OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

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SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202

July 28, 2006 

MEMORANDUM FOR OFFICE OF THE DEPUTY ASSISTANT SECRETARY OF 

THE ARMY (POLICY & PROCUREMENT) 

 COMMANDING GENERAL, JOINT CONTRACTING 

COMMAND-IRAQ/AFGHANISTAN 

 COMMANDING GENERAL, GULF REGION DIVISION, 

U.S ARMY CORPS OF ENGINEERS 

 

SUBJECT: Review of the Use of Definitization Requirements 

for Contracts Supporting Reconstruction in Iraq (SIGIR-06-019) 

We are providing this 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 such programs 

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

We considered comments from the Office of the Deputy Assistant Secretary of the Army 

(Policy & Procurement) and the Gulf Region Division-Project and Contracting Office, 

U.S. Army Corps of Engineers, on a draft of this report when preparing the final report 

Their comments are addressed in the report where applicable and copies of the comments 

are included in the Management Comments section of this 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. Steve Sternlieb at (703) 428-0240, or by 

email at steven.sternlieb@sigir.mil. For the report distribution, see Appendix C. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: Distribution 
i 

Office of the Special Inspector General 

For Iraq Reconstruction 

SIGIR-06-019 July 28, 2006

Review of the Use of Definitization Requirements for Contracts 

Supporting Reconstruction in Iraq 

Executive Summary 

Introduction. Congress appropriated $18.4 billion for security, relief, rehabilitation, and 

reconstruction in Iraq. The appropriation is known as the Iraq Relief and Reconstruction 

Fund (IRRF). Overall, as of April 2006, $16.4 billion in IRRF funds had been obligated. 

Funds are obligated for contracts, grants, local purchases, and agency operating expenses. 

Regarding contracts, as of April 2006 the United States awarded 1,678 contracts valued 

at nearly $12.1 billion from IRRF. Of these, the Department of Defense (DoD), mostly 

through the Department of the Army, has awarded 1,647 contracts with a value of nearly 

$7.5 billion. Other activities funded through IRRF, such as grants, local purchases, and 

agency operating expenses were outside the scope of this review. 

A variety of contract actions were used in awarding IRRF reconstruction contracts to 

meet this mandate, including what is referred to in the Defense Federal Acquisition 

Regulation Supplement (DFARS) as an undefinitized contract action. The Federal 

Acquisition Regulation (FAR), from which the DFARS is based, refers to these actions as 

letter contracts1

. This type of action is used when the contract terms, specifications, or 

price are not agreed upon before performance is begun2. An undefinitized contract action

is used in two cases: (1) when there is insufficient time to negotiate for a definitive 

contract to meet the government’s needs; and (2) when the government’s interest 

demands that a binding commitment be given so that contract performance can begin 

immediately3. The DFARS requires that definitization occur (to agree on the contract 

terms, specifications, and price) the earlier of (1) 180 days after the issuance of an 

undefinitized contract action; or (2) the date on which the amount of funds obligated 

under the contract action is equal to more than 50% of the not-to-exceed price. 

Objective. The overall objective of this audit was to determine whether the definitization 

process for contracts (including letter contracts and task orders) funded by the IRRF 

complied with applicable regulations, policies, and procedures and whether such 

contracts were being definitized in a timely basis. While the Department of State and the 

U.S. Agency for International Development award contracts using IRRF, neither 

identified contracts subject to definitization. Therefore, our review focused on contracts 

awarded by the DoD. 

 

1

 Under the Federal Acquisition Regulation (FAR) section 16.603, a “letter contract” is written as a 

preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing 

supplies or performing services. 

2

 Defense Federal Acquisition Regulation Supplement (DFARS), Subpart 217.7401(d). 3

 DFARS, Subpart 217.7403. 
ii 

Results. There was a lack of clarity regarding the regulatory requirement for 

definitization of task orders issued under contracts classified as IndefiniteDelivery/Indefinite-Quantity (IDIQ) on the part of the primary U.S. Army organizations 

involved in awarding and administering different types of contracts for Iraq 

reconstruction. Specifically, U.S. Army procurement officials with the Joint Contracting 

Command-Iraq/Afghanistan (JCC-I/A), the U.S. Army Corps of Engineers Gulf Region 

Division-Project and Contracting Office (GRD-PCO), and the Assistant Deputy Assistant 

Secretary of the Army for Policy and Procurement-Iraq/Afghanistan (ADASA P&P-I/A) 

all agreed that the DFARS regulation for definitization did not apply to task orders issued 

under contracts classified as IDIQ contracts. The basis of this interpretation was the lack 

of specific language in either the DFARS or the FAR to associate an IDIQ contract as a 

type of contract that would be subject to the definitization provisions for an undefinitized 

contract action. As such, the application of definitization requirements to task orders 

issued under IDIQ contracts has been done on a voluntary basis. 

