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S. HRG. 110–673 

EXAMINING THE EFFECTIVENESS OF U.S. EFFORTS 

TO COMBAT WASTE, FRAUD, ABUSE, AND 

CORRUPTION IN IRAQ 

HEARINGS 

BEFORE THE

COMMITTEE ON APPROPRIATIONS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

SPECIAL HEARINGS 

MARCH 11, 2008—WASHINGTON, DC 

JULY 23, 2008—WASHINGTON, DC 

Printed for the use of the Committee on Appropriations 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 
(II) 

COMMITTEE ON APPROPRIATIONS 

ROBERT C. BYRD, West Virginia, Chairman 

DANIEL K. INOUYE, Hawaii 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

BARBARA A. MIKULSKI, Maryland 

HERB KOHL, Wisconsin 

PATTY MURRAY, Washington 

BYRON L. DORGAN, North Dakota 

DIANNE FEINSTEIN, California 

RICHARD J. DURBIN, Illinois 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

JACK REED, Rhode Island 

FRANK R. LAUTENBERG, New Jersey 

BEN NELSON, Nebraska 

THAD COCHRAN, Mississippi 

TED STEVENS, Alaska 

ARLEN SPECTER, Pennsylvania 

PETE V. DOMENICI, New Mexico 

CHRISTOPHER S. BOND, Missouri 

MITCH MCCONNELL, Kentucky 

RICHARD C. SHELBY, Alabama 

JUDD GREGG, New Hampshire 

ROBERT F. BENNETT, Utah 

LARRY CRAIG, Idaho 

KAY BAILEY HUTCHISON, Texas 

SAM BROWNBACK, Kansas 

WAYNE ALLARD, Colorado 

LAMAR ALEXANDER, Tennessee 

CHARLES KIEFFER, Staff Director 

BRUCE EVANS, Minority Staff Director 
(III) 

C O N T E N T S 

TUESDAY, MARCH 11, 2008 

Page 

Opening Statement of Senator Patrick J. Leahy .................................................. 1 

Prepared Statement of Senator Robert C. Byrd .................................................... 1 

Statement of Senator Thad Cochran ...................................................................... 4 

Statement of Hon. David M. Walker, Comptroller General, Government Accountability Office ................................................................................................ 5 

Prepared Statement of ..................................................................................... 7 

Background .............................................................................................................. 9 

Poor Contracting Outcomes and Accountability Hinder U.S. Efforts in Iraq ..... 10 

Long-standing Problems Hinder DOD’s Management and Oversight of Contractors Supporting Deployed Forces ................................................................. 13 

Lack of Adequate Strategic Planning Impedes U.S. Efforts to Develop Capacity in Iraqi Ministries and Improve Outcomes in Iraq’s Energy Sector .......... 16 

Statement of Hon. Claude M. Kicklighter, Inspector General, Department 

of Defense ............................................................................................................. 19 

Prepared Statement of ..................................................................................... 22 

OIG Strategy ............................................................................................................ 22 

In Theater Presence ................................................................................................ 22 

Coordination ............................................................................................................. 22 

Details on Munitions Accountability ...................................................................... 23 

Details on Investigations ........................................................................................ 24 

Details on Audits ..................................................................................................... 26 

Completed Audit Work ............................................................................................ 27 

Ongoing Audit Work ................................................................................................ 28 

Planned Audit Work ................................................................................................ 29 

Details on Anticorruption Activities ....................................................................... 29 

Panel on Contracting Integrity ............................................................................... 30 

Significant Accomplishments .................................................................................. 30 

Statement of Stuart W. Bowen, Jr., Special Inspector General for Iraq Reconstruction ................................................................................................................ 31 

U.S. Anticorruption Programs Insufficient ............................................................ 32 

Fraud in Iraq Reconstruction ................................................................................. 32 

Waste in Iraq Reconstruction ................................................................................. 32 

Sustainment of Reconstruction Effort .................................................................... 33 

Prepared Statement of Stuart W. Bowen, Jr. ....................................................... 34 

SIGIR Background ................................................................................................... 35 

Audits ....................................................................................................................... 36 

Inspections ................................................................................................................ 36 

Investigations ........................................................................................................... 37 

Reconstruction Program Vulnerable to Fraud, Waste, and Abuse ...................... 38 

The Challenge in Quantifying Waste ..................................................................... 41 

Government of Iraq (GOI) Acceptance and Sustainment of U.S.-funded Infrastructure Crucial to Ensuring U.S. Assistance is Not Wasted ......................... 41 

U.S. Transfer Process Needs Improvement ........................................................... 42 

SIGIR Inspections and Audits Indicate Problems in GOI Sustainment of 

U.S. Funded Projects ........................................................................................... 42 

Results of SIGIR Investigations ............................................................................. 44 

Anticorruption: U.S. Programs and Iraqi Efforts .................................................. 46 

The Nature of Corruption ....................................................................................... 46 

U.S. Embassy Progress in Sustaining High Level Leadership and Comprehensive Approach ....................................................................................................... 47 

Government of Iraq Anticorruption Efforts: Challenges and Progress ............... 47 

Corruption Efforts Must be Sustained ................................................................... 48 
Page

IV 

SIGIR Lessons Learned and Recommendations ................................................... 48 

Options for Congress to Consider ........................................................................... 49 

Systemic Acquisition Challenges at the Department of Defense ......................... 60 

Use of Overseas Companies by Kellogg, Brown and Root (KBR) ........................ 62 

The Betrayal of Judge Radhi .................................................................................. 69 

Statement of Judge Radhi Hamza al-Radhi, Former Commissioner, Commission on Public Integrity, Republic of Iraq .......................................................... 77 

Prepared Statement of ..................................................................................... 78 

Greetings .................................................................................................................. 78 

Reasons for an Iraqi Commission on Public Integrity .......................................... 78 

Appointment as Commissioner ............................................................................... 79 

Operation of CPI ...................................................................................................... 79 

Results ...................................................................................................................... 79 

Guiding Principle ..................................................................................................... 80 

Main Obstacles ......................................................................................................... 80 

The Future ............................................................................................................... 81 

Additional Committee Questions ............................................................................ 99 

Questions Submitted to David M. Walker ............................................................. 99 

Questions Submitted by Senator Robert C. Byrd ................................................. 99 

Questions Submitted by Senator Dianne Feinstein .............................................. 100 

Questions Submitted by Senator Judd Gregg ....................................................... 102 

Questions Submitted to Claude M. Kicklighter .................................................... 103 

Questions Submitted by Senator Robert C. Byrd ................................................. 103 

Questions Submitted by Senator Dianne Feinstein .............................................. 106 

Questions Submitted to Stuart W. Bowen, Jr. ...................................................... 107 

Questions Submitted by Senator Robert C. Byrd ................................................. 107 

Questions Submitted by Senator Frank R. Lautenberg ....................................... 111 

Questions Submitted by Senator Judd Gregg ....................................................... 113 

Questions Submitted by Senator Larry Craig ....................................................... 115 

Questions Submitted to Judge Radhi Hamza al-Radhi ........................................ 115 

Questions Submitted by Senator Robert C. Byrd ................................................. 115 

WEDNESDAY, JULY 23, 2008 

Opening Statement of Senator Robert C. Byrd ..................................................... 121 

Statement of Senator Thad Cochran ...................................................................... 123 

Statement of Hon. Gordon England, Deputy Secretary of Defense, Department 

of Defense ............................................................................................................. 125 

Shay Assad, Director, Defense Procurement, Department of Defense ................ 125 

Prepared Statement of Gordon England ................................................................ 127 

Oversight of DOD Contracts for OIF ..................................................................... 127 

Department of Defense Inspector General’s Report .............................................. 128 

Systemic Challenges by Functional Area .............................................................. 128 

Systemic Challenges Across Functional Areas ...................................................... 128 

DOD Initiatives ........................................................................................................ 128 

DOD Audit Community Initiatives ........................................................................ 128 

Defense Contract Audit Agency (DCAA) ............................................................... 128 

Special Inspector General for Iraq Reconstruction (SIGIR) ................................. 129 

Actions Stemming From SIGIR Contracting Lessons Learned Recommendations ....................................................................................................................... 129 

Gansler Commission Report ................................................................................... 129 

Defense Contract Management Agency (DCMA) .................................................. 130 

Excellence in the Pursuit of Perfection .................................................................. 130 

Combating Corruption, Waste, Fraud, and Abuse in Iraq ................................... 131 

Statement of Hon. Gordon S. Heddell, Acting Inspector General, Department 

of Defense ............................................................................................................. 132 

Mary Ugone, Department of Defense ..................................................................... 132 

IG Strategy ............................................................................................................... 132 

Section 842 ............................................................................................................... 133 

Lessons Learned and Initiatives ............................................................................ 133 

Prepared Statement of Gordon S. Heddell ............................................................ 133 

OIG Strategy ............................................................................................................ 134 

New OIG Initiatives ................................................................................................ 135 

Ongoing Oversight Work ......................................................................................... 136 

Audit ......................................................................................................................... 139 

Policy and Oversight ............................................................................................... 141 

Special Plans and Operations ................................................................................. 142 
Page

V 

Intelligence ............................................................................................................... 143

Interagency Oversight ............................................................................................. 144 

Comprehensive Audit Plan for Southwest Asia .................................................... 145 

Statement of General Benjamin S. Griffin, Commanding General, U.S. Army 

Materiel Command .............................................................................................. 205 

Jeffrey Parsons, Executive Director, U.S. Army Materiel Command ................. 205 

Lee Thompson, Program Director, Logistics Civil Augmentation Program, 

U.S. Army Sustainment Command .................................................................... 205 

Prepared Statement of General Benjamin S. Griffin ............................................ 207 

Weapons Misplaced in Iraq ..................................................................................... 212 

Loss of U.S. Coalition Provisional Authority Funds in Iraq ................................ 214 

Army Contracting Command .................................................................................. 215 

Acquisition Workforce Training .............................................................................. 216 

Lack of Oversight of U.S. Contracts in Iraq .......................................................... 217 

Extending the Statute of Limitations .................................................................... 219 

Prepared Statement of Senator Patrick J. Leahy ................................................. 220 

Army Requests Additional General Officers ......................................................... 221 

Construction Contracts in Afghanistan ................................................................. 222 

Accountability from U.S. Contractors .................................................................... 223 

Agressive Prosecution of Wrongdoing .................................................................... 224 

Poorly Executed Contracts Endanger our Troops ................................................. 226 

AEY Ammunition Contracts ................................................................................... 228 

Fair Treatment of Whistleblowers? ........................................................................ 229 

Charles Smith Allegations ...................................................................................... 230 

KBR Water Allegations ........................................................................................... 233 

LOGCAP IV Acquisition Strategy .......................................................................... 233 

RCI Audit Assistance .............................................................................................. 234 

Additional Committee Questions ............................................................................ 236 

Questions Submitted to Hon. Gordon England ..................................................... 236 

Questions Submitted by Senator Robert C. Byrd ................................................. 236 

Questions Submitted by Senator Byron L. Dorgan .............................................. 244 

Questions Submitted by Senator Frank R. Lautenberg ....................................... 255 

Questions Submitted by Senator Mitch McConnell .............................................. 256 

Question Submitted by Senator Wayne Allard ..................................................... 257 

Questions Submitted to General Benjamin S. Griffin .......................................... 257 

Questions Submitted by Senator Robert C. Byrd ................................................. 257 

Questions Submitted by Senator Byron L. Dorgan .............................................. 259 

Question Submitted by Senator Frank R. Lautenberg ......................................... 264 

Questions Submitted to Gordon S. Heddell ........................................................... 265 

Questions Submitted by Senator Robert C. Byrd ................................................. 265 

Questions Submitted by Senator Byron L. Dorgan .............................................. 271 

Questions Submitted by Senator Frank R. Lautenberg ....................................... 272 

Questions Submitted by Senator Wayne Allard ................................................... 273 

Questions Submitted by Senator Larry Craig ....................................................... 275 

(1) 

EXAMINING THE EFFECTIVENESS OF U.S. EFFORTS TO COMBAT WASTE, FRAUD, ABUSE, 

AND CORRUPTION IN IRAQ 

TUESDAY, MARCH 11, 2008 

U.S. SENATE, 

COMMITTEE ON APPROPRIATIONS, 

Washington, DC. 

The committee met at 10:44 a.m., in room SD–106, Dirksen Senate Office Building, Hon. Patrick J. Leahy presiding. 

Present: Senators Leahy, Murray, Dorgan, Feinstein, Lautenberg, Nelson, Cochran, Craig, and Allard. 

OPENING STATEMENT OF SENATOR PATRICK J. LEAHY

Senator LEAHY. Good morning. 

First off, I apologize to all of our witnesses and those in the audience for being late. It was unavoidable. 

Chairman Byrd is not here today, but without objection I will include his full statement in the record. 

[The statement follows:] 

PREPARED STATEMENT OF SENATOR ROBERT C. BYRD

Ladies and Gentlemen, Members of the Committee, and our witnesses, I thank 

you for your attendance this morning. Today’s hearing is the first in a series of 

hearings to be conducted by the Appropriations Committee to examine the costs and 

consequences of fraud, waste, abuse and corruption within Iraq and with U.S. government contracts involving Iraq. I hope that over the course of these hearings we 

will discover some solutions to these problems, some remedies to drain the festering 

abscess of waste, fraud, abuse and corruption. 

Media reports, think tank papers and Congressional efforts, especially those of 

Representative Waxman and Senator Dorgan, have documented many aspects of 

these problems. But, it is still difficult to determine the full extent of the fraud and 

corruption that have become epidemic throughout seemingly every aspect of U.S. involvement in Iraq. 

Since 2003, there has been a slow steady drumbeat of reports that throw light 

in some very dark corners of the Iraqi reconstruction effort, but over the last year, 

that drumbeat has intensified. It is becoming clear that fraud, waste, abuse and corruption are major contributors to the lack of progress on economic and governmental 

reconstruction in Iraq. This lack of success, in turn, undermines the legitimacy and 

authority of the Iraqi government and contributes to the perceived need for the 

United States and the international community to remain in Iraq. 

The United States alone has invested well over six hundred billion dollars, five 

long and difficult years, and almost 4,000 lives to overthrow of Saddam Hussein’s 

regime and to the subsequent stabilization and rebuilding of Iraq. Our own economy 

suffers while war deficits mount. We will hear testimony today about billions in U.S. 

dollars, wrapped in plastic and flown to Iraq, never to be seen again. We have 

learned about millions of dollars in cash, U.S. currency, carried out of U.S. offices 

in Iraq in boxes and put in car trunks, only to be seized by Iraqi officials before 

it could be spent on its intended purpose. That money has never been accounted for. 
2 

Weapons, too, by the tens of thousands, have been distributed with little or no accountability, and their current whereabouts remain in question. 

Iraq is a nation of great natural resources, with vast oil wealth. It was asserted 

by the Administration that such resources could be tapped to fund reconstruction 

and investment in economic growth. So what has happened? 

We all know that the security situation in Iraq is still poor. Better, perhaps, than 

it was in 2006, but still insufficient to encourage local economic investment, let 

alone foreign investment. Despite more than $45 billion in U.S. reconstruction investment alone since 2003, Iraq’s infrastructure remains in poor shape. Oil production has not surpassed pre-war levels, power production fails to deliver more than 

a few hours of electricity per day, clean water is often not available, schools and 

hospitals still struggle. As of April 2007, only 8 of 150 planned primary healthcare 

facilities to be built by 2006 with U.S. reconstruction aid were open to the public. 

Our billions in reconstruction have not translated into bricks and mortar or lights 

and water, at least for the average Iraqi. 

After five years of U.S. assistance, Iraq’s economy is still struggling, and most of 

the country remains on a cash economy. Iraq soldiers disappear for weeks to hand 

carry their paychecks to their families because the banking system is inadequate. 

The government is unable to execute its budgets, it is rife with corruption and 

fraud, and it appears unable or unwilling to police itself. We have heard of instances 

in which $800 million of $1.3 billion allocated for Iraqi military procurement in a 

single year simply vanished, lost in the overseas bank accounts of former officials 

who live in luxury while their nation suffers. 

Iraq’s vast oil wealth has, to far too large an extent, financed Iraqi insurgents and 

militias. Some of it has lined the pockets of Iraqi government officials who have legions of so-called ‘‘ghost employees’’ working for them. It pays for fuel subsidies to 

Iraqi citizens, some of whom profit by reselling oil purchased at the subsidized price 

to United States contractors at an inflated price. No wonder there is little incentive 

for them to achieve political reconciliation. 

Some U.S. officials ask why we should care how the Iraqis spend their own 

money. I’ll tell you why. When Iraq misspends its own money and does not provide 

for its own security and its own reconstruction, guess who steps in to backfill that 

need? You do, and I do, and every American taxpayer does, to the tune of over $150 

billion each year after year. That is why we must care, and care a lot, about corruption in the Iraqi government. Some Americans might not mind their tax dollars 

helping average Iraqis build a workable society, but I will bet that not one single 

American taxpayer likes the idea of their tax dollars fattening the wallet of a corrupt Iraqi official or going to an insurgent group that uses that money to build or 

buy explosive devices to be used against our troops. 

Some U.S. contractors appear to be getting fat off of this war as well. Congress 

has heard from some whistleblowers that have brought to light the excesses associated with the profligate use of ‘‘cost-plus’’ contracts, and the practice of double 

counting or double billing for services provided to U.S. service members, as well as 

egregious abuses involving shoddy materials, contaminated water, or spoiled food. 

Contractors have been paid in full and been given bonuses even when their work 

was not exemplary. No civilian contractor here in the United States would get away 

with this kind work; why is it allowed to occur in Iraq? 

What we are seeing in Iraq, I fear, is an endless cycle of corruption, an ever-turning water wheel of corrupt practices fed by the endless stream of dollars from U.S. 

reconstruction assistance, military operations support contracts, and misappropriated Iraqi oil revenues. As long as this wheel keeps turning and profiting contractors, officials, insurgents, and militias, there is no incentive for anyone to shut 

it down. Why would Iraqi officials want to build a functioning, transparent, accountable government and live only on their own salaries, when they can skim millions, 

take bribes and collect salaries for non-existent employees? Why would contractors 

want to make only a modest profit, when there is little accountability for fraudulent 

practices? And why would the insurgents and militants work for reconciliation or 

peace and stability in Iraq when their funding, prestige, and social aims are fostered 

in an environment of instability and corruption? 

Our witnesses today include, on our first panel, the Honorable Claude M. 

Kicklighter, the Inspector General for the Department of Defense; Stuart W. Bowen, 

Jr., the Special Inspector General for Iraq Reconstruction; and the Honorable David 

M. Walker, Comptroller General of the United States. 

On our second panel, I am pleased that Judge Radhi Hamza al-Radhi, the former 

Director of the Iraqi Commission on Public Integrity, will share his observations regarding the scope of government corruption and criminal activity in Iraq, as well 

as the adequacy of anticorruption efforts within the Iraqi government and the effectiveness of U.S. anticorruption support. Judge Radhi has faced death threats for his 
3 

heroic efforts in Iraq, and members of his staff have been killed pursuing corrupt 

activities in Iraq. 

Senator LEAHY. As you know, the chairman’s been a strong voice 

for accountability of our assistance programs in Iraq. I talked with 

Senator Byrd yesterday. I know he still has that concern. We look 

forward to him being back here very soon. 

This committee has heard testimony on the President’s budget 

request for billions of dollars for Iraq reconstruction over several 

years. 

The Appropriations Committee is actually the only regulator on 

the spigot this administration opened in 2003, to flood Iraq with 

billions of dollars of U.S. taxpayers’ money. I think it’s time, after 

all these years, for the Congress to have a strong hand on that 

spigot, especially as we’re considering another $108 billion in supplemental emergency funds—money which the United States has to 

actually borrow, and pay interest on. 

Investigations of the Special Inspector General for Iraq Reconstruction (SIGIR), the Government Accountability Office (GAO), the 

media and others, have revealed waste and fraud on a scale unprecedented in our foreign assistance programs. 

The administration’s attitude toward budgeting, spending and 

accounting for U.S. tax dollars in Iraq can actually be summed up 

in two words, ‘‘Anything goes.’’ Just put it on the American taxpayers’ credit card. 

Meanwhile, the American people’s priorities here at home have 

been relegated further and further to the back of the line. We’ve 

heard this year that there are even more needs in the United 

States that are going to have to be put on the back burner, as we 

send more money to Iraq. Incidentally, we’ve been there longer 

than the United States was in World War II. 

Beginning last year, the new Congress has begun oversight to try 

to correct these mistakes, and learn lessons so we can avoid them 

in the future. At today’s hearing, we’ll continue that process. 

For an administration that came into office insisting they could 

be trusted to spend taxpayer dollars wisely, and then ignored any 

advice they disagreed with—including from people with decades of 

experience—both Republicans and Democrats—the record’s shameful. 

Even today, the administration continues to oppose remedies like 

the War Profiteering Prevention Act. 

It’s not that nothing has been accomplished—none of us are suggesting that. There have been some very successful projects in Iraq. 

But if one compares the results with the exorbitant amounts spent, 

it’s an embarrassment. 

As we struggle here, in the United States, to find the money to 

repair our decaying bridges or our roads or our schools, the administration has wasted hundreds of millions of dollars—some would 

say billions—in Iraq. 

Now, at first, of course, we were told by the administration and 

the American people were told that Iraqi oil would pay to rebuild 

the country. That assertion by the chief architects of the war 

turned out to be either naı ̈ve or intentionally dishonest. I tend to 

think the latter. 
4 

Instead, since 2003, they spent $45 billion for Iraqi relief and reconstruction, which of course does not include the half trillion dollars spent on the military operations. In fact, the long-term cost of 

this war is already expected to approach $3 trillion, if you count 

the cost of rebuilding our military and caring for the wounded. 

The administration spent huge amounts on no-bid contracts to 

companies like Halliburton and their subsidiaries, companies that 

have close connections with the White House. They charged exorbitant fees, they often did shoddy work, or never completed the work 

they were paid to do. 

I, and others, have urged the administration to focus on smaller 

projects and give more responsibility and involvement to the Iraqi 

people themselves, those who know the area the best. But stubbornness, arrogance and incompetence won out, and only recently 

has the approach begun to change. 

