United States Government Accountability Office

GAO Testimony 

Before the Subcommittee on Defense, 

Committee on Appropriations, House of 

Representatives

STABILIZING AND 

REBUILDING IRAQ 

Conditions in Iraq Are 

Conducive to Fraud, Waste, 

and Abuse 

Statement of David M. Walker 

Comptroller General of the United States 

A classified version of this statement was delivered to a closed session of

the Subcommittee on Defense, Committee on Appropriations, House of 

Representatives on January 30, 2007. 

April 23, 2007

GAO-07-525T 
Mr. Chairman and Members of the Subcommittee: 

I appreciate the opportunity to discuss some of the systemic conditions in

Iraq that contribute to the fraud, waste, or abuse of U.S.-provided funds. 

Since 2003, DOD has reported total costs of about $257.5 billion for 

military operations in Iraq; these have increased from about $38.8 billion in 

fiscal year 2003 to about $83.4 billion in fiscal year 2006. The largest 

increase has been in operation and maintenance expenses, including items 

such as support for housing, food, and services; the repair of equipment; 

and transportation of people, supplies and equipment. Many of the 

operation and maintenance expenses are for services. Other U.S. 

government agencies had reported obligations of $29 billion for Iraqi 

reconstruction and stabilization, as of October 2006. These funds have 

been used for, among other things, infrastructure repair of the electricity, 

oil, water, and health sectors; training and equipping of the Iraqi security

forces; and administrative expenses. 

My testimony today will focus on (1) security, (2) management and 

reporting of the program to train and equip Iraqi security forces, (3) 

contracting and contract management activities, and (4) Iraqi capacity and

commitment to manage and fund reconstruction and security efforts. 

In preparing this testimony, we relied on previously issued GAO reports 

and testimonies on the security situation in Iraq, the training and 

equipping of Iraqi security forces, capacity of key Iraqi ministries, the 

management of contracts and contractors used to support deployed 

forces, and issues related to the reconstruction of Iraq. We performed our 

work in accordance with generally accepted government auditing 

standards. 

Despite U.S. and Iraqi efforts to shift a greater share of the country’s 

defense on Iraqi forces, the security situation continues to deteriorate. 

Poor security conditions have hindered the management of the more than 

$29 billion that has been obligated for reconstruction and stabilization 

efforts since 2003. Although the State Department has reported that the

number of Iraqi army and police forces that has been trained and equipped 

has increased from about 174,000 in July 2005 to about 323,000 in 

December 2006, overall security conditions in Iraq have deteriorated and 

grown more complex. For example, the average number of enemy attacks 

rose from about 70 per day in January 2006 to a record high of about 180 

per day in October 2006, the single worst month on record. In December 

2006, the attacks averaged about 160 per day. Sectarian and militia 

Summary 

Page 1 GAO-07-525T 
influences in Iraqi security forces have added to the violence. Collectively,

these conditions have hindered efforts to engage with Iraqi partners and 

demonstrate the difficulty in making political and economic progress in 

the absence of adequate security conditions. 

Our ongoing work has identified weaknesses in the $15.4 billion program 

to support the development and sustainment of Iraqi security forces. 

Sectarian divisions have eroded the dependability of many Iraqi units, and 

a number of Iraqi units have refused to serve outside the areas where they 

were recruited. Corruption and infiltration by militias and others loyal to 

parties other than the Iraqi government have resulted in the Iraqi security

forces being part of the problem in many areas instead of the solution. 

While unit-level transition readiness assessments (TRA) provide important 

information on Iraqi security force capabilities, the aggregate reports DOD 

provides to Congress based on these assessments do not provide adequate 

information to judge the capabilities of Iraqi forces. The DOD reports do 

not detail the adequacy of Iraqi security forces’ manpower, equipment, 

logistical support, or training and may overstate the number of forces on 

duty. Congress will need additional information found in the TRAs to 

assess DOD’s supplemental request for funds to train and equip Iraqi 

security forces. GAO has made repeated attempts to obtain U.S. 

assessments of Iraqi forces without success. These data are essential for 

Congress to undertake an independent and informed assessment of Iraqi 

forces’ capabilities, funding needs, and results. Further, DOD and MNF-I 

may be unable to ensure that all of the equipment obtained for the Iraqis 

reached the intended recipients. It is also unclear what accountability 

measures DOD has applied to the train-and-equip program for Iraq. 

DOD’s heavy reliance on contractors in Iraq, its long-standing contract and 

contract management problems, and poor security conditions provide 

opportunities for fraud, waste, and abuse. First, military commanders and 

senior DOD leaders do not have visibility over the total number of 

contractors who are supporting deployed forces in Iraq. As we have noted

in the past, this limited visibility can unnecessarily increase costs to the 

government. For example, at a contractor accountability task force 

meeting we attended in 2006, an official from the Army Material Command 

noted that an Army official estimated that about $43 million is lost every 

year on free meals provided to contractor employees who also receive per 

diem. Second, DOD lacks clear and comprehensive guidance and 

leadership for managing and overseeing contractors. In October 2005, 

DOD issued, for the first time, department-wide guidance on the use of 

contractors that support deployed forces. Although this guidance is a good

first step, it does not address a number of problems we have repeatedly

Page 2 GAO-07-525T 
raised. In October 2006, DOD established the office of the Assistant 

Deputy Under Secretary of Defense for Program Support to serve as the 

office with primary responsibility for contractor support issues. However, 

as we noted in our December 2006 report, it is not clear to what extent this 

office serves as the focal point dedicated to leading DOD’s efforts to 

improve its contract management and oversight. Third, key contracting 

issues have prevented DOD from achieving successful acquisition 

outcomes. There has been an absence of well-defined requirements, and 

DOD has often entered into contract arrangements on reconstruction 

efforts and into contracts to support deployed forces that have posed 

additional risk to the government. Moreover, DOD does not have a 

sufficient number of oversight personnel, which precludes its ability to 

obtain reasonable assurance that contractors are meeting contract 

requirements efficiently and effectively at each location where work is 

being performed. Further, a lack of training hinders the ability of military 

commanders to adequately plan for the use of contractor support and 

inhibits the ability of contract oversight personnel to manage and oversee 

contracts and contractors in Iraq. 

