a

GAO

United States General Accounting Office

Report to Congressional Committees

June 2004 REBUILDING IRAQ

Fiscal Year 2003 

Contract Award 

Procedures and 

Management 

Challenges

GAO-04-605
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Highlights of GAO-04-605, a report to 

congressional committees. 

June 2004

REBUILDING IRAQ

Fiscal Year 2003 Contract Award 

Procedures and Management Challenges 

Agencies used sole-source or limited competition approaches to issue new 

reconstruction contracts, and when doing so, generally complied with 

applicable laws and regulations. Agencies did not, however, always comply 

with requirements when issuing task orders under existing contracts. For 

new contracts, the law generally requires the use of full and open 

competition, where all responsible prospective contractors are allowed to 

compete, but permits sole-source or limited competition awards in specified 

circumstances, such as when only one source is available or to meet urgent 

requirements. All of the 14 new contracts GAO examined were awarded 

without full and open competition, but each involved circumstances that the 

law recognizes as permitting such awards. For example, the Army Corps of 

Engineers properly awarded a sole-source contract for rebuilding Iraq’s oil 

infrastructure to the only contractor that was determined to be in a position 

to provide the services within the required time frame. The Corps 

documented the rationale in a written justification, which was approved by 

the appropriate official. The U.S. Agency for International Development 

properly awarded seven contracts using limited competition. The 

Department of State, however, justified the use of limited competition by 

citing an authority that may not be a recognized exception to competition 

requirements, although a recognized exception could have been used. 

There was a lesser degree of compliance when agencies issued 11 task 

orders under existing contracts. Task orders are deemed by law to satisfy 

competition requirements if they are within the scope, period of 

performance, and maximum value of a properly awarded underlying 

contract. GAO found several instances where contracting officers issued 

task orders for work that was not within the scope of the underlying 

contracts. For example, to obtain media development services and various 

subject matter experts, the Defense Contracting Command-Washington 

placed two orders using a management improvement contract awarded 

under the General Services Administration’s schedule program. But neither 

of the two orders involved management improvement activities. Work under 

these and other orders should have been awarded using competitive 

procedures or, due to the exigent circumstances, supported by a justification 

for other than full and open competition. 

The agencies encountered various contract administration challenges during 

the early stages of the reconstruction effort, stemming in part from 

inadequate staffing, lack of clearly defined roles and responsibilities, 

changing requirements, and security constraints. While some of these issues 

have been addressed, staffing and security remain major concerns. 

Additionally, the Army and its contractors have yet to agree on key terms 

and conditions, including the projected cost, on nearly $1.8 billion worth of 

reconstruction work that either has been completed or is well under way. 

Until contract terms are defined, cost risks for the government remain and 

contract cost control incentives are likely to be less effective. 

Congress has appropriated more 

than $20 billion since April 2003 to 

support rebuilding efforts in Iraq. 

This complex undertaking, which is 

occurring in an unstable security 

environment and under significant 

time constraints, is being carried 

out largely through contracts with 

private-sector companies. As of 

September 2003, agencies had 

obligated nearly $3.7 billion on 100 

contracts or task orders under 

existing contracts. 

Given widespread congressional 

interest in ensuring that 

reconstruction contracts are 

awarded properly and administered 

effectively, GAO reviewed 25 

contract actions that represented 

about 97 percent of the obligated 

funds. GAO determined whether 

agencies had complied with 

competition requirements in 

awarding new contracts and 

issuing task orders and evaluated 

agencies’ initial efforts in carrying 

out contract administration tasks. 

GAO is making several 

recommendations to the Secretary 

of the Army to ensure compliance 

with requirements when issuing 

task orders to rebuild Iraq and to 

reduce cost risk for the 

government. GAO also is 

recommending that the Secretary 

of Defense develop a strategy to 

improve the delivery of acquisition 

support in any future operations. 

DOD generally concurred with the 

recommendations and said it is 

resolving the contracting issues. 
Page i GAO-04-605 Iraq Reconstruction Contracting 

Letter 1

Scope and Methodology 1

Results in Brief 4

Background 6

New Contract Awards Generally Complied with Competition 

Requirements, but Task Orders Were Less Compliant 11

Effective Contract Administration Remains a Key Challenge as 

Contracting Activity Increases 21

Conclusions 28

Recommendations for Executive Action 29

Agency Comments and Our Evaluation 30

Appendix I List of Organizations Contacted 35 

Appendix II Iraq Reconstruction Contracts/Task Orders and 

Obligations as of September 30, 2003 36 

Appendix III Comments from the Department of Defense 41 

GAO Comments 46

Appendix IV Comments from the Department of State 48 

Appendix V Comments from the U.S. Agency for International 

Development 51 

Appendix VI Comments from the General Services Administration 52 

Appendix VII GAO Contacts and Acknowledgments 55 

Contents 
Page ii GAO-04-605 Iraq Reconstruction Contracting 

Tables 

Table 1: Organizations and Principal Areas of Responsibility for 

Rebuilding Iraq 7

Table 2: Contract Activity by Organization, as of September 30, 

2003 8

Table 3: Projected Uses of Fiscal Year 2004 Appropriations for Iraq 

Reconstruction Efforts 9

Table 4: Principal Procurement Approaches Used to Rebuild Iraq 11

Table 5: Agency Compliance with Requirements for Awarding New 

Contracts Using Other Than Full and Open Competition 13

Table 6: Agency Compliance with Requirements for Issuing Task 

Orders on Existing Contracts 16

Table 7: Undefinitized Contract Actions as of March 2004 23

Abbreviations 

CICA Competition in Contracting Act 

CPA Coalition Provisional Authority 

DCAA Defense Contract Audit Agency 

DCC-W Defense Contracting Command-Washington 

DCMA Defense Contract Management Agency 

DOD Department of Defense 

FAR Federal Acquisition Regulation 

GAO General Accounting Office 

GSA General Services Administration 

LOGCAP Logistics Civil Augmentation Program 

OMB Office of Management and Budget 

SAIC Science Applications International Corporation 

USAID U.S. Agency for International Development 

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Page 1 GAO-04-605 Iraq Reconstruction Contracting 

June 1, 2004 

Congressional Committees 

The United States, along with its coalition partners and various 

international organizations and donors, has embarked on a significant 

effort to rebuild Iraq in the aftermath of the war that replaced that 

country’s regime. Since April 2003, Congress has appropriated more than 

$20 billion to support rebuilding efforts such as restoring Iraq’s oil and 

electric infrastructures; reconstituting Iraq’s national army and local police 

forces; assisting in developing a market-based economy; and improving 

the country’s health, education, and medical services. The Coalition 

Provisional Authority (CPA), an entity established to manage Iraqi affairs 

on a temporary basis, is overseeing the rebuilding effort. This complex 

undertaking, which is occurring in an unstable security environment and 

under significant time constraints, is being carried out largely through 

contracts with private-sector companies. 

Given the widespread congressional interest in ensuring that 

reconstruction contracts are awarded properly and administered 

effectively, we initiated a review of the contracts awarded to rebuild Iraq. 

Our review focused on reconstruction-related contract actions by the 

Department of Defense (DOD) (primarily the U.S. Army, including the 

Army Corps of Engineers), the U.S. Agency for International Development 

(USAID), and the Department of State through September 30, 2003. Many 

of these contract actions were awarded on behalf of the CPA, especially by 

the Army, which acted as the CPA’s executive agent. Our objectives were 

to (1) determine whether agencies had complied with applicable laws and 

regulations governing competition in awarding new contracts and issuing 

task orders under existing contracts, and (2) evaluate agencies’ initial 

efforts in carrying out contract administration tasks. 

We reviewed reconstruction contracts that had been funded, in whole or 

in part, with U.S. appropriated funds. We focused our review on new 

contracts, modifications, task orders under existing contracts, and 

contract actions using the General Services Administration’s (GSA) federal 

supply schedule program as of September 30, 2003. We did not review 

contracts that were funded entirely with international or Iraqi national 

funds, such as funds seized after the 1991 Gulf War or funds that were 

discovered during Operation Iraqi Freedom in 2003. We also did not 

United States General Accounting Office 

Washington, DC 20548 

Scope and 

Methodology 
Page 2 GAO-04-605 Iraq Reconstruction Contracting 

review contracts or task orders that were used only for support of military 

operations or grants and cooperative agreements awarded to international 

or nongovernmental organizations. We continue to evaluate various issues 

related to military operations and the progress in rebuilding Iraq under 

separate reviews.1

To determine the number of reconstruction contract actions, the types of 

contract actions, the procedures used to make the awards, and the funding 

sources, we requested information from each of the principal 

organizations responsible for rebuilding activities in Iraq: the CPA, the 

Office of the Secretary of Defense, the Department of the Army, the Army 

Corps of Engineers, USAID, and the Departments of State and Justice. To 

verify the information provided, we requested copies of each contract 

action issued as of September 30, 2003, and corrected the information 

provided as appropriate. Agency officials could not provide the contract 

files for a limited number of small-dollar contracts awarded during the 

early stages of the reconstruction effort. To determine the amount 

obligated for reconstruction, we primarily used the obligation data 

recorded in the contracts. We also reviewed the data maintained by the 

agencies’ budget offices and information reflected in the Office of 

Management and Budget’s (OMB) quarterly status reports. To obtain 

information on contract activities since September 2003, we interviewed 

CPA and agency officials, attended industry day conferences, and 

reviewed solicitations and other relevant agency documents. 

To determine whether agencies had complied with applicable laws and 

regulations governing competition when awarding contracts and issuing 

task orders, we reviewed the requirements of the Competition in 

Contracting Act (CICA) of 1984 and other relevant laws and regulations. 

We judgmentally selected 25 contract actions, consisting of 14 new 

contracts awarded using other than full and open competition and 11 task 

orders issued under existing contracts. These 25 contract actions 

represented about 97 percent of the total dollars obligated for 

reconstruction through September 30, 2003. New contracts accounted for 

nearly 80 percent of this spending. 

 1

 For example, we testified on efforts to identify and recover assets of the former regime 

and return them to the Iraqi people. See Recovering Iraq’s Assets: Preliminary 

Observations on U.S. Efforts and Challenges, GAO-04-579T (Washington, D.C.: Mar. 18, 

2004). 
Page 3 GAO-04-605 Iraq Reconstruction Contracting 

We selected the 25 contracts or task orders based on various factors. We 

focused on high-dollar value contracts and task orders, and on contracts 

awarded using other than full and open competitive procedures. We also 

considered whether audits by the DOD or USAID Inspectors General were 

under way. Overall, the 25 contracts or task orders consisted of the 

following: 

• the largest contract awarded and the 4 largest task orders, by dollar 

value, issued to support CPA operations; 

• 9 contracts awarded and 1 task order issued by USAID, as well as 

1 task order issued under an Air Force contract to provide logistical 

support for USAID-managed efforts; 

• 2 contracts awarded and 4 task orders issued by the Army Corps of 

Engineers and the Army Field Support Command to help restore Iraq’s 

oil or electrical infrastructure; 

• 1 contract awarded and 1 task order issued by the Army to train or 

equip the New Iraqi Army; and 

• 1 contract awarded by the Department of State to support Iraqi law 

enforcement efforts. 

For new contract awards, we determined whether agency officials 

followed appropriate procedures in using other than full and open 

competition and assessed the agency’s justification for its contracting 

approach. For task orders issued under existing contracts, we determined 

whether the task orders were within the scope of the existing contracts, 

and if not, whether the agencies had followed proper procedures to add 

the work. To do so, we obtained the contracts or task orders and 

associated modifications, justification and approval documentation, 

negotiation memoranda, audit reports, and other relevant documents. We 

discussed the award and issuance process with agency procurement 

personnel, including contracting officers, program managers, and, in some 

cases, agency counsel. We also reviewed audit reports on various 

procurement issues prepared by the DOD and USAID Inspectors General 

and the Defense Contract Audit Agency (DCAA). 