I want to commend Ambassador Ryan Crocker, and Ambassador 

Charles Ries, and their staffs, for the long overdue changes they’re 

making. 

As chairman of the State and Foreign Operations Subcommittee, 

I’ve seen how foreign aid can be effective—it can help transform 

people’s lives for the better, it can help transform whole countries. 

And it serves our national interests in many, many ways. But in 

Iraq the experts were ignored by political ideologues who wanted 

a quick fix. So, at a time when hardworking Americans are losing 

their homes, and losing their jobs, and spending their savings on 

the soaring costs of healthcare, trying to make ends meet, these 

same taxpayers have a right to know how the administration has 

squandered so much of their hard-earned money in Iraq. 

And they have a right to ask, today, with the price of oil at $108 

a barrel, and the administration asking for billions of dollars more 

for Iraq reconstruction, why the American people should continue 

to foot the bill for what many say the Iraqis can afford themselves. 

I’ve been joined by one of the most distinguished and senior 

members of the United States Senate, Senator Thad Cochran, who 

has also chaired this committee in the past, and I yield to Senator 

Cochran. 

STATEMENT OF SENATOR THAD COCHRAN

Senator COCHRAN. Mr. Chairman, Thank you very much. You 

know, the seniority system is still alive and well in the U.S. Senate, and the more I’m here, the longer I’m here, the more I appreciate it. 

I also appreciate the fact that we have a panel of witnesses here 

who are very important. We appreciate your coming to talk with 

us about the reconstruction, the rebuilding in Iraq, and the challenges that we face there, Comptroller General, GAO, Inspector 

General of the Department of Defense, and Stuart Bowen, the Special Inspector General for Iraq Reconstruction. We appreciate all of 

the hard work you are undertaking in terms of trying to analyze 

and make recommendations for changes in policies, procedures, 

laws that we may consider, identifying the priorities for more funding, or funding that isn’t necessary in this effort—we would appreciate your advice and counsel as we proceed with our hearing 

today. 
5 

Thank you, Mr. Chairman. 

Senator LEAHY. Thank you, Senator Cochran. 

And our witnesses will be, first, David Walker, who is the Comptroller General of the United States. He became the seventh Comptroller General and began his 15-year term November 9, 1998, if 

I’m correct. 

As Comptroller General, he is the Nation’s chief accountability 

officer, and he’s the head of the U.S. Government Accountability 

Office, in the legislative branch, which was founded in 1921 to improve the performance and ensure the accountability of the Federal 

Government for the benefit of the American people. 

He will be followed by Claude M. Kicklighter, who is the Inspector General of the Department of Defense. He’s the sixth Senateconfirmed DOD Inspector General, but he’s served his country, not 

only since becoming inspector general on April 30 of last year, for 

over 50 years. First, as an Army officer for 35 years, retiring as a 

lieutenant general, followed by over 15 years as a distinguished 

public servant. 

He is selected by the Secretaries of State and Defense to establish and direct the Iraq/Afghanistan Joint Transition Planning 

Group, and is a man of great knowledge and competence. 

He’ll be followed by Stuart Bowen, who is the Special Inspector 

General for Iraq Reconstruction. He has served as Special Inspector 

General since October 2004. He was previously the Inspector General for the Coalition Provisional Authority, for which he was appointed in January 2004, and he has been asked to conduct effective oversight of $47 billion appropriated for the reconstruction of 

Iraq. 

We’ll begin with the Comptroller General. 

Mr. Walker, go ahead. 

STATEMENT OF HON. DAVID M. WALKER, COMPTROLLER GENERAL, 

GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WALKER. Thank you, Senator Leahy, Senator Cochran, members of the Senate Appropriations Committee. I’m pleased to be 

here today to discuss the challenges that the United States must 

address in order to improve performance and assure accountability 

over U.S. efforts to stabilize and reconstruct Iraq. 

Between fiscal years 2001 and 2008, Congress appropriated nearly $700 billion for the global war on terrorism (GWOT). The majority of this amount has been provided for DOD military operations 

in support of Operation Iraqi Freedom (OIF), including the cost of 

equipping, maintaining, and supporting our deployed forces. 

About $45 billion of this amount was provided for reconstruction 

efforts, including rebuilding Iraq’s oil and electricity sectors, improving its security forces, and enhancing Iraq’s capacity to govern. 

I’m pleased to appear here today with two of my colleagues from 

the accountability community, the DOD Inspector General, and the 

Special Inspector General for Iraq Reconstruction. As you know, 

GAO and the Inspectors General have different roles and responsibilities, and we try to work in a coordinated fashion to try to get 

our job done, while avoiding duplication of efforts. 

At GAO, our work tends to be more strategic, more long range, 

and cross-cutting across the different silos of Government, whereas 
6 

the Inspectors General tend to focus on fighting fraud, waste, 

abuse, and mismanagement within their respective Departments 

and agencies, and they tend to drill down more than GAO does. 

I would like to note that—since one of the concerns of this committee is the issue of fraud, waste, and abuse—I would like to note 

that with regard to U.S. funds, fraud is not a major problem. It is 

a major problem with Iraqi funds. Corruption is a serious problem 

in Iraq. 

But waste is a huge problem, both for the United States as well 

as for Iraq, and in that regard I recently worked with several of 

my colleagues in the Inspector General community to develop a definition of waste, which I found had not been defined before. 

As we see it, waste occurs when taxpayers, in the aggregate, do 

not receive reasonable value for money in connection with any Government-funded activity, due to inappropriate acts or omissions by 

officials with control over, or access to, Government resources. 

Most waste does not involve a violation of law, but it does involve 

mismanagement resulting from poor leadership or guidance, inappropriate acts or omissions, including the use of poor business arrangements or inadequate oversight, often caused by having too 

few skilled people to manage and oversee the task. 

The United States is entering into its fifth year of efforts to rebuild and stabilize Iraq, but these efforts have neither consistently 

achieved their desired outcomes, nor have they done so, always, in 

an economic and efficient manner. 

While specific facts and circumstances differed, a lack of well-defined requirements, poor business arrangements, and inadequate 

oversight and accountability have affected reconstruction, stabilization, and support efforts, alike. 

Several longstanding and systemic problems continue to hinder 

the Department of Defense’s management and oversight of contractors at deployed locations, including the failure to follow guidance, 

the failure to provide adequate numbers of contract oversight personnel, the failure to systematically collect and distribute lessons 

learned, and the failure to ensure pre-deployment training for military commanders and contract oversight personnel who have a role 

in connection with contractors. 

I might, however, note, in fairness—things are getting better, 

and that a number of the recommendations we’ve made have been 

implemented. There’s been an intention to implement others, and 

so we’re seeing improvement, but we’ve still got a long way to go. 

The United States has made available nearly $6 billion to rebuild 

Iraq’s energy sector, as an example, and $300 million to develop its 

Government ministries, but neither one of these important efforts 

has a strategic and integrated plan. 

We have a number of players on the field in the Federal Government, working with their Iraqi partners. Each are trying to do the 

best they can with regard to their narrow span of control, but we 

need a strategic and integrated plan with responsibility and accountability, not only overall, but with regard to each major components in order to make sure that we’re going to achieve positive results in an economic, efficient, and effective manner. 

The Iraqi Government is challenged. There is rampant corruption. There are problems with regard to capacity of their skills and 
7 

1This figure includes military appropriations for Operation Noble Eagle, Operation Enduring 

Freedom, and Operation Iraqi Freedom, as well as stabilization and reconstruction appropriations for Iraq and Afghanistan. 2To see GAO reports on Iraq, click on http://GAO.gov/docsearch/featured/oif.html. 

knowledge, there are problems, also, with regard to factionalization 

that exists within a number of the ministries, especially the largest 

ministries. 

We’ve made certain recommendations to the State Department 

about putting together this strategic and integrated plan in connection with these two matters. As an example, they came back and 

said they felt that was the responsibility of the Iraqi Government. 

In our view it’s a shared responsibility. U.S. taxpayer money is involved. And while it’s a shared responsibility to be successful, we 

think that the State Department needs to work with the Iraqi Government to make these plans a reality. 

Thank you, Senators, and I will be more than happy to answer 

questions after my colleagues have their opportunity to speak. 

Senator LEAHY. Thank you very much, Mr. Walker. 

[The statement follows:] 

PREPARED STATEMENT OF DAVID M. WALKER

Mr. Chairman and Members of the Committee: I am pleased to be here today to 

discuss the challenges the United States must address to successfully improve performance and ensure accountability over U.S. efforts to stabilize and reconstruct 

Iraq. In my statement today, I will discuss (1) factors contributing to poor contracting outcomes and accountability, (2) long-standing issues in the Department of 

Defense’s (DOD) management and oversight of contractors supporting deployed 

forces, and (3) efforts to improve the capacity of the Iraqi government. 

Between fiscal years 2001 to 2008, Congress appropriated nearly $700 billion for 

the global war on terrorism.1 The majority of this amount has been provided to 

DOD for military operations in support of Operation Iraqi Freedom, including the 

cost of equipping, maintaining, and supporting our deployed forces. About $45 billion was provided for reconstruction efforts, including rebuilding Iraq’s oil and electricity sectors, improving its security forces, and enhancing Iraq’s capacity to govern. Prudence with taxpayer funds and growing long-range fiscal challenges demand 

that the United States maximize its return on the billions of dollars invested in 

Iraq. Further, strengthening Iraq’s fragile government institutions, which have thus 

far failed to adequately deter corruption, stimulate employment, or deliver essential 

services, is critical to establishing a peaceful, stable, and secure Iraq. 

My statement today is based upon GAO’s extensive work spanning several years. 

Since 2003, we have issued nearly 130 Iraq-related reports and testimonies.2 Our 

work in Iraq largely has been performed under my authority as Comptroller General 

to conduct evaluations on my own initiative since it is a matter of broad interest 

to the entire Congress. We performed this work in accordance with generally accepted government auditing standards. 

I am pleased to appear with the DOD Inspector General and the Special Inspector 

General for Iraq Reconstruction. As you know, GAO and the inspectors general have 

different, but complementary, roles and responsibilities. GAO’s broad audit authority allows it to support Congress through strategic analyses of issues that cut across 

multiple federal agencies and sources of funding, while the inspectors general focus 

primarily on preventing and exposing fraud, waste, and abuse in individual federal 

agency programs. The abilities of the inspectors general to provide in-country oversight of specific projects and reconstruction challenges have enabled GAO to focus 

on national, sector, and interagency issues. We and the other accountability organizations coordinate our oversight efforts to avoid duplication and leverage our resources. 

I would like to note that several of my colleagues in the accountability community 

and I have developed a definition of waste. As we see it, waste occurs when taxpayers do not receive reasonable value for their money in connection with any government-funded activity due to inappropriate acts or omissions by officials with control over or access to government resources. Most waste does not involve a violation 

of law, but it does involve mismanagement resulting from poor leadership or guid-
8 

ance; inappropriate actions or omissions, including the use of poor business arrangements; or inadequate oversight, often caused by having too-few skilled people. Our 

reports and testimonies have provided specific examples where such issues resulted 

in higher costs, schedule delays, and unmet goals. I highlight some of these in my 

testimony. Nevertheless, estimating or quantifying the financial impact of fraudulent, wasteful, or abusive practices is not always feasible or practicable. However, 

the inability to do so should not detract from the need to improve management and 

accountability over our efforts in Iraq. 

SUMMARY

The United States is entering its fifth year of efforts to rebuild and stabilize Iraq, 

but these efforts have neither consistently achieved their desired outcomes nor done 

so in an economic and efficient manner. While the specific facts and circumstances 

differed, a lack of well-defined requirements, poor business arrangements, and inadequate oversight and accountability have affected reconstruction, stabilization, and 

support efforts alike. Two GAO reports issued in July 2007 illustrate some of these 

problems. In one report, we found that DOD completed negotiations for task orders 

on an oil contract more than 6 months after the work commenced. As a result, the 

contractor incurred almost all of its costs at the time of negotiations, which influenced DOD’s decision to pay nearly all of the $221 million in costs questioned by 

the Defense Contract Audit Agency (DCAA). In a second report, we found that unclear DOD guidance, inadequate staff, and insufficient technology resulted in poor 

accountability over 190,000 weapons provided to the Iraqi security forces. DOD concurred with our recommendation to identify accountability procedures for the program to train and equip the Iraqi security forces. However, as of March 2008, DOD 

had not developed the necessary procedures. 

Several long-standing and systemic problems continue to hinder DOD’s management and oversight of contractors at deployed locations, including the failure to follow planning guidance, provide adequate numbers of contract oversight personnel, 

systematically collect and distribute lessons learned, and ensure predeployment 

training for military commanders and contract oversight personnel on the use and 

role of contractors. The scale of contractor support DOD relies on today in locations 

such as Iraq and elsewhere amounts to billions of dollars worth of goods and services each year, underscoring the need to effectively manage and oversee contractor 

efforts. The magnitude of this support demands that DOD ensure that military personnel have the guidance, resources, and training to effectively monitor contractor 

performance at deployed locations. However, our work has identified instances 

where poor oversight and management of contractors led to negative financial and 

operational impacts. We have made a number of recommendations aimed at 

strengthening DOD’s management and oversight of contractor support at deployed 

locations, and the department has agreed to implement many of those recommendations. However, we have found that DOD has made limited progress implementing 

some key recommendations. 

The United States has made available nearly $6 billion to rebuild Iraq’s energy 

sector and $300 million to develop its government ministries but lacks integrated 

strategic plans for both efforts. Building the capacity of the ministries is critical to 

ensure that Iraq can effectively assume responsibility for delivering government 

services and sustain the effort to rebuild and stabilize the country. Rebuilding Iraq’s 

energy sector is necessary to ensure that Iraq can pay for these tasks and provide 

essential services to the Iraqi people. However, in the absence of a comprehensive 

and integrated strategic plan, U.S. efforts to build the capacity of the Iraqi government have been hindered by multiple U.S. agencies pursuing individual efforts without overarching direction. The creation of a comprehensive and integrated strategic 

plan for the energy sector is also essential for Iraq to identify the most pressing 

needs and address challenges affecting future development prospects. We recommended that the State Department work with Iraqi ministries to develop an integrated energy plan. State commented that the Iraqi government, not the U.S. government, should act on our recommendations. Given the billions of dollars provided 

to rebuild Iraq’s energy sector and the limited capacity of Iraqi ministries, I believe 

that our recommendations to State are still valid. 

DOD and State have taken action to implement some, but not all, of our recommendations, increasing the risk that past mistakes or lapses in accountability 

will be repeated and undermining efforts to enable Iraq to assume greater responsibility for rebuilding its nation. In doing so, DOD and State miss opportunities to 

improve outcomes and enhance accountability. 
9 

3 Established in May 2003 and led by the United States and the United Kingdom, the CPA 

was the United Nations-recognized coalition authority responsible for the temporary governance 

of Iraq. 

BACKGROUND

Several entities and U.S. agencies have played important roles in U.S. efforts to 

rebuild and stabilize Iraq. From May 2003 through June 2004, the Coalition Provisional Authority (CPA) 3 was responsible for overseeing, directing, and coordinating 

rebuilding efforts. After its dissolution, the Secretary of State assumed responsibilities for the supervision and general direction of reconstruction efforts in Iraq. DOD, 

including the U.S. Army Corps of Engineers, and United States Agency for International Development (USAID) have had responsibility for managing and overseeing 

specific reconstruction projects. 

Contractors have largely carried out reconstruction efforts in Iraq. For example, 

in early 2004, the CPA, through various military organizations, awarded seven contracts to help provide overall direction, coordination, and oversight of 12 large design-build contractors. In turn, these 12 design-build contractors were responsible 

for the design and execution of construction activities in various sectors such as 

electricity, oil, and public works and water. 

In addition, DOD has made extensive use of contractors to support its deployed 

forces. The scale of contractor support DOD relies on today in locations such Iraq 

and elsewhere amounts to billions of dollars worth of goods and services each year, 

underscoring the need to effectively manage and oversee contractor efforts. Contractors provide interpretation, intelligence analysis, and security services, as well as 

weapon systems maintenance and base operations support. The significance of such 

contracts is illustrated by the fact that the Army reported obligations of over $4.5 

billion in fiscal year 2007 on its single-largest support contract, the Logistics Civil 

Augmentation Program (LOGCAP). 

The collective effort of military, civilian, and contractor personnel in Iraq has been 

complicated by the country’s security environment. The CPA’s original reconstruction plan was premised on the assumption that a permissive security environment 

would enable the United States to restore Iraq’s essential services to prewar levels. 

The CPA also assumed that the Iraqi government and the international community 

would help finance Iraq’s development and that Iraqi oil revenues could help pay 

for reconstruction costs. None of these assumptions has materialized. 

In February 2007, we reported that the security situation was continuing to deteriorate, impeding the management and execution of reconstruction efforts. As shown 

in figure 1, the security situation generally deteriorated through the summer of 

2007, with the number of attacks increasing to about 180 per day in June 2007. 

FIGURE 1.—Enemy-Initiated Attacks against the Coalition and Its Iraqi Partners 

However, since then, the number of enemy-initiated attacks has decreased by 

about two-thirds, to the levels of early 2005. Specifically, the average number of 
10 

4GAO, Rebuilding Iraq: U.S. Water and Sanitation Efforts Need Improved Measures for Assessing Impact and Sustained Resources for Maintaining Facilities, GAO–05–872 (Washington, 

D.C.: Sept. 7, 2005). 5GAO, Military Operations: DOD’s Extensive Use of Logistics Support Contracts Requires 

Strengthened Oversight, GAO–04–854 (Washington, D.C.: July 19, 2004). 6GAO, Iraq Contract Costs: DOD Consideration of Defense Contract Audit Agency’s Findings, 

GAO–06–1132 (Washington, D.C.: Sept. 25, 2006). 

daily attacks decreased from about 180 in June 2007 to about 60 in January 2008— 

a nearly 70 percent decrease—as the number of attacks against coalition forces in 

particular fell considerably. The number of attacks on Iraqi security forces and civilians also declined from June 2007 levels. While security has improved in Iraq, a 

permissive security environment has yet to be achieved. 

POOR CONTRACTING OUTCOMES AND ACCOUNTABILITY HINDER U.S. EFFORTS IN IRAQ

Our work over the past 5 years has shown that one or more of the elements essential for achieving good acquisition outcomes—well-defined requirements matched 

with adequate resources, sound business arrangements, and the capacity to properly 

manage and oversee contractor performance—were often missing during specific reconstruction efforts, in contracts to support deployed forces, and in our efforts to 

equip Iraqi security forces. The absence of these elements often contributed to 

unmet expectations, schedule delays, or higher-than-necessary costs, underscoring 

both the need to hold agencies and contractors accountable for outcomes, and the 

challenges of doing so. Such issues are not unique to Iraq but reflect some of the 

long-standing and systemic issues confronting DOD. They are, however, magnified 

in a contingency situation such as Iraq or Katrina. Further, we found that unclear 

DOD guidance resulted in poor accountability over 190,000 weapons provided to the 

Iraqi security forces. 

Mismatch between Requirements and Resources 

A prerequisite to good outcomes is a match between well-defined requirements 

and available resources. Shifts in overall priorities and funding, even those made 

for good reasons, invariably have a cascading effect on individual contracts, making 

it more difficult to manage individual projects to successful outcomes and complicating efforts to hold agencies and contractors accountable. After the State Department assumed responsibility for U.S. reconstruction efforts in 2004, it re-examined 

the priorities and programs initiated by the CPA, with the objective of reprioritizing 

funding to key, high-impact projects. State increased support for security, law enforcement efforts, and oil infrastructure enhancements. These reallocations, affecting billions of dollars of planned work, led to the cancellation of some projects in 

the electricity and water sector. 

At the contract level, the lack of well-defined requirements resulted in schedule 

delays and the United States potentially paying more than necessary. For example, 

in September 2005, we reported that difficulties in defining the cost, schedule, and 

work to be performed on projects in Iraq’s water and sanitation sector contributed 

to project delays and reduced scopes of work.4 We found that agreement between 

the U.S. government and contractors on the final cost, schedule, and scope of 18 of 

the 24 task orders valued at $873 million had been delayed. These delays occurred, 

in part, because Iraqi authorities, U.S. agencies, and contractors could not agree on 

scopes of work and construction details. 

Previously, in July 2004, we reported that a disagreement between the LOGCAP 

contractor and the DCAA on how to bill for services to feed soldiers in Iraq involved 

at least $88 million in questioned costs.5 The disagreement regarded whether the 

government should be billed on the camp populations specified in the statement of 

work or on the actual head count. A clearer statement of work, coupled with better 

DOD oversight of the contract, could have prevented the disagreement and mitigated the government’s risk of paying for more services than needed. 

Business Arrangements that Increased Risk 

To award contracts and begin reconstruction efforts quickly, DOD used business 

arrangements that often increased DOD’s risk of paying higher costs than it might 

have otherwise. Such arrangements often allowed contractors to begin work before 

key contract terms and conditions, such as the scope of the work and its price, were 

fully defined. For example, in a September 2006 report, we found that DOD contracting officials were less likely to remove the costs questioned by auditors if the 

contractor had already incurred these costs before the contract action was definitized.6 In contrast, in the few instances in which the government negotiated the 

terms before starting work, the portion of questioned costs removed from the pro-
11 

7GAO, Defense Contract Management: DOD’s Lack of Adherence to Key Contracting Principles 

on Iraq Oil Contract Put Government Interests at Risk, GAO–07–839 (Washington, D.C.: July 

31, 2007). 8GAO, 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). 9GAO, Defense Logistics: The Army Needs to Implement an Effective Management and Oversight Plan for the Equipment Maintenance Contract in Kuwait, GAO–08–316R (Washington, 

D.C.: Jan. 22, 2008). 10GAO, Contract Management: DOD Vulnerabilities to Contracting Fraud, Waste, and Abuse, 

GAO–06–838R (Washington, D.C.: July 7, 2006). 

posal was substantial. For example, in three audits related to a logistics support 

contract, DCAA questioned $204 million. Since the government and the contractor 

negotiated the terms prior to the onset of the work, the contractor had not incurred 

any costs at the time of negotiations. DCAA calculated that $120 million of the $204 

million in questioned costs were removed as a result of its findings. 

