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

April 28, 2006 

MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ 

SUBJECT: Audit Report on Changes in Iraq Relief and Reconstruction Fund Program 

Activities – October through December 2005 

(SIGIR-06-004) 

We are providing this audit report for your information and use. We performed the audit 

in accordance with our statutory duties contained in Public Law 108-106, as amended, 

which requires that we provide for the independent and objective conduct of audits, as 

well as leadership and coordination of and recommendations on policies designed to 

promote economy, efficiency, and effectiveness in the administration of Iraq relief and 

reconstruction programs and operations and to prevent and detect waste, fraud, and 

abuse. 

This report does not contain recommendations; therefore no written response to this 

report is required. We appreciate the courtesies extended to the staff. For additional 

information on this report, please contact Mr. Joseph T. McDermott at (703) 343-7926, 

or by email at joseph.mcdermott@iraq.centcom.mil; or Mr. Glenn Furbish at 

(703) 343-9254, or by email at glenn.furbish@iraq.centcom.mil. For the report 

distribution, see Appendix D. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: Distribution 
i

Special Inspector General for Iraq Reconstruction 

SIGIR-06-004 April 28, 2006 

 

Changes in Iraq Relief and Reconstruction Fund Program Activities – 

October through December 2005 

Executive Summary 

In January 2006 we reported on the challenges faced by the Department of State in 

directing and supervising Iraq Relief and Reconstruction Fund (IRRF) program activities. 

That report focused on changes that occurred in the United State’s original reconstruction 

plans between November 2003 and September 30, 2005. This report updates our earlier 

report to include project changes that occurred between October 1, 2005 and December 

31, 2005. 

Introduction. In November 2003, Congress appropriated $18.4 billion for relief and 

reconstruction activities in Iraq and allocated the funds to specific sectors of Iraqi 

infrastructure and governance based on lists of project plans developed over the summer 

of 2003. In January 2006, we reported that reconstruction plans had changed 

significantly as evidenced by the large-scale movement of funds between sectors. For 

example, as of September 30, 2005, approximately $3.46 billion had moved between 

sectors, and another $2.1 billion had moved within sectors as a result of: 

• dramatically increased spending for security needs 

• strategy changes as the Department of State responded to the changing 

environment in Iraq 

• needed increases in spending for sustainment 

• the need to fund IRRF administrative expenses not considered in original 

planning 

• plans made without a clear understanding of actual situational conditions 

As a result, we reported that many of the original plans will not be fully achieved in some 

sectors. The largest dollar changes occurred in the Security and Law Enforcement sector 

and the Justice, Public Safety Infrastructure, and Civil Society sector indicating the 

higher priority accorded these sectors. The two service sectors, the Water Resources and 

Sanitation sector and the Electric sector provided the bulk of the funds. This report 

updates the changes that occurred between October 1, 2005 and December 31, 2005, in 

the Department of State’s IRRF program plans. 

Objectives. The objectives of this audit were (1) to determine the changes, if any, in the 

Department of State’s Iraq relief and reconstruction plans between October 1, 2005 and 

December 31, 2005, and (2) to identify reasons, if any, for those changes. 
ii

Results. Significant adjustments to IRRF program plans continued through the last 

quarter with $353.3 million in program changes. Altogether, $195.3 million in funding 

moved between sectors, and another $158 million moved within sectors. Nonconstruction programs in the Justice, Public Safety Infrastructure, and Civil Society 

sector; and the Education, Refugees, and Human Rights sector received the largest 

increases in funding, receiving $154.3 million of the $195.3 million that was reallocated 

between sectors. As shown in Table 1, the service sectors (Transportation and 

Telecommunications, Health Care, Electric, and Water Resources and Sanitation) were 

the source for most of the reallocated funds. 

These were some of the results of the adjustments: 

• Six transmission projects in the Electric sector were cancelled. 

• Two expanded healthcare centers and eight primary healthcare centers in the 

Health Care sector were cancelled. 

• Aircraft navigational aid and visual aid contracts and the national radar system 

contract were cancelled in the Transportation and Telecommunications sector. 

• Three large water treatment projects in the Potable Water subsector were reduced 

from design-build contracts to design-only contracts because of limited funding. 

• The last remaining project in the Irrigation and Drainage subsector was reduced to 

engineering design only. 

• The scope of the Umm Qasr to Basr water channel renovation project was 

reduced to repairs of the original channel. 

