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SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202

April 29, 2006 

MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ 

 COMMANDING GENERAL, MULTI-NATIONAL FORCE-IRAQ 

 COMMANDING GENERAL, MULTI-NATIONAL SECURITY 

TRANSITION COMMAND-IRAQ 

SUBJECT: Audit Report on Multi-National Security Transition Command-Iraq 

Management of the Transfer of Iraq Relief and Reconstruction Fund Projects 

to the Iraqi Government (SIGIR-06-006) 

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. 

We considered management comments from the Multi-National Security Transition 

Command-Iraq, on a draft of this report when preparing the final report. 

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. Clifton Spruill at (703) 343-9275, or by email 

at clifton.spruill@iraq.centcom.mil. For the report distribution, see Appendix C. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: Distribution 
i

Special Inspector General for Iraq Reconstruction 

SIGIR-06-006 April 29, 2006 

Multi-National Security Transition Command-Iraq Management of the Transfer of Iraq Relief and Reconstruction Fund 

Projects to the Iraqi Government 

Executive Summary 

This report is one of a series of reports addressing the management, by U.S. government 

organizations, of the transfer of completed reconstruction projects to the Iraqi 

government. 

Introduction. In November 2003, the United States Congress appropriated $18.4 billion, 

through Public Law 108-106, for the Iraq Relief and Reconstruction Fund (IRRF) to 

support security, relief, rehabilitation, and reconstruction projects in post-war Iraq; and 

National Security Presidential Directive No. 36 gave the responsibility to the Chief of 

Mission for Iraq, under the guidance of the U.S. Secretary of State, to provide policy 

direction for Iraq reconstruction efforts. 

The Multi-National Security Transition Command-Iraq (MNSTC-I) is a principal 

organization in the Iraq relief and reconstruction effort, with a mission to organize, train, 

equip, and mentor Iraqi security forces. In that capacity, it has provided professional 

engineering and project management support for 1,634 IRRF-funded projects with a 

projected completion cost of $1.7 billion. 

In a previous Special Inspector General for Iraq Reconstruction report,1

 we found the 

Gulf Region Division-Project Contracting Office, U.S. Army Corps of Engineers’ 

management of the transfer of IRRF-funded assets to the Iraqi government did not 

involve notification to the Iraqi government at the ministerial level when assets were 

transferred at the local and provincial levels. In the same report, we also noted a working 

group was formed in December 2005 to develop a policy to direct U.S. organizations in 

the management and reporting of asset transfers to the Iraqi government ministerial level. 

A formal asset recognition and transfer process is necessary to enable the Iraqi 

government to integrate the completed project assets into a nationwide infrastructure 

management plan, adequately budget for sustaining the transferred project assets, account 

for the assets, and leverage the project assets to obtain financing for additional projects 

from world markets. The Calendar Year 2007 Iraqi budget cycle requires that the 

Ministry of Finance recognize assets transferred to Iraqi control by June 2006 in order to 

include adequate sustainment funds for the assets in the budget. 

 

1

GRD-PCO Management of the Transfer of IRRF-funded Assets to the Iraqi Government, SIGIR-05-028 

(January 24, 2006). 
ii

Objectives. The overall objective of this audit was to determine whether the U.S. 

government organizations responsible for managing IRRF projects have developed and 

approved policies and procedures for transferring the billions of dollars of assets – 

purchased, renovated and constructed with IRRF funds – to the Iraqi government and its 

citizens. This audit focused specifically on asset recognition and transfer policies and 

procedures used by MNSTC-I. 

Results. MNSTC-I used standard U.S. Department of Defense (DoD) facilities 

management procedures to transfer project assets to the Iraqi government at the local 

level, but did not provide formal notification of the project asset transfer to the Iraqi 

Ministry of Planning and Ministry of Finance, largely because a requirement to report 

projects at that level has not yet been established. The need to formally transfer assets to 

the Ministries of Defense and Planning was first identified in the late summer of 2005, 

but the U.S. Department of State (DoS) did not establish a formal working group to 

develop policy until December 2005. Currently, the working group reports that it 

anticipates having a directive in place by May 1, 2006. MNSTC-I is a member of this 

working group and has stated that it will follow the new policy once it is established. 

