OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

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SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

October 23, 2006 

MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ 

COMMANDING GENERAL, MULTI-NATIONAL FORCEIRAQ 

DIRECTOR, IRAQ RECONSTRUCTION MANAGEMENT 

OFFICE 

COMMANDING GENERAL, JOINT CONTRACTING 

COMMAND–IRAQ/AFGHANISTAN 

COMMANDING GENERAL, GULF REGION DIVISION, U.S. 

ARMY CORPS OF ENGINEERS 

SUBJECT: Review of Administrative Task Orders for Iraq Reconstruction Contracts 

(SIGIR-06-028) 

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 comments from the Gulf Region Division-Project and Contracting Office, 

U.S. Army Corps of Engineers, and the Joint Contracting Command-Iraq/Afghanistan 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 (703-343-0982 / joseph.mcdermott@sigir.mil); Mr. 

Steven Sternlieb (703-428-0240 / steven.sternlieb@sigir.mil); or Mr. Clifton Spruill (703-

343-9275 / clifton.spruill@iraq.centcom.mil). For the report distribution, see Appendix C. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: See Distribution 

400 Army Navy Drive • Arlington, Virginia 22202
Table of Contents 

Executive Summary i

Introduction 1

Intended Purpose of Administrative Task Orders (ATOs) 6

Substantial Indirect Costs Were Incurred During Periods of Limited Direct 

Project Activity 9

The Effect of De-scoping Actions on ATOs is Unknown 12

Conclusion and Recommendations 14

Appendix A – Scope and Methodology 18

Appendix B – Acronyms 23

Appendix C – Report Distribution 24

Appendix D – Audit Team Members 26

Management Comments Gulf Region Division, U.S. Army Corps of Engineers

 27

Management Comments Joint Contracting Command-Iraq/Afghanistan 31
Review of Administrative Task Orders for Iraq 

Reconstruction Contracts 

SIGIR-06-028 October 23, 2006

Executive Summary 

Introduction 

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

of Iraq to the Iraq Relief and Reconstruction Fund 2 (IRRF). At the beginning of calendar 

year 2004, the U.S. government released a Design-Build (DB) Request for Proposal to 

provide construction services in Iraq. From January 13, 2004 to March 26, 2004, 12 DB 

cost-reimbursement contracts totaling $5.8 billion were awarded to 9 contractors. (Two 

contractors received multiple contracts.) One of the key elements of a DB construction 

contract is that it places the design and building phases of a project under the same 

contract.

Contractors incur administrative and overhead costs, as well as direct costs, associated 

with performing work. For these DB contractors, there was no consistent contract 

requirement for contractors to separately track and report to the U.S. government their 

administrative and overhead costs. To some extent, information on these indirect costs 

can be extracted from: 

 individual invoices when submitted at a detailed level by contractors 

 management cost reports when required to be submitted by contractors 

 task orders that have been established under the contract to specifically isolate 

administrative and overhead costs 

In June 2004, the Deputy Secretary of Defense established the Project and Contracting 

Office (PCO) within the Department of the Army and directed PCO to provide support 

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

construction and non-construction IRRF activities. In spring of 2004, senior Program 

Management Office and the successor PCO program and contracting managers sought to 

simplify tracking of administrative and overhead costs for the 12 DB contracts through a 

new type of task order—an administrative task order (ATO). ATOs were intended to 

capture all administrative and overhead costs for each DB contract, separate from direct 

costs, for each individual construction task order under the contract. This was expected to 

provide several benefits, including allowing the PCO managers to better understand 

direct and indirect contractor costs and to increase the ability of managers to control and 

minimize administrative costs. 

i
Objectives 

This audit was initiated to evaluate the effectiveness of project management and the 

monitoring and controls exercised by administrative contracting officers. Specifically, the 

objectives of the audit were to determine: 

• Did ATOs vary from one design-build contractor to another? 

• Did ATOs accomplish the intended purpose, to capture the fixed administrative 

costs of the design-build contractors? 

• Did increased or decreased periods of contract/task order performance impact the 

value of ATO cost? 

• Did the de-scoping of projects impact the need for certain administrative costs 

included in the ATO? 

We found that ATOs were issued for 6 of the 12 DB contracts. Further, one of the six DB 

contracts with an ATO was terminated and demobilized less than one year after contract 

award. Therefore, our review focused on the 11 active DB contracts, of which 5 were 

issued one or more ATOs. Because the first two objectives are closely linked, they are 

combined for discussion in the report. 

Results 

The DB contractors’ administrative costs were not uniformly tracked because ATOs were 

not issued for all 11 DB contracts and there were inconsistencies in the ATOs that were 

issued: 

• ATOs were issued for only 5 of the 11 DB contracts. 

• Of the 5 DB contracts, 2 were issued ATOs that covered and separately identified 

four categories of ATO costs (Mobilization and Transportation, Management and 

Administration, Security, and Life Support). 

• For the other 3 DB contracts, 2 were issued a single ATO that combined, rather 

than separated, ATO cost by specific categories; and 1 was issued an ATO that 

covered only Life Support costs. 

In a series of audits, the Defense Contract Audit Agency (DCAA) found that for the five 

contracts for which ATOs were issued, only one of the contractors had adequate 

accounting and billing systems to capture administrative costs. While we relied on the 

contractors’ invoices to analyze costs, DCAA’s findings raise questions about the actual 

value of the invoiced costs. 

Furthermore, the ATOs were issued at different times after contract award. Specifically, 

 For four of the five DB contracts, ATOs were issued sometime between when 

mobilization task orders (TOs) 1 were issued and when substantial work began on 

 

1

 These were orders to assemble and deploy the contractor’s workforce. 

ii
the project. The earliest ATOs were issued two months after the mobilization 

TOs were issued. 

 For the fifth DB contract, ATOs were not issued until after substantial work 

began. 

In the period before ATOs were issued, administrative costs would have likely been 

invoiced by the contractors against their existing mobilization or direct project task orders 

or a combination of the two. 

During periods of limited direct project activity, ATO costs were greater than direct TO 

costs for the five DB contracts. During the period between contractor mobilization and 

the start of substantial direct project work—from February to November 2004—

contractors for these five contracts submitted invoices for $62.1 million in ATO costs and 

$26.7 million in direct project costs. 

Three to nine months elapsed from (1) the date when the mobilization TO was issued, 

and (2) the date when substantial direct project work began. For the five DB contracts, 

the average time elapsed was six months. 

We believe that administrative and overhead costs that were intended to be charged 

against ATOs were actually higher than those invoiced because ATOs were not issued 

concurrent with the mobilization task orders. Contractors would have begun to incur 

administrative costs from the onset of mobilization. In the absence of ATOs, the 

contractors would have no other option but to include administrative costs in their 

mobilization or direct task order invoices or a combination of the two. 