Iraqi capacity and commitment to manage and fund reconstruction and 

security efforts remains limited. Since 2003, the United States has 

obligated about $29 billion to help Iraq rebuild its infrastructure and 

develop Iraqi security forces to stabilize the country. However, key goals 

have not been met. The Iraqi government has not sustained reconstruction

and security efforts, in part because Iraqi government institutions are 

undeveloped and lack needed management and human resource skills 

according to U.S. officials. Key ministries face challenges in staffing a 

competent and non-partisan civil service, fighting corruption, and using 

modern technology. The inability of the Iraqi government to spend its 2006 

capital budget also increases the uncertainty that it can sustain the 

rebuilding effort. 

Despite U.S. and Iraqi efforts to shift a greater share of the country’s 

defense to the Iraqi security forces, the security situation continues to 

deteriorate, impeding management of the more than $29 billion obligated

for reconstruction and stabilization efforts. The desired end-state for U.S.-

stabilization operations in Iraq is a peaceful, united, stable, and secure 

Iraq, well integrated into the international community, and a full partner in

the global war on terrorism. To achieve this end-state, the United States is,

among other things, (1) training and equipping Iraqi security forces that 

will be capable of leading counterinsurgency operations, and (2) 

transferring security responsibilities to Iraqi forces and the Iraqi 

Transferring 

Additional Security 

Responsibilities to the 

Iraqi Government Has 

Not Improved the 

Security Situation 

Page 3 GAO-07-525T 
government as capabilities improve. In October 2003, the multinational 

force outlined a multistep plan for transferring security missions to Iraqi 

security forces. The security transition plan had the objective of 

neutralizing Iraq’s insurgency while developing Iraqi forces capable of 

securing their country, allowing a gradual decrease in the number of 

coalition forces. 

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

transition plan several times because the Iraqi government and security 

forces proved incapable of assuming security responsibilities within the 

time frames envisioned by the plans. For example, in April 2004, Iraqi 

police and military units performed poorly during an escalation of 

insurgent attacks against the coalition. Many Iraqi security forces around 

the country collapsed, with some units abandoning their posts and 

responsibilities and in some cases assisting the insurgency. 

State and DOD have reported some progress in implementing the security

transition plan. The State Department has reported that the number of 

army and police forces that have been trained and equipped increased 

from about 174,000 in July 2005 to about 323,000 in December 2006. DOD 

and State also have reported progress in transferring security 

responsibilities to Iraqi army units and provincial governments. The 

number of Iraqi army battalions in the lead for counterinsurgency 

operations increased from 21 in March 2005 to 89 in October 2006. In 

addition, 7 Iraqi army division headquarters and 30 brigade headquarters 

had assumed the lead by December 2006. Moreover, by mid-December 

2006, three provincial governments—Muthanna, Dhi Qar, and Najaf—had 

taken over security responsibilities for their provinces. 

However, the reported progress in transferring securing responsibilities to 

Iraq has not led to improved security conditions (see fig.1). Since June 

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

complex, as evidenced by the increased numbers of attacks and the SunniShi’a sectarian strife that followed the February 2006 bombing of the 

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

and its Iraqi partners continued to increase through October 2006 and 

remain high. The average total attacks per day has increased, rising from 

about 70 per day in January 2006 to a record high of about 180 per day in

October 2006. These attacks have increased around major religious and 

political events, including Ramadan and the elections. Coalition forces are 

still the primary target of attacks, but the number of attacks on Iraqi 

security forces and civilians also has increased since 2003. In October 

2006, the State Department reported that the recent increase in violence

Page 4 GAO-07-525T 
has hindered efforts to engage with Iraqi partners and illustrates the 

difficulty in making political and economic progress in the absence of 

adequate security conditions. 

Page 5 GAO-07-525T 
Figure 1: Enemy-initiated Attacks Against the Coalition and Its Iraqi Partners

Page 6 GAO-07-525T 
Sectarian and militia influences in the Iraqi security forces contribute to 

the higher levels of violence. According to portions of the January 2007 

National Intelligence Estimate on Iraq that were declassified, sectarian 

divisions have eroded the dependability of many Iraqi units, and a number 

of Iraqi units have refused to serve outside the areas where they were 

recruited. According to an August 2006 DOD report, sectarian lines among 

the Iraqi security forces are drawn geographically, with Sunni, Shi’a, or 

Kurdish soldiers serving primarily in units located in areas familiar to their 

group. Further, according to the report, commanders at the battalion level 

tend to command only soldiers of their own sectarian or regional 

background. Moreover, in November 2006, the State Department reported

that corruption and infiltration by militias and others loyal to parties other 

than the Iraqi government have resulted in the Iraqi security forces being 

part of the problem in many areas instead of the solution. 

Because of the poor security conditions, the United States has not been 

able to draw down the number of U.S. forces in Iraq as early as planned. 

For example, after the increase in violence and collapse of the Iraqi 

security forces during the spring of 2004, DOD decided to maintain a force 

level of about 138,000 troops until at least the end of 2005, rather than 

reducing the number of troops to 105,000 by May 2004, as had been 

announced the prior fall. DOD reversed a decision to significantly reduce 

the U.S. force level during the spring of 2006 because Iraqi and coalition 

forces could not contain the rapidly escalating violence that occurred in 

the summer of 2006. 

Our work has identified weaknesses in the $15.4 billion program to 

develop Iraqi security forces. Although unit-level transition readiness 

assessments provide detailed information on Iraqi security force 

capabilities, the aggregate reports that DOD and State provide to Congress 

do not provide the information needed to determine the complete 

capabilities of the forces. Consequently, Congress will need additional 

information to assess the department’s supplemental request for $3.8 

billion to train and equip Iraqi security forces. GAO has made repeated 

attempts, without success, to obtain U.S. assessments of Iraqi forces. 

These data are essential for Congress to make an independent assessment 

of Iraqi forces’ capabilities, needs, and results. Moreover, DOD may be 

unable to fully account for weapons received by the Iraqi security forces 

and has yet to clarify which accountability requirements it chose to apply 

to the program. 

DOD Faces 

Weaknesses in the 

Program to Develop 

Iraqi Security Forces 

Page 7 GAO-07-525T 
MNF-I uses the TRA system to determine when units of the Iraqi security

forces are capable of assuming the lead for counterinsurgency operations

in specific geographic areas. The TRA is a joint assessment, prepared 

monthly by the unit’s coalition commander and Iraqi commander. 

According to MNF-I guidance, the purpose of the TRA system is to provide 

commanders with a method to consistently evaluate units; it also helps to

identify factors hindering unit progress, determine resource shortfalls, and 

make resource allocation decisions. Iraqi army TRA reports contain 

capabilities ratings in the areas of personnel, command and control, 

equipment, sustainment/logistics, training, and leadership. Commanders 

use the TRA results and their professional judgment to determine a unit’s 

overall readiness level. Each Iraqi army unit is assigned a readiness level 

of 1 through 4, with 1 the highest level a unit can achieve. 