Although MNSTC-I is actively participating in the DoS asset recognition and transfer 

program, a number of significant challenges remain. Planning for the Iraqi budget must 

be completed by late summer 2006 and the Iraqi Ministry of Finance and Ministry of 

Planning must have information on the assets by that time if they are to ensure that labor, 

security, operations and maintenance, and training costs associated with these projects are 

appropriately recognized and budgeted. 

MNSTC-I has a well-established process for transferring capital assets to the Iraqi 

Ministry of Defense. Using this process it should successfully meet the Iraqi budget 

deadlines. However, there are problems in transferring capital assets to the Iraqi Ministry 

of Interior. The Ministry of Interior has not recognized the project assets transferred to 

the Iraqi police forces for the past two years and it also does not have an effective process 

in place to receive and recognize assets for budgetary purposes. For example, there were 

no project sustainment costs for Ministry of Interior projects in the 2006 budget. While 

the same MNSTC-I management team that appears to be successful in the transfer of 

Defense assets is leading this effort, the Iraqi Ministry of Interior’s limited management 

and budgeting capacity poses a significant risk. 

The problems within the Ministry of Interior may be helped by the DoS Iraq 

Reconstruction Management Office’s (IRMO’s) newly created ministerial capacity 

development program. The Embassy has developed a comprehensive approach to train 

Iraqi officials in key ministries and to inculcate best practices. In support of this effort, 

Ministerial Assistance Teams were established that are led by IRMO senior consultants. 

These teams will work with key Ministries and provide a baseline assessment of each 

ministry’s ability to perform key functions. This will also serve to identify the basic 

needs of each ministry upon which action plans will be developed to train ministry 

leadership and staff in efficient and effective governance. 

Management Actions. MNSTC-I facilities engineers worked closely with the Ministry 

of Defense to create a well-defined plan that has successfully begun to take shape. 

However, the relationship at the Ministry of Interior has not been as successful because 

of ongoing political problems within the Ministry and a turbulent and unpredictable 

project approval process. 
iii

Recommendations. We recommend that MNSTC-I continue to participate fully in the 

development of a common U.S. government policy and process facilitating the transfer of 

completed project assets to the Iraq government, and lend their professional engineering 

and facilities management expertise to the working group process. When DoS directs a 

policy to provide formal notification of the project asset transfer to the Iraqi Ministry of 

Planning, Ministry of Finance, and the appropriate operating ministry, MNSTC-I should 

ensure that appropriate resources are made available so that its project information is 

provided in time to meet the planning deadline. 

Management Comments and Audit Response. MNSTC-I officials concurred with the 

finding and recommendations. Actions are underway to implement the 

recommendations. The comments received are fully responsive. 
Table of Contents 

Executive Summary i 

Introduction 

Background 1 

Objective 2 

Finding 

 Asset Recognition and Transfer Policies and Procedures 3 

Appendices 

A. Scope and Methodology 6 

B. Acronyms 7 

C. Report Distribution 8 

D. Audit Team Members 10 

Management Comments

Multi-National Security transition Command-Iraq 11 
1

Introduction 

Background 

On November 6, 2003, the U.S. Congress appropriated $18.4 billion, through Public Law 

108-106, for the Iraq Relief and Reconstruction Fund (IRRF) to fund Iraq reconstruction 

requirements that had been identified by the Coalition Provisional Authority during the 

summer and fall of 2003. Although this audit focuses on the IRRF, there are additional 

programs such as the Commander’s Emergency Response Program, the Development 

Fund for Iraq, the Commander’s Humanitarian Relief and Reconstruction Program and 

other sources that are funding thousands of additional reconstruction projects. 

The Multi-National Security Transition Command-Iraq (MNSTC-I) managed 1,634 

IRRF-funded projects with a projected cost of $1.7 billion. Asset recognition and 

transfer is the final step in a process which should begin with Iraqi government 

involvement in the programming and design of the project and continue through the 

inspection process and development and receipt of the contract deliverables necessary for 

operations and maintenance of the completed project. The final acceptance and transfer 

of the project assets should be the culmination of a collaborative process between the 

appropriate United States and Iraqi Government representatives. An effective transfer 

process will help MNSTC-I, in coordination with others, prepare the Iraqi government to 

sustain completed project assets after transfer. In addition, proper recognition of the 

completed project assets will enable the Iraqi government to leverage those assets to 

obtain financing from world markets, including the International Monetary Fund, World 

Bank, non-governmental organizations and donor nations. 