On June 2, 2006, as a result of this audit and discussions with U.S. Army officials 

regarding the DFARS requirement for definitization, the Office of the Army General 

Counsel, in conjunction with the ADASA (P&P-I/A), has re-examined this issue and now 

agrees that the provisions of DFARS Subpart 217.74, “is the prescription for 

undefinitized contract actions, which would include task orders, if the terms, 

specifications or price are not agreed upon before performance is begun under the task 

order.” 

 

We were unable to determine whether contracts identified as undefinitized contract 

actions were being definitized by the U.S. Army on a timely basis. In our review of the 

Iraq Reconstruction Management System and the Project Assessment Report databases, 

both used to track IRRF contract actions, we identified 194 task orders valued at $3.4 

billion, as of the reporting quarter ending March 31, 2006, that were classified as 

undefinitized contract actions, and all were associated with IDIQ contracts. However, 

the content of these databases, including the fields established to record definitization 

status, was incomplete. The specific data fields needed to be able to monitor and 

determine whether definitization occurred; when it occurred; what the definitized value 

was; and whether this occurred within the 180-day requirement were mostly not being 

populated in the databases. This is contrary to a September 20, 2005, directive issued by 

the Iraq Reconstruction Management Office to all agencies with IRRF-funded projects 

that requires agencies to load and update the Iraq Reconstruction Management System 

with complete and accurate information. 

Conclusion. The lack of clarity among U.S. Army procurement organizations as to the 

applicability of the DFARS definitization requirement for tasks orders issued under IDIQ 

contracts diminishes visibility and control over contractor costs by the government. The 

incomplete nature of the content in the contract databases does not support the DFARS 

requirement for ensuring that definitization occurs in a timely manner, and thus 

implementing cost control. Cost containment is essential for contract administration 

relating to funds control over the IRRF appropriation which is subject to expiration at 

fiscal year end 2006. 
iii 

Recommendations. We recommend that the Assistant Deputy Assistant Secretary of the 

Army for Policy and Procurement-Iraq/Afghanistan: 

1. Issue written clarification regarding the applicability of DFARS for definitizing 

task orders issued under IDIQ contracts in alignment with the opinion of the 

Office of the Army General Counsel. 

2. Consistent with the Iraq Reconstruction Management Office’s September 20, 

2005, directive that all agencies currently spending IRRF dollars load all IRRFfunded project data in IRMS, issue a directive to JCC-I/A and GRD-PCO 

requiring that each populates the Iraq Reconstruction Management System and 

the Project Assessment Report databases with complete and accurate information 

to monitor undefinitized contract actions; and that each ensures that the 

definitization of undefinitized contract actions occurs within established 

timeframes. 

Management Comments and Audit Response. We received written comments on a 

draft of this report from ADASA (P&P-I/A) and GRD-PCO officials. The ADASA 

(P&P-I/A)—addressing the contracting activities of JCC-I/A only—generally concurred 

with the findings and recommendation 1; and all comments received thereof are fully 

responsive. However, the ADASA (P&P-I-A) did not concur with recommendation 2 

that the IRMS or PAR databases be updated because JCC-I/A maintains its own contract 

database. We also received similar comments from GRD-PCO officials that it maintains 

other databases that contain undefinitized projects and scheduled completions. SIGIR 

disagrees with the non-concurrences and has referred to the September 2005 directive 

issued by IRMO to all agencies that have IRRF funds and projects that requires 

populating IRMS with complete and accurate information. Additional technical 

comments received to the draft of this report by the ADASA (P&P-I/A) have been 

incorporated into this final report as appropriate. 
Table of Contents 

Executive Summary i

Introduction

Background 1 

Objective 2 

Definitization Requirements 3 

Contract Management for Definitization 5

Conclusion and Recommendations 7 

Appendices 

A. Scope and Methodology 9 

B. Acronyms 11 

C. Report Distribution 12 

D. Audit Team Members 14 

Management Comments 

Assistant Deputy Assistant Secretary of the Army 

 (Policy and Procurement)-Iraq/Afghanistan 15 

Gulf Region Division-Project Contracting Office 17 
1

Introduction 

Background

Congress has appropriated $18.4 billion for security, relief, rehabilitation, and 

reconstruction in Iraq. The appropriation is known as the Iraq Relief and Reconstruction 

