United States Government Accountability Office

GAO Report to Congressional Leadership 

and Committees 

SECURING, 

STABILIZING, AND 

REBUILDING IRAQ 

Key Issues for 

Congressional 

Oversight 

January 2007 

This report was reissued on January 24, 2007, to reflect a

change in the total for capital project expenditures in table 1 

on page 55 to read $877 million and not $87 million. 

 

GAO-07-308SP 
Contents 

Letter 1

Strategy and Costs 6 

Enclosure I: More Comprehensive U.S. Strategy Needed to Achieve

Goals and Address Challenges in Iraq 7 

Enclosure II: U.S. Commitments Involve Significant Resources, but 

DOD Cost Reports and Budgets Limit Transparency 13 

Security Conditions 19 

Enclosure III: Security Conditions Have Deteriorated as Iraq Has 

Assumed Additional Security Responsibilities 20 

Enclosure IV: Assessing the Capabilities of the Iraqi Security 

Forces Is Critical 27 

Enclosure V: DOD May Be Unable to Ensure That U.S.-Funded 

Equipment Has Reached Iraqi Security Forces 33 

Governance Challenges 40 

Enclosure VI: The Iraqi Government Needs to Staff an Effective 

Civil Service and Fight Corruption 41 

Enclosure VII: Ministry Capacity Development Efforts Need 

Integrated Plan 47 

Enclosure VIII: Several Factors Affect Iraqi Ministry Efforts to 

Spend Capital Budgets 54 

Enclosure IX: Iraq Owes Significant Foreign Debt and Faces 

Challenges in Meeting IMF Conditions 59

Reconstruction Challenges 65 

Enclosure X: U.S. Efforts to Restore Iraq’s Oil Sector Have Been 

Slowed by Major Challenges 66 

Enclosure XI: U.S. Efforts to Improve Iraq’s Electricity Sector Have 

Been Constrained by Security, Management, and Funding 

Challenges 72

U.S. Military Readiness 79 

Enclosure XII: Extended Operations Have Had Significant 

Consequences for the U.S. Military 80 

Enclosure XIII: Securing Munitions Sites and Alleviating Armor 

Shortages Have Been Serious Problems 86 

Page i GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIV: Deficiencies in Supply Support for U.S. Ground 

Forces Have Resulted in Shortages of Critical Items 92

Improving Acquisition Outcomes 97 

Enclosure XV: DOD Needs to Improve Its Capacity to Manage 

Contractors 98

Objectives, Scope, and Methodology, and Staff Acknowledgments 105 

Enclosure XVI: Objectives, Scope, and Methodology 106 

Enclosure XVII: Staff Acknowledgments 114 

Page ii GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Abbreviations 

CDWG Capacity Development Working Group 

CPA Coalition Provisional Authority 

CSIS Center for Strategic and International Studies 

DOD Department of Defense 

EPSS Electric Power Security Service 

GRD Gulf Region Division 

GWOT global war on terrorism 

HMMWV High-Mobility Multipurpose Wheeled Vehicle 

IAMB International Advisory and Monitoring Board 

IED improvised explosive device 

IMF International Monetary Fund 

IRMO Iraq Reconstruction Management Office 

IRRF Iraqi Relief and Reconstruction Fund

ISF Iraqi security forces 

ISFF Iraqi Security Forces Fund 

JIEDDO Joint Improvised Explosive Device Defeat Organization 

LOGCAP Logistics Civil Augmentation Program 

MAT Ministry Assistance Team

mbpd million barrels per day 

MNF-I Multinational Force-Iraq 

MNSTC-I Multinational Security Transition Command-Iraq

mw megawatt 

NCDP National Capacity Development Program 

NSC National Security Council

NSVI National Strategy for Victory in Iraq 

OIF Operation Iraqi Freedom

OMB Office of Management and Budget 

SIB Strategic Infrastructure Battalions 

SIGIR Special Inspector General for Iraqi Reconstruction

TRA Transition Readiness Assessment 

USAID United States Agency for International Development 

Page iii GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
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Page iv GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
United States Government Accountability Office

Washington, DC 20548 

January 9, 2007 

Congressional Leadership and Committees 

As the United States reviews its plans to secure, stabilize, and rebuild Iraq, 

I have enclosed a series of issue papers for consideration in developing

your oversight agenda for the 110th Congress and analyzing the President’s 

revised strategy for Iraq. These papers are based on the continuing work 

of the U.S. Government Accountability Office and the 67 Iraq-related 

reports and testimonies we have provided to the Congress since May 2003. 

As the United States reviews its plans to secure, stabilize, and rebuild Iraq, 

I have enclosed a series of issue papers for consideration in developing

your oversight agenda for the 110th Congress and analyzing the President’s 

revised strategy for Iraq. These papers are based on the continuing work 

of the U.S. Government Accountability Office and the 67 Iraq-related 

reports and testimonies we have provided to the Congress since May 2003. 

Iraq has had three successful elections, adopted a constitution, and 

installed its first elected government. At the same time, since the initial 

ground offensive ended in 2003, the costs to secure and stabilize Iraq have 

grown substantially, as has the level of violence that afflicts Iraqi society.

Such violence stems from an insurgency that has grown more complex 

and lethal over the past 31⁄2 years and the Sunni-Shi’a conflict, which 

escalated dramatically in 2006. This instability complicates meaningful 

political reconciliation among Iraq’s religious and tribal groups, reduces 

the effectiveness of U.S. and Iraqi reconstruction and capacity-building 

efforts, and diminishes the hopes and expectations of an Iraqi people 

without adequate jobs, water, fuel, and electricity. 

Iraq has had three successful elections, adopted a constitution, and 

installed its first elected government. At the same time, since the initial 

ground offensive ended in 2003, the costs to secure and stabilize Iraq have 

grown substantially, as has the level of violence that afflicts Iraqi society.

Such violence stems from an insurgency that has grown more complex 

and lethal over the past 31⁄2 years and the Sunni-Shi’a conflict, which 

escalated dramatically in 2006. This instability complicates meaningful 

political reconciliation among Iraq’s religious and tribal groups, reduces 

the effectiveness of U.S. and Iraqi reconstruction and capacity-building 

efforts, and diminishes the hopes and expectations of an Iraqi people 

without adequate jobs, water, fuel, and electricity. 

Increasing Iraqi security forces and transferring security responsibilities to 

them have not resulted in reduced violence. Rather, attacks increased 

throughout 2006. Although more Iraqi troops have been trained and 

equipped, high absenteeism and divided loyalties have limited their overall

effectiveness. At the same time, our service members are working with 

great courage and diligence to perform the roles the President has asked 

of them. Notwithstanding their noble efforts, the U.S. military has 

sustained significant casualties. In addition, wear and tear on military 

equipment and growing replacement costs have risen substantially. The 

resulting stress and strain on American forces have reduced troop 

readiness levels and the availability of reserve personnel. 

Increasing Iraqi security forces and transferring security responsibilities to 

them have not resulted in reduced violence. Rather, attacks increased 

throughout 2006. Although more Iraqi troops have been trained and 

equipped, high absenteeism and divided loyalties have limited their overall

effectiveness. At the same time, our service members are working with 

great courage and diligence to perform the roles the President has asked 

of them. Notwithstanding their noble efforts, the U.S. military has 

sustained significant casualties. In addition, wear and tear on military 

equipment and growing replacement costs have risen substantially. The 

resulting stress and strain on American forces have reduced troop 

readiness levels and the availability of reserve personnel. 

The U.S. rebuilding effort in Iraq has focused on helping the Iraqi 

government establish a sound economy with the capacity to deliver 

essential services. Although Iraq’s economy has grown and U.S. efforts 

have helped restore portions of Iraq’s infrastructure, the poor security 

environment and mismanagement have diminished the overall results of 

U.S. investments. Iraq will need U.S. and international support, including 

The U.S. rebuilding effort in Iraq has focused on helping the Iraqi 

government establish a sound economy with the capacity to deliver 

essential services. Although Iraq’s economy has grown and U.S. efforts 

have helped restore portions of Iraq’s infrastructure, the poor security 

environment and mismanagement have diminished the overall results of 

U.S. investments. Iraq will need U.S. and international support, including 

Page 1 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
political and economic incentives, to strengthen its fragile government 

institutions, which have thus far failed to adequately deter corruption, 

stimulate employment, or deliver essential services. 

The enclosures that follow discuss these issues and other critical 

challenges that the United States and its allies face in the ongoing struggle 

to help the Iraqis stabilize, secure, and rebuild Iraq. Forthright answers to 

the oversight questions we pose herein are needed from the U.S. agencies

responsible for executing the President’s strategy. Congress and the 

American people need complete and transparent information on the 

progress made toward achieving U.S. security, economic, and diplomatic 

goals in Iraq to reasonably judge our past efforts and determine future 

directions. 

It is also important that the U.S. government account for the funds that it 

expended on behalf of the Iraqi government through the Development 

Fund for Iraq. After all, the Coalition Provisional Authority had a fiduciary 

responsibility to properly safeguard, use, and account for these funds. 

These enclosures focus on the U.S. strategy and costs of operations in 

Iraq; security, governance, and reconstruction issues; the readiness of U.S. 

military forces; and acquisition outcomes. They are based on our 

completed and ongoing Iraq-related work, and incorporate information 

from official documents and relevant officials from the various agencies 

involved in stabilizing and rebuilding Iraq, including the Departments of 

Defense, Energy, State, and the Treasury; the U.S. Agency for International 

Development; the Army Corps of Engineers; the multinational force; and

the Defense Intelligence Agency. As part of this work, we made multiple

visits to Iraq during 2006. For the enclosures that include new information, 

we provided copies to the relevant agencies for advanced review and 

technical comments, which we incorporated as appropriate. We 

conducted our review in accordance with generally accepted government 

auditing standards. Enclosure XVI contains a detailed scope and 

methodology. 

We are sending copies of this report to Members of Congress. This report 

will also be available at no charge on GAO’s Web site at 

http://www.gao.gov. 

Page 2 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
If you or your staff have any questions about this report, please contact the 

individual listed at the end of each enclosure. Contact points for our 

Offices of Congressional Relations and Public Affairs can be found on the 

last page of this report. For press inquiries, please contact Paul Anderson 

at (202) 512-3823. Key contributors to this report are included in enclosure 

XVII. 

Thank you for your time and consideration. As always, we at GAO stand 

ready to assist Congress in discharging its constitutional responsibilities 

for the benefit of the American people. 

David M. Walker 

Comptroller General of the United States 

Enclosures 

Page 3 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
List of Congressional Leadership and Committees 

The Honorable Harry Reid 

Majority Leader 

The Honorable Mitch McConnell 

Minority Leader 

United States Senate

The Honorable Nancy Pelosi 

The Speaker of the House of Representatives 

The Honorable John A. Boehner 

Minority Leader 

House of Representatives

The Honorable Robert C. Byrd 

The Honorable Thad Cochran 

Committee on Appropriations 

United States Senate 

The Honorable Carl Levin 

The Honorable John S. McCain 

Committee on Armed Services 

United States Senate 

The Honorable Joseph R. Biden, Jr. 

The Honorable Richard G. Lugar 

Committee on Foreign Relations 

United States Senate 

The Honorable Joseph I. Lieberman 

The Honorable Susan M. Collins 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

Page 4 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
The Honorable David Obey 

Chairman 

The Honorable Jerry Lewis 

Ranking Minority Member 

Committee on Appropriations 

House of Representatives 

The Honorable Ike Skelton 

Chairman 

The Honorable Duncan L. Hunter 

Committee on Armed Services 

House of Representatives 

The Honorable Tom Lantos 

Chairman 

The Honorable Ileana Ros-Lehtinen

Ranking Minority Member 

Committee on Foreign Affairs 

House of Representatives 

The Honorable Henry A. Waxman 

Chairman 

The Honorable Tom Davis 

Ranking Minority Member 

Committee on Oversight and Government Reform 

House of Representatives 

The Honorable Christopher Shays 

Ranking Minority Member 

Subcommittee on National Security and International Relations 

Committee on Oversight and Government Reform 

House of Representatives 

Page 5 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Strategy and Costs 

Page 6 GAO-07-308SP 

Strategy and Costs 

Enclosure I: More Comprehensive U.S. Strategy Needed to Achieve 

Goals and Address Challenges in Iraq 

Enclosure II: U.S. Commitments Involve Significant Resources, but

DOD Cost Reports and Budgets Limit Transparency

 Securing, Stabilizing, and Rebuilding Iraq
Enc

S

Address Challe

losure I: More Comprehensive U.S. 

trategy Needed to Achieve Goals and

nges in Iraq 

Page 7 GAO-07-308SP 

Enclosure I: More Comprehensive U.S. 

Strategy Needed to Achieve Goals and 

Address Challenges in Iraq 

In November 2005, the National Security Council (NSC) issued the 

National Strategy for Victory in Iraq (NSVI) to clarify the President’s 

strategy1

 for achieving U.S. political, security, and economic goals in Iraq. 

The U.S. goals included establishing a peaceful, stable, and secure Iraq. 

Based on a GAO report issued in July 20062

 and other GAO reviews, this 

enclosure discusses (1) the extent to which the NSVI and its supporting 

documents addressed the six characteristics of an effective national 

strategy, and (2) how security, political, and economic factors have 

affected the U.S. strategy for Iraq. Congressional review of the President’s

2007 plan for Iraq should consider whether it addresses the key elements 

of a sound national strategy. 

We reported in July 2006 that the NSVI was an improvement over previous

U.S. planning efforts for stabilizing and rebuilding Iraq. The strategy’s 

positive attributes included a clear purpose and scope and identification of

U.S. involvement in Iraq as a “vital national interest and the central front in 

the war on terror.” The strategy also provided a comprehensive 

description of U.S. political, security, and economic objectives in Iraq. 

However, the discussion of outcome-related performance measures to 

assess progress in achieving these goals and objectives was limited. 

Moreover, the strategy fell short in at least three other areas. First, it only 

partially identified the agencies responsible for implementing key aspects 

of the strategy. Second, it did not fully address how the U.S. will integrate 

its goals with those of the Iraqis and the international community, and it

did not detail Iraq’s anticipated contribution to its future needs. Third, it 

only partially identified the current and future costs of U.S. involvement in

Iraq, including maintaining U.S. military operations, building Iraqi 

government capacity, and rebuilding critical infrastructure. 

Issue 

Summary 

Security, political, and economic factors continue to hamper U.S. efforts 

to stabilize Iraq and achieve key U.S. goals. First, the United States and 

Iraq are trying to revitalize Iraq’s economy and restore the oil, electricity, 

and other key sectors. However, these efforts have been impeded by 

security, corruption, and other challenges. 

 1

The NSVI and key supporting documents are collectively referred to as the U.S. strategy 

for Iraq. 

2

GAO, Rebuilding Iraq: More Comprehensive National Strategy Needed to Help Achieve

U.S. Goals, GAO-06-788 (Washington, D.C.: July 11, 2006). 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure I: More Comprehensive U.S. 

Strategy Needed to Achieve Goals and

Address Challenges in Iraq 

The NSVI aimed to improve U.S. strategic planning for Iraq; however, the 

NSVI and supporting documents did not fully address all of the six 

desirable characteristics of effective national strategies that GAO has 

identified through its prior work.3

 We used these six characteristics to 

evaluate the strategy—that is, the NSVI and supporting documents that 

Department of Defense (DOD) and Department of State officials said 

encompassed the U.S. strategy for rebuilding and stabilizing Iraq.4

NSVI Did Not Fully 

Address All Key 

Characteristics of an 

Effective National 

Strategy 

As figure 1 shows, the strategy generally addressed three of the six 

characteristics but only partially addressed three others, limiting its 

usefulness in guiding agency implementation efforts and achieving desired 

results. Moreover, since the strategy was dispersed among several 

documents instead of one, its effectiveness as a planning tool for 

implementing agencies and informing Congress about the pace, costs, and

intended results of these efforts was limited. 

 3

See GAO, Combating Terrorism: Evaluation of Selected Characteristics in National

Strategies Related to Terrorism, GAO-04-408T (Washington, D.C.: Feb. 3, 2004); and

Defense Management: Comprehensive Strategy and Periodic Reporting Are Needed to

Gauge Progress and Costs of DOD’s Global Posture Restructuring, GAO-06-486C 

(Washington, D.C.: May 26, 2006). 

4

We evaluated the NSVI along with seven related classified and unclassified supporting

documents. These documents were identified by State’s Office of the Coordinator for Iraq,

State’s Bureau of Near Eastern Affairs, DOD’s Defense Reconstruction Support Office, and 

DOD’s Near Eastern South Asian Affairs office as having key details about the strategy. The 

documents included (1) the National Security Presidential Directive 36 (May 2004), (2) the

MNF-I Campaign Plan (August 2004), (3) the MNF-I/ U.S. Embassy Baghdad Joint Mission

Statement on Iraq (December 2005), (4) the Multinational Corps-Iraq Operation Order 05-03 

(December 2005), (5) the National Strategy for Supporting Iraq (updated January 2006), (6) 

State’s quarterly section 2207 reports to Congress (January and April 2006); and (7) the 

April 2006 Joint Campaign Plan issued by the Chief of Mission and the Commander of the 

MNF-I. 

Page 8 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure I: More Comprehensive U.S. 

Strategy Needed to Achieve Goals and

Address Challenges in Iraq 

Figure 1: Extent That November 2005 U.S. Strategy for Iraq Addressed GAO’s Desirable Characteristics of an Effective 

National Strategy 

Generally addresses Partially addresses

Extent the U.S. strategy for Iraq addresses GAO’s desirable

characteristics of an effective national strategy

1. Clear purpose, scope, and methodology

2. Detailed discussion of problems, risks, and threats

3. Desired goals, objectives, activities, and performance measures

6. Description of future costs and resources needed

4. Delineation of U.S. government roles and responsibilities

5. Description of strategy’s integration among and with other entities











 Sources: GAO analysis of NSC, State, and DOD data.

As shown in figure 1, the NSVI and supporting documents only partially (1) 

delineated the roles and responsibilities of key U.S. government agencies; 

(2) described the means by which the strategy will be integrated among 

U.S. entities, the Iraqi government, and international organizations, and 

the mechanisms for coordination; and (3) identified the strategy’s costs 

and sources of financing.

• Although the strategy partially addressed the roles and responsibilities of 

specific U.S. government agencies and offices and the process for 

coordination, it is not clear which agency was responsible for 

implementing the overlapping activities listed under the NSVI’s eight 

strategic objectives. For instance, one activity was to promote

transparency in the executive, legislative, and judicial branches of the Iraqi 

government; however, the NSVI and supporting documents did not 

indicate which agency was responsible for implementing this activity, or 

who was to be held accountable for results. Moreover, little guidance was

provided to assist implementing agencies in resolving conflicts among 

themselves, as well as with other entities. 

• The NSVI and supporting documents partially addressed how the strategy 

related to other international donors and Iraqi government goals, 

objectives, and activities. For instance, the NSVI and supporting 

documents identified the need to integrate the efforts of the coalition, the 

Iraqi government, and other nations, but did not discuss how U.S. goals 

and objectives would be integrated. In addition, the strategy did not 

address what it expects the international community or the Iraqi 

government to pay to achieve future objectives. 

Page 9 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure I: More Comprehensive U.S. 

Strategy Needed to Achieve Goals and

Address Challenges in Iraq 

• The November 2005 National Strategy for Victory in Iraq and related 

supporting documents did not clearly identify the costs of U.S. military 

operations, including the costs to repair and replace equipment used 

during operations. The strategy did not identify other key related costs, 

including the costs of training, equipping, and supporting Iraq’s security 

forces; the costs of rebuilding, maintaining, and protecting critical oil and 

electricity infrastructure; or the costs of building management capacity in

Iraq’s central ministries and 18 provincial governments. In addition to 

these costs, the new Iraqi government will need significant help in building 

the procurement, financial management, accountability, and other key 

systems needed to govern and provide basic services to its citizens. 

Our July 11, 2006, report and other GAO work show that security, political, 

and economic factors have hampered and will continue to influence U.S. 

efforts to stabilize Iraq and achieve key U.S. strategic goals. First, 

increases in attacks against the coalition and its Iraqi partners, growing 

sectarian violence, and the influence of militias have adversely affected 

U.S. and Iraqi efforts to secure Baghdad and other strategic cities. Second, 

sectarian control over ministries and the lack of skilled employees hinder 

efforts to improve Iraq’s governance by building the capacity of ministries 

and reconciling differences among sectarian interests. Third, security, 

corruption, and fiscal problems limit U.S. and Iraqi plans to revitalize Iraq’s 

economy and restore essential services in the oil and electricity sectors. 

Security, Political, and 

Economic Factors 

Hamper Efforts to 

Achieve Strategic 

Goals 

• Overall security conditions in Iraq have continued to deteriorate and have 

grown more complex despite recent progress in transferring security 

responsibilities to Iraqi security forces and the Iraqi government. The 

number of trained and equipped Iraqi security forces has increased from 

about 174,000 in July 2005 to about 323,000 as of December 2006, at the 

same time as more Iraqi army units have taken the lead for 

counterinsurgency operations in specific geographic areas. Despite this 

progress, however, attacks on coalition forces, Iraqi security forces, and 

civilians have all increased, reaching record highs in October 2006. 

Because of these conditions, the United States could not draw down U.S. 

force levels in Iraq as planned in 2004 and 2006, and U.S. forces have 

continued to conduct combat operations in urban areas, especially 

Baghdad (see encl. III). 

• The U.S. government faces significant challenges in improving the 

capability of national and provincial governments to provide security and 

deliver services to the Iraqi people. According to State, the Iraqi capacity

for self-governance was decimated after nearly 30 years of autocratic rule. 

Page 10 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure I: More Comprehensive U.S. 

Strategy Needed to Achieve Goals and

Address Challenges in Iraq 

In addition, Iraq lacked competent existing Iraqi governmental 

organizations. Since 2003, the United States has provided the Iraqis with a 

variety of training and technical assistance to improve their capacity to

govern. As of December 2006, we identified more than 50 capacity 

development efforts led by at least 6 U.S. agencies (see encl. VII). 

• Iraq’s oil production and exports have consistently fallen below U.S. 

program goals. U.S. and Iraqi efforts to restore Iraq’s oil sector have been 

impeded by the lack of security, corruption, sustainability, and funding 

challenges. The unstable security environment continues to place workers 

and infrastructure at risk while protection efforts remain insufficient. 

Widespread corruption and smuggling affect the distribution of refined oil 

products such as gasoline. The U.S. reconstruction program has 

encountered difficulty with Iraq’s ability to operate and maintain aging

infrastructure. Furthermore, uncertainties exist regarding the sources of 

future funding. These challenges could make it difficult to achieve current 

production and export goals, which are central to Iraq’s economic 

development (see encl. X). 

In our July 2006 report, we recommended that the NSC improve the 

current strategy by articulating clear roles and responsibilities, specifying 

future contributions, and identifying current costs and future resources. In 

addition, the United States, Iraq, and the international community should 

(1) enhance support capabilities of the Iraqi security forces, (2) improve 

the capabilities of the national and provincial governments, and (3) 

develop a comprehensive anti-corruption strategy. State commented that 

the NSVI’s purpose is to provide a broad overview of the U.S. strategy in 

Iraq rather than a detailed account. GAO’s analysis was not based 

exclusively on the NSVI but included all key supporting documents. 

Consequently, GAO retained the recommendation for a more complete 

and integrated strategy.

• What is the desired end-state of U.S. involvement in Iraq? How long, and at 

what cost, will it take to achieve a peaceful, stable, and secure Iraq? 

Prior 

Recommendations 

Oversight Questions 

• What political and economic incentives are needed to increase security, 

improve government capacity, and reduce corruption in Iraq?

• How will revised U.S. plans incorporate enhanced support for Iraqi 

security forces and national and provincial governments? 

Page 11 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure I: More Comprehensive U.S. 

Strategy Needed to Achieve Goals and

Address Challenges in Iraq 

• How will revised U.S. plans assist the Iraqi government in developing a 

comprehensive anti-corruption strategy? 

• If the President suggests a troop increase, what would be the mission of 

the additional troops? 

• How long would they stay? 

• How would the success of the mission be measured? 

• What additional costs would the United States incur? 

• To what extent does the administration’s revised strategy integrate the 

input and resources of the Iraqi government? 

Joseph A. Christoff, Director, International Affairs and Trade, (202) 512-

8979 or christoffj@gao.gov. GAO Contact 

Page 12 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enc

Sig

and Bud

losure II: U.S. Commitments Involve

nificant Resources, but DOD Cost Reports 

gets Limit Transparency 

Page 13 GAO-07-308SP 

Enclosure II: U.S. Commitments Involve 

Significant Resources, but DOD Cost 

Reports and Budgets Limit Transparency

Since 2001, Congress has appropriated about $495 billion to U.S. agencies 

for military and diplomatic efforts in support of the global war on 

terrorism (GWOT); the majority of this amount has gone to stabilize and 

rebuild Iraq. Efforts in Iraq involve various activities such as combating 

insurgents, conducting civil affairs, building capacity, reconstructing 

infrastructure, and training Iraqi military forces. The Departments of 

Defense (DOD) and State and the U.S. Agency for International 

Development, among others, play primary roles. To date, the United States

has reported substantial costs1

 for Iraq and can expect to incur significant 

costs in the foreseeable future, requiring decision makers to consider 

difficult trade-offs as the nation faces an increasing number of long-range 

fiscal challenges. Funding for these efforts has been provided through 

annual appropriations, as well as supplemental appropriations that are 

outside the annual budget process. Moving more funding into baseline 

budgets, particularly for DOD, would enable decision makers to better 

weigh priorities and assess trade-offs. This enclosure describes (1) the 

reported costs incurred by DOD and other U.S. agencies for military 

operations, reconstruction efforts, and stabilization activities in Iraq since 

2003; and (2) the issues involved in estimating future financial

commitments related to U.S involvement. 

As of September 30, 2006, DOD had reported costs of about $257.5 billion2

for military operations in Iraq. In addition, as of October 2006, about $29 

billion had been obligated for Iraqi reconstruction and stabilization efforts. 

