OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

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October 29, 2008

IMPROVEMENTS NEEDED IN REPORTING STATUS OF 

RECONSTRUCTION PROJECTS TO CHIEF OF MISSION

SIGIR 

Special Inspector General for IRAQ Reconstruction 

 

What SIGIR Found 

The Department of State has various avenues for communicating information 

on Iraq reconstruction projects, but they fall short of ensuring that the COM 

receives information critical for making decisions on reconstruction projects. 

The existing process for reporting reconstruction status to the COM includes: 

(1) the Reconstruction Core Group, which meets weekly with representatives 

from key reconstruction organizations, is the COM’s primary source of 

project-related information; (2) the Section 2207 Report, a quarterly report to 

Congress, estimates the cost to complete individual projects funded by the Iraq 

Relief and Reconstruction Fund (IRRF); and (3) the Iraq Reconstruction 

Management System provides aggregate data on Iraq reconstruction efforts 

funded by the U.S. government. 

Despite these existing reporting mechanisms, there are no formalized policies 

or guidance to outline what, when, or how to report reconstruction project 

status to the COM, according to senior officials. In addition, there is no 

systematic process or criteria to analyze cost, schedule, performance or 

associated impact that automatically initiate reporting to the COM based on 

these criteria. Project reporting is left to the discretion of project managers, 

subject matter experts, and other senior leaders. For example, until recently, 

the COM was unaware of various issues impacting the successful completion 

of the Falluja wastewater project, the only wastewater system built from the 

“ground up.” Security concerns, inadequate design, poor contractor 

performance, and work stoppages for non-payment of contractor invoices 

caused repeated delays in the project. Without a formalized reporting process 

or established reporting criteria, projects with substantial delays, spiraling 

costs, security concerns, or other high risk issues may not be brought to the 

COM’s attention, potentially resulting in poor management decisions and 

wasted taxpayer dollars. 

SIGIR’s Inspections Directorate recently completed a review of five projects 

that are part of the Falluja Wastewater Treatment System. The directorate 

reported the results of their reviews in “Falluja Waste Water Treatment 

System” (SIGIR-PA-08 144 to 148, October 27, 2008). 

Summary of Report: SIGIR-09-007 

Why SIGIR Did This Study 

In July 2008, the U.S. Ambassador to Iraq—

as Chief of Mission (COM)—asked SIGIR to 

examine the availability of management 

information needed for oversight of agency 

reconstruction projects, particularly as it 

related to the Falluja wastewater treatment 

project. The Ambassador had become 

concerned after belatedly being made aware 

of various issues impacting the successful 

completion of the project. 

The “American Embassy Baghdad, 

Organization and Staffing Report”, dated 

May 23, 2007, formalized a number of 

changes designed to improve the overall 

efficiency and effectiveness of organizations 

in support of operations in Iraq. The 

Coordinator for Economic Transition in Iraq 

(CETI) plays an important role in the new 

organizational alignment and reports directly 

to the COM. The COM coordinates U.S. 

policy on economic development in Iraq. 

Managing information flow is a key element 

of this responsibility. 

SIGIR’s objectives were to identify and 

determine the adequacy of the processes used 

to provide the current status of reconstruction 

projects to COM. 

What SIGIR Recommends

SIGIR makes two recommendations. One is 

for the U.S. Ambassador to establish policy 

and guidance to ensure uniform reporting on 

reconstruction projects, and the second is for 

CETI to establish a process to ensure that all 

projects, regardless of funding source or 

agency management, are accurately and 

adequately reported to the U.S. Ambassador. 

The Deputy COM and others concurred with 

the report and the Deputy stated that 

implementation of the recommendations has 

already begun. 

For more information, contact SIGIR Public Affairs 

at (703) 428-1100 or PublicAffairs@sigir.mil Special Inspector General for Iraq Reconstruction 
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

400 Army Navy Drive • Arlington, Virginia 22202

October 29, 2008 

MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ 

COMMANDING GENERAL, MULTI-NATIONAL FORCE-IRAQ 

MINISTER FOR ECONOMIC AFFAIRS/COORDINATOR FOR 

ECONOMIC TRANSITION IN IRAQ 

DIRECTOR, OFFICE OF IRAQ RECONSTRUCTION, U.S. AGENCY 

FOR INTERNATIONAL DEVELOPMENT 

COMMANDING GENERAL, U.S. ARMY CORPS OF ENGINEERS 

COMMANDING GENERAL, GULF REGION DIVISION, U.S. ARMY 

CORPS OF ENGINEERS 

COMMANDER, JOINT CONTRACTING COMMANDIRAQ/AFGHANISTAN 

DIRECTOR, IRAQ TRANSITION ASSISTANCE OFFICE 

SUBJECT: Improvements Needed in Reporting Status of Reconstruction Projects to Chief of 

Mission (SIGIR-09-007) 

We are providing this audit report for your information and use. The report discusses the State 

Department’s process for reporting the status of reconstruction projects in Iraq to the Chief of 

Mission. We performed this audit in accordance with our statutory responsibilities contained in 

Public Law 108-106, as amended. This law provides for independent and objective audits of policies 

designed to promote economy, efficiency, and effectiveness of programs and operations and to 

prevent and detect fraud, waste, and abuse. This audit was conducted as SIGIR project 8030. 

We considered comments from the Deputy Chief of Mission, Multi-National Force-Iraq, and Gulf 

Region Division in finalizing this report. The comments are addressed in the report, where 

applicable, and a copy is included in the Management Comments section of this report. 

We appreciate the courtesies extended to our staff. For additional information on this report, please 

contact Mr. Glenn Furbish (glenn.furbish@sigir.mil,703-428-1058) or Ms. Nancee Needham 

(nancee.needham@iraq.centcom.mil,703-343-9275). 

 Stuart W. Bowen, Jr. 