We subsequently issued a report in July 2007 that focused on the U.S. Army 

Corps of Engineers’ $2.5 billion contract to Kellogg Brown & Root to restore Iraq’s 

oil infrastructure and ensure an adequate fuel supply within Iraq.7 DCAA reviewed 

the contract’s 10 task orders and questioned $221 million in contractor costs. While 

DOD considered DCAA’s audit findings and performed additional analysis, the lack 

of timely negotiations contributed significantly to DOD’s decision on how to address 

the questioned costs. In this case, all 10 task orders were negotiated more than 180 

days after the work commenced and the contractor had incurred almost all its costs 

at the time of negotiations. These circumstances influenced DOD’s decision to pay 

nearly all of the $221 million in questioned costs. 

Poor Management and Oversight of Contractor Performance 

Managing contractors in an unstable contracting environment means greater attention to oversight, which relies on having a capable government workforce. Having 

personnel who are trained to conduct oversight and who are held accountable for 

their responsibilities is essential for effective oversight of contractors. If oversight 

is not conducted, not sufficient, or not well documented, DOD is at risk of being unable to identify and correct poor contractor performance. On multiple occasions, we 

and others have reported on deficiencies in DOD’s oversight; for example: 

—In December 2006, we reported that DOD did not have sufficient numbers of 

contractor oversight personnel at deployed locations, which limited its ability to 

obtain reasonable assurance that contractors were meeting contract requirements efficiently and effectively.8

—In October 2007, the report of the Commission on Army Acquisition and Program Management in Expeditionary Operations stated that the Army lacked 

the leadership and military and civilian personnel to provide sufficient contracting support to either expeditionary or peacetime missions. According to the 

Commission, Army contracting personnel experienced a 600-percent increase in 

their workload and were performing more complex tasks, while the number of 

Army civilians and military in the contracting workforce had remained stagnant 

or declined. As a result, the Commission found that the vital task of postaward 

contract management was rarely being done. It recommended that the Army increase the number of civilian and military personnel in its contracting workforce by 1,400 individuals. 

—Our recent analysis of five types of vehicles presented to the Army as ready for 

acceptance from July 2006 through May 2007 found that 18 to 31 percent of 

the vehicles failed government inspection.9 Some equipment presented to the 

Army failed inspection multiple times, sometimes for the same deficiency. Rework on equipment that failed inspections since May 2005 wasted $4.2 million. 

Such issues are not unique to Iraq but often reflect the long-standing and systemic issues DOD faces. Since 1992, we have identified DOD contract management 

to be high risk due to its vulnerabilities to fraud, waste, abuse, and mismanagement. In a report issued in July 2006, we concluded that, because awards to contractors were large and growing, DOD would continue to be vulnerable to contracting fraud, waste or misuse of taxpayer dollars, and abuse.10
12 

11GAO, Stabilizing Iraq: DOD Cannot Ensure That U.S.-Funded Equipment Has Reached 

Iraqi Security Forces, GAO–07–711 (Washington, D.C.: July 31, 2007). 12DOD defines accountability as the obligation imposed by law, lawful order, or regulation 

accepted by an organization or person for keeping accurate records, to ensure control of property, documents, or funds, with or without physical possession. 

Insufficient Accountability over U.S.-Funded Equipment Provided to Iraqi Security 

Forces 

In July 2007, we reported that DOD could not fully account for Iraqi security 

forces’ receipt of U.S.-provided equipment.11 Three factors contributed to this lapse 

in accountability. First, DOD had not specified which DOD equipment accountability 12 procedures, if any, applied to the train-and-equip program for Iraq. Congress funded the train-and-equip program for Iraq outside traditional security assistance programs, which, according to DOD officials, allowed DOD a large degree 

of flexibility in managing the program. These officials stated that, since the funding 

did not go through traditional security assistance programs, the DOD accountability 

requirements normally applicable to these programs did not apply. For example, 

under traditional security assistance programs, DOD regulations specify accountability procedures for storing, protecting, transporting, and registering small arms 

and other sensitive items transferred to foreign governments. 

Second, DOD did not maintain a centralized record of all equipment distributed 

to the Iraqi security forces from June 2004 until December 2005. At that time, DOD 

established a consolidated property book system to track the issuance of equipment 

to the Iraqi security forces and was attempting to recover past records. Our analysis 

found a discrepancy of at least 190,000 weapons between data reported by the 

former Multinational Security Transition Command- Iraq (MNSTC–I) commander 

and the property books (see figure 2). Former DOD officials stated that this lapse 

was due to an insufficient number of staff and the lack of a fully operational network to distribute equipment, among other reasons. 

FIGURE 2.—Discrepancies of MNSTC–I Reports of Selected Equipment Issued to Iraqi 

Security Forces, June 2004 through September 2005 

Third, since the beginning of the program, DOD has not consistently collected 

supporting documents that confirm when the equipment was received, the quantities of equipment delivered, or the Iraqi units receiving the equipment. Since June 
13 

13GAO, 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). 14GAO–04–854. 

2006, the command has placed greater emphasis on collecting this documentation. 

However, our review of the 2007 property books found continuing problems with 

missing and incomplete records. Further, the property books consist of extensive 

electronic spreadsheets, which are an inefficient data management tool given the 

large amount of data and limited personnel available to maintain the system. 

In our July 2007 report, we recommended that the Secretary of Defense (1) determine which DOD accountability procedures apply or should apply to the program, 

and (2) after defining the required accountability procedures, ensure that sufficient 

staff, functioning distribution networks, standard operating procedures, and proper 

technology are available to meet the new requirements. DOD concurred with our 

recommendations but, as of March 3, 2008, had not determined which accountability 

procedures apply to the program. 

LONG-STANDING PROBLEMS HINDER DOD’S MANAGEMENT AND OVERSIGHT OF

CONTRACTORS SUPPORTING DEPLOYED FORCES

Several long-standing and systemic problems continue to hinder DOD’s management and oversight of contractors at deployed locations, including the failure to follow planning guidance, an inadequate number of military and civilian contract oversight personnel, failure to systematically collect and distribute lessons learned, and 

the lack of comprehensive training for military commanders and contract oversight 

personnel. The recurring nature of these issues underscores the need for DOD leadership to ensure implementation of and compliance with existing guidance within 

the department. In prior reports, we made a number of recommendations aimed at 

strengthening DOD’s management and oversight of contractor support at deployed 

locations, and the department has agreed to implement many of those recommendations. However, our prior work has found that DOD has made limited progress implementing some key recommendations. Our work on contracts to support deployed 

forces in Iraq has identified instances where poor oversight and management of contractors led to negative financial and operational impacts. 

DOD Has Not Followed Long-standing Planning Guidance Regarding the Use of 

Contractors to Support Deployed Forces 

Our work has shown that DOD has not followed long-standing planning guidance, 

particularly by not adequately factoring the use and role of contractors into its planning. For example, DOD guidance stresses the importance of fully integrating into 

logistics plans and orders the logistics functions performed by contractors along with 

those performed by military and government personnel. However, we noted in our 

2003 report that the operations plan for the war in Iraq contained limited information on contractor support.13 Similarly, DOD policy requires planning for contractorprovided services during crisis situations to provide a reasonable assurance of the 

continuation of services and to prepare a contingency plan for obtaining services 

from alternate sources if needed. Our review found that essential contractor services 

for deployed troops had not been identified and backup planning was not being 

done. Without firm plans, there is no assurance that the personnel needed to provide essential services will be available when needed. 

In addition, we reported in 2004 that the Army did not follow its planning guidance when deciding to use the Army’s LOGCAP contract.14 Army guidance stresses 

the need for the clear identification of requirements and the development of a comprehensive statement of work early in the contingency planning process. Because 

this Army guidance was not followed, the plan to support the troops in Iraq was 

not comprehensive and was revised seven times in less than 1 year, generating a 

significant amount of rework that would have been avoided had the planning guidance been followed. 

We have also found that DOD has not reviewed contractor support to identify the 

essential services provided and the department lacked visibility over the totality of 

contractor support to deployed forces. This information is essential in incorporating 

contractor support into planning efforts. For example, senior military commanders 

in Iraq stated that, when they began to develop a base consolidation plan for Iraq, 

they had no source to draw upon to determine how many contractors were on each 

installation. 

DOD has taken some actions to address this challenge. For example, DOD is developing a database of contractors who deploy with U.S. forces. According to senior 

DOD officials familiar with the database, as of February 2008, the database had 

about 80,000 records. DOD is working with State to include new DOD contractors, 
14 

15GAO–07–145. 16GAO–08–316R. 

including private security contractors, in the database. This effort responds to recommendations we made in 2003 and 2006 to enhance the department’s visibility 

over contractors in locations such as Iraq and Afghanistan.15 In addition, Joint Contracting Command Iraq/Afghanistan has created the Theater Business Clearance 

process that reviews and approves all contracts for work in Iraq or Afghanistan. 

Joint Contracting Command Iraq/Afghanistan officials stated that this has helped 

military commanders know ahead of time when contractors are coming to work on 

their bases and to ensure sufficient facilities are available for them. According to 

senior DOD officials, DOD is also developing a cadre of contracting planners to ensure that contractor support is included in combatant commanders’ planning. 

DOD Lacks Adequate Numbers of Trained Contract Oversight Personnel 

Having the right people with the right skills to oversee contractor performance 

is crucial to ensuring that DOD receives the best value for the billions of dollars 

spent each year on contractor-provided services to support deployed forces. However, 

several reviews by GAO and other organizations have consistently found deficiencies 

in DOD’s oversight of contractors due to an inadequate number of trained military 

and civilian personnel to carry out these duties. 

Such concerns are not new, and we continue to find that poor oversight contributes to poor outcomes and wasted resources. For example, we reported in 2004 that 

DOD did not always have enough contract oversight personnel in place to manage 

and oversee its logistics support contracts such as LOGCAP and the Air Force Contract Augmentation Program (AFCAP). As a result, the Defense Contract Management Agency (DCMA) was unable to account for $2 million worth of tools that had 

been purchased using the AFCAP contract. In 2006, a LOGCAP Program Office official stated that the office did not prepare to hire additional contract oversight personnel in anticipation of an increased use of LOGCAP services due to Operation 

Iraqi Freedom. According to the official, if adequate staffing had been in place early, 

the Army could have realized substantial savings through more effective reviews of 

the increasing volume of LOGCAP requirements. 

In January 2008, we reported that the Army was inadequately staffed to conduct 

oversight of an equipment maintenance contract in Kuwait, a contract with cumulative obligations of more than $500 million.16 Vacant oversight personnel positions 

included a quality assurance specialist, a property administrator, and two quality 

assurance inspectors. According to Army officials, such shortfalls meant that surveillance was not being performed sufficiently, and the Army was less able to identify trends in contractor performance and begin corrective action. For example, a review of property accountability reports found that the contractor reported a total of 

$2.4 million in government-furnished property; however, two of the eight property 

listings alone totaled more than $2 million. Without adequate oversight of government property, the Army cannot be certain that duplicate supplies have not been 

ordered and that government property is not misplaced or misused. 

DOD has taken some actions to address the challenge of a less-than-adequate 

number of contract oversight personnel. For example, in February 2007, the Deputy 

Assistant Secretary of the Army (Policy and Procurement) issued guidance that required, among other actions, contracting officers to ensure that a quality assurance 

surveillance plan be prepared and implemented for service contracts exceeding 

$2,500. Joint Contracting Command Iraq/Afghanistan officials stated that they are 

in the process of adding about 39 personnel to provide additional contractor oversight. Similarly, DCMA has deployed 100 more personnel and plans to deploy another 150 to provide contract oversight and administration to both ongoing and future contracts in Iraq. DCMA is providing oversight for DOD’s private security contracts and other theater-wide contracts. Additionally, senior DOD officials stated 

that the department has created a task force to address the recommendations of the 

October 2007 report by the Commission on Army Acquisition and Program Management in Expeditionary Operations. 

DOD Does Not Systematically Collect and Distribute Lessons Learned 

DOD does not systematically ensure that lessons learned regarding the use of contractors to support deployed forces are shared with military personnel at deployed 

locations. Although DOD has a policy requiring the collection and distribution of lessons learned to the maximum extent possible, we found in our previous work that, 

with regard to contractor support to deployed forces, no procedures were in place 

to ensure lessons learned were being collected and distributed. For example, the 

Army regulation that establishes policies, responsibilities, and procedures for the 
15 

17GAO–07–145. 18GAO, Rebuilding Iraq: Actions Needed To Improve Use of Private Security Providers, GAO– 

05–737 (Washington, D.C.: July 28, 2005). 19 In response to an incident in September 2007 in which 17 Iraqis died, the Department of 

State and DOD signed a memorandum of agreement in December 2007 outlining actions needed 

to improve oversight of private security contractors. GAO is currently reviewing U.S. agencies’ 

use of private security contractors in Iraq. 

implementation of the LOGCAP program makes customers that receive services 

under the LOGCAP contract responsible for collecting lessons learned. However, we 

have repeatedly found that DOD is not systematically collecting and sharing lessons 

learned on the use of contractors to support the deployed forces. We have made several recommendations in the past that DOD implement a department-wide lessons 

learned program for contractor support to deployed forces. However, we have previously reported that DOD has not established any procedures to systematically do 

this. We also found a failure to share best practices and lessons learned between 

units as one redeploys and the other deploys to replace it. As a result, new units 

essentially start at ground zero, having to resolve a number of difficulties until they 

understand contractor roles and responsibilities. 

DOD Does Not Adequately Train Military Commanders and Contract Oversight Personnel 

DOD does not routinely incorporate information about contractor support for deployed forces in its predeployment training of military personnel, despite the longstanding recognition of the need to provide such information. Our work has shown 

the need for better predeployment training of military commanders since the mid1990s. DOD policy states that personnel should receive timely and effective training 

to ensure they have the knowledge and tools necessary to accomplish their missions. 

We have made several recommendations that DOD improve its contractor support-related training. In each instance, DOD concurred with our recommendation. 

However, our previous work has found limited evidence that improvements have 

been made in terms of how DOD trains military commanders and contract oversight 

personnel on the use of contractors to support forces prior to deployment. We have 

found that limited or no predeployment training on the use of contractor support 

has caused a variety of problems for military commanders in deployed locations. 

As we reported in 2006, several military commanders with limited or no 

predeployment training stated that they were not able to adequately plan for the 

use of those contractors.17 According to the commanders, their predeployment training provided them with insufficient information on how much support contractors 

would be providing in Iraq. The commanders were therefore surprised by the substantial number of personnel they had to use to perform missions such as on-base 

escorts for third-country and host-country nationals, convoy security, and other force 

protection support to contractors. 

We have found instances in which limited or no predeployment training for military commanders on the use of contractor support to deployed forces resulted in confusion about their roles and responsibilities in managing contractors. In some cases, 

concerns rose over the potential for military commanders to direct contractors to 

perform work outside the scope of the contract, which they lack the authority to do. 

As Army guidance makes clear, this can result in modifications to the contract that 

would involve additional costs and, in some cases, be in violation of competition requirements. For example, in 2006, a contractor stated that he was instructed by a 

military commander to release equipment the contractor was maintaining even 

though this action was not within the scope of the contract. The issue ultimately 

had to be resolved by the contracting officer. 

In a 2005 report on the use of private security contractors in Iraq,18 we found that 

commanders received no training or guidance on how to work with private security 

providers in Iraq. To highlight the lack of training and guidance, representatives 

from one unit stated they did not know private security providers were in their battle space until the providers called for assistance.19

We also found that contract oversight personnel such as contracting officers’ representatives continue to receive limited or no predeployment training regarding 

their roles and responsibilities in monitoring contractor performance. Contracting officers’ representatives are typically drawn from units receiving contractor-provided 

services and are not normally contracting specialists. However, DOD’s acquisition 

regulations require that contracting officer’s representatives be qualified through 

training and experience commensurate with their delegated responsibilities. 

We have found that limited or no predeployment training of contract oversight 

personnel has caused a variety of problems in deployed locations. 
16 

20GAO–07–145. 21To help Iraq develop the capability of its ministries, the United States has provided about 

$300 million between fiscal years 2005 to 2007. 22GAO, Stabilizing and Rebuilding Iraq: U.S. Ministry Capacity Development Efforts Need an 

Overall Integrated Strategy to Guide Efforts and Manage Risk, GAO–08–117 (Washington, D.C.: 

Oct. 1, 2007). 

The lack of training can affect the quality of service that contractors are providing 

at deployed locations. In a December 2006 report, officials from a corps support 

group in Iraq stated that, until they were able to get a properly trained contracting 

officer’s representative in place, they experienced numerous problems regarding the 

quality of food service LOGCAP provided. 

The lack of sufficient training also can lead to the inefficient use of military personnel. In the 2006 report, officials with a Stryker brigade stated that a lack of 

training hindered their ability to resolve staffing issues with a contractor conducting 

background screenings of third-country and host-country nationals. In this case, 

shortages of contractor-provided screeners forced the brigade to use its own intelligence personnel to conduct screenings. As a result, those personnel were not available for their primary intelligence-gathering responsibilities. 

DOD and its components have made some improvements in providing training to 

military commanders and contract oversight personnel on the use of contractors to 

support deployed forces prior to their deployment. In DOD’s response to our 2006 

report, the Director of Defense Procurement and Acquisition Policy stated that the 

Army is making changes to its logistics training programs that would incorporate 

contracting officers’ representatives training into its basic and advanced training for 

its ordnance, transportation, and quartermaster corps.20

In addition, the Defense Acquisition University has updated its contingency contracting course to include a lesson on contractors accompanying the force. DCMA 

is adding personnel to assist in the training and managing of contracting officers’ 

representatives. However, training of military commanders and contract oversight 

personnel remains a challenge. For example, the 2007 report of the Commission on 

Army Acquisition and Program Management in Expeditionary Operations found 

that combatant commands do not recognize the significance of contracts and contractors in expeditionary operations. The report concluded that the Army needs to 

educate and train commanders on the important operational role of contracting. 

LACK OF ADEQUATE STRATEGIC PLANNING IMPEDES U.S. EFFORTS TO DEVELOP

CAPACITY IN IRAQI MINISTRIES AND IMPROVE OUTCOMES IN IRAQ’S ENERGY SECTOR

U.S.efforts to increase the Iraqi government’s capacity to invest in its own rebuilding are undermined by strategic planning shortfalls in two critical areas—developing the capacity of the Iraqi ministries to effectively execute their responsibilities 

and integrating oil and electricity development into a unified plan. In the energy 

sector, developing a comprehensive and integrated strategic plan is essential to 

meeting energy production and export goals, which in turn will help Iraq meet its 

future financial needs. In both cases, U.S. assistance in developing these plans will 

help ensure that future U.S. expenditures in rebuilding Iraq will result in long-term 

benefits. 

Department of State Has Not Developed a Comprehensive and Integrated Strategy 

to Develop Transparent and Accountable Iraqi Ministries 

U.S. efforts to strengthen Iraqi ministries lack a strategic plan to integrate efforts, address challenges within the ministries, and set clear priorities.21 Over the 

past 4 years, U.S. efforts to help build the capacity of the Iraqi national government 

have been characterized by multiple U.S. agencies leading individual efforts, without overarching direction from a lead entity that integrates their efforts, and shifting time frames and priorities in response to deteriorating security and the reorganization of the U.S. mission in Iraq. Consequently, U.S. efforts to date have not resulted in key Iraqi ministries having the capacity to effectively govern and assume 

increasing responsibility for operating, maintaining, and further investing in reconstruction projects. 

The Iraqi ministries also face several challenges that pose a risk to their success 

and long-term sustainability.22 First, our October 2007 report found that Iraqi ministries lack personnel with key skills, such as budgeting and procurement. Second, 

sectarian influence over ministry leadership and staff complicated efforts to build 

a professional and nonaligned civil service. Third, pervasive corruption in the Iraqi 

ministries impeded the effectiveness of U.S. efforts. Fourth, poor security limited 

U.S. advisors’ access to their Iraqi counterparts, preventing ministry staff from at-
17 

23GAO, Iraq Reconstruction: Better Data Needed to Assess Iraq’s Budget Execution, GAO–08– 

153 (Washington, D.C.: Jan. 15, 2008). 

tending planned training sessions and contributing to the exodus of skilled professionals to other countries. 

While recognizing these challenges, U.S. efforts to help build the capacity of the 

Iraqi ministry suffered from the lack of coordination and shifting priorities. First, 

no single agency was in charge of leading U.S. ministry capacity development efforts. State, DOD, and USAID have led separate efforts at Iraqi ministries, investing about $169 million in funds in 2005 and 2006 for these efforts. As of mid-2007, 

State and USAID were providing 169 capacity development advisors to 10 key civilian ministries; DOD was providing 215 to the Ministries of Defense and Interior. 

Although State took steps to improve coordination in early 2007, coordination between the agencies remains problematic. For example, although State, USAID, and 

DOD tried to develop a common set of metrics to measure ministry capacity in 2005, 

the agencies have now developed separate sets of metrics. 

Second, the focus of U.S. capacity development efforts had shifted from long-term 

institution-building projects, such as helping the Iraqi government develop its own 

capacity development strategy, to an immediate effort to help Iraqi ministries overcome their inability to spend their capital budgets and deliver essential services to 

the Iraqi people. However, as we reported in January 2008, it is unclear if Iraq is 

spending its $10.1 billion capital budget since U.S. and Iraqi reports show widely 

disparate rates for Iraqi government spending in 2007.23 Citing unofficial Ministry 

of Finance data, the administration’s September 2007 Benchmark Assessment Report stated that the Iraqi ministries had spent 24 percent of their capital projects 

budgets, as of July 15, 2007. The report concluded that, compared with 2006, the 

government of Iraq was becoming more effective in spending its capital projects 

budget. However, the administration’s report is not consistent with Iraq’s official expenditure reports, which show that the central ministries had spent only 4.4 percent 

of their investment budget, as of August 2007. The lack of consistent and timely expenditure data limits transparency over Iraq’s execution of $10.1 billion 2007 budget 

for capital projects and reconstruction. The most recent expenditure data show a 

capital expenditure rate of 7 percent for the central ministries, as of November 

2007. 