DOD and State reports provide some information on the development of 

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

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

example, DOD and State provide Congress with weekly and quarterly 

reports on the progress made in developing capable Iraqi security forces 

and transferring security responsibilities to the Iraqi army and the Iraqi 

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

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

provincial governments that have assumed responsibility for security of 

specific geographic areas. 

The State Department reports that the number of trained and equipped 

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

about 323,000 in December 2006. However, these numbers do not provide 

a complete picture of the Iraqi security forces’ capabilities in part because

they may overstate the number of forces on duty. For example, Ministry of 

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

Defense data exclude absent personnel. In addition, poor reporting by the 

Ministry of Interior makes it difficult to determine how many of the 

coalition-trained police the ministry still employs or what percentage of 

the 180,000 police believed to be on the payroll are coalition trained and 

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

status of equipment, personnel, training, or leadership. 

We previously reported that we were working with DOD to obtain the unitlevel TRA reports because they would be useful in more fully informing 

Page 8 GAO-07-525T 
Congress about the capabilities and needs of Iraq’s security forces and in 

indicating how accurately DOD reports reflect the forces’ capabilities.1

According to MNF-I’s Deputy Chief of Staff for Strategic Effects, the best 

measure of the capabilities of Iraqi units and improvements in the security

situation comes from commanders on the ground at the lowest level.

Although unit-level TRA reports provide more detailed information on 

Iraqi security forces’ capabilities, DOD had not provided GAO with these 

unit-level reports as of February 2007. DOD routinely provides GAO access 

to the readiness levels of U.S. forces. 

Additionally, DOD and MNF-I may be unable to fully account for weapons 

issued to the Iraqi security forces, and DOD has not yet clarified what 

accountability requirements apply to the program. According to our 

preliminary analysis, as of January 2007, DOD and MNF-I may not be able

to account for Iraqi security forces’ receipt of about 90,000 rifles and 

80,000 pistols that were reported as issued before early October 2005. 

Additionally, it is unclear at this time what accountability measures DOD 

has chosen to apply to the train-and-equip program for Iraq. As part of our 

ongoing work, we have asked DOD to clarify whether MNF-I and MultiNational Security Transition Command-Iraq (MNSTC-I) must follow 

accountability measures specified in DOD regulations, or whether DOD 

has established other accountability measures. For example, DOD officials 

expressed differing opinions on whether the DOD regulation on the Small 

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

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

procured for Iraqi security forces. While it is unclear which regulations 

DOD has chosen to apply, beginning in 2004, MNF-I established 

requirements to control and account for equipment issued to the Iraqi 

security forces by issuing a series of orders that outline procedures for its 

subordinate commands. Although MNF-I took initial steps to establish 

property accountability procedures, according to MNF-I officials 

limitations such as the initial lack of a fully operational equipment 

distribution network, staffing weaknesses, and the operational demands of 

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

critical tasks outlined in the property accountability orders. 

 1

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

(Washington, D.C.: Sept. 11, 2006). 

Page 9 GAO-07-525T 
While DOD relies heavily on contractors for reconstruction projects and 

support to its forces in Iraq, it faces several management and oversight 

challenges. First, military commanders and senior DOD officials do not 

have visibility over contractors, which prevents DOD from knowing the 

extent to which it is relying on contractors for support in Iraq. Second, 

DOD lacks clear and comprehensive guidance and leadership for 

managing and overseeing contractors. Third, key contracting issues—

including unclear requirements and not reaching agreement on key terms 

and conditions in a timely manner—have prevented DOD from achieving 

successful acquisition outcomes. Fourth, DOD does not have a sufficient 

number of oversight personnel to ensure that the contracts that are in 

place are carried out efficiently and according to the contract 

requirements. Finally, military commanders and contract oversight 

personnel do not receive sufficient training to effectively manage 

contracts and contractors in Iraq. 

DOD Faces 

Challenges in 

Managing Contracts 

and Contractors in 

Iraq that Could Lead 

to Fraud, Waste, and 

Abuse 

Military Commanders and 

Senior DOD Leaders Need 

to Have Visibility Over the 

Contractors That Support 

Them 

DOD continues to lack the capability to provide senior leaders and military 

commanders with information on the totality of contractor support to 

deployed forces. Without such visibility, senior leaders and military 

commanders cannot develop a complete picture of the extent to which 

they rely on contractors to support their operations. We first reported the 

need for better visibility in 2002 during a review of the costs associated 

with U.S. operations in the Balkans.2

 At that time, we reported that DOD 

was unaware of (1) the number of contractors operating in the Balkans, 

(2) the tasks those contractors were contracted to do, and (3) the 

government’s obligations to those contractors under the contracts. We 

noted a similar situation in 2003 in our report on DOD’s use of contractors 

to support deployed forces in Southwest Asia and Kosovo.3

 At that time, 

we reported that, although most contract oversight personnel had visibility 

over the individual contracts for which they were directly responsible, 

visibility of all contractor support at a specific location was practically 

nonexistent at the combatant commands, component commands, and 

deployed locations we visited. As a result, commanders at deployed 

locations had limited visibility and understanding of all contractor activity 

supporting their operations and frequently had no easy way to get answers 

 2

GAO, Defense Budget: Need to Strengthen Guidance and Oversight of Contingency 

Operations Costs, GAO-02-450 (Washington, D.C.: May 21, 2002). 

3

GAO, Military Operations: Contractors Provide Vital Services to Deployed Forces but 

Are Not Adequately Addressed in DOD Plans, GAO-03-695 (Washington, D.C.: June 24, 

2003). 

Page 10 GAO-07-525T 
to questions about contractor support. This lack of visibility inhibited the 

ability of commanders to resolve issues associated with contractor 

support such as force protection issues and the provision of support to the 

contractor personnel. 

Most recently, in our December 2006 review of DOD’s use of contractors 

in Iraq, we found that DOD’s limited visibility unnecessarily increased 

contracting costs to the government and introduced unnecessary risk.4

Without visibility over where contractors are deployed and what 

government support they are entitled to, costs to the government may 

increase. For example, at a contractor accountability task force meeting 

we attended in 2006, an Army Material Command official stated that an

Army official estimated that about $43 million is lost each year on free 

meals provided to contractor employees at deployed locations who also 

receive a per diem food allowance. Also, when senior military leaders 

began to develop a base consolidation plan, officials were unable to 

determine how many contractors were deployed and therefore ran the risk

of over- or under-building the capacity of the consolidated bases. DOD’s 

October 2005 guidance on contractor support to deployed forces included

a requirement that the department develop or designate a joint database to 

maintain by-name accountability of contractors deploying with the force 

and a summary of the services or capabilities they provide. The Army has 

taken the lead in this effort, and DOD recently designated a database 

intended to provide improved visibility over contractors deployed to 

support the military in Iraq, Afghanistan, and elsewhere. 