However, problems with the processes for recording and reporting GWOT 

costs raise concerns that these data may not accurately reflect the true 

dollar value of war-related costs. U.S. commitments to Iraq will likely 

involve the continued investment of significant resources and will depend 

on several direct and indirect cost variables and, in some cases, decisions 

that have yet to be made. For DOD, these include the pace and duration of 

operations, redeployment and basing plans, and the amount of equipment 

to be repaired or replaced. Cost variables for other U.S. agencies include 

efforts to help form national and provincial governments, develop 

management capacity, build capable and loyal security forces, and 

Issue 

Summary 

 1

For purposes of this enclosure, the term “costs” refers to the obligations that have been

incurred by U.S. agencies in Iraq. Obligations are incurred through actions such as orders

placed, contracts awarded, services received, or similar transactions made during a given 

period that will require payments during the same or a future period. 

2

DOD’s reported costs in Iraq do not include the costs of classified activities. 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure II: U.S. Commitments Involve

Significant Resources, but DOD Cost Reports 

and Budgets Limit Transparency 

undertake reconstruction activities to restore, sustain, and protect critical

infrastructure. With activities likely to continue into the foreseeable

future, decision makers will have to carefully weigh priorities and make 

difficult decisions when budgeting for future costs. 

Since 2003, when DOD began Operation Iraqi Freedom, DOD has reported 

cumulative costs of about $257.5 billion for military operations in Iraq. As

shown in figure 1, DOD’s reported costs show a steady increase from 

about $38.8 billion in fiscal year 2003 to about $83.4 billion in fiscal year 

2006. The largest increase has been in operation and maintenance 

expenses, including items such as support for housing, food, and services; 

the repair of equipment; and transportation to move people, supplies, and 

equipment. Between fiscal years 2003 and 2006, DOD reported increases in 

these expenses from about $29.9 billion to about $50 billion. According to

DOD officials, some of this increase is attributable to higher fuel costs and 

higher costs for contracts to provide housing, food, and services. Reported

costs for military personnel have increased from about $8 billion in fiscal 

year 2003 to about $14.1 billion in fiscal year 2006, and include military pay 

and allowances for mobilized reservists, as well as special payments or 

allowances, such as imminent danger pay. DOD has also reported that 

costs for procurement of equipment and other items have increased from 

$0.7 billion in fiscal year 2003 to about $13 billion in fiscal year 2006. 

Reported Costs for 

Operations in Iraq Are 

Increasing 

Page 14 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure II: U.S. Commitments Involve

Significant Resources, but DOD Cost Reports 

and Budgets Limit Transparency 

Figure 1: DOD’s Reported Costs for Operation Iraqi Freedom by Fiscal Year 

Note: DOD spent an additional $6.1 billion for operations in Iraq that was not included in DOD’s

reported costs.

Other U.S. government agencies have reported obligating $29 billion for 

Iraqi reconstruction and stabilization, as of October 2006. Among other 

uses, these funds have been used for infrastructure repair of the 

electricity, oil, water, and health sectors; training and equipping of Iraqi 

security forces (military and police); and administrative expenses. The 

Department of State reports that the remaining funds will be used to 

sustain the infrastructure projects that are completed or under way and to

build greater capacity at the national, provincial, and municipal levels. 

Our prior work3

 found numerous problems with DOD’s processes for 

recording and reporting its war-related costs, including long-standing 

deficiencies in DOD’s financial management systems and business 

processes, the use of estimates instead of actual cost data, and the lack of

 3

For example, see GAO, Global War on Terrorism: Fiscal Year 2006 Obligation Rates Are

within Funding Levels and Significant Multiyear Procurement Funds Will Likely

Remain Available for Use in Fiscal Year 2007, GAO-07-76 (Washington, D.C.: Nov. 13,

2006); and Global War on Terrorism: DOD Needs to Improve the Reliability of Cost Data 

and Provide Additional Guidance to Control Costs, GAO-05-882 (Washington, D.C.: Sept.

21, 2005). 

Page 15 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure II: U.S. Commitments Involve

Significant Resources, but DOD Cost Reports 

and Budgets Limit Transparency 

adequate supporting documentation. DOD has taken some steps to 

address these issues, but problems remain. Without transparent and 

accurate cost reporting, Congress and DOD will continue to not have 

reliable information on how much the war is costing, sufficient details on

how appropriated funds are being spent, or the historical data needed to 

consider future funding needs. 

U.S. military and diplomatic commitments in Iraq will continue for the 

foreseeable future and are likely to be in the hundreds of billions of 

dollars. The magnitude of future costs will depend on several direct and 

indirect variables and, in some cases, decisions that have not been made. 

DOD’s future costs will likely be affected by the pace and duration of 

operations, the types of facilities needed to support troops overseas, 

redeployment plans, and the amount of equipment to be repaired or 

replaced. Although reducing troops would appear to lower costs, we have 

seen from previous operations in the Balkans and Kosovo that costs could 

rise—if, for example, increased numbers of contractors replace military 

personnel. If the pace of operations remains high or troops are increased,

costs for force protection, fuel, and other items could remain high. Lastly, 

sustained operations will continue to take a toll on the condition of 

equipment. The Army and Marine Corps will have the largest equipment 

reset (repaired, recapitalized, or replaced) costs. Although the military 

services are refining estimates of overall needs, their total requirements 

and costs are still unclear. 

Other future costs to the U.S. government in Iraq include efforts to help 

form national and provincial governments, develop management capacity, 

and build capable and loyal security forces. Also, more funds will be 

needed to restore, sustain, and protect infrastructure. The new Iraqi 

government will need significant help in building the procurement, 

financial management, and accountability systems needed to govern and

provide basic services to its citizens. The 18 provincial governments will 

need assistance in building management capacity and delivering results 

that make a difference in Iraqis’ daily lives. Sustaining Iraqi military and 

police forces of 323,000 personnel will require the Iraqi government to 

spend more money on personnel, maintenance, and equipment than 

originally anticipated. Also, the new Iraqi security forces will need 

additional help in addressing recurring training needs, replacing lost or 

stolen equipment, and developing improved logistical and sustainment 

capabilities. Although most of the early U.S. reconstruction monies for 

Iraq have been obligated, more funds will be needed for remaining 

Future Iraq Costs Are 

Likely to Be 

Considerable

Page 16 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure II: U.S. Commitments Involve

Significant Resources, but DOD Cost Reports 

and Budgets Limit Transparency 

reconstruction needs and to restore, sustain, and protect the infrastructure 

built to date.

With U.S. commitments in Iraq continuing for the foreseeable future, 

requiring decision makers to make difficult decisions, we would 

encourage DOD to consider moving certain costs into the baseline budget, 

as it has done with Operation Noble Eagle.4

 This action is consistent with 

our prior recommendations and testimony5

 that, once an operation 

reaches a known level of effort and costs are more predictable, more 

funding should be built into the baseline budget. We note that Congress, in 

the John Warner National Defense Authorization Act for Fiscal Year 2007,

requires, among other things, that the President’s annual budget submitted 

after fiscal year 2007 include a request for the funds for ongoing military 

operations in Iraq and Afghanistan. Doing so would allow decision makers 

to weigh priorities and consider trade-offs in making financial decisions.

Over the years, we have made a series of recommendations to the 

Secretary of Defense intended to improve the transparency and reliability 

of DOD’s GWOT obligation data, including recommendations that DOD (1) 

revise the cost-reporting guidance so that large amounts of reported 

obligations are not shown in “miscellaneous” categories, and (2) take steps 

to ensure that reported GWOT obligations are reliable. We have also 

recommended that DOD build more funding into the baseline budget once 

an operation reaches a known level of effort and costs are more 

predictable. In response, the department has implemented many of our 

previous recommendations. 

• What are the key factors causing steady growth in agencies’ reported costs 

to address the situation in Iraq, and what steps are being taken to control 

costs? 

Prior 

Recommendations 

Oversight Questions 

• To what extent have U.S. government agencies estimated the future costs 

and financial requirements of continued efforts in Iraq? 

 4

This operation, which defends the U.S. homeland against terrorist attacks, began in 2001. 

5

GAO, Global War on Terrorism: Observations on Funding, Costs, and Future

Commitments, GAO-06-885T (Washington, D.C.: July 18, 2006); and Future Years Defense

Program: Actions Needed to Improve Transparency of DOD’s Projected Resource 

Needs, GAO-04-514 (Washington, D.C.: May 7, 2004). 

Page 17 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure II: U.S. Commitments Involve

Significant Resources, but DOD Cost Reports 

and Budgets Limit Transparency 

• To what extent are improvements being made to existing accounting and 

management information systems so that they will be able to provide 

complete and reliable reporting on costs? 

• To what extent will the unstable security environment affect

reconstruction efforts in Iraq, and what is the impact on future costs? 

• What steps are U.S. government agencies taking to move some of their 

more predictable costs into their baseline budgets? 

• Does DOD have a valid basis for determining funding needs for Iraq? 

Sharon Pickup, Director, Defense Capabilities and Management, (202) 512-

9619 or pickups@gao.gov; and Joseph A. Christoff, Director, International

Affairs and Trade, (202) 512-8979 or christoffj@gao.gov. 

GAO Contacts 

Page 18 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Security Conditions 

Page 19 GAO-07-308SP 

Security Conditions 

Enclosure III: Security Conditions Have Deteriorated as Iraq Has 

Assumed Additional Security Responsibilities 

Enclosure IV: Assessing the Capabilities of the Iraqi Security 

Forces Is Critical 

Enclosure V: DOD May Be Unable to Ensure That U.S.-Funded 

Equipment Has Reached Iraqi Security Forces 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure

Deteriorated as

Securit

 III: Security Conditions Have 

 Iraq Has Assumed Additional

y Responsibilities 

Page 20 GAO-07-308SP 

Enclosure III: Security Conditions Have 

Deteriorated as Iraq Has Assumed Additional 

Security Responsibilities 

Since the fall of 2003, the U.S.-led multinational force in Iraq has 

developed and refined a series of plans to transfer security responsibilities 

to the Iraqi government and security forces, with the intent of creating 

conditions that would allow a gradual drawdown of the 140,000 U.S. 

military personnel in Iraq. This security transition was to occur first in 

conjunction with the neutralization of Iraq’s insurgency and second with 

the development of Iraqi forces and government institutions capable of 

securing their country. According to the November 2005 National Strategy 

for Victory in Iraq, security conditions in Iraq were expected to improve as 

the Iraqi government and security forces became more capable and took 

the lead for security. This enclosure provides information on (1) the 

evolution of the multinational force’s plan to transfer security 

responsibilities to the Iraqi government and forces, and (2) whether 

progress in implementing the current security transition plan has led to 

improved security conditions in Iraq.

The Multinational Force-Iraq (MNF-I) has revised its security transition 

plan numerous times over the past 3 years, as Iraqi security forces and 

government have not effectively taken over security responsibilities within 

planned time frames.1

 MNF-I first revised its security transition plan in the 

summer of 2004 following the collapse of Iraqi security forces during an 

insurgent uprising. This collapse ensued when MNF-I transferred security 

responsibilities to Iraqi forces before they were properly trained and 

equipped to battle insurgents. Under the current security transition plan, 

MNF-I has established partnerships with Iraqi security forces, is 

developing Iraqi army units so that they can lead counterinsurgency 

operations, and is assessing when to transfer security responsibilities to 

provincial Iraqi governments. After provincial transitions occur, the plan 

calls for MNF-I forces to move out of urban areas and assume a supporting 

role. 

Overall security conditions in Iraq have continued to deteriorate and have 

grown more complex despite recent progress in transferring security 

responsibilities to Iraqi security forces and the Iraqi government. The 

number of trained and equipped Iraqi security forces has increased from 

about 174,000 in July 2005 to about 323,000 in December 2006, at the same 

time as more Iraqi army units have taken the lead for counterinsurgency 

Issue 

Summary 

 1

The multinational force in Iraq was known as Combined Joint Task Force-7 until May

2004. 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure III: Security Conditions Have 

Deteriorated as Iraq Has Assumed Additional

Security Responsibilities 

operations in specific geographic areas. Despite this progress, however, 

attacks on coalition forces, Iraqi security forces, and civilians have all 

increased, reaching record highs in October 2006. Because of these 

conditions, the United States could not draw down U.S. force levels in Iraq 

as planned in 2004 and 2006, and U.S. forces have continued to conduct 

combat operations in urban areas, especially Baghdad. 

From the fall of 2003 through April 2006, MNF-I revised its security 

transition plan a number of times because the Iraqi government and 

security forces have proved incapable of assuming security responsibilities 

within the time frames envisioned by the plans. For example, in October 

2003, the multinational force outlined a four-phased plan for transferring 

security missions to Iraqi security forces (see table 1). Citing the growing 

capability of Iraqi security forces, MNF-I attempted to quickly shift 

responsibilities to them in February 2004 but did not succeed in this effort. 

In Baghdad, for example, the coalition forces withdrew to bases outside of 

the city, giving Iraqi forces greater responsibility for security within the 

city. In April 2004, however, Iraqi police and military units performed 

poorly during an escalation of insurgent attacks against the coalition.2

Many Iraqi security forces around the country collapsed during this 

uprising, with some units abandoning their posts and responsibilities and 

in some cases assisting the insurgency. Following the collapse of Iraqi 

security forces, MNF-I identified a number of problems that contributed to 

their poor performance, including problems in training and equipping Iraqi 

forces, and revised its security transition plan.3

MNF-I Revised 

Security Transition 

Plan Because Iraq 

Could Not Effectively 

Take Over Security 

Responsibilities 

 2

In March 2004, Iraqi security forces numbered about 203,000, including about 76,000

police, 78,000 facilities protection officers, and about 38,000 in the civilian defense corps. 

The Departments of State and Defense later stopped including facilities protection officers

in their count of Iraqi security forces. 

3

MNF-I first revised the security transition plan in its August 2004 campaign plan and later 

in the April 2006 joint MNF-I/U.S. Embassy Baghdad Campaign Plan. Detailed information 

on these plans is classified. See GAO, DOD Reports Should Link Economic, Governance,

and Security Indicators to Conditions for Stabilizing Iraq, GAO-06-152C (Washington,

D.C.: Oct. 18, 2005) for classified information on MNF-I’s original campaign plan; and Plans 

for Stabilizing Iraq, GAO-06-673C (Washington, D.C.: July 27, 2006) for classified 

information on the Joint MNF-I/U.S. Embassy Baghdad Campaign Plan. 

Page 21 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure III: Security Conditions Have 

Deteriorated as Iraq Has Assumed Additional

Security Responsibilities 

Table 1: MNF-I’s Initial and Current Plans for Transferring Security Responsibilities to Iraq 

Phase Initial security transition plan (October 2003) Current security transition plan (2005 and 2006) 

Phase I Mutual support: The multinational force 

establishes conditions for transferring security 

responsibilities to Iraqi forces. 

Partnership: MNF-I and its major subordinate commands establish 

and maintain partnerships in all Iraqi security force units, from 

battalion to ministerial level. 

Phase II Transition to local control: Iraqi forces in a local 

area assume responsibility for security. 

Iraqi army lead: Process during which Iraqi army units progress in 

capability from unit formation to the ability to conduct 

counterinsurgency operations in specific geographic areas. 

Phase III Transition to regional control: Iraqi forces are 

responsible for larger regions. 

Provincial Iraqi control: Iraqi civil authorities satisfy the conditions 

required to assume control and exercise responsibility for the security 

of their respective provinces. 

Phase IV Transition to strategic over watch: Iraqi forces 

on a national level are capable of maintaining a 

secure environment against internal and external 

threats, with broad monitoring from the 

multinational force. 

Iraqi security self-reliance: The government of Iraq is capable of 

planning, conducting, and sustaining security operations and forces 

through its security ministries. 

Source: GAO analysis of Combined Joint Task Force–7, DOD, and State documents. 

Note: The phases of the current security transition plan may occur at different times throughout Iraq.

As shown in table 1, the current version of the security transition plan 

includes four phases. During the first phase, which occurred from 2005 

through 2006, MNF-I expanded the use of military, police, and other 

transition teams to assist in the development of Iraqi security forces and 

ministries, and its major subordinate commands established partnerships 

with Iraqi military units. In the ongoing second phase, Iraqi army lead, 

MNF-I is attempting to organize and develop Iraqi army units to the point 

that they can assume the lead for counterinsurgency operations. Units in 

the lead, however, still require MNF-I support because they need to 

develop additional capabilities, particularly in the logistics and combat 

support areas.4

 For the third phase, provincial Iraqi control, MNF-I and the 

Iraqi government determine when Iraqi provinces can assume 

responsibility for security based on the threat level in the province, the 

capabilities of the Iraqi security forces and the provincial government, and 

MNF-I’s ability to respond to major threats, if needed. According to an 

MNF-I official, as these conditions are met, MNF-I forces will then move 

out of all urban areas and assume a supporting role. 

 4

We recently reviewed U.S. efforts to assist the Iraqi Ministries of Defense and Interior in 

developing support capabilities, particularly in the areas of logistics, command and control, 

and intelligence. We plan to report separately on these matters due to the sensitive nature 

of the information. 

Page 22 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure III: Security Conditions Have 

Deteriorated as Iraq Has Assumed Additional

Security Responsibilities 

The security situation has worsened despite progress in implementing the 

current security transition plan (see fig. 1). For example, the State 

Department has reported that the number of trained and equipped army 

and police forces has increased from about 174,000 in July 2005 to about 

323,000 in December 2006.

5

 As we previously reported, the number of 

trained and equipped security forces does not provide a complete picture 

of their capabilities and may overstate the number of forces on duty.6

Ministry of Interior data include police who are absent without leave, but

Ministry of Defense data exclude absent military personnel. Moreover, 

according to DOD’s November 2006 report to Congress, due to a lack of 

standardized personnel strength reporting in the Ministry of Interior, it is 

unclear how many of the coalition-trained police the ministry still 

employs, or what percentage of the 180,000 police thought to be on the 

ministry payroll are coalition trained and equipped. 

Progress in 

Transferring Security 

Responsibilities to 

Iraq Has Not Led to 

Improved Security 

Conditions 

DOD and State also have reported progress in transferring security 

responsibilities to Iraqi army units and provincial governments. As shown 

in figure 1, the number of Iraqi army battalions in the lead for 

counterinsurgency operations has increased from 21 in March 2005 to 89 

in October 2006. In addition, 7 Iraqi army division headquarters and 30 

brigade headquarters had assumed the lead by December 2006. Moreover,

by mid-December 2006, three provincial governments—Muthanna, Dhi 

Qar, and Najaf—had taken over security responsibilities for their 

provinces. In November 2006, DOD reported that security responsibility 

for up to five more provinces could transition to Iraqi government 

authority by February 2007. 

 5

The United States had set a goal of training and equipping about 325,000 Iraqi security 

forces by December 2006. This figure consists of 137,000 military personnel under the 

Ministry of Defense and 188,000 Ministry of Interior police and other forces. According to

DOD and MNF-I reports, the Prime Minister of Iraq has announced initiatives to man

combat units at 110 percent of their authorization levels and to expand the size of the army. 

If implemented, these moves would raise the end strength of Iraqi security forces to about

362,000 and would extend the training and equipping of Iraqi forces through January 2008. 

6

GAO, Stabilizing Iraq: An Assessment of the Security Situation, GAO-06-1094T 

(Washington, D.C.: Sept. 11, 2006); and Rebuilding Iraq: Preliminary Observations on 

Challenges in Transferring Security Responsibilities to Iraqi Military and Police, 

GAO-05-431T (Washington, D.C.: Mar. 14, 2005). 

Page 23 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure III: Security Conditions Have 

Deteriorated as Iraq Has Assumed Additional

Security Responsibilities 

Figure 1: Enemy-Initiated Attacks against the Coalition and Its Iraqi Partners Compared with Progress in Developing Iraqi 

Security Forces 

0

50

100

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350

0

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40

60

80

100

Jan.

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Aug.

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Oct.

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Aug.

S

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ept.

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ept.

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Aug.

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Jan.

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ept.

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ept.

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g.

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2005

2003 2004 2005 2006

2006

0

Number of attacks

1,000

2,000

3,000

4,000

5,000

6,000

Attacks on Iraqi security forces Attacks on civilians Attacks on coalition Total

Sources: Multinational Force-Iraq, DOD and State Reports, and DIA.

Number of

Iraqi army

battalions leading

counterinsurgency 

operations

Number of

Iraqi security 

forces trained

and equipped

(in thousands)

Violence in Iraq has

increased despite progress

in training and equiping Iraqi 

security forces and in their 

leading counterinsurgency 

operations. 2005 2006

Fiscal year

Notes: For the number of attacks in September 2006, an unclassified breakout of categories is not 

available. 

As shown in figure 1, the reported progress in transferring security 

responsibilities to Iraq has not led to improved security conditions. Since 

Page 24 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure III: Security Conditions Have 

Deteriorated as Iraq Has Assumed Additional

Security Responsibilities 

June 2003, overall security conditions in Iraq have deteriorated and grown 

more complex, as evidenced by the increased numbers of attacks and 

more recent Sunni-Shi’a sectarian strife after the February 2006 bombing 

of the Golden Mosque in Samarra. Enemy-initiated attacks against the 

coalition and its Iraqi partners have continued to increase through October 

2006. The average total attacks per day has increased, rising from about 70 

per day in January 2006 to about 180 per day in October 2006. These 

attacks have increased around major religious and political events, 

including Ramadan7

 and elections. Coalition forces are still the primary 

target of attacks, but the number of attacks on Iraqi security forces and 

civilians also has increased since 2003. In October 2006, the State 

Department reported that the recent increase in violence has hindered 

efforts to engage with Iraqi partners and shows the difficulty in making 

political and economic progress in the absence of adequate security 

conditions. 

Although the Iraqi government and security forces have recently made 

some progress in taking on security responsibilities, they and MNF-I have 

been unable to reduce the levels of violence in Iraq. Because of these 

conditions, the United States has not been able to draw down the number 

of U.S. forces in Iraq as early as planned. For example, after the increase in

violence and collapse of Iraqi security forces during the spring of 2004, 

DOD decided to maintain a force level of about 138,000 troops until at 

least the end of 2005, rather than reducing the number of troops to 105,000 

by May 2004, as had been announced the prior fall. More recently, DOD 

reversed a decision to significantly reduce the U.S. force level during the 

spring of 2006 because Iraqi and coalition forces could not contain the 

rapidly escalating violence that occurred the following summer. After 

reducing the number of troops from about 160,000 in December 2005 to 

about 127,000 in June 2006, the United States increased its force level to 

144,000 troops in September and October 2006 and then reduced it to 

140,000 the following month.8

 Moreover, rather than moving out of urban 

areas, U.S. forces have continued to conduct combat operations in 

Baghdad and other cities in Iraq, often in conjunction with Iraqi security 

forces. 

 7

Ramadan is the ninth month of the Islamic calendar. Over the past 4 years, Ramadan 

began about October 27, 2003; October 16, 2004; October 5, 2005; and September 24, 2006.

8

U.S. force levels for 2005 and 2006 came from Brookings Institution, Iraq Index: Tracking 

Variables of Reconstruction & Security in Post-Saddam Iraq (Washington, D.C: Dec. 21, 

2006). 

Page 25 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure III: Security Conditions Have 

Deteriorated as Iraq Has Assumed Additional

Security Responsibilities 

• Why have security conditions continued to deteriorate in Iraq even as the 

number of trained and equipped Iraqi security forces has increased and the

Iraqi forces and government have assumed increasing responsibility for 

security? 

• If existing U.S. political, economic, and security measures are not reducing 

violence in Iraq, what additional measures, if any, will the administration

propose to stem the violence and facilitate the achievement of U.S. 

objectives, including an eventual drawdown of U.S. forces? 

Joseph A. Christoff, Director, International Affairs and Trade, (202) 512-

8979 or christoffj@gao.gov. 

Oversight Questions 

GAO Contact 

Page 26 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enc

the Iraqi Security

losure IV: Assessing the Capabilities of 

 Forces Is Critical 

Page 27 GAO-07-308SP 

Enclosure IV: Assessing the Capabilities of 

the Iraqi Security Forces Is Critical 

Transferring security responsibilities to the Iraqi security forces and 

provincial governments is a critical part of the U.S. government’s strategy 

in Iraq and key to allowing a drawdown of U.S. forces. Toward this end, 

the United States has provided about $15.4 billion to train, equip, and 

sustain the Iraqi army and police since 2003. However, it is unclear 

whether U.S. expenditures and efforts are having their intended effect in 

developing capable forces and whether additional resources are needed. A 

key measure of the capabilities of Iraqi forces is the Transition Readiness 

Assessment (TRA) reports prepared by coalition advisors embedded in 

Iraqi units. These reports serve as the basis for the Multinational ForceIraq (MNF-I) determination of when a unit is capable of leading 

counterinsurgency operations and can assume security responsibilities for 

a specific area. This enclosure (1) assesses limitations in Department of 

Defense (DOD) and State Department reports on Iraqi security forces, and 

(2) discusses how unit-level TRA reports provide more comprehensive 

information on Iraqi security force capabilities. 

Although DOD and State reports indicate progress in the development of 

Iraqi security forces, the aggregate nature of the reports does not provide 

comprehensive information on the capabilities and needs of individual 

units. As of December 2006, MNF-I had trained and equipped

approximately 323,000 Iraqi security forces, had assigned specific areas of 

operations to 128 Iraqi army units, and had transferred security 

responsibilities to three Iraqi provinces. However, aggregate numbers of 

trained and equipped forces that are leading operations do not provide 

information on the capabilities and needs of individual units. This 

information is found in unit-level TRA reports. These reports provide the 

coalition commander’s professional judgment on an Iraqi unit’s 

capabilities and are based on ratings in personnel, command and control, 

equipment, sustainment and logistics, training, and leadership. To conduct 

future work on this issue, GAO has made multiple requests for access to 

the unit-level TRA reports over the last year. However, DOD has not yet 

complied with our requests. This serves to limit congressional oversight 

over the progress achieved toward a critical U.S. objective. 

Issue 

Summary 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure IV: Assessing the Capabilities of 

the Iraqi Security Forces Is Critical 

DOD and State reports provide some information on the development of 

Iraqi security forces, but they do not provide detailed information on the 

specific capabilities that affect the readiness levels of individual units. For 

example, DOD and State provide Congress with weekly and quarterly 

reports on the progress made in developing capable Iraqi security forces 

and transferring security responsibilities to the Iraqi army and the Iraqi 

government. This information is provided in two key areas: (1) the number 

of trained and equipped forces, and (2) the number of Iraqi army units and 

provincial governments that have assumed responsibility for security of 

specific geographic areas. 