Asset recognition and turnover is important because the Iraqi government needs to plan 

for and fund infrastructure and sustainment of completed projects on a nation-wide basis. 

This requires a comprehensive knowledge by all appropriate ministries of assets being 

transferred to its control. According to a senior Iraq Reconstruction Management Office 

official, an effective asset recognition and transfer program in the current Iraqi political 

and security environment should include notification of the transfer to the Ministry of 

Planning, Ministry of Finance, and appropriate operating ministry (Electricity, Water, 

Oil, Health, Education, Transportation, Roads, Communications, Justice, Interior and 

Defense) at the central government level in Baghdad. 

The Ministry of Planning has final planning responsibility for all capital assets. 

Recognition of transferred assets by the Ministry of Planning is necessary in order to 

integrate them into a nation-wide infrastructure plan for future capital projects that will 

best serve the people of Iraq. The Ministry of Finance is responsible for the overall Iraqi 

budget. Recognition by the Ministry of Finance is necessary to assure adequate 

budgeting for sustainability of the transferred assets. In addition, proper recognition of 

the completed projects will enable the Ministry of Finance to leverage those assets to 

obtain financing from world markets, including the International Monetary Fund, World 

Bank, non-governmental organizations and donor nations. 
2

Responsibilities

According to National Security Presidential Directive 36, entitled, “United States 

Government Operations in Iraq,” the Chief of the U.S. Mission in Iraq, under guidance 

from the Secretary of State, is responsible for the direction, coordination, and supervision 

of all United States government employees, policies, and activities in country, except 

those under the command of an area military commander. This includes the continuous 

supervision and general direction of all assistance for Iraq. The Directive also creates a 

temporary organization within the Department of State (DoS), called the Iraq 

Reconstruction Management Office (IRMO) to facilitate the reconstruction in Iraq. 

The Department of Defense (DoD) created MNSTC-I as a temporary organization whose 

staff was assigned to the Commander, Multi-National Force-Iraq, to provide program 

management services for reconstruction projects for Iraqi security forces. In that 

capacity, MNSTC-I has managed a large engineering workload in the field for major 

construction projects while it coped with a huge demand to develop statements of work, 

site layouts and design, as well as utilities planning for all levels of the Iraq government. 

MNSTC-I has created working relationships with the Ministry of Defense overseeing the 

Iraqi Armed Forces and the Ministry of Interior for the Iraqi Police Service, Directorate 

of Border Enforcement, Facilities Protection Service, and Iraqi Highway Patrol to 

institutionalize infrastructure sustainment responsibility. 

Objective 

The overall objective of this audit was to determine whether the U.S. government 

organizations responsible for managing IRRF projects have developed and approved 

policies and procedures for transferring the billions of dollars of assets purchased, 

renovated and constructed with IRRF funds to the Iraqi government and its citizens. This 

audit focused specifically on asset recognition and transfer policies and procedures used 

by MNSTC-I. We have also reported on the asset recognition and transfer policies and 

procedures used by the U. S. Army Corps of Engineers, Gulf Region Division-Project 

and Contracting Office,2 and the U.S. Agency for International Development.3 

For a discussion of the audit scope and methodology, see Appendix A. For definitions of 

the acronyms used in this report, see Appendix B. For a list of the audit team members, 

see Appendix D. 

 

2 GRD-PCO Management of the Transfer of IRRF-funded Assets to the Iraqi Government, SIGIR-05-028 

(January 24, 2006). 