For additional information on changes within each sub-sector, see appendix B. 
iii

Table 1: Iraq Relief and Reconstruction Funding Allocation Changes 

October 1, 2005 through December 31, 2005 

 (Dollars in millions) 

Sectors Allocation 

as of 

October 2005 

Allocation 

as of 

December 2005 

Change 

in 

Dollars 

Percent 

Change 

Sectors with Increases

Justice, Public Safety 

Infrastructure & Civil 

Society 

$2,242.5 $2,349.8 $107.3 4.8%

Education, Refugees & 

Human Rights 

363.0 410.0 47.0 12.9%

Security & Law 

Enforcement 

5,017.6 5,036.0 18.4 <1.0%

Oil Infrastructure 1,723.0 1,735.6 12.6 <1.0%

Private Sector 

Development1

443.0 453.0 10.0 1.3%

 --Iraq Debt Forgiveness 352.3 352.3 0 0

Sectors with Decreases 

Electric $4,309.8 $4,220.0 $(89.8) (2.1%)

Health Care 786.0 739.0 (47.0) (6.0%)

Transportation & 

Telecommunication 

508.5 465.5 (43.0) (8.5%)

Water Resources & 

Sanitation 

2,146.6 2,131.1 (15.5) (<1.0%)

Sectors with No Changes 

Roads, Bridges & 

Construction 

$333.7 $333.7 $0 0%

Administrative2 213.0 213.0 0 0%

Totals $18,439 $18,439 $(0.0) 0

Source: SIGIR analysis of Department of State and Office of Management and Budget data. 

1

The Private Sector Development sub-sector also includes $352.3 million for Iraq Debt Forgiveness. 

Because debt forgiveness is not an actual program, we have subtracted it from the sub-sector to provide a 

clearer picture on how sector programs changed. 

2

An additional $601.3 million was used to cover the FY2004 and 2005 operating expenses of the Coalition 

Provisional Authority and its successor, and the implementation costs of the implementing agencies. There 

costs are not identified and are spread across the sectors. Total FY2005-2005 administrative costs are 

actually $785.3 million. 
iv

The January 2006 Section 2207 Report generally cites emerging needs as the basis for the 

program changes that occurred during the quarter. For example, the report identifies: 

• The need to train Iraqi officials in key ministries in the modern techniques of civil 

service policies, requirements based budget processes, information technology 

standards, and logistics management systems as the basis for the new Ministerial 

Capacity Development program. 

• Other new programs are intended to expand local government, community, and 

election support; and address issues such as the criminal justice system, 

corrections, public prosecutors, intellectual property rights and property rights 

legislation; and boost the capacity of the Iraqi ministries. 

These changes would indicate a continuation of the prior strategy shift toward nonconstruction programs intended to establish security, increase employment and 

diversification in the private sector, and strengthen local and provincial government, and 

away from construction projects. 

Our earlier report, “Challenges Faced in Carrying Out Iraq Relief and Reconstruction 

Fund Activities,” (SIGIR-05-029, January 26, 2006) contained no recommendations 

because the Department of State was developing or refining metrics for all sectors in 

response to a Government Accountability Office report1

 on the Water Resources and 

Sanitation sector. This report follows up on our prior report and, similarly, contains no 

recommendations. 

 

1 Rebuilding Iraq: U.S. Water and Sanitation Efforts Need Improved Measures for Assessing Impact and 

Sustained Resources for Maintaining Facilities, GAO-05-872 (September 7, 2005). 
Table of Contents 

Executive Summary i 

Introduction 

Background 1 

Objectives 4 

Findings 

Changes in the IRRF Program – October through December 2005 5 

Reasons for Changes in Sector Programs 9 

Appendixes 

A. Scope and Methodology 10 

B. Summary of Changes in Sub-sector Programs 11 

C. Acronyms 15 

D. Report Distribution 16 

E. Audit Team Members 18 
1

Introduction 

In January 2006 we reported on the challenges faced by the Department of State in 

directing and supervising Iraq Relief and Reconstruction Fund (IRRF) program 

activities2. That report focused on changes that occurred in the United State’s original 

reconstruction plans between November 2003 and September 30, 2005. This report 

updates our earlier report to include project changes that occurred between October 1, 

2005 and December 31, 2005. 