Inspector General 
Table of Contents 

Executive Summary i 

Introduction 1 

Reporting Project Status to the Chief of Mission 7 

Conclusions and Recommendations 14 

Management Comments and Audit Response 15

Appendices 

A. Scope and Methodology 16 

B. Key Program Review Meetings 17 

C. Comprehensive List of Meetings 18 

D. Acronyms 20 

E. Audit Team Members 211 

Management Comments 

U. S. Embassy – Iraq 22 

U.S. Army Corps of Engineers, Gulf Region Division 24 
Improvements Needed in Reporting Status of 

Reconstruction Projects to Chief of Mission 

SIGIR-09-007 October 29, 2008

Executive Summary 

Introduction 

In July 2008, the U.S. Ambassador to Iraq (Chief of Mission, or COM) raised questions about 

the availability of management information needed for oversight of agency reconstruction 

projects. At the COM’s request, SIGIR initiated a review to identify and determine the adequacy 

of the processes used to provide the current status of reconstruction projects to the COM. 

On May 23, 2007, the “American Embassy Baghdad, Organization and Staffing Report”1

formalized a number of changes designed to improve the overall efficiency and effectiveness of 

organizations in support of operations and ongoing efforts for the transition in Iraq. The report 

recommended scheduled meetings at the post level to allow greater coordination on cross-cutting 

issues and daily briefings to the COM. 

The Economic Minister plays an important role in the new organizational alignment, serving as 

the Coordinator for Economic Transition in Iraq (CETI). The CETI coordinates U.S. government 

policy on economic development in Iraq, including coordinating all relevant elements of the U.S. 

Embassy to facilitate a smooth transition from U.S. government and other external assistance. 

Managing the flow of information is a key element of this responsibility. The CETI reports 

directly to the COM and Deputy Chief of Mission. 

Results 

The Department of State (DoS) has various avenues for communicating information on Iraq 

reconstruction projects, but they fall short of ensuring that the COM receives information critical 

for making decisions on reconstruction projects. The current process for reporting reconstruction 

status to the COM includes three sources of information: 

 

1

 The report is commonly called the Kennedy Report. 

i
• The Reconstruction Core Group, which meets weekly with representatives from key 

reconstruction organizations, is the COM’s primary source of project-related information. 

• The Section 2207 Report, a quarterly report to Congress, estimates the cost to complete 

individual projects funded by the Iraq Relief and Reconstruction Fund (IRRF). 

• The Iraq Reconstruction Management System provides aggregate data on Iraq 

reconstruction efforts funded by the U.S. government. 

Despite these reporting mechanisms, there are no formalized policies or guidance to outline 

what, when, or how to report reconstruction project status to the COM, according to senior 

officials. In addition, there is no systematic process or criteria to analyze the cost, schedule, 

performance, or associated impact that automatically initiate reporting to the COM based on 

these criteria. Project reporting is left to the discretion of project managers, subject matter 

experts, and other senior leaders. For example, until recently, the COM was unaware of various 

issues impacting the successful completion of the Falluja wastewater project, the only 

wastewater system built from the “ground up.” Security concerns, inadequate design, poor 

contractor performance, and work stoppages for non-payment of contractor invoices caused 

repeated delays in the project. Without a formalized reporting process or established reporting 

criteria, projects with substantial delays, spiraling costs, security concerns, or other high-risk 

issues may not be brought to the COM’s attention, potentially resulting in poor management 

decisions and wasted taxpayer dollars. 

Recommendations 

SIGIR recommends that the U.S. Ambassador to Iraq take these actions: 

1. Establish and publish policy and guidance to uniformly report the status of reconstruction 

projects to the U.S. Ambassador. The policy and guidance should consider stratifying 

and prioritizing projects to be reported to the U.S. Ambassador. Furthermore, the policy 

and guidance should establish a means of identifying key elements of a project—such as 

cost, schedule, and performance—to objectively provide the status of a project. 

2. Direct the Coordinator for Economic Transition in Iraq to establish a process based on the 

new policy guidance to ensure that all reconstruction projects, regardless of funding 

source or agency management, are accurately and adequately reported to the U.S. 

Ambassador. If a project is delayed or terminated, the Coordinator should also consider 

the associated impact on quality of life and diplomatic relationships. Any project 

deviating from established criteria should trigger required notification to the Ambassador. 

ii
iii

Management Comments and Audit Response 

In written comments on a draft of this report, the Deputy COM and the Commanding General, 

U. S. Army Corps of Engineers, Gulf Region Division (GRD), concurred with the report, and the 

Deputy COM stated that action to implement SIGIR’s recommendations is underway. The 

Deputy Chief of Mission indicated that she had requested the Coordinator for Economic 

Transition in Iraq to design a process to report project status, with some measure of objectivity, 

for problem projects. 

The Deputy COM suggested that for clarity’s sake, the second recommendation involving “all 

projects, regardless of funding source or agency management” should be refined to read “all nonmilitary projects, regardless of funding source or agency management,” indicating that the COM 

does not have authority over projects funded by the U.S. military. SIGIR did not change the 

recommendation because the majority of remaining reconstruction projects are funded by DoD. 

Consequently, SIGIR believes the process being developed to provide the COM information 

should include reconstruction projects funded by DoD. Although SIGIR realizes that there is a 

division of responsibilities between the Embassy and MNF-I, that does not exclude the sharing 

of information of mutual interest. Moreover, National Security Presidential Directive dated May 

11, 2004, states that “The Secretary of State shall be responsible for the continuous supervision 

and general direction of all assistance for Iraq.” Consequently, SIGIR believes that the process 

being developed to provide the COM information should include reconstruction projects for the 

benefit of Iraq, funded by DoD. Including such information is consistent with the collaborative 

working relationship between the COM and the Commanding General, MNF-I. The extent and 

scope of the information would be decided as part of the ongoing process described in the 

Deputy COM’s comments. 