3 U.S. Agency for International Development Management of the Transfer of Iraq Relief and 

Reconstruction Fund Projects to the Iraqi Government, SIGIR-06-007, April 2006. 
3

Asset Recognition and Transfer Policies and 

Procedures 

Effective asset recognition and transfer requires that assets be properly accepted by the 

U.S. government, accounted for, and then formally transferred to the Iraq operating 

ministry and the Iraq Ministries of Finance and Planning so they can appropriately plan 

and budget for their support. MNSTC-I officials have developed procedures for 

transferring defense-related assets to the Ministry of Defense (the operating ministry) 

based upon DoD standard facilities management policies and procedures. MNSTC-I has 

had less success transferring law enforcement-related assets to the Ministry of Interior 

because that ministry has a limited management and budgeting capacity. MNSTC-I is 

also a part of a DoS working group that is developing a common policy and procedure for 

transferring assets to the Iraqi Ministries of Finance and Planning. DoS officials report 

that these policies and procedures will be completed by May 1, 2006, contingent upon the 

Iraqi government’s participation and concurrence, and MNSTC-I has reported that it will 

comply with these policies and procedures once they are developed. 

Ministry of Defense 

MNSTC-I, in coordination with the Iraqi Ministry of Defense, created a successful 

working relationship and a well-defined process for the Ministry to recognize MNSTC-Ideveloped defense projects. The process includes a simplified requirement and approval 

process, and a capital investment and sustainment plan. A working group has also been 

established to prioritize projects and submit those requirements to the appropriate 

Ministry of Defense committees, if higher-level approval is required. The Ministry will 

manage and prioritize projects for multiple bases using the Ministry Master Plan and in 

consideration of facility standards. 

MNSTC-I program managers created processes and procedures for asset transfer of 

individual facilities and whole bases. The Real Property Transfer Report documents the 

facilities, infrastructure systems, site security and transition life support responsibility, 

such as base operations and maintenance and long-range capital investment requirements. 

The report is signed on-site by all parties to the asset transfer. This document serves as 

the basic information that feeds into the planning, programming, and budgeting processes 

required to effectively manage real property assets. In addition, the information for 

sustainment of facilities will provide Iraqi infrastructure engineers information to manage 

the transferred assets. 

For whole base transfers, MNSTC-I’s process entails a 120-day notification timeline. 

The process involves the Ministry in all phases of the transfer process, including 

notification, a Transfer Committee, turnover package, a Real Estate Transition 

Committee, joint site surveys, an inventory, and at the turnover date a joint inspection, 

formal acceptance ceremony, and the passing of responsibility for life support, 

infrastructure sustainment and security. 

Although MNSTC-I told us there is a long-road ahead, they estimate that the Ministry of 

Defense will be capable of establishing, preparing and maintaining their infrastructure by 

December 2006. Along with taking these steps, MNSTC-I is working to train their 

counterparts in the Ministry to plan, program and budget for future infrastructure 

requirements, and perform the management, execution and capitalization phases required 

to prioritize current and future requirements. 
4

Ministry of Interior 

MNSTC-I also attempted to develop a working relationship with the Ministry of Interior, 

but it has not been as successful. The uncertain and changing political climate at the 

Ministry has created a turbulent and unpredictable organizational process. MNSTC-I 

program managers report that, as a result, the Ministry has not recognized assets 

transferred at the local level for the past two years. While there are numerous reasons for 

this situation, including the requirement for police stations to be located in more 

dangerous, populated areas; issues of uncertain property ownership; and the constant 

rebuilding of projects due to damage and destruction caused by insurgents, the lack of 

progress is rooted in the Ministry’s political difficulties, not a lack of effort by MNSTC-I. 

MNSTC-I developed a timeline in November 2005 for the Ministry of Interior to 

organize both national and provincial infrastructure planning for projects, to include 

funding and development of statements of work and engineering packages. However, a 

complicated, multi-step approval process contributed to the failure to meet the 

organizational milestones set by MNSTC-I. The breakdown in planning for operating 

and maintenance and sustainment of project assets, such as police and border guard 

facilities, has created a very high risk for a successful, timely transition of those 

responsibilities from the U.S. government to the Iraqi government. 

Conclusion

MNSTC-I has developed an excellent process for transferring defense-related assets to 

the Ministry of Defense, but a lack of capability in the Ministry of Interior is impeding 

the transfer of police-related assets. MNSTC-I is also actively participating in the DoS 

working group that is developing the policies and procedures for transferring assets to the 

Iraqi Ministries of Finance and Planning. MNSTC-I’s challenges are (1) to continue its 

reform efforts in the Ministry of Interior and get an infrastructure management system in 

place, and (2) complete the development of a common policy and process facilitating the 

transfer of completed projects to Iraqi Ministry of Finance and Ministry of Planning, and 

then implement that policy in time to meet the Iraqi government’s budget planning 

deadlines. 