The State Department reports that the number of trained and equipped 

Iraqi security forces has increased from about 174,000 in July 2005 to 

about 323,000 in December 2006.1

 DOD reports that, as of December 5, 

2006, 128 Iraqi army units—7 division headquarters, 30 brigade 

headquarters, and 91 battalions—have assumed the lead for 

counterinsurgency operations in their areas of responsibility. In addition, 

Muthanna, Dhi Qar, and Najaf provincial governments assumed security 

responsibility in July, September, and December 2006, respectively. 

However, these numbers do not provide a complete picture of Iraqi 

security forces’ capabilities in part because they may overstate the number 

of forces on duty. For example, Ministry of Interior data include police 

who are absent without leave, but Ministry of Defense data exclude absent

personnel. Moreover, the numbers do not give detailed information on the 

status of equipment, personnel, training, or leadership. Unit-level TRA 

reports provide that information. For additional information on the 

limitations of DOD- and State-reported information on the number of units 

trained and equipped as well as the transfer of security responsibilities, 

see enclosure III. 

MNF-I uses the TRA system to determine when units of the Iraqi security

forces can assume the lead for conducting security operations. The TRA is 

a joint assessment, prepared monthly by the unit’s coalition commander 

and Iraqi commander. According to MNF-I guidance, the purpose of the 

TRA system is to provide commanders with a method to consistently 

evaluate units; it also helps to identify factors hindering unit progress, 

determine resource shortfalls, and make resource allocation decisions. 

Reports on Iraqi 

Security Forces 

Provide Limited 

Assessments of 

Capabilities 

Transition Readiness 

Assessments Assess 

Iraqi Security Force 

Capabilities 

 1

The 2006 number includes special operations forces and support forces. 

Page 28 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure IV: Assessing the Capabilities of 

the Iraqi Security Forces Is Critical 

The basic TRA reports2 are used by commanders to determine when an 

Iraqi army unit is prepared to assume the lead in counterinsurgency 

operations. 

Iraqi army TRA reports contain capabilities ratings in the areas of 

personnel, command and control, equipment, sustainment/logistics, 

training, and leadership (see fig. 1). Commanders use the TRA results and 

their professional judgment to determine a unit’s overall readiness level. 

Each Iraqi army unit is assigned a readiness level of 1 through 4, with 1 

being the highest level a unit can achieve. Accordingly, 

• level 1 units are capable of planning, executing, and sustaining 

counterinsurgency operations, 

• level 2 units are capable of planning, executing, and sustaining 

counterinsurgency operations with Iraqi security forces or coalition 

support, 

• level 3 units are partially capable of conducting counterinsurgency 

operations in conjunction with coalition units, and 

• level 4 units are forming or are incapable of conducting counterinsurgency

operations. 

The TRA reports also include the commanders’ estimates of the number of 

months needed before a unit can assume the lead for counterinsurgency 

operations. DOD also reports readiness assessments for headquarters 

service companies, such as engineering and signal units that support 

combat units.3

 2

The Iraqi army, national police, Department of Border Enforcement, and strategic 

infrastructure battalions use the basic TRA format. MNF-I assesses the capability of Iraqi 

police to perform law enforcement operations using a different TRA report. 

3

Headquarters service companies are rated levels 1 through 4 based on their ability to 

provide combat support and combat service support to units. 

Page 29 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure IV: Assessing the Capabilities of 

the Iraqi Security Forces Is Critical 

Figure 1: Transition Readiness Assessment (TRA) Report Form for the Iraqi Army

5. Equipment OVERALL ASSESSMENT

EQUIPMENT

ON HAND 

6. Leadership

Weapons

OVERALL ASSESSMENT

This Unit is Currently Assessed at Level

and will be ready to assume IAL in _____ months.

HSC is assessed at level _____________ overall. 

Unit: Location: Report Date: 

TRANSITION READINESS ASSESSMENT 

3. Sustainment/Logistics OVERALL ASSESSMENT

2. Command & Control OVERALL ASSESSMENT

Intelligence

Operations

Communications

1. Personnel OVERALL ASSESSMENT

Overall Manning

(assigned-On Hand) 

Officer Manning

Admin

4. Training OVERALL ASSESSMENT

METL

7. Performance Capability Assessment:

Annotate total number of pages attached to this report. See supplemental instructions for

required categories. 

Vehicles

Commo

OPERATIONAL

READINESS

Weapons

Vehicles

Commo

Source: MNF-I.

UNCLASSIFIED

UNCLASSIFIED

NCO Manning

Unable to pay 

troops

< 50% of auth 

manning

< 50% of auth 

manning

50-69% of 

auth manning

70-84% of 

auth manning

< 50% of 

authorization 

50-69% of 

authorization 

50-69% of OR 

50-69% of leaders

and staff primaries

50-69% of OR 

50-69% of OR 70-84% OR 

70-84% OR 

70-84% OR 

70-84% of leaders

and staff primaries

> 85% of leaders

and staff primaries

< 50% OR 

< 50% of leaders

and staff 

primaries

< 50% OR 

< 50% OR 

70-84% of 

authorization 

70-84% of 

authorization 

70-84% of 

authorization 

50-69% of 

authorization 

50-69% of 

authorization 

> 85% of 

authorization 

> 85% of 

authorization 

> 85% of 

authorization 

< 50% of 

authorization 

< 50% of 

authorization 

50-69% of 

auth manning

70-84% of 

auth manning

Pay System 

Established

No Intelligence 

capability 

No operational 

capability 

Leaders and 

staff primaries

are “capable”

Able to process, 

analyze, 

disseminate info

Participates in 

decision-making; 

develops enemy 

COAs

Able to conduct Intel 

based ops

Secure/Store 

supplies

Supply

(I, III, V, IX)

Medical

Infrastructure

Transportation

Maintenance

Temporary 

Billeting

Statement of 

Work/Construction 

has begun

Minimal billeting, 

administrative and 

perimeter security 

infrastucture

No Maint. 

conducted

No organic 

transport 

capability

Account/Issue 

items

Forecast/Requisition 

supplies

Maintain Stockage to 

meet mission 

requirements

Able to establish 

TOC; Maintains

situational 

awareness

Achieves ‘P’ or 

‘T’ in <25% of all 

METL tasks

Achieves ‘P’ or 

‘T’ in 26%-99% 

of all METL 

tasks

Achieves ‘P’ or 

‘T’ in ALL METL 

tasks

Capable of 

planning and 

executing training 

to sustain ‘P’ or ‘T’ 

in METL tasks

Able to send and 

receive 

reports/orders

from higher/lower 

echelons

Able to 

establish/maintain 

internal 

communications

Able to maintain 

external 

communications

with higher 

Able to conduct 

Staff Planning and 

Execution

Adequate billeting, 

adminstrative, mess, 

motor pool and 

perimeter security 

infrastructure

Able to conduct 

treatment and 

evacuation operations

Able to conduct 

treatment and 

evacuation 

operations with ISF 

or CF support

• Conducts 1st line 

repair

• Request repair 

parts

• 30% Personnel 

qualified

• Limited treatment 

capability

• Limited 

evacuation 

capability

• No treatment 

capability

• No evacuation 

capability

Conducts PMCS

and reports

equipment status

Capable of 

executing limited 

transport 

requirements

Capable of 

executing essential 

transport 

requirements

No ability to 

communicate 

50-69% of 

auth manning

70-84% of 

auth manning

< 50% of auth 

manning

>85% of auth 

manning

>85% of auth 

manning

>80% Personnel 

paid 

• HSC Signal 

Platoon/CO formed

• >70% personnel 

MIOS qualified

• >70% personnel 

qualified

• Utilizes 2nd line or 

above Maintenance

• S1/G1 maintains

current UMR 

• >90% Personnel paid 

• >80% Personnel paid 

IAW pay grade

>85% of auth 

manning

> 85% OR 

> 85% OR 

> 85% OR 

A Level 1 unit is capable of planning, executing, and sustaining 

counterinsurgency operations. 

A Level 2 unit is capable of planning, executing, and sustaining 

counterinsurgency operations with ISF or coalition support. 

A Level 3 unit is partially capable of conducting counterinsurgency operations

in conjunction with coalition units.

A Level 4 unit is forming and/or incapable of conducting counterinsurgency 

operations.

• >70% transport 

personnel driver 

qualified

• Able to conduct 

independent 

transport operations

Page 30 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure IV: Assessing the Capabilities of 

the Iraqi Security Forces Is Critical 

Finally, the TRA reports include the coalition commander’s narrative 

assessment of the Iraqi unit’s overall readiness level, known as the 

Performance Capability Assessment, which is designed to clarify the 

overall TRA. The narrative assesses the Iraqi unit’s leadership capabilities, 

combat experience, ability to execute intelligence-based operations, and 

describes any life support issues affecting the Iraqi unit’s capabilities. 

Commanders must explain and address any regression in the unit’s overall 

TRA level and list the top three issues preventing the unit from assuming 

the lead for counterinsurgency operations or advancing to the next TRA

level. Remarks are intended to provide information and details that will 

help to resolve the problems that degrade the unit’s status. 

DOD provided GAO with classified, aggregate information on overall 

readiness levels for the Iraqi security forces—including an executive-level

brief—and information on units in the lead, but has not provided unit-level 

reports on Iraqi forces’ capabilities. According to MNF-I’s Deputy Chief of 

Staff for Strategic Effects, the best measure of the capabilities of Iraqi 

units and improvements in the security situation comes from commanders 

on the ground at the lowest level. We previously reported that GAO was 

working with DOD to obtain the unit-level TRA reports because they 

would be useful in more fully informing Congress on the capabilities and 

needs of Iraq’s security forces and in indicating how accurately DOD 

reports reflect the forces’ capabilities. As of January 2007, DOD still has 

not provided GAO with this unit-level TRA data.

• Why has DOD not provided GAO and Congress with unit-level TRA Oversight Ques reports? tions 

• How does DOD assess the reliability of TRA reports and ensure that they 

present an accurate picture of Iraqi security forces’ capabilities and 

readiness? 

• At what TRA rating level would Iraqi army units not require any U.S. 

military support? What U.S. military support would Iraqi units still require 

at TRA levels 1 and 2? 

• How does DOD use unit-level TRA reports to assess shortfalls in Iraqi 

capabilities? What do DOD assessments show about the developmental 

needs of Iraqi security forces? 

Page 31 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure IV: Assessing the Capabilities of 

the Iraqi Security Forces Is Critical 

• How have changes in the TRA system and form affected the standards by 

which units are assessed? Have changes been made in the degree to which 

the commanders’ subjective judgment is used? If so, why? 

• What threat levels, if any, do commanders assess Iraqi units against when 

determining a unit’s overall readiness rating? Is the threat level used 

consistently across all units? 

Joseph A. Christoff, Director, International Affairs and Trade, (202) 512-

8979 or christoffj@gao.gov. GAO Contact 

Page 32 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

That U.S.-Fund

Iraqi Security

 V: DOD May Be Unable to Ensure 

ed Equipment Has Reached

 Forces 

Page 33 GAO-07-308SP 

Enclosure V: DOD May Be Unable to Ensure 

That U.S.-Funded Equipment Has Reached 

Iraqi Security Forces 

In the fall of 2003, the Coalition Provisional Authority and Multinational 

Force-Iraq (MNF-I) shared responsibility for the U.S.-funded train-andequip program for Iraqi security forces, which include military and police 

forces.1

 After the collapse of Iraqi forces in the spring of 2004, the United 

States restructured the multinational force and increased resources to 

train and equip Iraqi forces. Unlike traditional security assistance 

programs,2

 the train-and-equip program in Iraq operates under the 

authority of the Department of Defense (DOD) and is implemented by 

MNF-I subordinate commands, including the Multinational Security 

Transition Command-Iraq (MNSTC-I). Since 2003, the United States has 

provided $15.4 billion for Iraqi security forces and law enforcement. 

According to MNSTC-I records, MNF-I has issued about 480,000 weapons, 

30,000 vehicles, and 1.65 million pieces of gear (uniforms, body armor, 

helmets, and footwear), among other items, to the Iraqi security forces as 

of October 2006. This enclosure provides information on (1) the laws and 

regulations governing property accountability that DOD may have applied

to the U.S. train-and-equip program in Iraq3

 and (2) MNF-I’s accountability 

for U.S.-funded equipment that it has issued to Iraqi security forces. We 

plan on issuing a final report on these and related intelligence matters by 

March 2007. Our work focuses on the accountability requirements for the 

transportation and distribution of U.S.-funded equipment and did not 

review any requirements relevant to the procurement of this equipment. 

Congress funded the train-and-equip program for Iraq outside traditional 

security assistance programs, which, according to DOD officials, provided 

DOD with a large degree of flexibility in managing the program. Since the 

funding did not go through traditional security assistance programs, the 

accountability requirements normally applicable to these programs—

Issue 

Summary 

 1

The Coalition Provisional Authority was the U.N.-recognized authority led by the United

States and the United Kingdom that was responsible for the temporary governance of Iraq. 

Multinational Force-Iraq was known as Combined Joint Task Force-7 until May 2004. 

2

Traditional security assistance programs operate under State Department authority and

are managed in country by the Department of Defense through security assistance 

organizations under the direction and supervision of the Chief of the U.S. Diplomatic 

Mission.

3

DOD defines accountability as the obligation imposed by law, lawful order, or regulation, 

accepted by an organization or person for keeping accurate records, to ensure control of 

property, documents or funds, with or without physical possession (DODI 5000.64, 

Accountability and Management of DoD-Owned Equipment and Other Accountable

Property, E2.2).

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure V: DOD May Be Unable to Ensure 

That U.S.-Funded Equipment Has Reached

Iraqi Security Forces 

including the registration of small arms transferred to foreign

governments—did not necessarily apply. It is currently unclear what 

accountability measures, if any, DOD has chosen to apply to the train-andequip program for Iraq, as DOD officials have expressed differing opinions

on this matter. As part of our ongoing work, we have asked DOD to clarify 

what accountability measures it has chosen to apply to the program. 

While it is unclear which regulations DOD has chosen to apply, beginning 

in early 2004, MNF-I established requirements to control and account for 

equipment issued to the Iraqi security forces by issuing a series of orders 

that outlined procedures for its subordinate commands. These included

obtaining signed records for equipment received by Iraqi units or 

individuals and recording weapons serial numbers. Although MNF-I took 

initial steps to establish property accountability procedures, limitations 

such as the initial lack of a fully operational equipment distribution 

network, staffing weaknesses, and the operational demands of equipping 

the Iraqi forces during war hindered its ability to fully execute critical 

tasks outlined in the property accountability orders. Since late 2005, 

MNSTC-I has taken additional steps to improve its property accountability 

procedures, including establishing property books4

 for equipment issued 

to Iraqi Ministry of Defense and Ministry of Interior forces. According to 

MNSTC-I officials, MNSTC-I also recovered existing documentation for 

equipment previously issued to Iraqi forces. However, according to our 

preliminary analysis, DOD and MNF-I may not be able to account for Iraqi 

security forces’ receipt of about 90,000 rifles and about 80,000 pistols 

which were reported as issued before early October 2005. Thus, DOD and 

MNF-I may be unable to ensure that Iraqi military forces and police 

received all of the equipment that the coalition procured or obtained for 

them. 

 4

A property book is a formal set of property accounting records and files.

Page 34 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure V: DOD May Be Unable to Ensure 

That U.S.-Funded Equipment Has Reached

Iraqi Security Forces 

The train-and-equip program for Iraq received U.S. funding from sources 

other than traditional security assistance programs. These funding 

mechanisms, according to DOD officials, provided DOD with a large 

degree of flexibility in managing the program. Congress made funds 

available for developing Iraqi security forces initially through the Iraq 

Relief and Reconstruction Fund (IRRF) and later through the Iraq Security

Forces Fund (ISFF).5

 According to DOD officials, because the funding did 

not go through traditional security assistance programs, the equipment 

procured with these funds was not necessarily subject to the 

accountability requirements that normally apply to these programs. As 

specified in DOD regulations, these requirements include procedures for 

storing, protecting, transporting, and registering small arms and other 

sensitive items transferred to foreign governments. For example, the 

Security Assistance Management Manual, which provides guidance for 

traditional security assistance programs, states that the U.S. government’s 

responsibility for equipment intended for transfer to a foreign government 

under the Foreign Military Sales program does not cease until the recipient 

government’s official representative assumes final control.6

 Other 

regulations referenced by the Security Assistance Management Manual

prescribe minimum standards and criteria for the physical security of 

sensitive conventional arms and require the registration of small arms 

transferred outside DOD control.7

It is unclear at this time what accountability measures DOD has chosen to

apply to the train-and-equip program for Iraq. For example, DOD officials 

have expressed differing opinions on whether the DOD regulation on the 

Small Arms Serialization Program, which requires the entry of small arms 

serial numbers into a DOD-maintained registry, applies to U.S.-funded 

DOD Has Not 

Clarified What 

Accountability 

Requirements Apply 

to the Train-and-Equip 

Program for Iraq 

 5

See Emergency Supplemental Appropriations Act for Defense and for the Reconstruction

of Iraq and Afghanistan, 2004, P.L. 108-106; Emergency Supplemental Appropriations Act 

for Defense, the Global War on Terror, and Tsunami Relief, 2005, P.L. 109-13; Emergency 

Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane 

Recovery, 2006, P.L. 109-234; Department of Defense Appropriations Act, 2007, P.L. 109-

289. 

6

See DOD 5105.38-M, Security Assistance Management Manual, C7.5. The Foreign Military 

Sales program is a traditional security assistance program where eligible recipient 

governments purchase from the U.S. government defense articles, services, or training, 

often using grants provided under the Foreign Military Financing program. 

7

DOD 5100.76-M, Physical Security of Sensitive Conventional Arms, Ammunition, and

Explosives, C1.1.1; DOD 4000.25-M, Defense Logistics Management System, C18.7.4.3; and 

DOD 4000.25-2-M, Military Standard Transaction Reporting and Accounting Procedures, 

C12.7.4.3. 

Page 35 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure V: DOD May Be Unable to Ensure 

That U.S.-Funded Equipment Has Reached

Iraqi Security Forces 

equipment procured for Iraqi security forces.8 If the regulation does apply, 

then MNSTC-I would be required to provide the serial numbers of all small 

arms procured for Iraqi forces to the Small Arms Serialization Program. 

Although the regulation requirements are unclear, MNSTC-I has recently 

begun to provide weapons serial numbers to the Small Arms Serialization 

Program, according to MNSTC-I officials. As part of our ongoing work, we 

have asked DOD to clarify whether MNF-I and MNSTC-I must follow 

accountability measures specified in DOD regulations, or whether DOD 

has established other accountability measures. 

While it is unclear which regulations DOD has chosen to apply, MNF-I 

issued orders to its subordinate commands directing steps to account for 

all equipment distributed to the Iraqi security forces.9

 These orders tasked 

relevant coalition forces to collect property accountability items, including 

signed hand receipts and weapons serial numbers. For example, MNF-I 

and one of its subordinate commands, Multinational Corps-Iraq (MNC-I), 

issued two orders in early 200410 that together directed U.S. military units 

responsible for issuing equipment to the Iraqi security forces to conduct 

the following procedures, among others: 

• record the serial numbers for all sensitive items such as weapons and 

radios; 

Despite MNF-I 

Accountability 

Orders, DOD and 

MNF-I May Be Unable

to Fully Account for 

Weapons Issued to 

Iraqi Security Forces 

• enter relevant information onto a Department of the Army hand receipt

form and obtain signatures from receiving Iraqi security forces; and 

• submit property accountability information to MNSTC-I. 

 8

DOD 4000.25-2-M, Military Standard Transaction Reporting and Accounting Procedures, 

C12.7.4.3; DOD 4000.25-M, Defense Logistics Management System, C18.7.4.3. 

9

According to former and current MNSTC-I officials, MNF-I has issued equipment from a 

variety of sources. The equipment includes items procured with funds from the United 

States, Iraq, and other coalition countries, as well as weapons captured since the start of 

Operation Iraqi Freedom and then redistributed to Iraqi forces. 

10MNF-I Directive 04-015, OST Supply and Equipment Distribution Guidance (May 2004); 

MNC-I FRAGO 155 [12 June 2004 DTU] to MNC-I OPORD 04-01, Iraqi Security Force 

Property Accountability Requirements (June 2004). 

Page 36 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure V: DOD May Be Unable to Ensure 

That U.S.-Funded Equipment Has Reached

Iraqi Security Forces 

According to a former MNSTC-I official, hand receipts are critical to 

maintaining property accountability because they document the particular 

unit or individual that has control over a specific item. 

Although MNSTC-I took initial steps to establish property accountability 

procedures during 2004 and 2005, MNF-I subordinate commands did not 

fully execute critical tasks outlined in the property accountability orders 

due to the length of time necessary to fully develop an equipment 

distribution network, staffing weaknesses, and the operational demands of 

equipping the Iraqi forces during war: 

• The length of time necessary to fully develop the equipment distribution 

network hampered MNSTC-I’s ability to collect and maintain appropriate

equipment accountability records. According to former MNSTC-I officials, 

the equipment distribution network for Iraqi military forces and police, 

which included national warehouses and regional distribution centers, was 

initiated during 2004. MNSTC-I took initial steps to put in place 

accountability procedures at the national level warehouses located at Taji

and Abu Ghraib. For example, through the summer of 2004 and into early

2005, MNSTC-I consolidated and recorded existing inventory and 

established a database to track equipment that the national warehouses 

received, stored, and shipped. In addition, regional equipment distribution 

centers, from which MNF-I staff and contractors issued equipment to Iraqi 

units and maintained records of issue, were established to receive

equipment from the national warehouses. These and other efforts, 

however, did not result in a fully operational distribution network until 

mid-2005, over 1 year after MNF-I began distributing large quantities of 

equipment to the Iraqi security forces, according to former MNSTC-I 

officials. 

• According to former MNSTC-I and other officials, staffing weaknesses

also hindered the development of property accountability procedures. 

According to the former MNSTC-I commander, several months passed 

after MNSTC-I’s establishment before the command received the needed

number of staff. As a consequence, MNSTC-I did not have the personnel 

necessary to open shipping containers and record information on 

individual items distributed to Iraqi forces, according to former MNSTC-I 

officials. Moreover, frequent personnel turnover contributed to 

communications problems and a loss of institutional memory. For 

example, some former MNSTC-I staff told us that they were not aware that 

MNF-I had published a property accountability order in early 2004 for 

equipment issued to Iraqi security forces. 

Page 37 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure V: DOD May Be Unable to Ensure 

That U.S.-Funded Equipment Has Reached

Iraqi Security Forces 

• The operational demands of equipping Iraqi forces during war—

including the need to distribute weapons rapidly to Iraqi forces conducting

combat operations—limited MNSTC-I’s ability to fully comply with 

accountability procedures, according to former MNSTC-I officials. For 

example, during late 2004, according to the former MNSTC-I commander, 

Iraqi insurgents conducted a campaign of intimidation during which they 

attacked equipment convoys and killed contractors. 

Due to these early limitations, MNF-I subordinate commands did not 

consistently collect and maintain records of equipment issued to Iraqi 

security forces. As a result, DOD and MNF-I may be unable to ensure that 

all of the equipment obtained for the Iraqis reached the intended 

recipients. 

As MNSTC-I’s organization matured, it took additional steps to improve 

accountability procedures for the equipment provided to Iraqi security 

forces. Since the fall of 2005, MNSTC-I has collected hand receipts for 

equipment issued to Iraqi security forces, according to former and current 

MNSTC-I officials. In addition, in the fall of 2005, MNSTC-I logistics staff 

established separate electronic property books for the equipment provided 

to Iraqi Ministry of Defense and Ministry of Interior forces, including 

records for equipment previously issued to those forces. To create the 

records for equipment already issued to the Iraqis, MNSTC-I staff relied on

contract and shipping records stored at MNSTC-I, according to a former 

MNSTC-I official. In August 2006, according to MNSTC-I officials, MNSTC-I 

logistics staff began to build on earlier efforts to improve accountability by

recovering records maintained at the Umm Qasr port, the national 

warehouses at Taji and Abu Ghraib, and the regional distribution centers. 

The information collected since August 2006 includes hand receipts for 

many shipments, according to MNSTC-I officials. In addition, since the 

spring of 2006, MNSTC-I has been consolidating weapons serial numbers 

into an electronic format. MNSTC-I officials stated that they have begun to

submit these numbers to the DOD Small Arms Serialization Program, and 

are also establishing the basis for a weapons serial number registry for the 

government of Iraq. MNSTC-I officials stated that as a result of these 

efforts they can account for most of the weapons procured through 

coalition funding channels and issued to Iraqi security force units. 

Despite the steps MNF-I has taken to improve its accountability 

procedures, our preliminary analysis indicates that DOD and MNF-I may 

not be able to account for a number of weapons reported as issued to Iraqi 

forces. The MNSTC-I property books contain records for about 90,000 

rifles and about 90,000 pistols issued to Iraqi forces as of September 22, 

Page 38 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure V: DOD May Be Unable to Ensure 

That U.S.-Funded Equipment Has Reached

Iraqi Security Forces 

2005. These numbers incorporate records MNSTC-I recently recovered 

from earlier phases of the train-and-equip program for Iraq. However, the 

former MNSTC-I commander reported that about 180,000 rifles and about 

170,000 pistols were issued during the same time frame. According to 

former and current MNSTC-I officials, weapons obtained with non-U.S. 

funds may comprise a portion of the difference between these sets of 

numbers. In addition, MNSTC-I continues to recover records and may be 

able to account for some part of the difference. However, based on our 

preliminary analysis, because DOD and MNF-I maintained incomplete 

records for equipment issued to the Iraqi security forces before the fall of

2005, the numbers reported by the former MNSTC-I commander do not 

necessarily represent the weapons received by Iraqi security forces. 

Rather, these numbers indicate weapons tracked at the national 

warehouses and regional distribution centers, according to former 

MNSTC-I officials. In addition, former MNC-I property book officers told 

us they had maintained the required records for weapons their units had 

issued to Iraqi forces between 2004 and 2006. However, MNF-I officials 

were unaware of such records when we recently requested them. As a 

result, DOD and MNF-I may not be able to account for Iraqi security 

forces’ receipt of about 90,000 rifles and about 80,000 pistols that were 

reported as issued but were not recorded during earlier phases of the 

train-and-equip program for Iraq. Thus, DOD and MNF-I may be unable to 

ensure that Iraqi military forces and police received all of the equipment 

that the United States has procured or obtained for them. In our ongoing 

review, we will continue to assess MNF-I records for equipment 

distributed to Iraqi forces. 

• What are the steps being taken to ensure accountability of U.S.-funded 

equipment issued to the Iraqi security forces? 

