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

January 30, 2007 

MEMORANDUM FOR: SEE DISTRIBUTION 

SUBJECT: Fact Sheet on Major U.S. Contractors’ Security Costs Related to Iraq Relief 

and Reconstruction Fund Contracting Activities (SIGIR-06-044) 

We are providing this fact sheet for your information and use. Given the interest of the 

Administration and the Congress of the United States in determining the impacts of security 

costs on the Iraq Relief and Reconstruction Fund (IRRF), I requested my staff to conduct a 

survey of the security costs incurred by nine major U.S. contractors conducting 

reconstruction work in Iraq. Some of these companies may have additional contracts in Iraq 

funded through sources other than IRRF. However, this fact sheet focuses only on those 

security costs directly related to IRRF-funded reconstruction work. Security costs include, but 

are not limited to: 

• personal security details 

• construction site protection (guards, security equipment, and improvements) 

• living area protection (guards, security weapons/equipment, and improvements) 

• security to support convoy or other types of travel 

• security-related intelligence operations 

We initiated Project No. 6034 on September 7, 2006, in order to capture the following 

information: (1) the extent to which major U.S. contractors have identified, captured, and 

reported the security costs of their IRRF contracting activities; and (2) the impacts of these 

security costs in relation to the overall original project estimates. We requested that each of 

the nine major U.S. contractors conducting the physical reconstruction of Iraq’s infrastructure 

provide the following data to address the survey’s objectives: 

• the total amount of their IRRF contract dollars spent on security costs 

• the percentage of total IRRF funds disbursed comprising security costs 

• initial and subsequent revisions to the projected security costs of IRRF contracting 

activities 

• when the magnitude of these costs became evident, and what were the significant 

causal or contributing factors
• the contractor’s method(s) of record-keeping for capturing and differentiating 

between the types of security required, such as Personal Security Details, 

site/static, perimeter, and convoy/materiel movement 

• the breakdown, by category (billed, charged, and estimated) of both the direct and 

indirect security costs for IRRF contracting activities 

• any other additional security cost increases from subcontractor work

The following contractors were asked to respond to our survey: Bechtel National, Inc.; 

FluorAMEC, LLC; Kellogg, Brown & Root Services, Inc.; Lucent Technologies; 

Parsons; Parsons Iraq Joint Venture; Perini Corporation; Washington International/Black 

& Veatch; and Washington International, Inc.

All nine contractors responded to our request for information. The contractors generally 

provided security costs, total costs, and security costs as a percentage of total costs. Four 

of the nine contractors did not provide a summary of all total cost data; in these cases we 

calculated total costs based on the information provided. Contractor security costs ranged 

from a low of 7.6% to a high of 16.7%. The average for all contractors when identifying 

percentage of security costs to total costs was 12.5%. 

Detailed responses to our request for information from each of the nine contractors are 

included in our Fact Sheet on Major U.S. Contractors’ Security Costs Related to Iraq 

Relief and Reconstruction Fund Contracting Activities (Restricted Distribution) SIGIR06-042, January 30, 2007. This detailed fact sheet is available on a need-to-know basis 

because some of the contractor-provided information is marked proprietary by the 

provider. Requests by mail can be made to SIGIR Office of General Counsel, 400 Army 

Navy Drive, Arlington, VA 22202. 

- - - - 

This survey was conducted from September 2006 through December 2006, and was 

performed as nonaudit services as described in government auditing standards issued by 

the U.S. Government Accountability Office. Therefore, this fact sheet contains no 

verification, analysis, or evaluation of the information provided by the contractors; and 

contains no conclusions, recommendations, or opinions on this information. No formal 

response to this fact sheet is required. 

This fact sheet was prepared and the survey was conducted under the direction of Joseph 

T. McDermott, Assistant Inspector General for Audit. The staff members who conducted 

the survey and contributed to the fact sheet include James Pollard, Jack Van Meter, and 

Jason Venner. We appreciate the courtesies extended to the staff. For additional 

information on this fact sheet, please contact Mr. Joseph T. McDermott (703-604-0982/ 

joseph.mcdermott@sigir.mil). 

Stuart W. Bowen, Jr. 

 Inspector General 

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Appendix A: Report Distribution 

Department of State 

Secretary of State 

Senior Advisor to the Secretary and Coordinator for Iraq 

Director of U.S. Foreign Assistance/Administrator, U.S. Agency for 

International Development 

 Director, Office of Iraq Reconstruction 

 Assistant Secretary for Resource Management/Chief Financial Officer, 

 Bureau of Resource Management 

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 

Under Secretary of Defense (Comptroller)/Chief Financial Officer 

 Deputy Chief Financial Officer 

 Deputy Comptroller (Program/Budget) 

Deputy Assistant Secretary of Defense-Middle East, Office of Policy/International 

Security Affairs 

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 

Chief Financial Officer, U.S. Army Corps of Engineers 

Auditor General of the Army 

U.S. Central Command

Commanding General, Multi-National Force-Iraq 

Commanding General, Multi-National Corps-Iraq 

Commanding General, Multi-National Security Transition Command-Iraq 

Commander, Joint Area Support Group-Central 

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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 

President, Overseas Private Investment Corporation 

President, U.S. Institute for Peace 

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 

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SIGIR’s Mission Regarding the U.S. reconstruction plans, programs, 

and operations in Iraq, the Special Inspector General 

for Iraq Reconstruction provides independent and 

objective: 

• oversight and review through comprehensive 

audits, inspections, and investigations 

• advice and recommendations on policies to 

promote economy, efficiency, and effectiveness 

• deterrence of malfeasance through the prevention 

and detection of fraud, waste, and abuse 

• information and analysis to the Secretary of 

State, the Secretary of Defense, the Congress, 

and the American people through Quarterly 

Reports 

Obtaining Copies of SIGIR 

Reports and Testimonies 

To obtain copies of SIGIR documents at no cost, go 

to SIGIR’s Web site (www.sigir.mil). 

To Report Fraud, Waste, 

and Abuse in Iraq Relief 

and Reconstruction 

Programs 

Help prevent fraud, waste, and abuse by reporting 

suspicious or illegal activities to the SIGIR Hotline: 

• Web: www.sigir.mil/submit_fraud.html 

• Phone: 703-602-4063 

• Toll Free: 866-301-2003 

Congressional Affairs Marthena Cowart 

Assistant Inspector General for Congressional 

 Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-604-0368 

Email: marthena.cowart@sigir.mil 

Public Affairs Denise Burgess 

Assistant Inspector General for Public Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-428-1217 

Fax: 703-428-0818 

Email: PublicAffairs@sigir.mil 

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