 12, 2007, the agency was managing 3,470 IRRF-funded contracts or task orders. Of 

these, the agency had closed out 1,449 firm fixed-price contracts--577 of which had met the FAR 

guidelines to closeout within 180 days of project completion. 

DoS and USAID Management of Contract Closeout 

USAID and DoS officials informed us that because their Iraq contract portfolio is relatively 

small and does not present any unique conditions, they had not developed any Iraq-specific 

6
closeout procedures. Rather, they work with the policies and procedures they use in other 

countries. For the DoS, the Director, Office of Acquisition Management informed us that the 

department relies on the FAR for guidance. The Department has also issued DoS Acquisition 

Regulations in which Section 604.804-70 addresses contract closeout and, according to the 

Acquisitions Director, developed specific closeout forms which contracting officials must 

complete to document closeout. 

USAID uses its existing order, Contract Information Bulletin 90-12, to provide its Iraq and other 

overseas missions closeout instructions to implement the FAR requirements. The bulletin 

provides closeout forms and procedures addressing how to resolve all the financial closeout 

requirements and other issues such as the need to account for government owned or furnished 

equipment. Moreover, to provide additional oversight, USAID officials in the Asia and Near 

East Bureau, which includes Iraq, informed us that the agency hired additional contracting staff 

in its Iraq Mission. 

Overall, DoS and USAID officials voiced confidence in their abilities to closeout their Iraq 

portfolio DoS data indicate that it has 16-IRRF funded contracts or task orders, of which three 

were ready for closeout. As of April 2007, USAID was managing 28 contracts or task orders, 

four of which had been closed out. At that time, 11 cost-plus contracts had been completed and 

were ready to begin closeout; none of them, however, had yet passed the FAR’s three-year 

threshold for closing out cost contracts after project completion. 

AFCEE Management of Contract Closeout 

An AFCEE contracting official informed us that the agency uses FAR guidelines for closing out 

contracts in Iraq. Moreover, the agency has staff specifically for this effort and thus does not 

view it as a problem. AFCEE’s Project Tracking System which maintains information on the 

status of its task orders indicates that as of May 31, 2007, AFCEE was managing 64 orders that 

were fully or partially IRRF funded. An AFCEE contracting officer confirmed that none of its 

Iraq contracts were ready for closeout; only one out of 64 IRRF funded task orders has been 

closed.

Future Closeout of High-Value Cost-Reimbursable Contracts Could 

be Problematic 

DoD, USAID and DoS officials believe they will be able to close out all remaining contracts 

within acceptable time frames with one exception—the high-value, cost-reimbursable 

design/build contracts managed by JCC-I/A and GRD. Those, history has indicated, could take 

as long as fifteen years to close because of the need to address a number of legal and financial 

issues. The length of time involved poses some problems and uncertainties because JCC-I and 

GRD are temporary agencies, and DoD plans to transition their responsibilities to other 

organizations are still in the initial planning stages. 

From January through March 2004, the U.S. government awarded twelve cost-reimbursable 

contracts, valued at $7 billion, to design and build various facilities in Iraq. Although one 

contract for $325 million was terminated soon after that, all the others remain active. Based on 

the history of similar contracts, GRD and CETAC officials said it could take as long as fifteen 

years to closeout these contracts to address a myriad of legal and financial issues. For example, 

work on one of the early reconstruction contracts commonly referred to as Restore Iraqi Oil was 

completed in 2004 but the contract remains open principally because the required audits have not 

7
been completed. USACE’s Southwest Division, which is responsible for managing this contract, 

estimates that the normal time frame for closing out a cost- reimbursement contract is three to 

five years after work is completed. But the Southwest Division expects that closeout of the 

Restore Iraqi Oil contract may take longer than five years due to delays in completing audits of 

the contractor’s incurred costs. Another example, albeit not involving Iraq, involves a large 

(about $1 billion) cost-reimbursable contract to provide support for U.S. military forces in the 

Balkans. CETAC officials responsible for closing out that contract informed us that, although it 

was completed in 1999, it remains open pending resolution of legal and financial issues. 