• Should DOD formulate property accountability rules and regulations that 

distinguish between times of peace and war? 

• What is the potential for insurgents, militias, or other armed groups to 

obtain U.S.-funded equipment, including weapons? 

• What plans do DOD and the State Department have, if any, for 

transitioning MNSTC-I to a traditional security assistance organization? 

Joseph A. Christoff, Director, International Affairs and Trade, (202) 512-

8979 or christoffj@gao.gov. 

Oversight Questions 

GAO Contact 

Page 39 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Governance Challenges Governance Challenges 

Enclosure VI: The Iraqi Government Needs to Staff an Effective

Civil Service and Fight Corruption 

Enclosure VII: Ministry Capacity Development Efforts Need an

Integrated Plan 

Enclosure VIII: Several Factors Affect Iraqi Ministry Efforts to 

Spend Capital Budgets 

Enclosures IX: Iraq Owes Significant Foreign Debt and Faces 

Challenges in Meeting IMF Conditions

Page 40 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enc

Staff an Effe

Corrupti

losure VI: The Iraqi Government Needs to 

ctive Civil Service and Fight 

on 

Page 41 GAO-07-308SP 

Enclosure VI: The Iraqi Government Needs to 

Staff an Effective Civil Service and Fight 

Corruption 

Critical to stabilizing Iraq is ensuring that the nation’s central government 

ministries can provide security to the country and deliver essential 

government services to all citizens. The Iraqi government has 34 central 

government ministries that employ an estimated 2 million government 

workers. The United States has multiple ongoing efforts to strengthen key 

Iraqi ministries, including programs at the Ministry of Interior and the 

Ministry of Defense that are implemented by the Department of Defense 

(DOD). Additional efforts at civilian ministries under the authority of the 

Department of State and United States Agency for International 

Development (USAID) are also under way. This enclosure is based on U.S.

reports, an assessment by the World Bank, and interviews with U.S. 

officials.1

 This enclosure discusses U.S. and international assessments of 

the Iraqi ministries’ capacity to (1) build and train a nonpartisan civil 

service, (2) fight corruption within the ministries, and (3) use technology 

and effectively manage resources. U.S. and international assessments note 

that these three critical areas must be strengthened to improve the Iraqi 

government’s ability to provide basic services to its citizens. A classified 

version of this enclosure will be available in February. 

Issue 

 1

See Department of Defense, Measuring Stability and Security in Iraq (Washington, D.C.: 

August 2006 and November 2006); Department of State, Survey of Anticorruption 

Programs Embassy Baghdad, Iraq (Washington, D.C.: August 2006); The World Bank, 

Briefing Book for the Government of Iraq Part 1: Key Policy Issues (Washington, D.C.:

July 2006). 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure VI: The Iraqi Government Needs to 

Staff an Effective Civil Service and Fight 

Corruption 

Iraqi government institutions are undeveloped and confront significant 

challenges in staffing a competent, nonpartisan civil service; effectively 

fighting corruption; and using modern technology and managing resources 

effectively. Ministry personnel are frequently selected on the basis of 

political affiliation rather than competence or skills, and some ministries 

are under the authority of political parties hostile to the U.S. government. 

Also, U.S. reports cite widespread corruption in the Iraqi government and 

a lack of commitment to anti-corruption efforts within the ministries. 

Finally, reliance on manual processes and antiquated technology hampers 

efforts to build efficient, modern ministries. Figure 1 provides an 

organizational chart of the Iraqi executive branch and ministries. 

Summary 

Page 42 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VI: The Iraqi Government Needs to 

Staff an Effective Civil Service and Fight 

Corruption 

Figure 1: Iraqi Executive Branch and Ministries 

The Iraqi civil service remains hampered by inadequately trained staff 

whose political and sectarian loyalties jeopardize the ministries’ ability to 

provide basic services and build credibility among Iraqi citizens, according 

to U.S. government reports and international assessments. According to 

U.S. officials a significant number of Iraqi ministry staff lack adequate

skills, including computer skills. A World Bank assessment notes that 

political parties play a large role in hiring decisions within the Iraqi 

government. Also, a U.S. report states that the government ministries and 

Iraqi Ministries Lack 

Trained, Nonpartisan 

Civil Service 

Iraq

Baghdad

Iraq

Baghdad

Source: State Department.

Deputy President

President

Deputy

President

Prime Minister Deputy

Prime Minister

Deputy

Prime Minister

Minister of

Agriculture

Minister of

Communications

Minister of

Culture

Minister of

Defense

Minister of

Displacement and 

Migration

Minister of

Electricity

Minister of Oil Minister of

Planning

Minister of

Trade

Minister of Science 

and Technology

Minister of

Municipalities

and Public Works

Minister of

Transportation

Minister of

Water Resources

Minister of

Youth and Sports

Minister of State for

Civil Society

Minister of State for 

National Dialogue 

Affairs

Minister of State for 

National Security 

Affairs

Minister of State for 

Foreign Affairs

Minister of State for 

Governorates Affairs

Minister of State for 

Tourism and 

Antiquities

Minister of State for 

Women’s Affairs

Minister of State for 

CoR Affairs

Minister of

Education

Minister of

Environment

Minister of

Finance

Minister of

Foreign Affairs

Minister of

Health

Minister of

Higher Education

Minister of

Human Rights

Minister of

Industry and Minerals

Minister of

Interior

Minister of

Justice

Minister of Housing 

and Construction

Minister of Labor

and Social Affairs

Page 43 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VI: The Iraqi Government Needs to 

Staff an Effective Civil Service and Fight 

Corruption 

the associated budgets are used as sources of power for political parties 

with ministry positions staffed with party cronies as a reward for political 

loyalty. According to U.S. officials, patronage leads to instability in the 

civil service as many staff are replaced whenever the government changes 

or a new minister is named. 

Some Iraqi ministries are under the authority of political parties hostile to 

U.S. goals and use their positions to pursue partisan agendas that conflict 

with the goal of building a government that represents all ethnic groups. 

For instance, DOD reports that the Ministry of Interior has been infiltrated 

by members of the Supreme Council for Islamic Revolution in Iraq or its 

Badr Organization and Muqtada al-Sadr’s Mahdi Army. For example, the 

Mahdi Army often operates under the authority or approval of Iraqi police 

to detain, torture, and kill Sunni civilians. According to a November DOD 

report, steps are being taken to address these issues. The Ministries of 

Agriculture, Health, Transportation, and Tourism are led by ministers 

whose allegiance is to al-Sadr. U.S. officials expressed reservations about 

working in some of these ministries, noting that the effectiveness of 

programs is hampered by presence of unresponsive or anti-U.S. officials. 

Corruption in Iraq is reportedly widespread and poses a major challenge to 

building an effective Iraqi government and could jeopardize future flows of 

needed international assistance. A World Bank report notes that 

corruption undermines the government’s ability to make effective use of

current reconstruction assistance. A 2006 survey by Transparency 

International ranked Iraq’s government as the second most corrupt 

government in the world. Moreover, between January 2005 and August 

2006, 56 officials in Iraq’s ministries were either convicted of corruption 

charges or subject to arrest warrants. 

Corruption Is a Key 

Challenge 

According to U.S. government and World Bank reports, the reasons for 

corruption in the Iraqi ministries are several, including the following: 

• The absence of an effective Iraqi banking system leaves the government 

dependent on cash transactions. 

• The majority of key Iraqi ministries have inadequately transparent, 

obsolete, or ambiguous procurement systems. 

• Key accountability institutions, such as the inspectors general who were 

installed in each Iraqi ministry in 2004, lack the resources and 

Page 44 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VI: The Iraqi Government Needs to 

Staff an Effective Civil Service and Fight 

Corruption 

independence to operate effectively and consistently. 

• The government has no strategy to implement training for its three anticorruption institutions—the Commission on Public Integrity, the Board of 

Supreme Audit, and the inspectors general in each ministry. 

Furthermore, Embassy Baghdad’s Anticorruption Working Group 

attributed poor performance by the anti-corruption institutions to the 

government’s lack of visible and authoritative commitment and 

engagement.

The Iraqi ministries lack adequate technology and have difficulty managing

their resources, according to U.S. officials and an international 

assessment. For example, U.S. officials said that the Ministry of Interior 

relies on manual processes, such as hand-written ledgers and a cash-based 

payroll system, which have resulted in Iraqi police leaving their posts to 

deliver paychecks to their families. U.S. officials also said that the Iraqi 

ministries lack the technology to effectively disseminate information 

among offices and ministries within the Iraqi government. Finally, a U.S. 

contractor with a training center in Baghdad noted that the lack of 

communication technology at the Iraqi ministries increases the risk faced 

by staff and Iraqi trainees by requiring them to undertake dangerous travel 

to the National Training Center in Baghdad. This could be obviated 

through remote or offsite training via video conferences or other 

computer-based training.

U.S. officials said that the Iraqi ministries have limited capability to 

manage personnel, and that the Ministry of Interior has limited control of 

local and provincial police and that loyalty to officials in Baghdad is 

questionable. For example, the World Bank report states that the Iraqi 

government pays salaries to nonexistent, or “ghost employees,” that are 

collected by other officials. According to U.S. officials 20 percent to 30

percent of the Ministry of Interior staff are “ghost employees.” Also, many 

key ministries have been unable to expend budget resources on capital 

improvements and are running large surpluses due in part to an ineffective 

procurement process and the inability to carry out fair, competitive 

contracting, according to U.S. officials. Finally, U.S. officials said that the

civilian ministries need assistance developing long-term and strategic 

plans, including the ability to plan for and execute capital expenditures. 

• Given the level of corruption, partisanship, and sectarian loyalties in 

various ministries, what efforts are being made to ensure that U.S. 

Most Ministries Lack 

Technology and Face 

Challenges in 

Effectively Managing 

Resources 

Oversight Questions 

Page 45 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VI: The Iraqi Government Needs to 

Staff an Effective Civil Service and Fight 

Corruption 

resources, equipment, and training are appropriately used and are not 

used to support a single group’s agenda? 

• How can the United States ensure that the Iraqi government initiates and 

sustains effective anti-corruption efforts within the ministries? 

• Given the limited capacity of the Iraqi ministries to effectively manage 

government resources, can the Iraqi government effectively absorb 

significant levels of future U.S. and international assistance? 

Joseph A. Christoff, Director, International Affairs and Trade, (202) 512-

8979 or christoffj@gao.gov. GAO Contact 

Page 46 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

Efforts Need In

 VII: Ministry Capacity Development

tegrated Plan 

Page 47 GAO-07-308SP 

Enclosure VII: Ministry Capacity 

Development Efforts Need Integrated Plan 

Developing the capacity of Iraq’s national ministries to effectively provide

security and deliver essential services is critical to U.S. efforts to help Iraq 

build a legitimate sustainable government. According to U.S and Coalition

Provisional Authority (CPA) assessments and officials, years of neglect, a 

highly centralized decision-making system under the former regime, and 

the looting of ministries in 2003 have decimated Iraq’s government 

ministries. Since then, the United States and other donor partners have 

attempted to strengthen the ministries. Current U.S. activities include 

efforts targeting 10 key civilian ministries with funding totaling about $126 

million; transition efforts at the Ministries of Defense and Interior with 

funding of $43 million; and additional projects by several U.S. agencies. 

This enclosure (1) assesses the status of U.S. capacity development 

efforts, (2) examines overall leadership and coordination of these efforts, 

and (3) describes the metrics used to assess progress. We are continuing 

to review these issues and will report further on them in the spring of 

2007. 

The U.S. government lacks a plan that integrates current efforts to 

improve Iraq’s capacity to provide security and deliver essential services. 

Although the National Strategy for Victory in Iraq and related policy 

documents guide all U.S. efforts in Iraq, the United States lacks a specific 

plan for its capacity development efforts that includes milestones and 

agreed-upon metrics, integrates all U.S. and coalition efforts, and 

incorporates Iraqi governmentwide capacity objectives. We identified 

more than 50 U.S. efforts led by at least six U.S. agencies; however, it is 

unclear how these efforts address core needs and Iraqi priorities in the 

absence of an integrated U.S. plan. U.S. officials note that the Iraqi 

government has taken an increasing leadership role in capacity

development efforts in recent months and that coordination of U.S. efforts 

has improved. However, questions still remain about the extent of Iraqi 

leadership and ownership of these efforts. Moreover, it is uncertain how 

the U.S. will make the transition from the temporary U.S. entities leading 

these efforts to those having permanent post-conflict responsibilities. 

Finally, U.S. agencies are still developing the metrics to assess progress 

and effectiveness. After an initial U.S. Embassy effort was deemed 

inadequate, several efforts are ongoing. 

Issue 

Summary 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure VII: Ministry Capacity Development

Efforts Need Integrated Plan 

In its efforts to develop the capacity of Iraqi ministries, the United States 

lacks a plan that includes milestones and agreed-upon metrics, integrates 

all U.S. and coalition efforts, and incorporates Iraqi governmentwide 

capacity objectives. Overall U.S. activities in Iraq are guided by the April 

2006 Joint Campaign Plan issued by Embassy Baghdad and the 

Multinational Force-Iraq (MNF-I), the Joint Campaign Action Plan, the 

National Strategy for Supporting Iraq (updated January 2006), and Iraq’s 

National Development Strategy 2005-2007. However, there is no specific 

plan for capacity development that considers and integrates all U.S. 

efforts, according to U.S. officials. A mid-2005 U.S. Embassy assessment 

first identified the need for a broad, integrated approach. Multiple U.S. 

agencies had been conducting capacity development efforts since 2003 at

individual ministries; however, most of these efforts focused on helping 

Iraqi officials assume responsibility for sustaining new and restored 

infrastructure. (Fig. 1 illustrates U.S. capacity development efforts in Iraq 

since 2003.) In June 2004, CPA reported that all Iraqi ministries had 

graduated and were capable of managing the Iraqi government. 

Capacity 

Development Efforts 

Lack Integrated Plan 

Page 48 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VII: Ministry Capacity Development

Efforts Need Integrated Plan 

Figure 1: Key U.S. Efforts to Improve Iraqi Ministerial Capacity 

• Nov.: U.S. Congress

 recommended that

 U.S.-funded

 reconstruction projects

 provide capacity

 development.

Source: GAO analysis of relevant documents and interviews with U.S. government officials.

CPA senior advisors ran key ministries

and made all budgetary decisions.

USAID "Ministry in a Box" program

provided basic office furniture and

equipment kits to ministries.

USAID Economic Governance program, including various institutional capacity development efforts, began in July 2003 (efforts ongoing).

• Mid-2005: U.S. Embassy review

 of Iraqi government capacity.

Embassy senior consultants provided ministries with advice, training, and technical assistance. 

Multiple ongoing U.S. agency capacity development efforts.

• May: De-Ba’athification

 removed most ministry

 leadership.

• June 28:

 Interim

 government

 assumed power.

• Jan. 30: Transitional

 government elected.

• Jan.: Embassy

 reallocates

 funds for

 capacity

 development.

• Oct. 15:

 Constitution approved.

• Dec. 15: Council

 of Representatives

 elected.

• May:

 Cabinet approved.

2004

Jan.

2003

Apr.

Events

Ongoing activities

2005

Jan.

2006

Jan.

Interim

government Transitional government Permanentgovernment CPA authority

IRMO oversaw various project-focused and

ministry-specific capacity development efforts

implemented by U.S. agencies at all ministries.

National Capacity Development Program placed

IRMO in charge of short-term efforts and USAID

in charge of medium-term efforts at key civilian

ministries.

MNSTC-I placed in charge of all capacity

development efforts at security ministries.

The mid-2005 assessment and subsequent reviews by the State Department 

concluded, however, that a broader, Iraqi-led capacity development 

program with an integrated approach was needed to strengthen the 

ministries. The embassy conceived a National Capacity Development 

Program (NCDP) in late 2005. The program called for the U.S. Embassy to 

assess the current capacity of the ministries in conjunction with the Iraqi 

government, identify core needs, and work with the Iraqi government to 

develop a governmentwide strategy. The Multinational Security Transition 

Command-Iraq (MNSTC-I) assumed responsibility for capacity 

development at the Ministries of Defense and Interior. Plans to integrate 

Page 49 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VII: Ministry Capacity Development

Efforts Need Integrated Plan 

capacity development efforts at the security and civilian ministries for 

core common needs, such as budgeting, are ongoing. 

As of December 2006, we identified more than 50 capacity development 

efforts led by at least six U.S. agencies, including 18 programs launched 

under the NCDP. However, it is unclear how these efforts are addressing 

core needs and Iraqi priorities in the absence of an integrated U.S. plan. 

The State Department’s Iraq Reconstruction Management Office (IRMO) 

coordinates the overall effort, which targets 10 key civilian ministries, and 

is spending $61.5 million for short-term projects, such as providing 

English-language training for Iraqi officials, developing a new media center 

for the Prime Minister’s office, and adding budget and procurement 

components to Iraq’s financial management information system, which the 

U.S. Agency for International Development (USAID) is responsible for 

implementing. USAID is also implementing a $65 million medium-term 

effort initially focused on training the Iraqi civil service. A range of U.S. 

Army Corps of Engineers projects also currently provide capacity 

development and technical training at six ministries, including the 

Ministries of Electricity and Oil. According to U.S. officials and 

documents, IRMO has begun to identify all U.S. capacity development 

efforts to develop a comprehensive plan. 

The Iraqi government has not developed a governmentwide plan for 

capacity development that includes core objectives and appropriate 

benchmarks to measure progress. According to IRMO officials, the U.S. 

government worked with Iraqis to incorporate Iraq’s priorities into current

capacity development efforts and to validate these efforts. Nonetheless, a 

governmentwide capacity development plan for Iraq does not exist. USAID 

is responsible for helping the government of Iraq to create this plan as part

of its longer-term work to strengthen key public administration functions. 

It is uncertain if the plan will be developed. The contractor responsible for 

helping with the plan stated that the lack of a central coordinating entity

for the government of Iraq, combined with a lack of access at certain 

ministries, could hamper U.S. efforts. Moreover, only a few ministries, 

including the Ministries of Defense and Interior, have developed action

plans to address core needs and priorities. 

Page 50 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VII: Ministry Capacity Development

Efforts Need Integrated Plan 

Questions remain about the extent of Iraqi government leadership and 

ownership in current capacity development efforts. To ensure Iraqi 

ownership, a representative from the Iraq Ministry of Planning was to lead 

the overall effort as chair of the multinational Capacity Development 

Working Group formed in late 2005 to guide overall efforts. According to 

IRMO officials, the Iraqi government has become increasingly involved 

since the permanent government was finalized in May 2006. However, a 

representative from the Ministry of Planning did not attend any working 

group meetings until October 2006, according to U.S. officials.

Questions Remain 

about Iraqi 

Leadership and U.S. 

Agency Roles and 

Responsibilities 

In addition, Ministry Assistance Teams (MAT), comprised of 

representatives from the Iraqi ministries, the U.S. government, and donor 

partners, were to create capacity development action plans and to guide

and monitor efforts. However, one U.S. official stated that the MATs were 

largely a planning concept. Other officials noted that Iraqi participation in

the MATs was uncertain, as in some cases U.S. advisers completed work 

that was to be done by Iraqi counterparts. Another official told GAO that 

membership on the MATs is informal and ad hoc, with relevant 

representatives participating as needed to address specific issues. 

All U.S. capacity development efforts are being coordinated by a joint U.S. 

government task force. According to U.S. officials, early meetings of the 

task force involved information sharing rather than coordination. 

However, U.S. officials stated that the current objectives of the task force 

include identifying issues, critical paths, and potential overlap in U.S. 

capacity development efforts. Meetings held since the beginning of 

November 2006 have helped clarify questions between USAID and IRMO 

on project-specific issues. Although coordination mechanisms exist, the 

U.S. agencies’ roles and responsibilities for capacity development and for 

transition to normal post-conflict operations are uncertain: 

• IRMO was established as a temporary organization by National Security

Presidential Directive 36 in May 2004 and has responsibility for 

coordination, policy direction, and short-term capacity development 

efforts. U.S. officials questioned whether IRMO, as coordinator of all U.S. 

capacity development efforts, should also be implementing programs. In 

addition, one of IRMO’s short-term projects includes providing training on

principles of transparent procurement to Iraqi government officials. 

USAID has also delivered procurement training to Iraqi government 

officials through its efforts to train the Iraqi civil service, according to a 

high-level contractor. According to a senior State Department official, 

although IRMO was expected to cease operations in 2007, it is likely that 

its authority is going to be extended. However, it is unclear how IRMO will 

Page 51 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VII: Ministry Capacity Development

Efforts Need Integrated Plan 

transition responsibility for capacity development to USAID when it 

eventually ceases operations. 

• MNSTC-I is a temporary organization with more than 130 personnel and 

contractors that is responsible for leading capacity development at the 

Ministries of Defense and Interior. However, it is unclear how it will 

transition these efforts to an embassy-run post-conflict security assistance 

effort and a civilian-led rule of law program. According to a senior State 

Department official, U.S. support for the Ministry of Interior is scheduled 

to transition to State in fiscal year 2007. 

U.S. government agencies have developed multiple tools to assess capacity

and measure progress at the Iraqi ministries. For example, IRMO 

developed an initial set of metrics in late 2005 to assess six core functions 

common to 10 key civilian ministries and 2 security ministries. However, 

the government of Iraq did not participate in developing these metrics, 

according to an embassy document. U.S. officials also noted that these 

metrics were not based on internationally accepted approaches for 

measuring capacity. The metrics were dropped in early 2006 after they 

were deemed insufficient for their purpose at certain ministries, according 

to some U.S. government officials. 

Since then, at least three separate sets of metrics have been initiated or are 

under development. First, in mid-2006, MNF-I began monthly assessments 

of the capacity of the security ministries to perform nine key functions, 

such as planning, logistics, and budgeting. Second, IRMO completed a 

baseline assessment of the key civilian ministries in August 2006, using a 

new, more detailed ministry capacity assessment that gauges nine core 

functions, such as the ability to plan and to stem corruption. Third, USAID 

is developing a ministry self-assessment tool that will help determine Iraqi 

needs and how USAID will address these needs in its medium-term 

programs. The assessment also could inform an overall capacity 

development plan for the government of Iraq. 

• What progress has been made in developing an overall integrated plan for 

capacity development in conjunction with the government of Iraq and the 

international community? 

U.S. Metrics to Assess 

Ministerial 

Effectiveness Are Still 

Being Developed 

Questions for 

Oversight 

• To what extent have U.S. efforts to improve Iraq’s capacity to provide 

essential services incorporated lessons learned that have been cited by the 

World Bank and other international development organizations, such as 

Page 52 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VII: Ministry Capacity Development

Efforts Need Integrated Plan 

the need to establish host-nation ownership? 

• How are IRMO, USAID, and DOD clarifying their roles and responsibilities 

in Iraqi capacity development efforts? What are they doing to ensure there 

are no gaps or duplicative efforts in the U.S. program? 

• How are U.S. agencies developing, coordinating, and reporting metrics for 

assessing the effectiveness of U.S. assistance to Iraq’s ministries? How is 

the U.S. government validating the usefulness of its capacity development 

metrics? 

Joseph A. Christoff, Director, International Affairs and Trade, 

(202) 512-8979 or christoffj@gao.gov. GAO Contact 

Page 53 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

Mi

 VIII: Several Factors Affect Iraqi 

nistry Efforts to Spend Capital Budgets 

Page 54 GAO-07-308SP 

Enclosure VIII: Several Factors Affect Iraqi 

Ministry Efforts to Spend Capital Budgets 

When the Iraqi government assumed control over its finances in 2004, it 

became responsible for determining how more than $25 billion annually in 

government revenues would be collected and spent to rebuild the country 

and operate the government. However, the government faces difficulties in 

spending budgeted funds for capital goods and projects in the security, oil, 

and electricity sectors. In this enclosure, we discuss (1) the factors 

affecting the Iraqi ministries’ efforts to spend approved budgets, and (2) 

U.S. government efforts to address Iraq’s budget execution problems. 

Sound government budgeting practices can help determine the priorities 

of the new government, provide transparency on government operations, 

and help decision makers weigh competing demands for limited resources. 

However, unclear budgeting and procurement rules have affected Iraq’s 

efforts to spend capital budgets effectively and efficiently. The inability to 

spend the money raises serious questions for the government, which has 

to demonstrate to citizens who are skeptical that it can improve basic 

services and make a difference in their daily lives. The U.S. government 

has launched a series of initiatives in conjunction with other donors to 

address this issue and improve ministry budget execution. 

As of August 2006, the government of Iraq had spent, on average, 8 percent 

of its annual capital goods budget and 14 percent of its annual capital 

projects budget. Iraq’s fiscal year begins on January 1 of each year. Some 

of the weakest spending occurs at the Ministry of Oil, which relies on 

damaged and outdated infrastructure to produce the oil that provides 

nearly all of the country’s revenues (see table 1).

Issue 

Summary 

Iraq Has Spent Little 

of Its Annual Capital 

Budget 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure VIII: Several Factors Affect Iraqi 

Ministry Efforts to Spend Capital Budgets 

Table 1: 2006 Annual Iraq Budget and Actual Expenditures through August 2006 

Dollars in millions 

2006 Annual Budget 

Expenditures through August 

2006 

Ministry 

Capital 

goods

Capital 

projects

Total

budget

Capital 

goods

Capital 

projects

Total

budget

Finance $10 $33 $16,506 $1 $74 $8,895

Planning 4 27 55 0.4 3 9

Interior 233 27 1,919 25 0.2 958

Defense 864 33 3,443 12 0.0 831

Oil 2 3,533 3,590 0.4 4 40

Electricity 4 767 840 0.3 267 279

Water 0.2 200 259 0.0 49 78

Justice 3 10 74 2 0.2 34

Others 272 1,552 7,290 77 480 3,501

Total $1,392 $6,181 $33,975 $117 

(8.4%) 

$877

(14.2%)

$14,623

(43%)

Source: GAO analysis of Iraqi budget data. 

Since most of the $34.5 billion in reconstruction funds provided between 

fiscal year 2003 and 2006 have been obligated, unexpended Iraqi funds 

represent an important source of additional financing. The capital goods 

budgets of the Interior and Defense ministries were intended for the 

purchase of weapons, ammunition, and vehicles, among other items. 

However, as of August 2006, Interior and Defense had spent only about 11 

percent and 1 percent, respectively, of these budgeted funds. The Ministry 

of Oil’s $3.5 billion 2006 capital project’s budget targeted key 

enhancements to the country’s oil production, distribution, and export 

facilities. As of August 2006, the ministry had spent less than 1 percent of 

these budgeted funds. 