To assess agencies’ initial contract administration efforts, we interviewed 

procurement officials to determine how contract administration for their 

contracts was initially staffed, including the use of support contracts to 

assist in administering the contracts. We obtained information on plans for 

reaching agreement on key contract terms and conditions. We also 

reviewed the 25 contracts or task orders to determine whether they 

included provisions related to contract administration, such as quality 

assurance plans, requirements for monthly status reports, and 
Page 4 GAO-04-605 Iraq Reconstruction Contracting 

subcontractor management plans. As part of our monitoring of 

reconstruction activities, we conducted field visits in October 2003 in 

Baghdad and in other areas in Iraq, including Al Hillal and Al Basrah. 

During these visits, we held discussions with officials and visited project 

sites, including power plants, oil wells, oil processing facilities, water and 

sewage systems, schools, and many other reconstruction activities. During 

these visits, we observed the challenges faced in carrying out 

reconstruction efforts, including the hostile security environment, poor 

communications, and unsettled working conditions. 

Appendix I lists the agencies visited during our review. We conducted our 

work between May 2003 and April 2004 in accordance with generally 

accepted government auditing standards. 

Agencies generally complied with applicable laws and regulations 

governing competition when using sole-source or limited competition 

approaches to award new contracts for reconstruction. They did not 

always comply with competition requirements, however, in issuing task 

orders under existing contracts. For new contracts, the law generally 

requires the use of full and open competition, where all responsible 

prospective contractors are allowed to compete, but permits sole-source 

or limited competition awards in specified circumstances, such as when 

only one source is available or to meet urgent requirements. All of the 

14 new contracts we examined were awarded without full and open 

competition. Each of these contracts, however, involved circumstances 

that the law recognizes as permitting other than full and open competition, 

and agencies generally justified the use of sole-source or limited 

competition awards in accordance with legal requirements. For example, 

the Army Corps of Engineers properly awarded a sole-source contract for 

rebuilding Iraq’s oil infrastructure to the only contractor DOD had 

determined was in a position to provide the services within the required 

time frame given classified prewar planning requirements. The Army 

Corps of Engineers documented the rationale in a written justification and 

had the justification approved by the appropriate official. Similarly, USAID 

properly awarded seven contracts using limited competition procedures. 

In one instance, however, the Department of State justified and approved 

the use of limited competition by citing a unique authority that may not be 

a recognized exception to the competition requirements, even though a 

recognized exception to competition requirements was available. 

Of the 11 task orders agencies issued under existing contracts, 2 were 

within the scope of the underlying contracts and 7, in whole or part, were 

Results in Brief 
Page 5 GAO-04-605 Iraq Reconstruction Contracting 

not within scope; we have reservations about whether 2 others were 

within scope. Task orders are deemed by law to satisfy competition 

requirements if they are within the scope, period of performance, and 

maximum value of a properly awarded underlying contract. Although the 

maximum value and period of performance for a contract are almost 

always objectively ascertainable, decisions concerning the scope of a 

contract involve subjective analysis and judgment. Contracting officers 

must decide whether the work described in a task order fits within the 

work generally described in the contract. In several instances, contracting 

officers issued task orders for work that was not within the scope of the 

underlying contracts. For example, to obtain media development services 

and various subject matter experts, the Defense Contracting CommandWashington (DCC-W) placed two orders using a management 

improvement contract awarded under GSA’s federal supply schedule 

program. But the two orders, both placed with the same company, did not 

involve management improvement activities. The out-of-scope work under 

these and other orders should have been awarded using competitive 

procedures or, because of the exigent circumstances involved, supported 

by a justification for other than full and open competition in accordance 

with legal requirements. To ensure that task orders issued to rebuild Iraq 

comply with applicable requirements, we are making several 

recommendations to the Secretary of the Army to review out-of-scope task 

orders to address outstanding issues and take appropriate actions, as 

necessary. 

The agencies encountered various contract administration challenges 

during the early stages of the reconstruction effort, stemming in part from 

inadequate staffing, lack of clearly defined roles and responsibilities, 

changing requirements, and security constraints. While some of these 

issues have been addressed, staffing, security, and defining key terms and 

conditions of the contracts remain major concerns. For example, USAID 

officials have found it necessary to augment mission staff with personnel 

on temporary assignment from other USAID missions, while the State 

Department is exploring options for reorganizing the bureau overseeing its 

contract to use resources more efficiently. In addition, the Army has 

nearly $1.8 billion worth of reconstruction work that either has been 

completed or is well under way, but the agency and the contractors have 

yet to agree on key terms and conditions, including a projected cost. Until 

contract terms are defined, contract cost control incentives are likely to be 

less effective and risks to the government remain. To promote effective 

cost control, we are recommending that the Secretary of Army definitize 

outstanding contract actions as soon as possible. To improve the delivery 

of acquisition support in future operations, we are also recommending that 
Page 6 GAO-04-605 Iraq Reconstruction Contracting 

the Secretary of Defense, in consultation with the Administrator, USAID, 

evaluate the lessons learned in Iraq and develop a strategy for assuring 

that adequate staff and other resources can be made available in a timely 

manner. 

For future reconstruction efforts in Iraq, the CPA has established a 

program management office to provide better coordination and 

management over activities to be conducted during the next year. To 

implement this approach, in March 2004, DOD, on behalf of the CPA, 

awarded 17 contracts for overall program support and construction 

management services in such areas as electricity and water. Other 

agencies, such as USAID, will continue to award and manage contracts 

within their areas of responsibilities. 

We received written comments on a draft of this report from DOD, the 

Department of State, USAID, and GSA. DOD generally concurred with our 

recommendations and outlined a number of corrective actions it is taking. 

The Department of State disagreed with our assessment that the authority 

it cited to limit competition may not be a recognized exception to 

competition requirements. State did not provide us, however, with a 

persuasive basis to conclude that the authority is a recognized exception. 

USAID concurred with the draft as written. GSA noted it was working 

with DOD and other federal agencies to ensure that their contracting 

officers are fully trained on the proper use of the federal supply schedule 

program. The agencies’ comments appear in appendixes III, IV, V, and VI. 

During the latter part of 2002, as diplomatic efforts to convince the former 

Iraqi regime to comply with United Nations Security Council resolutions 

continued, discussions took place within the administration about the 

need to rebuild Iraq should combat operations become necessary. In 

October 2002, OMB established a senior interagency team to establish a 

baseline assessment of conditions in Iraq and to develop relief and 

reconstruction plans. According to an OMB official, the team developed 

plans for immediate relief operations and longer-term reconstruction in 

10 sectors: health, education, water and sanitation, electricity, shelter, 

transportation, governance and the rule of law, agriculture and rural 

development, telecommunications, and economic and financial policy. 

Though high-level planning continued through the fall of 2002, most of the 

agencies involved in the planning were not requested to initiate 

procurement actions for the rebuilding efforts until early in 2003. Once 

assigned the responsibilities, agency procurement personnel were 

Background 
Page 7 GAO-04-605 Iraq Reconstruction Contracting 

instructed to be ready to award the initial contracts within a relatively 

short time period, often within weeks. During 2003, several agencies 

played a role in awarding or managing reconstruction contracts, most 

notably USAID and the Army Corps of Engineers. Various agencies 

awarded contracts on behalf of the CPA and its predecessor organization, 

the Office of Reconstruction and Humanitarian Assistance. Table 1 shows 

the principal areas of responsibility assigned to the CPA and other 

agencies. 

Table 1: Organizations and Principal Areas of Responsibility for Rebuilding Iraq 

Organization Primary responsibilities 

CPA Acts as an interim government and oversees, directs, 

coordinates, and approves rebuilding efforts. The CPA 

Administrator reports to the President through the 

Secretary of Defense. 

Department of the Army DOD executive agent for the CPA. Provides 

administrative, logistics, and contracting support for the 

CPA and training for the New Iraqi Army. 

Army Corps of Engineers Iraqi oil and electrical infrastructures, CPA administrative 

support, and technical assistance on USAID capital 

construction contracts. 

USAID Nonoil-related capital construction, seaport and airport 

administration, local governance, economic development, 

education, and public health. 

Department of State Civilian law enforcement, judicial, and corrections 

support. 

Department of Justice Civilian law enforcement training and support. 

Source: GAO’s analysis of agency data. 

As of September 30, 2003, the agencies had obligated nearly $3.7 billion on 

100 contracts or task orders for reconstruction efforts (see table 2). These 

obligations came from various funding sources, including U.S. 

appropriated funds and Iraqi assets.2

 The Army Corps of Engineers and 

USAID together obligated about $3.2 billion, or nearly 86 percent of this 

total. The majority of these funds were used to rebuild Iraq’s oil 

infrastructure and to fund other capital-improvement projects, such as 

repairing schools, hospitals, and bridges. This spending reflects a 

relatively small part of the total amount that may be required to rebuild 

 2

 The Emergency Wartime Supplemental Appropriations Act, 2003 (Pub. L. No. 108-11, Apr. 

16, 2003) established several funds that could be used to support rebuilding efforts. 

Agencies also used other appropriation accounts to support certain rebuilding efforts. 
Page 8 GAO-04-605 Iraq Reconstruction Contracting 

Iraq, with estimates ranging from $50 billion to $100 billion.3 Appendix II 

lists the 100 reconstruction contracts and task orders we identified and the 

associated obligations as of September 30, 2003.4

Table 2: Contract Activity by Organization, as of September 30, 2003 

Dollars in millions 

Organization 

Contracts 

awarded or task 

orders issued

Amount 

obligated 

Percent of 

total obligations

CPAa

Army Field Support Command 1 $204.1 6

Defense Contracting Command-Washington 24 127.9 3 

Army Corps of Engineers 3 28.5 <1

Defense Information Systems Agency 4 27.4 <1

Defense Contract Management Agency 7 16.9 <1 

Army Contracting Agency 1 11.0 <1

Washington Headquarters Services 34 1.8 <1

Department of the Army 

Army Corps of Engineers 8 1,694.6 46

Army Field Support Command 3 69.4 2

Army Contracting Agency 1 48.1 1

USAID 

USAID 11 1,335.8 36

Department of the Air Forceb 1 91.5 2

Department of State 1 19.6 <1

Department of Justice 1 1.7 <1

Total 100 $3,678.3 100

Source: GAO’s analysis of data provided by DOD, the CPA, USAID, and the Departments of State and Justice. 

Note: Figures do not total to 100 percent. 

a

Reflects contracts awarded or task orders issued on behalf of the CPA by the listed agencies. 

b

Reflects an Air Force task order issued for logistical support on behalf of USAID. 

 3

 Congressional Budget Office, Paying for Iraq’s Reconstruction (January 2004). 

4

 Appendix II may understate the total number of reconstruction contracts and task orders, 

as agency officials were unable to provide information on a limited number of small-dollar 

contracts awarded during the early stages of the reconstruction effort. 
Page 9 GAO-04-605 Iraq Reconstruction Contracting 

In November 2003, Congress appropriated an additional $18.4 billion for 

rebuilding activities.5

 The CPA’s projected uses for the funds reflect a 

continued emphasis on rebuilding Iraq’s infrastructure and on providing 

improved security and law enforcement capabilities (see table 3). In 

appropriating these funds, Congress required that the CPA Administrator 

or the head of a federal agency notify Congress no later than 7 calendar 

days before awarding a contract, with these funds, valued at $5 million or 

more for reconstruction using other than full and open competition 

procedures.6

Table 3: Projected Uses of Fiscal Year 2004 Appropriations for Iraq Reconstruction 

Efforts 

Dollars in billions 

Purpose Amount 

Electric sector $ 5.6

Water resources and sanitation 4.3

Security and law enforcement 3.2

Oil infrastructure 1.7

Justice, public safety, and civil society 1.5

Health care 0.8

Transportation/telecommunications 0.5

Roads, bridges, and construction 0.4

Education, refugees, and human rights 0.3

Private-sector development 0.2

Total $18.4

Source: OMB. 