A principal cause of the delay is the difficulty in obtaining adequate final, indirect- cost rates 

proposals and supporting financial data from the contractors. Those data are needed to facilitate 

the DCAA audits that will determine if the costs are within contract terms, the FAR 

specifications, and Cost Accounting Standards rules and regulations. If contractors do not 

provide required information on time, the annual audits of the company will be delayed, causing 

postponement of financial closeout of all company contracts. DCAA officials told us that for 

one major contractor in Iraq, DCAA has been able to complete its annual incurred-cost audits 

only up through calendar year 2001 because of contractor delays in submitting acceptable data. 

By this time, annual audits should have been completed through calendar year 2005, and DCAA 

should now be working on the 2006 audit. 

A further challenge in closing out these large, cost-reimbursable contracts is that the two 

principal agencies involved in these contracts—GRD and JCC-I/A—are temporary agencies. 

Prospects for expeditiously closing out their contracts in the future are uncertain because DoD 

has not yet resolved who will assume the agencies’ duties when they close. 

On December 11, 20067, recognizing the need to plan for GRD’s shutdown, USACE 

headquarters issued a draft order for the transition of GRD responsibilities—including closeout--

to CETAC; as of the end of March 2007, however, no final order had been issued. 

Notwithstanding the lack of specific plans, CETAC’s Director of Contracting expressed concern 

about the agency’s financial and personnel capabilities to absorb GRD close-out workload from 

a financial and staffing perspective. He observed that CETAC has only about twenty contracting 

officers, far fewer than the sixty five specified in a requirements review, and that it is difficult to 

hire experienced contracting officers because the agency can only offer low-grade, temporary 

positions. 

As a result, CETAC’s Director of Contracting noted that the agency has not closed out any of its 

six IRRF-funded completed contracts in Iraq, valued at $464 million, nor approximately one 

hundred contracts it was managing elsewhere. For example, a fixed-price contract for an Air 

Force storage facility in Bahrain was physically completed in March 2005 but has yet to be 

closed out. SIGIR concluded, in its Lessons Learned report on contracting and procurement, that 

obtaining the necessary number of acquisition staff with the requisite skills in Iraq has been a 

challenge.8

According to an Assistant Deputy Assistant Secretary of the Army (Policy and Procurement)-

Iraq/Afghanistan (ADASA-P&P I/A) official, JCC-I/A transition workload planning is in the 

initial planning stages. JCC-I/A derives its contracting authority from the Assistant Secretary of 

the Army (Acquisition, Technology, and Logistics) (ASA/ALT), and the agency falls under the 

 

7

 Planning Order 2007-04, Transition of USACE Support to CENTCOM 8 Iraq Reconstruction, Lessons in Contracting and Procurement, SIGIR, Report Number 2, July 2006, Appendix B 

8
operational control of the U.S. Central Command (CENTCOM). Within ASA/ALT, the 

ADASA-P&P I/A is responsible for administrative and contracting support in those countries 

and is responsible for developing and implementing the long range contracting support plan for 

fiscal year 2008 and beyond, which includes contracting agency transition and contract closeout. 

As such, both ADASA-P&P I/A and CENTCOM are responsible for JCC-I/A transition 

planning. CENTCOM has established a Theater Reposture Working Group to develop a 

CENTCOM Transition Plan, including JCC-I/A. Drawdown of activities and personnel will 

drive that agency’s drawdown. 

Conclusion 

DoD, DoS and USAID contracting officials with whom we met and available data indicate that 

contract closeout does not appear to be a particularly problematic aspect of contract management 

in Iraq at this time. GRD and JCC-I/A, which handle the preponderance of contracts in Iraq, have 

established policies and procedures to closeout contracts in Iraq and have sought assistance when 

faced with significant backlogs or other problems. They can demonstrate that thousands of 

contracts are being closed out. Nevertheless, DoD may face future closeout problems because 

the department has not yet determined who will be responsible for the huge and complicated 

design-build contracts that GRD and JCC-I/A manage once these temporary organizations close. 

Recommendations 

We recommend that the ADASA-P&P I/A coordinate with JCC-I/A, USACE, and CENTCOM 

to ensure that timely action is taken to ensure that GRD and JCC-I/A transition plans address 

closing out the large, cost-reimbursable contracts in Iraq. 

Management Comments and Audit Response 

We provided a draft of this report to ADASA-P&P I/A, DoS, USAID, JCC-I/A, USACE, 

CENTCOM, CETAC and GRD for comment. Only ASA-P&P I/A provided a written response 

in which it concurred with our recommendation. DoS sent an email which stated that the 

Department concurred with the findings in the report.