Background 

Public Law 108-106, the Emergency Supplemental Appropriations Act for Defense and 

for the Reconstruction of Iraq and Afghanistan, appropriated $18.439 billion for security, 

relief, rehabilitation, and reconstruction in Iraq. The appropriation, known as the Iraq 

Relief and Reconstruction Fund (IRRF), was allocated among 10 sectors of Iraqi 

infrastructure and governance. According to a Congressional report, the provision of 

basic services, such as electricity, clean water, sewage treatment and disposal is urgently 

needed to give Iraqis hope for a better future.3

Section 2207 of Public Law 108-106 requires the Director of the Office of Management 

and Budget to submit a quarterly report, Section 2207 Report, to the Senate and House 

Committees on Appropriations, on the initial obligation of IRRF funds on a project-byproject basis, the distribution of duties and responsibilities regarding IRRF projects 

among the agencies of the U.S. government, funds provided by foreign governments and 

international organizations, and revenues from seized or frozen foreign assets. The 

Office of Management and Budget prepared these reports from January 2004 through 

July 2004. The U.S. Mission in Iraq, through its Iraq Reconstruction Management 

Office, has prepared the reports since October 2004. The U.S. Ambassador to Iraq is the 

Department of State’s Chief of the U.S. Mission in Iraq. 

The IRRF program projects include both construction and non-construction projects. 

Construction projects are those in which the U.S. is building or renovating Iraqi 

infrastructure facilities, such as border forts, military posts, electric generation plants, 

water and sewerage plants, and roads and bridges. Approximately $12.5 billion was 

originally allocated for infrastructure construction and renovation with the majority of it 

in six sectors; security and law enforcement, electricity, water, oil, transportation, and 

roads and bridges. Non-construction projects focus on the procurement of services, 

materiel and training outside the scope of the construction projects, and on democracy 

building activities. 

In some sectors the non-construction projects provide the complimentary equipment sets 

and training as clinics or facilities are refurbished using construction dollars. For 

example, water purification chemicals and spare parts would be non-construction 

expenses in the potable water sub-sector although most expenses would be related to the 

construction of water purification facilities. In other sectors, the non-construction 

projects focus more on providing intermediate support or emergency relief equipment 

until additional capacity is brought on-line via a corresponding construction project. 

 

2 Challenges Faced in Carrying Out Iraq Relief and Reconstruction Fund Activities, SIGIR-05-029 

(January 26, 2006). 

3

 House Committee on Appropriations Report 108-312 (October 14, 2003). 
2

Public education and outreach programs for Iraqi citizens, and support and training for 

Iraqi leaders are also important non-construction activities. Approximately $5.9 billion 

was initially allocated for non-construction activities, principally in the security, justice, 

and oil sectors. Table 2 categorizes each IRRF sub-sector by its primary activity. 

Table 2: Construction and Non-Construction Sub-Sectors 

 (based on primary activity) 