According to U.S. officials, Iraq lacks the clearly defined and consistently 

applied budget and procurement rules that are needed for effective budget 

planning and implementation. The Iraqi ministries are guided by complex 

and conflicting sets of laws and regulations, including those implemented 

under Saddam Hussein, the Coalition Provisional Authority (CPA), and by 

the current government. According to State officials, the lack of agreedupon procurement and budgeting rules causes confusion among ministry 

officials and creates opportunities for corruption and mismanagement. 

Lack of Clear Budget 

and Procurement 

Rules Affect Ministry 

Efforts to Spend 

Budgets 

Page 55 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VIII: Several Factors Affect Iraqi 

Ministry Efforts to Spend Capital Budgets 

The World Bank and U.S. Treasury also identified the following budget and 

financial management problems: 

• Ministries do not submit budget execution reports on a timely or complete 

basis. The Kurdistan Regional Government receives block grants from the 

central government but does not provide budget execution reports to the 

central government. 

• Reconciliation of government accounts is impossible because the 

government lacks consolidated information on the balances in government 

bank accounts or on the exact number of these accounts. 

• Donor-financed expenditures take place directly with ministries and 

outside the budget process. As a result, the Ministry of Finance has limited 

information on the activities of Iraq’s donors. 

• Provincial governments do not provide an accounting of the funds they 

receive ($2 billion in 2006 and slated to increase to $2.9 billion in 2007).

The World Bank also found that Iraq’s procurement procedures and 

practices are not in line with generally accepted public procurement 

practices, such as effective bid protest mechanisms and transparency on 

final contract awards.1

The U.S. government, World Bank, and International Monetary Fund (IMF) 

have taken steps to address some of the existing deficiencies in ministry 

budget planning and execution. U.S. government officials stated that 

reform of budget and procurement processes is urgently needed but would 

be challenging due to the cultural resistance to change within the 

ministries. 

The U.S. Embassy has formed a “budget execution” task force charged

with mapping out current ministry budgeting and procurement procedures 

to help ministry officials and external parties understand how their 

budgets are planned and implemented. This task force will identify the 

“rules of the road” for key agencies and help them streamline budget

procedures. Treasury and the U.S. Agency for International Development 

(USAID) are also working with the Ministry of Finance to implement a 

U.S. Government and 

Donors Have Made 

Efforts to Address 

Budget Execution 

Challenges 

 1

World Bank, IRAQ: Operation Procurement Review (June 2005). 

Page 56 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VIII: Several Factors Affect Iraqi 

Ministry Efforts to Spend Capital Budgets 

state-of-the-art financial management information system to provide it 

with more complete and timely information on ministry budgets. 

The United States, World Bank, IMF, and other donors are also planning 

additional steps to strengthen Iraq’s budget and procurement processes. 

First, the United States and other donors are training Ministry of Finance 

staff on budget preparation and execution. Second, according to U.S. 

officials, the IMF and World Bank helped implement a new budget 

classification system that is being used for the 2007 budget. This is an 

important step since it creates an accounting system for the entire 

government and provides a sound basis for budgeting and planning. (See 

enclosure X on Iraq’s debt and progress in meeting international economic 

milestones). Third, the World Bank recommends bringing all donor 

projects into the budget by means of a unified reporting framework and 

reflecting this information in the Donor Assistance Database, a database of 

donor commitments and projects. 

Over the longer term, the World Bank recommends that Iraq’s budget 

include all of the government’s significant revenues and expenditures—

including the full economic costs of the oil subsidies, which are currently

excluded. The Bank also recommended that the international donor 

community help the Ministry of Finance, inspector general offices, and 

Board of Supreme Audit provide greater oversight of budgeted and 

expended funds. 

• What are the key challenges that Iraq’s government faces in planning and Oversight Ques managing budgets and procurement in the near term and in the future? tions 

• What strategy guides U.S. efforts to build Iraqi ministry capacity to plan 

and execute budgets? Are the roles and responsibilities of the various U.S. 

agencies, international donors, and Iraqi ministries involved in these 

budget execution efforts clearly defined? 

• What types of assistance has the United States provided to improve 

ministry capacity to plan and implement budgets. What is the impact of 

this assistance? 

• Given the large unspent capital budgets, why should additional U.S. 

reconstruction assistance be provided to Iraq? 

Page 57 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure VIII: Several Factors Affect Iraqi 

Ministry Efforts to Spend Capital Budgets 

Joseph A. Christoff, Director, International Affairs and Trade, (202) 512-

8979 or christoffj@gao.gov. GAO Contact 

Page 58 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

Debt and Fa

C

 IX: Iraq Owes Significant Foreign 

ces Challenges in Meeting IMF 

onditions

Page 59 GAO-07-308SP 

Enclosure IX: Iraq Owes Significant Foreign 

Debt and Faces Challenges in Meeting IMF 

Conditions 

Iraq has significant foreign debt remaining from the Saddam Hussein 

regime, which presents financial challenges for Iraq’s reconstruction and

economic development. Although Iraq has negotiated some debt 

restructuring under an IMF reform program, implementing these reforms 

is challenging and, as of December 2006, has not been wholly successful. 

Nonetheless, Iraq’s progress in economic development is tied to the 

reforms and the debt reduction they secure. This enclosure describes (1) 

the nature and extent of Iraq’s debt and (2) challenges that Iraq faces in

implementing economic reforms to secure additional debt restructuring. 

The United States has led efforts to forgive Iraq’s bilateral debt and to 

secure greater debt relief and foreign assistance in exchange for political 

and economic reforms. At the end of 2004, Iraq owed about $120 billion to 

foreign creditors—an amount almost five times the size of its economy. 

The country owed about $36 billion to official creditors that were 

members of the Paris Club, a group of 19 creditor nations that includes the 

United States. In 2004, Paris Club members made a commitment to forgive 

80 percent of that debt. As part of this effort, the United States forgave all

of Iraq’s outstanding debt ($4.1 billion). However, the majority of Iraq’s 

debt—about $69 billion—is owed to non-Paris Club countries, particularly

those in the Persian Gulf region, such as Saudi Arabia. Negotiations with 

non-Paris Club countries are ongoing. Iraq’s foreign debt at the end of 2006 

is estimated at about $89 billion—almost twice the size of its economy. 

As a condition of Paris Club debt relief, Iraq agreed to follow a reform 

program developed by the International Monetary Fund (IMF). The IMF 

program stipulates a series of reforms that Iraq must undertake to qualify 

for debt relief and access to IMF funds. The reforms are intended to help

Iraq restructure its economy, spark economic development, and attract

investment. However, some of these reforms are challenging to implement 

due to the difficult security situation in Iraq and the government’s relative 

inexperience. In addition, the Iraqi government has not been able to 

complete all of the reforms stipulated under the IMF agreement, such as 

completing a census of government employees. The IMF, however, 

allowed Iraq to reschedule implementation of the reforms. 

After Saddam Hussein’s regime fell in 2003, Iraq’s international creditors 

sought payment on the nearly $120 billion in outstanding debt owed them. 

This outstanding debt was nearly five times the size of Iraq’s economy in 

2004 and was believed to inhibit Iraq’s ability to attract the investment 

needed to finance its economic reconstruction. Figure 1 shows that official 

Issue 

Summary 

Debt Reduction Has 

Been Promised, with 

Conditions 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure IX: Iraq Owes Significant Foreign 

Debt and Faces Challenges in Meeting IMF 

Conditions

Paris Club creditors—including the United States, United Kingdom, 

France, Japan, Russia, and 14 other countries—accounted for about $36 

billion (30 percent) of Iraq’s total foreign debt in 2004. However, the 

largest amount (about $62 billion) was owed to non-Paris Club bilateral 

creditors, particularly Persian Gulf states such as Saudi Arabia and 

Kuwait.1

 The remaining debt was held by private creditors and 

multinational creditors. 

Figure 1: Change in Iraq’s Debt, 2004 to 2006 

Note: Summations may differ from totals due to rounding. Non-Paris Club official creditor debt is 

based on estimates since it has not been reconciled. The estimate of this debt for 2004 was made by

the IMF, while the estimate for 2006 was provided by the U.S. Treasury Department.

 1

Most of the debt to Persian Gulf states is for financial assistance offered to the former 

Saddam Hussein regime during the 1980-1988 Iraq-Iran war. 

Page 60 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure IX: Iraq Owes Significant Foreign 

Debt and Faces Challenges in Meeting IMF 

Conditions

Iraq has engaged its creditors in negotiations to restructure and forgive 

portions of its foreign debt.2

 Paris Club official creditors agreed to reduce 

Iraq’s outstanding debt by 80 percent over three phases, one of the largest 

debt reductions ever agreed to by the Paris Club creditors. The United 

States, a member of the Paris Club, forgave all of Iraq’s outstanding debt 

($4.1 billion) in December 2004. Iraq received the first 30-percent tranche 

when it agreed to an IMF Emergency Post-Conflict Assistance program in 

November 2004. The second 30-percent tranche took effect in December 

2005 when Iraq agreed to a stand-by arrangement with the IMF. Iraq will 

receive the remaining 20-percent reduction following satisfactory 

performance for 3 years under the IMF reform program. Iraq cleared its 

arrears with the IMF and World Bank in 2004. By the end of July 2006, Iraq

had settled almost $20 billion in private creditor claims, receiving overall

(private) debt reduction of more than 80 percent. The Iraq Minister of 

Finance stated that the pace and scale of the commercial debt

restructuring program was unprecedented. 

However, even with Paris Club, private, and multilateral debt reductions, 

at the end of 2006, Iraq will still owe foreign creditors about $89 billion—

almost twice the size of its economy. In addition, Iraq owes an additional 

$31 billion in compensation claims for damages and losses resulting from 

Iraq’s invasion and occupation of Kuwait in 1990. Iraq is continuing to 

negotiate with other countries outside the Paris Club, including its largest 

creditors from the Persian Gulf region and China. It is unclear whether 

certain economic or political conditions may be requested by creditors to 

forgive or restructure this outstanding debt. U.S. government officials 

stated that political factors, not progress on the IMF program, will 

ultimately determine the degree to which Iraq succeeds in negotiating debt 

relief on the amounts owed to the Gulf states. Given the large share of 

Iraq’s outstanding debt, these negotiations and their outcome represent an

important factor that could affect Iraq’s reconstruction and economic 

development efforts. As part of a larger effort to assist Iraq’s economic 

development, the United States is strongly supporting efforts by the U.N. 

and Iraq to create an “International Compact for Iraq.” The compact is 

 2

In 1990, the United Nations (UN) imposed economic sanctions on Iraq following the 

invasion of Kuwait. The Iraqi government subsequently defaulted on its debts to the United 

States and other international creditors. Following the end of major combat operations in 

May 2003, the UN lifted sanctions and sheltered Iraq from certain debt claims. UN Security 

Council Resolution 1483 decided that, until December 31, 2007, Iraqi petroleum, natural

gas, and petroleum products shall generally be immune from legal proceedings against

them. 

Page 61 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure IX: Iraq Owes Significant Foreign 

Debt and Faces Challenges in Meeting IMF 

Conditions

aimed at providing greater debt relief and foreign assistance in exchange 

for political and economic reforms. However, this initiative, launched in 

the fall of 2006, is still being negotiated. 

To achieve debt restructuring, Iraq agreed to implement IMF conditions 

that stipulate specific economic reforms and milestones that the 

government needs to meet. The central objective of these reforms is to 

maintain macroeconomic stability with sustainable growth over the 

medium term. These conditions are contained in the IMF stand-by 

arrangement, which was approved in December 2005 and in subsequent 

reviews of the stand-by arrangement in July 2006. They include a wide 

range of reforms such as reducing the subsidies on petroleum products 

(e.g., raising prices of gasoline, kerosene, and similar products), limiting 

the budget deficit, and developing financial systems and audits that adhere 

to international standards. 

Iraq Has Met Some 

IMF Targets, but 

Others Are More 

Challenging 

The new Iraqi government affirmed its commitment to the IMF program 

that had been agreed to by the transitional government. However, due to 

the delay in forming a permanent government and the inherent challenges 

in implementing economic reforms in the midst of an active insurgency, 

the government did not meet all its commitments, according to the IMF. 

Table 1 provides a selective list of conditions for Iraq and their status. 

Table 1: Status of Selected IMF Conditions for Iraq Debt Restructuring

IMF condition Status 

Government budget deficit maintained below specific 

levels 

Iraq has maintained a budget surplus, due in part to the lack of spending by

certain ministries of their capital budgets (see enclosure 8).

Ceiling on government imports of petroleum products Iraq has reached the agreed-upon ceiling for the cost of these imports ($2.8

billion in 2006) and has requested a waiver from the IMF to import more. Since 

refinery capacity remains limited, this will likely be a problem in the future. The 

government committed to allow private imports of diesel, kerosene, and other 

fuel products to increase supplies and allow prices to rise to neighboring 

country levels (see enclosure 10). 

Reduced subsidies on petroleum products (gasoline, 

LPG, kerosene, diesel) 

The government has increased prices on fuel products twice—once in 2005

and again in June 2006—to keep them roughly in line with the IMF program. 

For example, the price of kerosene was increased from $0.01 to $0.19 per

gallon and the price of gasoline from $0.05 to $0.40 per gallon in June 2006. 

Further price increases are necessary to reduce price differentials with 

neighboring countries, but domestic fuel prices may still remain below prices in 

neighboring countries, according to the World Bank. 

Page 62 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure IX: Iraq Owes Significant Foreign 

Debt and Faces Challenges in Meeting IMF 

Conditions

IMF condition Status 

Adoption of a government budget classification and 

chart of accounts in line with IMF standards

Scheduled for completion June 30, 2006, this condition was rescheduled for 

December 31, 2006. According to U.S. officials, Iraq completed this condition. 

It is critical because it creates an accounting basis for the entire government 

and facilitates budgeting and planning. 

Complete a census of all public service employees 

(including the military) 

Scheduled for completion June 30, 2006, this condition was rescheduled for 

December 31, 2006. Because wages and pensions account for 28 percent of 

the operational budget, the government needs an accurate employee count. 

Source: International Monetary Fund. 

As the government seeks to implement the IMF reform program, it faces 

several challenges. Oil production and exports have been below expected 

levels, making overall economic expansion and job creation dependent on

growth in the non-oil sectors of the economy. Inflation of approximately 

50 to 60 percent in 2006 and increases in the prices of basic necessities 

such as food, fuel and electricity continue to be growing concerns. 

Corruption and lost oil revenues account for more than a billion dollars 

per year in lost government revenue, according to a 2006 report by the 

Ministry of Oil Inspector General. Unemployment, estimated at 25 percent 

to 40 percent in 2005 and even higher in 2006, contributes to the country’s

instability. Over the medium term—even with debt restructuring—Iraq will 

still have significant outstanding debt and accumulating interest. Without 

growth in oil revenues, the IMF notes that Iraq may need additional 

external financial assistance when the restructured loans become due. 

• What is the status of efforts to restructure Iraq’s remaining foreign debt? 

Does it present challenges for Iraq’s reconstruction and economic 

development? 

Oversight Questions 

• What types of conditions are Persian Gulf creditor nations seeking with 

Iraq to restructure or forgive outstanding debt? 

• How will the International Compact with Iraq help secure additional debt 

relief? 

• Are the pace and substance of IMF-required reforms realistic, given the 

security and political situation in Iraq? 

• In what areas can the U.S. government provide additional technical 

assistance to help Iraq meet its IMF reform goals? 

Page 63 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure IX: Iraq Owes Significant Foreign 

Debt and Faces Challenges in Meeting IMF 

Conditions

Joseph A. Christoff, Director, International Affairs and Trade, (202) 512-

8979 or christoffj@gao.gov. GAO Contact 

Page 64 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Reconstruction Challenges Reconstruction Challenges 

Enclosure X: U.S. Efforts to Restore Iraq’s Oil Sector Have Been 

Slowed by Major Challenges 

Enclosure XI: U.S. Efforts to Improve Iraq’s Electricity Sector 

Have Been Constrained by Security, Management, and Funding 

Challenges

Page 65 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

Sector Ha

C

 X: U.S. Efforts to Restore Iraq’s Oil 

ve Been Slowed by Major 

hallenges 

Page 66 GAO-07-308SP 

Enclosure X: U.S. Efforts to Restore Iraq’s Oil 

Sector Have Been Slowed by Major 

Challenges 

Iraq’s oil reserves, estimated at 115 billion barrels, are the third largest in 

the world. The oil sector currently accounts for about two-thirds of Iraq’s 

gross domestic product and over 90 percent of exports and revenues. 

However, Iraq’s oil wells and associated infrastructure have deteriorated 

due to years of neglect, mismanagement, and international sanctions. 

Considerable looting after Operation Iraqi Freedom, the government of 

Iraq’s reluctance or inability to approve equipment replacement or 

rehabilitation of oil field construction projects, and continued attacks on 

crude and refined-product pipelines also have contributed to Iraq’s 

reduced oil production and export capacities. As of October 2006, the U.S. 

government allocated about $1.7 billion in Iraq Relief and Reconstruction 

Funds (IRRF) for the Iraqi oil sector, of which about $1.6 billion has been 

obligated and $1.1 billion disbursed.1

 In this enclosure, we discuss (1) the 

status of efforts to meet U.S. goals for Iraq’s oil sector and (2) key 

challenges the United States faces in improving Iraq’s oil sector. 

Iraq’s oil production and exports have consistently fallen below U.S. 

program goals. U.S. and Iraqi efforts to restore Iraq’s oil sector have been 

impeded by the lack of security, corruption, sustainability, and funding 

challenges. The unstable security environment continues to place workers 

and infrastructure at risk while protection efforts remain insufficient. 

Widespread corruption and smuggling affect the distribution of refined oil 

products, such as gasoline. The U.S. reconstruction program has 

encountered difficulty with Iraq’s ability to operate and maintain aging

infrastructure. Further, uncertainties exist regarding the sources of future 

funding. These challenges could make it difficult to achieve current 

production and export goals, which are central to Iraq’s government 

revenues and economic development. 

U.S.-funded projects have focused on restoring Iraq’s oil production 

infrastructure, improving refining and export capacity, and providing 

training for operations and maintenance. As of December 11, 2006, the 

Army Corps of Engineers Gulf Region Division reported completing 97 of 

182 planned projects and is expected to complete the others by July 2007. 

These projects are intended to help improve Iraq’s oil production 

infrastructure, refinery, and export capacity. 

Issue 

Summary 

Iraq’s Oil Production 

and Exports Have Not 

Met U.S. Program 

Goals 

 1

Department of State, Quarterly Update to Congress; 2207 Report (Washington, D.C.: Oct.

2006). 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure X: U.S. Efforts to Restore Iraq’s Oil 

Sector Have Been Slowed by Major 

Challenges 

Despite U.S. efforts, Iraq’s oil production and exports have consistently 

fallen below their respective program goals. After initially rebounding in 

2003, oil production and exports averaged, respectively, 2.1 million and 1.5 

million barrels per day (mbpd) in 2006. U.S. program goals are to reach an 

average production capacity of 3 mbpd and export levels of 2.2 mbpd.2

Despite not meeting U.S. production and export goals, export revenue has 

generally grown as world prices for crude oil have risen. 

Figure 1: Iraqi Oil Production, Export, and Revenue, June 2003 through November 2006 

 2

According to State Department officials, the U.S. goals differ from the government of Iraq’s 

official production goal of 2.5 mbpd and the International Monetary Fund (IMF) target of

2.3 mbpd (annual average). 

Page 67 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure X: U.S. Efforts to Restore Iraq’s Oil 

Sector Have Been Slowed by Major 

Challenges 

The U.S. government and Iraq face several key challenges in improving 

Iraq’s oil sector. Security, Corruption, 

Sustainability, and 

Funding Challenges 

Hinder Efforts to 

Improve Iraq’s Oil 

Infrastructure 

Addressing Infrastructure 

Security 

Security conditions have affected Iraq’s oil production and have, in part, 

led to project delays and increased costs. Insurgents have destroyed key 

oil infrastructure, threatened workers, compromised the transport of 

materials, and hindered project completion and repairs by preventing

access to work sites. U.S. officials reported that major oil pipelines in the 

north continue to be sabotaged, shutting down oil exports and resulting in

lost revenues. Pipe line repair crews are overwhelmed by the amount of 

work and unable to make rapid repairs.

The U.S. government has developed a number of initiatives to protect the 

oil infrastructure and transfer this responsibility to the Iraqi government.3

Such efforts include improving the capabilities of infrastructure protection 

forces such as the Oil Protection Force, a protection force for static 

infrastructure sites. The U.S. military, with the assistance of other 

coalition forces, is also working to improve the capabilities of the 

Strategic Infrastructure Battalions (SIB). However, according to U.S. 

officials, some units are of questionable capability and loyalty. According

to U.S. government officials and a recent Center for Strategic and 

International Studies report,4

 such security forces are underpaid, 

underequipped, poorly led, and of questionable quality. Additional 

information on the effectiveness and quality of the SIBs is classified. 

 3

The Special Inspector General for Iraq Reconstruction, Unclassified Summary of SIGIR’s

Review of Efforts to Increase Iraq’s Capability to Protect Its Energy Infrastructure, 

SIGIR-06-038 (Arlington, Va.: Sept. 27, 2006). 

4

Anthony Cordesman, Center for Strategic and International Studies, Iraqi Force

Development and the Challenge of Civil War: The Critical Problems and Failures the U.S.

Must Address if Iraqi Forces Are to Eventually Do the Job, (Washington, D.C.: Nov. 30,

2006). 

Page 68 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure X: U.S. Efforts to Restore Iraq’s Oil 

Sector Have Been Slowed by Major 

Challenges 

U.S. and international officials note that corruption in Iraq’s oil sector is 

pervasive. In 2006, the World Bank and Ministry of Oil’s Inspector General 

estimated that millions of dollars of government revenue is lost each year 

to oil smuggling or diversion of refined products. According to State 

Department officials and reports, about 10 percent to 30 percent of refined

fuels is diverted to the black market or is smuggled out of Iraq and sold for 

a profit. According to U.S. Embassy documents, the insurgency has been 

partly funded by corrupt activities within Iraq and from skimming profits 

from black marketers. 

In addition, Iraq lacks fully functioning meters to measure oil production 

and exports. In 1996, the United Nations (UN) first cited the lack of oil 

metering during the time Iraq was under UN sanctions. In addition, in 

2004, the International Advisory and Monitoring Board for the 

Development Fund for Iraq recommended that metering equipment be 

expeditiously installed. According to the Ministry of Oil and the 

International Advisory and Monitoring Board (IAMB), an absence of 

functioning meters precludes control over the distribution and sale of 

crude and refined products. The U.S. government is currently taking steps 

to replace old and broken meters at the Al-Basra export terminal, Iraq’s 

major oil export terminal. This project is scheduled for completion in April 

2007. 

Combating Corruption and 

Smuggling 

Improving Infrastructure 

Management and 

Sustainability 

Problems in managing key oil projects have also led to delays. U.S. agency

and contractor officials have cited difficulties in initially defining the 

scope, schedule, and cost of oil projects, as well as completing projects. 

The Ministry of Oil has had difficulty operating and maintaining its aging 

infrastructure, including some refineries originally constructed in the 

1950s, 1960s, and 1970s. The ministry will have difficulty maintaining 

future production levels unless it initiates an ambitious rehabilitation 

program, according to State’s Iraq Reconstruction Management Office 

(IRMO). Iraq’s refineries are inefficient in their yield; for every barrel of 

crude oil sent to refineries only about half a barrel of refined fuel products

is produced, according to IRMO. U.S. officials report that the sector’s 

rebuilding efforts continue to be impeded by the lack of modern 

technology; qualified staff and expertise at the field, plant, and ministry 

level; an effective inventory control system for spare parts within the oil 

sector’s 14 operating companies; and difficulties in spending budgets for 

equipment upgrades and replacements (see related brief on budget 

execution). The U.S. government has provided additional training and 

management assistance in response to these needs. 

Page 69 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure X: U.S. Efforts to Restore Iraq’s Oil 

Sector Have Been Slowed by Major 

Challenges 

According to U.S. and foreign officials, the ability and willingness of the 

Iraqi government to fund improvements in its oil sector remain uncertain

for a number of reasons: 

• Iraq lacks effective procurement, budgeting, and financial management 

systems to execute budgets efficiently, ensure transparency of oil 

revenues, and ensure the accountability of Iraqi ministry and plant 

managers. As of August 2006, the Ministry of Oil had spent only 0.1 percent 

of its $3.5 billion capital budget, according to U.S. government reporting. 

• Current government subsidies have kept prices for refined oil products 

low and constrain opportunities for growth and investment. U.S. and 

international officials report that Iraq’s low domestic fuel prices have

stimulated black market activities and fuel smuggling out of the country; 

inadequate funding for maintenance and refinery upgrades; and domestic 

overconsumption. According to U.S. and international officials, the Iraqi 

budget is directly affected, since state-owned refineries cover less than 

half the domestic demand, and the Iraqi government has to import the rest 

at world market prices. 

• Iraq lacks a clear legal and fiscal framework to attract foreign investment. 

According to U.S. officials, until a new hydrocarbon law is passed, 

uncertainties exist surrounding the enforceability of contracts, how future 

oil revenues will be distributed, and what authority, if any, regional 

governments will have in signing oil exploration contracts with foreign 

firms. In addition, according to State officials, implementing regulations 

have yet to be issued for Iraq’s Fuel Import Liberalization Law passed in 

early September 2006. These regulations could allow the private sector to 

import and distribute some refined products at market prices.

• What is the Ministry of Oil’s current strategy for meeting Iraq’s growing 

fuel needs, and what assistance is the U.S. government planning to provide 

to help implement this strategy? 

Developing Adequate 

Sources of Future Funding 

Oversight Questions 

• To what extent will an adequate fuel supply for electricity generation be 

included in Ministry of Oil planning? 

• What is the status of actions to ensure adequate security and maintenance 

of facilities built or renovated with U.S. funding?

Page 70 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure X: U.S. Efforts to Restore Iraq’s Oil 

Sector Have Been Slowed by Major 

Challenges 

• How effective have U.S. efforts been in transferring responsibility for 

operations and maintenance of U.S. oil projects to the Iraqi government? 

How are these efforts integrated among U.S. agencies and the international 

community? 

