OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

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RREEEPPPOOORRRTTT NNNOOO..SSIIGGIIRR0055--001155 OOOCCCTTTOOOBBBEEERRR 222555,,,222000000555 
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202 

October 25, 2005 

MEMORANDUM FOR UNITED STATES AMBASSADOR TO IRAQ 

DIRECTOR, IRAQ RECONSTRUCTION MANAGEMENT OFFICE 

COMMANDING GENERAL, JOINT CONTRACTING COMMAND 

– IRAQ/AFGHANISTAN 

COMMANDER, JOINT AREA SUPPORT GROUP - CENTRAL 

SUBJECT: Management of Rapid Regional Response Program Grants in South-Central Iraq 

(Report No. SIGIR 05-015) 

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 

mandates the independent and objective conduct of audits relating to the programs and 

operations funded with amounts appropriated or otherwise made available to the Iraq Relief and 

Reconstruction Fund. Public Law 108-106, as amended, requires that we provide for the 

independent and objective leadership and coordination of and recommendations of polices 

designed to promote economy, efficiency, and effectiveness in the administration of such 

programs and operations and to prevent and detect waste, fraud, and abuse. 

We considered management comments from the Iraq Reconstruction Management Office, the 

Joint Contracting Command – Iraq/Afghanistan, and the Joint Area Support Group - Central on a 

draft of this report when preparing the final report. There was one recommendation to the Joint 

Area Support Group – Central that they did not believe they had the authority to take action on 

the recovery of overpayments made to grantees. Therefore, we added a recommendation to the 

final report to resolve that issue. 

Because we added a recommendation to the final report, we request that the 

United States Ambassador to Iraq provide comments to the final report by November 14, 2005. 

Comments should describe actions taken or planned in response to recommendation and provide 

completion dates for the actions. 

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

please contact Mr. Joseph T. McDermott at (703) 428-1100, or at joseph.mcdermott@sigir.mil or 

Mr. Clifton Spruill at (703) 343-8817, or at clifton.spruill@iraq.centcom.com. For the report 

distribution, see Appendix G. 

Stuart W. Bowen, Jr. 

Inspector General 
i 

Special Inspector General for Iraq Reconstruction 

Report No. SIGIR 05-015 October 25, 2005 

(Project No. D2004-DCPAAF-0034.2) 

Management of Rapid Regional Response Program Grants 

in South-Central Iraq 

Executive Summary 

Introduction. This audit report is one of a series of reports addressing controls over 

cash, contract management, and grant management for the Coalition Provisional 

Authority South-Central Region. This audit report discusses the processes used for the 

authorization, award, execution, and oversight of grants within the Coalition Provisional 

Authority South-Central Region. 

During 2003-2004, the Coalition Provisional Authority used grants in Iraq to transfer 

Development Fund for Iraq funds from the Coalition Provisional Authority or coalition 

forces to grant recipients. The grants were intended to help carry out a program or 

project that directly benefited the Iraqi people or assisted in the reconstruction and 

recovery of Iraq. Between February and June 2004, the Coalition Provisional Authority 

South-Central Region used funds provided from the Development Fund for Iraq through 

the Rapid Regional Response Program to award 74 grants worth approximately 

$20.8 million. 

Objective. The overall audit objective was to determine whether disbursing officers in 

selected locations in southern Iraq complied with applicable guidance and properly 

controlled and accounted for Development Fund for Iraq cash assets and expenditures. 

During our audit, we observed deficiencies in grant award documentation and expanded 

our scope to determine whether grants were properly managed by coalition 

representatives in the South-Central Region. 

Results. South-Central Region personnel, under the direction of the Coalition 

Provisional Authority, did not effectively manage 74 grants awarded through the 

Rapid Regional Response Program in the amount of $20.8 million. 

South-Central Region personnel cannot account for more than $20.5 million in 

Development Fund for Iraq funds provided for Rapid Regional Response Program 

grants, and they made payments in the amount of more than $2.6 million that 

exceeded the total value grants awarded. Our audit shows that Coalition 

Provisional Authority South-Central Region personnel disbursed a total of almost 

$23.5 million through 74 grants, although the award value of these grants was only 

$20.8 million. 

We could not determine how grant recipients actually used the cash distributed by 

the South-Central Region through the Rapid Regional Response Program. Because 

we could not find documentation to support grant performance, we could not 

determine: whether the grants met their intended goals; whether the work for which 

the grants were intended was started or satisfactorily completed; to whom the cash 

was actually disbursed in some grants; and what benefit, if any, the Iraqi people 

received as a result of the grants. 
ii 

We concluded, based on the documentation examined during our review, that the 

South-Central Region failed to adequately manage its Rapid Regional Response 

Program grant program. 

Material Internal Control Weaknesses. Our audit identified material internal control 

weaknesses. For example, United States government agents and Coalition partners did 

not comply with applicable guidance regarding cash management and did not properly 

control and account for Iraqi cash assets. In addition, based on our review of the grant 

award process and of actual grant management, there was no assurance that fraud, waste, 

and abuse did not occur in the management and administration of grant funds. 

Indications of Potential Fraud. During this audit, we found indications of potential 

fraud and referred these matters to the Assistant Inspector General for Investigations, 

Office of the Special Inspector General for Iraq Reconstruction, for action. Related 

investigations are continuing. 

Recommendations. Since the Coalition Provisional Authority was dissolved on 

June 28, 2004, we are addressing the recommendations to three of the 

four successor organizations: the Iraq Reconstruction Management Office, the Joint 

Contracting Command – Iraq/Afghanistan, and the Joint Area Support Group - 

Central. 

We added a recommendation to the United States Ambassador to Iraq, because the 

Commander, Joint Area Support Group - Central stated that the responsibility for seeking 

reimbursement of any overpayments is up to the office that managed the grant and not the 

disbursing office. 

1. We recommend that the United States Ambassador to Iraq determine the party 

responsible for collecting the overpaid grant amounts and direct the responsible 

individual to take action to seek reimbursement for the overpaid grant amounts. 

2. We recommend that the Director, Iraq Reconstruction Management Office, 

ensure proper authorization and oversight of the grant approval and 

administrative processes for all existing and future grants.

3. We recommend that the Commanding General, Joint Contracting Command – 

Iraq/Afghanistan require contracting officers, for all existing and future grants: 

a. Follow the Department of Defense 3210.6-R, Grants and Agreements, for 

the award and administration of grants 

b. Require grant recipients to provide receipts for all expenditures 

c. Require monthly reports from the grant recipients detailing expenditures and 

achievements 

d. Ensure regular site-visits to the grant recipient location 

e. Require reports at the end of the grant to assess the performance of the 

grantee and to document the outcome of the grant in relation to the grant 

goals 

4. We recommend that the Commander, Joint Area Support Group - Central: 

a. Require paying agents to obtain proper grant approval documentation prior 

to making disbursements 

b. Require the appropriate separation of duties 
iii 

c. Establish a special team to review disbursements made in other regions of 

Iraq to determine if the same conditions exist as determined by the Special 

Inspector General for Iraq Reconstruction in the South-Central Region 

Management Comments and Audit Response. The Director, Iraq Reconstruction 

Management Office; the Commanding General, Joint Contracting Command – 

Iraq/Afghanistan; and the Commander, Joint Area Support Group - Central 

generally concurred with the finding and recommendations. The comments that 

concurred with recommendations are responsive. However, for one 

recommendation, the Joint Area Support Group - Central stated it did not have the 