Note: Figures may not total due to rounding. 

 5

 Emergency Supplemental Appropriations Act for Defense and for the Reconstruction of 

Iraq and Afghanistan, 2004. (Pub. L. No. 108-106, Nov. 6, 2003.) Congress appropriated 

$18.649 billion for Iraq relief and reconstruction; however, of this amount, $210 million was 

set aside for assistance to Jordan, Liberia, and Sudan. Additionally, the Consolidated 

Appropriations Act, 2004 (Pub. L. No. 108-199, Jan. 23, 2004) allows another $100 million of 

that amount to be used for assistance to Turkey and $30 million for the Middle East 

Partnership Initiative. 

6

 Included within the information to be provided is the justification for using other than full 

and open competitive procedures, a brief description of the contract’s scope, the amount of 

the contract, a discussion of how the contracting agency identified and solicited offers 

from contractors, and a list of the contractors solicited. 
Page 10 GAO-04-605 Iraq Reconstruction Contracting 

U.S.-funded reconstruction efforts were undertaken through numerous 

contracts awarded by various U.S. agencies. CICA generally requires that 

federal contracts be awarded on the basis of full and open competition—

that is, all responsible prospective contractors must be afforded the 

opportunity to compete.7

 The process is intended to permit the 

government to rely on competitive market forces to obtain needed goods 

and services at fair and reasonable prices. Within this overall framework, 

agencies can use various procurement approaches to obtain goods and 

services. Each approach, as listed in table 4, involves different 

requirements with which agencies must comply. In some cases, agency 

officials may determine that a contractor working under an existing 

contract may be able to provide the required goods or services through 

issuance of a task order, thus obviating the need to award a new contract. 

Before awarding a task order under an existing contract, however, the 

agency must determine that the work to be added is within the scope of 

that contract (i.e., that the work fits within the statement of work, 

performance period, and maximum value of the existing contract). In 

making this determination, the contracting officer must decide whether 

the new work is encompassed by the existing contract’s statement of work 

and the original competition for that contract. 

 7

 CICA, as enacted in 10 U.S.C. § 2304(a)(1) (2000) (applicable to DOD) and codified at 41 

U.S.C. § 253(a)(1) (2000) (applicable to other executive agencies discussed in this report); 

41 U.S.C. § 403(6) (2000) (definition of “full and open competition”). CICA’s competition 

requirements are implemented in the Federal Acquisition Regulation (FAR), 48 C.F.R. part 

6 (2003) and agency supplements. 
Page 11 GAO-04-605 Iraq Reconstruction Contracting 

Table 4: Principal Procurement Approaches Used to Rebuild Iraq 

Procurement approach Key requirements 

Award new contract Contract awards generally must comply with CICA’s requirement for full and open 

competition. When not providing for such competition, the contracting officer must, 

among other things, justify the reasons for using the alternative authorized procedure, 

and, if applicable, solicit offers from as many potential sources as is practicable under 

the circumstances and consider actions to facilitate competition for any subsequent 

acquisition of the supplies or services required. The contracting officer’s justification for 

the use of other than full and open competitive procedures must be approved at the 

required level within the agency, depending on the value of the contract and the 

competition exception cited. 

Use existing indefinite-delivery/indefinitequantity contract Indefinite-delivery/indefinite-quantity contracts establish the basic terms of the contracts 

in advance, enabling agency personnel to issue subsequent task or delivery orders for 

specific services or goods expeditiously. Orders must be within the contract’s scope, 

issued within the period of performance, and be within the contract’s maximum value. 

Out-of-scope work must either be competed or be justified by the contracting officer 

under the same rules that apply to noncompetitive awards of new contracts. If the basic 

contract is awarded to multiple firms, then each generally must be given a “fair 

opportunity to be considered” for each order. Special competition requirements apply to 

orders for services by or on behalf of DOD. 

Use federal supply schedule contract GSA’s federal supply schedule program offers a wide variety of commercial goods and 

services through the use of various schedule contracts. Because these contracts are 

deemed to be competitively awarded, contracting officers generally may place orders 

under these contracts without seeking further competition or further determining whether 

the listed prices are fair and reasonable. For service contracts that are valued at more 

than $2,500 and require a statement of work, GSA established special ordering 

procedures that require agency personnel to solicit quotes from at least three contractors 

and evaluate the mix and price of the labor categories being offered, among other things. 

Special competition requirements apply to orders for services by or on behalf of DOD. 

Source: GAO’s analysis. 

Agencies generally complied with applicable laws and regulations 

governing competition when using sole-source or limited competition 

approaches to award the initial reconstruction contracts we reviewed. The 

exigent circumstances that existed immediately prior to, during, and 

following the war led agency officials to conclude that the use of full and 

open competitive procedures for new contracts would not be feasible. We 

found these decisions to be within the authority provided by law. We 

found several instances, however, in which agencies had issued task 

orders for work that was outside the scope of existing contracts. Such task 

orders do not satisfy legal requirements for competition. In these cases, 

the out-of-scope work should have been awarded using competitive 

procedures or supported with a Justification and Approval for other than 

full and open competition in accordance with legal requirements. Given 

the urgent need for reconstruction efforts, the authorities under the 

competition laws for using noncompetitive procedures provided agencies 

New Contract Awards 

Generally Complied 

with Competition 

Requirements, but 

Task Orders Were 

Less Compliant 
Page 12 GAO-04-605 Iraq Reconstruction Contracting 

ample latitude to justify other than full and open competition to satisfy 

their needs. 

The agencies responsible for rebuilding Iraq generally complied with 

applicable requirements governing competition when awarding new 

contracts. While CICA requires that federal contracts be awarded on the 

basis of full and open competition, the law and implementing regulations 

recognize that there may be circumstances under which full and open 

competition would be impracticable, such as when contracts need to be 

awarded quickly to respond to unforeseen and urgent needs or when there 

is only one source for the required product or service.8

 In such cases, 

agencies are given authority by law to award contracts under limited 

competition or on a sole-source basis, provided that the proposed actions 

are appropriately justified and approved.9

We reviewed 14 new contracts that were awarded using other than full and 

open competition: a total of 5 sole-source contracts awarded by the Army 

Corps of Engineers, the Army Field Support Command, and USAID and 

9 limited competition contracts awarded by the Department of State, the 

Army Contracting Agency, and USAID (see table 5). Because of the limited 

time available to plan and commence reconstruction efforts, agency 

officials concluded that the use of full and open competitive procedures in 

awarding new contracts would not be feasible. For 13 of these new 

contracts, agency officials adequately justified their decisions and 

complied with the statutory and regulatory competition requirements. In 

the remaining case, the Department of State justified and approved the use 

of limited competition under a unique authority that, in our opinion, may 

not be a recognized exception to the competition requirements.10 State 

 8

 These exceptions are listed in 10 U.S.C. § 2304(c) and 41 U.S.C. § 253(c). Agencies may 

have other authority available that permits them to justify using other than full and open 

competition in appropriate circumstances. For example, table 5 describes the authority 

USAID used to conduct its limited competitions. 

9

 10 U.S.C. § 2304(f) and 41 U.S.C. § 253(f) establish the required approval levels and the 

required contents of the justification. Lack of advance planning is prohibited as a basis for 

using other than competitive procedures. 

10 State relied on section 481(a) of the Foreign Assistance Act of 1961, as amended, 22 

U.S.C. § 2291(a)(4) (2000), which reads: “Notwithstanding any other provision of law, the 

President is authorized to furnish assistance to any country or international organization, 

on such terms and conditions as he may determine, for the control of narcotic and 

psychotropic drugs and other controlled substances, or for other anticrime purposes.” 

Agencies Properly 

Justified Use of Other 

Than Full and Open 

Competition in Awarding 

New Contracts 
Page 13 GAO-04-605 Iraq Reconstruction Contracting 

took steps to obtain competition, however, by inviting offers from four 

firms. State could have justified and approved its limited competition 

under recognized exceptions to the competition requirements. 

Table 5: Agency Compliance with Requirements for Awarding New Contracts Using Other Than Full and Open Competition 

Dollars in millions 

Contract(s) objectives Agency action Our assessment 

Obligations as 

of Sept. 2003

Army Corps of Engineers 

Repair and maintain 

operations of Iraq’s oil 

infrastructure 

Awarded sole-source contract citing authorized 

CICA exception for only one responsible source 

available. According to DOD, there was only one 

source with the capability to perform emergency 

repairs to the oil infrastructure given (1) the 

classified nature of the planning efforts, (2) the 

contractor’s role in those efforts, and (3) the 

imminent commencement of hostilities. DOD 

recognized as early as November 2002 that the 

contractor, given its role in preparing a 

contingency support plan, would be in the best 

position to execute the plan for emergency repair 

and continuing the operations of Iraq’s oil 

infrastructure. The contracting officer’s written 

justification outlined the rationale for the decision 

and other factors, and it was approved by the 

Army’s senior procurement executive. 

Justification and Approval 

complied with applicable 

legal standards.a 

$1,390.1

Interim transitional civil 

administration headquarters 

Awarded sole-source contract citing CICA’s 

unusual and compelling urgency exception. 

Justification and Approval 

complied with applicable 

legal standards. 

$19.7

USAID 

Capital construction, transition 

support, local governance, 

economic development, 

education, public health, 

personnel support, and airport 

and seaport administration 

Awarded seven contracts under limited 

competition and two sole-source contracts citing 

the foreign aid program impairment exception to 

the competition requirements provided for under 

the Federal Property and Administrative Services 

Act.b

 The waiver, signed on January 16, 2003, 

instructed procurement officials to seek offers 

from as many sources as was practicable. 

Excluding the two sole-source awards, USAID 

solicited between 2 and 10 potential offerors for 

each contract. 

Justifications and 

Approvals complied with 

applicable legal 

standards.c

$1,326.3
Page 14 GAO-04-605 Iraq Reconstruction Contracting 

Dollars in millions 

Contract(s) objectives Agency action Our assessment 

Obligations as 

of Sept. 2003

Army Contracting Agency 

Training program for New Iraqi 

Army 

Awarded contract under limited competition 

citing CICA’s unusual and compelling urgency 

exception. In this case, the CPA identified a 

requirement for a program on May 31, 2003, 

with the objective of having a program in place 

by July 1. The Army received five proposals, and 

following an evaluation, awarded a contract on 

June 25. 

Justification and Approval 

complied with applicable 

legal standards. 

$48.1

Army Field Support Command 

Prepositioning fire-fighting 

equipment 

Awarded sole-source letter contract (numbered as 

a task order under the Army’s existing Logistics 

Civil Augmentation Program (LOGCAP) contract) 

citing CICA’s exception for only one responsible 

source available. 

Justification and Approval 

complied with applicable 

legal standards.a

$37.5

Department of State 

Law enforcement, judicial, and 

corrections support 

Agency limited competition by citing a provision of 

the Foreign Assistance Act of 1961 that authorizes 

the President to furnish foreign assistance on 

such terms and conditions as he may determine 

for international narcotics control or for other 

anticrime purposes “notwithstanding any other 

provision of law.” 

Authority used by State 

may not be a recognized 

exception to competition 

requirements, although 

circumstances would have 

supported State’s use of a 

recognized exception to 

the requirements. 

$19.6

Source: GAO’s analysis of agency data. 

a

Because the Army cited national security considerations in deciding not to publicize its requirements, 

it was required under the Army FAR Supplement to cite national security as the basis for using other 

than full and open competition and request offers from as many potential sources as practicable 

under the circumstances. However, since the Army reasonably determined in both cases that there 

was only one available, responsible source, there was no substantive effect from the choice of 

authorized competition exception. 

b

The Federal Property and Administrative Services Act permitted waiver of competitive contracting 

procedures that would impair foreign aid programs. This authority, previously codified at 40 U.S.C. § 

474 (2000), was recently recodified and enacted into positive law, 40 U.S.C. § 113(e), by Pub. L. No. 