MNF-I and GRD provided additional comments, which for the most part, included suggestions 

for technical changes to the report. SIGIR considered these comments in preparing this final 

report and made changes considered appropriate. 
Introduction 

In July 2008, the U.S. Ambassador to Iraq (Chief of Mission) raised questions about the 

management information available to support oversight of agency reconstruction projects. This 

report discusses how the status of reconstruction projects is reported to the Chief of Mission and 

the adequacy of the reporting processes. SIGIR conducted this audit under its legislative 

mandate to (1) conduct audits relating to the programs and operations funded with amounts 

appropriated or otherwise made available for the reconstruction of Iraq and report to the 

Congress; (2) provide for the independent and objective leadership and coordination of, and 

recommendations on, policies designed to promote economy, efficiency, and effectiveness in the 

administration of programs and operations and prevent and detect fraud, waste, and abuse; and 

(3) provide for an independent and objective means of keeping the Secretary of State, the 

Secretary of Defense, and the Congress fully and currently informed about problems and 

deficiencies relating to the administration of such programs and operations and the necessity for 

and progress of corrective action. 

Chief of Mission 

The National Security Presidential Directive 36,2 states that the Chief of Mission (COM)—on 

behalf of the President and under the guidance of the Secretary of State—is “responsible for the 

direction, coordination and supervision of all United States government employees, policies, and 

activities in country, except those under the command of an area military commander, and 

employees seconded to International Organizations.” 

 

2

 National Security Presidential Directive 36 was signed by the President on May 11, 2004. 

1
Organization 

Figure 1 illustrates how the U.S. Mission-Iraq is currently aligned regarding reconstruction. 

Figure 1: Primary Offices Involved in Reconstruction in the U.S. Mission-Iraq 

Source: SIGIR extracted this chart from the “U.S. Mission Iraq” organization chart dated July 2007. 

Resident in the U.S. Mission, but not under the COM, is the MNF-I Commander, and 

subordinate organizations such as the Joint Contracting Command-Iraq/Afghanistan (JCC-I/A)3

and the Gulf Region Division of the U.S. Army Corps of Engineers, which, as discussed later, 

provide acquisition and project management support to reconstruction activities in Iraq. 

The key Department of State organizations responsible for the flow of information on project 

status and the Gulf Region Division’s (GRD) interaction in reporting information on 

reconstruction project status are discussed below. 

Iraq Transition Assistance Office (ITAO) 

NSPD 36 addressed the transition of U.S. government operations in Iraq from the Coalition 

Provisional Authority to the U.S. Mission-Iraq. The directive also established a temporary 

 

3

 In October 2004, the U.S. Central Command designated the Army as the lead component for contracting in the 

Combined Joint Operations Area, Iraq and Afghanistan, and the JCC-I/A was established. JCC-I/A provides 

contracting support to both the Iraq reconstruction effort and to combatant commanders in Iraq and Afghanistan. 

2
organization to facilitate the transition in Iraq performing duties like conducting sector reviews 

with the GRD, reviewing projects initiated and completed, and performing periodic financial 

reviews such as construction gap and cost-to-complete analysis. Initially that organization was 

known as the Iraq Reconstruction Management Office. However, on May 8, 2007, the President, 

by Executive Order 13431, created the Iraq Transition Assistance Office (ITAO) as the successor 

organization to IRMO, and IRMO’s functions were assumed by ITAO. The President 

established ITAO as a temporary organization within the Department of State “to perform the 

specific project of supporting executive departments and agencies in concluding remaining large 

infrastructure projects expeditiously in Iraq, in facilitating Iraq's transition to self-sufficiency, 

and in maintaining an effective diplomatic presence in Iraq.” 

Iraq Transition Assistance Office Senior Consultants 

ITAO does not have direct authority over organizations conducting reconstruction activities; 

rather, ITAO coordinates reconstruction activities through senior consultants who can attend 

meetings with GRD and the Multi-National Security Transition Command-Iraq. These meetings 

provide an opportunity for reconstruction project data to be openly discussed with senior 

consultants for water, electricity, and facilities. 

ITAO senior consultants are granted tremendous autonomy and independence in the manner in 

which they carry out their responsibilities and are subject “only to administrative and policy 

direction concerning overall project priorities and objectives.” Responsibilities include 

coordinating with reconstruction agencies as well as facilitating the planning, funding, and 

execution of comprehensive programs. 

Senior consultants’ responsibilities also include providing technical, reconstruction, policy, and 

regulatory advice to their respective Iraqi ministries; providing management consulting and 

logistical support; and monitoring and maintaining integrity of reconstruction program resources. 

Coordinator for Economic Transition in Iraq 

The American Embassy Baghdad, Organization and Staffing Report4

, dated May 23, 2007, 

formalized a number of changes designed to improve the overall efficiency and effectiveness of 

organizations in support of operations and ongoing efforts for the transition in Iraq. For 

example: 

The report supported an organizational structure that significantly reduced the number of 

organizations and the number of activities reporting directly to the Deputy Chief of Mission. It 

also recommended scheduled meetings at the post level to allow greater coordination on 

 

4

 The report is commonly called the Kennedy Report. 

3
crosscutting issues and daily briefings to the COM, presumably to address the most pressing 

issues of the day. 

Furthermore, the report addressed closer cooperation between the Embassy and the MultiNational Force-Iraq (MNF-I) and proposed a realignment of resources and office space at the 

New Embassy Compound to allow a number of options. 

The CETI, who reports directly to the COM and Deputy Chief of Mission, coordinates U.S. 

government policy on economic development in Iraq. This includes coordinating all relevant 

elements of the U.S. Embassy to bring about a smooth transition from U.S. Government and 

other external assistance. Managing the flow of information is a key element of this 

responsibility. 

Gulf Region Division 

NSPD 36 originally created a temporary organization, called the Project and Contracting Office 

(PCO), within the Department of Defense. The function of this office was to provide acquisition 

and project management support to reconstruction activities in Iraq, particularly to the COM. In 

early 2005, the Assistant Secretary of the Army (Acquisition, Logistics, and Technology) 

directed the merger of PCO and GRD because this was determined to be the most effective way 

to conduct business. In October 2006, GRD merged with the PCO and, as a result, GRD 

assumed more responsibility for project management. The GRD Programs Directorate supports 

the reconstruction efforts. Figure 2 shows how the GRD Programs Directorate is currently 

aligned. 