• What U.S. efforts will help ensure that Iraq develops an adequate legal and 

regulatory framework to provide transparency and accountability of 

current and future oil revenues? 

Joseph A. Christoff, Director, International Affairs and Trade, (202) 512-

8979 or christoffj@gao.gov. GAO Contact 

Page 71 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

Elect

Securit

C

 XI: U.S. Efforts to Improve Iraq’s

ricity Sector Have Been Constrained by 

y, Management, and Funding 

hallenges 

Page 72 GAO-07-308SP 

Enclosure XI: U.S. Efforts to Improve Iraq’s 

Electricity Sector Have Been Constrained by 

Security, Management, and Funding Challenges

Iraq’s electricity infrastructure has deteriorated due to years of neglect 

during the previous regime, international sanctions, and the destruction 

caused by conflict, looting, and vandalism. An inadequate and unreliable 

supply of electricity affects both public perceptions of the government’s 

ability to deliver basic services and the productivity of Iraq’s oil sector, 

which is crucial to rebuilding the economy. As of October 2006, the U.S. 

government allocated about $4.2 billion of the Iraq Relief and 

Reconstruction Fund (IRRF) to Iraq’s electricity sector; almost $2.7 billion 

of this amount has been disbursed.1

 In this enclosure, we discuss (1) the 

status of efforts to meet U.S. goals for Iraq’s electricity sector and (2) the 

key challenges the U.S. faces in improving Iraq’s electricity sector. 

In 2006, electricity reached 4,317 megawatt (mw) peak generation capacity 

per day but continued to fall short of the U.S. goal of 6,000 mw. Production

was also outpaced by increasing demand, which has averaged about 8,210 

mw per day. The Ministry of Electricity’s 2006-2015 master plan aims to 

rehabilitate and expand the national grid and will require substantial 

funding of about $27 billion. If this plan is implemented, the ministry 

estimates that Iraq will be able to meet projected demand for electricity in 

2009. 

U.S. and Iraqi efforts to restore Iraq’s electricity sector have been impeded 

by security, infrastructure management and sustainability, and funding 

challenges. The unstable security environment continues to put electrical 

workers and infrastructure at risk and protection efforts have been 

insufficient. It is also unclear whether Iraq can or will adequately manage 

and sustain U.S. projects, given inadequacies in operations and 

maintenance and an uncertain fuel supply. Further, uncertainties exist 

regarding the sources of future funds for the Iraqi electricity sector. These 

challenges could make it difficult to achieve an effective and efficient Iraqi

electrical grid. 

Issue 

Summary 

 1

U.S. Department of State, Quarterly Update to Congress; 2207 Report (Washington, D.C., 

October 2006). Funds were appropriated to the Iraq Relief and Reconstruction Fund in the

Emergency Wartime Supplemental Appropriations Act, 2003, P.L. 108-11, and the 

Emergency Supplemental Appropriations Act for Defense and for the Reconstruction of 

Iraq and Afghanistan, 2004, P.L. 108-106.

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure XI: U.S. Efforts to Improve Iraq’s

Electricity Sector Have Been Constrained by 

Security, Management, and Funding 

Challenges 

U.S. efforts focus on restoring or constructing generation, transmission, 

distribution, and automated monitoring and control system projects. As of 

December 2006, the Army Corps of Engineers Gulf Region Division (GRD) 

reported that 293 of its 523 planned projects had been completed and that

it is expected to complete most of the others by the end of 2007. The U.S. 

Agency for International Development (USAID) reported completing all of

its 29 projects. According to the State Department, as IRRF projects are 

completed, efforts are increasingly shifting from building large, U.S.-

funded infrastructure projects to better protecting, maintaining, and 

sustaining the current infrastructure. 

Despite these gains, Iraq’s electrical supply has not met initial program 

goals, remains unreliable, and is not meeting growing demand. While 

completed U.S. projects have added an estimated 2,093 mw2

 of new and 

rehabilitated generation capacity, U.S. efforts have not met the program 

goal of 6,000 mw established by the Coalition Provisional Authority (CPA) 

in 2004. Peak generation for 2006 averaged 4,317 mw per day, slightly 

above the prewar levels of 4,200 mw. Moreover, electricity supply across 

the nation continues to be unreliable. From July through September 2006, 

the nation averaged 11.1 hours, with Baghdad averaging 6.2 hours of 

power per day. Demand has also exceeded supply. In 2006, demand 

averaged 8,210 mw3

 per day and reached a peak of 9,622 mw4 during the 

week of August 21, 2006 (see fig. 1). According to the U.S. government, the 

growth in demand for electricity has been stimulated by government 

energy subsidies and a surge in consumer purchases of appliances and

electronics.

Restoring Iraq’s

Electricity Sector Has 

Been Difficult 

 2

A megawatt is a measure of the rate at which electric energy can be transferred and is 

used as a measure of electric generation capacity. One megawatt equals 1 million watts. 

3

This number is equal to 164,939 megawatt hours and is calculated by multiplying 8,210 

megawatts by 20.09 hours. 

4

This number is equal to 193,306 megawatt hours and is calculated by multiplying 9,622 

megawatts by 20.09 hours. 

Page 73 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XI: U.S. Efforts to Improve Iraq’s

Electricity Sector Have Been Constrained by 

Security, Management, and Funding 

Challenges 

Figure 1: Peak Electricity Produced and Demand in Iraq, May 2005–November 2006 

Megawatt hours

Date

Prewar

Summer 2005 target

Source: Iraq Ministry of Electricity data.

50,000

0

100,000

150,000

200,000

Weekly average demand

Weekly average peak generation

2005 2006

May June July Aug Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aug Sept. Oct. Nov. Dec.

In November 2006, the Ministry of Electricity presented an ambitious 

master plan for 2006 to 2015 to rehabilitate and expand the national grid; 

the plan will require substantial funding of about $27 billion. If this plan is 

implemented, the ministry estimates that Iraq will be able to meet its 

projected demand for electricity in 2009. 

The U.S. government and Iraq face key challenges in meeting Iraq’s 

electricity needs. Factors Hindering 

Efforts to Meet 

Electricity Needs 

Page 74 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XI: U.S. Efforts to Improve Iraq’s

Electricity Sector Have Been Constrained by 

Security, Management, and Funding 

Challenges 

The deteriorating security environment continues to pose a serious 

challenge to Iraq’s electricity system,5

 leading, in part, to project delays 

and increased costs for security services. Electrical workers and 

infrastructure are inadequately protected and are subject to targeted 

attacks. The security situation also makes it difficult to get workers, parts, 

and equipment to sites. Moreover, looting and vandalism have continued 

since 2003, and major electrical transmission and fuel lines have been 

repeatedly sabotaged, cutting power to other parts of the country. 

According to Ministry of Electricity and U.S. officials, workers are 

frequently intimidated by anti-Iraqi forces, and have difficulty repairing 

downed lines. 

Addressing Infrastructure 

Security 

In an effort to stop the sabotage, the ministry contracted with tribal chiefs 

to protect the transmission lines running through their areas, paying them 

about $60 to $100 per kilometer, according to State’s Iraq Reconstruction 

Management Office (IRMO). However, in October 2006, IRMO officials 

reported that this scheme was flawed and did not result in improved 

infrastructure protection.

The U.S. government has developed other initiatives to better protect 

energy infrastructure.6

 The United States has trained and equipped the 

Electrical Power Security Service (EPSS) and the Strategic Infrastructure 

Battalions (SIB) and partnered these security services with coalition 

forces. However, a U.S. official stated that the EPSS effort was 

unsuccessful and that some of the SIB units have questionable capability 

and loyalty. According to a U.S. government official and a recent Center 

for Strategic and International Studies report,7

 these security forces have 

been underpaid, underequipped, and poorly led, and are of questionable 

quality. Additional information on the status of the SIBs is classified. 

 5

MNF-I attack data on infrastructure are classified. The Iraq Reconstruction and 

Management Office (IRMO) has worked with the Ministry of Electricity to improve its 

infrastructure attack data, but it is not always feasible to distinguish between attacks, 

weather events, and equipment failures, according to IRMO officials. 

6

The Special Inspector General for Iraq Reconstruction (SIGIR), Unclassified Summary of 

SIGIR’s Review of Efforts to Increase Iraq’s Capability to Protect Its Energy 

Infrastructure, SIGIR-06-038 (Washington, D.C., Sept. 27, 2006). 

7

Anthony Cordesman, Center for Strategic and International Studies, Iraqi Force

Development and the Challenge of Civil War: The Critical Problems and Failures the U.S.

Must Address if Iraqi Forces Are to Eventually Do the Job (Washington, D.C., Nov. 30, 

2006). 

Page 75 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XI: U.S. Efforts to Improve Iraq’s

Electricity Sector Have Been Constrained by 

Security, Management, and Funding 

Challenges 

The U.S. reconstruction program has encountered difficulties with Iraq’s 

ability to sustain new and rehabilitated infrastructure and address fuel 

requirements. Iraq’s electricity sector suffers from deteriorated, outdated,

and inefficient infrastructure resulting from two decades of 

underinvestment in operations and maintenance, replacement, and 

expansion. This weakened infrastructure has led to unplanned outages.8

Improving Infrastructure 

Management and 

Sustainability 

The rebuilding of the electricity sector has been slowed by the lack of 

training to enhance the skills of plant workers, inadequate spare parts, and 

an ineffective asset management and parts inventory system. Moreover, 

plants are sometimes operated beyond their recommended limits and use 

poor-quality fuels that rapidly deteriorate parts, involve longer

maintenance downtimes, and increase pollution. According to U.S. 

government officials, Iraq needs to develop cleaner and more reliable 

sources of natural gas for its generators and to formulate an integrated 

fuel strategy to address these needs. Currently, Iraq’s fuel supply does not

meet demand and its quality is inconsistent. 

For example, of the 35 natural gas turbines the U.S. government installed

in power generation plants, 16 are using diesel, crude, or heavy fuel oil due 

to the lack of natural gas and lighter fuels. As a result, maintenance cycles

are reportedly three times as frequent and three times as costly. Poorquality fuels also decrease the power output of the turbines by up to 50

percent and can result in equipment failure and damage, according to U.S.

and Iraqi power plant officials. The U.S. government also estimates that 

Iraq is flaring enough natural gas to generate at least 4,000 mw of electrical 

power. Because of natural gas shortages, diesel has to be imported at a 

cost of about $1.2 billion a year, thus straining economic resources. 

The U.S. government is providing assistance to address these shortfalls 

through long-term operations and maintenance programs for thermal and 

gas turbine power plants and through other initiatives to help the ministry 

develop a sound operations and maintenance program. 

 8

Also, Iraq continues to lack an automated control system that would decrease reliance on

manual operators and help alert operators of imbalances in power transmission. According 

to the State Department, the United States is funding improvements that will help increase 

the current system’s reliability. 

Page 76 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XI: U.S. Efforts to Improve Iraq’s

Electricity Sector Have Been Constrained by 

Security, Management, and Funding 

Challenges 

Despite the Ministry of Electricity’s recent development of a 10-year 

master plan, Iraq’s ability to fund improvements in its electricity sector 

remains uncertain. 

• According to a World Bank assessment, Iraq lacks an adequate legal and

regulatory framework and the procurement, budgeting, and financial 

management systems to execute budgets efficiently and ensure 

accountability at government ministries. 

• Iraq’s electricity tariff, one of the lowest in the world, is below the cost of 

delivery and makes it difficult for Iraq to finance the improvements it 

needs to make. Moreover, Iraq’s cost recovery is low due to inadequate 

metering, billing, and illegal taps into the system. 

• The ministry faces uncertainty regarding future donor commitments, 

although some future international support is expected to come through 

an International Compact launched in July 2006. Under the compact, Iraq

would undertake economic, political, and security reforms to receive 

increased support from the international community. Donors have yet to 

agree on this compact. 

• What is the Ministry of Electricity’s strategy for meeting Iraq’s growing 

future electrical needs, and what assistance is the U.S. government 

providing to help implement this strategy? 

Developing Adequate 

Sources of Future Funding 

Oversight Questions 

• What is the status of actions taken to ensure adequate security and 

maintenance for transmission lines and facilities built or renovated with

U.S funding? 

• How effective have U.S. efforts been in transferring responsibility for 

operations and maintenance efforts for U.S. electricity projects to the Iraqi 

government? How are these efforts integrated among U.S. agencies and 

with international efforts? How is success measured? 

• What efforts are needed to ensure an adequate fuel supply for electricity

generation in Iraq? How are the needs of the electricity sector integrated 

into Ministry of Oil planning? 

• Why did the United States purchase natural gas turbines to generate 

electricity when the necessary supply of natural gas was not assured in 

Iraq? 

Page 77 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XI: U.S. Efforts to Improve Iraq’s

Electricity Sector Have Been Constrained by 

Security, Management, and Funding 

Challenges 

Joseph A. Christoff, Director, International Affairs and Trade, (202) 512-

8979 or christoffj@gao.gov. GAO Contact 

Page 78 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
U.S. Military Readiness U.S. Military Readiness 

Enclosure XII: Extended Operations Have Had Significant 

Consequences for the U.S. Military 

Enclosure XIII: Securing Munitions Sites and Alleviating Armor 

Shortages Have Been Serious Problems 

Enclosure XIV: Deficiencies in Supply Support for U.S. Ground 

Forces Have Resulted in Shortages of Critical Items 

Page 79 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

Had S

M

 XII: Extended Operations Have 

ignificant Consequences for the U.S. 

ilitary 

Page 80 GAO-07-308SP 

Enclosure XII: Extended Operations Have Had 

Significant Consequences for the U.S. Military 

Since September 11, 2001, U.S. military forces have experienced a high 

pace of operations to support homeland security missions, Operation 

Enduring Freedom in Afghanistan, and various combat and 

counterinsurgency operations in Iraq. These operations have required 

many units and personnel to deploy for multiple tours of duty and, in some 

cases, to remain for extended tours. The Department of Defense (DOD) 

faces significant challenges in maintaining readiness for overseas and 

homeland missions and sustaining rotational deployments of duty, 

especially if the duration and intensity of current operations continue at 

the present pace. Pursuant to a congressional mandate, we are examining 

readiness issues, including DOD’s ability to support ongoing operations as 

well as other commitments. This enclosure highlights some of the 

consequences that extended operations have had on the U.S. military 

regarding personnel, equipment, and training. It also discusses some of the 

challenges DOD faces as it adjusts the composition and size of its forces. 

Although DOD has overcome difficult challenges in maintaining a high 

pace of operations over the past 5 years, extended operations in Iraq and

elsewhere have had significant consequences for the U.S. military. Our 

work on personnel, equipment, and training issues has found problems 

with (1) DOD’s ability to provide active and reserve forces, especially for 

some skills; (2) the recruitment and retention of personnel to fill shortages 

of critical positions, including those requiring the ability to speak foreign 

languages such as Arabic; (3) policies and guidance affecting the 

availability of reserve personnel; (4) heavy wear and tear on equipment, as 

well as equipment shortages in the reserve components; and (5) the effects 

of continued deployment of U.S. ground forces on military training. In 

addition, extended operations present challenges in determining the 

Issue 

Summary 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure XII: Extended Operations Have 

Had Significant Consequences for the U.S. 

Military 

adjustments needed to the size and composition of the Army to meet both 

near- and long-term requirements.1

Ongoing operations in Iraq have challenged DOD’s ability to supply active 

and reserve forces that are ready to deploy, particularly with regard to the

Army and Marine Corps. Although the Army’s goal is to deploy active 

personnel only 1 of every 3 years, many soldiers have deployed more 

frequently, and some personnel are preparing for their third rotations to 

Iraq. Active Marine Corps personnel are also deploying more frequently 

than the goals established by Marine Corps leaders. Moreover, ongoing

operations have created a particularly high demand for certain combat 

support and combat service support skills, such as engineering, civil 

affairs, transportation, and military police. With limits placed on the 

availability of reserve component members with these skills (see 

discussion below), DOD is increasingly turning to the Navy and Air Force 

to help meet requirements for certain types of forces needed to support 

ground operations. The longer operations in Iraq continue, the greater the 

likelihood DOD will face increasing challenges in identifying sufficient 

numbers of such skilled personnel. 

Operations Have 

Challenged DOD’s

Ability to Provide 

Forces 

 1

For further information on the issues discussed in this enclosure, see GAO, Military 

Personnel: DOD Needs Action Plan to Address Personnel Recruitment and Retention 

Challenges, GAO-06-134 (Washington, D.C.: Nov. 17, 2005); Military Personnel: Reserve 

Components Need Guidance to Accurately and Consistently Account for Volunteers on

Active Duty for Operational Support, GAO-07-93 (Washington, D.C.: Oct. 31, 2006);

Reserve Forces: Army National Guard and Army Reserve Readiness for 21st Century 

Challenges, GAO-06-1109T (Washington, D.C., Sept. 21, 2006); Force Structure: DOD Needs 

to Integrate Data into Its Force Identification Process and Examine Options to Meet

Requirements for High-Demand Support Forces, GAO-06-962 (Washington, D.C.: Sept. 5,

2006); Defense Logistics: Preliminary Observations on Equipment Reset Challenges and

Issues for the Army and Marine Corps, GAO-06-604T (Washington, D.C.: Mar. 30, 2006);

Military Training: Funding Requests for Joint Urban Operations Training and 

Facilities Should Be Based on Sound Strategy and Requirements, GAO-06-193 

(Washington, D.C.: Dec. 8, 2005); Military Personnel: DOD Needs to Address Long-Term 

Reserve Force Availability and Related Mobilization and Demobilization Issues, 

GAO-04-1031 (Washington, D.C.: Sept. 15, 2004); Homeland Defense: DOD Needs to Assess 

the Structure of U.S. Forces for Domestic Military Missions, GAO-03-670 (Washington, 

D.C.: July 11, 2003); Force Structure: Army Needs to Provide DOD and Congress More 

Visibility Regarding Modular Force Capabilities and Implementation Plans, GAO-06-745 

(Washington, D.C.: Sept. 6, 2006); and Reserve Forces: Plans Needed to Improve Army

National Guard Equipment Readiness and Better Integrate Guard into Army Force 

Transformation Initiatives, GAO-06-111 (Washington, D.C.: Oct. 4, 2005.) 

Page 81 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XII: Extended Operations Have 

Had Significant Consequences for the U.S. 

Military 

Operations in Iraq have contributed to the U.S. military’s significant 

challenge in recruiting and retaining hundreds of thousands of service 

members each year. While the services have generally met their aggregate 

recruiting and retention goals, DOD has had problems recruiting and 

retaining sufficient numbers of individuals with the right skills and 

knowledge. Over 40 percent of DOD’s 1,484 occupational specialties were 

consistently underfilled for fiscal years 2000 through 2005, raising 

concerns about the military’s ability to meet all of its missions. For 

example, during fiscal year 2003 when the Iraq war began, DOD was 

unable to fill almost 103,000 positions in consistently underfilled 

occupations; this number grew to 112,000 unfilled positions by 2005. Many 

of these consistently underfilled occupations are in critical areas, such as 

health care, human intelligence collection, and explosive ordnance 

disposal. 

DOD has recognized that the department cannot execute major military 

operations without significant participation from its reserve components. 

However, its current mobilization and deployment policies and guidance 

restrict flexibility in staffing long-term operations such as the global war 

on terrorism. After September 11, 2001, DOD issued a series of policies 

and guidance to guide the use of reserves for the global war on terrorism 

in order to limit deployments and help sustain the all-volunteer force. Most 

significantly, it limited the services to one involuntary mobilization of their 

reserve component members for the global war on terrorism and limited 

reserve component mobilizations to Iraq and Afghanistan to 12 months “on 

the ground” in the U.S. Central Command area of operations, plus 

additional time for mobilization and demobilization activities. Thus, under 

the current policy, reserve component members who were involuntarily 

mobilized for operations related to the global war on terrorism cannot be 

involuntarily mobilized for the ongoing operation now referred to as “the 

long war.” As additional personnel have been involuntarily mobilized, the 

services have come to rely more heavily on active forces, repeat 

volunteers, and new recruits to meet their sourcing requirements. 

Ongoing military operations in Iraq are inflicting heavy wear and tear on 

equipment. Some equipment items used by U.S. forces are more than 20 

years old, and harsh combat and environmental conditions over time have 

further exacerbated equipment condition problems. The Army and the 

Marine Corps have initiated programs to reset (repair or replace) 

equipment and are likely to incur large expenditures in the future. We are 

currently assessing these programs, including the extent to which the 

DOD Faces Enlisted 

Personnel 

Recruitment and 

Retention Challenges 

DOD Policies and 

Guidance Have 

Limited the 

Availability of Reserve 

Forces 

Ongoing Operations 

Are Taking a Heavy 

Toll on Equipment 

Page 82 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XII: Extended Operations Have 

Had Significant Consequences for the U.S. 

Military 

services are tracking reset costs and the extent to which their reset plans 

maintain unit equipment readiness while meeting ongoing operational 

requirements. 

In addition, the Army National Guard and Army Reserve have transferred 

large quantities of equipment to deploying units, an approach that has 

contributed to growing equipment shortages in nondeployed units. Also, 

reserve units have left large quantities of equipment overseas, and DOD 

has not yet developed plans to replace the equipment. The Army National 

Guard reports that its nondeployed units have less than one-third of their 

required equipment, and the Army Reserve reports that its units have 

about half of the modern equipment they need to deploy. These shortages 

also could adversely affect reserve units’ ability to perform homeland 

defense missions and provide support to civil authorities in the event of 

natural disasters or terrorist attacks. 

The continuing deployment of ground forces to support ongoing 

operations has affected military training. The military services have been 

focused on preparing units to assume missions and to operate in 

conditions specific to Iraq and Afghanistan, with less time available to

prepare for other wartime and homeland defense missions. In addition, 

personnel and units are being asked to perform missions or functions 

different from those they were designed for and are being retrained 

accordingly. For example, field artillery units have been used to perform 

some military police duties and therefore spend time training for these 

missions before deploying. To support deploying units, units that remain 

behind must give up personnel and equipment, thus limiting their ability to 

train as a unit or to train on certain equipment that they might be required

to operate once deployed. Also, units are faced with replacing officer and 

senior enlisted personnel pulled to serve as trainers for Iraqi and Afghani 

security forces. 

Ongoing operations have raised questions about whether DOD has 

adequately reassessed and adjusted the size and composition of its forces, 

particularly with regard to the Army. Although the Army has begun to 

adjust its force structure, significant challenges remain. For example, in 

2004, the Army began to implement a $52.5 billion initiative throughout the 

active and reserve components to establish modular brigades that are 

intended to be more readily deployable to overseas operations such as Iraq 

than their predecessor units, which were designed for Cold War postures. 

The Army’s goal of establishing fully capable modular units will be difficult 

Continuing 

Deployment of 

Ground Forces Has 

Affected Military 

Training

Challenges Remain in 

Adjusting the 

Composition and Size 

of Forces 

Page 83 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XII: Extended Operations Have 

Had Significant Consequences for the U.S. 

Military 

given long-standing equipment and personnel shortfalls, particularly while 

the Army is also managing the training and deployment of forces to Iraq.

Further, to help support operations in Iraq, the Army has made some 

adjustments in its active-reserve mix to establish additional units that are 

in high demand. The Marine Corps has made similar changes. However, 

the Office of the Secretary of Defense had not conducted a recent 

comprehensive data-driven analysis to assess the number of active 

personnel needed by the services to implement the defense strategy and to

provide needed capabilities within acceptable levels of risk. 

In prior reports, we have made numerous recommendations addressing 

the military issues covered in this paper, including the following: 

• With regard to the recruitment and retention of enlisted personnel, we 

recommended that DOD develop a management action plan to help 

components identify and address the causes of their recruiting and 

retention challenges.2

 DOD partially concurred with this recommendation. 

Prior 

Recommendations 

• As the result of our work on the availability of reserve forces, we 

recommended that DOD develop a strategic framework that sets human 

capital goals concerning the availability of its reserve component forces to

meet the longer-term requirements of the global war on terrorism under 

various mobilization authorities and identify personnel policies that 

should be linked within the context of the strategic framework.3

 DOD 

partially concurred with this recommendation. 

• In our work on Army National Guard equipment readiness, we 

recommended that the Army develop and submit to Congress a plan and

funding strategy that addresses the equipment needs of the Army National 

Guard for the global war on terrorism and addresses how the Army will 

transition from short-term equipping measures to long-term equipping 

solutions.4

 DOD agreed with this recommendation. 

• In reporting on the Army’s modularity program, we recommended that the 

Army develop and provide the Secretary of Defense and Congress with a 

 2

GAO-06-134. 

3

GAO-04-1031. 

4

GAO-06-111. 

Page 84 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XII: Extended Operations Have 

Had Significant Consequences for the U.S. 

Military 

comprehensive plan for assessing the Army’s progress toward achieving 

the benefits of modularity. We recommended the plan include specific, 

quantifiable performance metrics to measure progress toward meeting the 

goals and objectives established in the Army Campaign Plan.

5

 DOD agreed 

to develop expanded performance metrics. 

• To what extent has DOD evaluated its ability to support any adjustments 

in troop levels in the administration’s revised strategy, including the 

availability of personnel, equipment and training necessary if the strategy 

calls for increases? 

• What options are available to DOD for making more personnel, including 

both active duty and reserve personnel, available for future rotations while 

sustaining an all-volunteer force? 

• To what extent have DOD components developed a management action 

plan to identify and address the causes of their recruiting and retention 

challenges? 

• To what extent will equipment reset plans maintain unit equipment 

readiness while meeting ongoing operational requirements? 

• What is the state of readiness of our armed forces? To what extent has 

DOD evaluated whether units are ready and trained to respond to 

operations other than Iraq or Afghanistan? 

• Are the Army and Marine Corps appropriately sized, with the right 

composition and mix of units and personnel skills, to support ongoing 

operations, while remaining prepared for missions that could arise at 

home or abroad? 

Henry L. Hinton, Jr., Managing Director, Defense Capabilities and 

Management, (202) 512-4300 or hintonh@gao.gov. 

Oversight Questions 

GAO Contact 

 5

GAO-06-745. 

Page 85 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

A

Serious Proble

 XIII: Securing Munitions Sites and

lleviating Armor Shortages Have Been

ms 

Page 86 GAO-07-308SP 

Enclosure XIII: Securing Munitions Sites and 

Alleviating Armor Shortages Have Been 

Serious Problems 

U.S. ground forces in Iraq have come under frequent and deadly attacks 

from insurgents using weapons such as improvised explosive devices 

(IED), mortars, and rocket launchers. IEDs, in particular, have emerged as 

the number one threat against U.S. forces. Insurgents have made many 

IEDs from munitions looted from storage sites in Iraq. This enclosure 

discusses (1) the security provided by U.S. forces over conventional 

munitions storage sites in Iraq and (2) the challenges the Department of 

Defense (DOD) has faced in meeting increased requirements for body and 

truck armor to protect U.S. ground forces. 