Fund (IRRF). Overall, 1,678 contracts valued of nearly $12.1 billion have been awarded 

from IRRF, as of April 20064. Of these, the Department of Defense (DoD), mostly 

through the Department of the Army (U.S. Army), has awarded 1,647 contracts with a 

value of nearly $7.5 billion. A number of contract types have been used, including firm 

fixed price and cost plus with various types of award fees. Some of the cost plus 

contracts utilized were classified as Indefinite-Delivery, Indefinite-Quantity (IDIQ) 

contracts. IDIQ contracts have been used for reconstruction projects in Iraq because of 

the urgency to initiate work on projects. Task orders are orders placed by the government 

against IDIQ contracts for individual requirements within stated limits during a fixed 

period of time. 

Detailed contract information is maintained under the direction of the Iraq Reconstruction 

Management Office and contained in two databases: the Iraq Reconstruction 

Management System and the Project Assessment Report databases. These databases 

contain specific fields to allow for the monitoring and recording of definitized contract 

actions in alignment with contract management. As of March 31, 2006, reports from 

these databases indicated that 35 IDIQ contracts had been issued by DoD organizations5

with a total authorized amount of $3.4 billion, and that were comprised of 194 task 

orders. Of those, 184 were associated with U.S. Army organizations. 

U.S. Army Organizations Responsible for Contract Management. Several U.S. Army 

organizations have responsibility for contract management in Iraq. These include the 

Assistant Deputy Assistant Secretary of the Army for Policy and ProcurementIraq/Afghanistan (ADASA P&P-I/A); Joint Contracting Command-Iraq/Afghanistan 

(JCC-I/A); and the U.S. Army Corps of Engineers Gulf Region Division-Project and 

Contracting Office (GRD-PCO)6. The U.S. Army is DoD’s executive agent for 

administrative matters in Iraq. 

Assistant Deputy Assistant Secretary of the Army for Policy and ProcurementIraq/Afghanistan (ADASA P&P-I/A). Provides administrative and contracting support 

to U.S. organizations in Iraq, including the Department of State, Chief of Mission, GRDPCO, and Multi-National Force-Iraq. In addition, ADASA P&P-I/A provides 

administrative and contracting support for Iraq reconstruction to the JCC-I/A; the Project 

and Contracting Office-Washington, DC; and the Offices of the Secretary of Defense, as 

well as provides reach-back to U.S.-based contracting agencies. 

 

4

 Estimate based on Special Inspector General for Iraq Reconstruction (SIGIR) compilation of contract 

information submitted by agencies responsible for IRRF. This information was not audited or verified. In 

addition, there are other activities funded through IRRF, such as grants, local purchase, and agency 

operating expenses that are outside the scope of this report. See SIGIR Quarterly Report to Congress, 

Appendix G, April 2006. 

5

 The DoD organizations with IDIQ contracts were GRD-PCO, the United States Air Force Center for 

Environmental Excellence and the United States Navy. 

6

 Until December 4, 2005, the Project and Contracting Office and the U.S. Army Corps of Engineers Gulf 

Region Division were separate organizations. They were merged to form GRD-PCO. 
2

Joint Contracting Command-Iraq/Afghanistan (JCC-I/A). The head of 

contracting activity, JCC-I/A, has the responsibility to administer contracts. The JCC-I/A 

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. 

Project and Contracting Office (PCO). National Security Presidential Directive 

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

and directed the PCO to provide acquisition and project management support for 

activities in Iraq. On June 22, 2004, the Deputy Secretary of Defense established the 

PCO within the Department of the Army and directed the PCO to provide support for all 

activities associated with financial, program, and project management for both 

construction and non-construction IRRF activities. 