4
5

Figure 2: U.S. Army Corps of Engineers, Gulf Region Division, Programs Directorate a

Programs Directorate

Public Works & 

Water Branch Facilities Branch Electrical 

Generation

Branch 

Reconstruction 

Division 

Energy

Division 

Electrical 

Transmission & 

Distribution Branch

Military Programs

Division

Program Support & 

Integration Division 

Energy Branch Oil Branch

Source: U.S. Army Corps of Engineers, Gulf Region Division. 

Notes: 

a GRD has stopped using the term “Sector” within the Programs Directorate and has begun using “Division” or “Branch,” which is 

more in line with how U.S. Army Corps of Engineers is aligned.

GRD contributes to the reconstruction mission along with the Department of State, the U.S. 

Agency for International Development and the Multi-National Force-Iraq. GRD’s goal is to 

assist in restoring infrastructure associated with essential services in the country. To execute 

projects, GRD has three subordinate districts—Gulf Region North, in Tikrit; Gulf Region 

Central, in Baghdad; and Gulf Region South, in Tallil. GRD is assigned to MNF-I, and reports 

to the Commander, MNF-I to provide engineering expertise in Iraq. 

Funding 

SIGIR has reported that the United States has appropriated more than $50 billion from various 

funds for Iraq’s reconstruction. The major accounts supporting Iraq reconstruction are the Iraq 

Relief and Reconstruction Fund ($20.86 billion), the Iraq Security Forces Fund ($17.94 billion), 

the Economic Support Fund ($3.74 billion), and the Commander’s Emergency Response 

Program ($3.49 billion). While not all of these funds are under the direct control of the COM, 

each one supports an element for success in Iraq. Consequently, the COM should be aware of 

successes and challenges associated with all assistance efforts in Iraq. Without adequate 

knowledge of the successes and challenges, the COM is less able to take proactive rather than 

reactive actions to address pertinent issues. 
6

Falluja Wastewater Treatment System 

The Falluja Wastewater Treatment System (Falluja wastewater project) is a sewage collection 

and treatment project in the city of Falluja, Iraq. The $98 million project—funded by the Iraq 

Relief and Reconstruction Fund, the Commander’s Emergency Response Program and the 

Development Fund for Iraq—was designed to serve the city of Falluja. However, for several 

reasons, including the varied size of individual projects and an inability to mix funding sources, 

uncertainty regarding the project’s scope, and limitations on Development Fund for Iraq (DFI) 

funds, the project was divided into 45 contracts and will now serve only 9,300 homes─only 38% 

of the homes in Falluja. These contracts covered engineering design, construction, and 

procurement of equipment. Work started on this project in March 2005 and was ongoing as of 

September 2008. 

Objective 

The objective of this review was to identify and determine the adequacy of the processes used to 

provide the current status of reconstruction projects to COM. 
Reporting Project Status to Chief of Mission 

The Department of State has various avenues for communicating information on Iraq 

reconstruction projects; however, they fall short of ensuring that the Chief of Mission (COM) 

receives information critical for making decisions on reconstruction projects. Although there are 

periodic meetings to provide the COM with project status updates, the topics discussed are 

determined subjectively by officials involved in project management. In many cases, the data 

collected is not shared, not provided to senior management, stovepiped, incomplete, and not 

coordinated. This has occurred because COM lacks policy and guidance on reporting project 

status to the COM. In addition, there is not an adequate reporting process to ensure that projects 

with substantial delays, spiraling costs, security concerns, or other high impact factors like 

quality of life, diplomatic relationships, and other projects will be brought to the Chief of 

Mission’s attention. As a result, without adequate project status reporting to the COM, 

permitting higher level review of problem issues, poor management decisions may result in 

wasted taxpayer dollars. For example, until recently, the COM was unaware of the various 

issues impacting the successful completion of the Falluja wastewater project. These issues 

caused repeated delays in the three year old project and include security concerns, inadequate 

design, poor contractor performance, and work stoppages for non-payment of contractor 

invoices. 

Chief of Mission Sources of Information on Reconstruction Projects 

The Reconstruction Core Group meeting is the primary source of reconstruction project 

information for the COM; however, projects discussed at this meeting are subjectively selected 

by senior ITAO staff. Other sources of project information are also available as requested. 

Figure 3 provides an overview of the “as is” process for informing the COM about ongoing 

reconstruction projects; however, information does not always flow as illustrated. 

7
8

Figure 3: “As Is” Process for Providing the Chief of Mission Project Status Updates a

Source: SIGIR developed this figure based upon interviews and review of documentation. 

Notes: 

a Figure 3 provides an overview of the existing process for informing the COM about ongoing reconstruction projects; however, 

information does not always flow as illustrated.

b Discussion elsewhere in this report, states that the Section 2207 report is compiled by the Bureau of Near Eastern Affairs-Iraq

(NEA-I) with information provided by principal agencies involved in reconstruction. ITAO coordinates, compiles, and locally vets 

input for the 2207, which is reviewed by CETI and provided as input to NEA-I for further clearance of the 2207. The COM reviews 

the input provided to NEA-I.

The following paragraphs discuss meetings, reports, and other sources of reconstruction project 

data for the COM. 

Gulf Region Division and Districts 

Meetings of the Gulf Region Division (GRD) are not a direct means of providing information to 

the COM; rather, they are the source of most reconstruction project-related data. GRD conducts 

many meetings dealing with project management. Several of the meetings are attended by senior 

consultants and are key to communicating project status to the COM. The key meetings are the 
Program Review Board, Cost-to-Complete and the Senior Executive Review Group (previously 

called the Critical Project Review). 

• The Program Review Board meets monthly5 to provide project updates, including new 

awards, project starts, and completions and specific project updates. 

• The Cost-to-Complete monthly meeting primarily deals with project cost and funding 

issues. 

• The Senior Executive Review Group meets monthly to review potential project funding. 