Recommendation, Management Comments and Audit 

Response

We recommend that the Commanding General, Multi-National Security Transition 

Command-Iraq continue to support the evolving policies and procedures for transferring 

completed projects to the Iraqi Ministries of Finance and Planning and, once those 

procedures are finalized, ensure sufficient resources are made available to fully 

implement the procedures in sufficient time that the information can be used by the Iraqi 

government in formulating its calendar year 2007 budget. 

Management Comments and Audit Response. MNSTC-I officials concurred with the 

finding and recommendations. Actions are underway to implement the 

recommendations. The comments received are fully responsive. 
5

Additional Observations

In the course of our review, we also noted that in addition to the IRRF, Iraq 

reconstruction activities are also being funded by the Development Fund for Iraq, the 

Commander’s Emergency Response Program, and the Commander’s Humanitarian 

Relief and Reconstruction Program as well as various other U.S. governmentadministered funding sources. As with IRRF-funded projects, formal asset recognition 

and transfer policies and procedures are similarly needed for the transfer of additional 

billions of dollars worth of assets. We believe that the transfer of all assets developed or 

funded by U.S. programs should be governed by a common set of policies and 

procedures. 

MNSTC-I officials recognized the need to improve their policies and procedures for 

closing contracts and transferring IRRF-funded assets to the Iraqi government, and also 

participates in three multi-agency working groups -- the Asset Recognition and Transfer 

Team Working Group, the Information Technology Working Group, and the Sustainment 

Working Group, comprised of representatives from the principal agencies of the U.S. 

government charged with the relief and reconstruction effort in Iraq. These agencies 

include, among others, the Gulf Region Division-Project Contracting Office, U.S. Army 

Corps of Engineers; the Iraq Reconstruction Management Office, the Multi-National 

Force-Iraq, the Joint Contracting Command-Iraq/Afghanistan, and the U.S. Agency for 

International Development. 
6

Appendix A. Scope and Methodology__________

In January 2006, we initiated this audit (Project No. 2005-20) to determine if MNSTC-I 

had adequate policies and procedures in place to manage the transfer of assets to the Iraq 

government. We conducted interviews with MNSTC-I representatives, including the J7 

Commander, Program Manager for Northern Iraq, the Resource Advisor, the Iraqi 

Ministry of Interior Liaison and the Iraqi Ministry of Defense Liaison. We also 

interviewed representatives from the Iraq Reconstruction Management Office to gather 

information about how the asset transfer process affects planning and budgeting at the 

Iraqi central government level. 

We reviewed MNSTC-I’s policies and procedures regarding the asset transfer process. 

We did not visit MNSTC-I’s Forward Operating Bases to review completed asset transfer 

documentation to determine if they were accomplished in accordance with MNSTC-I 

policies and procedures. 

We conducted this audit from January 2006 through March 2006, in accordance with 

generally accepted government auditing standards. 

Use of Computer-Processed Data. We used computer-processed data from the 

Iraq Reconstruction Management System (IRMS) to validate that MNSTC-I 

managed 1,634 IRRF-funded projects with a projected cost of $1.7 billion. We did 

not assess the general or application controls of IRMS. 

Prior Coverage. “GRD-PCO Management of the Transfer of IRRF-funded Assets to the 

Iraqi Government”, SIGIR-05-028, January 24, 2006. 
7

Appendix B. Acronyms 

DoD U.S. Department of Defense 

DoS U.S. Department of State 

GRD-PCO Gulf Region Division-Project and Contracting Office, U.S. Army 

Corps of Engineers 

IRMO Iraq Reconstruction Management Office 

IRRF Iraq Relief and Reconstruction Fund 

MNSTC-I Multi-National Security Transition Command-Iraq 
8

Appendix C. 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 
9

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 
10

Appendix D. Audit Team Members 

This audit 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 members who 

contributed to the report include: 

Sandra Cross 

Glenn Furbish 

Robert Gabriel 

 
11

Management Comments 

Multi-National Security Transition CommandIraq 

MULTI-NATIONAL SECURITY TRANSITION COMMAND-IRAQ 

BAGHDAD, IRAQ 

APO AE 09316 

 28 March 2006 

Mr. Joseph T. McDermott 

Assistant Inspector General for Audit 

Special Inspector General for Iraq Reconstruction 

400 Army Navy Drive 

Arlington, VA 22202 

Sir, 

 I am pleased to provide our response to the one recommendation addressed to this 

command as contained in your draft audit report on Multi National Security Transition 

Command-Iraq Management of IRRF-funded Assets to the Iraqi Government, Report No. 