responsibility for seeking recovery of overpayments to grantees. Therefore, we 

added a recommendation to the United States Ambassador to Iraq in the final report 

to establish who is responsible to recover these funds and deleted the 

recommendation directed to the Joint Area Support Group - Central to seek 

recovery of overpayments. 
Table of Contents 

Executive Summary i 

Introduction 

Background 1 

Objective 3 

Finding 

Management of Grants in the South-Central Region 4 

Appendixes 

A. Scope and Methodology 15 

B. Coalition Provisional Authority Guidance Applicable to Grants 17 

C. Coalition Provisional Authority Organizational Responsibilities 

for Grants 18 

D. Present U.S. Government Organizational Responsibilities 

for Grants 19 

E. Grants Awarded by the South-Central Region 20 

F Overpayments on Grants 24 

G. Acronyms 25 

H. Report Distribution 26 

I. Audit Team Members 28 

Management Comments 

Director, Iraq Reconstruction Management Office 29 

 Commanding General, Joint Contracting Command – Iraq/Afghanistan 31 

 Commander, Joint Area Support Group – Central 33 
1 

Background 

Introduction 

This audit report is one of a series of reports addressing controls over cash, contract 

management, and grant management for the Coalition Provisional Authority (CPA) 

South-Central Region. This audit report discusses the processes used for the 

authorization, award, execution, and oversight of grants within the CPA South-Central 

Region. 

Coalition Provisional Authority. CPA Regulation Number 1 was issued on 

May 16, 2003, by the CPA Administrator, “Pursuant to my authority as Administrator of 

the Coalition Provisional Authority, relevant United Nations Security Council 

resolutions, including Resolution 1483 (2003), and the laws and usages of war,. . . .” 

CPA Regulation Number 1 stated: 

The CPA shall exercise powers of government temporarily in order to 

provide for the effective administration of Iraq during the period of 

transitional administration, to restore conditions of security and 

stability, to create conditions in which the Iraqi people can freely 

determine their own political future, including by advancing efforts to 

restore and establish national and local institutions for representative 

governance and facilitating economic recovery and sustainable 

reconstruction and development. 

The Development Fund for Iraq. United Nations Security Council Resolution 1483, 

which was adopted on May 22, 2003, noted the establishment of the Development Fund 

for Iraq (DFI) and assigned responsibility for managing the fund to the CPA. The 

resolution noted that the CPA should direct disbursement of DFI funds, in consultation 

with the Iraqi interim administration. It also required that the DFI funds be used in a 

transparent manner to meet the humanitarian needs of the Iraqi people, for the economic 

reconstruction and repair of Iraq’s infrastructure, for the continued disarmament of Iraq, 

for the costs of Iraqi civilian administration, and for other purposes benefiting the people 

of Iraq. The DFI was the primary financial vehicle to channel revenue from ongoing 

Iraqi oil sales, unencumbered Oil for Food deposits, and repatriated Iraqi assets into the 

relief and reconstruction of Iraq. 

During the CPA’s administration of Iraq, the CPA Comptroller managed the DFI, and the 

Program Review Board (PRB) was responsible for recommending expenditures of 

resources from the DFI. For a description of CPA Regulation Number 2, which applied 

to the DFI, and CPA Regulation Number 3, which applied to the PRB, see Appendix B. 

Program Review Board Guidance. The Director of the PRB provided directives that 

applied to grants’ management within CPA regions. Two of these directives addressed 

the management of the Rapid Regional Response Program (R3P): 

• PRB Guidance 06, “Rapid Regional Response Program Overview,” 

September 27, 2003 

• PRB Guidance 06.2, “Rapid Regional Response Program Overview 

(amended),” December 14, 2003, and January 25, 2004 
2 

Rapid Regional Response Program. The R3P funds were derived from the DFI, and 

the CPA provided those funds to the Iraqi people for needed infrastructural repairs and 

upgrades. The objectives of the R3P were to create local jobs, support local industries, 

and stimulate the economy. The R3P was initially conceived as a civilian equivalent of 

the Commanders’ Emergency Response Program fund.1 Further, it was designed to 

provide maximum flexibility to regional and governorate coordinators in implementing 

projects responsive to the needs in their areas of responsibility. The program 

incorporated and expanded upon authorities of previously funded programs: 

• the Directors’ Emergency Response Program, which provided an emergency 

response capacity

• the Construction Initiative, which provided greater funding authority for 

construction activities

The discretionary authority under which regions could execute programs without prior 

Regional Program Coordinator approval was increased to $500,000 from $200,000 

through PRB Guidance 06.2, as amended on December 14, 2003, and January 25, 2004.

South-Central Region. The CPA established the South-Central Regional office in the 

spring of 2003, and it was comprised of the provinces of Anbar, Babil, Karbala, Najaf, 

Qadisiyah, and Wasit; which cover approximately half of the land mass of Iraq. SouthCentral Region personnel worked with the Iraqi people and coalition forces to establish 

the conditions for a free, sovereign, and democratically-elected representative 

government in Iraq. The top priorities of the South-Central Region were electricity, 

human rights, security, strategic communications, tribal democracy, and women’s rights. 

Organizations Responsible Grants Management. The CPA was the authority 

responsible for the temporary governance of Iraq through June 28, 2004. Thereafter, the 

Iraqi Interim Government was the authority responsible for the governance of Iraq. The 

responsibility for the DFI transferred from the CPA to the Iraqi Interim Government on 

June 28, 2004. For information on the CPA organizational responsibilities concerning 

grants management, until it ceased to exist on June 28, 2004, see Appendix C. 

Due to the dissolution of the CPA, four U.S. government organizations assumed 

responsibilities for the management of grants in Iraq. For information on the current 

organizational responsibilities for grants management in Iraq, see Appendix D. 

Project and Contracting Office. The Project and Contracting Office (PCO) now 

has the responsibility to assess requirements for grants. National Security Presidential 

Directive 36, “United States Government Operations in Iraq,” May 11, 2004, established 

the PCO and directed that the PCO provide acquisition and project management support 

with respect to activities in Iraq, to include grant related activities. The PCO reports 

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

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

also administratively reports to the Iraq Reconstruction Management Office. 

Iraq Reconstruction Management Office. The Iraq Reconstruction Management 

Office now has the responsibility to approve grants. National Security Presidential 

Directive 36, “United States Government Operations in Iraq,” May 11, 2004, established 

 

1

 According to Combined Joint Task Force-7, Fragmentary Order 89, June 19, 2003, DFI funds were to be 

used to help fund the Commanders’ Emergency Response Program, which provides reconstruction 

assistance to the Iraqi people. 
3 

the Iraq Reconstruction Management Office within the Department of State and directed 

that organization to facilitate the transition in Iraq. The Iraq Reconstruction Management 

Office reports to the Chief of Mission in Iraq. 

Joint Contracting Command – Iraq/Afghanistan. The Head of Contracting 

Activity, Joint Contracting Command – Iraq/Afghanistan now has the responsibility to 

administer grants.2 The Joint Contracting Command – Iraq/Afghanistan was established 

in 2004 to consolidate contracting activities and reports through the Deputy Assistant 

Secretary of the Army (Policy and Procurement) to the Assistant Secretary of the Army 

for Acquisition, Logistics, and Technology. 

Joint Area Support Group - Central Comptroller. The Joint Area Support Group 

- Central now has the financial responsibility3 for grants. The CPA Comptroller, as part 

of the CPA, ceased to exist on June 28, 2004. When the CPA was dissolved, the CPA 

Comptroller was realigned as the Joint Area Support Group - Central Comptroller. The 

Joint Area Support Group - Central Comptroller continued to perform the same duties for 

that portion of the DFI still administered by the U.S. Government. The Joint Area 

Support Group - Central reports to the Commander, Multi-National Force – Iraq. 