U.S. Army Corps of Engineers Gulf Region Division (GRD). The Gulf Region 

Division provides engineering services in the Iraq combat theater to Multi-National 

Force-Iraq, the Department of State, the U.S. Agency for International Development, and 

the Iraqi government with planning, design, and construction management support for 

military and civil infrastructure construction. The responsibilities of the PCO were 

consolidated with those of the GRD on December 4, 2005, to form GRD-PCO. 

Objective 

The overall objective of this audit was to determine whether the definitization process for 

contracts (including letter contracts and task orders) funded by the IRRF complied with 

applicable regulations, policies, and procedures and whether such contracts were being 

definitized in a timely basis. While the Department of State and the U.S. Agency for 

International Development award contracts using IRRF, neither identified contracts 

subject to definitization. Therefore, our review focused on contracts awarded by the 

DoD. 

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

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

For a distribution list for this report, see Appendix C. For a list of the audit team 

members, see Appendix D. 
3

Definitization Requirements 

A variety of contract actions were used in awarding IRRF reconstruction contracts, 

including what is referred to in the Defense Federal Acquisition Regulation Supplement 

(DFARS) as an undefinitized contract action. The Federal Acquisition Regulation 

(FAR), from which the DFARS is based, refers to these actions as letter contracts7. This 

type of action is used when the contract terms, specifications, or price are not agreed 

upon before performance is begun8. An undefinitized contract action is used in two 

cases: (1) when there is insufficient time to negotiate for a definitive contract to meet the 

government’s needs; and (2) when the government’s interest demands that a binding 

commitment is given so that contract performance can begin immediately9. 

The DFARS requires that definitization occur (to agree on the contract terms, 

specifications, and price) the earlier of (1) 180 days after the issuance of an undefinitized 

contract action; or (2) the date on which the amount of funds obligated under the contract 

action is equal to more than 50% of the not-to-exceed price. 

Lack of Clarity in Regulations. In discussions with U.S. Army procurement officials 

with the Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) and the U.S. Army 

Corps of Engineers Gulf Region Division-Project and Contracting Office (GRD-PCO), 

none of these U.S. Army officials interpreted the FAR nor DFARS requirement for 

definitization as applicable to “task orders” issued under IDIQ contracts. This view was 

also shared by officials of the Assistant Deputy Assistant Secretary of the Army for 

Policy and Procurement-Iraq/Afghanistan (ADASA P&P-I/A).

FAR 16.501-1 defines an Indefinite-Delivery “task order contract” as a contract that does 

not procure or specify a firm quantity of services (other than minimum or maximum 

quantity) and that provides for the issuance of orders for the performance of tasks during 

the period of the contract. An Indefinite-Quantity contract limits the government’s 

obligation to the minimum quantity specified in the contract during a fixed period. This 

type of contract can be used when the government cannot predetermine, above a specified 

minimum, the precise quantity of supplies or services that will be required during the 

contract period10. 

Although an IDIQ contract type is intrinsically “undefinitized” by its “indefinite” 

statement of terms, specifications, or price; it is not specifically referred to as an 

undefinitized contract action in the DFARS. In fact, both the FAR and DFARS are silent 

as to definitizing task orders issued under IDIQ contracts. Despite this lack of clarity, 

JCC-I/A and GRD-PCO officials stated that the definitization of task orders issued under 

IDIQ contracts was done voluntarily as a matter of practice, rather than in accordance 

with a specific requirement. 

 

7

 Under the Federal Acquisition Regulation (FAR) section 16.603, a “letter contract” is written as a 

preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing 

supplies or performing services. 

8

 Defense Federal Acquisition Regulation Supplement (DFARS), Subpart 217.7401(d). 9

 DFARS, Subpart 217.7403. 

10 FAR 16.504(a) and (b). 
4

We discussed this interpretation of the non-applicability of DFARS definitization 

requirements for IDIQ task orders with officials of JCC-I/A, GRD-PCO, and ADASA 

P&P-I/A. The Chief of Policy, ADASA P&P-I/A, advised us that task orders under IDIQ 

contracts, “nowhere fall within the definition of an undefinitized contract action in either 

FAR or DFARS”. We were also told that since the FAR and DFARS did not apply to 

task orders issued under IDIQ contracts there was no regulatory requirement to definitize 

such task orders. Although the U.S. Army saw no regulatory requirement, these officials 

believed that contracting officers have a fiduciary responsibility to protect the 

government, including the timely definitizition of task orders under IDIQ contracts. As 

such, officials told us that the U.S. Army seeks to follow the FAR and DFARS 

requirements on a voluntary basis to the extent possible in a contingency environment, 

although it is not required to do so. 