For example, the longest period between mobilization and the beginning of substantial 

direct project work—and the highest ATO costs—involved the Kellogg Brown and Root 

(KBR) DB contract. Although KBR was issued its mobilization task order on February 

15, 2004, ATOs were not issued until June 7, 2004, almost four months after the 

mobilization TO. Substantial direct project activity did not occur until November 19, 

2004. During this billing period, KBR’s ATO costs were $52.7 million. Direct project 

costs were $13.4 million, and mobilization costs were $5.8 million. Because KBR could 

not invoice administrative costs against ATOs until June 7, 2004, we believe that KBR’s 

cumulative administrative costs were higher than the $52.7 million it invoiced against the 

ATOs and its mobilization and/or direct project costs were lower than the invoiced 

amounts. In a letter of concern to KBR about its cost reporting on August 28, 2004, the 

contracting officer stated that the contract was rapidly accruing exorbitant costs. 

We were unable to determine how de-scoping contract actions affected ATO costs 

because invoices are not maintained in a form that allowed such analysis. In one instance, 

we identified a de-scoping action that occurred on December 27, 2004, which was 

followed by an increase rather than a decrease in ATO costs. However, we cannot draw 

any conclusions from this analysis because the ATO costs included administrative costs 

for 14 different TOs issued under the contract, and the ATO invoices do not break out—

nor are they required to break out—indirect costs by individual TOs. Furthermore, 

individual TOs are allowed to include multiple projects. In another instance, we 

iii
documented that most costs incurred for the DB contract cancelled less than a year after it 

was issued were for mobilization, demobilization, and administrative costs. 

We discussed the results of this work with officials from the U.S. Army Corps of 

Engineers, Gulf Region Division-Project and Contracting Office (GRD-PCO). The 

officials told us that there were other ways to track administrative costs—specifically 

through management cost reports. These officials also suggested that SIGIR not publish 

this audit report because it would be of limited or no value now that contracts are being 

awarded to Iraqi rather than U.S. contractors. 

We do not agree with the GRD-PCO position. In response to the GRD-PCO suggestion 

that management reports are another way to track administrative costs, we examined 

management reports provided for each of the 11 DB contracts. Our review indicated that 

reporting of administrative costs varied from contract to contract and did not capture 

specific administrative costs as comprehensively as ATOs. We believe that there is value 

in understanding the extent to which administrative costs were tracked and reconstruction 

funds were used for administrative costs rather than direct project costs—regardless of 

the nationality of individual contractors. 

Recommendations 

To enable the U.S. government to better track administrative and overhead costs for 

future reconstruction contracts—both funded through the IRRF as well as under any 

future reconstruction effort—and to minimize costs during periods of inactivity until the 

authorization to begin work can be issued, we recommend that the Commanding General 

of GRD-PCO coordinate with the Commanding General of the Joint Contracting 

Command-Iraq/Afghanistan (JCC-I/A) to take these actions: 

1. Ensure that cost-reimbursement contracts contain explicit requirements for all 

contractors in Iraq and future reconstruction efforts for segregating, tracking, and 

billing administrative costs—such as through the use of contractual direction, 

including segregating and reporting administrative costs in management cost reports.

2. Ensure that adequate project planning is conducted to minimize contractor down-time 

between the issuance of mobilization orders and the beginning of substantial direct 

project activity.

3. Improve processes to monitor contractor administrative costs to ensure that the level 

of administrative activity is appropriately adjusted to reflect any work stoppages, 

descoping actions, and reductions attributable to project completion or close-out.

Management Comments and Audit Response 

We received written comments on a draft of this report from GRD-PCO and the JCC-I/A. 

Both organizations concurred with all of our recommendations. Both noted a caveat that 

recommendation number one would only apply to cost-reimbursement contracts, but not 

fixed price (direct) contracts. We agreed and clarified this recommendation accordingly. 

GRD-PCO did not agree with some of our conclusions and analytical methods. We did 

not agree with GRD-PCO’s interpretations regarding our analysis or presentation of 

findings. We have addressed those comments in the Management Comments and Audit 

Response section of the report. 

iv
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 2 (IRRF). 

Organizations Responsible for Contract Management 

The Coalition Provisional Authority (CPA) was initially responsible for managing the 

construction and contracting efforts in the reconstruction of Iraq through its Program 

Management Office. The Program Management Office was redesignated the Project and 

Contracting Office (PCO) in June 2004. Contract administration for the base DesignBuild (DB) contracts and the ATOs was maintained by the administrative contracting 

officers in PCO. In the transition to Joint Contracting Command-Iraq/Afghanistan (JCCI/A), contract administration for the construction task orders issued against the DB base 

contracts was maintained by the PCO/JCC-I/A contracting officers until definitization. 

Upon definitization of the construction task orders, partial contract administration was 

delegated to the U.S. Army Corps of Engineers Gulf Region Division (GRD) contracting 

office. During the time period covered by this audit, the PCO and the GRD were separate 

organizations. On December 4, 2005, the PCO was merged into the GRD. 

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. 

Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) 

A special command was set up as the contracting activity JCC-I/A with the responsibility 

to administer contracts. The JCC-I/A was established in November 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. 

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

The GRD 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. 

1
Sector Project and Contracting Office Contractor 

Contracts were awarded to provide dedicated contract management support to the 

Coalition Provisional Authority’s Program Management Office. The Sector Project and 

Contracting Office Contractor continued to provide support under the PCO. 

Individuals Responsible for Contract Management 

There are a number of positions involved in contract management and oversight on a 

routine basis, including the following:

Contracting Officer 

A contracting officer is the U.S. Government’s authorized agent for dealing with a 

contractor and has sole authority to solicit proposals, negotiate, award, and modify 

contracts on behalf of the U.S. Government. 

Administrative Contracting Officer 

An administrative contracting officer performs the same functions as a contracting officer 

under a delegation of authority from the contracting officer but typically does not 

participate in the solicitation, negotiation, or award process. 

Contracting Officer Representative 

A contracting officer representative assists in the solicitation process and can administer 

the contract after award. The contracting officer representative usually works in the office 

that identified the need or requirement that resulted in a contract.

Design-Build (DB) Contracts 

At the beginning of calendar year 2004, the U.S. government released a DB Request for 

Proposal to provide for construction services in Iraq. From January 13, 2004 to March 26, 

2004, 12 DB cost-reimbursement contracts totaling $5.8 billion were awarded for Iraq 

reconstruction projects to 9 contractors (2 contractors received multiple contracts). 

However, one of the DB contracts was terminated and demobilized less than one year 

after contract award. Therefore, our review focused on the 11 active DB contracts. One of 

the key elements of a DB construction contract is that it places the design and building 

phases of a project under the same contract. 