Objectives 

The overall audit objective was to determine whether disbursing officers in selected 

locations in southern Iraq complied with applicable guidance and properly controlled and 

accounted for DFI cash assets and expenditures. During our audit, we observed 

deficiencies in grant award documentation and expanded our scope to determine whether 

CPA South Central Region personnel properly managed grants. 

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 F. For a 

list of the audit team members, see Appendix H. 

 

2

 The Joint Contracting Command – Iraq/Afghanistan used Department of Defense 3210.6-R, “DoD Grant 

and Agreement Regulations,” April 13, 1998, as guidance. 

3

 The Joint Area Support Group - Central Comptroller provided funds to the CPA regions to disburse for 

the grants. Afterward, the disbursement documentation was returned to the Joint Area Support Group - 

Central Comptroller’s office for review and to be cleared. 
4 

Management of Grants in the South-Central 

Region 

South-Central Region personnel, under the direction of the CPA, did not effectively 

manage 74 grants awarded through the R3P in the amount of $20.8 million. 

This condition occurred because South-Central Region personnel did not always: 

• follow established policies and procedures for authorizing, competing, and 

properly documenting grant awards 

• properly monitor grant performance 

• disburse funds in accordance with proper authorization or specific grant 

agreement disbursing criteria 

• identify disbursements made to grant recipients 

• account for the funds disbursed for the grants 

• prevent payments that exceed the award value of grants 

As a result, South-Central Region personnel cannot account for more than 

$20.5 million in DFI funds provided for R3P grants, and they made payments in the 

amount of more than $2.6 million that exceeded the total value grants awarded. 

Our audit shows that CPA South-Central Region personnel disbursed a total of 

almost $23.5 million through 74 grants, although the award value of these grants 

was only $20.8 million. 

We could not determine how grant recipients actually used the cash distributed by 

the South-Central Region through the R3P. Because we could not find 

documentation to support grant performance, we could not determine: whether the 

grants met their intended goals; whether the work for which the grants were 

intended was started or satisfactorily completed; to whom the cash was actually 

disbursed in some grants; and what benefit, if any, the Iraqi people received as a 

result of the grants. 

We concluded, based on the documentation examined during our review, that the 

South-Central Region failed to adequately manage its R3P grant program. 

Guidance for Grants 

In Iraq, the CPA used grants to transfer DFI funds from the CPA or coalition forces to a 

grant recipient. The grants were intended to help carry out a program or project that 

directly benefited the Iraqi people or assisted in the reconstruction and recovery of Iraq. 

The South-Central Region used funds provided from the DFI through the R3P to award 

74 grants worth approximately $20.8 million between February and June 2004. A 

Department of Defense regulation and a CPA memorandum provided guidance for the 

management of grants. 

Department of Defense 3210.6-R. According to Department of Defense 3210.6-R, 

“DoD [Department of Defense] Grant and Agreement Regulations,” April 13, 1998, a 

grant is: 
5 

 A legal instrument which, consistent with 31 U.S.C. 6304, is 

used to enter into a relationship: 

 (a) The principal purpose of which is to transfer a thing of 

value to the recipient to carry out a public purpose of support or 

stimulation authorized by a law of the United States, rather than to 

acquired property or services for the Department of Defense’s direct 

benefit or use. 

 (b) In which substantial involvement is not expected between 

the Department of Defense and the recipient when carrying out the 

activity contemplated by the grant. 

Coalition Provisional Authority Memorandum 4. CPA Memorandum 

Number 4, “Contract and Grant Procedures Applicable to Vested and Seized Iraqi 

Property and the Developmental Fund for Iraq, Implementation of Regulation 

Number 3, Program Review Board,” August 19, 2003, (CPA Memorandum 

Number 4) “establishes procedures applicable to the execution of contracts and 

grants for the benefit of the Iraqi people using Iraqi Funds. . . .” The memorandum 

directs that “the CPA will manage and spend Iraqi Funds, which belong to the Iraqi 

people, for their benefit. . . . in a transparent manner that fully comports with the 

CPA's obligations under international law, including Resolution 1483.” The memo 

also states: 

Consistent with their programmatic responsibility to ensure that 

contractors and grantees properly perform their duties, Contracting 

Officers shall be responsible for regularly monitoring the post-award 

execution of all Contracts they approve. This monitoring process 

includes ensuring that the contractor provides the agreed upon goods, 

services or construction in accordance with the provisions, and that 

payments are made in a timely manner. Contracting Officers shall 

include in the Contract file a written report describing post-award 

performance by contractors or grantees, including a final assessment 

upon completion of the Contract. Contracting officers shall rely upon 

locally available military engineering resources in assessing all repair 

and construction projects. All documents related to the establishment 

and execution of Contracts will be maintained in a Contract file that 

includes the materials described in Appendix A to this Memorandum.

Further, the memorandum states “the Head of Contracting Activity, CPA, shall 

provide administrative oversight as well as technical supervision” of contracting 

officers. The appendices to this memorandum provided supplemental instructions 

on preparing and executing contracts and grants pursuant to the memorandum. 

Specifically, Appendices A, B, and C of the memorandum identified the contract 

file requirements, standard terms and conditions for solicitations and contracts in 

excess of $5,000, and contract and grant procedures applicable to vested and seized 

Iraqi property and the DFI. 

Authorization, Award, and Documentation for Grants 

South-Central Region personnel did not follow established policies and procedures 

for authorizing, competing, and properly documenting the awarding of grants issued 

through the R3P. 
6 

Grants Awarded for Projects Exceeding $500,000. Ten of the 74 grants we 

reviewed during our audit were awarded in amounts greater than $500,000. The 

value of those ten grants was $13.4 million. We identified discrepancies in the 

compliance with the procedures concerning the discretionary authority for the 

approval of grants, the competition for awards, and the amounts of the awards. 

Discretionary Authority. We determined that South-Central Region 

personnel improperly approved 9 of the 10 grants. The value of those nine grants 

was about $7.4 million. South-Central Region personnel did not fully comply with 

PRB Guidance 06.2 (amended). The guidance stated that the “discretionary 

authority under which Regional Coordinators can execute projects without Regional 

Program Coordinator approval is increased to $500,000, and projects up to 

$100,000 can be executed at the Governorate Coordinators’ discretion.” Projects 

over $500,000 required Regional Program Coordinator approval via form PRB-01, 

“Funding Request Form.” The Regional Program Coordinator had to review and 

approve the funding request for completeness of the information concerning budget 

and justification, appropriate clearances, identification of funding sources, and other 

pertinent factors. South-Central Region personnel did not submit form PRB-01 for 

nine grants to the Regional Program Coordinator for approval; instead, SouthCentral Region personnel approved the grants. For a description of CPA 

Regulation Number 3, which applied to the PRB review process, see Appendix B. 

Competition in Awarding Grants. We determined that none of the 

10 grants, totaling $13.4 million, was competitively awarded, and that there was no 

evidence of any necessary competitive process documented in the files. SouthCentral Region personnel did not comply with the required competition actions for 

awarding grants over $500,000. CPA Memorandum 4 states that “reasonable 

efforts will be made to identify all organizations capable of performing the Grant. 

Grants in excess of $500,000 will be tendered for proposals by capable 

organizations, except as authorized for good cause, in writing, by the official that 

appointed the Contracting Officer involved.” 