The U.S. government is beginning to develop a comprehensive and integrated 

strategy for U.S. capacity development efforts in Iraq, although agencies have been 

implementing separate programs since 2003. GAO’s previous analyses of U.S. multiagency national strategies demonstrate that such a strategy should integrate the efforts of the involved agencies with the priorities of the Iraqi government, and include a clear purpose and scope; a delineation of U.S. roles, responsibilities, and coordination with other donors, including the United Nations; desired goals and objectives; performance measures; and a description of benefits and costs. U.S. efforts to 

develop Iraqi ministry capacity have included some but not all of these components. 

For example, agencies are working to clarify roles and responsibilities. However, 

U.S. efforts lack clear ties to Iraqi-identified priorities at all ministries and information on how resources will be targeted to achieve the desired end-state. 

In October 2007, we recommended that State, in consultation with the Iraqi government, complete a comprehensive and integrated strategy for U.S. capacity development efforts. State recognized the value of an integrated strategy but stated that 

it may hinder efforts to tailor capacity development efforts to the priorities of each 

ministry. GAO’s recommendation does not preclude tailoring capacity development 

efforts to meet each ministry’s unique needs. A strategy ensures that a U.S.-funded 

program has consistent overall goals, clear leadership and roles, and risks that are 

assessed. 

Similarly, in January 2008, we recommended that to help ensure more accurate 

reporting of the government of Iraq’s spending of its capital projects budget, the Secretary of the Treasury work with the government of Iraq to ensure the reporting 

of accurate and reliable expenditure data. The Department of the Treasury agreed 

with our recommendation to ensure accurate and reliable reporting of Iraqi expenditure data and is working to implement it. 

Lack of Adequate Strategic Planning Impedes U.S. and Iraqi Efforts to Restore Iraq’s 

Energy Sectors 

Despite the United States’ investment of about $6 billion to rebuild Iraq’s oil and 

electricity sectors, production in both sectors has consistently fallen below U.S. program goals of 3 million barrels per day and 6,000 megawatts of electrical peak generation capacity. As we reported in May 2007, it is difficult to identify the most 

pressing future funding needs, key rebuilding priorities, and existing vulnerabilities 
18 

24GAO, Rebuilding Iraq: Integrated Strategic Plan Needed to Help Restore Iraq’s Oil and Electricity Sectors, GAO–07–677 (Washington, D.C.: May 15, 2007). 25 According to State, revenues generated from Iraqi oil exports increased from $31 billion in 

2006 to $41 billion in 2007 (Iraq Weekly Status Report, Feb. 6, 2008). 

and risks within the sectors given the absence of an overarching strategic plan that 

comprehensively assesses the requirements of the energy sector as a whole.24 While 

the Iraqi government has crafted a multiyear strategic plan for Iraq’s electricity sector, no such plan exists for the oil sector. Given the highly interdependent nature 

of the oil and electricity sectors, such a plan would help identify the most pressing 

needs for the entire energy sector and help overcome the daunting challenges affecting future development prospects. 

As shown in figure 3, Iraq’s oil production and exports, despite recent improvements, continue to fall below U.S. goals. As of December 2007, Iraq produced about 

2.5 million barrels of oil per day and exported nearly 2 million barrels per day, compared with the U.S. goals of 3 million barrels and 2.2 million barrels, respectively.25

FIGURE 3.—Oil Production, Exports, and U.S. Goals, June 2003 to December 2007 

In addition, U.S. goals for electricity remain unmet. The problem is compounded 

by increasing demand that outstrips supply. As of February 2008, demand for electricity was twice as high as the supply. In addition, available power in Baghdad was 

9 hours per day, compared with 17 hours per day in Basra. As we previously reported in May 2007, one of the challenges in developing the electricity sector was 

the U.S. government’s decision to install natural gas turbine engines despite the absence of a natural gas distribution network. Of the 35 engines installed, 16 were 

using diesel or crude oil rather than natural gas. As a result, maintenance was 

three times as costly and electricity generated decreased by 50 percent. 

Billions of dollars are still needed to rebuild, maintain, and secure Iraq’s oil and 

electricity infrastructure, underscoring the need for sound strategic planning. The 

Ministry of Electricity’s 2006–2015 Electricity Master Plan estimates that $27 billion will be needed to reach its goal of providing reliable electricity across Iraq by 

2015. According to DOD, investment in Iraq’s oil sector is ‘‘woefully short’’ of the 

absolute minimum required to sustain current production, and additional foreign 

and private investment is needed. Moreover, U.S. officials and industry experts estimate that Iraq would need $20 billion to $30 billion over the next several years to 

reach and sustain a crude oil production capacity of 5 million barrels per day. 

We recommended that the Secretary of State, in conjunction with relevant U.S. 

agencies and international donors, work with Iraqi ministries to develop an integrated energy strategy. State commented, however, that the Iraqi government, not 

the U.S. government, is responsible for taking action on GAO’s recommendations. 
19 

We believe that the recommendations are still valid given the billions of dollars 

made available for Iraq’s energy sector, the limited capacity of the Iraqi ministries, 

and the U.S. government’s influence in overseeing Iraq’s rebuilding efforts. 

CONCLUSION

U.S. efforts in Iraq are expansive: combating insurgents, training local security 

forces, shaping government institutions, reconstructing infrastructure, and enhancing public services. These efforts demonstrate a substantial commitment to most aspects of nation building. However, nation building is costly, particularly in the absence of a permissive security environment. Since 2001, Congress has appropriated 

about $700 billion for military and diplomatic activities in support of the global war 

on terrorism; the majority of this amount has supported U.S. actions in Iraq. This 

large expenditure of resources and the enormous task at hand heightens the levels 

of risk and offers the potential for fraud, waste, abuse, and corruption. 

But, as GAO’s audits point out, these risks are further heightened when U.S. programs lack sound strategic planning, well-defined requirements, adequate oversight 

and accountability, and sufficient training for personnel. Future investments in Iraq 

will require decision makers not only to assess the outcomes achieved thus far but 

also the outcomes that could have been achieved with more efficient and effective 

use of appropriated dollars. It will also require decision makers to consider difficult 

trade-offs as the nation faces increasing fiscal challenges on the home front. Nonetheless, continuing oversight by Congress and the accountability organizations is 

needed to ensure that opportunities for waste, fraud, abuse, and corruption are 

minimized. 

In prior reports, GAO recommended that, to improve accountability and minimize 

opportunities for fraud, waste, and abuse of U.S. funds, (1) DOD adopt sound business processes in its acquisition strategies, such as definitizing contracts in a timely 

fashion and strengthening accountability procedures; (2) DOD leadership ensure implementation of and compliance with existing guidance to improve its management 

and oversight of contractors supporting deployed forces; and (3) U.S. agencies work 

with Iraq to develop strategic plans for key sectors. 

DOD and State have taken action to implement some, but not all, of our recommendations. Given the billions of dollars that the United States has spent in Iraq 

to help rebuild its infrastructure, improve security, support our forces, and improve 

the capacity of the ministries, I believe our recommendations, if fully implemented, 

would improve accountability and outcomes. Whether they are fully implemented, 

however, will depend on the leadership at each agency to set the appropriate tone, 

ensure that existing guidance is effectively implemented, take actions to prevent 

mistakes from being repeated, and seize opportunities to ensure that the efforts to 

help rebuild and stabilize Iraq achieve their intended results. 

Mr. Chairman, this concludes my statement. I would be pleased to answer questions that you or other Members have at this time. 

Senator LEAHY. General Kicklighter. 

STATEMENT OF HON. CLAUDE M. KICKLIGHTER, INSPECTOR GENERAL, DEPARTMENT OF DEFENSE 

General KICKLIGHTER. Senator Leahy, Senator Cochran, distinguished members of the Senate Appropriations Committee, thank 

you very much for the opportunity to appear before you this morning, and address corruption, fraud, waste, and abuse in Iraq. This 

testimony will cover the accomplishments of the Department of Defense Office of the Inspector General and other organizations in 

DOD, that have the mission to combat illegal and improper expenditures and improve accountability of DOD resources that support 

operations in Iraq. 

To date, $492 billion has been appropriated to Defense for Operation Iraqi Freedom. The U.S. military presence in Iraq is aimed 

at providing a secure environment which will enable the Iraqi people to establish a stable and strong Government that upholds the 

rule of law, good governance, and helps keep this Nation on a path 

to freedom. Corruption greatly undermines the effort of both the 
20 

United States and Iraq, in establishing effective institutions of 

Government. 

As this committee knows, better than most, the DOD Inspector 

General has the primary responsibility within Defense, for providing oversight of Defense programs and funds appropriated to the 

Department, at home and around the world, and especially in 

southwest Asia. 

To accomplish our oversight mission, we have adopted a strategy 

that is based on maintaining an adequate presence in theater, but 

recognizing that much of the work can be done—and in some cases, 

should be done—outside of Iraq. 

A very important part of our effort is ensuring inter-service and 

inter-agency coordination and collaboration, as Mr. Walker just 

talked about. We chair a quarterly Southwest Asia Joint Planning 

Group, which includes all the agencies that work together on this 

mission, and the DOD military organizations, to ensure coordination and collaboration and integration of our effort. 

In December 2005, our office received a hotline complaint that alleged that a single U.S. Army officer was receiving illegal gratuities 

from a DOD contractor. This evolved into an extensive and ongoing 

criminal investigation, involving millions of dollars in bribes, and 

a large number of U.S. military officers, non-commissioned officers, 

DOD civilians, and contractor personnel. 

In December 2006 and January 2007, we began to receive allegations from the Turkish National Police, and the Turkish Minister 

of Defense that weapons and explosives that were shipped to the 

Iraqi Security Forces were crossing their border, and finding their 

way into the hands of insurgents, terrorists, and criminals in Turkey. 

Around the same time, we were also beginning to find some of 

the weapons that the United States had supplied to the Iraqi Security Forces in the hands and control of insurgent groups, and U.S. 

security contractors in Iraq. 

With this information, we briefed the senior leadership in Defense, and those briefings resulted in the Secretary and the Chairman requesting that we send an assessment team to Iraq to review 

accountability, and also making sure that we kept the Secretary 

and the Chairman informed of our findings, but also making sure 

that we kept Congress fully informed, promptly, on this situation. 

We briefed the chairmen and the ranking members of our oversight committees. In this committee, we briefed Senator Inouye and 

Senator Stevens. The general request from Congress was that we 

get a team on the ground rapidly, and check to make sure that the 

barn door had no cracks in it, and if it did, make sure that it was 

nailed up promptly. 

We assembled an inter-agency, multidiscipline munitions assessment team, composed of subject matter experts, and deployed to 

Iraq and southwest Asia, in general. 

Our preliminary findings were that DOD and the Iraqi Security 

Forces currently had a system in place for controlling and accounting for weapons and ammunition being supplied to the military and 

police units. However, there still remained work to be done. 

Weapons were lost, early on, in large part due to battle losses on 

the battlefield, police stations being overrun, desertions, disintegra-
21 

tion of untrained units—sometimes when they were committed to 

combat—some police and military personnel, and largely police, 

were selling their weapons, and poor recordkeeping. We also have 

an intensive investigation ongoing, looking into pilferage out of 

storage facilities. 

The assessment team will return to Iraq in April to review 

progress and assess the current status of munitions accountability. 

They will also be looking at foreign military sales operations, 

progress in helping the Iraqis build their own logistics sustainment 

base, so that they can take over and conduct more independent operations, and take over more battle space. 

As a result of our closed and ongoing investigations in southwest 

Asia, 18 Federal criminal indictments have been handed down, 26 

Federal criminal informations have been issued, three hearings 

were conducted under Article 32, Uniformed Code of Military Justice, and in total, 25 people have been convicted of felony crimes, 

resulting in a total of 34 years of confinement, 35 years of probation, nine individuals and three companies were de-barred from 

contracting with the U.S. Government, 12 companies and 13 persons have been suspended from contracting with the United States 

Government. Two contractors have signed settlement agreements 

with the U.S. Government—a total of $11.1 million has been paid 

to the United States in restitution, recoveries—$365,000 was levied 

in fines and penalties, $1.76 million was forfeited back to the Government and $2.2 million was seized from the bank accounts of 

some of the companies involved. 

In addition, we currently have 102 Iraqi-related investigations 

still ongoing. In November 2007, we realigned the internal core 

mission assets to support southwest Asia audit operations, by establishing an expeditionary audit division, comprised of highly 

skilled, 30 audit personnel. Currently, we have 196 audit personnel, conducting audits related to Iraq and southwest Asia operations. 

In April 2008, approximately 25 auditors will be redeployed in 

support of OIF and Operation Enduring Freedom (OEF), with an 

additional 30 in reserve, to be called forward, if needed. 

We have 24 ongoing Iraqi-related audit projects, and as a result 

of the findings and recommendations, we in the Department have 

identified more than $840 million in funds that could be put to better use. 

We are dedicating more resources to this mission in Iraq on control and accountability, acquisition, contracting, corruption, waste, 

fraud, abuse, and expanding our footprint in all of southwest Asia, 

in some part, due to the support of this committee. 

We will continue to evaluate the lessons learned, and do our best 

to minimize the mistakes of the past. We will keep Congress and 

our leadership fully and promptly informed as we make—as we 

conduct these audits and investigations, and we will assist to build 

a stronger inner-agency and DOD oversight team, as we go forward. 

Sir, thank you for the opportunity of being here today, and I 

stand ready to try to answer your questions. 

[The statement follows:] 
22 

1 Congressional Research Service report, ‘‘The Cost of Iraq, Afghanistan, and Other Global 

War on Terror Operations Since 9/11,’’ dated February 8, 2008. The numbers listed are DOD 

funds. 

PREPARED STATEMENT OF CLAUDE M. KICKLIGHTER

Mr. Chairman, Senator Cochran, and distinguished members of this committee, 

thank you for the opportunity to appear before you this morning and address corruption, fraud, waste, and abuse in Iraq. This testimony will cover the accomplishments of the Department of Defense Office of the Inspector General (DOD IG) and 

the other DOD organizations that have the mission to combat illegal and improper 

expenditures and to improve accountability of DOD resources that support operations in Iraq. To date, $655 billion has been appropriated to the Department of Defense in support of the men and women of our Armed Forces in Southwest Asia and 

the fight against terrorism, of which $492 billion has been appropriated to support 

Operation Iraqi Freedom 1. The U.S. military presence in Iraq is aimed at providing 

a secure environment which will enable the Iraqi people to establish a stable government that upholds the rule of law and good governance. Corruption undermines 

the efforts of both the Iraqi people to establish effective institutions of government 

and undermines the United States ability to support this effort. 

As this committee knows, the DOD IG has the primary responsibility within the 

Department of Defense for providing oversight of the defense programs and the 

funds appropriated to the Department at home and around the world, to include 

Southwest Asia. In this role, the DOD IG office oversees, integrates, and attempts 

to ensure there are no gaps in the stewardship of DOD resources. We spearhead 

the DOD oversight community in auditing, investigating, and inspecting accountability processes and internal controls, in areas such as contracting, logistics, and 

financial management. Collectively, the community has dedicated over 470 auditors 

and over 190 investigators that have reviewed a wide range of issues pertaining to 

Southwest Asia. We also work in close partnership with other oversight organizations, such as the Government Accountability Office (GAO), the Special Inspector 

General for Iraq Reconstruction (SIGIR), the Department of State, and the U.S. 

Agency for International Development. In addition, we provided the core staff for 

the Coalition Provisional Authority IG, and later assisted the stand-up of the SIGIR. 

Since 2003 the OIG has provided 141 full or part-time personnel in support of both 

organizations. 

Adequate management controls and oversight to verify that proper safeguards are 

in place and working as intended are essential in the fight against corruption, 

fraud, waste, and abuse. Conditions where internal controls are severely lacking or 

proper oversight is minimal create opportunities for corruption, fraud, waste, and 

abuse. Additionally, individuals must be held accountable for violating laws and regulations and mismanagement of DOD resources. 

OIG STRATEGY

To accomplish our oversight mission, we have adopted a strategy that is based 

on maintaining the right size presence in-theater but which also recognizes that 

much of our work can be done out of Iraq. An important part of our oversight effort 

is to improve inter-service and interagency coordination and collaboration to minimize duplication of effort and ensure that we have only the staff needed in-theater 

to accomplish the mission. 

IN THEATER PRESENCE

We have adopted an expeditionary workforce model to support efforts throughout 

all of Southwest Asia. We have core staff forward deployed at all times. The core 

contingent is comprised of individuals serving between 6 and 12 month deployments. Expeditionary team members will deploy for as long as needed to complete 

the task, but no longer. The actual number of auditors, investigators, and inspectors 

in Southwest Asia and Iraq fluctuates on a daily basis depending on requirements. 

We are increasing our presence in Southwest Asia and currently have 279 personnel dedicated to Southwest Asia operations and are deployable as mission requirements dictate. Currently we have 22 people deployed to Southwest Asia. Utilizing both domestic and in theater assets we have 28 ongoing Iraq related audits 

and inspections and 102 ongoing Iraq related investigations. 

COORDINATION

We have jointly established and chair an interagency Southwest Asia Joint Planning Group (JPG) that meets quarterly and provides oversight of fraud, waste, 
23 

abuse, and criminal activities in the Southwest Asia region. The JPG provides unity 

of effort of the organizations engaged in this effort, including the Military Inspectors 

General and Auditors General, the Government Accountability Office, the Department of State and the U.S. Agency for International Development Inspectors General, the SIGIR, and the Combatant Commands Inspectors General. The mission of 

the JPG is to better coordinate and integrate oversight activities in the region. The 

Southwest Asia JPG leads the coordination and oversight required to identify and 

recommend improved mission support to military units conducting operations. 

DETAILS ON MUNITIONS ACCOUNTABILITY

One example of the expeditionary model is the ongoing work regarding munitions 

control and accountability. In December 2005, our office received a Hotline complaint and other allegations that a senior U.S. Army officer received illegal gratuities from a DOD Contractor. This evolved into extensive and ongoing DOD criminal 

investigations, involving millions of dollars in bribes and a large number of U.S. 

military officers, non-commissioned officers, and civilian personnel. 

In December 2006, and January 2007, we began to receive allegations from the 

Turkish National Police and the Turkish Ministry of Defense that weapons and explosives that were shipped to the Iraqi Security Forces (ISF) were crossing the border and finding their way into the hands of insurgents, terrorists, and criminals in 

Turkey. In response, we sent two special agents to Turkey in January 2007, to follow-up on the allegations. Around this time, we were also beginning to find some 

weapons that the United States had supplied to the ISF, in the hands and control 

of insurgent groups and U.S. security contractors in Iraq. 

Additional concerns regarding the accountability and control of U.S. provided 

weapons and ammunition to ISF were also identified by SIGIR and GAO. In October 

of 2006, SIGIR identified materiel management control weaknesses regarding the 

accountability of weapons and the registration of weapons’ serial numbers. In July 

2007, GAO reported that DOD and Multi National Forces—Iraq could not fully account for weapons reported as previously issued to the Iraqi forces. 

With this information, we briefed the Secretary of Defense; the Chairman, Joint 

Chiefs of Staff; and the senior Defense team. Those briefings resulted in the Secretary and Chairman requesting that we send an assessment team into Iraq to review accountability and control of munitions being supplied by the United States 

to ISF. In addition, the Secretary of the Army was asked to do an assessment of 

contracting in Southwest Asia. The Secretary of Defense and the Chairman requested they be kept fully informed and also that we keep Congress fully informed. 

We briefed the Chairmen and Ranking Members of our primary oversight committees to include the Chairman and Ranking Member of the Senate Appropriations 

Subcommittee on Defense (Senators Inouye and Stevens). The general request from 

Congress was to get on-the-ground post-haste, see if the barn door had a crack, and 

if so, nail it shut. 

As a result, we assembled an interagency, multi-disciplinary Assessment Team on 

Munitions Accountability composed of twenty-two subject matter experts from the 

Office of Inspector General, U.S. Central Command, Army Audit Agency, Army 

Criminal Investigation Command (Army CID), Army Corps of Engineers, Air National Guard (who happened to be an Assistant U.S. Attorney General from Justice), 

Department of State, and the Department of Justice Bureau of Alcohol, Tobacco, 

Firearms and Explosives. 

The assessment team’s objectives were to: 

—Determine whether DOD currently has adequate accountability and control over 

U.S.-purchased munitions before formal turnover to the ISF. Specifically, this 

included munitions from the time of arrival at selected Iraq ports of entry until 

formal turnover to ISF; and to 

—Determine whether the ISF currently have adequate accountability and controls 

over U.S.-purchased munitions under their control. Specifically, this included 

munitions from the time of formal transfer to ISF through their subsequent 

issuance to selected Iraq military and police units. 

Prior to our arrival in Iraq, we examined two additional related areas that are 

very important to the ability of the United States and ISF to account for and control 

munitions. One is establishing an effective Foreign Military Sales (FMS) program 

to support ISF, and the other is assisting the ISF to build their logistics 

sustainment base, for both military and police. The team did a lot of work in 

CONUS before they departed. 

To better understand the overall CENTCOM theater logistics operations, we spent 

several days in Kuwait evaluating accountability, control and onwards shipment of 

ammunition. We also looked at contract operations. The team also spent a week in 
24 

Afghanistan looking at munitions accountability and control, contracting, and the 

Afghanistan National Security Forces logistics base. 

The assessment team then spent five weeks in Iraq examining the current U.S. 

and ISF supply chain operations, including transportation, delivery, storage and distribution. The assessment began at the port of entry, through all the supply nodes 

until the issuance of weapons and ammunition to Iraqi military and police units at 

the end of their pipe line. 

While in Iraq, the assessment team conferred with the U.S. Ambassador and staff, 

and the respective Commanders and staff of the Multi-National Force—Iraq (General Petraeus), the Multi-National Corps—Iraq (Lieutenant General Odierno), and 

the Multi-National Security Transition Command—Iraq (MNSTC–I) (Lieutenant 

General Dubik). The team also met with the U.S. Joint Contracting Command— 

Iraq/Afghanistan, U.S. Army Corps of Engineers, Gulf Region Division (to include 

the Logistics Movement Coordination Center and U.S. Warehouse at Abu Ghraib), 

MNSTC–I’s Security Assistance Office (which manages FMS in Iraq), and many 

other officials with the Coalition Forces and U.S. Embassy Baghdad. 

In addition, the team conferred with numerous Government of Iraq officials from 

the Ministry of Defense, the Ministry of Interior, the Inspectors General of the ministries, and various Iraqi Army units and police forces. 