A list of key program review meetings is in Appendix B. A comprehensive list of reconstruction 

project meetings conducted by GRD is in Appendix C. The list includes the frequency, purpose, 

and primary attendees of each meeting. 

Reconstruction (Recon) Core Group 

The weekly Recon Core Group meeting is the primary source of reconstruction project 

information to the COM; however, the Embassy has not developed formal policy and guidance 

for reporting this information. Consequently, the presentations are ad hoc in nature. According 

to senior management, the meetings generally last less than an hour and have an agenda of three 

or four items. Attendees at the meetings sometime include, but are not limited to, the COM, the 

Deputy Chief of Mission, and representatives from the Office of the Coordinator for Economic 

Transition in Iraq, the Iraq Transition Assistance Office, the Office of Provincial Affairs, the 

U.S. Agency for International Development, and the GRD. 

Potentially, all reconstruction projects can be discussed at this meeting, but there are no formal 

criteria to develop an agenda. We were told that senior leaders from ITAO try to ensure that 

projects from each sector are discussed at least once a month. We were also told that any of the 

key participants can request that a topic be included in an agenda, but without specific reporting 

criteria, critical projects may not be included for discussion. 

Preceding the Recon Core Group meeting, a group of senior leaders meet to establish the agenda. 

The agenda is “scrubbed” the evening before the Recon Core Group meeting and sent to the 

Chief of Mission for prior review. According to senior management, if no topics have been 

submitted for discussion at the meeting, projects are subjectively selected and added to the 

agenda. 

When we asked for copies of the minutes for the Recon Core Group meetings, we were told that 

minutes for the meetings were not documented. To determine what has been discussed at the 

 

5

 This was a biweekly meeting until April 2008. 

9
prior meetings, we requested copies of the meeting agendas as far back as available. We were 

provided the agendas from February 12 through September 17, 2008. 

Our review of the agendas showed that the Falluja Wastewater Treatment System project was 

first briefed to the COM on July 15, 2008, and has been included on every Recon Core Group 

meeting agenda through September 17, 2008. 

Given the COM’s interest in this project, we selected the Falluja Wastewater Treatment System 

for review to determine whether data was reported up the chain throughout the project’s history. 

The Falluja Wastewater project, a basic need that will improve the lives and health of thousands 

of Iraqi citizens in the Falluja area, was started in March 2005 and has yet to be completed. This 

project was beset with problems from early 2005 through the date of this report, yet the COM 

just learned of the magnitude of these issues in July 2008, more than three years after the start of 

the project. Through our review of project-related documents and interviews with government 

personnel, we determined that information on the project’s status was repeatedly prepared and 

forwarded from project management to the ITAO Senior Consultant for water and upward to 

ITAO management through joint weekly meetings. Yet the issues surrounding this project failed 

to make the Recon Core Group agenda until July 15, 2008. For example, from early on in this 

project through the date of this report, the payment of invoices for contracts funded by DFI has 

been an issue. Several contractors were not paid and have either stopped work or refused to 

deliver equipment. Because of the interdependency of segments of work on this project, other 

contractors have also been forced to suspend construction. Although multiple courses of action 

have been proposed and repeatedly presented by the ITAO Senior Consultant, a decision on 

those options had not been made for over two years.6

According to documents we obtained, including e-mails, memorandums, briefings, and listings, 

we determined that senior IRMO/ITAO officials received information on significant issues 

surrounding the Falluja Wastewater Treatment System project on at least 27 separate occasions–

five times in 2006, 20 times in 2007 and twice in 2008.7

 One e-mail we obtained, from April 

2007, indicated that senior ITAO officials debated whether or not to discuss the Falluja DFI 

funding problem with the COM at the Recon Core Group meeting. However, since there are no 

 

6

 SIGIR’s Inspections Directorate recently completed a review of five projects that are part of the Falluja 

Wastewater Treatment System. The directorate reported the results of their reviews in “Falluja Waste Water 

Treatment System (SIGIR-PA-08 144 to 148), issued in October 2008.

7

 These figures on the communication of key issues related to the Falluja project exclude numerous briefing 

documents from 2005 through 2007 because these documents did not indicate the attendees at the briefings or the 

recipients of the information. 

10
minutes from Recon Core Group meetings, we were unable to verify if this issue was ever 

discussed. We were able to identify documentation indicating that the commander of MNF-I was 

briefed on the Falluja DFI funding issue–once in 2007 and once in 2008. 

The substantial amount of communication to senior IRMO/ITAO officials regarding significant 

Falluja Wastewater project issues, combined with a lack of communication to the COM on the 

same issues, indicates a serious management control weakness. This appears to be the result of 

the lack of standard performance/cost indicators as criteria for raising project issues to the COM. 

Other issues that have contributed to delays in completing the Falluja wastewater project include 

a volatile security environment, an inadequate engineering design, and poor contractor 

performance. Security issues in Falluja have included the threatening, ambushing, and murdering 

of contractors, vandalism, material hijacking, and the murder of personal security staff.8

Problems with engineering design have included the need for significant re-engineering, 

problems identified during construction, and the absence of a final design that has yet to be 

completed. Contractors have had cash flow problems as well as numerous safety violations that 

contributed to four construction-related fatalities. Individually, these issues may not rise to the 

level of attention of the Recon Core Group, but combined, especially with the DFI payment 

issue, they should have been discussed. However, again, without standard policies and guidance 

on reporting, and the establishment of a formalized process for reporting on criteria-based 

standards, the COM was not informed. 

Other Core Group Meetings 

The COM attends other core group meetings: Economic, Provincial Reconstruction Teams, Rule 

of Law, Public Affairs Office, and Political. While these core group meetings are not directly 

related to reconstruction, projects could be a topic of discussion. For example, the Department 

of State’s Bureau of International Narcotics and Law Enforcement Affairs, which is responsible 

for prison construction in Iraq, reports to the Rule of Law Coordinator rather than CETI as a 

result of realignment. Reconstruction issues should be reported at the Recon Core Group 

meeting; however, specific issues could be discussed during the Rule of Law Core Group 

meeting. 