Split Awards. We determined that five grants, totaling $2.1 million, were 

awarded to two recipients. South-Central Region personnel did not fully comply 

with PRB Guidance 06.2 (amended). They split the grant amounts in an attempt to 

keep the grant awards under the $500,000 threshold and thus circumvent Regional 

Program Coordinator review. Projects over $500,000 required Regional Program 

Coordinator approval. Although each of the five grants amounted to less than the 

$500,000 threshold, when combined, both recipients received grant awards 

exceeding the $500,000 threshold. 

Separation of Duties. We identified three examples in which the South-Central Region 

disbursing agent approved the Funding Request Forms, instead of the Regional Program 

Coordinator, who was the appropriate approval authority. The disbursing agent 

personally authorized and disbursed $950,000 worth of grants; but, given the lack of 

documentation in the grant files, we could not determine whether this agent approved any 

additional grant funding. PRB Guidance 06.2 (amended) specifically stated that "the 

disbursing authority may not be involved in the approval process." Therefore, the 

disbursing agent did not have the discretionary authority to approve these funding 

requests. 

Signatures for Grant Agreements. We determined that 4 of the 74 grants were 

not signed by the contracting officer and that 9 were not signed by the grant 

recipient, as required. 
7 

Documentation in Grant Files. We determined that 73 of the 74 grants did not 

have the required documentation and approval authority. South-Central Region 

personnel did not fully comply with PRB Guidance 06.2 (amended), which required 

that all project proposals must be justified based upon the criteria in the Funding 

Request Form. For example, 53 of 74 grants did not have the Funding Request 

Form in the files. Of the 21 grant files that contained a Funding Request Form, 

1 form was signed by an appropriate approving authority, 8 forms were signed by 

South-Central Region personnel that did not possess the appropriate discretionary 

authority, and 12 forms were unsigned. 

Monitoring Grant Performance 

South-Central Region personnel did not properly monitor grant performance as 

required by the guidance provided by CPA Memorandum Number 4 and 

PRB Guidance 05, “Project Monitoring and Evaluation,” September 30, 2003 

(PRB Guidance 05). Although CPA Memorandum Number 4 stated that 

performance monitoring was important to ensure that grantees are properly 

performing their duties, this guidance and PRB Guidance 05 generally were not 

followed. 

Management Actions to Monitor Grant Performance. We determined that, for 

most of the grants we reviewed, the responsible officials did not perform the 

following required duties: 

• Reviewing project timelines and project implementation plans with grant 

recipients 

• Visiting projects sites regularly 

• Ensuring monthly reporting from grant recipients that documented the 

expenditures incurred and achievements accomplished 

• Documenting the results of the monitoring and evaluation, which should 

have been included in grant files 

• Confirming delivery of goods or products to recipients to verify receipt 

• Documenting satisfactory work performance by recipients, including a 

completed Certificate of Completion 

• Discussing with the Iraqi beneficiary of the project whether the project 

achieved the desired outcome 

• Reporting on grantee performance by the contracting officer post-award 

Progress Reports in the Grant Files. We determined that 69 of the 74 grants did 

not have any progress reports in the grant files, and that none of the 74 grants 

awarded by the South-Central Region had any final reports in the files. SouthCentral Region grant files contained no documentation of site-visits or final reports 

written after the completion of the grant. When we asked about the status of the 

grants, current and former South-Central Region personnel stated they were not 

certain what the status or the outcome was of the grants. Without any progress 

reports, site-visit reports, or final reports from the grant recipients, we could not 

determine whether the work on projects was satisfactorily completed or even begun. 
8 

Coalition Provisional Authority Oversight. We determined that no one from 

outside the South-Central Region provided any oversight of the South-Central 

Region personnel actions in managing or monitoring these grants. 

Disbursing Grant Funds 

South-Central Region personnel disbursed funds in advance of authorization, 

violated specific grant agreement disbursing criteria, and could not identify 

disbursements made to grant recipients. CPA Memorandum 4 and the 

R3P guidance required each contract or grant file to contain disbursement 

documentation that recorded the date, amount, and payee for each disbursement 

made. 

Disbursement Authorization in Grant Agreements. We determined that 

five disbursements totaling more than $2.5 million were made to grant recipients 

prior to the signing of the grant agreement. In four instances, the funds for an entire 

grant or a modification to a grant were paid to the grant recipient at least 10 days 

before the grant agreement was signed. All grant agreements required the grant 

recipient and the contracting officer to sign the agreement prior to the disbursement 

of funds. The grant was not considered binding until both the authorized SouthCentral Region personnel and grant recipient signed the agreement. Therefore, 

South-Central Region personnel made these disbursements without proper 

authorization. Table 1 shows disbursements made prior to the signing of the grant 

agreement. 

Table 1. Disbursements Made Prior to Signing of Grant Agreement 

Grant Number Date of 

Disbursement 

Date of 

Signed 

Grant 

Agreement 

Amount 

DABV01-04-G-8007 

P0001 (a modification to 

a grant) 

5/15/2004 5/26/2004 $450,000 

DABV01-04-G-8008 3/15/2004 3/25/2004 $500,000 

DABV01-04-G-8016 4/14/2004 4/15/2004 $500,000 

DABV01-04-G-8022 5/15/2004 5/26/2004 $600,000 

DABV01-04-G-8027 5/15/2004 5/26/2004 $500,000 

 

Total Amount 

Disbursed 

 $2,550,000 

Disbursement Criteria in Grant Agreements. Six of the 74 grants awarded by 

the South-Central Region, valued at a total of $1,975,000, had specific language 

that provided procedures for disbursements to the grant recipient. In all six cases, 

the disbursements did not adhere to the procedures established in the grant 

agreements. The grant agreement identified conditions as to the amount and time-
9 

frames for disbursements.4 In four instances, instead of 10 percent of the funds 

being disbursed upon signing the grant as the procedures provided, 100 percent was 

disbursed at signing. In the other two grants, South Central Region personnel 

disbursed the balance of remaining grant funds without the required submission of a 

budget or initial reports documenting results from the initial disbursement. 

Disbursement Documentation in Grant Files. We determined that the SouthCentral Region personnel did not properly document the disbursements of more 

than $1.1 million. CPA Memorandum 4 and PRB Guidance 04, “Maintaining 

Project Files,” September 30, 2003 (PRB Guidance 04), required grant files to 

contain a signed grant agreement, receipts and invoices, disbursement 

documentation, and a certificate of completion. 

We identified a disbursement document in the amount of $950,000, and SouthCentral Region personnel stated they had never heard of the particular grant for 

which the disbursement was made. South-Central Region personnel were unable to 

match the disbursement document to either a signed grant agreement or a grant file. 

A review of records at the Joint Area Support Group - Central Comptroller’s office 

confirmed that the $950,000 was disbursed, and we were able to identify the 

organization receiving the grant. However, South-Central Region personnel were 

unable to identify the signature of the recipient. They believed the signature was 

one of the organization’s board members, but they were not certain. South-Central 

Region personnel were completely unaware that the disbursement had been made, 

the organization to which it was provided, or for what purpose the $950,000 was 

used. 

We reviewed another grant file that contained no documentation on a grant project 

that intended payment to the grant recipient in the amount of $200,000. We found 

that the grant agreement was not signed by the grant recipient; but the file did 

contain a certificate of completion statement stating the grant project was 

completed on May 16, 2004. However, no documentation was available to show 

payment to the grant recipient. Former South-Central Region personnel were asked 

whether the grant was paid, and they stated they “believed” the money was 

disbursed. 