Our preliminary finding is that DOD and ISF have a system currently in place 

for controlling and accounting for weapons and ammunition being supplied to the 

ISF; however, there still remains work to be done. Many weapons were lost early 

on due in large part to battle loss, police stations being overrun, desertion, disintegration of untrained units, some police and military personnel selling their weapons, 

and poor record keeping. We also have an ongoing investigation into pilferage of 

storage facilities. 

The U.S. supply of munitions to Iraq is shifting to FMS. The United States needs 

to put FMS on a war-time footing while also continuing to assist the ISF in building 

their logistics sustainment base. Both of these actions are underway and will greatly 

enhance the control and accountability of munitions. As reported by CENTCOM, a 

great deal of progress has already been made. Continued improvements in these two 

critical areas will also greatly enhance the ISF’s ability to conduct independent operations and in taking over more battle space. 

Since the Assessment Team’s return in late October 2007, we have briefed the 

Secretary of Defense; the Deputy Secretary of Defense; the Chairman, Joint Chiefs 

of Staff; and other senior leaders. Further, we briefed our primary oversight committees. We are drafting the report and upon completion will provide it to 

CENTCOM and other DOD organizations for review and official comment. The report is expected to be released in April 2008. This will complete Phase I. 

The Assessment Team is planning a follow-up trip (Phase II) to Iraq in April 

2008, to review the status of actions taken on the report’s recommendations and to 

assess the current status of munitions accountability and control, the FMS program, 

the development of their logistics sustainment base for the ISF, and contract operations in general. We will also spend time working with the Iraq Ministries of Defense and Interior Inspectors General. 

DETAILS ON INVESTIGATIONS

The Defense Criminal Investigative Service (DCIS), the criminal investigative arm 

of the DOD Inspector General, has been engaged in investigating waste, fraud, 

abuse, and corruption pertaining to the Iraqi theater since the start of the war. Pursuant to the Inspector General Act of 1978, DCIS has broad criminal investigative 

jurisdiction regarding DOD programs and operations. However, effectively countering fraud in Southwest Asia requires the cooperative efforts of other DOD investigative agencies and Federal law enforcement partners as well as the audit community. Investigative jurisdiction for fraud offenses involving DOD, to include offenses 

pertaining to Southwest Asia, are established in DOD Instruction 5505.2, ‘‘Criminal 

Investigations of Fraud Offenses.’’ The instruction establishes policies, responsibilities, and procedures for determining which of the DOD Criminal Investigative Organizations (DCIOs)—Defense Criminal Investigative Command (DCIS), the U.S. 

Army Criminal Investigation Command (Army CID), the Naval Criminal Investigative Service (NCIS), and the Air Force Office of Special Investigations (AFOSI)—are 

conducting investigations of fraud offenses under the United States Code and/or 

Uniform Code of Military Justice. DCIS has primary jurisdiction over matters involving most contract and procurement actions awarded by Defense Agencies, OSD 

components, and field activities. Additionally, DCIS has jurisdiction over, ‘‘any allegations [involving DOD] that the IG DOD considers appropriate for investigation by 

DCIS.’’ This broad authority affords DCIS the ability to easily partner with other 
25 

2Logistics support can include, but is not limited to, laboratory services, polygraphs, and specialized equipment (e.g., GPS phones). 

agencies in an effort to protect the integrity of the entire DOD procurement and acquisition process—from countering fraud impacting initial research and development, to investigating fraud during contract execution, to ensuring appropriate disposal of products no longer needed by DOD components. The Service-specific Military Criminal Investigative Organizations (Army CID, NCIS, and AFOSI) typically 

focus upon allegations involving contract and procurements that their respective 

military department awards. Significant non-DOD partners in Iraq include the 

SIGIR, which investigates fraud involving Iraq reconstruction programs; and the 

FBI, which has overarching authority to investigate violations of various Federal 

statutes relating to fraud and corruption. Other organizations, such as the U.S. Department of State, Office of the Inspector General; and the U.S. Agency for International Development, Office of the Inspector General, partner with DCIS and other 

agencies when alleged fraudulent activity impacts their respective departments. 

From May 2003 through October 2004, DCIS deployed teams of two to three 

agents to Baghdad. From October 2004 to present, the DCIS European Post of Duty 

and multiple CONUS DCIS offices have conducted a wide variety of investigations 

related to Iraq. In September 2006, DCIS established a permanent presence in Iraq 

by deploying four special agents to the theater—two special agents are currently assigned to Iraq and two special agents are assigned to Kuwait. An additional special 

agent has been temporarily deployed to Iraq to support a special cell investigating 

issues relating to weapons accountability. Two additional special agents will soon 

deploy to Afghanistan. These in-theater agents are the forward-deployed elements 

of the approximately 64 DCIS special agents in CONUS and OCONUS participating 

in Southwest Asia investigations. 

DCIS protects America’s warfighters by vigorously investigating alleged and suspected procurement fraud, corruption, and other breaches of public trust that impact 

critical DOD programs. Our investigations focus on matters such as bribery, theft, 

procurement fraud, illegal receipt of gratuities, bid-rigging, defective and substituted products, and conflicts of interest. DCIS’ presence in the region has identified corrupt business practices, loss of U.S. funds through contract fraud, and theft 

of critical military equipment destined for the ISF. 

DCIS plays a significant and pivotal role in both the National Procurement Fraud 

Task Force (NPFTF) and the International Contract Corruption Task Force 

(ICCTF). Under the auspices of the Department of Justice, the NPFTF was created 

on October 10, 2006, to promote the prevention, early detection, and prosecution of 

procurement fraud nationwide and abroad. This multi-disciplinary and multi-agency 

(e.g., Federal Inspectors General, U.S. Attorneys, Federal law enforcement agencies 

such as the FBI) coalition has been extremely effective in fostering and better coordinating procurement fraud investigations. The ICCTF, an offshoot of the NPFTF, 

was formed in November 2006, to specifically target fraud and corruption involving 

Southwest Asia. The primary goal of the ICCTF is to combine the resources of multiple investigative agencies to effectively and efficiently investigate and prosecute 

cases of contract fraud and public corruption related to U.S. government spending 

in Iraq, Kuwait, and Afghanistan. The participating agencies in the ICCTF are 

DCIS; the U.S. Army Criminal Investigation Command’s Major Procurement Fraud 

Unit; the Office of the Inspector General, U.S. Department of State; the Office of 

the Inspector General, U.S. Agency for International Development; the Federal Bureau of Investigation (FBI); and the SIGIR. The ICCTF created a Joint Operations 

Center (JOC) in furtherance of achieving maximum interagency cooperation. The 

JOC, which is located in Washington, D.C., serves as the nerve center for the collection and sharing of intelligence regarding corruption and fraud relating to funding 

for the Global War on Terror (GWOT). The JOC coordinates intelligence-gathering, 

de-conflicts case work and deployments, disseminates intelligence, and provides analytic and logistical support 2 for the ICCTF agencies to enhance criminal prosecutions and crime-prevention. The JOC is the vital link into the entire intelligence 

community and provides a repository from which to disseminate intelligence indicative of criminal activity. Case information and criminal intelligence are shared, and 

accomplishments are reported jointly. The agency heads meet regularly to collectively provide policy, direction, and oversight. 

In addition to investigating allegations of fraud, waste, and abuse, DCIS launched a proactive project which will analyze over $10 billion in payment vouchers related 

to U.S. Army purchases in Iraq. The vouchers are currently stored at the Defense 

Finance & Accounting Service (DFAS), Rome, NY. The project is being coordinated 

with DFAS, the DOD IG’s Audit component, the Defense Contract Audit Agency, the 

U.S. Army Audit Agency, and the FBI. The project will attempt to identify fraudu-
26 

lent activity related to the war effort in Iraq and Afghanistan through utilization 

of data mining techniques. While the initiative is in its infancy, several questionable 

transactions have been identified and referred for further investigation. In addition 

to these analytical efforts to develop cases, the investigative team assigned to the 

project is also supporting ongoing investigations involving fraud and corruption in 

Iraq. 

To pursue investigative leads concerning weapons accountability in Iraq, DCIS is 

participating in a multi-agency Weapons Investigative Cell. Other participants include Army CID and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The 

Weapons Investigative Cell is working with the International Zone Police Department and Government of Iraq officials to conduct weapons and munitions accountability investigations. In addition, the Weapons Investigative Cell is coordinating its 

activities with other affected U.S. and foreign agencies, and is attempting to determine if there is any evidence of weapons leaving Iraqi warehouses and being diverted or sold to unauthorized sources. 

As previously mentioned, investigations conducted in Southwest Asia are cooperative efforts. A total of sixty-four DCIS special agents (CONUS and OCONUS) are 

working the majority (97 percent) of these investigations in conjunction with one or 

more law enforcement partner agencies. DCIS’ primary partner in countering DODrelated fraud in Southwest Asia is the Major Procurement Fraud Unit (MPFU), a 

component of Army CID. The MPFU conducts investigations into allegations of 

fraud associated with the Army’s major acquisition programs. The MPFU is responsible for conducting Army-related investigations of allegations of fraud, defective 

pricing, corruption, kickbacks, antitrust violations and miscellaneous other incidents 

involving procurement fraud. Since June 2005, the MPFU has deployed 46 agents 

on rotational assignments to work in the region. The MPFU presently has 13 agents 

in offices in Iraq, Kuwait, and Afghanistan, and has initiated 146 investigations, of 

which 92 investigations are ongoing. 

To date, DCIS has completed 25 investigations that are related to Southwest Asia. 

In addition, DCIS currently has 102 open investigations relating to the Iraqi theater. The majority of these investigations are being jointly investigated with one or 

more law enforcement partners. Of these 102 investigations, 16 are being conducted 

by agents deployed throughout Southwest Asia; the other 86 investigations are 

being conducted by special agents in the United States and Germany. DCIS attempts to transfer investigations developed in Southwest Asia to an appropriate 

CONUS venue as soon as practical so as to ensure we maximize the best use of our 

in-theater investigative resources and to begin and facilitate prosecution efforts. 

DETAILS ON AUDITS

Our OIG expeditionary model combined with our regional strategy in approaching 

our work in Iraq raises issues that often require solutions at the systemic level, as 

already illustrated by the munitions assessment team findings and recommendations. Further, we continue to evolve our comprehensive plan for audits of contracts, 

subcontracts, and task and delivery orders in support of coalition forces in Iraq and 

Afghanistan. Given that Army Audit Agency is focusing on the Commander’s Emergency Response Program (CERP) and contracts for basic life support activities and 

that SIGIR focus is on reconstruction contracts, we have begun and will to continue 

to conduct a series of audits and report on financial and contracting systems in Iraq 

that support Coalition Forces and Iraq operations including contracts for maintenance service, transportation, and fuel. 

Additionally, we continue to focus on the training and equipping of the Iraqi military and police mission, acquisitions of key operational support assets such as body 

armor, fielding of mine resistant ambush protected vehicle, medical equipment, use 

of GWOT supplemental funds, controls over cash, monitoring of sensitive equipment, and out of country payments to name a few. 

In November 2007, we realigned internal core mission assets to support SWA 

audit operations by establishing an expeditionary audit division comprised of about 

30 people. This audit division is complemented by other work conducted by U.S. 

based teams. In total, we have 196 personnel conducting audits related to Iraq and 

Southwest Asia operations. In April 2008, approximately 25 people will be deployed 

in support of OIF/OEF with an additional 30 in reserve. We will also have about 

16 additional personnel deployed in support of the Munitions Assessment Team, 

FMS processes, and the progress being made to establish an effective Government 

of Iraq logistics process to support the ISF. 

We have 24 on-going Iraq-related audit projects reviewing mission-critical support 

functions that directly impact the warfighter, such as: contract surveillance, contract 

payments, resetting of returning U.S. forces equipment, and acquisition of armored 
27 

3Service members who perform wartime missions that are not traditionally organized, 

trained, and equipped to perform are called ‘‘In Lieu Of’’ (ILO) forces. 

vehicles. Our audits also include oversight of cash and other monetary assets within 

Iraq as well as the execution of supplemental funds to train and equip the Iraq Security Forces. A complete list of completed reports, on-going projects, and planned 

projects is attached to this statement. 

We plan to issue a final audit report on controls over payments in support of Iraqi operations, which amounted to $10.7 billion for February 2003, to June 2006, and 

have already referred 28 vouchers totaling $35.1 million to DCIS for potential investigation. 

The following will be some key completed, ongoing, and planned audits. 

COMPLETED AUDIT WORK

In our report D–2007–107, ‘‘Procurement Policy for Armored Vehicles,’’ issued 

June 27, 2007, we addressed inquiries made by Congresswoman Louise M. Slaughter. We identified the following: 

—The Marine Corps Systems Command awarded sole-source contracts for body 

armor and armored vehicles even though officials knew other sources were 

available for competition. 

—Acquisition officials continued to award contracts for armored vehicles even 

though the contractor repeatedly failed to meet contractual delivery schedules 

for getting vehicles to the theater, and 

—The government did not execute the liquidated damages clause of the contract 

to collect appropriate fees from the contractor. 

In November 2006, we reported on the Army’s small arms program including the 

availability, maintainability, and reliability of the small arms support for the 

warfighter. We found that the Army equipped its deployed forces in support of Operation Iraqi Freedom with the small arms necessary to meet Combatant Commanders requirements. However, to accomplish these requirements the deploying 

unit obtained some of the small arms from other sources, such as nondeployed units. 

As a result, the nondeployed units faced a potential shortage of small arms and may 

not have had the ability to adequately train and maintain equipment and personnel 

readiness at an acceptable level. We also determined that implementing and monitoring the Army Force Generation Program, as well as, developing an overarching 

Army training strategy will ensure that the unit’s readiness is not degraded. We 

agreed with the Army that outlining requirements and developing a plan for small 

arms distribution will avert future small arms shortages. 

We also found that the Army generally had adequate controls for maintainability 

and reliability of small arms fielded to the warfighter. As a result of the Army’s 

proactive approach to maintenance and reliability, the warfighter is provided with 

reliable small arms capabilities to sustain operations in varying environments but 

we also agreed with the Army that following up on findings and recommendations 

made by the Soldier Weapons Assessment Team will address small arms maintainability risks identified. We determined that ongoing initiatives and management actions were responsive to our initial concerns and we agreed with the actions the 

Army took. 

Another key report classified report, ‘‘Equipment Status of Deployed Forces within 

the U.S. Central Command,’’ issued January 25, 2007. We reported that service 

members experienced shortages of force-protection equipment, such as up-armored 

vehicles, electronic countermeasure devices, crew-served weapons, and communications equipment. As a result, Service members were not always equipped to effectively complete their missions. Also, the Request for Forces process did not always 

ensure that Service members performing nontraditional missions, such as Provincial 

Reconstruction Teams (PRTs) and detainee operations (i.e. In Lieu Of units 3), received the equipment necessary to perform their wartime mission. As a result, Service members performed missions without the proper equipment or postponed missions while waiting to receive equipment. As a result of this review, the Under Secretary of Defense for Personnel and Readiness issued interim policy on training and 

equipping In Lieu Of units. A follow-on audit on equipping units in Iraq in accordance with mission requirements is currently being conducted in conjunction with the 

Multi-National Forces-Iraq Inspector General. 

Last week on March 6, we issued a report on a review of the use of supplemental 

funds for medical support of GWOT. We performed this review in response to Office 

of the Assistant Secretary of Defense (Health Affairs) concerns over the reporting 

and use of GWOT supplemental funding by the Military Health System (MHS). The 

Military Department Surgeons General did not consistently report obligations of 
28 

GWOT supplemental funds by mission as required by the TRICARE Management 

Activity. Without accurate and consistent reporting of GWOT supplemental fund obligations, DOD has no assurance that the Military Health System used funds for 

the missions for which they were requested. Additionally, DOD cannot ensure that 

the amounts reported in the fiscal year 2006 Defense Health Program Cost of War 

report are accurate and complete. 

ONGOING AUDIT WORK

One of highest priority ongoing reviews is an assessment of the procurement, distribution, and use of body armor in DOD. This audit is being performed at the request of Congresswoman Louise M. Slaughter. The objective of the audit was to 

evaluate the procurement history and practices for body armor and the effect that 

the Army’s decision to ban the use of personally purchased body armor has on the 

safety of Service members. The audit team is reviewing 35 contracts and 5 Federal 

Supply Schedule orders, valued at more than $5.2 billion, awarded by the Army and 

Marine Corps between January 2004 and December 2006 for body armor components. The team will determine whether the contracts and orders for body armor 

components, such as the outer tactical vest, enhanced side ballistic inserts, small 

arms protective inserts, and deltoid and auxiliary protectors, were awarded in accordance with the Federal Acquisition Regulation. 

Another review relates to the protection of the Forces. We are assessing procurement and delivery of joint service armor protected vehicles. The objective is to determine whether the Mine Resistant Ambush Protected (MRAP) vehicle program office 

is effectively procuring armored vehicles in accordance with the Federal Acquisition 

Regulation and DOD requirements. Specifically, we will review MRAP program administration to determine whether the program office is taking appropriate actions 

to accelerate vehicle delivery to users. An additional objective is to review the Services’ requirements for MRAP and High Mobility Multipurpose Wheeled Vehicles. 

We have two on-going audits related to Common Access Cards (CAC) issued to 

contractors. The first will determine whether controls over Common Access Cards 

(CACs) provided to contractors are in place and work as intended: specifically, 

whether DOD officials issue CACs to contractors, verify the continued need for contractors to possess CACs, and whether cards are being revoked or recovered from 

contractors in accordance with DOD policies and procedures. The importance of this 

series of reviews is to also ensure we are not providing contractors access to benefits 

that are not called for in specific contracts such as over compensating by providing 

a contractor daily expenses for basic life support items and by issuing an improper 

CAC providing these same life support items free. The team visited 67 sites, identified with the greatest number of contractor CACs, to test processes for the contractor CAC lifecycle. The audit team also obtained contractor CAC data from the 

Defense Manpower Data Center and tested a sample of the data to evaluate the reliability of controls over the issuance, periodic verification of continued need, revocation, and recovery of contractor CACs. The team anticipates issuing a draft report 

in April 2008. The second project will address specifically the controls over the contractor CACs in Southwest Asia was announced on January 24, 2008. 

We also are looking at the management and controls over selected funds to ensure 

proper use of and/or the support of payments in the following reviews: 

—Internal Controls Over Out-Of-Country Payments.—The objective is to determine 

whether internal controls over out-of-country payments supporting GWOT provide reasonable assurance that payments are properly supported and recorded. 

DFAS Rome is the field accounting office for contingency disbursing in Iraq, Afghanistan, Kuwait, Saudi Arabia, and Egypt. 

—Funds appropriated for Afghanistan and Iraq processed through the Foreign 

Military Sales Trust Fund.—The overall objective is to determine whether the 

funds appropriated for the security, reconstruction, and assistance of Afghanistan and Iraq and processed through the Foreign Military Sales Trust Fund are 

being properly managed. Specifically, we will determine whether the transfer of 

appropriated funds from the Army’s accounts into the Foreign Military Sales 

Trust Fund was properly authorized, accounted for, and used for the intended 

purpose. In addition, we will verify whether the appropriated funds are properly 

reported in DOD financial reports. 

—Operations and Maintenance Funds Used for GWOT Military Construction Contracts.—The objective is to determine whether DOD components followed requirements for using operations and maintenance funds for GWOT military construction. Specifically, we will determine whether DOD followed proper procedures for administering, executing, and reporting the use of operations and 

maintenance funds on GWOT military construction contracts. 
29 

—Small arms ammunition fund management in support of GWOT.—Specifically, 

we will determine whether financial management officials fully supported and 

properly incurred obligations and expenditures. We will also determine whether 

funds for small arms ammunition were accurately recorded in financial systems 

for reporting to the Office of the Secretary of Defense. 

—Internal controls over the Army, General Fund, Cash and other monetary assets 

held in Southwest Asia.—To accomplish this review, we will verify the existence 

of cash reported by disbursing officers to the U.S. Treasury; inspect physical 

controls over cash; confirm collection and payment documents to insure adequate internal controls over disbursing officer accountability documents; and determine the source and use of cash. We anticipate conducting site visits from 

April to June of 2008 in Iraq, Afghanistan, Kuwait, Saudi Arabia, and Egypt. 

PLANNED AUDIT WORK

We have attached a list of our current planned audits for SWA including Iraq and 

Iraq-related. We have also modified our planning process to include the specifics required by the National Defense Authorization Act for Fiscal Year 2008, January 28, 

2008. Section 842 of the Act, ‘‘Investigation of waste, fraud, and abuse in wartime 

contracts and contracting processes in Iraq and Afghanistan,’’ requires the Inspector 

General of the Department of Defense to develop a comprehensive plan for a series 

of audits of contracts, subcontracts, and task and delivery orders for the support of 

coalition forces. The group developing this plan consists of the most experienced and 

senior executives in our audit organization. 

To develop the plan the group is: reviewing completed and ongoing audits and inspections; analyzing contract actions; researching the appropriations and expenditures; examining the contracting processes and systems; obtaining information from 

Iraq and Afghanistan; evaluating the related accounting and financial systems; and 

studying contracting problems that occurred in prior wars. 

The group is identifying areas or gaps in need of audit coverage. Examples of 

areas that may require audit work are: maintenance service contracts; security service contracts; air transportation contracts; DOD financial systems used in Iraq and 

Afghanistan; and staffing and training of contract oversight personnel. 

We want audits in the plan that will identify abuses and defects in contracts, systems and processes that can be promptly remedied. The plan will help us expand 

and refocus our audit efforts to support the war fighters. The plan will be coordinated through existing councils with the cognizant Inspectors General and Audit 

Chiefs. 

DETAILS ON ANTICORRUPTION ACTIVITIES

We continue to play a key role in developing and promoting the establishment of 

effective oversight and security organizations in Afghanistan and Iraq. As we stated 

earlier, until recently, we provided two full-time IG advisors to the Multi-National 

Security Transition Command—Iraq (MNSTC–I) Transition Teams in Baghdad to 

assist the Offices of the Inspectors General for the Ministry of Defense, Joint Headquarters (JHQ), and the Ministry of Interior. Prior to reassigning these advisors 

back to Washington D.C., we facilitated the establishment of a new MNSTC–I billet 

for an ‘‘IG Integration Officer.’’ The billet was approved and filled in July 2007 and 

is making a difference. The IG DOD will continue to provide assistance and advice 

as required. 