Administrative Task Orders (ATO) 

Contractors incur administrative and overhead costs as well as direct costs associated 

with performing work. There is no consistent contract requirement for contractors to 

separately track and report to the U.S. government their administrative and overhead 

costs. To some extent, information on these indirect costs can be extracted from: 

 individual invoices when submitted at a detailed level by contractors 

 management cost reports when required to be submitted by contractors 

2
 task orders that have been established under the contract to specifically isolate 

the incurrence of administrative and overhead costs 

In spring of 2004 senior Program Management Office and then the successor PCO 

program and contract managers sought to simplify the tracking of administrative and 

overhead costs for the 12 DB contracts through a new type of task order (TO)—an 

administrative task order (ATO). The ATOs were to capture all administrative and 

overhead costs for each DB contract, separate from direct costs, for each individual 

construction task order under the contract. PCO believed that doing so would provide the 

following benefits: 

• allow managers to better understand direct and indirect contractor costs 

• control administrative costs 

• minimize administrative costs 

• understand carrying costs should contracts be extended 

By segregating costs, PCO further believed that it could avoid paying for the same 

indirect costs for two different projects as only direct costs would be applied to specific 

construction task orders. Of the 11 DB contracts, ATOs were issued for 5, as identified in 

Table 1, along with the applicable reconstruction sector. 

3
Table 1—Design-Build Contracts Funded by Iraq Relief and Reconstruction 

 Fund (as of May 6, 2006)

ATO 

ISSUED = √

Design-Build Contractors 

by Reconstruction Sector 

Contract 

Award 

Number 

Contract 

Award 

Date Awarding Agency 

Oil Sector 

1. 

√

Kellogg Brown and Root 

(KBR) 

W9126G-04-

D-0001 

1/16/04 U.S. Army Corps of 

Engineers 

2. 

√

Parsons Iraq Joint Venture W9126G-04-

D-0002 

1/16/04 U.S. Army Corps of 

Engineers 

Electric Sector 

3. Fluor-AMEC Joint Venture W914NS-04-

D-0003 

3/11/04 U.S. Army Corps of 

Engineers 

4. Washington International W914NS-04-

D-0010 

3/12/04 U.S. Army Corps of 

Engineers 

5. Perini Corporation W914NS-04-

D-0011 

3/12/04 U.S. Army Corps of 

Engineers 

Water Sector 

6. Washington International 

and Black & Veatch 

W914NS-04-

D-0007 

3/11/04 Navy Facilities 

Engineering 

Command 

7. Fluor-AMEC Joint Venture W914NS-04-

D-0008 

3/23/04 Navy Facilities 

Engineering 

Command 

8. Fluor-AMEC Joint Venture W914NS-04-

D-0022 

3/23/04 Navy Facilities 

Engineering 

Command 

Buildings, Hospitals, and Education Sector 

9. 

√

Lucent Technologies W914NS-04-

D-0005 

3/23/04 Army 

Communications 

and Electronic 

Command 

Acquisition Center 

10. 

√

Parsons Delaware W914NS-04-

D-0006 

3/25/04 U.S. Army Corps of 

Engineers 

11. 

√

Parsons Delaware W914NS-04-

D-0009 

3/26/04 U.S. Army Corps of 

Engineers 

Source: Developed by SIGIR from Project and Contracting Office data, as of May 6, 2006. 

4
DB Invoice Process 

The U.S. Army Corps of Engineers (USACE) Financial Management System (CEFMS), 

maintained by the USACE Finance Center, was used for processing the 11 DB 

contractors’ invoices for payment. From January 2004 through May 2006, we estimate 

that CEFMS has processed and has on file over 5,000 invoices submitted by the 11 DB 

contracts. The contractor submits invoices by TO and “period of performance”, which 

can represent any period of time during which costs were incurred under a TO, including 

ATOs. A contractor can submit numerous invoices for a single TO. For example, one DB 

contractor submitted 61 invoices for one TO covering the period March 25, 2004 through 

May 6, 2006, with a total value of $30 million. This same contractor had multiple TOs. 

Our review of the other DB contractors indicated that this example was typical of all the 

DB contractors. 

Objectives 

This audit was initiated to evaluate the effectiveness of project management and the 

monitoring and controls exercised by administrative contracting officers. Specifically, the 

objectives of the audit were to determine: 

• Did ATOs vary from one design-build contractor to another? 

• Did ATOs accomplish the intended purpose, to capture the fixed administrative 

costs of the design-build contractors? 

• Did increased or decreased periods of contract/TO performance impact the value 

of ATO cost? 

• Did the de-scoping of projects impact the need for certain administrative costs 

included in the ATO?

We found that ATOs were issued for 6 of the 12 DB contracts. Further, one of the six DB 

contracts with an ATO was terminated and demobilized less than one year after contract 

award. Therefore, our review focused on the 11 active DB contracts, of which 5 were 

issued one or more ATOs, which are identified in Table 1. Because the first two 

objectives are closely linked, they are combined for discussion in the report. 

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

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

list of the audit team members, see Appendix D. 

5
Intended Purpose of Administrative Task Orders 

(ATOs) 

The DB contractors’ fixed administrative costs were not uniformly tracked because 

ATOs were not issued for all 11 DB contracts and there were inconsistencies in the ATOs 

that were issued. In addition, audits conducted by the Defense Contract Audit Agency 

found that the contractors’ had inadequate accounting and billing systems, which raises 

questions about the actual value of invoiced costs. 

Inconsistency and Variations in the Issuance of ATOs 

As shown in Table 2, the 11 DB contracts were awarded to 8 contractors. However, 

ATOs were not issued for the majority of the contracts. Specifically: 

• ATOs were issued for only 5 of the 11 DB contracts. 

• Of the 5 DB contracts, 2 were issued ATOs that covered and separately identified 

four categories of ATO costs (Mobilization and Transportation; Management and 

Administration; Security; and Life Support). 

• For the other 3 DB contracts, 2 were issued a single ATO that combined, rather 

than segregated, all of the ATO costs categories; and 1 was issued an ATO that 

only covered Life Support costs. 

Table 2 – Distribution of Administrative Task Orders by Design-Build Contract 

Design-Build Contractor 

Transportation 

& Mobilization 

ATO 

Management 

& 

Administration

ATO 

Security

ATO 

Life 

Support 

ATO 

Single 

Multipurpose 

ATO 

No 

ATO 

Kellogg Brown and Root (KBR) X X X X 

Parsons Iraq Joint Venture X X X X 

Lucent X 

Parsons Delaware X 

Parsons Delaware X 

Washington International and 

Black & Veatch X 

Fluor-AMEC Joint Venture X 

Perini X 

Washington International X 

Fluor-AMEC Joint Venture X 

Fluor-AMEC Joint Venture X 

Source: Developed by SIGIR from GRD-PCO records, as of May 6, 2006. 

6
In addition to ATOs varying in coverage, they were issued at different times following 

contract award. Each contractor was also issued a mobilization task order, in addition to 

the ATO, directing it to assemble and deploy its workforce. Table 3 lists the dates the 

mobilization task orders and ATO were issued according to the applicable contract 

documents, and the date that substantial project work began. We calculated the date 

substantial work began by analyzing invoices submitted by the contractors for direct 

project work to determine the date that marked the beginning of the period of 

performance when substantial direct project costs were incurred. 