Scope and Methodology 

This review was announced with the objective of determining whether IRRF- funded contracts, 

including task orders, grants and cooperative agreements, were being closed-out in a timely 

manner and in accordance with Federal Acquisition Regulation (FAR) 4.804-1(a) and other 

applicable regulations, policies, and procedures. Specifically, we addressed the policies and 

procedures agencies adopted to meet closeout requirements and the issues that affect their ability 

to conform to FAR guidelines. Since grants and cooperative agreements encompass a relatively 

small share of IRRF funded awards, and are not covered under the FAR, we did not include them 

in the analysis.9

 

 

9

 Grants and cooperative agreements are not covered by the FAR because they are not considered 

acquisition instruments but rather assistance instruments that transfer funds for stated purposes. 

As such, they are covered under Title 22 of the U.S. Code, Foreign Relations, which specifies 

that all financial, performance, and other reports in the award must be completed within 90 days 

9
To address whether agencies were following FAR guidelines, we first determined whether 

agencies had prepared closeout directives and other instructions to implement FAR direction. 

We also met with knowledgeable officials to determine if any additional management actions 

had been taken or planned with regard to FAR closeout requirements. Similarly, to determine 

the issues that may impact future contract closeouts, we met with staff from each agency in the 

Washington, D.C. area or in Baghdad, as well as with officials from the Defense Contracting 

Audit Agency and the Defense Contracting Management Agency, and we spoke with an official 

from the U.S. Central Command. We reviewed transition-planning documents. We also 

discussed with contracting officers the closeout history of previous contracts that might shed 

light on expectations for closing out similar contracts in Iraq. 

To address contract closeout status we obtained and analyzed closeout data provided by each 

agency managing contracts in Iraq. We requested comprehensive data on IRRF contracts. 

Specifically, we asked that each agency provide us data on their IRRF-funded contracts and 

subordinate task orders, as well as grants, and cooperative and interagency agreements. For 

each, agencies were asked to provide information on the type of contract or other award, the 

recipient, the award date, the date the contract, task order, grant or agreement was completed, 

and the closeout status and closeout date. Such data were needed to assess whether contracts 

were being completed according to FAR guidelines. When those data were not available, we 

requested that the agency develop data runs to the extent possible. SIGIR did not independently 

develop the data and did not attempt to verify the accuracy of the data. We did, however, note 

where data elements were missing and determine whether agencies were reporting on the same 

contracts resulting in duplications. We discussed with agency personnel the discrepancies and 

information gaps we identified. 

Use of Computer-Processed Data 

To perform this audit, we used data from the Iraq Reconstruction Management System 

databases, the Joint Contracting Command’s Access Contract Database, the Army Corps of 

Engineers’ Resident Management System, and the Air Force’s Project Tracking System Report. 

We did not audit these project-management systems during this review. However, we 

previously audited the Iraq Reconstruction Management System and identified issues regarding 

incomplete data.10

Prior Audit Coverage 

We reviewed applicable reports issued by SIGIR and the DoD Inspector General: 

• Review of the Use of Definitization Requirements for Contracts Supporting 

Reconstruction in Iraq, (SIGIR-06-09, July 28,2006) 

 

of completion of the award, and that if a final audit has not been conducted, the awarding agency 

retains the right to recover amounts from the final audit. 

10 Management of the Iraq Relief and Reconstruction Fund: The Evolution of the Iraq Reconstruction Management 

System” (SIGIR-06-001), April 24, 2006 

“Review of Data Entry and General Controls in the Collecting and Reporting of the Iraq Relief and Reconstruction 

Fund (SIGIR-06-003), April 28, 2006 

10
• Closing Overage Contracts Prior to Fielding a New DOD Contractor Payment System,

(DODIG, Report No. D-2002-027, December 19,2001) 

• Iraq Reconstruction, Lessons in Contracting and Procurement, (SIGIR Report Number 2, 

July 2006) 

We conducted this audit from January 2007 through September 2007, in accordance with 

generally accepted government auditing standards. 

- - - 

This report is provided for your information and use. A draft of this report was provided to 

USACE, CETAC, ASA/ALT, AFCEE, GRD, JCC-I/A, CENTCOM, DoS and USAID and their 

comments are addressed in the final report as appropriate. 