Accountability for Grant Funds

South-Central Region personnel could not account for the funds disbursed for the 

grants we reviewed, and they made payments that exceeded the award value of 

certain grants. CPA Memorandum 4 and PRB Guidance 04 required each contract 

or grant file to contain disbursement documentation to record the date, amount, and 

payee for each disbursement made. 

Accountability for Grant Funds. We determined that South-Central Region 

personnel could not account for about $20.5 million of grant funds. We reviewed 

the South-Central Region’s receipt files for the 74 grants and determined that valid 

receipts were available for only $297,000 of the $20,838,000 disbursed, leaving 

approximately $20.5 million in cash unaccounted for. According to CPA 

 

4

 Some grant agreements stated that the grantee was to receive 10 percent of the funds at the signing of the 

grant agreement, and the remaining funds were to be disbursed after a specific action occurred (e.g., the 

election of a board, the approval of the grant recipient’s budget, or an initial report from the grant recipient 

documenting achievements or results obtained as a result of the initial disbursement). 
10 

Memorandum 4, grant recipients were required to document the use of funds with 

receipts. The grant agreements also called for the grant recipients to maintain 

records of all expenditures incurred and to provide the receipts to the South-Central 

Region along with a report documenting the rationale for each of the expenditures. 

Without receipts, the South-Central Region could not account for the funds spent on 

the grants, thus we could not determine how recipients used the grant funds. 

Table 2 shows the amount of grant awards made for which no receipts existed. 

Table 2. Amount of Cash Unaccounted For 

 Number of 

Grants 

Amount

Total Amount of Grants Awarded 74 $20,838,000 

 Less: Grant Files with Receipts Available 7 $297,000 

 

Grant Files with Receipts Missing 67 $20,541,000 

Disbursement Amounts. South-Central Region personnel overpaid eight grants in 

the amount of approximately $2.6 million. The grant files contained no evidence 

indicating that the overpayments were ever returned or that the South-Central 

Region personnel ever asked for return of this money. For a detailed list of the 

overpayments, see Appendix F. 

Examples of South-Central Region Grants Management

The CPA South-Central Region used R3P funds to award 74 grants worth 

approximately $20.8 million between February and June 2004. The following are 

two examples, from those 74 grants, of the mismanagement of grants used in the 

South-Central Region. The examples show the results of our evaluations of the 

management of these two particular grants. 

A Grant to Establish or Restore Public Structures and Facilities. A grant in the 

amount of $6 million was awarded to the Provincial Government of Najaf5

 to: 

. . . establish or restore to appropriate condition public structures and 

facilities in the Province of Najaf, including but not limited to, 

government, educational, historical, and religious structures and 

facilities and the surrounding areas which were damaged by war and 

conflicts to facilitate the economic recovery of the Province of Najaf. 

The grant required the Provincial Government of Najaf to maintain records and 

promptly furnish quarterly reports to the CPA. The quarterly reports were to 

contain all such information as the CPA would reasonably require for 

documentation of the use of the proceeds of this grant. 

 

5

 Najaf is one of the six Iraqi provinces that comprised the CPA South-Central Region 
11 

Documentation in Grant Files. We found that the grant file contained only 

the signed grant agreement and the disbursement document in the amount of 

$6 million. The grant file did not contain any requests for information from the 

CPA representatives, any receipts or written reports from the Provincial 

Government of Najaf, or any record of site-visits from South-Central Region 

personnel. 

Expenditure of Grant Funds. According to the grant agreement, the 

completion date of the grant was December 31, 2006, and any sums provided under 

this grant which were not expended on or before that date were to be ”remitted back 

to the CPA.” At the time of our review, South-Central Region personnel did not 

know the amount expended and whether any funds potentially were available for 

return. 

Completion of Grant Work. At the time of our review, no South Central 

Region personnel knew whether this grant was still underway or completed. If the 

grant had been completed, then South-Central Region personnel should have 

executed a post-award assessment to evaluate the affect the grant had upon the 

community and the performance of the Provincial Government of Najaf in 

achieving the objectives of the grant. 

Oversight of the Grant. We found a complete lack of any requests for 

information, no receipts or written reports, no record of site-visits, and no funds 

accountability, and thus the South-Central Region apparently exercised no oversight 

of the $6 million grant. 

Grants for Programs to Promote Employment, Equal Rights for Women, and 

Democratic Ideals. A grant recipient received six grants between April and May 

2004 totaling $3,550,000. The grants were intended to establish a program for 

immediate employment for Iraqis and to promote programs for equal rights for 

women and democratic ideals. The grants contained language requiring the 

recipient to: 

. . . track all expenditures and the purpose of each expenditure and 

provide a report to the South-Central Regional Coordinator on a 

monthly basis until such time as the funds are fully expended. 

CPA Memorandum Number 4 “establishes procedures applicable to the execution 

of contracts and grants for the benefit of the Iraqi people using Iraqi Funds. . . .” 

CPA Memorandum 4 also stated that obtaining receipts for significant payments 

and documenting the use of funds was necessary to exercise fiscal responsibility 

when executing grants. 

Expenditure of Grant Funds. Instead of following the requirements of 

CPA Memorandum Number 4, South-Central Region personnel disbursed the 

money for each grant in one lump sum at the start of the grant. The grant recipient 

did not provide any receipts to document the expenditure of funds and did not 

provide the required monthly project reports. 

Site-visits to Grant Projects. The South-Central Region was responsible for 

visiting project sites to “ascertain proper usage of the funds.” No documentation 

existed in the six grant files to indicate any site-visits, any contact with the 

recipient, or any attempt to determine how the funds were spent. 
12 

Completion of Grant Work. Current and former South-Central Region 

personnel were not familiar with any project or program completed by the grant 

recipient with the funding provided by the six grants. 

Oversight of the Grant. The lack of any receipts or written reports, any 

record of site-visits, and any funds accountability resulted in the South-Central 

Region apparently losing oversight of the $3,550,000 grants. 

Conclusion 

The South-Central Region awarded 74 R3P grants using funds from the DFI to 

support programs and projects that were to directly benefit the Iraqi people or assist 

in the recovery of Iraq. 

Our review of these grants determined that CPA South-Central Region personnel 

did not properly manage approximately $20.8 million in funds provided by the DFI 

to support the South-Central Region R3P. South-Central Region personnel could 

not account for more than $20.5 million in funds provided by the DFI for grants 

they managed during the period February through June 2004. Further, 

overpayments were made that exceeded the total value of grants awarded by more 

than $2.6 million. Our audit revealed that South Central Region personnel 

disbursed a total of almost $23.5 million for the 74 grants even though the award 

value of these grants was only $20.8 million. 

Because almost 98 percent of the awarded amounts for the 74 grants could not be 

accounted for, we could not determine for what purposes the cash expended by the 

South-Central Region for the grants were actually used by the grant recipients. 

Finally, because we could not find documentation to support grant performance, we 

could not determine whether the grants met their intended goals; whether the work 

for which the grants were intended was started or satisfactorily completed; to whom 

the cash was actually disbursed in some grants; and what benefit, if any, the Iraqi 

people received as a result of the grants. 

We concluded, based on the documentation examined during our review, that the 

South-Central Region failed to adequately manage its R3P grant program. 

Material Internal Control Weaknesses. Our audit identified material internal control 

weaknesses. U.S. government agents and Coalition partners did not comply with 

applicable guidance and did not properly control and account for Iraqi cash assets. In 

addition, based on the award process for grants and the management of grants we 

evaluated, there was no assurance that fraud, waste, and abuse did not occur in the 

management and administration of assets. 