Other Available Project Information 

In addition to the meetings discussed, other sources of reconstruction project status are available. 

Some of the primary sources are discussed below. 

 

8

 Security conditions have improved from mid- to late 2007. 

11
Section 2207 Report 

The Congress established a requirement in Section 2207 of Public Law 108-106, “Emergency 

Supplemental Appropriations Act for Defense and for the Reconstruction of Iraq and 

Afghanistan, 2004,” to report quarterly estimates of costs to complete all projects funded by 

IRRF, listed on a project-by-project basis. This report, known as the Section 2207 Report, is 

currently compiled by the Department of State’s Bureau of Near Eastern Affairs from 

information provided by the principal agencies involved in Iraq relief and reconstruction–the 

U.S. Agency for International Development, GRD, and the Multi-National Security Transition 

Command-Iraq (formerly through IRMO). The requirement for the Section 2207 Report expired 

on October 1, 2008, as set forth in Public Law 109-234, Section 1302 (a). 

We reviewed the Section 2207 Reports, dated from January 2004 through July 2008, to 

determine what was reported on the Falluja Wastewater Treatment System project. We found 

that the Falluja project was included in the reports, which highlighted increased project funding, 

contracting with Iraqi firms, problems with security, and payment issues associated with 

contracts funded with Development Funds for Iraq. However, as written, the language included 

in these reports would not have alerted the reader to a significant problem with the Falluja 

project. 

Iraq Reconstruction Management System 

The Iraq Reconstruction Management System (IRMS) is another source of reconstruction project 

data available to the COM. This system provides the only aggregate data on U.S. governmentfunded reconstruction efforts in Iraq and currently provides various reports. However, in July 

2008, SIGIR reported that IRMS is becoming obsolete, its data is incomplete, and it provides 

only a limited common operating picture of Iraq reconstruction activities. 9 To resolve system 

issues—such as program management accountability and data quality, SIGIR recommended that 

the COM and the Commander, MNF-I jointly establish an interagency planning process to 

address the future operation and use of IRMS. This recommendation highlights the need for 

documented policies and guidance to effectively track progress of reconstruction projects. 

Issues with Reporting Process 

Throughout our review, senior leaders told us there is no documented policy and guidance that 

outlines how, what, and when to report reconstruction project status to the Chief of Mission. No 

policy and guidance defines the information that the COM needs and criteria to base it on. In 

addition, the COM has no systematic process or baseline criterion for analyzing cost, schedule, 

 

9 Comprehensive Plan Needed to Guide the Future of the Iraq Reconstruction Management System (SIGIR-08-021, 

July 26, 2008). 

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performance, or impact, and no criteria to automatically initiate reports to the COM based on 

those criteria. Project reporting is left to the discretion of project managers, subject matter 

experts, and other senior leaders. 

Government Accountability Office Standards for Internal Control in the Federal Government

and Office of Management and Budget Circular A-123 Management Accountability and Control

state that the proper stewardship of government resources is an essential responsibility of agency 

managers and staff. Government employees must ensure that programs operate, and resources 

are used, efficiently and effectively to achieve desired objectives. To achieve these ends, 

management has a fundamental responsibility to develop and maintain effective internal control. 

Internal control alone does not guarantee the success of agency operations but is a means of 

managing the risk of waste, fraud, and mismanagement associated with government programs 

and operations. 

Impact of Inadequate Controls 

This report has outlined the limitations associated with the process the Department of State uses 

for reporting reconstruction project status to the Chief of Mission. It is unclear why important 

information on the status of the Falluja Wastewater Treatment System was not regularly 

presented to the COM. Nevertheless, this project suggests there are significant weaknesses in the 

system for keeping the COM informed regarding the status of such projects. 

Without standardized baseline criteria—like cost, schedule, performance and their associated 

risks—responsible officials cannot objectively measure project deviations and report them to the 

COM and other senior leaders. Without such criteria, uninformed management decisions could 

result in delayed construction and wasted taxpayer dollars. 
Conclusions and Recommendations 

Conclusions 

While the Department of State has an informal process for reporting reconstruction project status 

to the COM, its ad hoc nature and lack of standard policies and guidance leaves the process 

vulnerable to the omission of important and timely information that should be brought to the 

COM’s attention. No documented policies and guidance outline how and when to report 

deviations from established project baselines related to cost, schedule, and performance, and 

what specifically should be reported Without a formal process, critical decisions on project 

issues may be delayed or based on incomplete information and result in inefficient and 

ineffective operations. Establishing measurable criteria that trigger automatic reporting is 

essential to timely, complete, and independent project reporting. Establishing such an effective 

process will require the cooperation of the various agencies represented in Iraq as well as seniorlevel commitment to the process. The formal process should apply to all reconstruction sectors 

(water, electric, health, transportation, law enforcement, and provincial reconstruction teams). 

Recommendations 

SIGIR recommends that the U.S. Ambassador to Iraq take these actions: 

1. Establish and publish policy and guidance to uniformly report the status of reconstruction 

projects to the U.S. Ambassador. The policy and guidance should consider stratifying and 

prioritizing projects to be reported to the U.S. Ambassador. Furthermore, the policy and 

guidance should establish a means of identifying key elements of a project—such as cost, 

schedule, and performance—to objectively provide the status of a project. 

2. Direct the Coordinator for Economic Transition in Iraq to establish a process based on the 

new policy guidance to ensure that all reconstruction projects, regardless of funding 

source or agency management, are accurately and adequately reported to the U.S. 

Ambassador. If a project is delayed or terminated, the Coordinator should also consider 

the associated impact on quality of life and diplomatic relationships. Any project 

deviating from established criteria should trigger required notification to the Ambassador. 

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Management Comments and Audit Response 

In written comments on a draft of this report, the Deputy COM and the Commanding General, 

U. S. Army Corps of Engineers, Gulf Region Division (GRD), concurred with the report, and the 

Deputy COM stated that action to implement SIGIR’s recommendations is underway. The 

Deputy Chief of Mission indicated that she had requested the Coordinator for Economic 

Transition in Iraq to design a process to report project status, with some measure of objectivity, 

for problem projects. 