Sector Construction sub-sectors Non-construction sub-sectors 

Security and Law 

Enforcement 

• Iraqi Armed Forces Facilities 

• Iraqi National Guard Facilities 

• Police Training & Technical 

Assistance 

• Border Enforcement 

• Facilities Protection Service 

• Iraqi Armed Forces Equipment 

• Iraqi Security Forces Quick 

Response Program 

• Iraqi Armed Forces Training & 

Operations 

• Iraqi National Guard Operations & 

Personnel 

• Iraqi National Guard Equipment 

• (New) Non-proliferation. Export 

Control, and Border Security 

• (New) Focused Stabilization 

• Commander’s Humanitarian Relief 

and Reconstruction Program 

Justice, Public Safety 

Infrastructure and Civil 

Society 

• Reconstruction and 

Modernization of Detention 

Facilities 

• Penal Facilities 

• Judicial Security and Facilities 

• Technical Investigative Methods 

• Witness Protection Program 

• Facilities Repair, Fire Service, & 

De-mining 

• Public Safety Training & Facilities 

• First Responder Network 

• Rule of Law in Iraq 

• Investigations of Crimes Against 

Humanity 

• Democracy Building Activities 

• U.S. Institute for Peace 

Electric • Generation 

• Transmission 

• Network Infrastructure 

• Automated Monitoring & 

Control Systems 

• Security 

Oil • Oil Infrastructure • Emergency Supplies of Refined 

Petroleum Products 
3

Sector Construction sub-sectors Non-construction sub-sectors 

Water Resources & 

Sanitation 

• Potable Water 

• Water Conservation 

• Sewerage 

• Solid Waste Management 

• Pumping Stations & 

Generators 

• Irrigation & Drainage 

• Major Irrigation Projects 

• Dam Repair, Rehabilitation 

and New Construction 

• Umm Qasr to Basra Water 

Supply Project 

• Basra Channel Flushing 

Transportation & 

Telecommunication 

• Civil Aviation 

• Umm Qasr Port Rehabilitation 

• Railroad Rehabilitation & 

Restoration 

• Iraq Telecommunications 

Systems 

• Consolidated Fiber Network 

• Iraq Telecommunications & Postal 

Corporation 

• Iraq Communications Operations 

Roads, Bridges & 

Construction 

• Public Buildings Construction 

& Repair 

• Roads & Bridges 

Health Care • Nationwide Hospital & Clinic 

Improvement 

• Pediatric Facility in Basra 

• Equipment Procurement & 

Modernization 

Private Sector 

Development 

• Expand Network of Employment 

Centers 

• Vocational Training 

• Business Skills Training 

• Micro-Small-Medium Enterprises 

• Institutional Reforms 

• Agriculture 

• Market-Based Reforms 

• Iraq Debt Forgiveness 

Education, Refugees, 

Human Rights, 

Democracy, & 

Governance 

• Migration & Refugee Assistance 

• Property Claims Tribunal 

• Governance 

• (New) Ministerial Capacity 

Development 

• Banking System Modernization 

• Human Rights 

• Education 

• Civic Programs 

Source: SIGIR analysis of Department of State data. 
4

Objectives

The objectives of this audit were (1) to determine the changes, if any, in the Department 

of State’s Iraq reconstruction plans between October 1, 2005 and December 31, 2005, 

and (2) to identify the reasons, if any, for changes in the plans. 

For a discussion of the audit scope, methodology, and a summary of prior coverage, see 

Appendix A. For definitions of the acronyms used in this report, see Appendix C. For a 

list of the audit team members, see Appendix E. 
5

Changes in the IRRF Program - October through 

December 2005 

Between October 1, 2005 and December 31, 2005, $353.3 million in changes were made 

to IRRF program plans with $195.3 million in funding moving between sectors, and 

another $158 million moving within sectors. Thirty of 67 sub-sectors (45 percent) had 

funding changes, with 6 sub-sectors experiencing changes (increases or decreases) 

greater than 25 percent of their October allocation. Three new sub-sectors were created. 

As shown in Table 3, programs in the Justice, Public Safety Infrastructure, and Civil 

Society sector; and the Education, Refugees, and Human Rights sector received the 

largest increases in funding, receiving $154.3 million (79 percent) of the $195.3 million 

that was reallocated between sectors; while programs in the service sectors 

(Transportation and Telecommunications, Health Care, Electric, and Water Resources 

and Sanitation) were the source for all $195.3 million of the reallocated funds. 
6

Table 3. Iraq Relief and Reconstruction Funding Allocation Changes 

October 1, 2005 through December 31, 2005 (Dollars in millions) 

Sectors Allocation 

as of 

October 2005 

Allocation 

as of 

December 2005 

Change 

in 

Dollars 

Percent 

Change 

Sectors with Increases

Justice, Public Safety 

Infrastructure & Civil 

Society 

$2,242.5 $2,349.8 $107.3 4.8%

Education, Refugees & 

Human Rights 

363.0 410.0 47.0 12.9%

Security & Law 

Enforcement 

5,017.6 5,036.0 18.4 <1.0%

Oil Infrastructure 1,723.0 1,735.6 12.6 <1.0%

Private Sector 

Development1

443.0 453.0 10.0 1.3%

 --Iraq Debt Forgiveness 352.3 352.3 0 0

Sectors with Decreases 

Electric $4,309.8 $4,220.0 $(89.8) (2.1%)

Health Care 786.0 739.0 (47.0) (6.0%)

Transportation & 

Telecommunication 

508.5 465.5 (43.0) (8.5%)

Water Resources & 

Sanitation 

2,146.6 2,131.1 (15.5) (<1.0%) 

Sectors with No Changes 

Roads, Bridges & 

Construction 

$333.7 $333.7 $0 0%

Administrative2 213.0 213.0 0 0%

Totals $18,439 $18,439 $(0.0) 0

Source: SIGIR analysis of Department of State data. 

1

The Private Sector Development sub-sector also includes $352.3 million for Iraq Debt Forgiveness. 

Because debt forgiveness is not an actual program, we have subtracted it from the sub-sector to provide a 

clearer picture on how sector programs changed. 

2

An additional $601.3 million was used to cover FY2004 and 2005 program implementation costs and the 

FY2005 operating expenses of the Coalition Provisional Authority and its successor agency. These costs 

are not identified and are spread across the sectors. Total FY2004-2005 administrative costs are actually 

$785.3 million. This does not include project overhead. 