Indications of Potential Fraud. During this audit, we found indications of potential 

fraud and referred these matters to the Assistant Inspector General for Investigations, 

Office of the Special Inspector General for Iraq Reconstruction, for action. Related 

investigations are continuing. 
13 

Recommendations, Management Comments, and Audit 

Response 

Redirected and Added Recommendations. Since the Coalition Provisional 

Authority was dissolved on June 28, 2004, we are addressing the recommendations 

to three of the four successor organizations: the Iraq Reconstruction Management 

Office; the Joint Contracting Command – Iraq/Afghanistan; and the Joint Area 

Support Group - Central. 

We added a recommendation to the United States Ambassador to Iraq because the 

Commander, Joint Area Support Group - Central, stated that the responsibility for 

seeking reimbursement of any overpayments is up to the office that managed the grant, 

not the disbursing office. 

1. We recommend that the U.S. Ambassador to Iraq determine the party 

responsible for collecting the overpaid grant amounts and direct the responsible 

individual to take action to seek reimbursement for the overpaid grant amounts. 

2. We recommend that the Director, Iraq Reconstruction Management Office, 

ensure proper authorization and oversight of the grant approval and 

administrative process for all existing and future grants. 

Management Comments. The Director, Iraq Reconstruction Management Office 

concurred. 

3. We recommend that the Commanding General, Joint Contracting Command – 

Iraq/Afghanistan require that contracting officers, for all existing and future 

grants: 

a. Follow the Department of Defense 3210.6-R, Grants and Agreements, 

for the award and administration of grants. 

b. Require grant recipients to provide receipts for all expenditures. 

c. Require monthly reports from the grant recipients detailing expenditures 

and achievements. 

d. Ensure regular site-visits to the grant recipient location. 

e. Require reports at the end of the grant to assess the performance of the 

grantee and to document the outcome of the grant in relation to the grant 

goals. 

Management Comments. The Commanding General, Joint Contracting 

Command – Iraq/Afghanistan concurred and noted that Joint Contracting 

Command – Iraq/Afghanistan currently has no grants officers and the normal 

requirement for grants reporting is quarterly. 

4. We recommend that the Commander, Joint Area Support Group - Central: 

a. Require paying agents to obtain proper grant approval documentation 

prior to making disbursements. 

b. Require the appropriate separation of duties. 
14 

c. Establish a special team to review disbursements made in other regions 

of Iraq to determine if the same conditions exist as determined by the 

Special Inspector General for Iraq Reconstruction in the South-Central 

Region. 

Management Comments. The Commander, Joint Area Support Group - Central 

generally concurred with all recommendations and took corrective actions. The 

Commander, Joint Area Support Group - Central partially concurred with the 

recommendation to seek reimbursement for overpayments, stating that the 

responsibility for seeking reimbursement of any overpayments is up to the office 

that managed the grant, not the disbursing office. However, it will support 

whatever guidance it is provided by the office that is responsible. As a result, we 

deleted the recommendation to the Commander, Joint Area Support Group - Central 

to seek reimbursement for the overpayments. 
15 

Appendix A. Scope and Methodology 

In September 2004, we initiated an audit of cash controls over disbursing officers in 

southern Iraq as a result of concerns brought to our attention by staff of the 

Coalition Provisional Authority (CPA) Comptroller. 

We reviewed the following documents issued by the CPA: 

• CPA Regulation Number 2, “Developmental Fund for Iraq,” June 10, 2003 

• CPA Regulation Number 3, “Program Review Board,” June 18, 2003 

• CPA Memorandum Number 4, “Contract and Grant Procedures Applicable 

to Vested and Seized Iraqi Property and the Developmental Fund for Iraq, 

Implementation of Regulation Number 3, Program Review Board,” 

August 19, 2003 

• Combined Joint Task Force-7, Fragmentary Order 89, June 19, 2003 

• Combined Joint Task Force-7, Fragmentary Order 1268, December 22, 2003 

• Director, Program Review Board, Program Review Board Guidance 01, 

“Coalition Provisional Authority Allocation Process,” June 9, 2003, updated 

October 4, 2003 

• Director, Program Review Board, Program Review Board Guidance 02, 

“Program Management Model for the Regions,” July 30, 2003 

• Director, Program Review Board, Program Review Board Guidance 03, 

“Program Management Assessment,” July 9, 2003 

• Director, Program Review Board, Program Review Board Guidance 04, 

“Maintaining Project Files,” September 30, 2003 

• Director, Program Review Board, Program Review Board Guidance 05, 

“Project Monitoring and Evaluation,” September 30, 2003 

• Director, Program Review Board, Program Review Board Guidance 06, 

“Rapid Regional Response Program Overview,” September 27, 2003 

• Director, Program Review Board, Program Review Board Guidance 06.2, 

“Rapid Regional Response Program Overview (amended),” December 14, 

2003 and January 25, 2004 

The CPA South-Central Region used Rapid Regional Response Program funds to 

award 74 grants worth approximately $20.8 million between February and June 

2004. We reviewed all 74 grants. We initially reviewed the Program Review 

Board minutes to determine whether those grants were approved by the Program 

Review Board. 

During our audit, we observed deficiencies in grant award documentation and 

expanded our scope to determine whether grants were properly managed by 

coalition representatives in the South-Central Region to include the authorization, 

award, execution, and oversight of the grants. We spoke with the contracting 

officials available at the time of our audit regarding the status of the grant projects 

and examined documentation maintained in the grant files. Those contracting 

officers primarily were located at the South-Central Region, now known as the 

U.S. Regional Embassy Office, located in Al Hillah, Iraq; but one contracting 
16 

officer who had previously worked for the South-Central Region was working for 

the Joint Contracting Command – Iraq/Afghanistan. 

We performed audit work at two locations to review applicable documentation and 

grants management procedures. At the Joint Area Support Group - Central 

Comptroller’s Office, located in the U.S. Embassy, Baghdad, Iraq; we reviewed 

receipts submitted by South-Central Region pay agents to confirm disbursements 

made for the grants. At the U.S. Regional Embassy Office, we reviewed all other 

aspects of the grants. 

We conducted this performance audit from September 2004 through August 2005, 

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. The Special Inspector General for Iraq Reconstruction (SIGIR), 

which was formerly the Office of the Inspector General, Coalition Provisional 

Authority (CPA-IG), issued five reports related to controls over cash and the 

management of contracts. The U.S. Army Audit Agency also issued a report 

related to controls over cash. The reports are listed below and are available at the 

indicated website addresses. 

Special Inspector General for Iraq Reconstruction Reports. Reports can be accessed 

on its website at http://www.sigir.mil. 

SIGIR Report No. 05-019, “Attestation Engagement Concerning the Award of NonCompetitive Contract DACA63-03-D-0005 to Kellogg, Brown and Root Services, 

Inc.,” September 30, 2005 

SIGIR Report No. 05-006, “Control of Cash Provided to South-Central Iraq,” 

April 30, 2005 

SIGIR Report No. 05-008, “Administration of Contracts Funded by the 

Development Fund of Iraq,” April 30, 2005 

CPA-IG Report No. 04-007, “Oil for Food Cash Controls for the Office of Project 

Coordination in Erbil, Iraq,” July 26, 2004 

CPA-IG Report No. 04-009, “Coalition Provisional Authority Comptroller Cash 

Management Controls Over the Development Fund for Iraq,” July 28, 2004 

CPA-IG Report No. 04-013, “Coalition Provisional Authority’s Contracting 

Processes Leading Up to and Including Contract Award,” July 27, 2004 

U.S. Army Audit Agency. Reports can be accessed on its website at 

https://www.aaa.army.mil/reports.htm. 