The Deputy COM suggested that for clarity’s sake, the second recommendation involving “all 

projects, regardless of funding source or agency management” should be refined to read “all nonmilitary projects, regardless of funding source or agency management,” indicating that the COM 

does not have authority over projects funded by the U.S. military. SIGIR did not change the 

recommendation because the majority of remaining reconstruction projects are funded by DoD. 

SIGIR believes the process being developed to provide the COM information should include 

reconstruction projects funded by DoD. Although SIGIR realizes that there is a division of 

responsibilities between the Embassy and MNF-I, that does not exclude the sharing of 

information of mutual interest. Moreover, National Security Presidential Directive dated May 11, 

2004, states that “The Secretary of State shall be responsible for the continuous supervision and 

general direction of all assistance for Iraq.” Consequently, SIGIR believes that the process being 

developed to provide the COM information should include reconstruction projects for the benefit 

of Iraq, funded by DoD. Including such information is consistent with the collaborative working 

relationship between the COM and the Commanding General, MNF-I. The extent and scope of 

the information would be decided as part of the ongoing process described in the Deputy COM’s 

comments. 

MNF-I and GRD provided additional comments, which for the most part, included suggestions 

for technical changes to the report. SIGIR considered these comments in preparing this final 

report and made changes considered appropriate. 
Appendix A—Scope and Methodology 

SIGIR initiated this audit in August 2008 (Project 8030) in response to a request from the U.S. 

Ambassador to Iraq. In our discussions, the Ambassador raised questions about the management 

information available to support oversight of reconstruction projects. The Ambassador requested 

that SIGIR look into this issue. This report identifies the current process of reporting 

reconstruction project status to the Chief of Mission and the adequacy of project information for 

fulfilling oversight responsibilities. 

To identify the current process for reporting the reconstruction project status to the Chief of 

Mission, we interviewed Chief of Mission staff and officials from the Department of State, the 

Department of Defense, and the U.S. Agency for International Development. For each of the 

agencies where officials were interviewed we requested copies of any written policies and 

guidance regarding the tracking and reporting of project status. We also requested sample copies 

of project status reports. 

To determine the adequacy of project status reporting, we analyzed the flow of information as 

identified during interviews and examined sample copies of project status reports, meeting 

agendas, and briefing slides. We also selected a sample project, the Falluja Wastewater 

Treatment System, and reviewed project status reports to determine if there was a breakdown in 

communication and, if so, where it occurred. 

We performed this audit under authority of Public Law 108-106, as amended, which also 

incorporates the duties and responsibilities of inspectors general under the Inspector General Act 

of 1978, as amended. We conducted this review between August and September 2008 in 

accordance with generally accepted government auditing standards. Those standards require that 

we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and conclusions based on our 

audit objectives. 

Use of Computer-Processed Data 

We did not use computer-processed data to perform this audit. 

Internal Controls 

We examined internal controls as it relates to policies and procedures in place to ensure the 

adequate flow of information to the COM. 

Prior Coverage 

There has been no prior audit coverage on project status reporting to the Chief of Mission.

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Appendix B— Key Program Review Meetings 

This appendix shows some of the key meetings in support of reconstruction efforts in Iraq and 

illustrates participation at various levels of the Gulf Region Division and the Department of 

State. 

Meeting Frequency 

Minutes/ 

Slides/ 

Other 

Distributed 

GRx a GRD 

GRD 

Senior 

Staff 

Senior 

Consultants 

DoS 

Executive 

Directors 

COM/ 

DCM 

GRx Project Review 

Board Bi-weekly Slides X X X 

Program Review 

Board Monthly b Slides X X X X 

Cost-to-Complete 

Working Group Monthly Spread- 

 sheet X X X X 

Sector Meeting c Weekly Minutes/ 

Slides X X X X 

Senior Executive 

Review Group d Monthly Slides X X X X 

Reconstruction 

Core Group Weekly Agenda X X X X

Source: SIGIR

Notes:

a GRx denotes the Gulf Region Division districts—North, Central, and South

b The Program Review Board meeting was a biweekly meeting until April 2008.

c Collection of meetings that are sector dependant.

d Previously called the Critical Project Review. 

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Appendix C—Comprehensive List of Meetings 

Listed below are many of the meetings held in support of reconstruction efforts in Iraq.10 The 

frequency, purpose, and participation depicted indicate that opportunities for communicating 

information are available. The effectiveness of these meetings was not determined. 

Meeting Frequency Purpose of Meeting Participants/ 

Distribution 

Executive Level 

Program Review Board (PgRB) Monthly 

Review program status, including 

specific information on completions, 

starts, and new awards 

CG, Deputy, DP, Chief of 

Contracting, Senior Council, 

Sector Leads, District 

Commanders, and District 

DPs/staff via telecom, ITAO 

Special Focus Program Review 

Board/Senior Executive Review 

Group or SERG a

Monthly 

Provide detailed project and programlevel review of an individual program 

or series of programs affecting a single 

customer. 

GRD Staff, District 

Commander, Deputy 

Commander, DPM, Chief 

E&C, ITAO b

Twice to three times weekly 

meetings with the Minister of 

Electricity that involve Energy 

Sector Lead and ITAO 

Weekly Discuss Strategic Energy issues CETI, ITAO, CG, Energy 

Sector Lead, EFC staff 

CETI Meeting Weekly Discuss Strategic Energy issues CETI , ITAO, CG, Energy 

Sector Lead, EFC staff 

Cost to Complete Working 

Group Monthly Provide updates on overall program 

cost, ITAO, State Department, CG. ITAO, State Department, CG 

Program Level 

ITAO Water Sector Project 

Reviews Weeklyc

Provide updates on open IRRF and 

ESF funded projects. Focus recently 

has been on ensuring all FY07-08 

IRRF funded projects are executed 

prior to end of the FY. Prior to this 

“Red Zone” focus, these meetings 

provided updates on all open projects 

in the water sector. 