As a result of this audit and our discussions with U.S. Army officials, the Office of the 

Army General Counsel in conjunction with ADASA P&P-I/A, has re-examined the 

applicability of the FAR and DFARS to task orders under IDIQ contracts in response to 

our inquiries. We were advised on June 2, 2006, that undefinitized task orders would fall 

within the definition of an undefinitized contract action if the terms, specifications or 

price are not agreed upon before performance is begun under the task order. Specifically, 

the U.S. Army officials stated that FAR Part 16.504 sets forth regulatory requirements 

that apply to IDIQ contracts and DFARS Subpart 217.74 provides the prescription for 

undefinitized contract actions, to include definitization timelines. 
5

Contract Management for Definitization 

Several information management systems have been established to support all 

organizations responsible for reporting IRRF project and funding information. These 

include the Iraq Reconstruction Management System (IRMS) and the Project Assessment 

Reports (PAR) database. IRMS is meant to provide a unified common operating picture 

of the reconstruction programs in order to synchronize and coordinate efforts across U.S. 

government agencies and from Iraqi national, provincial, and local government levels. It 

is a web-based reconstruction database that the Director of the Iraq Reconstruction 

Management Office directed on September 20, 2005, be used by all U.S. government 

agencies in Iraq for situational awareness, data management and reporting for U.S. 

government funded reconstruction and managed work. The September 2005 directive 

required that all agencies currently spending IRRF dollars load and update all IRRFfunded project data in IRMS. The PAR report is compiled by the Iraq Reconstruction 

Management Office and is issued to Congress as part of the Quarterly 2207 Report 

submission required under Public Law 108-106 to provide an estimate of the cost 

required to complete each project under IRRF. 

To monitor the status of completed definitization actions, information is needed for each 

contracting action on the date definitization occurred and/or the identification of the

definitized value. In addition, there are three measures for determining when 

definitization should occur. Whichever measure occurs first takes precedence. One 

measure is based on time, generally within 180 days of when the contractor has been 

issued a notice to proceed.11 The other two measures are based on project status: under 

the FAR it is before completion of 40% of the work to be performed; under the DFARS it 

is before the date on which the amount obligated is equal to more than 50% of the not-toexceed price. Therefore to monitor whether definitization is occurring in a timely 

manner, the data elements required are: (1) either the date the government provided the 

contractor notice to proceed or the not-to-exceed dollar amount placed on the task order; 

(2) the percentage of work completed; and (3) the funds obligated. 

Lack of Complete Data. In our review of data elements contained in IRMS as of June 

2006 and the PAR database as of March 2006, we found that the combined set of data 

contained all of the data fields necessary to monitor whether definitization has 

occurred—the definitization date and definitization value. However, these data fields 

were mostly not being populated. The failure to include complete information in IRMS 

was reported in our April 2006 audit of IRMS.12 In reviewing data in IRMS and PAR on 

the definitization status of 194 task orders under IDIQ contracts, which were valued at 

$3.4 billion, we found that: 

• The fields related to definitization contained data for only 19 of the 194 task 

orders issued under those contracts. 

• Of the 19, there were 14 task orders, with both the definitization date and 

definitization value; and 5 task orders which had the definitization value but not 

the definitization date. 

• The total dollar amount shown as definitized was $312 million or about 9% of 

the total authorized amount of $3.4 billion for all 194 task orders. 

 

11 This is usually the date the government issues the task order. 

12 Special Inspector General for Iraq Reconstruction, The Evolution of the Iraq Reconstruction Management 

System, SIGIR-06-001, April 24, 2006. 
6

Without the definitization date and value, we were unable to determine either whether 

definitization occurred, but data was not entered in the relevant fields; or whether 

definitization did not occur. 