107-217, § 1, 116 Stat. 1062, 1066 (2002). 

c

The USAID Inspector General also evaluated USAID’s procurement processes. While the Inspector 

General found that USAID had generally complied with applicable federal regulations, the Inspector 

General identified a number of issues, including inadequate needs assessments, absence of a clear 

methodology for and documentation of market research decisions in identifying prospective 

contractors, need to obtain general counsel’s advice on certain procurement matters, and lack of 

notification and timely debriefings of unsuccessful offerors. USAID agreed to address the issues 

raised by the Inspector General. 
Page 15 GAO-04-605 Iraq Reconstruction Contracting 

We found a lesser degree of compliance when agencies issued task orders 

under existing contracts. When issuing a task order under an existing 

contract, the competition law does not require competition beyond that 

obtained for the initial contract award,11 provided the task order does not 

increase the scope of the work, period of performance, or maximum value 

of the contract under which the order is issued.12 The scope, period, or 

maximum value may be increased only by modification of the contract,13

and competitive procedures are required to be used for any such increase 

unless an authorized exception applies.14

Determining whether work is within the scope of an existing task order 

contract is primarily an issue of contract interpretation and judgment by 

the contracting officer (in contrast to the contract’s maximum value and 

performance period, which are explicitly stated in the contract). Other 

than the basic requirement that task orders be within scope, there are no 

statutory or regulatory criteria or procedures that guide a contracting 

officer in making this determination. Instead, guiding principles for scope 

of contract determinations are established in case law, such as bid protest 

decisions of the Comptroller General.15 These decisions establish that the 

key factor is whether there is a material difference between the new work 

and the contract that was originally awarded—in other words, whether 

 11 10 U.S.C. § 2304c(a)(2) and 41 U.S.C. § 253j(a)(2) (2000). If more than one contractor 

was awarded a contract, however, then all the contractors are required to be provided 

a fair opportunity to be considered for the task order. 10 U.S.C. § 2304c(b) and 41 U.S.C. 

§ 253j(b). 

12 10 U.S.C. § 2304a(e) and 41 U.S.C. § 253h(e) (2000). 

13 10 U.S.C. § 2304a(e) and 41 U.S.C. § 253h(e). 

14 This requirement for competition for out-of-scope modifications is explicitly stated for 

task order contracts for advisory and assistance services. 10 U.S.C. § 2304b(f) and 41 U.S.C. 

§ 253i(f) (2000). For other types of task and delivery order contracts, the requirement for 

competition for out-of-scope modifications is based on case law such as bid protest 

decisions of the Comptroller General of the United States. See, for example, Makro 

Janitorial Srvs., Inc., B-282690, Aug. 18, 1999, 99-2 CPD ¶ 39 at 2; Anteon Corp., B-293523, 

B-293523.2, Mar. 29, 2004, 2004 CPD ¶___at 4-5. 

15 Although we used such bid protest decisions in establishing the criteria for our review of 

the task orders issued for Iraq’s reconstruction, our review is not related in any way to the 

statutory bid protest function of the Comptroller General under CICA. 

Agencies Did Not Always 

Satisfy Competition 

Requirements When 

Issuing Task Orders under 

Existing Contracts 
Page 16 GAO-04-605 Iraq Reconstruction Contracting 

new work is something potential offerors reasonably could have 

anticipated in the competition for the underlying contract.16

Of the 11 task orders we reviewed, 2 were within the scope of the 

underlying contract and 7 were, in whole or part, not within scope; we 

have reservations concerning whether 2 others were within scope (see 

table 6). 

Table 6: Agency Compliance with Requirements for Issuing Task Orders on Existing Contracts 

Dollars in millions 

Task order objectives Our assessment 

Obligations as 

of Sept. 2003

Defense Information Systems Agency 

Provide internal communications and 

management support to the CPA 

No issues identified. Task order is within the scope of the contract. $22.0

USAID 

Provide monitoring and evaluation 

services for USAID activities in Iraq 

No issues identified. Task order is within the scope of the contract. $5.5

DCC-W 

Establish an Iraqi media capability, 

including print, television, and radio 

Work is outside the scope of the existing contract to provide management 

consulting services to assist in improving federal agency operations. 

$82.4

Recruit and provide logistical support 

for subject matter experts to assist the 

Iraqi Reconstruction and Development 

Council 

Work is outside the scope of the existing contract to provide management 

consulting services to assist in improving federal agency operations. 

$24.8

Air Force Contract Augmentation Program 

Provide logistical support and 

equipment to support USAID mission in 

Baghdad and at other sites in Iraq 

Work is, in part, outside the scope of the contract, which is primarily to 

provide commanders an ability to augment or relieve base operating 

support functions for sustaining deployed operating forces. The Air Force is 

issuing new guidance to ensure orders supporting USAID are within the 

scope of the contract. 

$91.5

Army Field Support Command 

Contingency support planning for 

restoring the Iraqi oil infrastructure 

Work was outside the scope of the existing LOGCAP contract, which 

provides for planning in support of requirements designated to be met via 

LOGCAP support. At the time the order was issued, DOD recognized that 

restoration of the oil infrastructure was beyond the scope of the LOGCAP 

contract. In our opinion, planning for such efforts was, correspondingly, 

also outside the scope. DOD nevertheless determined the planning was 

within scope. 

$1.9

 16 Floro & Assocs., B-285451.3; B-285451.4, Oct. 25, 2000, 2000 CPD ¶ 172 at 4; Anteon 

Corp., supra, at 5. 
Page 17 GAO-04-605 Iraq Reconstruction Contracting 

Dollars in millions 

Task order objectives Our assessment 

Obligations as 

of Sept. 2003

Three task orders issued to repair and 

restore the Iraqi electrical infrastructure 

Work is outside the scope of the three existing contracts because it causes 

the maximum value ($100 million) of each underlying contract to be 

exceeded. 

The Army Corps of Engineers used limited competition in awarding the 

three underlying contracts. Also, the subsequent task orders were not 

competed among the three contractors as required; rather, the work was 

assigned to each contractor based on its existing capabilities within 

geographic location, among other factors. We found that the contracting 

officer had not prepared a justification for these noncompetitive task orders. 

After we raised this issue with agency officials, the contracting officer 

prepared the required documentation in April 2004. 

Although CICA and the FAR permit after-the-fact Justification and Approval 

of noncompetitive awards based on unusual and compelling urgency, 

neither the justification for limiting competition in the award of the three 

underlying contracts, nor the justification for increasing their maximum 

value, has been approved by the Army—almost a year after award and 

more than 6 months after the justification was submitted by the Army Corps 

of Engineers. 

$280.0

Army Field Support Command 

CPA logistical support Work may be outside of the scope of the existing LOGCAP contract, which 

provides for civilian contractor augmentation of combat service support and 

combat support for Army and other entities in wartime and other specified 

operations. 

$204.1

New Iraqi Army training logistical 

support 

Work may be outside of the scope of the existing LOGCAP contract, which 

provides for civilian contractor augmentation of combat service support and 

combat support for Army and other entities in wartime and other specified 

operations. 

$30.0

Source: GAO’s analysis of agency data. 

The seven instances in which agencies issued task orders for work that 

was, in whole or in part, outside the scope of an existing contract are 

described on the following pages. In each of these cases, the out-of-scope 

work should have been awarded using competitive procedures or 

supported with a Justification and Approval for other than full and open 

competition in accordance with legal requirements. Given the urgent need 

for reconstruction efforts, the authorities under the competition laws for 

using noncompetitive procedures provided agencies ample latitude to 

justify other than full and open competition to satisfy their needs. 
Page 18 GAO-04-605 Iraq Reconstruction Contracting 

• DCC-W17 improperly used a GSA schedule contract to issue two task 

orders with a combined value of over $107 million for work that was 

outside the scope of the schedule contract. 

Under GSA’s federal supply schedule program, GSA negotiates 

contracts with multiple firms for various commercial goods and 

services and makes those contracts available for other agencies to use. 

In March 2003, DCC-W placed two orders with Science Applications 

International Corporation (SAIC) under SAIC’s schedule contract. One 

order involved development of a news media capability—including 

radio and television programming and broadcasting—in Iraq. The other 

required SAIC to recruit people identified by DOD as subject matter 

experts, enter into subcontracts with them, and provide them with 

travel and logistical support within the United States and Iraq. The 

schedule contract, however, was for management, organizational, and 

business improvement services for federal agencies. In our view, the 

statements of work for both task orders were outside the scope of the 

schedule contract, which typically would encompass work such as 

consultation, facilitation, and survey services. The period of 

performance for the media services task order has expired, and the 

task order for subject matter experts was extended through 

April 30, 2004.18

• Over $91 million was obligated under an Air Force Contract 

Augmentation Program contract for delivery of commodities to USAID 

for reconstruction activities and logistical support for USAID’s mission 

in Iraq. The contract is intended primarily to provide base-level 

logistical and operational support for Air Force deployments. Under an 

 17 DCC-W, a division within the office of the Administrative Assistant to the Secretary of the 

Army, provides administrative support, including contracting support, to DOD components 

located in the National Capital Region. 

18 In March 2004, the DOD Inspector General reported that a review of 24 contract actions 

awarded by DCC-W on behalf of the CPA (including the two task orders we reviewed) 

revealed that DCC-W circumvented contracting rules—including improperly using schedule 

contracts and improperly contracting for personal services. The Inspector General 

attributed this condition to the need to quickly award contracts and to DOD’s failure to 

plan for the acquisition support the CPA needed to perform its mission. DCC-W officials 

reported that they have and will continue to provide additional guidance and training on 

the use of the schedules program to its personnel. See Acquisition: Contracts Awarded for 

the Coalition Provisional Authority by the Defense Contracting Command–Washington. 

(Report. No. D-2004-057, Office of the Inspector General, Department of Defense. 

Arlington, Va., Mar. 18, 2004). 
Page 19 GAO-04-605 Iraq Reconstruction Contracting 

interagency agreement,19 the Air Force used the contract to provide 

USAID a variety of support tasks related to storage, inventory control 

and management, and other logistical and operational support. Some of 

these funds, however, had been obligated for services such as building 

materials for Iraqi schools and planning for fixing electrical power 

generation for Baghdad water treatment plants. Because these types of 

services—though related to USAID’s foreign assistance mission—are 

not related to support for a deployment, they appear to be outside the 

scope of the contract. When we brought this issue to the attention of 

Air Force officials, they agreed that some of the work was outside the 

scope of the contract, and they are issuing guidance to ensure that 

logistical support for USAID does not go beyond the scope of the 

contract. 

• The Army Field Support Command issued a $1.9 million task order for 

contingency planning for the Iraqi oil infrastructure mission under its 

LOGCAP contract with Kellogg Brown & Root. The task order was not 

within the scope of that contract.20 This task order, issued in November 

2002, required the contractor to develop a plan to repair and restore 

Iraq’s oil infrastructure should Iraqi forces damage or destroy it. 

Because the contractor was knowledgeable about the U.S. Central 

Command’s planning for conducting military operations, DOD officials 

determined the contractor was uniquely positioned to develop the 

contingency support plan. DOD determined that planning for the 

missions was within the scope of the LOGCAP contract, but it also 

determined that the actual execution of the Iraq oil mission, including 

prepositioning of fire-fighting equipment and teams, was beyond its 

scope. 

 19 The interagency agreement is based on authorization contained in the Foreign Assistance 

Act. Section 491(b) of the Foreign Assistance Act authorizes the President, 

“notwithstanding any other provision of this or any other Act,” to furnish foreign assistance 

“on such terms and conditions as he may determine, for international disaster relief and 

rehabilitation,” while section 632(b) of the Act authorizes, for carrying out foreign 

assistance functions, the utilization of the services (including defense services) and 

facilities of, or procurement of commodities and defense articles from, any U.S. agency. 