DOD provided additional information after we briefed the House 

Appropriations Committee’s Subcommittee on Defense. According to 

DOD, in January 2007, the department designated the Army’s 

Synchronized Predeployment & Operational Tracker (SPOT) as the 

department-wide database to maintain by-name accountability of all 

contractors deploying with the force. According to DOD the SPOT 

database includes approximately 50,000 contractor names. Additionally in

December 2006, the Defense Federal Acquisition Regulation Supplement 

was amended to require the use of the SPOT database by contractors 

supporting deployed forces. 

 4

GAO, Military Operations: High-Level DOD Action Needed to Address Long-standing 

Problems with Management and Oversight of Contractors Supporting Deployed Forces, 

GAO-07-145 (Washington, D.C.: Dec. 18, 2006).

Page 11 GAO-07-525T 
Since the mid-1990s, our reports have highlighted the need for clear and

comprehensive guidance for managing and overseeing the use of 

contractors who support deployed forces. For example, in assessing the 

Logistics Civil Augmentation Program (LOGCAP) implementation during 

the Bosnian peacekeeping mission in 1997, we identified weaknesses in 

the available doctrine on how to manage contractor resources, including

how to integrate contractors with military units and what type of 

management and oversight structure to establish.5

 We identified similar 

weaknesses when we began reviewing DOD’s use of contractors in Iraq. 

For example, in 2003, we reported that guidance and other oversight 

mechanisms varied widely at the DOD, combatant-command, and service 

levels, making it difficult to manage contractors effectively.6

DOD Needs Clear and 

Comprehensive Guidance 

and Leadership to Manage 

and Oversee Contractors 

Similarly, in our 2005 report on private security contractors in Iraq, we 

noted that DOD had not issued any guidance to units deploying to Iraq on

how to work with or coordinate efforts with private security contractors.7

Our prior work has shown that it is important for organizations to provide 

clear and complete guidance to those involved in program 

implementation. In our view, establishing baseline policies for managing 

and overseeing contractors would help ensure the efficient use of 

contractors in places such as Iraq. DOD took a noteworthy step to address 

some of these issues when it issued new guidance in 2005 on the use of 

contractors who support deployed forces. However, as our December 2006 

report made clear, DOD’s guidance does not address a number of 

problems we have repeatedly raised—such as the need to provide 

adequate contract oversight personnel, to collect and share lessons 

learned on the use of contractors supporting deployed forces, or to 

provide DOD commanders and contract oversight personnel with training 

on the use of contractors overseas before deployment.8

 After our January 

30, 2007 briefing to the House Appropriations Committee’s Subcommittee 

on Defense, DOD provided additional information on a new publication it 

was developing. The department noted that it was developing a joint 

 5

GAO, Contingency Operations: Opportunities to Improve the Logistics Civil 

Augmentation Program, GAO/NSIAD-97-63 (Washington, D.C.: Feb. 11, 1997). 

6

GAO-03-695.

7

GAO, Rebuilding Iraq: Actions Needed to Improve Use of Private Security Providers, 

GAO-05-737 (Washington, D.C.: July 28, 2005). 

8

GAO-07-145. 

Page 12 GAO-07-525T 
publication entitled “Contracting and Contractor Management in Joint 

Operations,” which it expects to be distributed in May 2007.

In addition to the lack of clear and comprehensive guidance for managing 

contract personnel, we have issued several reports highlighting the need 

for DOD components to comply with departmental guidance on the use of 

contractors. For example, in our June 2003 report, we noted that DOD 

components were not complying with a long-standing requirement to 

identify essential services provided by contractors and develop backup 

plans to ensure the continuation of those services during contingency 

operations should contractors become unavailable to provide those 

essential services. We believe that risk is inherent when relying on 

contractors to support deployed forces, and without a clear understanding 

of the potential consequences of not having the essential service available,

the risks associated with the mission increase. 

In other reports, we highlighted our concerns over DOD’s planning for the 

use of contractor support in Iraq—including the need to comply with 

guidance to identify operational requirements early in the planning 

process.9

 When contractors are involved in planning efforts early and given 

adequate time to plan and prepare to accomplish their assigned missions, 

the quality of the contractor’s services improves and contract costs may be 

lowered. DOD’s October 2005 guidance on the use of contractor support to 

deployed forces went a long way to consolidate existing policy and 

provide guidance on a wide range of contractor issues. However, as of 

December 2006, we found little evidence that DOD components were 

implementing that guidance, in part because no individual within DOD was 

responsible for reviewing DOD and service efforts to ensure that the 

guidance was being consistently implemented. 

We have made a number of recommendations for DOD to take steps to 

establish clear leadership and accountability for contractor support issues. 

For example, in our 2005 report on LOGCAP, we recommended that DOD 

designate a LOGCAP coordinator with the authority to participate in 

deliberations and advocate for the most effective and efficient use of the 

LOGCAP contract. Similarly, in our second comprehensive review of 

contractors on the battlefield in 2006, we recommended that DOD appoint 

a focal point within the Office of the Under Secretary of Defense for 

 9

GAO, Military Operations: DOD’s Extensive Use of Logistics Support Contracts 

Requires Strengthened Oversight, GAO-04-854 (Washington, D.C.: July 19, 2004). 

Page 13 GAO-07-525T 
Acquisition, Technology, and Logistics—at a sufficiently senior level and 

with the appropriate resources—to lead DOD’s efforts to improve its 

contract management and oversight. DOD generally agreed with these 

recommendations. In October 2006, DOD established the office of the 

Assistant Deputy Under Secretary of Defense for Program Support to 

serve as the office of primary responsibility for contractor support issues.

However, as we noted in our December 2006 report, it is not clear to what

extent this office would serve as the focal point dedicated to leading 

DOD’s efforts to improve its contract management and oversight. 