To monitor whether definitization was conducted in a timely manner, data is needed at 

the task order level on (1) either the date the government provided the contractor notice 

to proceed, or the not to exceed dollar amount placed on the task order; (2) the percentage 

complete; and (3) the funds obligated. Neither the notice to proceed date nor the not-toexceed amount was contained in IRMS as of June 2006 or in the PAR report for the 

quarter ending March 31, 2006. IRMS and PAR did contain data fields for both the 

percentage complete and the funds obligated. However, we could not determine 

percentage complete because many task orders have multiple projects whose percentage 

complete are individually reported. Specifically, in reviewing IRMS and PAR reports we 

found measuring the percentage complete for task orders to be inconclusive. This is 

primarily because GRD-PCO manages projects as opposed to task orders. Many task 

orders have multiple projects with each project assigned a separate Unique Record 

Indicator. In the IRMS and PAR reports each project shows its percentage complete, 

which varies from project to project, but there is no correlation of the overall completion 

rate of the task order the projects are derived from. Without a measurement for the 

percentage complete at the task order level, the IRMS and PAR reports do not provide 

senior managers with the necessary data to assess if undefinitized contract actions

requiring definitization are being completed within regulatory requirements. 

Without management information systems that can be used by senior management 

officials to provide for visibility and assess definitization status, contracting officers are 

the only source of information on definitization status. In discussions with GRD-PCO 

contracting officials we were told that they depend on their contracting officers to 

complete definitization in a timely manner. When we asked whether any definitization 

actions were found to have occurred in an untimely basis, ADASA P&P-I/A, in a 

response coordinated with both JCC-I/A and GRD-PCO, told us that the timeliness of 

definitization is not a data point that is currently being tracked. We also asked ADASA 

P&P-I/A how then were IDIQ contracts reviewed for timeliness and were told that the 

contracting officers are responsible for their contracts, including ensuring the timeliness 

of definitization, and that the JCC-I/A Principal Assistant Responsible for Contracts 

monitors open contracting items assigned to the contracting officers under his/her 

purview. 
7

Conclusion and Recommendations 

Conclusion 

The lack of clarity among U.S. Army procurement organizations as to the applicability of 

the DFARS definitization requirement for tasks orders issued under IDIQ contracts 

diminishes visibility and control over contractor costs by the government. The 

incomplete nature of the content in the contract databases does not support the DFARS 

requirement for ensuring that definitization occurs in a timely manner, and thus 

implementing cost control. Cost containment is essential for contract administration 

relating to funds control over the IRRF appropriation which is subject to expiration at 

fiscal year end 2006. 

Both the Government Accountability Office and the Army Audit Agency have reported 

on the importance of definitization to the government. In March 2005, the Government 

Accountability Office reported that definitization is important because until the task order 

estimate is formalized, the contractor has no real incentive to control costs, as increased 

project costs potentially mean a higher project estimate, potentially resulting in a higher 

award fee.13 In August 2004, the Army Audit Agency reported that if definitization does 

not occur, the government’s risk will be significantly increased because of limited 

visibility and control over contractor costs, and the Army will not be able to achieve the 

benefits associated with contract definitization.14

Recommendations 

We recommend that the Assistant Deputy Assistant Secretary of the Army for Policy and 

Procurement-Iraq/Afghanistan: 

1. Issue written clarification regarding the applicability of DFARS for definitizing 

task orders issued under IDIQ contracts in alignment with the opinion of the 

Office of the Army General Counsel. 

2. Consistent with the Iraq Reconstruction Management Office’s September 20, 

2005, directive that all agencies currently spending IRRF dollars load all IRRFfunded project data in IRMS, issue a directive to JCC-I/A and GRD-PCO 

requiring that each populates the Iraq Reconstruction Management System and 

the Project Assessment Report databases with complete and accurate information 

to monitor undefinitized contract actions; and that each ensures that the 

definitization of undefinitized contract actions occurs within established 

timeframes. 

Management Comments and Audit Response 

We received written comments on a draft of this report from ADASA (P&P-I/A) and 

GRD-PCO officials. The ADASA (P&P-I/A)—commenting on JCC-I/A contracting 

activities only—concurred with our recommendation for ADASA (P&P-I/A) to issue 

 

13 U.S. Government Accountability Office, Defense Logistics: High-Level DOD Coordination is Needed to 

Further Improve Management of the Army’s LOGCAP Contract, GAO-05-328, Mar. 2005 14 U.S. Army Audit Agency, Definitization of Task Orders-Audit of Logistics Civil Augmentation Program, 

A-2004-0438-AML, Aug. 2004. 
8

written clarification to the applicability of the DFARS that would be in alignment with 

the opinion of the Office of the Army General Counsel regarding definitizing task orders 

issued under IDIQ contracts. GRD-PCO commented that ADASA (P&P-I/A) can not 

issue directives for the DFARS, only the Army Federal Acquisition Regulation. We were 

not suggesting that ADASA (P&P-I/A) issue DFARS directives, but simply that the 

ADASA (P&P-I/A) issue written clarification on the applicability of DFARS for 

definitizing task orders issued under IDIQ contracts given the lack of clarity on the part 

of the primary Army organizations involved in awarding and administering different 

types of contracts for Iraq reconstruction. We have accordingly clarified our 

recommendation. 