20 The LOGCAP contract, which was competitively awarded in 2001, requires the contractor 

to provide planning and a broad range of logistics services to the Army and other entities in 

wartime and other operations. The Army has used LOGCAP to support both military 

operations and reconstruction efforts in Iraq. We are reviewing DOD’s use of the LOGCAP 

contract to support military operations under a separate review that will be completed later 

this year. 
Page 20 GAO-04-605 Iraq Reconstruction Contracting 

We agree with the DOD conclusion that repairing and continuing the 

operations of the Iraqi oil infrastructure are not within the scope of the 

contract. But unlike DOD, we conclude that preparation of the 

contingency support plan for this mission was beyond the scope of the 

contract. We read the LOGCAP statement of work as contemplating 

planning efforts for missions designated for possible contractor 

execution under the contract. Consequently, the Army Field Support 

Command should have prepared a written justification to authorize the 

work without competition. The resulting contingency plan was used as 

justification for subsequently awarding a sole-source contract to 

Kellogg Brown & Root for restoring the oil infrastructure, for which 

nearly $1.4 billion was obligated during fiscal year 2003. As noted in 

table 5, we found that the award of this contract generally complied 

with applicable legal standards. 

• In March 2003, the Army Corps of Engineers conducted a limited 

competition resulting in multiple-award contracts with three firms—

Washington International, Inc., Fluor Intercontinental, Inc., and Perini 

Corporation—for construction-related activities in the Central 

Command’s area of responsibility. These contracts had a maximum 

value of $100 million each. In the latter part of August 2003, as efforts 

to restore electricity throughout Iraq lagged and amid concerns that the 

electrical shortages presented social unrest and security threats to the 

CPA and the military forces, the Central Command tasked the Army 

Corps of Engineers with taking steps to rebuild the electrical 

infrastructure as quickly as possible. In response, the Army Corps of 

Engineers issued task orders under each of these contracts causing 

them to exceed their maximum value.21 Consequently, the orders are 

outside the scope of the underlying contracts. 

The Army Corps of Engineers prepared a justification for award of the 

underlying contracts in August 2003 and a subsequent justification in 

September 2003 to increase the maximum value of each contract from 

 21 As of September 30, 2003, two of the three multiple-award contracts had exceeded their 

maximum value. In October 2003, the third contract also exceeded its maximum value. 
Page 21 GAO-04-605 Iraq Reconstruction Contracting 

$100 million to $500 million. Neither justification had been approved as 

of March 31, 2004. 22

Finally, we note that section 803 of the National Defense Authorization 

Act for Fiscal Year 2002 (Pub. L. No. 107-107) requires that an order for 

services in excess of $100,000 issued under a multiple-award contact by 

or on behalf of a DOD agency be made on a competitive basis, unless a 

contracting officer justifies an exception in writing. The Army Corps of 

Engineers did not compete these task orders among the three multipleaward contractors. Rather, the agency and the contractors collectively 

decided to allocate the electrical infrastructure work based on 

geographical sectors and the capabilities of the contractors in the 

theater. We found that the contracting officer had not prepared a 

justification for these noncompetitive task orders. After we raised this 

issue with agency officials, the contracting officer prepared the 

required documentation in April 2004. 

As described in table 6, we also have reservations about whether work 

ordered under two other Army task orders was within the scope of an 

underlying contract for combat support. These task orders were issued by 

the Army Field Support Command for the CPA’s logistical support and for 

a base camp used in training the New Iraqi Army. In these, as in the other 

cases, the competition laws provided agencies ample latitude to justify 

using other than full and open competition to satisfy their needs. 

The need to award contracts and begin reconstruction efforts quickly—the 

factors that led agencies to use other than full and open competition—also 

contributed to initial contract administration challenges. Faced with 

uncertainty as to the full extent of the rebuilding effort, agencies often 

authorized contractors to begin work before key terms and conditions, 

including the statement of work to be performed and the projected cost 

for that work, were fully defined. Until agreement is reached, contract 

incentives to control costs are likely to be less effective. Staffing 

constraints and security concerns posed further challenges. Agencies have 

 22 Under 10 U.S.C. § 2304(f)(2), a Justification and Approval for unusual and compelling 

urgency can be made after award. It has been a year since these contracts were awarded 

using limited competition and more than 6 months since the Corps requested approval 

from the Army’s senior procurement executive for its limited competitive awards. The 

Army FAR Supplement requires the submission of such a post-award justification for 

approval within 30 working days of award. 

Effective Contract 

Administration 

Remains a Key 

Challenge as 

Contracting Activity 

Increases 
Page 22 GAO-04-605 Iraq Reconstruction Contracting 

made progress in addressing these issues, but there remains a backlog of 

contracts for which final agreement has not yet been reached. The CPA 

has created a new office to better manage and coordinate reconstruction 

efforts to be conducted over the next year. 

To meet urgent operational needs, as is the case in Iraq’s reconstruction, 

agencies are permitted to authorize contractors to begin work before 

contracts or task orders have been definitized—that is, before key terms 

and conditions, including price, have been defined and agreed upon. While 

this approach allows agencies to initiate needed work quickly, it also can 

result in potentially significant additional costs and risks being imposed on 

the government. Agencies generally are required to definitize contractual 

actions within 180 days.23

For many of the contracts we reviewed, agencies authorized the 

contractors to begin work before terms were fully defined, and later 

reached final agreement on the scope and price of the work. There remain 

six DOD contracts or tasks orders, however, that had yet to be definitized 

as of March 2004, two involved work that had been completed more than a 

year earlier (see table 7). In total, nearly $1.8 billion had been obligated on 

these contracts or task orders as of September 30, 2003. These contracts 

or task orders had been awarded or issued by either the Army Corps of 

Engineers or the Army Field Support Command, and they include efforts 

to restore Iraq’s oil and electrical infrastructures and to provide logistical 

support to the CPA. 

 23 DOD may waive this requirement if the head of a DOD agency determines that the waiver 

is necessary for a contract to support a contingency operation or a humanitarian or 

peacekeeping operation. 10 U.S.C. § 2326(b)(4) (2000). No such waivers have been issued 

for the contracts we reviewed. The DOD requirements for undefinitized contract actions 

are in the Defense FAR Supplement at subpart 217.74. General requirements for all 

agencies are listed in FAR ¶16.603. 

Reaching Agreement on 

Key Contract Terms and 

Conditions 
Page 23 GAO-04-605 Iraq Reconstruction Contracting 

Table 7: Undefinitized Contract Actions as of March 2004 

Dollars in millions 

Agency Purpose of contract/ task order 

Work status as of 

March 31, 2004 

Amount obligated as 

of Sept. 30, 2003

Army Corps of Engineers Restore Iraq’s oil infrastructurea Ongoing $1,390.0

Army Field Support Command Provide support to the CPA Ongoing 204.1

Army Corps of Engineers Restore Iraq’s electrical infrastructure Ongoing 111.0

Army Field Support Command Prepositioning of fire-fighting equipment 

and personnel 

Completed 

March 2003 

37.5

Army Field Support Command Logistical support for personnel training 

for the New Iraqi Army 

Ongoing 30.0

Army Field Support Command Contingency plan for repairing and 

maintaining Iraq’s oil infrastructure 

Completed 

February 2003 

1.9

Total $1,774.5

Source: GAO’s analysis of agency data.

a

The Army Corps of Engineers awarded a single, sole-source indefinite-delivery/indefinite-quantity 

contract in March 2003. Under this contract, the Army Corps of Engineers had issued a total of 10 

task orders as of March 30, 2004. 

Agency officials attribute much of the delay in reaching agreement to 

continued growth in reconstruction efforts, which in turn have required 

numerous revisions to contract statements of work. The continued growth 

in requirements has resulted in an increase in both contractor costs and 

administrative workload on both contractor and agency procurement 

personnel. For example, the Army Corps of Engineers’ contract to restore 

Iraq’s oil infrastructure had individual task orders placed in March and 

May 2003 that were supposed to be definitized within 180 days.24 Similarly, 

the Army Field Support Command has four task orders that have to be 

definitized. For example, the Army Field Support Command’s task order to 

support the CPA was originally issued in March 2003, at an estimated cost 

of $858,503. As of September 30, the Army had obligated $204.1 million, 

and the statement of work had been modified a total of nine times. With 

each change, the contractor had to revise its cost and technical proposals, 

which also increased the workload for agency procurement personnel. 

 24 This contract also includes a requirement to import fuel and other petroleum products 

into Iraq by the contractor, Kellogg Brown & Root. This task, which accounts for nearly 40 

percent of the amount obligated on the contract as of September 2003, is the subject of 

ongoing reviews by the DOD Inspector General and DCAA. Because of these ongoing 

investigations, we did not evaluate the Army Corps of Engineers’ oversight of this task 

order as part of this review. 
Page 24 GAO-04-605 Iraq Reconstruction Contracting 

The Army Field Support Command’s revised schedule now calls for 

definitizing the task orders between June and October 2004. 

Some of the delays reflect concerns over the adequacy of the contractors’ 

proposals. For example, on the task order awarded to restore Iraq’s 

electrical infrastructure, DCAA found a significant amount of proposed 

costs for which the contractor had not provided adequate support. 

Consequently, DCAA believed that the proposal was inadequate for the 

purposes of negotiating a fair and reasonable price. As of March 2004, 

negotiations between the contractor and the Army Corps of Engineers 

were still ongoing. To reduce risks, the Army Corps of Engineers has 

proposed paying the contractor only 85 percent of incurred costs until the 

contractor has adequately fulfilled its contract closeout responsibilities 

and acceptable business systems were in place. 

The lack of timely contract definitization potentially can have a significant 

impact on total contract costs and related risks. Specifically, the major 

reconstruction efforts have used cost-reimbursement type contracts under 

which the government has agreed, subject to cost ceilings, to reimburse 

the contractor for all reasonable and allowable costs incurred in 

performing the work. In two of the largest contract actions—the contract 

to repair and maintain Iraq’s oil infrastructure and the task order to 

support the CPA operations—the agencies have included an award fee 

provision under which the contractor can earn additional profit for 

meeting set targets in specified areas, such as cost control. As long as 

work continues to be performed under an undefinitized contract, however, 

the award fee incentive is likely to be less effective as a cost control tool 

since there is less work remaining to be accomplished and therefore less 

costs to be controlled by the contractor.25 Given the high cost involved, 

particularly for the Iraq oil mission (over $2.5 billion), any reduction in 

cost control incentives potentially involves a significant contract cost risk. 

 25 Other cost control mechanisms, such as the use of on-site government oversight 

personnel and auditors, as well as contractor cost accounting systems, could mitigate some 

of the cost risks to the government where definitization has been delayed. In addition, 

10 U.S.C. § 2326(e) requires DOD to ensure that the profit allowed on an undefinitized 

contract for which the final price is negotiated after a substantial portion of the work is 

completed reflects the possible reduced cost risk to the contractor. 
Page 25 GAO-04-605 Iraq Reconstruction Contracting 

The lack of adequate staffing presented challenges to several agencies 

involved in reconstruction efforts and, at times, resulted in inadequate 

oversight of the contractors’ activities. While agencies have taken actions, 

some of these early contract administration issues have yet to be fully 

resolved. 

When the CPA’s predecessor organization—Office of Reconstruction and 

Humanitarian Assistance---was established in mid-January 2003, it lacked 

an in-house contracting capability. It was not until February 27, 2003, that 

the Defense Contract Management Agency (DCMA) was asked to provide 

contracting support, including providing acquisition planning assistance 

and awarding and administering contracts. DOD officials noted that this 

tasking was unusual for DCMA, as it is typically responsible for 

administering, rather than awarding, contracts. 

According to DOD officials, they found that the Office of Reconstruction 

and Humanitarian Assistance did not have an official responsible for 

authorizing contract actions and supervising contracting officers and 

others performing procurement-related duties. Further, DOD had 

authorized positions for only two contracting officers, who had yet to 

arrive. In addition, DCMA officials reported that the lack of an 

organizational structure led to contractors providing draft statements of 

work and cost estimates to the contracting officers so that contracts could 

be awarded more quickly. Normally, it is the government’s responsibility 

to provide statements of work and develop independent cost estimates. 