While in Iraq, with the munitions assessment team, we visited with the Inspector 

General for the Ministry of Defense and staff and the Deputy Inspector General, 

Ministry of Interior and were impressed with their progress. We also met with all 

Inspectors General from all ministries at a central meeting. 

In July 2007, we initiated a project to document the lessons learned during our 

3-year experience in assisting in establishing and developing a viable, sustainable, 

effective IG system in Iraq. This project will capture the concepts, strategies, options, and practical applications establishing a Federal IG system may be appropriate in nation building missions and as an instrument to combat fraud, waste, 

abuse, and corruption in developing nations. The expected completion date for the 

lessons learned report is April 2008. 

The OIG works with DOD agencies to prevent corruption, fraud, waste, and abuse 

by keeping all informed, to include Defense agencies and military commanders, of 

vulnerabilities detected within their systems; providing mission briefings which address the impact of fraud, waste, and abuse on DOD programs and operations; and 

by documenting deficiencies in DOD internal management controls when discovered 

during the course of an investigation. 
30 

4 ‘‘Information’’ is a criminal charge brought by a prosecutor without using a Grand Jury to 

get an indictment. The ‘‘Information’’ is filed in court and serves to notify the court and the accused of the charges. The ‘‘Information’’ must be in writing and must be supported by evidence 

submitted by the prosecutor, usually in the form of affidavits. The name is derived from the 

prosecutor providing information to the court to justify a prosecution. 

Since the initiation of Operation Enduring Freedom and Operation Iraqi Freedom, 

we have acted in collaboration with the military services and the Defense Logistics 

Agency to pursue administrative remedies, such as suspensions and debarments 

from government contracting, against U.S. contractors and their personnel. We ensure investigations are coordinated with central points of contact, and we engage 

agency fraud counsels and suspension and debarment authorities to prevent repeat 

losses to DOD caused by unscrupulous contractor activities. 

We are also a member of the U.S. Department of Justice Asset Forfeiture Program. Our participation in this program results in seizure of fraud proceeds from 

criminals who have targeted DOD. The intent of the program is to deter criminal 

activity, punish offenders, and dismantle criminal organizations. Forfeitures related 

to fraud and corruption in Iraq are soon expected to exceed $5.1 million in funds 

and property. It is anticipated that considerable additional funds and property will 

be seized in the future as ongoing cases are resolved. 

PANEL ON CONTRACTING INTEGRITY

The John Warner National Defense Authorization Act of 2007 (Public Law 109– 

364) directed the DOD to convene a panel of senior leaders to conduct Departmentwide reviews of progress to eliminate areas of vulnerability of the defense contracting system that allow fraud, waste, and abuse to occur. The panel was to review the report of the Comptroller General required by the National Defense Authorization Act of 2006 (Public Law 109–163) related to these areas of vulnerability, 

and to recommend changes in law, regulations, and policy deemed necessary. 

The DOD IG representative is a member of the overall Panel on Contracting Integrity, a member of the subcommittee on Adequate Pricing, and is Chairperson of 

the Procurement Fraud Indicators subcommittee. The Procurement Fraud Indicators 

subcommittee is identifying what these indicators are and how they should best be 

addressed and used for the contracting/acquisition workforce. 

As part of the Senior Steering Group for GWOT, DOD OIG representatives will 

meet monthly, beginning in March, to discuss ways to improved finance, accounting 

and procurement in Iraq. The group will determine needed tasks and timeframes; 

identify lead organizations and resource requirements to complete the tasks; determine whether an expeditionary finance and accounting capability is needed and if 

so, what would it look like, how it would be staffed, and how it would be funded; 

and discuss any changes needed in guidance to ensure the tasks can be completed 

efficiently and effectively. While it is imperative that solutions are implemented 

quickly, the group’s focus is to propose and implement solutions that most benefit 

the warfighter and make the best use of the taxpayer’s funds. 

SIGNIFICANT ACCOMPLISHMENTS

Of the 102 ongoing DCIS investigations, 41 investigations involve public corruption offenses (bribery, gratuities, and conflicts of interest); 47 investigations involve 

procurement fraud offenses (false claims and statements, undelivered products, defective products, cost/labor mischarging); 13 investigations involve theft and technology protection offenses (theft of funds, property, equipment, supplies; and export 

violations involving U.S. technology and vehicles), and one terrorism-related case. 

To date, DCIS’ ongoing Iraq related investigations have identified 229 subjects 

consisting of 22 U.S. Government employees, 53 military personnel, 17 foreign nationals, 68 U.S. Government contractors, 23 U.S. Government sub-contractors, 6 dependents of military personnel, and 40 others with no known affiliation to the government. 

As a result of closed and ongoing investigations in Southwest Asia, 18 Federal 

criminal indictments and 26 Federal criminal informations 4 have been issued, and 

3 hearings have been conducted under Article 32 of the Uniform Code of Military 

Justice. In total, 25 persons have been convicted of felony crimes, resulting in a total 

of approximately 34 years of confinement and 35 years of probation; 9 individuals 

and 3 companies were debarred from contracting with the U.S. Government; 12 

companies and 13 individuals were suspended from contracting; and 2 contractors 

signed settlement agreements with the U.S. Government. A total of $11.1 million 
31 

was paid to the United States in restitution; $365,725 was levied in fines and penalties; $1.76 million was forfeited; and $2.2 million was seized. 

As a result of our audit work since fiscal year 2003, we made 64 recommendations 

to improve financial management, logistics, contract administration, and accountability with DOD GWOT operations. Defense management took sufficient actions in 

implementing 48 of the 64 recommendations. As a result, our records show 48 recommendations closed, 16 remain open. Additionally, as a result of our findings and 

recommendations, we and the Department have identified over $840 million in 

funds that could be put to better use. We anticipate additional potential monetary 

benefits or improved financial management in the ongoing audits of controls over 

payments made in support of DOD Iraq operations, and internal controls over cash 

and other monetary assets. We also are working in partnership with the Defense 

Finance and Accounting Service on establishing minimum accountability requirements for payments made in support of DOD Iraq operations. 

CLOSING

Thanks to Congressional support, we are now dedicating more resources to provide oversight on munitions control and accountability, acquisition, corruption, 

waste, fraud, abuse, and expanding our footprint in all of Southwest Asia. We will 

continually evaluate the lessons learned and do our best to prevent the mistakes 

of the past. We will continue to keep Congress and our leadership fully and promptly informed. 

Thank you for the opportunity to appear before the committee today to address 

our ongoing oversight work regarding Iraq. 

Senator LEAHY. And we will have questions—just one thought occurs to me, I just wanted to make sure I understand, of the number 

of auditors going in there, how many speak the language? 

General KICKLIGHTER. Sir, I would say very few, if any. 

Senator LEAHY. Thank you. I was afraid of that. 

Mr. Bowen. 

STATEMENT OF STUART W. BOWEN, JR., SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

Mr. BOWEN. Thank you, Senator Leahy. And just, on that point, 

I have three auditors and one investigator on my staff who speak 

Arabic. Their presence has enhanced our capacity to provide oversight and engage with the Iraqis. 

Senator LEAHY. Thank you. 

General KICKLIGHTER. We have one. 

Senator LEAHY. Thank you. 

Mr. BOWEN. Thank you, Senator Leahy, Ranking Member Cochran, and members of the committee for this opportunity to appear 

before you today to discuss important issues facing the United 

States’ continuing support for relief and reconstruction in Iraq. 

The central matter before the committee today is the effectiveness of U.S. efforts to combat fraud, waste, abuse, and corruption 

in Iraq. This matter has two significant facets: fraud and waste 

within the U.S. program, and the problem of corruption within the 

Government of Iraq. 

Two days ago, I returned from my 19th trip to Iraq since my appointment 4 years ago as Special Inspector General. During my 15- 

day stay, I had informative meetings on the many challenges confronting the program—the relief and reconstruction program—with 

former Prime Ministers Jaafri and Allawi, Deputy Prime Minister 

Barham Salih, and the current chair of the Baghdad Services Committee, Dr. Ahmed Chalabi. 

I also met with the leaders of the two primary anti-corruption 

agencies in Iraq, Dr. Abdul Basit, who heads the board of supreme 

audit, and the new commissioner of what’s now called the commis-
32 

sion on integrity, formerly the commission on public integrity, 

Judge Rahim al-Ugaili. 

Dr. Basit recounted to me during our visit that his current audits 

reveal a continuing and serious problem of corruption within Iraqi 

ministries. Judge Rahim, the new commissioner on integrity, admitted and acknowledged the current weakness of his investigators’ 

capacity to fight corruption in Iraq—a symptom of, frankly, a rule 

of law system that’s in need of much repair. 

U.S. ANTICORRUPTION PROGRAMS INSUFFICIENT

Over the past 5 years, U.S. programs to bolster anti-corruption 

institutions in Iraq have been inconsistent, suffering from poor coordination, weak planning, and limited resources. SIGIR has completed several audits looking at these efforts and has found that 

the programs have yet to meet their goals. 

But the U.S. Embassy is making progress on the recommendations, as evidenced in our most recent audit, and we’re following 

that up with another review that will be published this spring to 

give more detail on that progress. 

The Congress established SIGIR 4 years ago to provide oversight 

and relief of reconstruction funds in Iraq. Today, SIGIR has 36 

auditors on the ground in Iraq—inspectors and investigators, as 

well—and we expect to expand our team to 46 to meet our newly 

expanded mandate. 

FRAUD IN IRAQ RECONSTRUCTION

To date, SIGIR has issued 216 audits and inspections and addressed myriad problems within programs and projects of the U.S. 

reconstruction effort. Our investigative work has identified a number of instances of egregious fraud that have led to five convictions 

to date. In fact, this morning, jury selection has begun in the trial 

of three more persons arrested as a result of SIGIR investigations. 

We currently have—— 

Senator LEAHY. Juries here? In the United States? 

Mr. BOWEN. Yes, in New Jersey, in the Federal District Court in 

New Jersey. 

Senator LEAHY. Okay. 

Mr. BOWEN. We currently have over 50 cases ongoing, 30 of them 

under management at the Department of Justice. The real challenge in the U.S. program—as Comptroller General Walker noted— 

is the problem of waste with respect to the oversight and management execution of almost $50 billion in relief and reconstruction 

funds. The fraud has been egregious; but as a relative matter to 

the total investment, it’s a small percentage. 

WASTE IN IRAQ RECONSTRUCTION

Waste is another problem. It has diminished over time, as lessons learned have been applied, but it continues to be an issue, as 

our audits and inspections reveal. 

SIGIR has found pervasive weakness in program and contract 

management. Our inspections found a wide array of problems at 

construction sites. 
33 

As requested by the committee, I’ve submitted, for the record, a 

number of examples from our auditors’ inspections that identify 

vulnerabilities to fraud, waste, and abuse. Let me just highlight 

two in the interest of time. 

The Baghdad Police College, which we first reported on 18 months ago, was a $72 million program. Really, this is a very critical single project, in my view, with respect to security, because it 

is where every Iraqi police officer is trained or is supposed to be 

trained. 

I visited there, again, last week, to see what progress had been 

made resolving the many problems uncovered in that initial inspection. Those problems included plumbing that didn’t work at all, resulting in breakdowns and seepage, which rendered certain barracks unusable. 

Progress has been made. There are still problems with the 

plumbing, but I noted that the barracks are in better condition. Importantly, this program has expanded significantly, from that original $72 million program, and another $75 million will be spent— 

in phase II and phase III—that will result in a significantly greater 

capacity to train 12,000 Iraqi police officers. 

The audit I want to mention is our review this last quarter of 

the design-build contract that was awarded to Parsons, Inc. in 

March 2004. Of the 11 task orders issued under this particular contract—which involved buildings and health—only 3 were completed. We’ve addressed some of the programs and projects before, 

most notably the primary health care clinic program. I think this 

is one of the single biggest failures of all of the programs in Iraq— 

one that would have provided clinics all across the country. It was 

a $186 million program, and when the contract was terminated, 

only six health clinics were complete. 

Now the Corps of Engineers has made significant progress, direct-contracting the completion of a number of the remaining clinics. About 75 are complete today, and about 50 are open. 

The Parsons design-build contract, frankly, is emblematic of a 

poor choice of a contracting vehicle to engage in the kind of work 

anticipated. We’ll come out with the second review of Parson’s this 

spring, looking at security and justice programs. 

SUSTAINMENT OF RECONSTRUCTION EFFORT

The other key issue with respect to fraud, waste, and corruption 

in Iraq is sustainment. As you noted, Mr. Chairman, about $47 billion has been invested in Iraq. The success of that investment, regardless of how much has been accomplished to date, is contingent 

upon an effective program, operated by the Iraqis, funded by the 

minister of finance, overseen by the ministries, to sustain what 

we’ve provided. 

Absent that, frankly, the biggest waste is yet to come, because 

those are enormously significant projects. Let me note one—the 

Nasiryah water treatment facility—which we’re inspecting now. It 

is the most expensive project that the United States has undertaken, at a cost of $300 million. It is supposed to provide 600,000 

persons in central Iraq with clean water, but it’s operating at less 

than 50 percent capacity right now, because of poor operations and 

maintenance and lack of power. That inspection report will be out 
34 

1See Appendix I for a definition of fraud, waste, and abuse developed by GAO, SIGIR, and 

the Inspectors General of the Departments of Defense and State. 

in the spring detailing the issues. To its credit, the Embassy is responding to this matter, and Ambassador Crocker will visit 

Nasiryah soon to help further those efforts along. But sustainment 

is key to this waste issue. 

Let me say that we continue to carry out our lessons learned program, with proposals for the Congress to consider that will improve 

how the U.S. manages contingency operations. I think if there’s one 

overarching lesson learned, it’s that reform is essential in this particular province in order to protect American interests abroad. 

So, let me close by thanking you for this opportunity to testify, 

Senator Leahy, and for the opportunity to address these important 

matters. I look forward to your questions. 

[The statement follows:] 

PREPARED STATEMENT OF STUART W. BOWEN, JR. 

INTRODUCTION

Chairman Byrd, Ranking Member Cochran, and members of the Committee, 

thank you for this opportunity to appear before you today to discuss important 

issues facing the United States’ continuing support for the relief and reconstruction 

efforts in Iraq. The central issue that I will address is the effectiveness of U.S. efforts to combat fraud, waste, abuse, and corruption in Iraq. The efficacy of these 

efforts is essential to ensuring that the investment of billions in taxpayer dollars 

in relief and reconstruction activities in Iraq is protected and preserved.1

The Office of the Special Inspector General (SIGIR) began as the Coalition Provisional Authority Inspector General, starting work soon after my appointment in 

January 2004. SIGIR, which was formed in October 2004, reports to the Congress 

and jointly to the Secretaries of State and Defense. It is our mission to keep the 

Congress, the Administration, and the American people transparently informed 

about the results of our oversight, which have been both positive and negative, and 

to provide recommendations for improvement and lessons learned. During its short 

lifespan, SIGIR has issued 216 audit and inspection reports that address myriad 

programs and projects related to U.S. reconstruction efforts in Iraq. Our investigative work has identified a number of instances of egregious fraud that have led to 

five convictions to date, several trials that will begin this week, and pending indictments stemming from active cases. 

Our audit and inspection reports document a number of challenging situations 

that we have examined and investigated in Iraq. As a preliminary matter, it is important to note that the reconstruction program in Iraq is unlike any other in history in that it has been carried out virtually under fire. Thus, it is fundamentally 

different from reconstruction in a stable environment and our findings should be 

viewed in that light. 

The security challenges in Iraq, however, do not supersede the applicable rule 

governing the use of taxpayer dollars, and, in fact, the difficult environment increases the need for comprehensive on-the-ground oversight. Thus, SIGIR has been 

and remains committed to maintaining a robust operational presence in Iraq to provide effective oversight and real-time review. Our collective reporting to date reveals 

a simple axiom: effective quality assurance programs carried out by the government 

and complemented by effective quality control programs performed by contractors 

will yield successful programs and projects. Where good quality assurance and quality control programs have been applied in Iraq, success has been achieved. SIGIR’s 

inspection reports document that the majority of the projects we have visited have 

met contract expectations and are being used per their original intentions. However, 

of the 50 construction project assessments that were deemed a success, eight had 

inadequate design submissions, four had some form of inadequate construction, and 

two lacked sufficient attention to sustainability issues. Despite these findings, the 

overall rate of success is notable given the high security risks that have afflicted 

the program in Iraq. 

Since SIGIR’s inception, an essential element of our approach to oversight has 

been to rapidly identify problem areas and work with management to develop improvement plans. I instruct my auditors to produce audits that provide solutions to 
35 

any findings and to be transparent with management throughout the audit process. 

This approach has worked. Most of SIGIR’s published audits have provided recommendations with which management concurred and agreed to implement. This 

approach has promoted positive change in the program through the application of 

lessons learned along the way. 

While the fraud we have found in Iraq has been egregious, it has also been limited in scope relative to the overall investment of taxpayer dollars in Iraq. However, 

SIGIR reporting has found that waste, while difficult to quantify in gross numbers, 

has been present in a wide variety of U.S.-funded Iraq reconstruction projects and 

programs. The problem of waste has diminished since the inception of the program 

as managers have applied lessons learned (e.g., moving from expensive design-build 

cost-plus contracts to direct, fixed-price contracts). 

Regarding the preservation of the U.S. investment in Iraq, SIGIR has found weaknesses in plans and processes governing the transfer of U.S.-funded projects and assets to the Government of Iraq (GOI). We raised a red flag on this issue (in an audit 

released last July), noting that much of the U.S. reconstruction investment is at risk 

unless these issues are effectively addressed by the GOI. 

Our investigative work and capacity are increasing, particularly with regard to 

using forensic capabilities to review allegations of contract fraud like double billing. 

We also are strengthening investigative coordination through expanded participation in various Iraq fraud task forces. 

As our previous audits have noted, the U.S. support for GOI for anticorruption 

programs has been relatively limited and less effective than necessary. The GOI 

continues to face a plethora of problems arising from corruption within its governmental institutions, a reality that the GOI has begun to face publicly as evidenced 

in its three-day anticorruption conference in early January 2008. Taking seriously 

the fight against corruption—a burden shared by the GOI and the U.S. Mission in 

Iraq—is an essential element to the ultimate success of the fledgling Iraqi democracy. Success on this front is key to preserving the U.S. investment in Iraq’s relief 

and reconstruction. 

I returned two days ago from Iraq. It was my 19th trip over the past four years. 

During my 15-day stay, I had informative dialogues with a number of Iraqi officials 

about the past and present U.S. reconstruction programs. I met with former Prime 

Ministers Jaafri and Allawi, the current Deputy Prime Minister, Dr. Barham Salih, 

the Chair of the Baghdad Services Committee, Dr. Ahmed Chalabi, the President 

of the Board of Supreme Audit—Dr. Abdul Basit, and the new Commissioner of the 

Commission on Integrity. Judge Rahim al-Ugaili. 

My discussions with Dr. Basit and Judge Rahim focused on the current state of 

corruption in the GOI. Dr. Basit acknowledged that corruption within a number of 

ministries continues to restrict their progress. Judge Rahim, who has been in his 

new position for just under two months, concurred that Iraq and, specifically, his 

Commission must improve its collective anticorruption investigative capacity 

through training, better coordination with U.S. investigators, and expanded use of 

technical tools and expertise. Prime Minister Maliki has designated 2008 as the 

Year of Reconstruction and Anticorruption. While this is a signal and welcome recognition within the Iraqi government of the importance of addressing this continuing problem, it is essential, as Dr. Basit related to me, that the GOI substantiate its welcome rhetoric with robust rule of laws actions. 

I also met with Ambassador Crocker, General Petraeus, and the leaders of the primary U.S. reconstruction management offices, collectively finding continued 

progress toward improving processes for managing the U.S. investment in Iraq. 

SIGIR BACKGROUND

My testimony is based on the audit reports that SIGIR has issued, in accord with 

Generally Accepted Audit Standards, and the SIGIR inspections and investigations, 

which have been completed in accord with standards established by the President’s 

Council on Integrity and Efficiency (PCIE). Our continuing oversight work is summarized every three months in SIGIR’s comprehensive Quarterly Reports—of note, 

we are the only IG required to produce quarterly reports to the Congress. We have 

also produced three lessons learned reports—on personnel, contracting, and program 

oversight—which have led to improvements through legislative and regulatory reforms. We are at work on a fourth cumulative lessons learned report scheduled for 

release this summer. 

By maintaining a significant oversight presence on the ground in Iraq, SIGIR is 

uniquely and robustly positioned to review U.S. reconstruction programs through its 

cross-jurisdictional mandate authority and capacity derived from four years of institutional experience. We conduct, supervise, and coordinate audits and investigations 
36 

2 Sec. 3001(m)(2)(B) of Public Law 108–106 as amended by Sec. 1221, National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181). 

of the treatment, handling, and expenditure of amounts made available for the reconstruction of Iraq. We do so in order to ensure the independent and objective leadership of oversight; to promote economy, efficiency, and effectiveness; and to prevent 

and detect waste, fraud, and abuse in Iraq programs. 

The Congress has assigned SIGIR the responsibility for conducting audits and investigations relating to expenditures from a set of accounts specified in law, including the Iraq Relief and Reconstruction Fund, the Iraq Security Forces Fund, the 

Commander’s Emergency Response Program, the Economic Support Fund, and a variety of smaller funds. In addition, Congress has assigned SIGIR the duty to provide 

reporting on amounts appropriated or otherwise made available ‘‘for assistance for 

the reconstruction of Iraq... under any other provision of law.’’ 2

We regularly coordinate our work with other audit and investigative agencies 

with whom we share overlapping jurisdiction through a variety of mechanisms, including the Iraq Inspectors General Council, which I formed four years ago, and 

through joint audits with our sister agencies. Because of our unique mandate, 

SIGIR can take a multi-agency approach to the problems of Iraq reconstruction, 

comparing, for example, the Department of State’s Provincial Reconstruction Teams 

and the Department of Defense’s Commander’s Emergency Response Program. 

These programs at times have similar goals but have also upon occasion used conflicting practices and procedures. SIGIR closely coordinates its work with the Government Accountability Office. 