As shown in Table 3, ATOs were issued sometime between when mobilization orders 

were issued and when substantial work began for 4 of the 5 contracts and after substantial 

work began for one of the contracts. For the 4 contracts under which ATOs were issued 

between when mobilization orders were issued and when substantial work began on the 

project. The earliest ATOs were issued two months after the mobilization TOs were 

issued. In one instance, a single multipurpose ATO was issued almost 6 months after the 

mobilization TO. In the period before ATOs were issued administrative costs would have 

to have been included in either mobilization or direct task order invoices or a 

combination of the two. 

Table 3 – Key Contract Events for Contractors Issued ATOs

Contractor 

Contract 

Issued 

Date 

Mobilization TO 

Issued 

Date ATO 

Issued 

Date Substantial 

Work Began 

November 19, 

2004 KBR January 16, 

2004 February 15, 2004 June 7, 2004 

Parsons Iraq JV January 16, 

2004 April 2, 2004 June 17, 2004 July 10, 2004 

Lucent March 23, 2004 March 23, 2004 May 21, 2004 October 25, 2004 

Parsons 

Delaware 0006 March 25, 2004 March 25, 2004 September 16, 2004 October 20, 2004 

Parsons 

Delaware 0009 March 26, 2004 March 26, 2004 November 1, 2004 July 31, 2004 

Source: Develop by SIGIR from CEFMS payment invoices and contract files as of May 6, 2006 

We were not able to determine why ATOs were not issued for all 11 DB contracts, as 

originally intended. In our review of the DB contract files, we found that there was an 

apparent effort by the U.S. government to create an administrative cost reporting 

structure for the six contracts without ATOs. For two contracts, we found unexecuted 

modifications that were intended to be issued to segregate administrative and overhead 

costs in a similar structure as with an ATO. However, a representative from one of the 

two contractors with the unexecuted modification told us that the government never 

followed through on implementing the modifications. Those contractors that did not 

receive ATOs identified their general and administrative costs on their invoices for direct 

project work. For example, one contractor had various general and administrative rates 

7
ranging from 2.3 percent to 17.89 percent depending on whether it was billing for 

material, labor, or subcontracts.

In discussing the results of our work with GRD-PCO, we were told that ATOs were not 

the only means of tracking administrative costs and these costs are also captured in 

management cost reports. We consequently examined management reports provided for 

each of the 11 DB contracts. Our review determined that the reporting of administrative 

costs varied from contract to contract. For example: 

• On the Contract Status Report for two of the three Fluor AMEC contracts, some 

data on administrative costs was listed by task order for the current period and 

job-to-date. However, on the third Fluor AMEC contract, no administrative costs 

were listed. 

• On the Monthly Project Report for the Lucent contract there was information on 

budgeted amounts for the month covered by the report, but no actual cost data. 

• On the Monthly Status Report for the Parsons Iraq Joint Venture contract there 

was data on administrative costs reported by ATO on a cumulative basis, but no 

data for the current period. 

• On the Management/PCO Monthly Report for the Washington International and 

Black & Veatch contract there was data on administrative costs listed by task 

order for the current period and for the task order to date, but no summary of all 

administrative costs.

The Contractors Had Inadequate Accounting and Billing Systems 

Due to the detailed cost breakdown that would be required by DB contractors with ATOs 

for their submission of invoices, we reviewed audit reports of these contractors’ cost 

accounting and billing systems prepared by the Defense Contract Audit Agency (DCAA). 

We obtained 28 DCAA audit reports that in total addressed all 8 of the DB contractors’ 

accounting, billing, and estimating systems, covering calendar years 2004 and 2005. Each 

of these systems can affect the handling of costs associated with ATOs, administrative 

and overhead costs, and project costs. In summary, DCAA found that for the five 

contracts for which ATOs were issued, all but one of the contractors did not have 

adequate systems to capture administrative costs. Each of these impacted contractors 

agreed with the DCAA recommendation to develop or implement corrective action plans. 

We contacted several DCAA branch offices, and in each instance were told that DCAA 

was monitoring follow-up action, and all but one of the contractors had taken corrective 

action. 

8
Substantial Indirect Costs Were Incurred During 

Periods of Limited Direct Project Activity 

Poor planning led to ATO costs that were greater than direct project costs during periods 

of start-up. Between March 2004 and November 2004, the period between contractor 

mobilization and the beginning of substantial direct project work for the 5 DB contracts 

that were issued ATOs, contractors for these 5 contracts submitted invoices for a total of 

$62.1 million in ATO costs and $26.7 million in direct project costs. As much as 9 

months elapsed between the date a mobilization TO was issued and the date substantial 

direct project work began. The shortest period of time between the mobilization TO date 

and the beginning of substantial direct project work was 3 months. For the other contracts 

issued ATOs the period between mobilization and substantial direct project work was 

between 4 and 7 months. As shown in Table 4, the longest period between mobilization 

and substantial direct project work and the highest ATO costs involved the KBR contract. 

KBR was issued its mobilization task order on February 15, 2004, but substantial direct 

TO activity did not occur until November 19, 2004. During this 9 month period, KBR’s 

ATO costs were $52.7 million, as compared to its direct project costs of $13.4 million. In 

an August 28, 2004, letter of concern to KBR regarding its cost reporting, the contracting 

officer stated that the contract was accruing exorbitant costs at a rapid pace. 

We also believe that administrative costs that were intended to be covered by ATOs were 

actually higher than invoiced because ATOs were not issued concurrent with the 

mobilization task orders. Contractors would have begun to incur administrative costs 

from the onset of mobilization. In the absence of ATOs, the contractors would have no 

option but to include administrative costs in their mobilization or direct task order 

invoices or a combination of the two. For example, as shown in Table 3: 

• In one of the Parsons Delaware contracts (0009), the mobilization order was 

issued on March 26, 2004; substantial work began on July 31, 2004; and the ATO 

was issued on November 1, 2004. During the period between contractor 

mobilization and the beginning of substantial direct project work, Parsons 

Delaware invoiced no ATO costs as shown in Table 4. Therefore, Parson 

Delaware would have billed administrative costs to the mobilization TO, the 

direct TO for this time period, or a combination of the two. 

• In the case of KBR’s contract, its ATOs were not issued until almost 4 months 

after its mobilization TO. Therefore, we believe that KBR’s cumulative 

administrative costs were higher than the $52.7 million it invoiced against the 

ATOs and its mobilization and/or direct project costs were lower than the 

invoiced amounts. 

• In the case of the other Parsons Delaware contract (0006), a single multipurpose 

ATO was issued almost 6 months after the mobilization TO, and therefore, we 

believe that the administrative costs for the contract were greater than the $2.5 

million invoiced under the ATO and that the mobilization task order costs were 

lower after adjusting for administrative costs. 