We found that there were not always sufficient in-country personnel to 

administer the contracts or task orders when they were initially awarded 

or issued. For example, for the federal supply schedule order issued in 

March 2003 by DCC-W to establish an Iraqi media capability, contractor 

personnel purchased property that was not part of the task order, 

including purchases that may not have been necessary or appropriate. 

According to DOD officials, contractor personnel purchased about 

$7 million in equipment and services not authorized under the contract, 

including a H-2 Hummer and a pickup truck, and then chartered a flight to 

have them delivered to Iraq. According to DCMA officials, these actions 

were primarily due to inadequate government property management to 

control or monitor the contractor’s purchases. DCMA officials decided in 

May 2003 that it was in the best interests of the government to modify the 

approved equipment list, and include the materials purchased by the 

contractor. 

Providing Adequate Staff 

to Oversee Contracts 
Page 26 GAO-04-605 Iraq Reconstruction Contracting 

The lack of in-country procurement staff proved problematic in another 

task order issued by the DCC-W to help recruit and support subject matter 

experts to assist the CPA and Iraqi ministries.26 According to DCC-W and 

DCMA officials, there was initially neither contractor staff nor government 

officials to monitor the subject matter experts once they arrived in Iraq. 

DCMA officials indicated that some experts failed to report to duty or 

perform their responsibilities as expected or were no longer performing 

work under the task order. 

Staffing concerns affected other agencies as well. For example, USAID 

recognized early that its resources were insufficient to administer and 

oversee the contracts it expected to award. Consequently, USAID arranged 

for the Army Corps of Engineers to provide oversight on its $1.0 billion 

infrastructure contract, arranged to have DCAA audit contractors, and 

made plans to augment its mission in Iraq. As of January 2004, however, a 

senior USAID procurement official stated that its Iraq mission remained 

understaffed to provide adequate contract oversight in Iraq.27 USAID stated 

it has four full-time procurement staff that will be assigned to work in Iraq 

for 3 years. According to the senior official, this long-term commitment is 

essential to establishing the institutional knowledge needed to monitor 

and administer the contracts effectively. However, USAID indicated that 

given the workload, providing an appropriate degree of oversight would 

require at least seven additional personnel. Consequently, USAID found it 

necessary to augment the mission staff with personnel on temporary 

assignment from other USAID missions, who will serve between 1 and 3 

months. 

Similarly, State Department officials noted that the Bureau of International 

Narcotics and Law Enforcement Affairs—the bureau responsible for 

monitoring State’s law enforcement support contract—is understaffed. For 

example, the department official responsible for contract oversight had 

multiple, time-consuming roles. This official currently serves as both the 

 26 The DOD Inspector General’s March 2004 report found that, overall, government 

personnel did not provide adequate surveillance on 13 of the 24 contracts or task orders 

awarded or issued on behalf of the CPA by DCC-W. 

27 We have previously reported that USAID’s lack of personnel support has affected the 

agency’s abilities to deliver reconstruction assistance. See Major Management Challenges 

and Program Risks: U.S. Agency for International Development. GAO-03-111

(Washington, D.C.: Jan. 1, 2003) and Foreign Assistance: Disaster Recovery Program 

Addressed Intended Purposes, but USAID Needs Greater Flexibility to Improve Its 

Response Capability, GAO-02-787 (Washington, D.C.: July 24, 2002). 
Page 27 GAO-04-605 Iraq Reconstruction Contracting 

program manager and the contracting officer’s representative for the law 

enforcement support contract. As such, the official approves the 

contractor’s monthly vouchers along with carrying out other detailed 

procurement tasks. The same official also had responsibilities for the 

department’s efforts to recompete a $1.3 billion effort to provide 

worldwide law enforcement support and for law enforcement support 

efforts in Liberia and Haiti. To address the workload issue, the bureau has 

assigned two additional staff to assist in overseeing contract activities in 

Iraq and is exploring options for reorganizing the bureau to use resources 

more efficiently. 

Providing adequate oversight on reconstruction efforts is challenging 

given the uncertain security environment and harsh working conditions. 

During site visits to Iraq in October 2003, we observed the considerable 

degree to which these factors were affecting reconstruction efforts. For 

example, travel outside secure compounds occurred only in convoys of 

armored vehicles with armed security forces. Flak jackets and helmets 

were required to be worn or, at a minimum, carried. Communications 

were generally difficult and unreliable. In addition, the living and working 

environment afforded individuals little privacy or time to rest. We 

observed that personnel generally worked 12 to 15 hour days and often 

shared cramped living and working quarters. In Al Hillah, for example, five 

USAID personnel shared two small offices with their security team. 

To better coordinate and manage the $18.4 billion in reconstruction 

funding provided for fiscal year 2004, the CPA established a program 

management office that is responsible for infrastructure-related programs. 

The office, which includes representatives from USAID and the Army 

Corps of Engineers, is responsible for coordinating the efforts of the CPA, 

the Iraqi ministries, and other coalition partners. 

The office’s acquisition strategy reflects a plan to award 

• 1 program management support contract to support the program 

management office and to oversee reconstruction efforts of specific 

sectors—electricity, oil, public works and water, security and justice, 

transportation and communications, and buildings and health; 

• 6 program management contracts to coordinate reconstruction efforts 

specific to each sector; and 

• 15 to 20 design-build contracts to execute specific tasks. 

Revised Approach Planned 

for Fiscal Year 2004 

Reconstruction Efforts 
Page 28 GAO-04-605 Iraq Reconstruction Contracting 

In March 2004, various DOD components, on behalf of the CPA, awarded 

17 contracts—the program management support contract, the 6 sectorspecific program management and the 10 design-build contracts. These 

contracts were awarded pursuant to a DOD decision to limit competition 

to firms from the United States, Iraq, coalition partners, and force 

contributing nations.28

In addition to these contracts, other agencies will continue to award and 

manage contracts for areas within their assigned area of responsibility. 

For example, in January 2004, USAID competitively awarded a $1.8 billion 

contract to enable further reconstruction efforts, while the Army Corps of 

Engineers competitively awarded two contracts with a combined value of 

$2.0 billion to further repair and rehabilitate Iraq’s oil infrastructure. 

USAID announced its intent to solicit bids on at least seven new contracts. 

One of these contracts is intended to provide USAID with an enhanced 

capability to carry out data collection, performance monitoring, and 

evaluation of USAID’s ongoing work in Iraq. 

The United States, along with its coalition partners and various 

international organizations and donors, has undertaken an enormously 

complex, costly, and challenging effort to rebuild Iraq. At the early stages 

of these efforts, agency procurement officials were confronted with little 

advance warning on which to plan and execute competitive procurement 

actions, an urgent need to begin reconstruction efforts quickly, and 

uncertainty as to the magnitude of work required. Their actions, in large 

part, reflected proper use of the flexibilities provided under procurement 

laws and regulations to award new contracts using other than full and 

open competitive procedures. 

With respect to several task orders issued under existing contracts, 

however, some agency officials overstepped the latitude provided by 

competition laws by ordering work outside the scope of the underlying 

contracts. This work should have been separately competed, or justified 

 28 On December 5, 2003, the Deputy Secretary of Defense approved a determination and 

findings under the public interest exception to the competition requirements that eligibility 

for 26 contracts to be awarded by DOD on behalf of the CPA would be limited to firms 

from the United States, Iraq, coalition partners, and force contributing nations. The 

Secretary of Defense is authorized to use this exception only on a non-delegable basis. 

10 U.S.C. 2304(c)(7), (d)(2); FAR 6.302-7(c)(1). Further, the Secretary’s determination and 

finding to use the exception cannot be made on a class basis. FAR 6.302-7(c)(4). 

Conclusions 
Page 29 GAO-04-605 Iraq Reconstruction Contracting 

and approved at the required official level for performance by the existing 

contractor. Given the war in Iraq, the urgent need for reconstruction 

efforts, and the latitude allowed by the competition law, these task orders 

reasonably could have been supported by justifications for other than full 

and open competition. In some cases, such as the task order for the Iraqi 

media capability, the work has been completed so there is no practical 

remedy available. In several other cases, however, the opportunity exists 

to bring task orders into compliance with requirements, as well as to 

ensure that future task orders are issued properly. 

Providing effective contract administration and oversight remains 

challenging, in part due to the continued expansion of reconstruction 

efforts, the staffing constraints, and the need to operate in an unsecure 

and threatening environment. Indeed, the magnitude of work that remains 

undefinitized is symptomatic of changing requirements and the lack of 

sufficient agency and contractor resources. Nevertheless, timely 

definitization of outstanding contracts and task orders is needed to 

promote effective cost control. More broadly, these challenges suggest the 

need to assess the lessons learned from the contract award and 

administration processes in Iraq to identify ways to improve similar 

activities in the future. 

It is too early to gauge whether the CPA approach to improving its ability 

to monitor and coordinate reconstruction efforts through the use of a new 

program management office and the planned award of various types of 

construction and management support contracts will be effective. 

However, recent congressional action requiring the CPA Administrator 

and heads of federal agencies to report on contracts awarded using other 

than full and open competition will provide more transparency and 

accountability in the award of new Iraq reconstruction contracts. 

To ensure that task orders issued to rebuild Iraq comply with applicable 

requirements, and to maximize incentives for the contractors to ensure 

effective cost control, we recommend that the Secretary of the Army take 

the following four actions: 

• Review the out-of-scope task orders for Iraqi media and subject matter 

experts issued by the Defense Contracting Command-Washington and 

take any necessary remedial actions. 

• Ensure that any future task orders under the LOGCAP contract for Iraq 

reconstruction activities are within the scope of that contract. 

Recommendations for 

Executive Action 
Page 30 GAO-04-605 Iraq Reconstruction Contracting 

• Address and resolve all outstanding issues in connection with the 

pending Justifications and Approvals for the contracts and related task 

orders used by the Army Corps of Engineers to restore Iraq’s electricity 

infrastructure. 

• Direct the Commanding General, Army Field Support Command, and 

the Commanding General and Chief of Engineers, U.S. Army Corps of 

Engineers, to definitize outstanding contracts and task orders as soon 

as possible. 

To improve the delivery of acquisition support in future operations, we 

recommend that the Secretary of Defense, in consultation with the 

Administrator, U.S. Agency for International Development, evaluate the 

lessons learned in Iraq and develop a strategy for assuring that adequate 

acquisition staff and other resources can be made available in a timely 

manner. 

DOD and the Department of State provided written comments on a draft of 

this report. Their comments are discussed below and are reprinted in 

appendixes III and IV. USAID concurred with the draft report as written. 

USAID’s response is reprinted in appendix V. GSA also provided 

comments regarding its efforts to ensure that agencies properly use the 

federal supply schedule program. GSA’s comments are reprinted in 

appendix VI. 

DOD generally concurred with our recommendations. DOD noted that it is 

in the process of taking appropriate remedial actions on the task orders 

issued by the Defense Contracting Command-Washington, and is resolving 

outstanding issues related to the task orders issued by the Army Corps of 

Engineers to restore Iraq’s electrical infrastructure. As part of its efforts 

to definitize contracts, DOD noted that the Army Field Support Command 

has, among other things, established firm dates for the submission of 

contractor proposals and to complete negotiations. DOD also noted that 

progress on these efforts is being reviewed by senior Command officials 

on at least a weekly basis. DOD did not indicate, however, what steps the 

Army Corps of Engineers is taking to definitize the actions for which they 

are responsible. As we noted in the report, the Army Corps of Engineers 

had two undefinitized contracts on which they had obligated more than 

$1.5 billion as of March 2004. Lastly, DOD reported that efforts are already 

underway to conduct a study to evaluate the lessons learned in Iraq and 

develop a strategy for assuring that adequate staff and other resources can 

be made available. 