The enactment of the fiscal year 2008 National Defense Authorization Act (NDAA) 

in late January 2008 provided SIGIR with new responsibilities. Specifically, the 

NDAA give SIGIR expanded oversight of funds in the Iraq Security Forces Fund, 

the Commander’s Emergency Response Program, and the Economic Support Fund. 

Section 842 of the NDAA directs SIGIR to develop a comprehensive audit plan for 

a series of audits of Federal agency contracts, subcontracts, and task and delivery 

orders for the performance of security and reconstruction functions in Iraq. This will 

require a level of effort beyond SIGIR’s already extensive focus on contract audits 

of reconstruction activities. The legislation requires SIGIR to play a significant leadership role in planning and coordinating these audits with other relevant inspector 

general organizations, including the DOD IG, the DoS IG, and USAID IG. 

Along with the work required under our new mandate, SIGIR continues its ongoing emphasis on detailed reconstruction contract review. Specifically, we continue 

work on our extant mandate to complete a final forensic audit report on all amounts 

appropriated or otherwise made available for the reconstruction of Iraq. To fulfill 

this requirement, SIGIR is executing a series of focused contract audits of large Iraq 

reconstruction contracts and will culminate this work with capping reports. Our focused financial audits have examined overall IRRF contract administration and 

oversight, contract outcomes, and have included assessments of vulnerabilities to 

fraud, waste, and abuse. Future contract audit coverage will be expanded to include 

contracts across additional reconstruction funding appropriations, years of funding, 

programs, and include construction as well as non-construction contracts. 

AUDITS

Over its four-year existence, SIGIR’s Audit Directorate has issued 108 audit reports that provide 315 recommendations. These recommendations cover a wide 

range of issues that have contributed to improvements in agency operations in Iraq 

reconstruction. SIGIR audits have been directly responsible for $58 million in savings and $40 million that has been put to better use. SIGIR has challenged $7.5 

million in payments. The vast majority of our recommendations have been agreed 

to by the agencies to whom they were addressed, with many corrective actions underway or completed. 

INSPECTIONS

As of January 2008, the SIGIR Inspections Directorate has issued 108 project assessment reports that cover reconstruction project sites in Iraq valued at over 

$1.265 billion. To date, SIGIR has conducted 84 construction assessments and 24 

sustainment assessments. The assessments have yielded a variety of results, ranging from noting well-constructed projects to finding projects with serious deficiencies. 

The projects with deficiencies are largely the result of insufficient government 

oversight and inadequate contractor performance. Of the 84 construction assessments, 34 had significant deficiencies preventing the project from meeting its origi-
37 

nal objectives. These deficiencies resulted from inadequate design, construction, 

quality control, government quality assurance, and planning for sustainment. 

INVESTIGATIONS

SIGIR’s investigative work has produced 14 indictments, 14 arrests, 5 convictions, 

9 individuals pending trial (several of whom go on trial this week), and over $17 

million in fines, forfeitures, and restitution. We currently have 50 ongoing investigations into fraud, waste and abuse involving funds for the reconstruction of Iraq. 

From its inception, SIGIR has had a strong investigative presence in Iraq. Currently, we are expanding our capability throughout the continental United States, 

to areas where much of the information and many potential subjects are currently 

located. 

SIGIR Investigations continues to work with a wide range of U.S. agency partners 

in its pursuit of allegations of fraud, waste, and abuse in Iraq relief, reconstruction, 

and infrastructure building. SIGIR’s investigative partners include: U.S. Army 

Criminal Investigation Command, Major Procurement Fraud Unit (CID–MPFU); 

Defense Criminal Investigative Service (DCIS); Federal Bureau of Investigation 

(FBI); U.S. Agency for International Development, Office of Inspector General 

(USAID OIG); and U.S. Department of State, Office of Inspector General (DoS OIG). 

Our partnerships with other Federal law enforcement agencies have enhanced interagency cooperation and maximized our investigative resources through investigative 

case coordination and deconfliction. 

SIGIR supports the ongoing national initiatives and task forces, such as the Defense Finance and Accounting Service invoice review project in Rome, New York. 

DCIS initiated the project to detect fraud involved with payments made by the U.S. 

Army to support the war effort in Iraq. Next week, two SIGIR agents will deploy 

to Rome, New York, to work with the task force in furtherance of this investigative 

effort. 

SIGIR continues to participate in the National Procurement Fraud Task Force 

(NPFTF) and the International Working Committee (IWC), a subcommittee of the 

NPFTF. In October 2006, the Department of Justice (DoJ) Criminal Division created 

the NPFTF to promote the early detection, prevention, and prosecution of procurement fraud associated with increased contracting activity for national security and 

other government programs. The IWC links DoJ and Federal law enforcement agencies and provides a venue to address prosecutorial issues resulting from fraud investigations conducted in an international war zone. 

While SIGIR agents in Iraq concentrate on American targets and work with our 

investigative partners and the DoJ, our special agents also continue to develop close 

relationships with Iraq’s Commission on Integrity (CoI, formerly known as the Commission on Public Integrity) and the Board of Supreme Audit (BSA). My agents and 

I met with the head of the CoI during my recent visit to Iraq, and I am pleased 

to report that the close relationship that we previously had with the CoI will be continued under the CoI’s new leadership. Thus, our agents in Iraq will be able to continue to assist Iraqi authorities in their investigations of Iraqi contractors who engaged in fraud potentially involving U.S. dollars. 

A key component of SIGIR’s investigative program has been the strategic development of investigative task forces that enable synergistic collaboration among law enforcement agencies pursuing Iraq fraud cases. SIGIR formed the first Iraq fraud 

task force in spring 2005. This initiative, the Special Investigative Task Force on 

Iraq Reconstruction (SPITFIRE), combined the efforts of SIGIR with investigative 

assets from the Internal Revenue Service, the Department of Homeland Security’s 

Office of Immigration and Customs Enforcement, the Federal Bureau of Investigation, and the Department of State’s Office of Inspector General. SPITFIRE succeeded in effectively pursuing the investigation of the Bloom-Stein conspiracy, the 

first major fraud prosecution in Iraq. SIGIR investigators developed allegations uncovered during a SIGIR audit, which revealed an egregious criminal conspiracy in 

Hilla, Iraq, involving tens of millions of dollars in fraudulent contracts, bribes, and 

kickbacks. Nine individuals (military, civilian, and contractors) were indicted, four 

convicted and five are pending trial; several others will go on trial start this week. 

SIGIR is not limiting its efforts just to addressing contractor misconduct through 

the criminal and civil justice system. We also refer cases to the U.S. Army Legal 

Services Agency, Procurement Fraud Branch, for adjudication under the administrative suspension and debarment process. Since December 2005, SIGIR and its partner agencies have worked closely with the Army’s Procurement Fraud Branch to 

suspend and debar contractors for fraud or corruption within the Army, including 

those involving Iraq reconstruction or Army support contracts in Iraq. 
38 

In June 2003, the Department of Defense designated the Department of the Army 

as the executive agent for contracting support to the Coalition Provisional Authority. As a result, the Army’s suspension and debarment authority leads the effort to 

ensure the integrity of contractors performing these contracts. The goal of this program is to ensure that these contracts are awarded to, and performed by, contractors who are honest and ethical and who have the ability to successfully perform 

this important work. The Procurement Fraud Branch has also taken a leading role 

within the Army and at joint contracting organizations to train contracting officers 

to aid in the prevention and early detection of contractor fraud in Iraq reconstruction and support contracts. As reflected in SIGIR’s last Quarterly Report to the 

United States Congress, the Army Procurement Fraud Branch reported that it had 

suspended 32 individuals or companies, proposed 30 for debarment, and debarred 

20 based on allegations of fraud and misconduct connected to Iraq reconstruction 

and contractor fraud. 

RECONSTRUCTION PROGRAM VULNERABLE TO FRAUD, WASTE, AND ABUSE

Systemic contracting and management problems, corruption, and the general lack 

of security in Iraq are major factors that have made reconstruction programs in Iraq 

vulnerable to fraud, waste and abuse. With the limited resources available, agencies 

often did not effectively administer or implement reconstruction contracts. This was 

particularly the case when it involved government oversight of the work performed 

and government review of invoices. Poor security exacerbated these problems by frequently making it too dangerous to provide oversight of reconstruction activities, to 

transport needed materials to construction sites, or to allow quality assurance personnel to visit sites. Our audits found pervasive weaknesses in program and contract management and our inspections uncovered many problems at construction 

sites. However, there have also been a number of successes in the program, and executive agencies have largely been responsive to our observations and recommendations, applying lesson learned along the way. As requested by the Committee, the 

following litany provides selected examples from our audits and inspections wherein 

we identified vulnerabilities to fraud, waste, and abuse. 

Police Academy, Hilla, Iraq (SIGIR Inspection PA 05–032 issued January 31, 2006) 

At the direction of the Coalition Provisional Authority, the Joint Contracting Command—Iraq awarded a contract to SBIG Logistics and Technical Services, Inc. for 

the construction and support for an addition to the Al Hillah (Hilla) Police Academy. 

The total contract price was $23.6 million, of which $9.1 million was specifically for 

the additional building. The SIGIR inspection identified numerous deficiencies with 

the construction project. Overall, the U.S. government did not implement a quality 

assurance program and it did not ensure the design requirements were met. Even 

though the statement of work clearly required design submittals from the contractor 

for the major components of the police academy addition, the contractor did not provide them for review. In addition, SIGIR found significant cracks in the walls, inadequate backup power capability, poorly constructed sidewalks, a poorly designed 

wastewater system, evidence of roof leaks, and inadequate security systems. The 

contractor did not deliver or install the two back-up generators that were required 

by the contract. In addition, one other generator that was removed for overhaul was 

not returned. The two remaining generators that were on site were not capable of 

sustaining the academy in case of a power outage. 

Border Posts (SIGIR Inspections PA 05–021 thru PA 05–024 issued January 31, 

2006) 

USACE awarded a contract valued at $36.5 million in March of 2004 to Parsons, 

Inc., to build border posts at Iraq’s border crossings. The contractor did not prepare 

a properly designed facility and did not obtain written approval from USACE for 

the design before construction. Projects were not consistent with the original objective to complete and commission border denial posts. The border forts were not constructed with the perimeter security requirements. The jail facility, generator units, 

fuel tanks, and water system were not secured, and there were no physical restrictions preventing access to the walls of the border posts. 

During the design phase the contractor proposed replacing steel-reinforced concrete columns and beams with structural steel I-beams. There was no record that 

USACE reviewed or approved the design changes. During construction, USACE personnel observed that the horizontal I-beams supporting the roof were deflecting 

under the weight of the roofing material, and that some of the I-beams were improperly installed. A retrofit to reinforce the installed undersized I-beams was required. 
39 

U.S. Agency for International Development’s (USAID) Management of the Basrah 

Children’s Hospital Project (SIGIR Audit 06–026 issued July 31 2006) 

USAID was tasked with constructing a pediatric hospital with an estimated ceil- ing cost of $50 million. In August 2004, USAID awarded a contract to Bechtel National, Inc., to build the hospital. However, early decisions to increase the size of 

the facility, design flaws, contract delays, poor construction and site security ultimately increased the price to between $149.5 and $169.5 million. USAID was required by Public Law 108–106 to report on the progress of construction and its incurred costs to the Congress. However, USAID’s accounting systems and management processes were inadequate and failed to identify either construction progress 

or accurate contract costs. To stay within the cost limits, USAID stopped reporting 

indirect costs that may have totaled $48 million that should have been assigned to 

the contract. Further, based on cost data obtained from USAID, SIGIR estimated 

the new completion price to be between $149.5 and $169.5 million. Compounding 

these problems was a lack of effective program management and oversight by 

USAID and the Department of State. SIGIR observed that at the time of the audit, 

there was one contracting officer, one administrative contracting officer and one cognizant technical officer along with a few support staff who were responsible for management and oversight of $1.4 billion in construction activities including the Basrah 

Children’s Hospital. Construction management was taken over by the U.S. Army 

Corps of Engineers (USACE). USACE says that completion of the hospital is now 

scheduled for mid-2008 with a planned opening of early 2009. 

Baghdad Police College (SIGIR Inspections PA 06–078 and 06–079.2 issued January 

29, 2007) 

USACE awarded two task orders totaling $72.2 million to Parsons, Inc., to renovate portions and construct other portions of the Baghdad Police College. The contractor did not provide—and the government did not review—the required number 

of design drawings, USACE did not review the contractor’s daily quality control reports and it also was unaware of significant construction deficiencies at the project 

site. SIGIR identified significant construction deficiencies, such as poor plumbing installation, expansion cracks, problems with the quality of the concrete, exposed 

rebar, and poor brickwork. Also, the construction and equipment installation were 

performed at a low level of workmanship by the contractor and did not comply with 

the international standards required in the contract. In addition, SIGIR found that 

the completed barracks buildings had significant plumbing failures and there were 

massive expansion cracks on the interior and exterior of the buildings that will 

leave the Iraqis with continual maintenance issues. 

Finally, in an effort to complete the project, which was experiencing significant 

cost overruns and schedule slippages, 24 items were removed from the scope of work 

under the contract. During this inspection, SIGIR inspectors found indications of potential fraud and referred these matters to SIGIR Investigations for appropriate action. 

On February 25, 2008, the SIGIR inspections staff initiated a follow-up assessment to determine the current status of the Baghdad Police College. During my recent trip to Iraq, I and my inspection team visited the Baghdad Police College as 

part of the new assessment. We found that, in addition to ongoing efforts to correct 

previous deficiencies (noted in our January 2007 report), the Multinational Security 

Transition Command—Iraq (MNSTC–I) is undertaking significant additional construction work. MNSTC–I estimates that current repair work will amount to $9 million and new construction contracts will amount to $42 million. Additional contracts 

to further expand training capabilities may add another $24 million to costs. The 

quality of the repair and construction work we observed on the initial return to the 

Baghdad Police College was decidedly better than the work that we previously reported on. 

DynCorp International Task Order for the Iraqi Police Training Program Support 

(SIGIR Audit 06–029 issued January 30, 2007) 

Under this task order issued in June 2004, the Department of State’s Bureau for 

International Narcotics and Law (INL) contracted with DynCorp International for 

training services for international police liaison officers, training support equipment, 

and construction of a residential camp on the Adnan Palace grounds in Baghdad to 

house training personnel. The contract value was $188.7 million. Poor contract oversight resulted in millions of dollars being put at risk, and inadequate accounting of 

property acquired under the contract. Between July 2004 and June 2006, the Department of State paid about $43.8 million for manufacturing and temporary storage of a residential camp, including $4.2 million for unauthorized work associated 

with the camp. As of October 2007, INL has reached agreement for use of all the 
40 

trailers for either the Embassy or a camp to be established at the Baghdad International Airport. In addition, the Department of State may have spent another 

$36.4 million for weapons and equipment, including armored vehicles, body armor, 

and communications equipment that cannot be accounted for. 

Relief and Reconstruction Funded Work at the Mosul Dam (SIGIR Inspection PA 07– 

105 issued October 29, 2007) 

The United States Army Corps of Engineers selected CH2Mhill/Parsons as the 

Sector Project and Contracting Office Contractor. It was responsible for engineering 

analysis and technical consulting, requirements management, quality assurance, 

contract administration, procurement, and logistics support. 21 contracts valued at 

$27 million were let to foreign companies. The SIGIR inspection found numerous 

problems at the site. There were no design drawings and specifications for large 

silos for holding concrete or for the construction of a grout-mixing plant. In addition, 

the foundation bolts of the stationary silos were so poorly installed that in 43 of 144 

cases (30 percent), there were few, if any, bolt threads for the nuts to twist on. The 

government’s quality assurance program did not adequately ensure correct delivery 

and construction of materials and equipment. 

Further, many contractor invoices lacked supporting details for materials and 

equipment claimed. For example, one contractor’s invoice claimed the delivery of 4 

contract-specified submersible pumps with 54-m3/hour and 20-meter lift capability, 

but the pumps actually delivered had only 36-m3/hour and 17.5-meter lift capability. 

In addition, the contractor delivered two 30-m3/hour concrete mixing plants instead 

of the two 30-m3/hour grout mixing plants specifically required. 

Contract file documentation showed that the contracting officer attempted to modify the delivered concrete mixing plants into grout mixing plants at the expense of 

the U.S. government, instead of enforcing the Federal Acquisition Regulation clause 

in the contract that requires the contractor to replace or repair them at no increase 

in price. Approximately $19.4 million worth of equipment and materials delivered to the 

Mosul Dam for the implementation of the grouting operations did not provide benefit to the Ministry of Water Resources and may have been wasted. During this inspection, SIGIR found indications of potential fraud and referred these matters to 

SIGIR investigations. 

Department of State, Bureau of International Narcotics and Law Enforcement Affairs (INL), Management of DynCorp International, LLC, Contract for the Iraqi 

Police Training Program (SIGIR Audit 07–016 issued October 23, 2007) 

INL awarded a contract to DynCorp International in February 2004, to provide 

housing, food, security, facilities, training support systems, and a cadre of law enforcement personnel to support the Iraqi civilian police-training program. As of August 23, 2007, INL had obligated about $1.4 billion and paid about $1.2 billion. 

INL’s prior lack of management and financial controls created an environment vulnerable to waste and fraud and a situation whereby INL does not know specifically 

what it received for most of the $1.2 billion in expenditures. Although training has 

been conducted and equipment provided under the contract, INL officials report that 

(1) invoices and supporting documents submitted by DynCorp were in disarray, but 

are being organized; (2) INL had not validated the accuracy of the invoices it received prior to October 2006; INL personnel in Iraq and in Washington, D.C. are 

in the process of validating past invoices; and (4) INL lacks confidence that Department of State accounting records accurately capture the purpose for most disbursement. INL had taken action and continues to take action to improve its contract 

management in general and its management of the DynCorp contract in particular. 

According to INL officials, it will take three to five years to complete a 100 percent 

review and reconciliation of the invoices and a validation of the property records. 

To date, SIGIR’s reviews of DynCorp contracts with INL have resulted in about $4.1 

million in potential savings to the U.S. government. SIGIR plans to follow up its 

work on this contract later this year. 

Outcome, Cost, and Oversight of Iraq Reconstruction Contract W914NS–04-D–0006 

(SIGIR Audit 08–010 issued January 28, 2008) 

In March 2004, USACE issued a contract to Parsons, Inc., with a ceiling price of $500 million to repair, renovate, or construct Iraqi ministry buildings and hospitals 

and to construct primary healthcare facilities. Of 11 task orders issued, only 3 were 

completed. The other 8 task orders were terminated for the convenience of the government with the work at most of the sites only partially completed. The projects 

were between 78 and 98 percent complete at the time. 

USACE terminated these contracts because Parsons had poor control of its subcontractors, poorly managed and supervised the projects, and failed to control its 
41 

costs. Parsons made infrequent trips to the project sites and as a result there was 

an overall lack of knowledge regarding conditions at the sites and in reporting construction progress. On the government side, SIGIR observed numerous management 

weaknesses, including high turnover of personnel, contracting office personnel with 

limited contact experience, a failure to enforce contract requirements for monthly 

cost reports, and a failure to review contractor invoices before payment to assure 

that the work was performed. 

U.S. Agency for International Development’s (USAID) Efforts to Implement a Financial-Management Information System in Iraq (SIGIR Audit 08–007 issued January 25, 2008) 

In 2003, USAID contracted with BearingPoint to develop and implement an Iraqi 

financial management information system. By October 2007, the system, which had 

achieved limited functionality, was shut down due to security issues and a lack of 

support by the Government of Iraq. At that point about $26 million had been expended for the system under broad-based contracts that included numerous other 

tasks related to economic and financial reforms for Iraq. Although deteriorating security conditions and competing demands for funds under the contracts no doubt adversely impacted the system’s development, there was also a lack of clear direction 

based on user requirements. Neither the contracts nor BearingPoint’s work plans 

provided that direction. As a result, information was not available to clearly assess 

progress on the system in relation to available benchmarks, making it difficult for 

USAID to assess BearingPoint’s performance. In mid-January 2008, the Iraqi Minister of Finance and Acting Mission Director at USAID signed a Memorandum of 

Understanding to restart the system. 

THE CHALLENGE IN QUANTIFYING WASTE

I am often asked: ‘‘What is the total amount that has been wasted in the U.S. 

reconstruction effort in Iraq?’’ To answer the total waste question, SIGIR would 

have to audit and inspect many more programs, projects, and contracts than we are 

able. I have 22 auditors in Iraq, 6 inspectors, and 5 investigative staff. Thus, our 

oversight targets are necessarily judgmentally selective, developed through strategic 

planning that aims to provide the widest review possible. The foregoing litany of 

oversight reporting illustrates the scope of issues arising from our reviews of Iraq 

reconstruction contracts. This variety makes it impossible to calculate now what the 

precise total waste figure might be. But our collection of audits and inspections provide an episodic story of waste, as we have defined it with the GAO (see definition 

at Appendix I). 

One episode of waste is evidenced by our audit of the Iraq Financial Management 

System. The system is not being used and it does not appear that the GOI wants 

to use it. Thus, if the system ultimately falls into permanent disuse, then the entire 

U.S. investment, amounting to tens of millions of dollars, could be counted as waste. 

Other contracts we reviewed have uncovered decisions to reduce, descope, or terminate work because of cost overruns, changing needs, or security conditions. While 

some of these causes may be unavoidable others entail factors that point to waste. 

Despite these difficulties, I have directed my auditing team to continue to identify 

waste to the extent practical. We intend to do that principally through the forensic 

audit process. The bottom line is that our reporting demonstrates that waste—rather than fraud—has been the chief problem in the Iraq reconstruction program. But 

both the waste and the fraud issues could pale in comparison to the problem of ensuring that the GOI sustains the programs and projects funded by U.S. taxpayer 

dollars. 

GOVERNMENT OF IRAQ (GOI) ACCEPTANCE AND SUSTAINMENT OF U.S.-FUNDED

INFRASTRUCTURE CRUCIAL TO ENSURING U.S. ASSISTANCE IS NOT WASTED

SIGIR audits have revealed that the U.S. investment is vulnerable to additional 

waste if construction projects are not properly maintained. To realize the maximum 

benefit of reconstruction investments, the assets must be effectively maintained and 

operated. However, the U.S. government and the GOI have yet to implement effective programs and plans to ensure proper asset transfer and maintenance. Planning 

for the effective management of these assets, from small health clinics to complex 

electrical generation plants, is critical for the economic and political recovery of Iraq 

and the security of U.S. interests in Iraq. 