We appreciate the courtesies extended to the staff. For additional information on this report, 

please contact either Mr. Glenn Furbish (703-428-1058) / glenn.furbish@sigir.mil), or Ms. Joan 

S. Hlinka (703-604-0945/ joan.hlinka@sigir.mil). For the report distribution, see Appendix B. 

For a list of the audit team members, see Appendix C. 

Stuart W. Bowen, Jr. 

Inspector General 

Cc: See Distribution 

11
Appendix A—Key U. S. Agencies Managing 

IRRF Contracts in Iraq 

Department of Defense (DoD) 

The following are the principal DoD agencies responsible for managing contracts in Iraq: 

Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) – JCC-I/A was established in 

November 2004 as a special command to administer and consolidate DoD contracting activities. 

It reports through the Deputy Assistant Secretary of the Army (Policy and Procurement) to the 

Assistant Secretary of the Army for Acquisition, Logistics, and Technology. 

U.S. Army Corps of Engineers (USACE) Gulf Region Division (GRD)—GRD was established 

as a temporary USACE agency after operations in Iraq surged beyond the capabilities of the 

USACE Transatlantic Command, a permanent U.S. entity charged with supporting USACE 

activities in the region. According to Planning Order 2007-04, 02, USACE was granted 

approval to form GRD with the understanding that it would shrink in size along with the 

workload. The GRD provides engineering services to the Multi-National Force-Iraq, DoS, 

USAID, and the Iraqi government, supporting planning, design, and management for military 

and civil- infrastructure construction. 

Air Force Center for Engineering and the Environment (AFCEE) – AFCEE provides the Air 

Force technical and professional services in environmental and installation planning, 

construction, engineering, and military housing construction and privatization. AFCEE first 

began managing contracts in Iraq in 2003 at the request of the Coalition Provisional Authority. 

It subsequently agreed to provide for the planning, design, upgrade, renovation and construction 

of facilities designated by Multi-National Security Transition Command-Iraq. 

Department of State (DoS) 

DoS is the lead institution in the conduct of American diplomacy, and the Secretary of State is 

the President’s principal foreign policy advisor. Its mission is carried out in Washington, D.C. 

headquarters through bureaus based on regions of the world and on functions and management 

responsibilities. Within the former, the Bureau of Near Eastern Affairs has responsibility for 

Iraq, and other bureaus, such as the one dealing with international narcotics and law 

enforcement, operate significant programs in Iraq. . 

U.S. Agency for International Development (USAID) 

USAID is the principal agency charged with extending assistance to countries recovering from 

disaster, trying to escape poverty, or engaging in democratic reforms. Its mission in Iraq is to 

implement programs in three strategic areas: restoring essential infrastructure, supporting 

essential health and education, expanding economic opportunity, and improving efficiency and 

accountability of government. The mission has undertaken programs across a broad range of 

sectors, including education, health care, food security, infrastructure reconstruction, airport and 

seaport management, economic growth, community development, local governance, and 

transition initiatives. 

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Appendix B—Report Distribution 

Department of State 

Secretary of State 

Senior Advisor to the Secretary and Coordinator for Iraq 

Director of U.S. Foreign Assistance/Administrator, U.S. Agency for International 

Development 

 Director, Office of Iraq Reconstruction* 

 Assistant Secretary for Resource Management/Chief Financial Officer, 

 Bureau of Resource Management 

U.S. Ambassador to Iraq 

Director, Iraq Reconstruction Management Office 

Mission Director-Iraq, U.S. Agency for International Development 

Inspector General, Department of State 

Department of Defense 

Secretary of Defense 

Deputy Secretary of Defense 

Under Secretary of Defense (Comptroller)/Chief Financial Officer 

 Deputy Chief Financial Officer 

 Deputy Comptroller (Program/Budget) 

Deputy Assistant Secretary of Defense-Middle East, Office of Policy/International Security 

Affairs 

Inspector General, Department of Defense 

Director, Defense Contract Audit Agency 

Director, Defense Finance and Accounting Service 

Director, Defense Contract Management Agency 

Department of the Army 

Assistant Secretary of the Army for Acquisition, Logistics, and Technology 

Principal Deputy to the Assistant Secretary of the Army for Acquisition, Logistics, and 

Technology* 

Deputy Assistant Secretary of the Army (Policy and Procurement) 