Programs receiving the largest increases. As shown in Table 3, the Justice, Public 

Safety Infrastructure, and Civil Society sector had the largest change, receiving $107 

million in additional funding (4.8 percent). In our January 2006 report, this sector was 

identified as the second largest beneficiary of reallocated funds, having gained $924.5 

million, primarily for Democracy Building Activities. Democracy Building focuses on 
7

assisting the Iraqis in building a legitimate government nationally and regionally, 

supporting the development of democratic, competitive political parties, and ensuring 

open and transparent elections, and growth in this sector illustrates the growing emphasis 

being placed on improving the economic and political environment. 

The $107.3 million increase this quarter is again partly attributable to an increase in 

Democracy Building Activities, along with similar non-construction activities in the Rule 

of Law in Iraq program. According to the January Section 2207 Report; Democracy 

Building will increase by $38.5 million to expand local government, community, and 

election support programs. Similarly, the Rule of Law in Iraq program’s funding will 

increase by $53.6 million to address issues such as the criminal justice system, 

corrections, public prosecutors, intellectual property rights and property rights legislation. 

Finally, the Mine Removal program will increase by $13.2 million to fund the existing 

National Mine Action Program to minimize the impact of landmines and unexploded 

ordnance, mine detection dog training, and support for the Iraqi Mine Clearance 

Organization. 

The Education, Refugees, and Human Rights sector received the second largest increase 

in funding this quarter, growing by $47 million, or 12.9 percent. All of the money was 

directed at two non-construction programs; Migration and Refugee Assistance, and 

Ministerial Capacity Building. The Migration and Refugee Assistance program was 

increased by $27 million to fund assistance to meet the immediate needs of refugees and 

other conflict victims. Ministerial Capacity Building is a new $20 million initiative 

designed to train Iraqi officials in key ministries in the modern techniques of civil service 

policies, requirements based budget processes, information technology standards and 

logistics management systems. 

Security and Law Enforcement programs increased by $18.4 million, primarily due to 

two new programs, (1) Nonproliferation, Export Control and Border Security; and (2) 

Focused Stabilization. Nonproliferation, Export Control and Border Security is a new 

$3 million program to inhibit proliferation of Iraq’s weapons expertise through payment 

of regular stipends to approximately 150 key Iraqi weapons development personnel, the 

provision of career transition assistance in the form of workshops, seminars and 

collaboration with western counterparts, and the funding of science-based projects 

proposed by program participants. The Focused Stabilization program is a $30 million 

program that will fund community infrastructure and essential services programs, 

employment generation programs, and small-medium-enterprise expansion programs. 

Funding for three security programs was slightly reduced to partially offset the costs of 

these new programs. 

 

Programs receiving the largest decreases. Projects in four service sectors were 

reduced or eliminated to provide the funding for the new activities. The Electric Sector, 

Health Care, Transportation and Telecommunications, and Water Resources and 

Sanitation were reduced by a combined $195.3 million with the Electric sector incurring 

the largest decrease ($89.8 million). All of the Electric Sector’s decrease came from the 

Transmission sub-sector, where six transmission projects were cancelled. The second 

largest decrease came from the Health Sector ($35 million) as a result of project 

cancellations related to inefficiencies caused by security concerns and low productivity. 

Among the projects cancelled were two expanded healthcare centers, and eight primary 

healthcare centers. In the Transportation and Telecommunications Sector, the civil 

aviation sub-sector was reduced by $38 million. Aircraft navigational aid and visual aid 

contracts and national radar system contract were deferred. 

 
8

A major reprogramming occurred in the Water Resources and Sanitation Sector, with 

four sub-sectors receiving large funding increases and three sub-sectors receiving large 

funding decreases. Altogether, the Water sector funding decreased $15.5 million during 

this quarter. Pumping Stations and Generators; Sewerage; Dam Repair; and Major 

Irrigation projects received a combined $127.7 million increase, with all of the money 

coming from Potable Water, Irrigation and Drainage, and the Umm Qasr to Basr Water 

Pipeline. Three large water treatment projects in the Potable Water sub-sector were 

reduced from design-build contracts to design only due to limited funding, the last 

remaining project in the Irrigation and Drainage sub-sector was reduced to engineering 

design only, and the Umm Qasr to Basr water channel renovation project was reduced to 

repairs of the original channel.
9

Reasons for Changes in Sector Programs 

The Department of State’s January 2006 Section 2207 Report generally cites emerging 

needs as the basis for the program changes that occurred during the quarter. However, 

strategic changes to the IRRF program that were begun in the late summer of 2004 

appear to continue to influence IRRF program plans. 