SIGIR-06-006, 19 March 2006. We appreciate your efforts to help us to perform 

our mission better. 

 If you have any questions or require other assistance, please contact LTC Kenneth 

Wherry, Chief, Command Audit at DSN (318) 852-1351. 

 Sincerely, 

 ORIGINAL SIGNED 

 Encl JAMES K. GREER 

 COL, AR 

 Chief of Staff 

 
12

COMMAND REPLY 

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR IRAQ 

RECONSTRUCTION 

AUDIT OF THE MULTI-NATIONAL SECURITY TRANSITION COMMANDIRAQ MANAGEMENT OF THE TRANSFER OF IRRF-FUNDED ASSESTS TO 

THE IRAQI GOVERNEMENT REPORT NO. SIGIR-06-006, 19 MAR 2006 

Audit Objective: The overall objective of this audit was to determine whether the U.S. 

government organizations responsible for managing IRRF (Iraqi Relief and 

Reconstruction Fund) projects have developed and approved polices and procedures for 

transferring the billions of dollars of assets purchased, renovated and constructed with 

IRRF funds to the Iraqi government and its citizens. This audit focused specifically on 

asset recognition and transfer policies and procedures used by the Multi-National 

Security Transitional Command-Iraq (MNSTC-I). We previously reported on the asset 

recognition and transfer policies and procedures used by the U.S. Army Corps of 

Engineers, Gulf Region Division-Project and Contracting Office. We will report on the 

U.S. Agency for International Development in a separate report. 

Audit Conclusion: MNSTC-I has developed an excellent process for transferring 

defense-related assets to the Ministry of Defense, but a lack of capability in the Ministry 

of Interior is impeding the transfer of police-related assets. MNSTC-I is also actively 

participating in the DoS working group that is developing the policies and procedures for 

transferring assets to the Iraqi Ministries of Finance and Planning. MNSTC-I’s 

challenges are (1) to continue it reform efforts in the Ministry of Interior and get an 

infrastructure management system in place, and (2) complete the development of a 

common policy and process facilitating the transfer of completed projects to Iraqi 

Ministry of Finance and Ministry of Planning, and then implement that policy in time to 

meet the Iraqi government’s budget planning deadlines. 

Recommendation: We recommend that the Commanding General, MNSTC-I continue 

to support the evolving policies and procedures for transferring completed projects to the 

Iraqi Ministries of Finance and Planning and, once those procedures are finalized, ensure 

sufficient resources are made available to fully implement the procedures in sufficient 

time that the information can be used by the Iraqi government in formulating its calendar 

year 2007 budget. 

Command Reply: Concur: MNSTC-I will continue its active involvement with the 

IRMO Asset Recognition and Transfer working group which focuses on the development 

and refinement of transfer procedures to the Iraqi Ministries of Finance and Planning. In 

support of the Ministry of Interior’s real property management program, MNSTC-I is 

organizing a dedicated team to address the Ministry’s infrastructure management system 

and its acceptance of transferred properties. One of the primary missions is to quickly 

establish a baseline policy for sustainment of transferred assets in order to support the 

1 
13

submittal of appropriate facility sustainment funding request to meet the April 2006 start 

of the budget cycle. This new team will concurrently work on establishing a functional 

Ministry of Interior infrastructure management capacity by reviewing and updating 

existing policies and procedures. Personnel from the team will work from FOB Shield, 

beginning April 2006, and embed within the Ministry of Interior to assist and ensure 

development and implementation of the appropriate real property data management 

systems to provide for planning, budgeting and sustainment of transferred assets 

throughout their lifecycle. 

2