Director, Project and Contracting Office 

Commanding General, Joint Contracting Command-Iraq/Afghanistan* 

Assistant Secretary of the Army for Financial Management and Comptroller 

Chief of Engineers and Commander, U.S. Army Corps of Engineers 

 Commanding General, Gulf Region Division* 

Chief Financial Officer, //U.S. Army Corps of Engineers* 

Auditor General of the Army 

U.S. Central Command

Commanding General, Multi-National Force-Iraq 

Commanding General, Multi-National Corps-Iraq 

Commanding General, Multi-National Security Transition Command-Iraq 

Commander, Joint Area Support Group-Central 

*Recipient of the draft audit report 

Other Federal Government Organizations 

Director, Office of Management and Budget 

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Comptroller General of the United States 

Inspector General, Department of the Treasury 

Inspector General, Department of Commerce 

Inspector General, Department of Health and Human Services 

Inspector General, U.S. Agency for International Development 

President, Overseas Private Investment Corporation 

President, U.S. Institute for Peace 

Congressional Committees and Subcommittees, Chairman and 

Ranking Minority Member 

U.S. Senate 

Senate Committee on Appropriations 

Subcommittee on Defense 

Subcommittee on State, Foreign Operations and Related Programs 

Senate Committee on Armed Services 

Senate Committee on Foreign Relations 

Subcommittee on International Operations and Organizations, Democracy and Human 

Rights 

Subcommittee on International Development and Foreign Assistance, Economic Affairs 

and International Environmental Protection 

Subcommittee on Near East and South and Central Asian Affairs 

Senate Committee on Homeland Security and Governmental Affairs 

Subcommittee on Federal Financial Management, Government Information, Federal 

Services and International Security 

Permanent Subcommittee on Investigations 

Subcommittee on Oversight of Government Management, the Federal Workforce, and 

the District of Columbia 

U.S. House of Representatives 

House Committee on Appropriations 

Subcommittee on Defense 

Subcommittee on State, Foreign Operations, and Related Programs 

House Committee on Armed Services 

House Committee on Oversight and Government Reform 

Subcommittee on Government Management, Organization, and Procurement 

Subcommittee on National Security and Foreign Affairs 

House Committee on Foreign Affairs 

Subcommittee on Middle East and South Asia 

Subcommittee on International Organizations, Human Rights, and Oversight 

14
Appendix C—Audit Team Members 

This report was prepared, and the audit work conducted, under the direction of Glenn D. Furbish, 

the Acting Inspector General for Audit, Office of the Special Inspector General for Iraq 

Reconstruction. 

The staff members who conducted the audit and contributed to the report include: 

Karen Bell 

Steven Sternlieb 

Roger Florence 

Joan Hlinka 

Nelson Reyes 

15
Management Comments 

Department of the Army – Assistant Deputy Assistant 

Secretary of the Army (Policy & Procurement) – 

Iraq/Afghanistan 

16
SIGIR’s Mission Regarding the U.S. reconstruction plans, programs, 

and operations in Iraq, the Special Inspector General 

for Iraq Reconstruction provides independent and 

objective: 

• oversight and review through comprehensive 

audits, inspections, and investigations 

• advice and recommendations on policies to 

promote economy, efficiency, and effectiveness 

• deterrence of malfeasance through the prevention 

and detection of fraud, waste, and abuse 

• information and analysis to the Secretary of 

State, the Secretary of Defense, the Congress, 

and the American people through Quarterly 

Reports 

Obtaining Copies of SIGIR 

Reports and Testimonies 

To obtain copies of SIGIR documents at no cost, go 

to SIGIR’s Web site (www.sigir.mil). 

To Report Fraud, Waste, 

and Abuse in Iraq Relief 

and Reconstruction 

Programs 

Help prevent fraud, waste, and abuse by reporting 

suspicious or illegal activities to the SIGIR Hotline: 

• Web: www.sigir.mil/submit_fraud.html

• Phone: (703) 602-4063 

• Toll Free: (866) 301-2003 //check SIGIR audit 

style on web addresses and phone numbers; 

I’ve changed original to the styles generally 

used. If you do change the original, make 

consistent throughout the following boxes//

Congressional Affairs Hillel Weinberg

Assistant Inspector General for Congressional 

 Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: (703) 428-1059 

Email: hillel.weinberg@sigir.mil 

Public Affairs Kristine R. Belisle

Director for Public Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: (703) 428-1217 

Fax: (703) 428-0818 

Email: PublicAffairs@sigir.mil 

17