DOD Needs to Address 

Key Contracting Issues to 

Promote Successful 

Acquisition Outcomes 

DOD needs to address long-standing contracting issues related to 

acquisition outcomes. Two of the key factors that promote successful 

acquisition outcomes are (1) clearly defined requirements and (2) timely 

agreement on a contract’s key terms and conditions, such as the scope and 

cost. The absence of well-defined requirements and clearly understood 

objectives complicates efforts to hold DOD and contractors accountable 

for poor acquisition outcomes. 

Further, in Iraq, DOD’s contracts were often cost- reimbursable contracts, 

which allow the contractor to be reimbursed for reasonable, allowable, 

and allocable costs to the extent prescribed in the contracts. When costreimbursable contracts such as those used in the reconstruction of Iraq 

and the support contracts for deployed forces (e.g. LOGCAP) are not 

effectively managed and given sufficient oversight, the government’s risk 

is likely to increase. For example, we have reported that poorly written 

statements of work, which included vague or ill-defined requirements, can 

lead the contractor to take excessive steps to ensure customer satisfaction 

and result in additional costs to the government. Similarly, we have

reported that contract customers need to conduct periodic reviews of 

services provided under cost-reimbursable contracts to ensure that 

services provided are supplied at an appropriate level. Without such a 

review, the government is at risk of paying for services it no longer needs. 

For example, the command in Iraq lowered the cost of the LOGCAP 

contract by $108 million dollars by reducing services and eliminating 

unneeded dining facilities and laundries. 

A prerequisite to achieving good acquisition outcomes is a match between 

well-defined requirements and available resources. U.S. reconstruction 

goals were based on assumptions about the money and time needed, 

which have proven unfounded. U.S. funding was not meant to rebuild 

Iraq’s entire infrastructure but rather to lay the groundwork for a longerPage 14 GAO-07-525T 
term reconstruction effort that anticipated significant assistance from 

international donors. 

To provide that foundation, the Coalition Provisional Authority (CPA) 

allocated $18.4 billion in fiscal year 2004 reconstruction funds among 

various projects in each reconstruction sector, such as oil, electricity, and 

water and sanitation.10 Almost immediately after the CPA dissolved, the 

Department of State reprioritized funding for projects that would not 

begin until mid to late 2005 and used those funds to target high-impact 

projects. By July 2005, the State Department had conducted a series of 

funding reallocations to address new priorities, including increasing 

support for security and law enforcement efforts and oil infrastructure 

enhancements. One of the consequences of these reallocations was to 

reduce funding for the water and sanitation sector by about 44 percent,

from $4.6 billion to $2.6 billion. One reallocation of $1.9 billion in 

September 2004 led the Project and Contracting Office to cancel some 

projects, most of which were planned to start in mid-2005. Changes, even

those made for good reasons, make it more difficult to manage individual 

projects to successful outcomes. 

Further, such changes invariably have a cascading effect on individual 

contracts. To produce desired outcomes within available funding and 

required time frames, DOD and its contractors need to have a clear 

understanding of reconstruction objectives and how they translate into the 

terms and conditions of a contract: what goods or services are needed, 

when they are needed, the level of performance or quality desired, and 

what the cost will be. When such requirements were not clear, DOD often 

entered into contract arrangements on reconstruction efforts that posed 

additional risks, such as authorizing contractors to begin work before key 

terms, conditions such as the work to be performed, and projected costs 

were fully defined.11 For example, we found that, as of March 2004, about 

$1.8 billion had been obligated on reconstruction contract actions without 

DOD and the contractors reaching an agreement on the final scope and 

cost of the work. 

 10From April 2003 to June 28, 2004, the CPA served as Iraq’s interim government and was 

responsible for overseeing, directing, coordinating, and approving rebuilding efforts. With

the establishment of Iraq’s interim government, the CPA ceased to exist and its 

responsibilities were transferred to the Iraqi government or to other U.S. agencies. The 

Department of State is now responsible for overseeing U.S. efforts to rebuild Iraq. 

11GAO, Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and Management

Challenges, GAO-04-605 (Washington, D.C.: Jun. 1, 2004). 

Page 15 GAO-07-525T 
In September 2006, we issued a report on how DOD addressed issues 

raised by the Defense Contract Audit Agency (DCAA) in its audits of Iraqrelated contract costs.12 We noted that, in cases where DOD authorized 

contractors to begin work before reaching agreement on the scope or 

price, DOD contracting officials were less likely to remove costs from a 

contractor’s proposal when DCAA raised questions about them if the 

contractor had already incurred those costs. For example, of the 18 audit

reports we reviewed, DCAA issued 11 reports on contract actions where 

more than 180 days had elapsed between the beginning of the period of 

performance to final negotiations. For nine of these audits, the period of 

performance DOD initially authorized for each contract action concluded 

before final negotiations took place. In one case, DCAA questioned $84 

million in its audit of a task order proposal for an oil mission. In this case, 

the contractor did not submit a proposal to DOD until a year after the 

work was authorized, and DOD and the contractor did not negotiate the 

final terms of the task order until more than a year after the contractor had 

completed the work. In the final negotiation documentation, the DOD 

contracting official stated that the payment of incurred costs is required 

for cost-type contracts, if there are no unusual circumstances. In contrast, 

in the few audit reports we reviewed in which the government negotiated

the terms before starting work, we found that the portion of questioned 

costs removed from the proposal was substantial. 

DOD Needs Sufficient 

Contract Oversight 

Personnel to Ensure that 

Contract Requirements 

Are Met Effectively and 

Efficiently 

An unstable contracting environment—when contract requirements are in 

a state of flux—requires greater attention to oversight, which in turn relies 

on a capable government workforce. Having personnel who are trained to

conduct oversight and held accountable for their oversight responsibilities 

is essential for effective oversight of contractors. If surveillance is not 

conducted, not sufficient, or not well documented, DOD is at risk of being 

unable to identify and correct poor contractor performance in a timely 

manner and potentially paying too much for the services it receives. 

On multiple occasions, we and others have reported on deficiencies in 

DOD’s oversight. For example, our June 2004 report found that early 

contract administration challenges were caused, in part, by the lack of 

personnel.13 In addition, the Special Inspector General noted that, with 

 12GAO, Iraq Contract Costs: DOD Consideration of Defense Contract Audit Agency’s

Findings, GAO-06-1132 (Washington, D.C.: Sep. 25, 2006). 

13GAO-04-605. 

Page 16 GAO-07-525T 
regard to the CPA, gaps existed in the experience levels of those hired and 

the quality and depth of their experiences relative to their assigned jobs. 