For example, the report identifies the need to train Iraqi officials in key ministries in the 

modern techniques of civil service policies, requirements based budget processes, 

information technology standards, and logistics management systems as the basis for the 

new Ministerial Capacity Development program. Other new programs are intended to 

expand local government, community, and election support, and address issues such as 

the criminal justice system, corrections, public prosecutors, intellectual property rights 

and property rights legislation, and boost the capacity of the Iraqi ministries. Other 

program changes are identified as a reprioritization of activities. 

Our analysis of this quarters changes generally indicate that the changes are a 

continuation of the strategic program changes begun in June 2004. At that time, a 

strategic review of the IRRF spending plan resulted in a reprioritization of funding from 

projects that would not begin until late in the program to key, high-impact projects that 

would support longer-term reconstruction efforts. The strategic review shifted $3.46 

billion, principally from the water and electric sectors to security activities and to projects 

intended to strengthen local and provincial government, and to elections activities. This 

quarter appears to continue that trend with another $153.3 million moving from 

construction programs in the service sectors into local government, community, and 

election support programs, and on programs intended to address issues in the criminal 

justice system, corrections, intellectual property rights and property rights legislation. 

Appendix B of this report identifies specific sub-sector changes and, where we could 

identify them, the reasons for the changes. 
10

Appendix A. Scope and Methodology__________

We initiated this audit in March 2006 (Project No. 6010) to review the changes that 

occurred between October 1, 2005 and December 31, 2005, in the Department of State’s 

Iraq Relief and Reconstruction Fund (IRRF) program plans. To determine the changes, 

we reviewed reports submitted to meet the requirements of Section 2207 of Public Law 

108-106. These reports, which have been submitted every three months since January 

2004, identify ten sectors of Iraqi infrastructure and governance, and identify how IRRF 

funds have been allocated between those sectors. The reports also identify any changes 

that have occurred in a sector’s allocation since the previous quarter. We tracked these 

changes to determine how funds moved between the sectors, and to identify, where 

possible, the reasons for the changes. We then identified the primary reasons for the 

changes, and aggregated the amount of funding moved for each of the primary reasons 

we had identified. 

To identify reasons for changes in U.S. plans, we also reviewed the Section 2207 Reports. 

In the body of the Section 2207 Reports, reasons were generally given as to why funding 

changes were made. We then summarized these changes for the report. 

We conducted this audit between January and March 2006, in accordance with generally 

accepted government auditing standards. 

Use of Computer-Processed Data. We did not use computer-processed data to perform 

this audit. 

Prior Coverage. 

SIGIR. SIGIR reported on January 26, 2006, in “Challenges Faced in Carrying Out Iraq 

Relief and Reconstruction Fund Activities” (SIGIR-05-029), that the United States would 

not complete all of the projects it originally planned to construct through its Iraq Relief 

and Reconstruction program because of: 

• dramatically increased spending for security needs 

• strategy changes as the Department of State responded to the changing 

environment in Iraq 

• needed increases in spending for sustainment 

• the need to fund IRRF administrative expenses that were not considered in initial 

planning 

• plans made without a clear understanding of actual situational conditions 
11

Appendix B: Summary of Changes in Sub-sector 

Programs

The following significant increases and decreases occurred in IRRF program sub-sectors 

between October 1, 2005 and December 31, 2005: 

Table 1: Sub-Sector Allocation Increases October 2005 through December 2005 

(Dollars in millions) 

 Allocation as of 

October 2005 

Allocation as of 

December 2005 

Change Percent 

change 

Sub-Sectors with Increases 

Pumping Stations & Generators 

(Water) 

$123.0 $179.9 $56.9 46.3%

Rule of Law in Iraq (Justice) 56.2 109.8 53.6 95.4%

Democracy Building Activities 

(Justice) 

995.3 1,033.8 38.5 3.9%

Sewerage (Water) 234.7 271.4 36.7 15.6%

Focused Stabilization (Security) New program 30.0 30.0 

Migration & Refugee Assistance 

(Education) 

159.0 186.0 27.0 17.0%

Dam Repair, Rehabilitation, & 

Construction (Water) 

61.5 82.6 21.1 34.3%

Ministerial Capacity Building 

(Education) 

New program 20.0 20.0 

Oil Infrastructure (Oil) 1,697.0 1,713.1 16.1 <1.0%

Facilities Protection, Mine Removal, 

Fire Service (Justice) 

274.0 287.2 13.2 4.8%

Major Irrigation Projects (Water) 53.4 66.4 13.0 24.3%

Iraqi National Guard Facilities 

(Security) 