U.S. Army Audit Agency Audit Report: A-2005-0095-FFG, “Vested and Seized 

Assets, Operation Iraqi Freedom,” February 16, 2005 
17 

Appendix B. Coalition Provisional Authority 

Guidance Applicable to Grants 

Coalition Provisional Authority (CPA) guidance for the Development Fund of Iraq 

(DFI) and for the Program Review Board’s (PRB) operations that are relevant to 

grants is: 

Coalition Provisional Authority Regulation Number 2. CPA Regulation 

Number 2, “Development Fund for Iraq,” June 10, 2003, described the 

responsibilities for the administration, use, accounting, and auditing of the DFI. 

This regulation was intended to ensure that the DFI was managed in a transparent 

manner for and on behalf of the Iraqi people, consistent with United Nations 

Security Council Resolution 1483, and that all DFI disbursements would be for 

purposes benefiting the people of Iraq. 

Coalition Provisional Authority Regulation Number 3. CPA Regulation 

Number 3, “Program Review Board,” June 18, 2003, established the procedures 

applicable to the PRB operations. The PRB was responsible for recommending 

expenditures of resources from the DFI in a manner that meets the interests of the 

people of Iraq, furthers CPA policy objectives, and comports fully with CPA 

stewardship and financial management duties under the applicable laws and 

regulations, including United Nations Security Council Resolution 1483. The PRB 

was not responsible for overseeing the manner in which approved spending 

requirements were executed. 
18 

Appendix C. Coalition Provisional Authority 

Organizational Responsibilities for Grants 

The diagram shown below identifies organizational entities within the Coalition 

Provisional Authority (this is not a complete organizational diagram of the 

Coalition Provisional Authority) that had oversight and administrative 

responsibilities for grants until it ceased to exist on June 28, 2004. 

Administrator

Comptroller

Rapid Regional 

Response Program

Coordinator

Head Activity

Contracting

Program

Management

Office

Field 

Disbursing Agents

Field

Contracting Agents
19 

Appendix D. Present U.S. Government 

Organizational Responsibilities for Grants 

The diagram shown below identifies the present U.S. government organizational 

entities that had oversight and administrative responsibilities for grants. 

Director, 

Iraq Reconstruction and 

Management Office 

Approval 

Project and 

Contracting Office 

Requirements 

Joint Contracting 

Command - 

Iraq/Afghanistan 

Award/Monitor 

Joint Area Support 

Group - Central 

Disburse 
20 

Appendix E. Grants Awarded by the SouthCentral Region 

The South Central Region awarded 74 grants. The total amount awarded was 

$20,838,000. 

Grant Number Grant 

Amount Grant Description 

DABV01-04-G-8001 $50,000 Media advancement through training, marketing. 

DABV01-04-G-8002 $100,000 Assistance to the Karbala Provincial Council to 

deal with the Ashoura bombing 

DABV01-04-G-8003 $135,000 Delegation of key Iraqi personnel to Washington 

DC for meetings with US Government officials. 

DABV01-04-G-8004 $25,000 Funding for the grand opening of regional 

democracy centre 

DABV01-04-G-8005 $10,000 To aid the Karbala Police Department during the 

religious holiday of Arbaaeen 

DABV01-04-G-8006 $150,000 

Iraq Media Professionals Association South East 

Region (IMPASER) to provide support of the 

media 

DABV01-04-G-8007 $600,000 Provide operating support for the Babylon police 

academy 

DABV01-04-G-8008 $500,000 Provide operating support for the Babylon 

advanced police training facility 

DABV01-04-G-8009 $10,000 

Provide operating support for the Diwaniyah 

Archeology Office to assist in the disinterring of 

the historical city of Nippur (Nafar) & the 

protection of a group of historical graves 

DABV01-04-G-8010 $200,000 Provide initial start-up and operating expenses 

for the South Central Freedom Soccer League 

DABV01-04-G-8011 $200,000 

Exportable medical training; training & public 

education subscription to medical journals, 

books, and computer equipment 

DABV01-04-G-8012 $15,000 Cleanup of the Barnoon village & instill civic 

pride 

DABV01-04-G-8013 $450,000 Provide support for Babylon Security Training 

Facility 

DABV01-04-G-8014 $500,000 Funding for the security tracking system 

DABV01-04-G-8015 $150,000 

Aid the Iraqi Democratic Gathering Regional 

Centre to assist in activities against the Mahdi 

Army & Moqtada Sadr 

DABV01-04-G-8016 $500,000 

Aid the Iraqi Democratic Gathering Regional 

Centre to assist in activities against the Mahdi 

Army & Moqtada Sadr 

DABV01-04-G-8017 $100,000 Support for the people in the Kawliyah Gypsy 

Tribe 

DABV01-04-G-8018 $250,000 

Assist w/ City of Najaf's populace needs & 

counteract the ruinous deeds of Moqtada Al 

Sadr & Madhi Militia 

DABV01-04-G-8019 $950,000 No Grant paperwork 

DABV01-04-G-8020 $210,000 Provide operating support for the Karbala 

Library librarians 
21 

Grant Number Grant 

Amount Grant Description 

DABV01-04-G-8021 $600,000 

Sustain democratic initiatives through funding 

of programs, projects, conferences, & promote 

women's rights 

DABV01-04-G-8022 $600,000 

Sustain democratic initiatives through funding 

of programs, projects, conferences, & promote 

women's rights 

DABV01-04-G-8023 $750,000 

Sustain democratic initiatives through funding 

of programs, projects, conferences, & promote 

women's rights 

DABV01-04-G-8024 $403,500 Start up funding for the establishment of a Small 

Business Development Center 

DABV01-04-G-8025 $250,000 

To provide news, democracy broadcasts, 

information, & entertainment to the Diwaniyah 

area 

DABV01-04-G-8026 $950,000 

Sustain the physical center & cover operational 

expenses for the Hilla University for 

Humanitarian, Scientific, and Religious Studies 

DABV01-04-G-8027 $500,000 

Provide a base monthly operating budget over 

the next 12 months, while translating books & 

periodicals that define "Western Civilization" 