Both ADASA (P&P-I/A) and GRD-PCO officials non-concurred with our 

recommendation that ADASA(P&P-I/A) issue a directive to JCC-I/A and GRD-PCO 

requiring that each populate the IRMS and PAR databases. The ADASA (P&P-I/A) 

stated that the IRMS and PAR are program management vs. contract management tools 

and that JCC-I/A maintains its own contract database; should not be directed to update 

the IRMS or PAR databases; and provides copies of all contract actions, including task 

orders and related modifications, to the respective program management team so that 

they may update IRMS and PAR as needed. However, the ADASA (P&P-I/A) told us 

during this review that the definitization of IDIQ contracts in Iraq is not a data point that 

is currently being tracked. Furthermore, IRMS is the system that has been chosen for 

reporting and managing the IRRF. GRD in non-concurring stated that no directive is 

required and that GRD-PCO databases already contain undefinitized projects and 

scheduled completions. Nonetheless, we believe that IRMS and PAR are important 

management tools and that without management information systems that can be used by 

senior management officials to provide for visibility and assess definitization status, 

contracting officers are the only sources of information on definitization status. We 

previously reported that although some progress has been made in developing IRMS, 

there continues to be delays in providing accurate data for reporting and that a complete 

and accurate IRRF database that is accessible by the U.S. government activities and their 

respective management via an automated solution is the key to the success of the IRRF 

program15. We have, therefore, retained the recommendation. 

Technical comments to the draft of this report were also provided by the ADASA (P&PI/A) and have been incorporated into this final report as appropriate. Regarding the 

comment that FAR 32.503-6 is not applicable, we note that DFARS refers to FAR 

32.503-6, but for clarification we have deleted citation as it does not change the 

underlying discussion. Regarding the ADASA (P&P-I/A) comment that there are only 

two undefinitized task orders on one of the contracts in the oil sector, ADASA(P&P-I/A) 

emphasized that its comments were applicable exclusively to JCC-I/A and not inclusive 

of any other U.S. Army contracting activities whose contracts may also involve 

undefinitized task orders. As the report states, the 194 task orders relate to all DoD 

entities. The 184 of these 194 task orders pertain to GRD-PCO, and none are executed 

by JCC-I/A. The concern we raised in the report is the inability to discern the status of 

definitization from the project management databases, which includes JCC-I/A and other 

organizations. 

 

15 Special Inspector General for Iraq Reconstruction, The Evolution of the Iraq Reconstruction Management 

System, SIGIR-06-001, April 24, 2006. 
9

Appendix A. Scope and Methodology 

This audit was initiated on January 27, 2006 (Project No. 6005). The objective of this 

audit was to determine whether the definitization process for contracts funded by the Iraq 

Relief and Reconstruction Fund (including letter contracts and task orders) complied with 

applicable regulations, policies, and procedures and whether such contracts were being 

definitized on a timely basis. While the Department of State and the U.S. Agency for 

International Development award contracts using the Iraq Relief and Reconstruction 

Fund, neither identified contracts subject to definitization. Therefore, our review focused 

on contracts awarded by the Department of Defense (DoD). 

To determine whether the definitization process for Iraq Relief and Reconstruction 

Funded (IRRF) contracts complied with applicable regulations, policies, and procedures 

governing timely definitization of task orders issued under Indefinite-Delivery, 

Indefinite-Quantity (ID/IQ) contracts, we took the following actions. 