Agency Comments 

and Our Evaluation 
Page 31 GAO-04-605 Iraq Reconstruction Contracting 

DOD partially concurred with our recommendation to ensure that future 

task orders issued on the LOGCAP contract are within the scope of that 

contract. DOD noted that the LOGCAP contracting officer reviews each 

proposed scope of work and determines whether the action is within the 

scope of the contract, and obtains legal advice as needed. DOD also noted 

that the recommendation appeared to be based on only one action, namely 

the task order for contingency planning for the Iraq oil infrastructure 

mission. We also expressed concern, however, about whether the task 

orders to provide logistical support for the CPA and to the New Iraqi Army 

training program were within the scope of the underlying LOGCAP 

contract. Consequently, the steps taken by the contracting officer—while 

necessary and appropriate—may not be sufficient to ensure that work 

outside the scope of the LOGCAP contract is either competed or properly 

justified. 

DOD provided two comments on our findings. First, DOD took exception 

to our observations on the manner by which the Deputy Secretary limited 

competition for contracts awarded in fiscal year 2004 to firms from the 

United States, Iraq, coalition partners and force contributing nations. 

DOD noted that the Deputy Secretary has broad authority from the 

Secretary to act on his behalf, which we do not dispute. We note, 

however, that the plain language of the law provides that authority to 

approve public interest exceptions may not be delegated.29 While the 

Deputy Secretary may have broad authority to act on the Secretary’s 

behalf, he was not authorized to do so in this case. Second, regarding our 

conclusion that the LOGCAP contingency planning order was not within 

the scope of the contract, DOD commented that our conclusion should be 

couched in terms of opinion. While legal analysis by its nature reflects 

opinion, we remain convinced of our conclusion and emphasize the need 

for more analytical rigor in the review of LOGCAP task orders. 

The Department of State disagreed with our assessment that the authority 

it cited to limit competition may not be a recognized exception to 

competition requirements. The department believed that the authority it 

cited—section 481 of the Foreign Assistance Act of 1961, as amended—

was used appropriately. The specific section of the Act cited by the 

department—section 481(a)(4)—speaks to the authority of the President 

to furnish assistance to a country or international organization, but does 

not provide relief from statutory competition requirements. In its 

 29 10 U.S. C. 2304(d)(2). 
Page 32 GAO-04-605 Iraq Reconstruction Contracting 

comments and in earlier discussions, State did not provide us with a 

persuasive basis to conclude that the authority is a recognized exception 

to the competition requirements. However, we did not need to resolve the 

issue because State appears to have maximized competition under the 

circumstances, and we believe State could have used other recognized 

exceptions, such as 40 U.S.C. §113(e), to meets its requirements. This 

authority permits the waiver of competitive contracting procedures when 

use of those procedures would impair foreign aid programs. 

GSA recognized that it has a responsibility to ensure that agency personnel 

are adequately trained in the proper use of the federal supply schedule 

program. GSA noted that it has been working with DOD and other federal 

agencies to ensure that their contracting officers are fully trained on the 

proper use of the program and identified some of its ongoing and planned 

efforts toward this objective. 

We are sending copies of this report to the Director, Office of Management 

and Budget; the Secretaries of Defense and State; the Administrator, U.S. 

Agency for International Development; the Commanding General and 

Chief of Engineers, U.S. Army Corps of Engineers; the Director, Defense 

Contract Management Agency; and the Director, Defense Contract Audit 

Agency. We will make copies available to others on request. In addition, 

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

http://www.gao.gov. 

The major contributors to this report are listed in appendix VII. If you have 

any questions about this report, please contact me on (202) 512-4841 or 

Timothy DiNapoli on (202) 512-3665. 

William T. Woods 

Director, Acquisition and Sourcing Management 
Page 33 GAO-04-605 Iraq Reconstruction Contracting 

List of Committees 

The Honorable Susan M. Collins 

Chairman 

The Honorable Joseph I. Lieberman 

Ranking Minority Member 

Committee on Governmental Affairs 

United States Senate 

The Honorable Tom Davis 

Chairman 

The Honorable Henry A. Waxman 

Ranking Minority Member 

Committee on Government Reform 

House of Representatives 

The Honorable John W. Warner 

Chairman 

The Honorable Carl Levin 

Ranking Minority Member 

Committee on Armed Services 

United States Senate 

The Honorable Duncan Hunter 

Chairman 

The Honorable Ike Skelton 

Ranking Minority Member 

Committee on Armed Services 

House of Representatives 

The Honorable Ted Stevens 

Chairman 

The Honorable Robert C. Byrd 

Ranking Minority Member 

Committee on Appropriations 

United States Senate 
Page 34 GAO-04-605 Iraq Reconstruction Contracting 

The Honorable C. W. Bill Young 

Chairman 

The Honorable David R. Obey 

Ranking Minority Member 

Committee on Appropriations 

House of Representatives 

The Honorable Richard G. Lugar 

Chairman 

The Honorable Joseph R. Biden 

Ranking Minority Member 

Committee on Foreign Relations 

United States Senate 

The Honorable Henry J. Hyde 

Chairman 

The Honorable Tom Lantos 

Ranking Minority Member 

Committee on International Relations 

House of Representatives 
Appendix I: List of Organizations Contacted 

Page 35 GAO-04-605 Iraq Reconstruction Contracting 

During the course of the review, we contacted the following organizations: 

• Office of Management and Budget, Washington, D.C.; 

• Office of Reconstruction and Humanitarian Assistance, Washington, 

D.C.; 

• Coalition Provisional Authority, Washington, D.C., and Baghdad, Iraq; 

• Department of Defense, the Comptroller, Pentagon, Washington, D.C. 

• Department of the Army, Pentagon, Washington, D.C; 

• Washington Headquarters Services, Pentagon, Washington, D.C.; 

• Defense Contracting Command-Washington, Pentagon, Washington, 

D.C.; 

• Southern Region Contracting Center, Army Contracting Agency, Fort 

McPherson, Georgia; 

• Northern Region Contracting Center, Army Contracting Agency, Fort 

Eustis, Virginia; 

• Army Field Support Command, Rock Island, Illinois; 

• Headquarters, U.S. Army Corps of Engineers, Washington, D.C.; U.S. 

Army Engineer Division, Southwestern, Dallas, Texas; U.S. Army 

Engineer District, Fort Worth, Fort Worth, Texas; Engineering and 

Support Center, Huntsville, Alabama; Transatlantic Program Center, 

Winchester, Virginia; U.S. Army Engineer District, Philadelphia, 

Philadelphia, Pennsylvania; and Vicksburg Consolidated Contracting 

Office, Alexandria, Virginia; 

• Defense Information Systems Agency, Arlington, Virginia, and Scott Air 

Force Base, Illinois; 

• Department of Defense, Inspector General, Arlington, Virginia; 

• Defense Contract Management Agency, Alexandria, Virginia; 

• Defense Contract Audit Agency, Fort Belvoir, Virginia; 

• U.S. Agency for International Development, Washington, D.C.; 

• U.S. Department of State, Washington, D.C.; and 

• U.S. Department of Justice, Washington, D.C. 

Appendix I: List of Organizations Contacted 
Appendix II: Iraq Reconstruction 

Contracts/Task Orders and Obligations as of 

September 30, 2003 

Page 36 GAO-04-605 Iraq Reconstruction Contracting 

Contracting agency/ 

Contractor Purpose 

Procurement 

method 

Amount 

obligated

Department of Defense 

Department of the Army 

U.S. Army Corps of Engineers 

Brown & Root Services, a division of 

Kellogg Brown & Root, Inc. 

Restore Iraqi oil New contract $1,390,095,044

Washington International Inc. Restore Iraqi electricity Task order 110,960,000

Fluor Intercontinental, Inc. Restore Iraqi electricity Task order 102,460,000

Perini Corporation Restore Iraqi electricity Task order 66,589,900

Raytheon Systems Development 

Company 

Interim Transitional Civil Administration 

Headquarters 

New contract 19,679,939

IAP Worldwide Services Restore Iraqi electricity-25 diesel 

generators 

Task order 11,875,000

USA Environmental Explosive ordnance removal services Task order 6,800,000

Michael Baker Jr., Inc. Coalitional Provisional Authority (CPA) 

program management support 

Task order 4,416,209

Stanley Consultants, Inc. CPA program management support Task order 4,414,150

IAP Worldwide Services Emergency generator lease for oil refinery Contract modification 3,500,000

EOD Technology, Inc. Explosive ordnance removal services Task order 2,308,439

Total, U.S. Army Corps of Engineers $1,723,098,681

Army Field Support Command 

Brown & Root Services, a division of 

Kellogg Brown & Root, Inc. 

Logistic support for the CPA Task order $204,130,305

Brown & Root Services, a division of 

Kellogg Brown & Root, Inc. 

Prepositioning fire-fighting equipment New contract 37,500,000

Brown & Root Services, a division of 

Kellogg Brown & Root, Inc. 

New Iraqi Army logistical training support Task order 30,000,000

Brown & Root Services, a division of 

Kellogg Brown & Root, Inc. 

Contingency planning Task order 1,883,681

Total, Army Field Support Command $273,513,986

Army Contracting Agency 

Vinnell Corporation New Iraqi Army training New Contract $48,074,442

Blackwater Security Consulting LLC Support services for protective security 

detail 

General Services 

Administration (GSA) 

supply schedule 

10,994,423

Total, Army Contracting Agency $59,068,865

Defense Contracting Command–Washington 

Science Applications International 

Corporation 

Iraqi Free Media Program GSA supply schedule $82,350,557

Appendix II: Iraq Reconstruction 

Contracts/Task Orders and Obligations as of 

September 30, 2003 
Appendix II: Iraq Reconstruction 

Contracts/Task Orders and Obligations as of 

September 30, 2003 

Page 37 GAO-04-605 Iraq Reconstruction Contracting 

Contracting agency/ 

Contractor Purpose 

Procurement 

method 

Amount 

obligated

Science Applications International 

Corporation 

Subject matter experts for the Iraqi 

Reconstruction and Development Council 

GSA supply schedule 24,811,853

S&K Technologies, Inc. Administrative support New contract 8,259,385

MZM, Inc. Interpreter/linguists support services GSA supply schedule 3,640,896

Military Professional Resources Inc. Linguists GSA supply schedule 1,901,962

Chugach McKinley Inc. Professional skills and competencies support 

requirements program 

New contract 1,210,846

Dataline, Inc. Secure mobile communication and 

information collaboration capability 

GSA supply schedule 1,028,852

Red River Computer Company Computer equipment and accessories GSA supply schedule 972,593

Military Professional Resources Inc. Technical support to the Iraqi Army 

Reconstruction Support Program 

GSA supply schedule 706,833

Dell Marketing, L.P. Computer hardware and software GSA supply schedule 513,679

Science Applications International 

Corporation 

Subject matter expert for Energy Group GSA supply schedule 477,284

RONCO Consulting Corporation Disarmament, Demobilization and 

Reintegration Program 

Purchase order 419,793

Force 3 Computer equipment and accessories GSA supply schedule 274,652

UNISYS Corporation Infrastructure study—country plan 

development 

GSA supply schedule 255,000

Science Applications International 

Corporation 

Subject matter experts for Democratization 

and Governance 

GSA supply schedule 235,231

Science Applications International 

Corporation 

Subject matter expert for military ministry 

coordinator 

GSA supply schedule 201,011

Native American Industrial Distributors Protocol officer and materials Purchase order 195,017

International Global Systems, Inc. Computer hardware and software GSA supply schedule 157,383

Science Applications International 

Corporation 

Subject matter expert for the civil 

administration advisor 

GSA supply schedule 87,461

Giesecke & Devrient America, Inc. Lease of currency authentication systems Purchase order 66,200

Science Applications International 

Corporation 

Subject matter expert for United Nations 

liaison and coordination 

GSA supply schedule 64,028

Science Applications International 

Corporation 

Senior executive assistant to Oil Advisory 

Board 

GSA supply schedule 55,174

Intelligent Enterprise Solutions Computer hardware and software GSA supply schedule 19,835

JSI Inc. Desktop administration tool Purchase order 3,376

Total, Defense Contracting Command-Washington $127,908,901

Total, Department of the Army $2,183,590,433

Department of the Air Force 

Readiness Mgt. Support LC Iraq logistical support Task order $91,500,000

Total, Department of the Air Force $91,500,000
Appendix II: Iraq Reconstruction 

Contracts/Task Orders and Obligations as of 

September 30, 2003 

Page 38 GAO-04-605 Iraq Reconstruction Contracting 

Contracting agency/ 

Contractor Purpose 

Procurement 

method 

Amount 

obligated

Other Defense agencies and components 

Defense Contract Management Agency 

Global Risk Strategies, Ltd. Personal and Facility Security Program New contract $7,112,813 

Global Risk Strategies, Ltd. Personal and Facility Security Program New contract 3,537,449 

Global Risk Strategies, Ltd. Personal and Facility Security Program New contract 2,413,205 

Global Risk Strategies, Ltd. Security mobilization and start up New contract 1,633,032 

Motorola, Inc. Mobile digital radios, equipment and 

accessories 

GSA supply schedule 1,281,701 

Meteoric Tactical Solutions, (PTY) Ltd. Security advisors and planners New contract 599,383 

Blackwater Lodge and Training 

Center, Inc. 