Similarly, in 2004, an interagency assessment team found that the number 

of contracting personnel was insufficient to handle the increased 

workload. In part, the CPA’s decision to award seven contracts in early 

2004 to help better coordinate and manage the fiscal year 2004

reconstruction efforts recognized this shortfall. As a result, DOD is in the 

position of relying on contractors to help manage and oversee the work of 

other contractors. 

More recently, in December 2006, we reported that DOD does not have 

sufficient numbers of contractor oversight personnel at deployed 

locations, which limits its ability to obtain a reasonable assurance that 

contractors are meeting contract requirements efficiently and effectively.14

Although we could find no DOD guidelines on the appropriate number of 

personnel needed to oversee and manage DOD contracts at a deployed 

location, several contract oversight personnel stated that DOD does not 

have adequate personnel at deployed locations to effectively oversee and

manage contractors. For example, an Army official acknowledged that the 

Army is struggling to find the capacity and expertise to provide the 

contracting support needed in Iraq. In addition, officials responsible for 

contracting with MNF-I stated that they did not have enough contract 

oversight personnel and quality assurance representatives to allow MNF-I 

to reduce the Army’s use of the LOGCAP contract by awarding more 

sustainment contracts for base operations support in Iraq. Furthermore, a 

LOGCAP program official noted that, if adequate staffing had been in 

place, the Army could have realized substantial savings on the LOGCAP 

contract through more effective reviews of new requirements. Finally, the 

contracting officer’s representative for an intelligence support contract in 

Iraq stated that he was also unable to visit all of the locations that he was 

responsible for overseeing. At the locations he did visit, he was able to 

work with the contractor to improve the project’s efficiency. However, 

because he was not able to visit all of the locations at which the contractor 

provided services in Iraq, he was unable to duplicate those efficiencies at 

all the locations in Iraq where the contractor provided support. 

The inability of contract oversight personnel to visit all the locations they 

are responsible for can also create problems for units that face difficulties

resolving contractor performance issues at those locations. For example, 

 14GAO-07-145. 

Page 17 GAO-07-525T 
officials from a brigade support battalion stated that they had several 

concerns with the performance of a contractor that provided maintenance 

for the brigade’s mine-clearing equipment. These concerns included delays

in obtaining spare parts and a disagreement over the contractor’s 

obligation to provide support in more austere locations in Iraq. According 

to the officials, their efforts to resolve these problems in a timely manner 

were hindered because the contracting officer’s representative was 

located in Baghdad while the unit was stationed in western Iraq. In other 

instances, some contract oversight personnel may not even reside within 

the theater of operations. For example, we found the Defense Contract 

Management Agency’s (DCMA) legal personnel responsible for LOGCAP in 

Iraq were stationed in Germany, while other LOGCAP contract oversight 

personnel were stationed in the United States. According to a senior 

DCMA official in Iraq, relying on support from contract oversight 

personnel outside the theater of operations makes resolving contractor 

performance issues more difficult for military commanders in Iraq, who 

are operating under the demands and higher operational tempo of a 

contingency operation in a deployed location. 

Better Training of Military 

Commanders and Contract 

Oversight Personnel Is 

Essential 

Since the mid-1990s, our work has shown the need for better predeployment training for military commanders and contract oversight 

personnel on the use of contractor support. Training is essential for 

military commanders because of their responsibility for identifying and

validating requirements to be addressed by the contractor. In addition, 

commanders are responsible for evaluating the contractor’s performance 

and ensuring the contract is used economically and efficiently. Similarly,

training is essential for DOD contract oversight personnel who monitor the 

contractor’s performance for the contracting officer. 

As we reported in 2003, military commanders and contract management 

and oversight personnel we met in the Balkans and throughout Southwest 

Asia frequently cited the need for better preparatory training.15

Additionally, in our 2004 review of logistics support contracts, we reported 

that many individuals using logistics support contracts such as LOGCAP 

were unaware that they had any contract management or oversight roles.16

Army customers stated that they knew nothing about LOGCAP before 

their deployment and that they had received no pre-deployment training 

 15GAO-03-695. 

16GAO-04-854. 

Page 18 GAO-07-525T 
regarding their roles and responsibilities in ensuring that the contract was 

used economically and efficiently. In our December 2006 report, we noted 

that many officials responsible for contract management and oversight in 

Iraq stated that they received little or no training on the use of contractors 

prior to their deployment, which led to confusion over their roles and 

responsibilities.17 For example, in several instances, military commanders 

attempted to direct (or ran the risk of directing) a contractor to perform 

work outside the contract’s scope, even though commanders are not 

authorized to do so. Such cases can result in increased costs to the 

government.

Over the years, we have made several recommendations to DOD intended 

to strengthen this training. Some of our recommendations were aimed at 

improving the training of military personnel on the use of contractor 

support at deployed locations, while others focused on training regarding 

specific contracts, such as LOGCAP. Our recommendations have sought to 

ensure that military personnel deploying overseas have a clear 

understanding of the role of contractors and the support the military 

provides to them. DOD has agreed with most of our recommendations. 

However, we continue to find little evidence that DOD has improved 

training for military personnel on the use of contractors prior to their 

deployment.

DOD provided additional information after we briefed the House 

Appropriations Committee’s Subcommittee on Defense. DOD advised us 

that they had established a contingency contracting training program at 

the Defense Acquisition University. While this is a good first step, we 

would note that according to the course description, the course is 

intended for contracting professionals. As we noted, we believe that there 

is a need to provide training for those personnel who are not contracting 

professionals such as commanders and others who are likely to work with 

contractor employees on a daily bases, but are not contracting 

professionals. 

 17GAO-07-145. 

Page 19 GAO-07-525T 
Since 2003, the United States has obligated about $29 billion to help Iraq 

rebuild its infrastructure and develop Iraqi security forces to stabilize the 

country. However, key goals have not been met and the Iraqi government 

has not sustained these efforts, in part because of the lack of management 

and human resource skills in Iraq’s key ministries. According to U.S. 

officials, the inability of the Iraqi government to spend its 2006 capital 

budget also increases the uncertainty that it can sustain the rebuilding 

effort. 

The Iraqi Government 

Currently Lacks the 

Capacity to Sustain 

and Continue 

Reconstruction and 

Security Efforts 

Iraq Has Difficulty 

Sustaining the Billions of 

Dollars Invested in 

Infrastructure and Security 

The United States has obligated about $14 billion to restore essential 

services such as oil, electricity, and water, and more than $15 billion to

train, equip, and sustain Iraqi security forces. Reconstruction has focused 

on projects such as repairing oil facilities, increasing electricity generating

capacity, and restoring water treatment plants. For example, the U.S. 