9
Table 4 – ATO and Mobilization vs. Direct Project Costs Invoiced 

During Period Between Start-up and the Date Substantial 

Work Began (as of May 6, 2006) 

Contractor 

Mobilization 

Date 

Date 

Substantial 

Work Began 

Mobilization 

Costs ATO Costs 

Direct 

Project 

Costs

KBR 02/15/2004 11/19/2004 $5,841,630 $52,736,055 $13,391,764 

Parsons Iraq 

Joint 

Venture 

04/02/2004 07/10/2004 12,791,877 1,773,981 1,166,568 

Lucent 03/23/2004 10/25/2004 2,474,330 5,120,860 2,620,926 

Parsons 

Delaware 

0006 2 03/25/2004 10/20/2004 4,611,213 2,458,615 7,745,741 

Parsons 

Delaware 

0009 

03/26/2004 07/31/2004 1,348,398 0 1,823,815 

Totals $27,067,448 $62,089,511 $26,748,814

Source: Developed by SIGIR from CEFMS invoices, as of May 6, 2006. 

DB contractors were directed by the U.S. government to quickly mobilize. Although 

mobilization was rapid in some instances, as discussed above several months elapsed 

before substantial work began on projects. One Sector Project and Contracting Office 

Contractor official with whom we spoke told us that the government was guilty of poor 

timing in asking contractors to mobilize before reconstruction planning was finalized. 

Nevertheless, the government took only limited action to reduce administrative and 

overhead costs during periods of project inactivity. In the case of the KBR contract, the 

contracting officer concluded that because the “center of operations” for KBR’s contract 

was in Basrah, the need for a KBR office in Baghdad was greatly diminished and perhaps 

even eliminated; and that KBR could substantially reduce indirect program costs by 

closing the Baghdad office. The contracting officer also concluded that substantial cost 

reductions could be realized by reducing the size of the office and supporting 

infrastructure in Kuwait. Consequently, the contracting officer directed KBR to submit a 

plan outlining a timeline/approach for closing its Baghdad office and moving those 

resources to Basrah, Iraq, which was closer to the job site. In addition, the contracting 

officer directed KBR to provide recommendations for consolidating its operations in 

Kuwait. 

As late as May 6, 2006, ATO costs continued to account for a substantial proportion of 

overall project costs. Table 5 contains ATO cost data for the five DB contracts for which 

ATOs were issued. As detailed in the table, the ATO costs represented as much as 55% 

of overall contract costs. For the five DB contracts for which ATOs were issued, ATO 

costs accounted for 11% to 55 % of overall project costs, depending on the contract. For 

 

2

 The invoices used to calculate the Parsons Delaware 0006 contract included information through October 

29, 2004. We were not able to segregate out the costs for the nine days past the date we used to denote that 

substantial work began date of October 20, 2004. 

10
three of the five DB contracts for which ATOs were issued, ATO costs represented more 

than one-third of overall project costs, specifically, 55%, 43%, and 35%. Regarding the 

two DB contracts with a smaller proportion of ATO costs to overall project costs, the one 

awarded to Lucent only had an ATO for one element of administrative costs, life support. 

Therefore, we believe that its overall administrative costs accounted for more than the 

11% shown in Table 5 as other types of administrative costs would have been included in 

direct project costs. 

Table 5 – Invoiced ATO and Total Costs for DB Contracts with ATOs, 

January 2004-May 2006 

KBR 

Parsons Iraq 

Joint 

Venture

Parsons 

Delaware 

0006

Parsons 

Delaware 

0009 Lucent

Total Contract 

Costs $296,330,126 $312,609,553 $311,683,394 $252,259,585 $142,972,324

Total ATO 

Costs $163,064,668 $133,991,678 $107,980,708 $41,638,352 $14,869,023

Percent of ATO 

Costs to Total 

Costs 

55% 43% 35% 17% 11% 

Source: Developed by SIGIR from CEFMS Paid Invoices, as of May 6, 2006 

11
The Effect of De-scoping Actions on ATOs is 

Unknown 

We were unable to determine how de-scoping contract actions affected ATO costs 

because invoices are not maintained in a form that allows us to undertake such analysis. 

We have determined that there have been a number of de-scoping actions involving the 

termination of contracts or individual TOs within larger contracts for the government’s 

convenience. For example, a de-scoping action occurred on December 27, 2004, 

involving $21.7 million on the Parsons Iraq Joint Venture contract in the oil sector. 

Unless offset by increases to other projects under the same contracts, ATO costs would 

be expected to decline as projects were de-scoped. In the case of the December 27, 2004, 

de-scoping action, between December 2004 and January 2005, the dollar value of 

descoping actions exceeded the dollar value of increases to other projects under the 

contract, resulting in a net overall decrease of $19.4 million to the overall value of the 

contract. We were able to determine from ATO invoices for periods of performance 

immediately preceding and following this de-scoping action that ATO costs rose in the 

weeks following the descoping action. Specifically, ATO costs rose from an average of 

$176,644 per day for the period November 27, 2004, through December 31, 2004,3

 to an 

average of $374,167 per day for the period January 1, 2005, through January 14, 2005.4

However, we cannot draw any conclusions from this analysis because the ATO costs 

included administrative costs for 14 different TOs issued under the contract and the ATO 

invoices do not break out—and are not required to break out—indirect costs by 

individual TO. 

There was one instance that was discussed earlier in which one of the original 12 DB 

contracts was cancelled in its entirety that illustrates the substantial costs that can be 

incurred even where there is limited direct project activity. This contract was in the 

transportation sector. In this example, the price negotiation memorandum that was part of 

the contract file stated that PCO leadership decided that this contract was no longer a 

viable means to accomplish the transportation program’s goal of rebuilding the Iraqi 

infrastructure. Key contract dates were as follows: 

• the contract was awarded on March 23, 2004 

• an ATO was issued on September 14, 2004 

• the contractor was initially told to stop work on October 13, 2004 

• the final stop work order was issued on December 2, 2004 

• the contract was terminated on February 20, 2005 

 

3

 Invoices for the period of performance prior to the de-scoping action include 4 days of the time period of 

performance after the de-scoping action. 

4

 There were no invoices submitted for the period of performance January 15, 2005 through January 31, 

2005 for the ATOs. 

12
During the short life of the contract only 28 percent of the $17.7 million paid the 

contractor was for direct project activity. Almost half of the contractor payments ($8.7 

million) were for mobilization and demobilization costs and the remaining 23 percent ($4 

million) were for ATO costs. 

13
Conclusion and Recommendations 

Conclusion 

Although the U.S. government intended to simplify the tracking of administrative and 

overhead costs for the 11 DB contracts issued for Iraq reconstruction through the use of 

ATOs, it never issued ATOs for all 11 DB contracts. The ATOs that were issued did not 

uniformly capture the DB contracts’ administrative costs due to inconsistencies in the 

cost categories of the ATOs that were issued. 

 ATOs were issued for only 5 of the 11 contracts. 