ITAO Senior Consultant for 

Water, Water Sector staff, 

RM funds managers 

Energy Sector Weekly Meeting Weekly Discuss overall Energy Sector 

program status 

Energy Sector Leads and 

staff, ITAO 

 

10 The acronyms used in this appendix are defined on page 18. 

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General Generation Program 

Teleconference Weekly Discuss all Generation Projects 

including OMS 

ITAO, Energy Sector Lead 

and Deputy, Generation 

PMs, Field PMs, OMS PMs 

ISP Program Review Weekly Update key stakeholders on program 

progress. 

ISP Program Manager, 

ITAO Senior Consultant, 

MNC-I C7, EFC 

MoE Meeting Weekly Discuss ongoing projects, ministry 

coordination, and general liaison. 

ITAO, Energy Sector Lead, 

DG, Deputy Minister 

Basrah Children’s Hospital 

Review Weekly Review status of BCH and all other 

projects/programs of interest to ITAO. 

Director of Programs and 

staff, Director of ITAO and 

staff. 

Project Level 

Falluja Waste Water Treatment 

Project Teleconference Weekly d Assign and track action items for 

Falluja contracts. 

Water Sector Lead & staff, 

GRC PM and staff. e

Sadr City R3 Water Treatment 

Plant Project Update Weekly Discuss issues and planning for this 

project. 

ITAO Senior Consultant for 

Water, Water Sector staff, 

JROC, GRC staff, contractor 

NET Approval Meeting As directed 

by ITAO Approve validated PRDC projects. PRDC Program Manager, 

ITAO Ops, ITAO Budget 

Pre-NET Validation Meeting As directed 

by ITAO 

Review PRDC project submittals from 

the PRTs and PRDCs. 

PRDC Program Manager, 

ITAO Ops, ITAO Budget 

Notes: a Formally known as the Critical Project Review (CPR) b On a quarterly basis, the SERG is attended by Command and more senior-level GRD and DoS personnel. 

c Weekly since summer 2005. 

d Weekly since September 23, 2007. 

e In July 2008, senior leadership from GRD and GRC, JCCI, and ITAO began attending. 

Acronyms Used in this Appendix 

BCH Basrah Children’s Hospital JCC-I Joint Contracting Command-Iraq 

CETI Coordinator for Economic Transition in Iraq JROC Joint Reconstruction Operations Center 

CG Commanding General MNC-I C7 Multi-National Corps-Iraq C7 

CPR Critical Project Review MoE Minister of Electricity 

DG Director General NET National Embassy Team 

DoS Department of State OMS Operations, Maintenance and Sustainment 

DP Deputy Programs Ops Operations 

EFC Energy Fusion Cell PgRb Program Review Board 

FY Fiscal Year PM Project Manager 

GRC Gulf Region Central PMs Project Managers 

GRD Gulf Region Division PRDC Provincial Reconstruction and Development 

Committees 

IRRF Iraq Relief and Reconstruction Fund PRT Provincial Reconstruction Teams 

ISP Infrastructure Security Plan RM Resource Manager 

ITAO Iraq Transition Assistance Office SERG Senior Executive Review Group 
Appendix D—Acronyms 

CETI Coordinator for Economic Transition in Iraq 

COM Chief of Mission 

DFI Development Fund for Iraq 

DoS Department of State 

GRD Gulf Region Division 

IRMO Iraq Reconstruction Management Office 

IRMS Iraq Reconstruction Management System 

IRRF Iraq Relief and Reconstruction Fund 

ITAO Iraq Transition Assistance Office 

MNF-I Multi-National Force-Iraq 

NSPD National Security Presidential Directive 

PCO Project and Contracting Office 

SIGIR Special Inspector General for Iraq Reconstruction 

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Appendix E—Audit Team Members 

This report was prepared and the audit conducted under the direction of David R. Warren, 

Assistant Inspector General for Audit, Office of the Special Inspector General for Iraq 

Reconstruction. 

The staff members who conducted the audit and contributed to the report include: 

W. Dan Haigler 

Walt R. Keays 

Richard R. Kusman 

Waheed Nasser 

Milton L. Naumann 

Nancee K. Needham 

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Management Comments 

U.S. Embassy -Iraq

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Management Comments 

U.S. Army Corps of Engineers, Gulf Region Division 
SIGIR’s Mission Regarding the U.S. reconstruction plans, programs, and 

operations in Iraq, the Special Inspector General for Iraq 

Reconstruction provides independent and objective: 

• oversight and review through comprehensive audits, 

inspections, and investigations 

• advice and recommendations on policies to promote 

economy, efficiency, and effectiveness 

• deterrence of malfeasance through the prevention and 

detection of fraud, waste, and abuse 

• information and analysis to the Secretary of State, the 

Secretary of Defense, the Congress, and the 

American people through Quarterly Reports 

Obtaining Copies of SIGIR 

Reports and Testimonies 

To obtain copies of SIGIR documents at no cost, go to 

SIGIR’s Web site (www.sigir.mil). 

To Report Fraud, Waste, and 

Abuse in Iraq Relief and 

Reconstruction Programs 

Help prevent fraud, waste, and abuse by reporting 

suspicious or illegal activities to the SIGIR Hotline: 

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

• Phone: 703-602-4063 

• Toll Free: 866-301-2003 

Congressional Affairs Hillel Weinberg 

Assistant Inspector General for 

Congressional Affairs 

Mail: Office of the Special Inspector General 

for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-604-0368 

Email: hillel.weinberg@sigir.mil 

Public Affairs Kristine Belisle 

Assistant Inspector General for Public Affairs 

Mail: Office of the Special Inspector General 

for Iraq Reconstruction 

 400 Army Navy Drive 

 Arlington, VA 22202-4704 

Phone: 703-428-1217 

Fax: 703-428-0818 

Email: PublicAffairs@sigir.mil 

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