Army Corps of Engineers reported that it had completed 293 of 523 

planned electrical projects, including the installation of 35 natural gas 

turbines in Iraqi power generation plants. Stabilization efforts have 

focused on MNF-I training and equipping approximately 323,000 Iraqi 

security forces. To help sustain these forces, MNF-I is assisting Iraq’s 

Ministries of Defense and Interior in funding and building logistics systems 

for the military and police. The military logistics system includes a 

national depot, regional logistics centers, and garrison support units. The 

draft logistics plan for the police called for a system of warehouses to 

perform maintenance on equipment and distribution centers to dispense 

supplies. 

The United States has spent billions of dollars rebuilding the infrastructure 

and developing Iraqi security forces. However, the Iraqi government has 

had difficulty operating and sustaining the aging oil infrastructure, 

maintaining the new and rehabilitated power generation facilities, and 

developing and sustaining the logistics systems for the Ministries of 

Defense and Interior. The coalition provides the critical support necessary 

for the ministries to carry out their security responsibilities. As of 

December 2006, neither ministry was self-sufficient in logistics, command 

and control, or intelligence. For example: 

• Iraq’s oil production and exports have consistently fallen below their 

respective program goals. In 2006, oil production averaged 2.1 million 

barrels per day, compared with the U.S. goal of 3.0 million barrels per day. 

The Ministry of Oil has had difficulty operating and maintaining the 

refineries. According to U.S. officials, Iraq lacks qualified staff and 

expertise at the field, plant, and ministry level, as well as an effective 

Page 20 GAO-07-525T 
inventory control system for spare parts. According to State, the Ministry 

of Oil will have difficulty maintaining future production levels unless it 

initiates an ambitious rehabilitation program. In addition, oil smuggling 

and theft of refined oil products have cost Iraq substantial resources. 

• In 2006, electrical output reached 4,317 megawatts of peak generation per

day, falling short of the U.S. goal of 6,000 megawatts. Prewar electrical 

output averaged 4,200 megawatts per day. Production also was outpaced 

by increasing demand, which has averaged about 8,210 megawatts per day. 

The Iraqi government has had difficulty sustaining the existing facilities. 

Problems include the lack of training, inadequate spare parts, and an 

ineffective asset management and parts inventory system. Moreover, 

plants are sometimes operated beyond their recommended limits, 

resulting in longer downtimes for maintenance. In addition, major 

transmission lines have been repeatedly sabotaged and repair workers 

have been intimidated by anti-Iraqi forces. 

• As of December 2006, the coalition was providing significant levels of 

support to the Iraqi military because the Ministry of Defense could not 

fully supply its forces with adequate life support, fuel, uniforms, building 

supplies, ammunition, vehicle maintenance and spare parts, or medical 

supplies. In addition, the ministry was not able to run its communications 

networks on its own or independently acquire communications equipment. 

Furthermore, the Ministry will likely lack a comprehensive plan for its 

intelligence structure until December 2007. Although the coalition plans to

begin turning over certain support functions to ministerial control in the 

spring of 2007, it is unlikely that the Ministry of Defense will achieve 

complete self-sufficiency in logistics, command and control, or 

intelligence before mid-2008. 

• The Ministry of Interior also receives critical support from the coalition 

and is not self-sufficient in logistics, command and control, or intelligence.

Because the ministry is unable to provide maintenance for vehicles of the

national police, the coalition has let several contracts to train Iraqi 

mechanics, provide spare parts to contractors, and repair police vehicles. 

In addition, the ministry is not able to self-sufficiently operate or maintain

its communications networks. Furthermore, the coalition estimates that, if 

the security environment in Baghdad improves, the ministry’s intelligence 

organization will be self-sufficient by mid-2008. However, if this selfsufficiency depends on improved security, there may be cause for 

concern, given that the average total attacks per day have increased, rising 

from about 70 per day in January 2006 to a record high of about 180 per 

day in October 2006. Although the coalition plans to begin turning over 

certain support functions to ministerial control in the spring of 2007, it is 

Page 21 GAO-07-525T 
unlikely that the Ministry of Interior will achieve complete self-sufficiency 

in logistics, command and control, or intelligence before mid 2008. 

Iraqi government institutions are undeveloped and confront significant 

challenges in staffing a competent, non-partisan civil service; effectively 

fighting corruption; using modern technology; and managing resources 

effectively. Figure 2 provides an organizational chart of the Iraqi executive

branch and ministries. 

The Iraqi Government 

Faces Critical Challenges 

Staffing Effective Civil 

Service, Fighting 

Corruption, and Managing 

Resources 

Page 22 GAO-07-525T 
Figure 2: Iraqi Executive Branch and Ministries 

The Iraqi civil service remains hampered by inadequately trained or 

unskilled staff whose political and sectarian loyalties jeopardize the 

ministries’ ability to provide basic services and build credibility among 

Iraqi citizens, according to U.S. government reports and international 

assessments. A U.S. report states that the government ministries and the 

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

Iraq

Baghdad

Iraq

Baghdad

Source: State Department.

Deputy President

President

Deputy

President

Prime Minister Deputy

Prime Minister

Deputy

Prime Minister

Minister of

Agriculture

Minister of

Communications

Minister of

Culture

Minister of

Defense

Minister of

Displacement and 

Migration

Minister of

Electricity

Minister of Oil Minister of

Planning

Minister of

Trade

Minister of Science 

and Technology

Minister of

Municipalities

and Public Works

Minister of

Transportation

Minister of

Water Resources

Minister of

Youth and Sports

Minister of State for

Civil Society

Minister of State for 

National Dialogue 

Affairs

Minister of State for 

National Security 

Affairs

Minister of State for 

Foreign Affairs

Minister of State for 

Governorates Affairs

Minister of State for 

Tourism and 

Antiquities

Minister of State for 

Women’s Affairs

Minister of State for 

CoR Affairs

Minister of

Education

Minister of

Environment

Minister of

Finance

Minister of

Foreign Affairs

Minister of

Health

Minister of

Higher Education

Minister of

Human Rights

Minister of

Industry and Minerals

Minister of

Interior

Minister of

Justice

Minister of Housing 

and Construction

Minister of Labor

and Social Affairs

Page 23 GAO-07-525T 
ministry positions staffed with party cronies as a reward for political 

loyalty.18 According to U.S. officials, patronage leads to staff instability as 

many are replaced when the government changes or a new minister is 

named. Some Iraqi ministries, including the Ministries of Interior, 

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

whose allegiance is to political parties hostile to U.S. goals. These 

ministers use their positions to pursue partisan agendas that conflict with 

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

officials have expressed reservations about working in some of these 

ministries, noting that the effectiveness of programs is hampered by the 

presence of unresponsive or anti-U.S. officials. 