 Of the 5 DB contracts, 2 were issued ATOs that covered and separately identified 

four categories of ATO costs (Mobilization and Transportation, Management and 

Administration, Security, and Life Support). 

 For the other 3 DB contracts, 2 were issued a single ATO that combined, rather 

than separated, ATO cost by specific categories; and 1 was issued an ATO that 

covered only Life Support costs. 

Furthermore, the ATOs were issued at different times after contract award. In addition, a 

series of audits conducted by DCAA found that all but one of the accounting and billing 

systems associated with the five contracts for which ATOs were issued were not adequate 

to capture administrative costs. 

Our analysis of the ATO invoices indicated that during periods of limited direct project 

activity, contractors incurred substantial administrative costs while waiting for 

government direction to begin project work. In the period between contractor 

mobilization and the beginning of substantial direct project work, which occurred 

between February and November 2004 for the five DB contracts that had ATOs, 

contractors for these five contracts submitted invoices for $62.1 million in ATO costs and 

$26.7 million in direct project costs. As much as 9 months elapsed between the date a 

mobilization TO was issued and the date substantial direct project work began. 

Nevertheless, the government took only limited action to reduce administrative and 

overhead costs during periods of project inactivity. 

We were unable to determine how de-scoping contract actions affected ATO costs 

because invoices are not maintained in a form that allows us to undertake such analysis. 

In one instance we identified a de-scoping action that occurred on December 27, 2004, 

which was followed by an increase rather than a decrease in ATO costs. However, we 

cannot draw any conclusions from this analysis because the ATO costs included 

administrative costs for 14 different TOs issued under the contract and the ATO invoices 

do not break out—nor are they required to break out—indirect costs by individual TOs. 

In another instance we documented that most of the costs incurred for the DB contract 

cancelled less than a year after it was issued were for mobilization, demobilization, and 

administrative costs. 

14
We discussed the results of this work with officials from the U.S. Army Corps of 

Engineers, GRD-PCO. The officials told us that there were other ways to track 

administrative costs—specifically through management cost reports. These officials also 

suggested that SIGIR not publish this audit report because it would be of limited or no 

value now that contracts are being awarded to Iraqi rather than U.S. contractors. 

We do not agree with the GRD-PCO position. In response to the GRD-PCO suggestion 

that management reports are another means of tracking administrative costs, we 

examined management reports provided for each of the 11 DB contracts. Our review 

indicated that the reporting of administrative costs varied from contract to contract and 

did not capture specific administrative costs as comprehensively as ATOs. We believe 

that there is value in understanding the extent to which administrative costs were tracked 

and reconstruction funds were used for administrative costs rather than direct project 

costs—regardless of the nationality of individual contractors. 

Recommendations 

To enable the U.S. government to better track administrative and overhead costs for 

reconstruction contracts—both funded through the IRRF as well as under any future 

reconstruction effort—and to minimize costs during periods of inactivity until the 

authorization to begin work can be issued, we recommend that the Commanding General 

of GRD-PCO in coordination with the Commanding General of the JCC-I/A to take these 

actions: 

1. Ensure that cost-reimbursement contracts contain explicit requirements for all 

contractors in Iraq and future reconstruction efforts for segregating, tracking, and 

billing administrative costs—such as through the use of contractual direction 

including segregating and reporting administrative costs in management cost reports. 

2. Ensure that adequate project planning is conducted to minimize contractor down-time 

between the issuance of mobilization orders and the beginning of substantial direct 

project activity. 

3. Improve processes to better monitor contractor administrative costs to assure that the 

level of administrative activity is appropriately adjusted to reflect any work 

stoppages, descoping actions, and reductions attributable to project completion or 

close-out.

Management Comments and Audit Response

We received written comments on a draft of this report from GRD-PCO and JCC-I/A. 

Both organizations concurred with all of our recommendations. Regarding our 

recommendation that all contracts contain explicit requirements for all contractors in Iraq 

and future reconstruction efforts for segregating, tracking, and billing administrative 

costs, the Joint Contracting Command-Iraq/Afghanistan stated that it concurred for all 

future cost reimbursement contracts. Similarly, GRD-PCO stated that it concurred when 

15
the recommendation is applied to only cost type contracts and considered it unfeasible to 

implement the recommendation on firm fixed price contracts. We agreed that this 

addresses the intent of our recommendation and have clarified our recommendation 

accordingly. 

GRD-PCO stated that it did not agree with some of our conclusions and analytical 

methods as follows. 

• Regarding whether ATOs accomplished their intended purpose, GRD-PCO 

commented that our report should evaluate whether the ATO accomplished the 

intended purpose for specific contracts. In the case of one contract in the 

buildings, hospitals, and education sector, GRD-PCO stated that it believes that 

the intent of Government visibility and tracking ATO costs was achieved, and that 

ATOs still met the intent to separately capture these costs and provide the 

Government more visibility over costs that would otherwise be included in 

general cost pools or spread across multiple task orders. We agree that the 

contracts for which ATOs were issued provided more visibility over 

administrative costs, but believe that their usefulness was limited because they 

were issued at different times following contract award and varied in the 

categories of administrative costs covered. 

• Regarding our analysis of ATO costs incurred during periods of contractor 

inactivity, GRD-PCO commented that our report made a general analysis of “cost 

of work” to “work being performed” that didn’t fully consider construction and 

contractor invoicing practices. GRD-PCO further commented that periods of 

inactivity, like waiting for concrete to cure, or low dollar value activity, like 

design time and administrative support like planning, logistical coordination, and 

placing subcontracts, does not mean that the project is not moving forward. 

Further, GRD-PCO commented that using cost invoiced for a period based on the 

invoice date would not present an accurate analysis, because it could take up to a 

year for a contractor to invoice certain costs. GRD-PCO suggested that an 

accurate analysis would evaluate when the cost was incurred across all invoices 

and would not just examine invoices over a short period of time. We agree that 

projects can move forward during periods of low dollar value activity. However, 

we found and reported that substantial indirect costs were incurred during periods 

of limited direct project activity. Contracting personnel involved with the 

contracts we analyzed also raised concern about the level of administrative 

expenses being incurred under some of the contracts. As we stated in our report, 

our analysis was based on the periods of performance covered by each invoice, 

not the invoice date. To respond to GRD-PCO’s comment that we not just 

examine invoices over a short period of time, which was also made during our 

exit conference, we expanded our analysis and found and reported that as late as 

May 6, 2006, ATO costs continued to account for a substantial portion of overall 

project costs. 

16
• Regarding our analysis of whether de-scoping contract actions resulted in reduced 

ATO costs, GRD-PCO commented that descoping contract actions could have the 

effect of increasing ATO costs. For example, GRD-PCO stated that a descoping 

action can shift labor categories from a task order to the ATO, which would 

happen if the descoping action was a termination of an entire task order. Finally, 

GRD-PCO again commented that using invoices based on submission date/time 

period is not a recommended method to determine if costs increased or decreased 

after a descoping action and that a detailed analysis of all invoices and supporting 

documentation should be performed to find out when costs were incurred and if 

costs increased or decreased the ATO. We reported that we were unable to 

determine if de-scoping contract actions resulted in reduced ATO costs because 

invoices are not maintained in a form that allows us to undertake such analysis. 