As a result of the overwhelming size and number of conventional 

munitions storage sites in Iraq, combined with prewar planning 

assumptions that proved to be invalid, U.S. forces did not adequately 

secure those sites and looting was widespread. Despite the potential risk 

posed by unsecured sites, DOD’s actions in response to lessons learned 

during Operation Iraqi Freedom (OIF) have focused on countering IEDs 

and not on the strategic implications of munitions sites for future 

operations.1

Efforts to protect U.S. ground forces with increased body and truck armor 

have been characterized by shortages and delays, which have reduced 

operational capabilities and forced combat commanders to accept

additional risk in completing their missions.2

 We are currently reviewing 

force protection measures, including body armor, for current operations, 

as well as the organization and management of the Joint IED Defeat 

Organization (JIEDDO), which was established in January 2006 with a 

mission of countering the IED threat.

Issue 

Summary 

 1

These issues are discussed in a classified GAO report, Operation Iraqi Freedom: DOD 

Should Apply Lessons Learned Concerning the Need for Security over Conventional 

Munitions Storage Sites to Future Operations Planning, GAO-07-71C (Washington, D.C.: 

December 20, 2006). We plan to issue an unclassified version of this report in January 2007. 

2

For further information on these issues, see GAO, Defense Logistics: Actions Needed to 

Improve the Availability of Critical Items during Current and Future Operations, 

GAO-05-275 (Washington, D.C.: Apr. 8, 2005); Defense Logistics: Several Factors Limited

the Production and Installation of Army Truck Armor during Current Wartime 

Operations, GAO-06-160 (Washington, D.C.: Mar. 22, 2006); and Defense Logistics: Lack of

a Synchronized Approach between the Marine Corps and Army Affected the Timely

Production and Installation of Marine Corps Truck Armor, GAO-06-274 (Washington, 

D.C.: June 22, 2006). 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIII: Securing Munitions Sites and

Alleviating Armor Shortages Have Been

Serious Problems 

A fundamental gap existed between OIF war plan assumptions and the 

experiences of U.S. and coalition forces in Iraq, contributing to an 

insufficient number of troops on the ground to prevent the widespread 

looting of conventional munitions storage sites. Looted munitions have 

emerged as a continuing asymmetric threat to U.S. and coalition forces. 

The human, strategic, and financial costs of the failure to provide 

sufficient troops on the ground have been high, since IEDs made from 

looted explosives have caused about half of all U.S. combat fatalities and 

casualties in Iraq and have killed hundreds of Iraqis. In addition, 

unsecured conventional munitions sites have helped sustain insurgent 

groups and threatened the achievement of the OIF strategic goal of 

creating a stable Iraqi nation. 

DOD’s actions have primarily focused on countering IEDs and not on the 

security of conventional munitions storage sites as a strategic planning 

and priority-setting consideration for future operations. Although good 

first steps, these actions do not address what we believe is a critical OIF 

lesson learned: If not secured during initial combat operations, an 

adversary’s conventional munitions storage sites can represent an 

asymmetric threat to U.S. forces that remain in country. 

DOD faced challenges in supplying sufficient quantities of body armor to 

meet the requirements for U.S. military forces in Iraq. Temporary 

shortages of body armor occurred because of acquisition delays related to

the lack of key materials and distribution problems in theater. Increasing

military requirements for body armor exceeded the manufacturer’s 

capacity to produce enough of the Army’s new Interceptor body armor,3

particularly after October 2003, when U.S. Central Command required 

body armor for all U.S. personnel in its area of responsibility. Before that, 

the Army required body armor for all soldiers in Iraq but not for all U.S. 

personnel. As a result of the shortages, many individuals purchased body 

armor that was available in the private sector with their own funds. 

According to the Defense Logistics Agency, the organization that manages

body armor for the Army, the shortfall in vests and ceramic plates was due 

to the lack of Kevlar (a type of fiber) for manufacturing the vests and a 

lack of material for manufacturing the plates. Attempts to accelerate the 

U.S. Did Not Prevent 

Looting of Munitions 

Sites 

Acquisition Delays 

and Distribution 

Problems Resulted in 

Body Armor 

Shortages 

 3

The Interceptor body armor is designed to provide protection against rifle rounds through 

the combined use of ceramic tiles and polyethylene fiber. 

Page 87 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIII: Securing Munitions Sites and

Alleviating Armor Shortages Have Been

Serious Problems 

fielding of the new armor had some success but also created additional 

logistics problems, including the inaccurate reporting of on-hand 

quantities. 

We are currently reviewing force protection measures, including body 

armor requirements, testing, and oversight, for current operations. 

DOD also faced the challenge of supplying sufficient amounts of armor for 

Army and Marine Corps trucks. U.S. military forces in Iraq have 

experienced shortages of truck armor due to problems with production 

and installation of armor kits. Although the Army first identified a 

requirement for 3,780 truck armor kits for five types of trucks4

 in 

November 2003, it did not produce all of the kits until February 2005 and 

did not install the kits to meet the initial requirement until May 2005—18 

months after the requirement was identified. Requirements continued to 

increase after May 2005, but the time lag to meet them lessened. A number 

of factors contributed to the time needed to provide truck armor to 

deployed Army troops. As a result, troops were placed at greater risk as 

they conducted wartime operations in vehicles not equipped with the 

preferred level of protection. For example, the Army missed a valuable 

opportunity to have substantial numbers of truck armor kits available for 

OIF by not fully capitalizing on approved requirements for these kits 

established in 1996. In addition, production time lengthened because 

contracts were awarded for amounts less than total requirements due to 

increasing needs for truck armor and inadequate funding. Sufficient 

documentation was lacking to determine why funding was not available 

when needed, limiting effective oversight over funding decisions. Material 

shortages and limited kit installation rates also affected the availability of

truck armor. 

The Marine Corps also experienced shortages of truck armor during OIF. 

The Marine Corps belatedly met requirements for the production and 

installation of add-on truck armor in September 2004—8 months after the 

requirements were identified. Two factors affected the timely production 

and installation of Marine Corps truck armor. First, the lack of a 

synchronized approach between the Marine Corps and the Army resulted 

in the Marine Corps identifying its truck armor requirements and seeking

Production and 

Installation Problems 

Resulted in Shortages 

of Army and Marine 

Truck Armor

 4

This requirement excludes tanker trucks. The completion of armor kit installation for 

tankers was expected by January 2007. 

Page 88 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIII: Securing Munitions Sites and

Alleviating Armor Shortages Have Been

Serious Problems 

armor solutions 2 months after the Army. This delay may have limited the 

Marine Corps’ ability to field interim armor that met IED protection 

requirements and may have contributed to delays in providing add-on 

truck armor to deployed Marine Corps forces. The Marine Corps did not 

officially identify a requirement for truck armor and did not begin seeking 

out armor materials from industry until January 2004—2 months after the 

Army began its truck armor program in November 2003. According to 

Marine Corps officials, the armor-grade steel needed for sufficient IED 

protection was not available from suppliers in time to meet the Marine 

Corps’ deployment timeline of March 2004. As a result, the Marine Corps 

fielded the interim armor with only limited IED protection. Second, 

mission needs restricted the rate at which the Marine Corps could replace 

its interim armor with add-on armor and install integrated armor. 

DOD has taken actions to improve the timely availability of truck armor. 

For example, the Army is developing a long-term armoring plan to improve 

the availability of truck armor for future operations. The Marine Corps 

increased the rate of installation for integrated armor by expanding its 

armor installation capacity. The Marine Corps is also taking longer-term 

actions, such as developing a plan to address the availability of truck 

armor for future operations. 

In response to Senate Report 109-292, we have initiated a review of 

JIEDDO. The objectives of our ongoing review are to determine (1) 

whether JIEDDO’s overall management and organizational structure, 

including funding, personnel, and strategic planning processes, effectively 

support its mission; (2) the challenges, if any, that affect JIEDDO’s ability 

to quickly and effectively identify, develop, test, and support technology 

and training solutions; and (3) the level of coordination that exists 

between JIEDDO and other DOD and non-DOD organizations to leverage 

existing capabilities and prevent duplication of efforts. 

In December 2006, we recommended that the Chairman of the Joint Staff 

conduct a theaterwide survey and risk assessment regarding unsecured 

conventional munitions in Iraq and incorporate conventional munitions 

storage site security as a strategic planning factor into all levels of 

planning policy and guidance, including joint doctrine, instructions, 

GAO Is Reviewing 

JIEDDO 

Prior 

Recommendations 

Page 89 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIII: Securing Munitions Sites and

Alleviating Armor Shortages Have Been

Serious Problems 

manuals, and other directives.5 DOD partially concurred with our 

recommendations. 

In prior reports, we have recommended actions to ensure funding needs 

for urgent wartime requirements are identified quickly, requests for 

funding are well documented, and funding decisions are based on risk and 

an assessment of the highest priority requirements. For example, in March 

2006, we recommended that the Army establish a process to document and 

communicate all urgent wartime funding requirements for supplies and 

equipment at the time they are identified and the disposition of funding 

decisions.6

 DOD concurred with the intent of the recommendation. More 

recently, we have recommended actions to ensure that the services make 

informed and coordinated decisions about what materiel solutions are 

developed and procured to address common urgent wartime 

requirements.7

 DOD generally agreed with these recommendations. 

• Has DOD conducted a theaterwide survey and risk assessment regarding 

unsecured conventional munitions storage sites in Iraq? Has DOD 

developed a risk mitigation strategy for unsecured sites in Iraq? 

Oversight Questions 

• Has DOD incorporated the security of conventional munitions storage 

sites as a strategic planning factor into all levels of planning policy and 

guidance? 

• Is the supply chain adequately supporting the troops’ needs for body 

armor and truck armor during combat operations? Are the Army and 

Marine Corps coordinating the requirements, testing, and production of 

body armor and evaluating its effectiveness in the field? 

• Is JIEDDO structured to effectively accomplish its mission and account for 

its expenditures? 

• What steps has DOD taken to stay abreast of evolving force protection 

threats and to identify and employ appropriate mitigation measures? 

 5

GAO-07-71C. 

6

GAO-06-160. 

7

GAO-06-274. 

Page 90 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIII: Securing Munitions Sites and

Alleviating Armor Shortages Have Been

Serious Problems 

Davi M. D’Agostino, Director, Defense Capabilities and Management, (202) 

512-5431 or dagostinod@gao.gov; and William M. Solis, Director, Defense 

Capabilities and Management, (202) 512-8365 or solisw@gao.gov. 

GAO Contacts 

Page 91 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

for

Shortages of Cr

 XIV: Deficiencies in Supply Support

 U.S. Ground Forces Have Resulted in 

itical Items 

Page 92 GAO-07-308SP 

Enclosure XIV: Deficiencies in Supply Support 

for U.S. Ground Forces Have Resulted in 

Shortages of Critical Items 

To support Operation Iraqi Freedom (OIF), the Department of Defense 

(DOD) undertook a massive logistics effort, moving millions of tons of 

cargo, including critical equipment, spare parts, and other supplies several

thousand miles to the Persian Gulf. This effort began in late 2001, 

accelerated in the fall of 2002 just before major combat operations were 

launched in March 2003, and continues today as U.S. forces undertake 

stabilization efforts in Iraq. However, U.S. forces have still experienced 

shortages of critical supply items. This enclosure discusses (1) systemic 

deficiencies in DOD’s supply support for U.S. ground forces during OIF 

and (2) actions DOD has taken to improve supply support. 

OIF tested the DOD logistics system and the industry’s capability to meet 

rapidly increasing demands, and in many instances the supply chain failed 

to respond quickly enough to meet the needs of modern warfare. In prior 

reports, we have reported on shortages of critical items1

 and the systemic 

deficiencies in supply support that led to these shortages. These 

deficiencies included (1) inaccurate and inadequately funded Army war 

reserve requirements, (2) inaccurate supply forecasts, (3) insufficient and

delayed funding, (4) delayed acquisition, and (5) ineffective distribution.2

DOD developed short-term solutions to manage item shortages during OIF, 

and DOD and the services have begun to undertake systemic, long-term 

changes to fix some of the supply problems identified. 

The Army’s out-of-date and inadequately funded war reserve requirements 

for spare parts negatively affected the availability of armored vehicle track 

shoes, lithium batteries, and tires. At the time of our April 2005 report, the 

Army had not conducted annual updates to its war reserve requirements 

since 1999. In addition, Army war reserve requirements had not been fully 

Issue 

Summary 

Inaccurate and 

Inadequately Funded 

Requirements 

 1

Items we reviewed included lithium batteries, tires, vehicle track shoes, add-on body

armor, Meals-Ready-to-Eat, up-armored High-Mobility Multi-Purpose Wheeled Vehicles

(HMMWV) and kits, and vehicle generators. We have also reviewed delays in the 

production and installation of Army and Marine Corps truck armor.

2

For further information on issues discussed in this enclosure, see GAO, Defense Logistics:

Actions Needed to Improve the Availability of Critical Items during Current and Future 

Operations, GAO-05-275 (Washington, D.C.: Apr. 8, 2005); Defense Logistics: Several 

Factors Limited the Production and Installation of Army Truck Armor during Current 

Wartime Operations, GAO-06-160 (Washington, D.C.: Mar. 22, 2006); and Defense 

Logistics: Lack of a Synchronized Approach between the Marine Corps and Army

Affected the Timely Production and Installation of Marine Corps Truck Armor, 

GAO-06-274 (Washington, D.C.: June 22, 2006). 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIV: Deficiencies in Supply Support

for U.S. Ground Forces Have Resulted in 

Shortages of Critical Items 

funded for many years, indicating that the Army had made a risk 

management decision not to fund war reserves. This decision forced war 

reserve managers to prioritize the use of available funding, which meant 

that some items had no war reserve to support initial operations. In our 

March 2006 report on Army truck armor, we similarly found that the Army 

made a decision not to fund prior requirements for truck armor identified

in 1996; thus, the Army did not have a significant number of add-on armor 

kits available when the need for them arose in Iraq. 

DOD was unable to accurately forecast supply requirements for armored 

vehicle track shoes, lithium batteries, Meals-Ready-to-Eat, and tires. The 

Army’s computer models for forecasting item demand did not have the 

capability to switch to a wartime forecasting mode as required. Further, 

the Defense Logistics Agency’s model was not effective for all supply 

items. As a result, item managers had to manually develop forecasts for 

OIF, but they did not always have sufficient or timely information on 

estimated deployment sizes or the duration of operations. In some cases, 

they underestimated the actual demand, which resulted in supply 

shortages during operations. 

In April 2005, we reported that delays in funding impeded the availability 

of armored vehicle track shoes, lithium batteries, and tires. Specifically, 

during OIF, the Army Materiel Command asked for additional funding to

support forecasted OIF requirements but did not receive these funds in a 

timely manner. In March 2006, we similarly reported that funding was not 

always available to award truck armor contracts when requirements were 

identified. As a result, production time lengthened because contracts were 

awarded for amounts less than total requirements. In all of the cases we 

reported, sufficient documentation was lacking to determine why funding 

was not available when needed, thus limiting effective oversight over 

funding decisions. 

Problems with delayed acquisition led to several shortages of critical 

supply and equipment items. For example, in April 2005, we reported that

a lack of key materials and long production lead-times resulted in 

shortages of body armor and lithium batteries. Similarly, in March and 

June 2006, we reported that shortages of key materials, such as steel, 

negatively affected the availability of Army and Marine Corps truck armor 

kits. In addition to these shortages, in April 2005, we reported that DOD’s 

decision not to maximize available production capacity adversely affected

Inaccurate Supply 

Forecasts 

Insufficient and 

Delayed Funding 

Delayed Acquisition 

Page 93 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIV: Deficiencies in Supply Support

for U.S. Ground Forces Have Resulted in 

Shortages of Critical Items 

the availability of up-armored High-Mobility Multi-Purpose Wheeled 

Vehicles (HMMWV) and add-on armor kits. The acquisition challenges we 

reported impeded DOD’s ability to quickly respond to rapidly increasing 

demands, resulting in equipment items not being available to warfighters 

when needed. 

As a result of an ineffective joint distribution system during OIF, DOD was 

unable to distribute sufficient quantities of four items we reported on in 

April 2005—assault amphibian vehicle generators, body armor, MealsReady-to-Eat, and tires. Among the problems we identified with theater 

distribution were (1) conflicting doctrine, or military principles, defining 

the authority of the geographic combatant commander to synchronize the 

distribution of supplies from the United States to the theater; (2) improper 

packaging of air shipments from the United States, which forced personnel 

in theater to spend extra time opening and sorting shipments; (3) 

insufficient transportation equipment and supply personnel in theater; and

(4) the inability of logistics information systems to support the requisition

and shipment of supplies into and throughout Iraq. To address OIF 

distribution problems, DOD established a deployment and distribution 

operations center in Kuwait to coordinate the arrival of supplies in theater

and consolidated air cargo pallets for shipment to a single supply support 

activity. According to DOD, these two initiatives improved the flow of 

supplies into and around the OIF theater. 

DOD, the services, and the defense agencies have taken actions to improve 

supply availability. Many short-term solutions to lessen the impact of 

supply shortages were instituted during combat operations. For example, 

as a result of the lithium battery shortage, the Joint Staff developed the 

“critical few list” to improve the availability of items that the services and 

combatant commands report as critical to their worldwide operations. 

DOD is also beginning to make systemic, long-term changes to correct 

some of its supply problems. One of the more notable is that the Secretary 

of Defense designated the U.S. Transportation Command as responsible 

for improving distribution. With the encouragement of the Office of 

Management and Budget, DOD has also developed a plan to improve 

supply chain management. The plan focuses on three areas—forecasting 

requirements, materiel distribution, and asset visibility. We have 

Ineffective 

Distribution 

DOD Actions Taken to 

Improve Supply 

Support 

Page 94 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIV: Deficiencies in Supply Support

for U.S. Ground Forces Have Resulted in 

Shortages of Critical Items 

previously reported on DOD’s efforts to improve supply distribution and 

supply chain management.3

We have made a number of prior recommendations aimed at improving 

the effectiveness of DOD’s supply system in supporting deployed forces 

for contingency operations. For example, we have made recommendations 

to improve the accuracy of war reserve requirements, support prewar 

planning through supply forecasting, minimize future acquisition delays, 

and improve supply distribution. DOD agreed with the intent of the 

recommendations and cited actions it had taken or was taking to eliminate 

supply chain deficiencies. However, it did not clearly identify timelines for 

fully implementing most of these recommendations, and we subsequently 

modified our recommendations to require that DOD specify when actions

will be completed. 

• What actions has DOD taken to improve the accuracy of war reserve 

requirements and wartime supply requirements? 

Prior 

Recommendations 

Oversight Questions 

• To what extent has DOD funded its war reserve and other equipment 

requirements, and what are the operational impacts of any unfunded 

requirements? 

• What actions has DOD taken to improve the timely availability of funding 

for wartime supply needs and emerging equipment requirements? 

• What actions has DOD taken to assess the industrial base’s capacity to 

meet increasing wartime supply and equipment needs and to minimize 

acquisition delays? 

• What actions have DOD and the U.S. Transportation Command

implemented to improve theater distribution during wartime? 

 3

GAO, Defense Logistics: DOD Has Begun to Improve Supply Distribution Operations, 

but Further Actions Are Needed to Sustain These Efforts, GAO-05-775 (Washington, D.C.: 

Aug. 11, 2005); DOD’s High-Risk Areas: High-Level Commitment and Oversight Needed 

for DOD Supply Chain Plan to Succeed, GAO-06-113T (Washington, D.C.: Oct. 6, 2005); and 

DOD’s High-Risk Areas: Challenges Remain to Achieving and Demonstrating Progress in

Supply Chain Management, GAO-06-983T (Washington, D.C.: July 25, 2006). 

Page 95 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XIV: Deficiencies in Supply Support

for U.S. Ground Forces Have Resulted in 

Shortages of Critical Items 

William M. Solis, Director, Defense Capabilities and Management, (202) 

512-8365 or solisw@gao.gov. GAO Contact 

Page 96 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Improving Acquisition Outcomes Improving Acquisition Outcomes 

Enclosure XV: DOD Needs to Improve Its Capacity to Manage 

Contractors

Page 97 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

Capac

 XV: DOD Needs to Improve Its 

ity to Manage Contractors 

Page 98 GAO-07-308SP 

Enclosure XV: DOD Needs to Improve Its 

Capacity to Manage Contractors 

The Department of Defense (DOD) has relied extensively on contractors 

to undertake major reconstruction projects and provide logistical support 

to its troops in Iraq. For example, DOD has responsibility for a significant 

portion of the more than $30 billion in appropriated reconstruction funds 

and has awarded and managed many of the large reconstruction contracts,

such as the contracts to rebuild Iraq’s oil, water, and electrical 

infrastructure, and to train and equip Iraqi security forces. Further, U.S. 

military forces in Iraq have used contractors to a far greater extent than in 

prior operations to provide interpreters and intelligence analysts, as well 

as more traditional services such as weapons systems maintenance and 

base operations support. The Army alone estimates that almost 60,000 

contractor employees currently support ongoing military operations in 

Southwest Asia and has spent about $15.4 billion on its single largest 

support contract—the Logistics Civil Augmentation Program (LOGCAP)—

between 2001 and 2004. These contracts are often cost-plus type contracts, 

which allow the contractor to be reimbursed for reasonable, allowable, 

and allocable costs to the extent prescribed in the contracts. This 

enclosure discusses actions needed to improve (1) DOD’s reconstruction 

outcomes and (2) its use of logistics support contractors. 

The United States has made significant investments through 

reconstruction and logistics support contracts, but this investment has not 

always resulted in the desired outcomes. Many reconstruction projects 

have fallen short of expectations, and DOD has yet to resolve longstanding challenges in its management and oversight of contractors in 

deployed locations. These challenges often reflect shortcomings in DOD’s 

capacity to manage contractor efforts, including having sufficiently 

focused leadership, guidance, a match between requirements and 

resources, sound acquisition approaches, and an adequate number of 

trained contracting and oversight personnel. Further, because information 

on the number of contractor employees and the services they provide is 

not aggregated within DOD or its components, DOD cannot develop a 

complete picture of the extent to which it relies on contractors to support 

its operations. With about 29 percent of DOD’s planned construction work 

remaining and the need for continued logistical support for deployed 

forces, it is essential to improve DOD’s capacity to manage its contractors 

if the department is to increase its return on its investment. 

Issue 

Summary 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure XV: DOD Needs to Improve Its 

Capacity to Manage Contractors 

Amid some signs of progress, the United States and its coalition partners 

face numerous political, security, and economic challenges in rebuilding 

Iraq. Within this environment, many reconstruction projects have fallen 

short of expectations, resulting in increased costs, schedule delays, and 

reduced scopes of work. These outcomes have contributed to the inability 

of the United States to fully meet its goals with respect to oil, electricity, 

and water sectors. Poor acquisition outcomes are not unique to Iraq, and

the contracting challenges are emblematic of systemic issues faced by

DOD. In fact, GAO designated DOD’s contract management activities as a 

high-risk area more than a decade ago. In our January 2005 report, we 

noted that DOD needed to use sound business practices when buying 

goods and services and have the right skills and capabilities in its 

acquisition workforce to properly manage these acquisitions.1

A prerequisite to having good outcomes is a match between well-defined 

requirements and available resources. Shifts in priorities and funding 

invariably have a cascading effect on individual contracts. To produce 

desired outcomes within available funding and required time frames, DOD 

and its contractors need to clearly understand reconstruction objectives 

and how they translate into the contract’s terms and conditions: the goods 

or services needed, the level of performance or quality desired, the 

schedule, and the cost. When such requirements were not clear, DOD 

often entered into contract arrangements that posed additional risks. In 

June 2004, we reported that DOD often authorized contractors to begin 

work before key terms and conditions, including the work to be performed 

and its projected costs, were fully defined.2

 In September 2006, we 

reported that, under this approach, DOD contracting officials were less 

likely to remove the costs questioned by auditors if the contractor had 

incurred these costs before reaching agreement on the work’s scope and 

price.3

 In one case, the Defense Contract Audit Agency questioned 

$84 million in an audit of a task order for an oil mission. In this case, the 

contractor did not submit a proposal until a year after the work was 

authorized, and DOD and the contractor did not negotiate the final terms 

Better Reconstruction 

Outcomes Require 

Improved Contract 

Management 

 1

GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005). 

2

GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and Management

Challenges, GAO-04-605 (Washington, D.C.: June 1, 2004). 

3

GAO, Rebuilding Iraq: Continued Progress Requires Overcoming Contract Management 

Challenges, GAO-06-1130T (Washington, D.C.: Sept. 28, 2006); and Iraq Contract Costs:

DOD Consideration of Defense Contract Audit Agency’s Findings, GAO-06-1132 

(Washington, D.C.: Sept. 25, 2006). 

Page 99 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XV: DOD Needs to Improve Its 

Capacity to Manage Contractors 

of the contract until more than a year after the contractor had completed

the work. The absence of well-defined requirements and clearly 

understood objectives complicates efforts to hold DOD and contractors 

accountable for poor acquisition outcomes. 

An unstable contracting environment—when wants, needs, and contract 

requirements are in flux—also requires greater attention to oversight, 

which relies on a capable government workforce. However, the Special 

Inspector General for Iraq Reconstruction found that one of the Coalition 

Provisional Authority’s (CPA) critical shortcomings in personnel was the 

inadequate link between position requirements and necessary skills. 

Similarly, in January 2004, an interagency assessment team found that the 

number of contracting personnel was insufficient to handle the increased

workload expected with the influx of fiscal year 2004 funding. In part, the 

CPA’s decision to award seven contracts in early 2004 to help better 

coordinate and manage the fiscal year 2004 reconstruction efforts 

recognized this shortfall. As a result, however, DOD is relying on 

contractors to help manage and oversee other contractors. 

DOD’s lack of capacity contributed to challenges in using interagency 

contracting vehicles.4

 In certain instances, rather than develop and award

its own contracts, DOD used contracts already awarded by other agencies. 