• We researched the Federal Acquisition Regulation (FAR) and the Defense Federal 

Acquisition Regulation Supplement (DFARS) and identified the specific guidance 

on the definitization criteria for contracts. Specific citations used: 

o FAR Sections 16.603; 16.501-1; 16.504 (a through c); 16.505(b)(3); and 

32.503-6 

o DFARS Subparts 216.5; 217.7401(d); and 217.7403 

• We held discussions with representatives of key DoD organizations involved with 

Iraq reconstruction contracting: the GRD-PCO and the JCC-I/A, as well as the 

ADASA P&P-I/A, the U.S. Army office responsible for Iraq procurement policy, 

who also consulted with the Office of the Army General Counsel. 

Following these discussions we identified and verified with appropriate U.S. Army 

officials that task orders issued under IDIQ contracts were determined to be the only 

undefinitized contract actions identified as subject to definitization in accordance with 

the DFARS, and as contained in the contract databases included in this review. 

To determine whether such contracts were being definitized on a timely basis we took the 

following actions. 

• We reviewed the FAR and DFARS to identify the parameters within which 

contracts are to be definitized. 

• We reviewed key project databases, IRMS and PAR, to ascertain the extent to 

which they contained information related to definitization. 

• We held discussions with representatives of key DoD organizations involved with 

Iraq reconstruction contracting— the GRD/PCO and the JCC-I/A—as well as the 

ADASA P&P-I/A, the U.S. Army office responsible for Iraq procurement policy 

regarding how they monitor definitization status. 

We conducted this review from April through June 2006, in accordance with generally 

accepted government auditing standards. 
10

Use of Computer-Processed Data. Computer processed data from the Iraq 

Reconstruction Management System database as of March 31, 2006 and from the Project 

Assessment Report as of March 31, 2006, were used in this report. We did not audit 

these project management systems during this review. However, SIGIR previously 

audited the Iraq Reconstruction Management System and found similar issues relating to 

incomplete data. See: 

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

Iraq Reconstruction Management System (SIGIR-06-001, April 24, 2006) 

• Review of Data Entry and General Controls in the Collecting and Reporting of 

the Iraq Relief and Reconstruction Fund (SIGIR-06-003, April 28, 2006) 

Prior Coverage. The following audits related to the definitization of task orders have 

been issued within the past five years: 

• Special Inspector General for Iraq Reconstruction, Letter Report: Task Order 

0044 of the Logistics Civilian Augmentation Program III Contract (SIGIR-05-

003, November 23, 2004) 

• Army Audit Agency, Definitization of Task Orders – Audit of Logistics Civil 

Augmentation Program, (A-2004-043, August 2004- AML) 

• U.S. Government Accountability Office, Defense Logistics: High Level DoD 

Coordination is Needed to Further Improve the Management of the Army’s 

LOGCAP (GAO-05-328, March 22, 2005) 

• U.S. Government Accountability Office, Military Operations: DOD’s Extensive 

Use of Logistics Support Contracts Requires Strengthened Oversight (GAO-04-

854, July 19, 2004) 

• U.S. Agency for International Development, USAID Audit of USAID’s 

Compliance with Federal Regulations in Awarding the Contract for Security 

Services in Iraq to Kroll Government Services International, (A-267—05-005-P, 

January 6, 2005) 
11

Appendix B. Acronyms 

ADASA (P&P-I/A) Assistant Deputy Assistant Secretary of the Army for Policy 

 and Procurement – Iraq/Afghanistan 

DFARS Defense Federal Acquisition Regulation Supplement 

DoD Department of Defense 

FAR Federal Acquisition Regulation 

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

 Corps of Engineers 

IDIQ Indefinite-Delivery, Indefinite-Quantity 

JCC-I/A Joint Contracting Command – Iraq/Afghanistan 

IRMS Iraq Reconstruction Management System 

IRRF Iraq Relief and Reconstruction Fund 

PAR Project Assessment Report 
12

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 
13

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 
14

Appendix D. Audit Team Members 

This report was prepared and the review was conducted under the direction of Joseph T. 

McDermott, Assistant Inspector General for Audit, Office of the Special Inspector 

General for Iraq Reconstruction. The staff members who contributed to the report 

include: 

James R. Adams 

Roger H. Florence 

Kenneth A. Littlefield 

Teravy Mol 

Steven H. Sternlieb 
15

Management Comments 

Assistant Deputy Assistant Secretary of the Army 

(Policy and Procurement)-Iraq/Afghanistan 
16
17

Management Comments 

Gulf Region Division, U.S. Army Corps of Engineers 
18