GRD-PCO continues to misconstrue our analysis by stating that using invoices 

based on submission date/time period is not a recommended method to determine 

if costs increased or decreased after a descoping action. Our analyses of invoices 

were based on the periods of performance covered by the invoices, not the date 

the invoices were submitted. In fact, we observed that some invoices were indeed 

submitted long after the period of performance covered by the invoice, as GRDPCO observes, but that did not affect our analysis because we focused only on the 

periods of performance covered by each invoice, not when it was submitted. 

17
Appendix A – Scope and Methodology 

We conducted this review (Project No. 2005-19) to evaluate the effectiveness of project 

management and the monitoring and controls exercised by administrative contracting 

officers. Specifically, the objectives of the review were to determine the extent to which: 

• Administrative Task Orders (ATOs) varied from one design-build (DB) 

contractor to another 

• ATOs accomplished the intended purpose, that is to capture the design-build 

contractors’ fixed administrative costs 

• increased or decreased periods of contract/TO performance impacted the value of 

ATO cost 

• the de-scoping of projects impacted the necessity for certain administrative costs 

included in the ATO 

To assess whether ATOs were accomplishing their intended purpose, we first reviewed 

all 12 DB contracts to identify those that had been issued ATOs as was intended by the 

Coalition Provisional Authority. We found that ATOs were issued for six of the 12 DB 

contracts. One of the six DB contracts with an ATO was terminated and demobilized less 

than one year after contract award. Therefore, our review focused on the 11 active DB 

contracts, of which 5 were issued one or more ATOs. Through the review of contract 

files and supporting databases we determined that 5 of the 11 DB contracts were issued 

ATOs between June 7, 2004, and November 1, 2004. We then established key contract 

dates, including contract award, mobilization date, ATO issuance date, and date 

contractor was directed to begin construction activity. We also examined supporting data 

that Gulf Region Division-Project and Contracting Office (GRD-PCO) furnished, 

including documentation that we obtained from the official contract officer files 

maintained in Baghdad by the GRD-PCO. Some of that data included task orders (TOs), 

TO modifications, emails, correspondence with the contractors, termination orders, and 

cost reports. We examined the data to determine whether all contractors were issued 

ATOs and whether ATOs that were issued were consistent. 

To assess the reliability of invoiced costs, we obtained and reviewed 28 audit reports 

prepared by the Defense Contract Auditing Agency (DCAA) that in total addressed all 9 

of the DB contractors’ accounting, billing, and estimating systems, covering calendar 

years 2004 and 2005. Because the DCAA reports identified deficiencies in the 

contractors’ accounting and billing systems, we contacted several DCAA branch offices 

to ascertain if DCAA was monitoring follow-up action to determine if the contractors 

issued ATOs had taken corrective action. 

To examine whether substantial ATO costs were incurred during periods of limited 

project activity, we obtained and examined invoices from the U.S. Army Corps of 

Engineers (USACE) Finance Center in Millington, Tennessee. All DB contractor 

invoices were filed through the Corps of Engineers Financial Management System 

18
(CEFMS) for payment. All invoices are received via mail, Defense Finance and 

Accounting Service Web Invoicing System or by e-mail. A hard copy of the invoice is 

used for data input into CEFMS at the USACE Finance Center. At the GRD-PCO Office 

in Baghdad, Form DD250 receiving/accepted reports and progress payments are entered 

into CEFMS based on hard copy documentation. There is no automatic interface for 

entering invoices into CEFMS. All invoices, receiving reports and progress payments 

entered into CEFMS require a signature to validate the user for audit purposes. The users 

are all government employees. Invoices are imaged and stored on the USACE Finance 

Center Document Management System for retrieval. For contracts awarded for work in 

Iraq, the USACE Finance Center, located in Millington, Tennessee, filed and maintained 

hard copies of the DB invoices. 

Through examining CEFMS invoices, we identified the value of ATO and direct TO 

billings and the periods of performance covered by each invoice. We compared the 

period of performance identified in monthly billings with key contract dates to assess 

how much contractors were spending while awaiting orders to begin construction. We 

calculated the date substantial work began by analyzing invoices submitted by the 

contractors for direct project work to determine the date that marked the beginning of the 

period of performance when substantial direct project costs were incurred. We 

interviewed a wide array of government officials involved with the DB contracts, 

including numerous government officials who were in-theater during the ramp-up of 

reconstruction beginning in calendar year 2004. We also interviewed contracting officers, 

to include the individual who was the Director of Procurement Operations, Office of the 

Assistant Deputy Assistant Secretary of the Army, Iraq Headquarters, from March 2005 

through June 2006 and who had previously been the Operations Officer, Joint 

Contracting Command-Iraq/Afghanistan from January through March 2005. We 

interviewed the current sector contracting officers, as well as managers from the GRDPCO, representatives from the Sector Project and Contracting Office Contractor support 

organization and USACE personnel. Finally, we also interviewed several managers with 

various DB contract firms to obtain their perspective on the process of issuing ATOs. 

To determine the effect of de-scoping actions on ATO costs, we identified when descoping actions occurred by examining task order modifications. After identifying task 

order modifications involving de-scoping actions we examined invoices for the periods 

immediately preceding and following de-scoping actions to the extent possible. However, 

we found that ATO costs included administrative costs for multiple TOs issued under 1 

contract and the ATO invoices do not break out and are not required to break out indirect 

costs by individual TO. This substantially limited the analyses that we could perform. 

We conducted this audit from October 2005 to August 2006 in accordance with generally 

accepted government auditing standards. 

Use of Computer-Processed Data 

We reviewed invoice reports that were compiled in Excel spreadsheets based on data 

taken from reports run in the USACE’s CEFMS. The CEFMS was designed as a single 

entry system so the transactions update, in real time, the general ledger and subsidiary 

19
ledgers. We did not audit CEFMS.5

 We also examined data contained in the Iraq 

Reconstruction Management System and in the contracting officers’ electronic files. We 

did not conduct audits of the controls of any of the systems used. SIGIR previously 

audited the Iraq Reconstruction Management System.6

Prior Coverage 

We reviewed applicable reports issued by SIGIR and DCAA. 

Special Inspector General for Iraq Reconstruction (SIGIR). 

SIGIR-05-007, Administration of Iraq Relief and Reconstruction Fund Contract Files, 

April 30, 2004 

SIGIR-05-017, Award Fee Process for Contractors Involved in Iraq Reconstruction, 

October 25, 2004 

SIGIR-05-029, Challenges Faced in Carrying Out Iraq Relief and Reconstruction Fund 

Activities, January 26, 2006 

Defense Contract Audit Agency (DCAA). We reviewed 28 reports that the DCAA 

issued on the DB contractors. 