358.5 365.5 7.0 2.0%

Institutional Reforms (Private 

Sector) 

80.0 85.0 5.0 6.3%

Agriculture (Private Sector) 100.0 105.0 5.0 5.0%

Business Skills Training (Private 

Sector) 

37.0 40.2 3.2 8.6%

Nonproliferation & Export Control 

and Border Security (Security) 

New Program 3.0 3.0 

Reconstruction & Modernization of 

Detention Facilities (Justice) 

165.0 167.0 2.0 1.2%

Iraqi Armed Forces Training & 

Operations (Security) 

429.3 430.9 1.6 <1.0%

Generation (Electric) 1,607.8 1,608.2 .4 <1.0%

Source: Department of State Section 2207 Report, January 2006. 
12

Programs with Increases Greater Than $10 Million

Pumping Stations and Generators. The sub-sector received $56.9 million to fully fund 

the Nassriya Drainage Pumping Station. Nassriya was one of the original planned 

projects. However, the original cost estimate of $38 million was imprecise. 

Rule of Law in Iraq. The Rule of Law in Iraq program received $53.6 million in 

additional funding. The program had previously focused on police training but was 

reorganized to include additional issues, such as the criminal justice system, corrections, 

public prosecutors, intellectual property rights and property rights legislation. 

Democracy Building programs were expanded to include local government, community, 

and election support programs. 

Democracy Building. The Democracy Building program received $38.5 million, 

bringing total funding for this sub-sector to $1.03 billion. The money will be used to 

fund Provincial Reconstruction Team local government support and community support 

programs. 

Sewerage. The Sewerage sub-sector received $36.7 million. The money will be used to 

fund the Sewerage Infrastructure Sustainment Program and the Fallujah Sewerage Phase 

2 project. 

Focused Stabilization. Focused Stabilization is a new $30 million project in the 

Security sector that will fund community infrastructure and essential services, 

employment generation, small-medium enterprise expansion, and micro-enterprises. 

Migration and Refugee Assistance. The Migration and Refugee Assistance program 

received $27 million to meet the immediate needs of refugees and other conflict victims. 

Dam Repair, Rehabilitation, and New Construction. Dam Repair received $21 

million to fully fund the Mosul Dam repair project. According to the Senior Advisor to 

the Ministry of Water Resources, the original estimates for this project were inaccurate 

and more money was required to complete the planned work. 

Ministerial Capacity Building. Ministerial Capacity Building is a new $20 million 

program in the Education, Refugees, Human Rights, Democracy, and Governance sector. 

The program is intended to train Iraqi officials in key ministries in the modern 

techniques of civil service policies, requirements based budget processes, information 

technology standards and logistics management systems. 

Oil Infrastructure. The Oil Infrastructure program increased by $16.1 million to fund 

repairs for the Al Fatha crossing, and to fund an infrastructure sustainment program. 

Facilities Protection, Mine Removal, and Fire Service. The Facilities Protection, Mine 

Removal, and Fire Service sub-sector received a $13.2 million increase to fund (1) the 

existing National Mine Action Program to minimize the impact of landmines and 

unexploded ordnance on Iraq, (2) mine detection dog training, and (3) the Iraqi Mine 

Clearance Organization. 

Major Irrigation Projects. The Major Irrigation Projects sub-sector received $13 

million. According to the Senior Advisor to the Ministry of Water Resources, the 

original estimates for this project were inaccurate and more money was required to 

complete the planned work. 
13

 

Table 2: Sub-Sector Allocation Decreases October 2005 through December 2005 

(Dollars in millions) 

Allocation as of 

October 2005 

Allocation as of 

December 2006 

Change Percent change 

Sub-Sectors with Decreases 

Transmission (Electric) $1,241.6 $1,151.8 $(89.8) (7.2%)

Umm Qasr to Basra Water 

Pipeline & Treatment Plant 

(Water) 

110.7 35.4 (75.3) (68.0%)

Civil Aviation 

(Transportation) 

113.7 75.7 (38.0) (33.4%)

Potable Water (Water) 1,483.0 1,445.9 (37.1) (2.5%)

Nationwide Hospital & 

Clinic Improvements 

(Health) 

439.0 404.0 (35.0) (8.0%)

Irrigation & Drainage 

Systems (Water) 

38.4 7.6 (30.8) (80.2%)

Iraqi Armed Forces 

Equipment (Security) 

628.6 614.4 (14.2) (2.3%)

Equipment Procurement & 

Modernization (Health) 