with democratic thoughts and practices from 

English, French, & German into Arabic 

DABV01-04-G-D9001 $50,000 

Provide funds to assist in strengthening the 

Governor's ability to promote the Diwaniyah 

people's welfare 

DABV01-04-G-D9002 $50,000 

Provide funds to assist in strengthening the 

Governor's ability to promote the Diwaniyah 

people's welfare 

DABV01-04-G-D9003 $50,000 

Provide funds to assist in strengthening the 

Governor's ability to promote the Diwaniyah 

people's welfare 

DABV01-04-G-D9004 $50,000 

Support operations & improvements to the 

facilities & equipment of the Diwaniyah's Al 

Amel & Al Rijaa Institute 

DABV01-04-G-D9005 $50,000 

Provide the Provincial Council of Diwaniyah 

representatives funds to assist in strengthening 

the Council's ability to promote the Diwaniyah 

people's welfare 

DABV01-04-G-D9006 $50,000 

Provide the Provincial Council of Diwaniyah 

representatives funds to assist in strengthening 

the Council's ability to promote the Diwaniyah 

people's welfare 

DABV01-04-G-D9007 $40,000 

Provide the DCCVMV funds to assist in 

compensating Diwaniyah people with legitimate 

claims against the Sadr JAS Mehdi Militia for 

damages and losses incurred during April/May 

2004 

DABV01-04-G-D9008 $50,000 

Support the Governor’s unexpected 

humanitarian & representation needs including 

those of non-governmental provincial 

organizations 
22 

Grant Number Grant 

Amount Grant Description 

DABV01-04-G-D9009 $50,000 

Support library's continued development & 

usage by the Diwaniyah people through building 

repair, book binding, essay writing contests, & 

purchase of additional books 

DABV01-04-G-D9010 $10,000 

Support Law and Medical College students by 

providing funds for the purchase of additional 

books that reflect today's legal & medical 

environment 

1 $25,000 Install street lighting 

2 $50,000 Develop educational programs 

3 $50,000 Develop community programs 

4 $50,000 Develop a sport's club 

5 $50,000 Develop community programs 

6 $50,000 Develop education programs 

7 $50,000 Develop community programs 

8 $50,000 Develop community programs 

9 $50,000 Develop literacy programs 

10 $50,000 Develop women's programs 

11 $50,000 Develop water recreation programs 

12 $50,000 Construct a home as residence for a medical 

doctor 

13 $10,000 Renovate a home for the medical doctor's 

residence 

14 $25,000 Construct a home for the teacher's residence 

W911SO-04-A-0002 $6,000,000 Establish & restore public structures & facilities 

in Najaf 

DABV01-04-1-0015 $375,000 Road repair in Najaf Province 

DABV01-04-1-0016 $150,000 Road repair in Kufa Municipality 

DABV01-04-1-0017 $225,000 Road repair in Najaf Municipality 

DABV01-04-1-0018 $350,000 Cleanup of Kufa Municipality 

DABV01-04-1-0019 $1,400,000 Installation of a water system in Najaf 

Municipality 

DABV01-04-1-0020 $1,000,000 Installation of a water system in Kufa 

Municipality 

DABV01-04-1-0021 $525,000 Cleanup of Najaf Municipality 

LGF II - 001 $50,000 Provide support for Shiek Saad's people 

(Irrigation system) 

LGF II - 004 $50,000 Provide support for Engineer's Association 

LGF II - 012 $29,500 Provide support or Wassit newspaper 

LGF II 014 $50,000 Provide support for Province Council 

LGF II - 015 $10,000 Provide support for Province Council 

LGF II - 016 $50,000 Provide support for Province Council 

LGF 004 Wassit 052 $47,000 Provide support for an independent media 

LGF 004 Wassit 053 $27,000 Produce better quality programs 

K-1000-1 $250,000 damaged properties in the city of Kerbala 
23 

Grant Number Grant 

Amount Grant Description 

K-685-01 $14,000 Conduct a 1 month cleanup in 6 sectors of the 

Yarmouk Quarter of Karbala 

K-685-02 $5,000 Provide support for women's rights 

K-685-03 $3,000 Promote and facilitate women's rights and 

welfare in Karbala 

K-685-04 $1,000 Promote and facilitate women's rights and 

welfare in Karbala 

K-685-10 $3,000 Provide project support to conduct human rights 

and democracy educational programming 

K-685-11 $5,000 Provide support for the Human Right Center to 

conduct voter's rights educational program 

Total Grant Amount $20,838,000 
24 

Appendix F. Overpayments on Grants 

South-Central Region personnel overpaid eight grants in the amount of $2,663,500. 

For a detailed list of the duplicate payments, see the table. 

Overpayments on Grants 

Grant Agreement 

Number 

Grant 

Agreement 

Date 

Grant 

Award 

Amount 

Disbursement 

Date 

Disbursement 

Amount 

Amount of 

Overpayment 

 

DABV01-04-G-8002 3/2/2004 $100,000 3/2/2004 $100,000 

 3/3/2004 $100,000 $100,000 

DABV01-04-G-8015 4/10/2004 $150,000 4/10/2004 $150,000 

 4/10/2004 $150,000 $150,000 

DABV01-04-G-8016 4/16/2004 $500,000 4/15/2004 $500,000 

 4/15/2004 $500,000 $500,000 

DABV01-04-G-8017 4/19/2004 $100,000 4/20/2004 $100,000 

 4/28/2004 $100,000 $100,000 

DABV01-04-G-8020 5/24/2004 $210,000 5/26/2004 $210,000 

 6/8/2004 $210,000 $210,000 

DABV01-04-G-8024 5/26/2004 $403,500 5/27/2004 $403,500 

 5/27/2004 $403,500 $403,500 

DABV01-04-G-8025 5/25/2004 $250,000 5/27/2004 $250,000 

 5/27/2004 $250,000 $250,000 

DABV01-04-G-8026 5/26/2004 $950,000 5/27/2004 $950,000 

 6/1/2004 $950,000 $950,000 

Total Overpayments $2,663,500 
25 

Appendix G. Acronyms 

CPA Coalition Provisional Authority 

CPA-IG Coalition Provisional Authority Office of the Inspector General 

DFI Development Fund for Iraq 

DoD Department of Defense 

PCO Project and Contracting Office 

PRB Program Review Board 

R3P Rapid Regional Response Program 

SIGIR Special Inspector General for Iraq Reconstruction 
26 

Appendix H. 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 

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 

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 

Commander, 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 Defense Organizations

Director, Defense Contract Audit Agency 
27 

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 

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

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 
28 

Appendix I. Audit Team Members 

The Office of the Assistant Inspector General for Auditing, Office of the Special 

Inspector General for Iraq Reconstruction, prepared this audit report. The Office of 

the Special Inspector General for Iraq Reconstruction staff members who 

contributed to the report include: 

James Carrera 

Angelina Johnston 

Robert Murrell 

Kevin O’Connor 

William Shimp 

William Whitehead 
Management Comments 

Director, Iraq Reconstruction Management Office 

29 

 Embassy of the United States of America 

 Baghdad, Iraq 

September 22, 2005 

RESPONSE TO REPORT STATEMENTS 

UNCLASSIFIED

TO: Senior Audit Manager, SIGIR - James Carrera 

FROM: IRMO Director – Daniel Speckhard 

SUBJECT: Report on Management of Rapid Response Program Grant 

 in South-Central Iraq 

The following comments are provided as requested for the draft statements and 

recommendations shown: 

Statements and Findings: Concur with statements as written. Between February and 

June 2004, the Coalition Provisional Authority (CPA) South-Central Region used funds 

provided from the Development Fund of Iraq (DFI) through the Rapid Regional 

Response Program (R3P) to award 74 grants worth about $20.8M. The overall audit 

objective was to determine whether disbursing officers in selected locations in southern 

Iraq complied with applicable guidance and properly controlled and accounted for DFI 

cash assets and expenditures. While the Iraq Reconstruction Management Office 

(IRMO) began operations subsequent to these matters, the recommendations from SIGIR 

are noted below. 

Recommendations: The SIGIR recommended that the Director of IRMO ensure proper 

authorization and oversight of the grant and administrative process for all existing and 

future grants. IRMO concurs. 

Attachment

 Report on Management of Rapid Response Program Grant in South-Central Iraq 

Dated September 1, 2005 
30 

DRAFTED: IRMO Operations RDiehl 19 September 2005 

CLEARED: IRMO ExecOfc DHarris (ok)
Management Comments 

Commanding General, Joint Contracting Command – Iraq/Afghanistan 

31 
32 
Management Comments 

Commander, Joint Area Support Group – Central

33 
34