Private security details New contract 300,000 

Total, Defense Contract Management Agency $16,877,583

Defense Information Systems Agency 

Science Applications International 

Corporation 

CPA integrated communication and 

information technology support systems 

Task order $22,081,803

SETA Corporation CPA internal communications and 

management support 

Task order 3,165,765

Artel Telecommunications and LAN support for 

Iraqi Forum building 

New contract 1,254,902

AOS, Inc. Satellite phone channel Delivery order 866,988

Total, Defense Information Systems Agency $27,369,458

Washington Headquarters Services 

Cellhire USA Airtime for satellite telephones GSA supply schedule $960,000

Cellhire USA 20 satellite telephones and accessories GSA supply schedule 260,480

Cellhire USA 15 satellite telephones and airtime GSA supply schedule 85,545

Cellhire USA 80 satellite phones GSA supply schedule 71,920

LandSea Systems, Inc 6 portable telephone systems and 

accessories 

GSA supply schedule 47,750

Comfort Inn Hotel lodging/meals Purchase order 47,324

Cellhire USA 4 satellite telephones, accessories, and 

airtime 

GSA supply schedule 46,040

Cartridge Discounters 1 copier and supplies GSA supply schedule 40,492

Cellhire USA 17 satellite telephones and airtime GSA supply schedule 35,683

Outfitter Satellite, Inc. 13 satellite telephones and airtime Purchase order 33,203

Bald Industries 285 holsters, 250 compasses, and 6 rolling 

duffel bags 

GSA supply schedule 21,884

The GPS Store, Inc 90 Global Positioning Systems GSA supply schedule 19,761

Atlas Case, Inc. 25 cases GSA supply schedule 17,243

CDW Government, Inc 8 digital projectors GSA supply schedule 16,224
Appendix II: Iraq Reconstruction 

Contracts/Task Orders and Obligations as of 

September 30, 2003 

Page 39 GAO-04-605 Iraq Reconstruction Contracting 

Contracting agency/ 

Contractor Purpose 

Procurement 

method 

Amount 

obligated

Export Depot 165 voltage converters Purchase order 14,473

Bald Industries 200 mosquito netting GSA supply schedule 13,850

Bea Mauer, Inc. 40 footlockers GSA supply schedule 9,920

SPARCO 20 digital cameras GSA supply schedule 9,215

CDW Government, Inc 75 2-way radios and accessories GSA supply schedule 7,965

CDW Government, Inc 188 UPS power supply units GSA supply schedule 7,332

The Electric Generator Store 3 generators Purchase order 6,974

Export Depot 112 transformers Purchase order 6,709

Cellhire USA Satellite telephone and accessories GSA supply schedule 6,315

Capital Shredder Corporation 3 shredders and accessories GSA supply schedule 6,286

Capital Shredder Corporation 3 shredders GSA supply schedule 5,517

Total Business 8 digital camcorders GSA supply schedule 4,696

Hardware Associates 14 2-way radios and accessories GSA supply schedule 4,304

Staples National Advantage 5 copiers with supplies GSA supply schedule 4,194

EHI Company 6 flat screen TVs GSA supply schedule 3,956

CDW Government, Inc 30 handheld 2-way radios GSA supply schedule 3,653

The Complement, Inc. 28 steel trunks Purchase order 3,358

MEI Research Corporation 15 cases Purchase order 3,276

WECSYS 20 folding tables and 30 chairs GSA supply schedule 3,040

Smith Office Machines Corporation 3 copiers with supplies Purchase order 2,961

Total, Washington Headquarters Services $1,831,543

Total, other Defense agencies and components $46,078,584

Total, Department of Defense $2,321,169,017

U.S. Agency for International Development 

Bechtel National Inc. Capital construction New contract $1,029,833,259

Research Triangle Institute Local governance New contract 104,611,000

BearingPoint, Inc. Economic recovery, reform, and sustained 

growth 

New contract 39,000,000

Creative Associates International Inc. Education New contract 37,853,000

Development Alternatives, Inc. Transition initiative New contract 35,523,857

International Resources Group Personnel support New contract 26,621,153

Abt Associates Inc. Public health New contract 20,995,000

Stevedoring Services of America, Inc Seaport administration New contract 14,318,985

SkyLink Air and Logistic Support USA) 

Inc. 

Airport administration New contract 17,500,000

Management Systems International Monitoring and evaluation Task order 5,500,000

Development Alternatives, Inc. Marshland initiative Task order 4,000,000
Appendix II: Iraq Reconstruction 

Contracts/Task Orders and Obligations as of 

September 30, 2003 

Page 40 GAO-04-605 Iraq Reconstruction Contracting 

Contracting agency/ 

Contractor Purpose 

Procurement 

method 

Amount 

obligated

Total, U.S. Agency for International Development $1,335,756,254

Department of State 

DynCorp International, LLC Law enforcement, judicial, and corrections 

support 

New contract $19,640,359

Total, Department of State $19,640,359

Department of Justice 

Science Applications International 

Corporation 

Police training and support Task order $1,700,000

Total, Department of Justice $1,700,000

Grand Total $3,678,265,630

Source: GAO’s analysis of data provided by DOD, the CPA, USAID, and the Departments of State and Justice. 
Appendix III: Comments from the Department 

of Defense 

Page 41 GAO-04-605 Iraq Reconstruction Contracting 

Appendix III: Comments from the 

Department of Defense 

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix. 
Appendix III: Comments from the Department 

of Defense 

Page 42 GAO-04-605 Iraq Reconstruction Contracting 

See comment 1. 
Appendix III: Comments from the Department 

of Defense 

Page 43 GAO-04-605 Iraq Reconstruction Contracting 

See comment 2. 
Appendix III: Comments from the Department 

of Defense 

Page 44 GAO-04-605 Iraq Reconstruction Contracting 

See comment 4. 

See comment 3. 
Appendix III: Comments from the Department 

of Defense 

Page 45 GAO-04-605 Iraq Reconstruction Contracting 
Appendix III: Comments from the Department 

of Defense 

Page 46 GAO-04-605 Iraq Reconstruction Contracting 

The following are GAO’s comments on the Department of Defense’s letter 

dated May 13, 2004. 

1. The Department of Defense (DOD) incorrectly noted that the 

recommendation was based on only one instance. In addition to the 

example cited by DOD, we also expressed concern about whether the task 

orders to provide logistical support for the Coalition Provisional Authority 

(CPA) and to the New Iraqi Army training program were within the scope 

of the underlying Logistics Civil Augmentation Program (LOGCAP) 

contract. 

2. The actions being taken by the Army Field Support Command are 

positive steps to monitor progress in reaching agreement on the contracts’ 

key terms and conditions. DOD did not indicate, however, what steps the 

Army Corps of Engineers was taking to definitize the actions for which the 

Corps is responsible. As noted in table 7, the Army Corps of Engineers 

had two undefinitized contracts on which had obligated more than $1.5 

billion as of March 2004. 

3. DOD asserts that the determination and finding was not made on a class 

basis because it included a common justification for 26 specifically 

identified “particular procurements.” The Federal Acquisition Regulation 

(FAR) provides for determination and findings for individual contract 

actions (FAR 1.702) and a class of contract actions (FAR 1.703). Because 

the determination and finding encompasses 26 contract actions, we 

conclude that it is a class determination and finding. Specifically 

enumerating members of the class does not alter the fundamental fact that 

it is for more than one action. Class determination and findings are 

specifically prohibited by FAR 6.302-7(c)(4). As to the question of 

authority to execute the determination and finding, we do not dispute that 

the Deputy Secretary has broad authority to act on behalf of the Secretary. 

We note, however, that the plain language of the law provides that 

authority to approve public interest exceptions may not be delegated1

 and 

conclude that the Deputy Secretary did not have authority in this instance. 

 1

 With regard to the public interest exception (10 U.S.C. 2304(c)(7)), the law specifically 

states that, “the authority of the head of an agency under subsection (c)(7) may not be 

delegated.” 10 U.S. C. 2304(d)(2). 

GAO Comments 
Appendix III: Comments from the Department 

of Defense 

Page 47 GAO-04-605 Iraq Reconstruction Contracting 

4. Legal analysis by its nature reflects opinion. In the opinion of GAO, the 

Army, and DOD, the actual restoration of Iraqi oil infrastructure was not 

within the scope of the LOGCAP contact. We also noted that the LOGCAP 

contract anticipates contingency planning for work that can be executed 

under the contract. In other words, contingency planning is within the 

scope of the contract only if the actual work is also within the scope of the 

contract. In this instance, all parties agree that actual restoration of the oil 

infrastructure was not within the scope of the contract. Consequently, we 

conclude that planning the oil infrastructure restoration was also not 

within the scope of the contract. 

We would encourage the contracting officer to continue to obtain legal 

assistance given the complexity of the LOGCAP contract, but we also 

believe that DOD needs to ensure analytical rigor in its review of task 

orders. 
Appendix IV: Comments from the Department 

of State 

Page 48 GAO-04-605 Iraq Reconstruction Contracting 

Appendix IV: Comments from the 

Department of State 
Appendix IV: Comments from the Department 

of State 

Page 49 GAO-04-605 Iraq Reconstruction Contracting 
Appendix IV: Comments from the Department 

of State 

Page 50 GAO-04-605 Iraq Reconstruction Contracting 
Appendix V: Comments from the U.S. Agency 

for International Development 

Page 51 GAO-04-605 Iraq Reconstruction Contracting 

Appendix V: Comments from the U.S. Agency 

for International Development 
Appendix VI: Comments from the General 

Services Administration 

Page 52 GAO-04-605 Iraq Reconstruction Contracting 

Appendix VI: Comments from the General 

Services Administration 
Appendix VI: Comments from the General 

Services Administration 

Page 53 GAO-04-605 Iraq Reconstruction Contracting 
Appendix VI: Comments from the General 

Services Administration 

Page 54 GAO-04-605 Iraq Reconstruction Contracting 
Appendix VII: GAO Contacts and 

Acknowledgments 

Page 55 GAO-04-605 Iraq Reconstruction Contracting 

William T. Woods, (202) 512-4841 

Timothy DiNapoli, (202) 512-3665 

Major contributors to this report were Robert Ackley, Ridge Bowman, 

Carole Coffey, Muriel Forster, Glenn D. Furbish, Charles D. Groves, 

John Heere, Chad Holmes, John Hutton, Ronald Salo, Karen Sloan, 

Lillian Slodkowski, Steve Sternlieb, Susan Tindall, Adam Vodraska, and 

Tim Wilson. 

Appendix VII: GAO Contacts and 

Acknowledgments 

GAO Contacts 

Acknowledgments 

(120248) 
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