Defense Contract Audit Agency, Report on Audit of the cost and Schedule Performance 

Reports for the Five Months Ended June 30, 2005 for Task Orders No. 4, 6, 7, and 8 of 

Contract No. W914NS-04-D-0007, (2131-2005N17760004, October 30, 2005) 

Defense Contract Audit Agency, Report on Audit of the Cost and Schedule Performance 

Report for period ending June 30, 2005 for Task Orders No. 1, 2, 3, and 5 of Contract 

Number W914NS-04-D-0007, (2131-2005N17760005, October 9, 2005) 

Defense Contract Audit Agency, Report on Audit of the Cost and Schedule Performance 

Reporting for the Five Months ended June 30, 2005 for Task Order Nos. 9, 10, 11, and 12 

of Contract No. W914NS-04-D-0007, (2131-2005N17760006, November 21, 2005) 

Defense Contract Audit Agency, Audit Report for Billing System Review Follow-Up,

(4261-2005W11010001, June 21, 2005) 

Defense Contract Audit Agency, Report on Audit of Construction Business Unit 

Estimating System, (04261-2004W24010001, December 23, 2004) 

 

5

 For more information on the reliability of data drawn from CEFMS, see GAO report 01-89, “Significant 

Weaknesses in Corps of Engineers’ Computer Controls,” October, 2000, and GAO follow-up report 02-

589, “Corps of Engineers Making Improvements But Weaknesses Continue,” June, 2002. 

6

 “Management of the Iraq Relief and Reconstruction Fund Program: The Evolution of the Iraq 

Reconstruction Management System,” SIGIR-06-001, April 24, 2006; and “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. 

20
Defense Contract Audit Agency, Report on Accounting System Review, (4261-

2004W11070001, July 15, 2004) 

Defense Contract Audit Agency, Report on Audit of Budget and Planning System 

Internal Controls, (04261-2004W11020002, July 7, 2004) 

Defense Contract Audit Agency, Report on Audit of the Cost and Schedule Performance 

Reporting for the Six Months ended June 30, 2005 for Task Orders No. 1, 2, 3, and 4 of 

Contract No. W914NS-04-D-0008, (2131-2005N17760007, November 14, 2005) 

Defense Contract Audit Agency, Report on Audit of the Cost and Schedule Performance 

Reporting for the Six Months ended June 30, 2005 for Task Orders 5, 6, and 7 of 

Contract No. W914NS-04-D-0008, (2131-2005N17760008, November 21, 2005) 

Defense Contract Audit Agency, Report on Audit of FluorAMEC, LLC Billing System 

Internal Controls (Iraq Reconstruction Support), (01281-2004H11010002, March 14, 

2005) 

Defense Contract Audit Agency, Report on Audit of FluorAMEC, LLC Estimating System 

Internal Controls (Iraq Reconstruction Support), (1281-2005H22010001, June 29, 2005) 

Defense Contract Audit Agency, Billing System Review, (4901-2001B11010002, July 15, 

2005) 

Defense Contract Audit Agency, Review of Direct Labor Recorded and Billed Under the 

Security and Justice (S&J) Administrative Task Order (ATO), (4901-2005B17900013, 

September 15, 2005) 

Defense Contract Audit Agency, Report on Security and Justice Administrative Task 

Order Floor Check, (4901-2005B10310005, September 22, 2005) 

Defense Contract Audit Agency, Report on Audit of the Cost and Schedule Performance 

Reporting for the Six Months ended June 30, 2005 for Task Order Nos. 1 through 13 

Under Contract No. W914NS-04-D-0006, (2131-2005N17760002, November 30, 2005) 

Defense Contract Audit Agency, Review of Direct Labor Recorded and Billed Under the 

Buildings Health and Education (BHE) Administrative Task Order (ATO), (4901-

2005B17900012, September 15, 2005) 

Defense Contract Audit Agency, Report on Price Proposal for Modification of Task 

Order 6, 10, and 13—Increased Costs for Remote Site Security, (2131-2006T21000014, 

March 13, 2006) 

Defense Contract Audit Agency, Audit Report on Accounting System Internal Controls,

(3521-2004V11070001, March 30, 2005) 

Defense Contract Audit Agency, Report on Audit of Contractor’s Billing System Internal 

Controls, (3521-2004V11010001, March 31, 2005) 

21
Defense Contract Audit Agency, Report on Agreed-Upon Procedures, (3521-

2006V28000002, November 30, 3005) 

Defense Contract Audit Agency, Report on Audit of Billing System Internal Controls,

(02161-2004V11010001, May 17, 2005) 

Defense Contract Audit Agency, Report on Estimating System Deficiency, (02161-

2005V24020001, April 15, 2005) 

Defense Contract Audit Agency, Report on Follow up Examination of PMSI Control 

Environment and Overall Accounting Controls ̧ (02161-2005V11070001, September 16, 

2005) 

Defense Contract Audit Agency, Report on Audit of Estimating System, (3311-

2004K24010001, August 4, 2004) 

Defense Contract Audit Agency, Follow-Up Report on Audit of Kellogg Brown and Root 

Services, Inc. Billing System and Related Internal Controls, (3311-2005B11010001, 

December 29, 2005) 

Defense Contract Audit Agency, Report on Audit of Task Order No. 0006, Modification 

02, Amendment 03 Under Prime Contract No. W914NS-04-D-0005, (1281-

2005C21000061, August 18, 2005) 

Defense Contract Audit Agency, Report on Audit of Task Order No. 0006, Modification 

02, Amendment 04 Under Prime Contract No. W914NS-04-D-0005, (1281-

2005C21000062, August 19, 2005) 

Defense Contract Audit Agency, Report on Audit of Specified Demobilization and 

Indirect Costs for Delivery Order No. 0027 for the Period of September 2004 through 

Contract Settlement, (2191-2005M27000001, February 15, 2005) 

22
Appendix B – Acronyms 

Acronym Definition 

ATO Administrative Task Order 

CEFMS U.S. Army Corps of Engineers Financial Management System 

DB Design-Build 

DCAA Defense Contract Audit Agency 

GRD-PCO Gulf Region Division-Project and Contracting Office 

IRRF Iraq Relief and Reconstruction Fund 

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

KBR Kellogg Brown and Root 

SIGIR Special Inspector General for Iraq Reconstruction 

TO Task Order 

USACE U.S. Army Corps of Engineers 

23
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 Corps-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 

* Recipient of the draft report.

24
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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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: 

Karen Bell 

Michael Bianco 

Frank Bonsiero 

James Carrera 

Shawn Kline 

Peter Lee 

Rizwan Shah 

Clifton Spruill 

Steven Sternlieb 

26 
Management Comments 

Gulf Region Division, U.S. Army Corps of 

Engineers 

27 
28 
29 
30 
Management Comments 

Joint Contracting Command-Iraq/Afghanistan 

31