SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202

January 27, 2006 

MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ 

 DIRECTOR, IRAQ RECONSTRUCTION MANAGEMENT 

OFFICE 

 COMMANDING GENERAL, GULF REGION DIVISION, 

U.S. ARMY CORPS OF ENGINEERS 

SUBJECT: Fact Sheet on the Use of the $50 Million Appropriation to Support the 

Management and Reporting of the Iraq Relief and Reconstruction Fund 

 (SIGIR-05-026) 

 

We are providing this memorandum for your information and use. We performed this 

review in accordance with our statutory duties 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 in support 

of Iraq relief and reconstruction. 

This memorandum addresses the disposition of the Fiscal Year 2004 $50 million 

Department of Defense appropriation to the Coalition Provisional Authority earmarked 

for the preparation, maintenance, monitoring, or reporting of the Iraq Relief and 

Reconstruction Fund information required by the Public Law 108-106. We present the 

facts on how the funds were used and our concerns as to the lack of information available 

to support the detail expenditure of this appropriation. 

The objective of this review was to determine whether the $50 million appropriated by 

Congress was used appropriately and in an efficient and effective manner. We 

interviewed and received documentation from responsible staff in the Office of 

Management and Budget, the Department of State, and the Department of the Army. 

In November 2003, Congress passed Public Law 108-106, the Emergency Supplemental 

Appropriations Act for Defense and for the Reconstruction of Iraq and Afghanistan, 

which appropriated $18.4 billion for the rebuilding of Iraq. This money is known as the 

Iraq Relief and Reconstruction Fund (IRRF). The Act imposed significant reporting 

requirements on the implementing agencies, including quarterly reports to Congress on 

how the IRRF was being spent; estimates of the costs required to complete each project; 

information on IRRF obligations and expenditures; IRRF reconstruction activities; IRRF 

contracts; and IRRF fund transfers. To meet these reporting and monitoring requirements 

and to prepare and maintain public records required by the Act, Congress authorized $50 

million, which was to remain available until September 30, 2005. 

One of the efforts to collect and report on IRRF information was to develop and 

implement an automated system in Iraq. Although efforts to develop this system have 

been underway since June 2004, at present the system has only been partially 

implemented. Moreover, only $26.2 million of the authorized money had been spent on a 
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system development effort. The remaining $23.8 million was returned to the Office of 

Management Budget and reapportioned to the Department of State. 

Our review determined that the $50 million was initially apportioned by the Office of 

Management and Budget to the Department of Defense as “Operating Expenses of the 

Coalition Provisional Authority” (apportionment symbol 31 2004/2005 2090). The 

Department of the Army obligated $26.2 million in FY 2004 under the sub-account 

“Reporting” and made disbursements of $9.2 million in FY 2004 and $9.7 million in FY 

2005, with the remaining $7.3 million remaining obligated for additional disbursements 

under the “Reporting” sub-account requirement. 

When the Coalition Provisional Authority was terminated, the Department of the Army 

transferred the remaining $23.8 million in “Reporting” funds back to the Office of 

Management and Budget; which in turn reapportioned the $23.8 million to the 

Department of State. The Department of State allocated the funds to the Near East Asia 

Bureau where $22.1 million went for Iraq Reconstruction Management Office 31611

salary expenses; and the remaining $1.7 million was transferred to the Department of 

State Office of the Inspector General for the reimbursement for the Iraq-related activities 

to engage in monitoring functions through the Economy Act. The Department of State 

did not provide further documentation on how these expenses supported the preparation, 

maintenance, monitoring, or reporting of the IRRF information. 

The Special Inspector General for Iraq Reconstruction does not question the Department 

of State’s authority for obligating and disbursing the $23.8 million. We do question, 

however, disbursing the remaining of the earmarked funds for salary expenses without 

being able to provide either the rationale or support for how these expenditures complied 

with the congressional intent for the appropriation. 

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

memorandum, please contact Joseph T. (Mickey) McDermott, at 914-822-4618 

(Baghdad), or by email at joseph.mcdermott@iraq.centcom.mil, or Dan Haigler by email 

at wilson.haigler@iraq.centcom.mil. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: See Distribution 

 

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 Employees that are appointed as 3161 employees are Excepted Service employees governed by 5 U.S.C. 

3161 and provisions of Title 5 of the United State Code. 
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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 

 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 Defense Organizations

Director, Defense Contract Audit Agency 
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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