297.0 285.0 (12.0) (4.0%)

Iraqi Security Forces 

Quick Response Program 

(Security) 

170.0 163.0 (7.0) (4.0%)

Iraqi Communications 

Operations (Transportation) 

25.0 20.0 (5.0) (20.0%)

Emergency Supplies of 

Refined Petroleum Products 

(Oil) 

26.0 22.5 (3.5) (13.5%)

Micro-Small-Medium 

Enterprises (Private Sector) 

44.0 40.8 (3.2) (7.3%)

Police Training and 

Technical Assistance 

(Security) 

1,808.4 1,806.4 (2.0) (<1.0%)

Security (Electric) 44.0 43.6 (0.4) (<1.0%)

Source: Department of State Section 2207 Report, January 2006. 
14

Programs with Decreases Greater Than $10 Million

Transmission. The Transmission sub-sector sub-sector was reduced by $89.8 million. 

Six projects were removed from Transmission. Three transmission over head line 

projects, removed from the program, will be completed by the Ministry due to their 

importance to the local region. 

Umm Qasr to Basra Water Supply Project. The Umm Qasr to Basra Water Supply 

Project was intended to provide higher quality water to Basra, the second largest city in 

Iraq. Umm Qasr, historically the recipient of poor quality, highly saline water would also 

benefit. The project planned to line the existing canal with concrete thereby reducing 

saline infiltration and reducing evaporation. However, the project plan has been reduced 

to repairs of the original canal, a 68 percent reduction in allocated funds. 

Civil Aviation. The Civil Aviation sub-sector was reduced by $38 million. Aircraft 

navigational aid and visual aid contracts and the national radar system contract were 

deferred. 

Potable Water. The Potable Water sub-sector was reduced by $37.1 million. Three 

large water treatment projects in the Potable Water sub-sector were reduced from designbuild contracts to design only due to limited funding. 

Nationwide Hospital and Clinic Improvements. The Hospital and Clinic Improvement 

sub-sector was reduced by $35 million as a result of project cancellations related to 

inefficiencies caused by security concerns and low productivity. Among the projects 

cancelled were two expanded healthcare centers, and eight primary healthcare centers. 

Irrigation and Drainage. The Irrigation and Drainage sub-sector was reduced by $30.8 

million. The last remaining project in this sub-sector, the Kut Betera Drainage project, 

was terminated with an engineering design only. 

Iraqi Armed Forces Equipment. Armed Forces Equipment decreased by $14.2 million. 

However, the Section 2207 Report does not identify any change in plans as a result of the 

reallocation. We believe that no effects are identified because of the availability of the 

$5.7 billion Iraq Security Forces fund. 

Equipment Procurement & Modernization. Health Care equipment procurement was 

reduced by $12 million. The reduction in health care facilities caused a commensurate 

reduction in the amount of equipment needed. 
15

Appendix C. Acronyms 

IRRF Iraq Relief and Reconstruction Fund 

SIGIR Special Inspector General for Iraq Reconstruction 
16

Appendix D. Report Distribution 

Department of State 

Secretary of State 

Senior Advisor to the Secretary and Coordinator for Iraq 

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 

Director, Defense Reconstruction Support Office 

Under Secretary of Defense (Comptroller)/Chief Financial Officer 

 Deputy Chief Financial Officer 

 Deputy Comptroller (Program/Budget) 

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 

Auditor General of the Army 

U.S. Central Command

Commanding General, Multi-National Force-Iraq 

Commanding General, Multi-National Security Transition Command-Iraq 

Commander, Joint Area Support Group-Central 

Other Federal Government Organizations 

Director, Office of Management and Budget 

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
17

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 Terrorism 

Subcommittee on Near Eastern and South Asian Affairs 

Senate Committee on Homeland Security and Governmental Affairs 

Subcommittee on Federal Financial Management, Government Information and 

International Security 

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 Foreign Operations, Export Financing and Related Programs 

Subcommittee on Science, State, Justice and Commerce and Related Agencies 

House Committee on Armed Services 

House Committee on Government Reform 

Subcommittee on Management, Finance and Accountability 

Subcommittee on National Security, Emerging Threats and International 

Relations 

House Committee on International Relations 

Subcommittee on Middle East and Central Asia 
18

Appendix E. Audit Team Members 

This report was prepared and the audit work was conducted under the direction of 

Joseph T. McDermott, the Assistant Inspector General for Audit, Office of the 

Special Inspector General for Iraq Reconstruction. The staff member who 

contributed to this report: 

Glenn D. Furbish