Corruption in Iraq is reportedly widespread and also poses a major 

challenge to building an effective Iraqi government. Corruption 

jeopardizes future flows of needed international assistance and reportedly 

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

reconstruction assistance. According to U.S. government and World Bank 

reports, there are several reasons for corruption in Iraq. The reasons, 

among others, include (1) an ineffective banking system that leaves the

government dependent on cash transactions; (2) nontransparent, obsolete 

ministry procurement systems; and (3) ineffective, inadequately resourced 

accountability institutions, such as the ministries’ inspectors general. 

GAO and the inspectors general are working with Iraq’s accountability 

organizations—the Board of Supreme Audit, Commission on Public 

Integrity, and inspectors general of the ministries—to strengthen their 

capabilities. 

The Iraqi ministries lack adequate information technology and have 

difficulty managing their resources, according to U.S. officials and an 

international assessment, further contributing to the corruption problem. 

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

manual processes such as hand-written ledgers and a cash-based payroll 

system that has resulted in Iraqi police leaving their posts to deliver cash 

to their families. U.S. officials also estimated that 20 to 30 percent of the 

Ministry of Interior personnel are “ghost employees”— nonexistent staff 

paid salaries that are collected by other officials. 

 18See Department of Defense, Measuring Stability and Security in Iraq (Washington, D.C.: 

August 2006). 

Page 24 GAO-07-525T 
Inability of Iraq’s Ministries 

to Spend the 2006 Capital 

Budget Creates Further 

Uncertainty about 

Sustaining Efforts 

Sound government budgeting practices can help determine the priorities 

of the new government, provide transparency on government operations, 

and help decision makers weigh competing demands for limited resources. 

However, unclear budgeting and procurement rules have affected Iraq’s 

efforts to spend capital budgets effectively and efficiently according, to 

U.S. officials. The inability to spend the money raises serious questions for 

the government, which has to demonstrate to skeptical citizens that it can 

improve basic services and make a difference in their daily lives. The U.S. 

government has launched a series of initiatives in conjunction with other 

donors to address this issue and improve the Iraqi government’s budget 

execution. 

As of August 2006, the government of Iraq had spent, on average, 8 percent 

of its annual capital goods budget and 14 percent of its annual capital 

projects budget.19 Some of the weakest spending occurs at the Ministry of 

Oil, which relies on damaged and outdated infrastructure to produce the 

oil that provides nearly all of the country’s revenues. The Ministry of Oil’s 

$3.5 billion 2006 capital project’s budget targeted key enhancements to the 

country’s oil production, distribution, and export facilities. However, as of 

August 2006, the ministry had spent less than 1 percent of these budgeted 

funds. Moreover, Interior and Defense had only spent about 11 and 1 

percent, respectively, of their capital goods budget, which include funds 

for the purchase of weapons, ammunition, and vehicles, among other 

items. According to U.S. officials, Iraq lacks clearly defined and 

consistently applied budget and procurement rules needed for effective

budget planning and implementation. The ministries have multiple rules 

and regulations promulgated under the former regime, the CPA, and the 

current government. The lack of procurement and budgeting rules creates 

opportunities for corruption and mismanagement. Table 1 provides further 

information on the Iraqi ministries efforts to spend their capital budgets. 

 19Iraq’s fiscal year begins on January 1 of each year. 

Page 25 GAO-07-525T 
Table 1: 2006 Annual Iraq Budget and Actual Expenditures through August 2006 

Millions of dollars

2006 Annual Budget Expenditures through August 2006 

Ministry 

Capital 

 goods

Capital 

projects

Total

 budget

Capital

 goods

Capital

 projects

Total

 budget

Finance $10 $33 $16,506 $1 $74 $8,895

Planning 4 27 55 0.4 3 9

Interior 233 27 1,919 25 0.2 958

Defense 864 33 3,443 12 0.0 831

Oil 2 3,533 3,590 0.4 4 40

Electricity 4 767 840 0.3 267 279

Water 0.2 200 259 0.0 49 78

Justice 3 10 74 2 0.2 34

Others 272 1,552 7,290 77 480 3,501

 Total $1,392 $6,181 $33,975 $117

 (8.4%)

$877

(14.2%)

$14,623

(43.0%)

Source: GAO analysis of Iraqi budget data. 

As I have discussed in my statement today, a number of conditions exist in 

Iraq that have led or will lead to fraud, waste, and abuse of U.S funds and 

will affect the U.S. effort to achieve our security, economic, and 

diplomatic goals in Iraq. Addressing these problems will require complete 

and transparent information on the progress made to reasonably judge our 

past efforts and determine future directions. This includes more accurate, 

reliable, and comprehensive information on the cost of the war, the 

capabilities of Iraqi security forces, and the results of U.S. efforts to build 

the managerial capacity of the Iraqi ministries. 

Concluding 

Observations 

Furthermore, given DOD’s heavy and increasing reliance on contractors in 

Iraq and elsewhere, and the risks this reliance entails, it may be

appropriate to ask if DOD has become too reliant on contractors to 

provide essential services. Moreover, given the pace of activities during 

contingency operations, it is essential that DOD and other government 

agencies engage, as early as possible, in (1) identifying potential support 

requirements, (2) locating contractors capable of providing support and 

negotiating with contractors to provide this support in a timely and costeffective manner, and (3) planning for additional military and civilian 

personnel to oversee and manage this increase in contractor activities. 

Page 26 GAO-07-525T 
Mr. Chairman and members of the committee, this concludes my 

statement. I will be happy to answer any questions you may have. 

For questions regarding this testimony, please call Joseph A. Christoff, 

Director, International Affairs and Trade, at (202) 512-8979; John Hutton, 

Acting Director, Acquisition and Sourcing Management, at (202) 512-4841; 

or William Solis, Director, Defense Capabilities and Management, at (202) 

512-8365. 

Other key contributors to this statement Nanette Barton, Dan Cain, Carole 

Coffey, Allisa Czyz, Tim DiNapoli, Mattias Fenton, Whitney Havens, 

Patrick Hickey, Wesley Johnson, Hynek Kalkus, Judy McCloskey, Tet

Miyabara, James A. Reynolds, Chris Turner, and Marilyn Wasleski. 

Page 27 GAO-07-525T 

Contact and 

Acknowledgments 

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