While this practice may improve efficiency and timeliness, these contracts 

need to be effectively managed and their use requires a higher than usual 

degree of business acumen and flexibility on part of the workforce. During 

the initial stages of reconstruction, we and the DOD Inspector General 

found instances in which DOD improperly used interagency contracts. For 

example, we found that the lack of effective management controls, 

including insufficient oversight and a lack of adequate training, led to 

breakdowns in the issuance and administration of task orders for 

interrogation and other services by the Department of the Interior on 

behalf of DOD.5

 Similarly, the Inspector General found that a DOD 

component circumvented contracting rules when awarding contracts on 

behalf of the CPA by using the General Services Administration’s federal 

supply schedule, in part due to DOD’s failure to plan for the acquisition 

support the CPA needed to perform its mission. 

 4

GAO identified management of interagency contracting a high-risk area in January 2005.

See GAO-05-207. 

5

GAO, Interagency Contracting: Problems with DOD’s and Interior’s Orders to Support 

Military Operations, GAO-05-201 (Washington, D.C.: Apr. 29, 2005).

Page 100 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XV: DOD Needs to Improve Its 

Capacity to Manage Contractors 

The need to award contracts and begin reconstruction efforts quickly also

contributed to DOD using other than full and open competition during the 

initial stages of reconstruction. While full and open competition can be a 

tool to mitigate acquisition risks, DOD officials had only a relatively short 

time—often only weeks—to award the first major reconstruction 

contracts. We recently reported that available data indicate that between 

October 1, 2003, through March 31, 2006, the vast majority of DOD’s 

contract obligations were on competed contracts.

6

To improve its capacity to plan and award contracts and manage 

contractor performance, DOD has merged the Project and Contracting 

Office with the U.S. Army Corps of Engineers’ Gulf Region Division. 

Additionally, DOD established the Joint Contracting Command–Iraq to 

consolidate and prioritize contracting activities and resolve contracting 

issues, among other things. In some sectors, DOD has attempted to 

directly contract with Iraqi firms, rather than rely on the large U.S. designbuild contracts that it had awarded in early 2004. Although DOD expects 

this approach will reduce costs, it will likely increase the administrative 

and oversight burden on DOD’s acquisition workforce. Overall, about 29 

percent of DOD’s planned construction program was incomplete as of 

October 2006. 

DOD has long used contractors to provide supplies and services to 

deployed forces, but the scale of contractor support that DOD relies on in 

locations such as Iraq has increased considerably from prior operations. 

Since 1997, we have reported on DOD’s management and training 

shortcomings related to contractors supporting deployed forces, including 

the lack of senior DOD leadership, the lack of visibility and knowledge of 

the number of contractors and the services they provide, and an 

inadequate number of trained personnel to ensure the efficient and 

effective use of contractor resources. 

We recently found these long-standing problems continue to hinder DOD’s 

management and oversight of support contractors.7

 For example, despite 

Action Needed to 

Address Longstanding Problems 

with Management and 

Oversight of Military 

Support Contractors 

 6

GAO, Rebuilding Iraq: Status of Competition for Iraq Reconstruction Contracts, 

GAO-07-40 (Washington, D.C.: Oct. 6, 2006). 

7

GAO, Military Operations: High-Level DOD Action Needed to Address Long-standing 

Problems with Management and Oversight of Contractors Supporting Deployed Forces,

GAO-07-145 (Washington, D.C.: Dec. 18, 2006). 

Page 101 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XV: DOD Needs to Improve Its 

Capacity to Manage Contractors 

DOD actions to improve its guidance on the use of contractors to support 

deployed forces, we found few measures had been taken by the relevant 

office within the Office of the Secretary of Defense to ensure that DOD 

components complied with this guidance. Similarly, despite facing many of 

the same difficulties in managing and overseeing contractors in Iraq as it 

faced in prior operations, no organization within DOD or its components is 

responsible for systematically collecting and sharing institutional 

knowledge regarding using support contractors. As a result, new units 

deploying to Iraq run the risk of repeating past mistakes. DOD has recently 

established an office to address contractor support issues, but the office’s

specific roles and responsibilities have not yet been clearly defined. 

Further, because information on the number of contractor employees or 

the services they provide is not aggregated by any organization within 

DOD or its components, senior leaders and military commanders cannot 

develop a complete picture of the extent to which they rely on contractors 

to support their operations. For example, when senior military leaders 

began to develop a base consolidation plan, officials were unable to 

determine how many contractors were deployed and therefore ran the risk

of over- or under-building the capacity of the consolidated bases. Having 

limited visibility can also unnecessarily increase contracting costs to the 

government. For example, an Army official estimated that about $43 

million is lost every year on free meals provided to contractor employees 

at deployed locations who also receive a per diem food allowance. 

Additionally, DOD does not have sufficient numbers of contractor 

oversight personnel at deployed locations, precluding its ability to obtain 

reasonable assurance that contractors are meeting contract requirements 

efficiently and effectively. An Army official acknowledged that the Army is 

struggling to find the capacity and expertise to provide the contracting 

support needed in Iraq. A LOGCAP program official noted that, if adequate 

staffing had been in place, the Army could have realized substantial 

savings on the LOGCAP contract through more effective reviews of new 

requirements. DOD is also at risk of being unable to monitor and assess 

contractor performance. A Defense Contract Management Agency official

responsible for overseeing the LOGCAP contractor’s performance at 27 

locations noted that he was unable to visit all of those locations during his 

6-month tour to determine the extent to which the contractor was meeting 

the contract’s requirements. 

Military personnel continue to receive limited or no training on the use of 

contractor support as part of their predeployment training. The lack of 

training hinders commanders’ ability to adequately plan for the use of 

Page 102 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XV: DOD Needs to Improve Its 

Capacity to Manage Contractors 

contractor support and inhibits the ability of contract oversight personnel 

to manage and oversee contractors in deployed locations. Limited or no 

training also can lead to confusion regarding roles and responsibilities 

military commanders have in overseeing contractors at deployed 

locations. For example, in several instances, military commanders 

attempted to direct or ran the risk of directing a contractor to perform 

work outside the scope of the contract, even though commanders are not 

authorized to do so and such cases can result in increased costs to the 

government.

We have made several recommendations to improve DOD acquisition 

outcomes, including those intended to assure that adequate acquisition 

staff and other resources are available to support future operations, to 

emphasize the need to define contract requirements in a timely manner, to

improve the management of interagency contracting, and to resolve longstanding issues with regard to the management and use of support 

contractors. DOD has generally agreed with our recommendations and has 

actions under way to address them. 

• What steps is DOD taking to ensure it has the capacity and knowledge to 

successfully execute remaining reconstruction efforts? 

Prior 

Recommendations 

Oversight Questions 

• What actions has DOD taken to ensure that its business arrangements, 

including its use of contracts awarded by other agencies, result in the 

acquisition of goods and services in an appropriate, timely, and costeffective manner? 

• To what extent is DOD improving its ability to identify the number of 

contractor employees and the types of services they provide as it 

considers how to support deployed forces in Iraq? 

• What steps is DOD taking to ensure that contractor support training is 

consistently provided to deployed forces? 

• What actions has DOD taken to ensure that it has a sufficient number of 

trained contracting and contract management personnel in place in Iraq? 

• What can be done to establish contracting arrangements in advance to 

support future contingency operations? 

• What limitations should be placed on the role that contractors play in 

conflict zones? 

Page 103 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XV: DOD Needs to Improve Its 

Capacity to Manage Contractors 

John P. Hutton, Acting Director, Acquisition and Sourcing Management, 

(202) 512-4841 or huttonj@gao.gov; and William M. Solis, Director, Defense 

Capabilities and Management, (202) 512-8365 or solisw@gao.gov. 

GAO Contacts 

Page 104 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Objectives, Scope, and Methodology, and Staff Objectives, Scope, and Methodology Acknowledgments 

, and 

Staff Acknowledgments 

Enclosure XVI: Objectives, Scope, and Methodology 

Enclosure XVII: Staff Acknowledgments

Page 105 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure

Methodology 

 XVI: Objectives, Scope, and

Page 106 GAO-07-308SP 

Enclosure XVI: Objectives, Scope, and 

Methodology 

To monitor U.S. efforts in Iraq, we focused on (1) the U.S. strategy and 

costs of operations in Iraq, (2) security issues, (3) governance challenges, 

(4) reconstruction challenges, (5) U.S. military readiness, and (6) 

acquisition outcomes. Our analysis is based on completed and ongoing 

work. As part of this work, we made multiple visits to Iraq during 2006. 

For the enclosures that include new information, we provided copies to 

the relevant agencies for advanced review and technical comments, which 

we incorporated as appropriate. We conducted our review in accordance 

with generally accepted government auditing standards. The information 

on foreign law in this report does not reflect our independent legal 

analysis, but it is based on interviews and secondary sources. 

We examined (1) the U.S. strategy in Iraq, and (2) U.S. resource 

commitments in Iraq. 

To assess the U.S. strategy in Iraq, we obtained and analyzed records, 

reports, and data from U.S. government and military officials in

Washington, D.C., and Baghdad, Iraq. We also examined the reports of 

other oversight entities that performed internal control and management 

reviews. We assessed the strategy using the six desirable characteristics of 

an effective national strategy developed in previous GAO work. National 

strategies with these characteristics offer policymakers and implementing 

agencies a management tool that can help ensure accountability and more 

effective results. The six characteristics are (1) a clear purpose, scope, 

methodology; (2) a detailed discussion of the problems, risks, and threats 

the strategy intends to address; (3) the desired goals and objectives, and 

outcome-related performance measures; (4) a description of the U.S. 

resources needed to implement the strategy; (5) a clear delineation of the

U.S. government roles, responsibilities, and mechanisms for coordination; 

and (6) a description of how the strategy is integrated internally among 

U.S. agencies and externally with the Iraqi government and international 

organizations. We evaluated the National Strategy for Victory in Iraq 

(NSVI) alone and in conjunction with seven related classified and 

unclassified supporting documents that Department of State (State) and 

Department of Defense (DOD) officials said encompassed the U.S. 

strategy. 

To describe U.S. resource commitments in Iraq, we reviewed prior GAO 

products examining the reported obligations and funding for military 

operations in support of the global war on terrorism (GWOT). We also 

reviewed DOD’s reported obligations as of September 2006. In our prior 

work, we compared supplemental and annual appropriations identified for 

Strategy and Costs 

 Securing, Stabilizing, and Rebuilding Iraq
Enclosure XVI: Objectives, Scope, and

Methodology 

GWOT to the military services’ reported obligations and cost projections 

and examined the extent to which DOD has taken steps to improve its 

cost-reporting procedures and the reliability of its reported GWOT 

obligation data. To compare the military services’ reported obligations 

against available funding appropriated for GWOT, we analyzed copies of 

DOD’s monthly Supplemental and Cost of War Execution Report and 

reviewed applicable supplemental and annual appropriations and DOD 

reports on the transfer of funds between various appropriation accounts. 

We also interviewed key officials from the Office of the Under Secretary of 

Defense (Comptroller) and the Army, Navy, Marine Corps, and Air Force 

to determine if their projected GWOT obligations are within funding levels. 

As previously reported, we found the data in DOD’s monthly Supplemental 

and Cost of War Execution Report to be of questionable reliability. 

Consequently, we are unable to ensure that DOD’s reported obligations for 

GWOT are complete, reliable, and accurate, and they should therefore be 

considered approximations. In addition, DOD has acknowledged that 

systemic weaknesses with its financial management systems and business 

operations continue to impair its financial information. To examine the 

steps DOD has taken to improve the reliability of its reported GWOT 

obligations, we interviewed key officials from the DOD Comptroller and 

the Army, Navy, Marine Corps, and Air Force to determine the extent to

which our previous recommendations have been implemented. We also 

reviewed any new guidance issued by DOD regarding the analysis and 

reporting of obligations for contingencies. In addition, we performed 

limited testing of the reported GWOT obligations for military personnel 

and discussed with DOD and military service financial managers their 

specific processes and procedures used to ensure that reported GWOT 

obligation data provided by the subordinate commands are accurate and 

reliable. 

To address security issues, we focused on (1) trends in security conditions

in Iraq and in Multinational Force-Iraq’s (MNF-I) plans for transferring 

security responsibilities to the Iraqi government and security forces, (2) 

how MNF-I measures the capabilities of the Iraqi security forces, and (3) 

accountability procedures for U.S.-funded equipment provided to the Iraqi 

security forces. Although we reviewed classified documents during our 

completed and ongoing Iraq security engagements, the information in this 

report is based on unclassified documents only. 

Security Conditions 

Page 107 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XVI: Objectives, Scope, and

Methodology 

To provide information on areas (1) and (2), we relied extensively on a 

number of prior GAO reports.1

 Where appropriate, we updated data on 

security trends and progress in developing Iraqi security forces and 

transferring security responsibilities to them. To update data on trends in 

the security situation, we obtained and assessed MNF-I data on enemyinitiated attacks against the coalition and its Iraqi partners from the 

Defense Intelligence Agency. We determined that the data were 

sufficiently reliable for establishing general trends in the number of 

attacks. To assess and update data on progress in developing Iraqi security 

forces, we reviewed DOD and State reports, transcripts of MNF-I and U.S. 

Embassy press conferences, and MNF-I guidance on Iraqi readiness 

assessments.

To address accountability for U.S.-funded equipment provided to the Iraq 

security forces, we reviewed (1) the laws and regulations governing 

property accountability for U.S.-funded equipment that DOD has applied 

to the U.S. train-and-equip program for Iraq, and (2) MNF-I’s accountability 

for U.S.-funded equipment that it has issued to Iraqi security forces. 

To examine the laws and regulations that govern property accountability, 

we reviewed relevant legislation appropriating funds to train and equip the 

Iraqi security forces, pertinent DOD regulations, and relevant U.S. military 

orders. We interviewed officials from State and DOD, including the DOD 

Office of the Secretary of Defense, Deputy Undersecretary of Defense 

(Logistics and Material Readiness); Defense Security and Cooperation 

Agency; the Defense Logistics Agency; Tank-automotive and Armaments 

Command; and Defense Reconstruction and Support Office. We did not 

review individual contracts to determine whether they contained 

equipment accountability provisions. 

To review MNF-I’s accountability for U.S.-funded equipment that it has 

issued to Iraqi security forces, we reviewed documentation and 

interviewed current and former officials of the U.S. Central Command 

(CENTCOM), MNF-I, and Multinational Security Transition Command-Iraq

(MNSTC-I) in Baghdad, Iraq; Tampa, Florida; Washington, D.C.; and Fort 

 1

GAO, Stabilizing Iraq: An Assessment of the Security Situation, GAO-06-1094T 

(Washington, D.C.: Sept. 11, 2006); Rebuilding Iraq: Preliminary Observations on

Challenges in Transferring Security Responsibilities to Iraqi Military and Police, 

GAO-05-431T (Washington, D.C.: Mar. 14, 2005); and Rebuilding Iraq: Resource, Security,

Governance, Essential Services, and Oversight Issues, GAO-04-902R (Washington, D.C.: 

June 28, 2004). 

Page 108 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XVI: Objectives, Scope, and

Methodology 

Leavenworth, Kansas. To provide our preliminary observations on the 

amount of equipment reported by MNF-I as issued to the Iraqi security 

forces, we interviewed key officials to gain an understanding of the 

MNSTC-I property book data and information reported by the former 

MNSTC-I commander. We determined that the property books, as of 

October 2006, were sufficiently reliable for the purposes of our report. We 

did not assess the reliability of the commander’s data. According to former 

MNSTC-I officials, the data represent equipment tracked at the national

warehouses or the regional distribution centers. Based on interviews with 

current and former MNSTC-I officials, we noted the weaknesses in the 

data and determined that the data were sufficiently reliable for the 

purposes of our report. 

To address governance issues, we examined (1) U.S. and international 

assessments of Iraq’s ministries, (2) the status of ministry capacity 

development efforts, (3) the factors affecting Iraqi ministry efforts to 

spend capital budgets, and (4) Iraq’s foreign debt and the challenges it 

faces in meeting International Monetary Fund (IMF) conditions. 

To describe U.S. and international assessments of Iraq’s ministries, we 

reviewed official reports, such as Measuring Stability and Security in 

Iraq (Department of Defense), Survey of Anticorruption Programs 

(Department of State), and Briefing Book for the Government of Iraq

(World Bank). We interviewed officials from the Departments of State and 

Defense, the U.S. Agency for International Development (USAID), and the 

World Bank about the status of Iraq’s ministries and the challenges they 

face. We also discussed the status of Iraq’s ministries with U.S. officials at

the U.S. Embassy in Iraq. 

To address U.S. efforts to build Iraq ministry capacity, we reviewed U.S. 

documents, such as the Iraq Reconstruction Management Office (IRMO) 

Weekly Status Reports, contracts and statements of work for capacity

development efforts, reports to Congress pursuant to Section 1227 (c) of 

the National Defense Authorization Act for fiscal year 2006, and multiple 

U.S. briefings and status reports about U.S. capacity development efforts 

and coordination. We interviewed U.S. officials from the Departments of 

State, Defense, Justice, and the Treasury and USAID who are responsible 

for implementing capacity development programs. We discussed with 

them (1) coordination among their agencies and (2) their roles. We 

interviewed officials of the World Bank and the United Nations about 

lessons learned from international capacity building and their current 

program efforts in Iraq. We identified and reviewed the various 

Governance 

Challenges 

Page 109 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XVI: Objectives, Scope, and

Methodology 

approaches to assessing ministry capacity used by USAID, State, and

Defense. 

To address the factors affecting Iraqi ministry efforts to spend capital 

budgets, we reviewed budget expenditure reports of Iraqi Ministries 

prepared by the Department of the Treasury. We compiled these data to 

provide summary data. We also discussed these data with U.S. Treasury 

officials in the United States and Iraq. We also reviewed IMF and World 

Bank documents on developments in Iraq. We interviewed officials from 

the Departments of State, IRMO, USAID, and the World Bank about issues 

related to budget execution. 

To identify oversight questions related to Iraq’s foreign debt and the 

challenges it faces in meeting IMF conditions, we examined documents 

from the IMF (including Iraq’s stand-by arrangement), the Paris Club of 

international creditors, and relevant U.S. agencies and international 

organizations. To determine the amount of outstanding debt in 2004 (prior 

to debt restructuring) and 2006, we used official IMF estimates of Iraq’s 

external debt. Since the IMF estimates for 2006 included debt 

restructuring by non-Paris Club official creditors that had not been 

completed, we used the IMF estimate from 2004 for these countries. 

To address reconstruction challenges, we examined (1) U.S. efforts to 

restore Iraq’s oil sector, and (2) U.S. efforts to improve Iraq’s electricity

sector. 

To determine the progress made in restoring oil and electricity, we 

reviewed weekly and daily status reports prepared by U.S. agencies, 

including the Army Corps of Engineers, State, and IRMO. We compiled 

these data and analyzed the results to provide summary data. To discuss 

progress in improving the electricity sector, we also met with U.S., Iraqi, 

and United Nations (UN) officials at a November 2006 electricity 

conference sponsored by the UN Development Program at the Dead Sea, 

Jordan. To determine the effect of Iraq’s security environment on the U.S. 

rebuilding program, we interviewed Army Corps of Engineers, Defense, 

State, USAID, and Department of Energy officials in the United States and 

Iraq. We also obtained documents from State and Defense on security 

issues and funding. To help assess U.S. oversight of the program, we 

interviewed U.S. agency officials in the United States and Iraq and 

reviewed management reports used to help monitor progress, including 

the Corps’ Sector Consolidated Results Updated Meeting reports for the 

oil and electricity sectors. 

Reconstruction 

Challenges 

Page 110 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XVI: Objectives, Scope, and

Methodology 

To address the impact of U.S. operations on U.S. force readiness, we 

examined (1) the impact of extended operations in Iraq on the U.S. 

military, (2) munitions security and protection of U.S. ground forces, and 

(3) supply support for U.S. ground forces. 

To discuss the impact of extended operations on the U.S. military, we 

relied extensively on a number of prior GAO products addressing 

personnel, force structure, equipment, training, and other Iraq-related

military issues. These products, which are cited in Encl. XII, provide 

detailed information on our scope and methodology. 

To assess the security provided by DOD over conventional munitions 

storage sites captured in Iraq, we reviewed DOD, Joint Staff, and service 

policies, guidance, procedures, and plans. We obtained documentation and 

interviewed officials from the U.S. Joint Forces Command; the U.S. 

Central Command, U.S. Army Forces Command; Third Army, which is also 

known as the U.S. Army Central and Coalition Forces Land Component 

Command; Joint Improvised Explosive Device (IED) Defeat Task Force; 

Defense Intelligence Agency; National Geospatial-Intelligence Agency; 

National Ground Intelligence Center; and Central Intelligence Agency. In 

addition, we interviewed previous command officers and active duty 

personnel who served as operational war planners prior to Operation Iraqi

Freedom (OIF). Finally, we reviewed various iterations of operational 

plans and stability plans prepared by U.S. Central Command and the 

Coalition Forces Land Component Command. To assess DOD’s actions to 

mitigate risks associated with an adversary’s conventional munitions 

storage sites for future operations based on OIF lessons learned, we 

examined joint staff and service-specific lessons learned reports. We also 

reviewed joint doctrine and multiservice doctrines, tactics, techniques, 

and procedures, and the Joint IED Defeat handbook to determine how 

those documents address the security of conventional munitions storage 

sites. 

To address protection of U.S. ground forces in Iraq, we focused on the 

availability of body armor and truck armor to meet requirements. Our 

methodology for evaluating the supply of body armor—one of nine supply 

items we selected for detailed case studies—is discussed in the section 

below on supply support for U.S. ground forces. To examine the 

availability of truck armor, we focused on medium and heavy tactical 

trucks used by Army and Marine Corps forces in the U.S. Central 

Command area of responsibility, which included those in Iraq and 

Afghanistan. To identify the extent to which truck armor was produced 

and installed to meet identified requirements, we visited numerous DOD, 

U.S. Military 

Readiness 

Page 111 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XVI: Objectives, Scope, and

Methodology 

Army, and Marine Corps organizations to obtain data on the requirements, 

funding, production, and installation of truck armor kits. We considered 

the armor requirement as met for each type of truck when the quantity of

armor kits produced and installed onto vehicles equaled the requirement. 

Based on the information gathered, we identified factors that affected the 

time to provide truck armor kits to deployed forces. We also identified 

DOD’s, the Army’s, and the Marine Corps’ short-term and long-term efforts 

to improve the availability of truck armor. 

To assess supply support for U.S. ground forces, we developed detailed

case studies of nine supply items that were reported to be in short supply 

during OIF between October 2002 and September 2004. To identify the 

extent and impact of supply shortages, we visited numerous DOD logistics 

organizations to obtain data on the production, availability, and 

distribution of supply items at the national level. We interviewed members 

of units that had returned from the theater to determine the extent and 

impact of item shortages on their operations. We identified deficiencies 

that affected the availability of two or more of the case study items. We 

worked with DOD logistics agencies, operational units, and service and

geographic commands to evaluate the significance of these deficiencies. 

We also identified DOD’s and the military services’ short-term and longterm efforts to address these shortages. Our methodology for assessing 

supply support of truck armor is discussed in the section above on 

protection of U.S. forces. To assess DOD’s progress in resolving supply 

distribution deficiencies, we reviewed DOD’s organizational structure, 

transformation strategy, and major initiatives to improve the distribution 

system, including the U.S. Transportation Command’s progress in 

implementing its responsibilities as DOD’s “distribution process owner” 

and the extent to which DOD’s logistics transformation strategy provides a 

framework for guiding and synchronizing distribution improvement 

efforts. We obtained information on five initiatives that DOD highlighted 

as major efforts to resolve distribution problems. We also reviewed DOD’s 

plan to address long-term systemic weaknesses in supply chain 

management. 

To examine efforts to improve acquisition outcomes, we relied primarily 

on our completed and ongoing reviews of efforts to rebuild Iraq that we 

have undertaken since 2003, as well as our work related to selected DOD 

contract management issues. We also reviewed audit reports and lessons 

learned reports issued by the Special Inspector General for Iraq 

Reconstruction and work completed by the Inspector General, 

Improving Acquisition 

Outcomes 

Page 112 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XVI: Objectives, Scope, and

Methodology 

Department of Defense. To determine the extent to which DOD has 

improved its management and oversight of contractors supporting 

deployed forces, we met with DOD and military department officials and 

reviewed changes to key policies and guidance. We visited selected DOD 

components and military commands in the United States and held 

discussions with military commanders, staff officers, and other officials 

that had deployed to Iraq or elsewhere in Southwest Asia during the 2003-

2006 time frame to discuss their experiences and the challenges they faced 

managing and overseeing contractors in a deployed location. We also 

traveled to Southwest Asia, including Iraq, to meet with combat units and 

to discuss the use of contractor support with military and installation 

commanders and other military personnel. We also met with 26 U.S. and 

foreign contractors who provide support to DOD in Southwest Asia to 

discuss contracting and contract management issues. 

Page 113 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
Enclosure XVII: Staff Acknowledgments Enclosure XVII: Staff Acknowledgments 

Key contributors to this report include Nanette Barton, Ann Borseth, 

David Bruno, Donna Byers, Dan Cain, Joseph A. Christoff, Carole Coffey, 

Lynn Cothern, Tracey Cross, Davi D’Agostino, Tim DiNapoli, Mike Ferren, 

Rich Geiger, Tom Gosling, Whitney Havens, Lisa Helmer, Patrick Hickey, 

Henry L. Hinton Jr., Rhonda Horried, John Hutton, Mike Kennedy, Bruce 

Kutnick, Steve Lord, Judy McCloskey, Tet Miyabara, Kate Monahan, Dave 

Moser, Mary Moutsos, Ken Patton, Sharon Pickup, Jason Pogacnik, Jim 

Reynolds, Donna Rogers, Cary Russell, Dave Schmitt, Amy Sheller, 

William Solis, Lorelei St. James, Janet St. Laurent, Derek Stewart, John 

Van Schaik, and Tim Wedding. 

Ben Atwater, Rob Ball, Leslie Bharadwaja, Michael Derr, Susan Ditto, 

George Duncan, Etana Finkler, Muriel Forster, Brent Helt, Wesley 

Johnson, Hynek Kalkus, Andy Marek, Jim Michels, Don Morrison, Marc 

Schwartz, Michael Simon, Jena Sinkfield, Cynthia Taylor, Gergana Trainor, 

Kristy Williams, Wilda Wong, and Tony Wysocki provided technical 

assistance. 

(320472) Page 114 GAO-07-308SP Securing, Stabilizing, and Rebuilding Iraq
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