SIGIR oversight has identified deficiencies related to the transfer of U.S. funded 

assets to the control of the GOI. Our audits and inspections identified that the U.S. 

and Iraqi governments need to improve the asset transfer process, and the GOI 

must address its shortfalls in sustaining U.S. funded projects to ensure that recon-
42 

3GRD–PCO Management of the Transfer of IRRF-funded Assets to the Iraqi Government, (SIGIR 05–028, January 24, 2006); Multi-National Security Transition Command—Iraq Management of the Transfer of Iraq Relief and Reconstruction Fund Projects to the Iraqi Government, (SIGIR 06–006, April 29, 2006); U.S. Agency for International Development Management of the 

Transfer of Iraq Relief and Reconstruction Fund Projects to the Iraqi Government, (SIGIR 06– 

007, April 29, 2006); Transition of Iraq Relief and Reconstruction Fund Projects to the Iraqi Government, (SIGIR 06–017, July 28, 2006); Transfering Iraq Relief and Reconstruction Fund Capital Projects to the Government of Iraq, (SIGIR–07–004, July 25, 2007). 4 However, the number of poorly sustained sites may be larger because several sites could not 

be visited due to security concerns. As a result, the assessment team relied upon a review of 

the contract and photos taken at the time the projects were completed. Thus, actual sustainment 

is not known. 

struction funds are not wasted. Overall, SIGIR determined that the inability of U.S. 

agencies to agree on one common asset transfer process, compounded by reluctance 

from Iraqi government officials at the national level to formally accept projects, has 

hindered the effective turnover of U.S. funded reconstruction projects. 

U.S. TRANSFER PROCESS NEEDS IMPROVEMENT

SIGIR has issued five reports 3 on the transfer process, and we are currently 

working on a sixth. As explained in our July 2007 report, the asset transfer process 

is essential to both the United States and Iraq for two main reasons. First, it allows 

the GOI to recognize its ownership of the project. Asset recognition is the point at 

which the GOI officially agree that the project is complete, that all necessary 

project-specific documentation is in place, and that the U.S. government has provided the necessary training and orientation to the local Iraqi staff that will be responsible to manage, operate and maintain the new or refurbished facility. Second, 

it validates that the GOI is now responsible for project operation and maintenance 

and capital replacement. A formalized, unified asset transfer process allows the GOI 

to plan for and fund the operations and maintenance of U.S. funded construction 

projects. 

SIGIR’s audits have made recommendations to USACE, MNSTC–I, and USAID 

to complete, in coordination with the asset transfer focal point organization in the 

Embassy, the development of a common policy facilitating the transfer of competed 

projects to the GOI. SIGIR follow up reviews recommended that the Embassy develop a single uniform process for asset recognition and transfer for all agencies. In 

July 2007, SIGIR again assessed the progress and recommended that the U.S. Ambassador to Iraq provide senior level support to finalize a Memorandum of Understanding (MOU) between the United States and Iraq on asset transfer. 

SIGIR is currently in the process of updating our previous asset transfer reports 

and we are seeing some improvements. Since we began our reviews of asset transfer, SIGIR has been consistent in emphasizing the need to standardize the process 

for transferring assets to the GOI. Most recently, the Embassy, specifically the 

Asset Transfer and Recognition Working Group, has drafted an Interagency Agreement to formalize the asset transfer process among all U.S. partners. However, our 

preliminary evaluation indicates that the agreement still allows each agency to use 

its own procedures, and covers only projects funded by the Iraq Relief and Reconstruction Fund (IRRF). We will be following up with the Embassy on these issues 

for further clarification. 

SIGIR recommended last July that the Embassy execute an Asset Transfer MOU 

or Bilateral Agreement with the GOI. The working group drafted an MOU with the 

aim of achieving a consensus on each side’s intentions with respect to the transfer 

of assets. Mission officials recently informed us that, although the MOU was delivered to the Deputy Prime Minister in November 2007, there has been no progress 

by the GOI regarding the pending MOU. Moreover, our current work suggests that 

the MOU, even if signed, may have only limited impact: it again relates only to 

IRRF, and the MOU stipulates that all agreements in the MOU are nonbinding. 

Embassy officials informed us that the most important aspect of the MOU is in the 

naming of an Iraqi point of contact to serve as a central point of contract within 

the Deputy Prime Minister’s office on issues relating to asset transfer. 

SIGIR INSPECTIONS AND AUDITS INDICATE PROBLEMS IN GOI SUSTAINMENT OF U.S. 

FUNDED PROJECTS

SIGIR audits and inspections have demonstrated that the GOI has had some successes but has experienced notable difficulties in sustaining transferred U.S. assets. 

To illustrate, SIGIR’s Inspections staff conducted 24 sustainment assessments and 

found that 12 had significant deficiencies.4 SIGIR’s inspections indicate that some 

projects now under Iraqi control are not being adequately maintained, posing 
43 

threats to the condition and durability of the facilities and to the health and safety 

of those who work at them. Comprehensive Operations and Maintenance programs 

and effective training are key to improving prospects for sustainment. 

Here are examples of what our inspections and audits found: 

—Erbil Maternity and Pediatric Hospital, Erbil, Iraq (SIGIR Inspection PA–06– 

94, April 19, 2007).—In January 2007 SIGIR inspectors assessed the condition of this $6.8 million project that had been turned over to the GOI. At that time, 

SIGIR determined that long-term sustainability and serviceability of hospital 

equipment had been reduced because of the absence of effective operations and 

maintenance and parts-management programs. To illustrate, the hospital sewer 

system has occasionally clogged, causing wastewater to back up through floor 

drains into some sections of the hospital where patients receive care. This may 

have occurred because of the improper disposal of medical waste materials. 

SIGIR observed large quantities of medical waste in the sewer system’s traps, 

manholes, and septic tank. Some mechanical equipment installed during renovation was inoperable either because operations and maintenance practices 

had been ineffective or because hospital workers chose not to use the new equipment. For example, SIGIR observed that a new incinerator installed during renovation was not used because the people initially trained to operate the incinerator were no longer employed at the hospital. Also a sophisticated new oxygen 

generator and distribution system was used only as a back-up system while hospital staff continued to use oxygen tanks that were not properly protected and 

secured. One of three new boilers was not operating, possibly because of a fire, 

and it was being used for parts. Critical water purification equipment did not 

function because weekly maintenance checks to observe and drain moisture 

traps were not performed. 

SIGIR recommended that U.S. reconstruction officials engage with the appropriate Iraqi government officials to ensure sustainment of this U.S. taxpayer investment. They responded that our recommendations exceeded the contract requirements and their purview to address. —Recruiting, Babel Volunteer Center, Hilla, Iraq (SIGIR Inspection PA–06–089, 

April 17, 2007).—In January 2007, we inspected the Al Hilla (Hilla) Recruit- ment and Training Center which cost $1.8 million to repair. Our inspectors 

identified numerous problems in its maintenance. For example, two bathroom 

floors had buckled, which caused damage to concrete and tiles. Because the tenants never evacuated the sewage holding tank, effluent backed up in the drain 

lines and leaked into the ground beneath the floors. The problem would have 

been mitigated if the sewage holding tank had been properly evacuated; however, force protection barriers and internal walls prevented pumping trucks 

from accessing the tanks. 

Wiring appeared to have short-circuited and ignited an electrical box, which 

has been replaced. The SIGIR inspection noted that bathrooms were not clean, 

there were no beds for the Iraqi soldiers stationed at the facility, and electrical 

wiring had been improperly pieced-together to either repair burned-out circuits 

or to add lighting. The wastewater holding tank was full and channeling raw 

sewage onto the adjacent property, which eventually drains into the Hilla River. 

At the time of the inspection, SIGIR determined that if maintenance continued 

at its current level, the useful life of the facility would be significantly shortened and health hazards would persist. Insufficient funding was identified as 

the cause of inadequate maintenance. 

—West Baghdad International Airport Special Forces Barracks, Baghdad, Iraq 

(SIGIR Inspection PA–07–100, April 24, 2007).—The Special Forces Barracks 

was a $5.2 million reconstruction project which SIGIR inspected in March 2007. 

The four 150 kilovolt (kV) electrical generators installed under the contract, valued at approximately $50,000 each, were not operational. SIGIR could not determine when or why the generators became inoperative, but observed that batteries were missing and the levels of engine oil were inadequate. Some bathroom floor drains in company barracks were plugged or drained very slowly, 

which caused flooding in the bathrooms. The roofs of at least three barracks 

leaked in several places where water accumulated around drain basins. 

In this case, U.S. reconstruction managers were responsive to SIGIR recommendations and indicated they would work with the Iraqi government to develop the capacity necessary to sustain projects constructed with U.S. funds. 

—Doura Power Station, Units 5 and 6, Baghdad, Iraq (SIGIR Inspection PA–07– 

103, July 18, 2007).—In June 2007 SIGIR inspected the Doura Power Station 

which cost $90.8 million to construct and an additional $80 million to provide 

for operations and maintenance and training for the Ministry of Electricity. 

SIGIR determined that sustainable operations at full capacity after start-up of 
44 

5 Commander’s Emergency Response Program in Iraq Funds Many Large Scale Projects, 

(SIGIR–08–006, January 25, 2008); Management of the Commander’s Emergency Response Program in Iraq for Fiscal Year 2006 (SIGIR–07–006, April 26, 2007); Management of the Commander’s Emergency Response Program for Fiscal Year 2005 (SIGIR–05–025, January 23, 2006). 

Units 5 and 6 could not be reasonably assured unless the Ministry of Electricity’s operations and maintenance practices improved. To illustrate, SIGIR 

observed that the ministry improperly operated or insufficiently maintained 

equipment in environments where equipment failure was likely. For example, 

in April 2007, dust and oil film accumulated in critical parts, which caused the 

complete failure of Unit 5. Bypassing and intentionally overriding automatic 

controls caused a system imbalance and catastrophic failure of power plant 

equipment. Electricity was being illegally tapped directly from the power plant 

using ad hoc cable taps throughout the facility. SIGIR assessed, however, that 

a planned contract for operations and maintenance and to implement a local 

training program should result in the prevention of future similar type deficiencies. We will be assessing progress in the future. 

—Iraqi C–130 Base, Baghdad, Iraq (SIGIR Inspection PA–07–099, July 24, 

2007).—This $30.8 million air base was inspected by SIGIR in May 2007. During the inspection, SIGIR observed that numerous generators were not functional. Moreover, SIGIR observed flaws in the sewage system. For example, the 

nearby storm-water collection pond and connected drainage ditch contained 

sewage. The holding tank design allows sewage removal only by pump. Therefore, it appeared that the waste-removal truck pumped the sewage from the collection tanks into the drainage ditch. SIGIR noted a number of documented 

malfunctions of the reverse osmosis (RO) system. Regular filter changes had not 

been performed, chlorine dosing did not meet requirements, and the RO system 

pressures were not within the recommended range. Additionally, filters, antiscaling, testing kits, and other various maintenance items were not available 

on site. 

SIGIR inspectors worked with MNSTC–I management during this project and 

identified that a master plan was under development that would address the 

problems identified. 

SIGIR’s audits on Commander’s Emergency Response Program (CERP) projects 

have identified further sustainment problems. SIGIR reviewed the CERP program 

in 2006, 2007, and 2008.5 Overall, SIGIR found that despite some improvements, 

continuing challenges in planning for the transition of completed projects to the 

Iraqi people and in fostering long term sustainment of completed projects. We also 

found instances of lack of coordination between the CERP program and programs 

managed by the Provincial Reconstruction Teams. While PRT programs tended to 

try to induce Iraqis to devise and solve their own problems, CERP programs tended 

to quickly ‘‘fix’’ problems identified by local commanders. Occasionally, the two programs were acting at cross-purposes. In addition, the CERP program has gotten involved in much larger projects over time, such as complex water projects, and its 

managers lack many of the necessary resources to carry such projects forward. 

RESULTS OF SIGIR INVESTIGATIONS

In our U.S. office, SIGIR investigators have historically worked from one central 

location in Arlington, Virginia; however, we recently expanded our investigative 

presence in the United States by opening offices in Florida, Texas, and Pennsylvania, with an additional office soon to be opened in Ohio. The agents assigned to 

these offices are conducting SIGIR’s investigative work in their areas—where much 

of the records and witnesses are located, as well as providing SIGIR’s investigative 

expertise to local task forces that are investigating allegations of fraud in U.S. funded programs and operations in Iraq. 

Pursuing allegations of criminal fraud in Iraq has been a high priority for me ever 

since my appointment as Inspector General four years ago, and I remain committed 

to ensuring SIGIR continues its rigorous investigation program. SIGIR’s robust 

oversight efforts to date have helped deter fraud, yet much work remains to be done. 

SIGIR’s investigative work to date has resulted in the following convictions and 

indictments—noting that criminal indictments are only charges and not evidence of 

guilt and a defendant is presumed innocent until and unless proven guilty: 

—On February 2, 2006, Robert Stein, the former CPA Comptroller and Funding 

Officer in Hilla, Iraq, pleaded guilty to conspiracy, bribery, money laundering, 

possession of machine guns, and being a felon in possession of a firearm. Stein 

was the primary co-conspirator with Philip Bloom funneling numerous fraudulent contract payments to Bloom in exchange for kickbacks and bribes. Stein 
45 

also admitted to facilitating the purchase and possession of at least 50 weapons, 

including machine guns, gun barrel silencers and grenade launchers with misappropriated CPA funds. On January 29, 2007, Stein was sentenced to nine 

years in prison and three years of supervised release. Additionally, he was ordered to pay $3.6 million in restitution and forfeit $3.6 million in assets. 

—On March 9, 2006, Philip Bloom, a U.S. citizen, who resided in Romania and 

Iraq, pleaded guilty to conspiracy, bribery, and money laundering in connection 

with a scheme to defraud the CPA. Bloom admitted that from December 2003 

through December 2005, he, along with Robert Stein and numerous public officials, including several high-ranking U.S. Army officers, conspired to rig bids 

for federally-funded contracts awarded by the CPA-South Central Region (CPA– 

SC) so that all of the contracts were awarded to Bloom. The total value of the 

contracts awarded to Bloom exceeded $8.6 million. Bloom admitted paying Stein 

and other public officials over $2 million from proceeds of the fraudulently 

awarded contracts and an additional at least $2 million in stolen money from 

the CPA. On February 16, 2007, Bloom was sentenced to 46 months in prison 

and two years of supervised release. Additionally, he was ordered to pay $3.6 

million in restitution and forfeit $3.6 million in assets. 

—On August 4, 2006, Faheem Mousa Salam, an employee of a government contractor in Iraq, pleaded guilty to a violation of the Foreign Corrupt Practices 

Act for offering a bribe to an Iraqi police official. Salam is a naturalized U.S. 

citizen employed by Titan Corporation and was living in Baghdad, Iraq. According to court filings, Salam offered a senior Iraqi police officer $60,000 for the 

official’s assistance with facilitating the purchase by a police training organization of approximately 1,000 armored vests and a sophisticated map printer for 

approximately $1 million. On February 2, 2007, Salam was sentenced to three 

years in prison, two years of supervised release and 250 hours of community 

service. 

—On August 25, 2006, Bruce D. Hopfengardner, a Lieutenant Colonel in the 

United States Army Reserve, pleaded guilty to conspiracy to commit wire fraud 

and money laundering in connection with the Bloom-Stein scheme. In his guilty 

plea, Hopfengardner admitted that while serving as a special advisor to the 

CPA–SC, he used his official position to steer contracts to Philip H. Bloom, a 

U.S. citizen who owned and operated several companies in Iraq and Romania. 

In return, Bloom provided Hopfengardner with various items of value, including 

$144,500 in cash, over $70,000 worth of vehicles, a $2,000 computer and a 

$6,000 watch. Hopfengardner and his coconspirators laundered over $300,000 

through various bank accounts in Iraq, Kuwait, Switzerland and the United 

States. Finally, Hopfengardner admitted that he stole $120,000 of funds designated for use in the reconstruction of Iraq from the CPA–SC and that he 

smuggled the stolen currency into the United States aboard commercial and 

military aircraft. On June 25, 2007, Hopfengardner was sentenced to 21 months 

in prison followed by 3 years supervised release, and ordered to forfeit $144,500. 

—On February 7, 2007, U.S. Army Colonel Curtis G. Whiteford, U.S. Army Lt. 

Colonels Debra M. Harrison and Michael B. Wheeler and civilians Michael Morris and William Driver were indicted for various crimes related to the BloomStein scheme in Hilla, Iraq. Whiteford, who was Stein’s deputy in the comptroller’s office, was charged with one count of conspiracy, one count of bribery and 

11 counts of honest services wire fraud. Harrison, at one time the acting Comptroller at CPA–SC who oversaw the expenditure of CPA–SC funds for reconstruction projects, was charged with one count of conspiracy, one count of bribery, 11 counts of honest services wire fraud, four counts of interstate transport 

of stolen property, one count of bulk cash smuggling, four counts of money laundering and one count of preparing a false tax form. Wheeler, an advisor for CPA 

projects for the reconstruction of Iraq, was charged with one count of conspiracy, one count of bribery, 11 counts of honest services wire fraud, one count 

of interstate transport of stolen property and one count of bulk cash smuggling. 

Morris, who worked for Bloom, was charged with one count of conspiracy and 

11 counts of wire fraud. Driver, who is Harrison’s husband, was indicted on four 

counts of money laundering. The trial for Whiteford, Morris and Wheeler starts 

on March 11, 2008. The trial for Harrison and Driver has been postponed and 

a date has not yet been scheduled. 

—On February 16, 2007, Steven Merkes, a former U.S. Air Force Master Sergeant 

working for the Department of Defense in Germany, pleaded guilty in U.S. District Court for accepting illegal bribes from Phillip Bloom. Merkes accepted the 

bribes in exchange for furnishing Bloom with sensitive contract information 

prior to awarding contracts to Bloom. Merkes was sentenced on February 16, 
46 

6Testimony of Stuart W. Bowen, Jr., Special Inspector General for Iraq Reconstruction, ‘‘Assessing the State of Iraqi Corruption’’, House Committee on Oversight and Government Reform. 

2007, to 12 months and one day in prison and ordered to pay restitution of 

$24,000. 

—On July 23, 2007, U.S. Army Major John Cockerham, his wife Melissa 

Cockerham, and his sister Carolyn Blake, were arrested on a criminal complaint, and on August 22, 2007, they were charged with conspiracy to defraud 

the United States and to commit bribery, conspiracy to obstruct justice, and a 

money laundering conspiracy. Major Cockerham was also charged with three 

counts of bribery. According to the indictment, from late June 2004 through late 

December 2005, Major Cockerham was deployed to Camp Arifjan, Kuwait, serving as a contracting officer responsible for soliciting and reviewing bids for Department of Defense (DOD) contracts in support of operations in the Middle 

East, including Operation Iraqi Freedom. The contracts were for various goods 

and services to DOD, including bottled water destined for soldiers serving in 

Kuwait and Iraq. Major Cockerham, Melissa Cockerham, Blake, an unidentified 

co-conspirator, and others allegedly accepted millions of dollars in bribe payments on John Cockerhams’ behalf, in return for his awarding co-conspirator 

contractors and others DOD contracts, including those for bottled water, 

through a rigged bidding process. Cockerham allegedly guaranteed that a contractor would receive a contract in return for the payment of money. Cash 

bribes paid to the defendants and other co-conspirators allegedly totaled $9.6 

million. The indictment also alleges that Melissa Cockerham and Carolyn Blake 

received millions of dollars from these contractors, and that the conspirators deposited the money in bank accounts and safe deposit boxes in Kuwait and 

Dubai. 

—On November 15, 2007, Terry Hall was arrested on a criminal complaint charging bribery. Subsequently, on November 20, 2007, a federal grand jury indicted 

Hall for soliciting bribes. The indictment alleged that Hall paid money and 

other things of value to a U.S. military contracting officer to influence the actions of the officer, including the award of more than $20 million in military 

contracts. Hall operated companies that had contracts with the U.S. military in 

Kuwait, including Freedom Consulting and Catering Co., U.S. Eagles Services 

Corp., and Total Government Allegiance. According to the indictment, those 

companies received more than $20 million worth of military contracts for providing, among other things, bottled water to the U.S. military in Kuwait. 

ANTICORRUPTION: U.S. PROGRAMS AND IRAQI EFFORTS

In our January 2008 Quarterly Report to the Congress, we noted that the prevailing view among Iraqis about corruption in their country is not an optimistic one. 

Iraqis recognize the complex pattern woven from Iraq’s long list of challenges—from 

its limited personnel and government capacity, to the fractious nature of politics, 

and all of those persisting in a still dangerous security environment. Corruption in 

Iraq, and for that matter in any country in transition, is not a problem that can 

be solved by simply creating a commission or by passing a law. It will take many 

long years of sustained effort, combined with political will, before the people of Iraq 

are assured that they are the beneficiaries of the oil riches and the full economic 

potential of their country. 

Today, corruption remains endemic in Iraq. Unless checked, it is doubtful that 

many U.S. funded reconstruction efforts will be able to achieve their intended purpose. Furthermore, as SIGIR pointed out in its most recent Quarterly Report to 

Congress, Iraq is facing a windfall in potential oil revenues in 2008—over $50 billion that is highly vulnerable to corruption. 

THE NATURE OF CORRUPTION

I testified in October 2007 6 that corruption in Iraq is a second insurgency because 

it directly harms the country’s economic viability. In very real terms, corruption stymies the construction and maintenance of Iraq’s infrastructure, deprives people of 

goods and services, reduces confidence in public institutions, and potentially aids insurgent groups reportedly funded by graft derived from oil smuggling or embezzlement. Corruption discourages hope, devalues America’s contributions to Iraq, and 

strengthens the appeal of our opponents. 

Surveys of Iraq’s citizens continue to reveal a common belief that corruption is 

pervasive within their national government. Transparency International conducts 

annual surveys within countries on individuals’ perceptions of the degree of public 

sector corruption. Their scores range from 10 for highly clean to 0 for highly corrupt. 
47 

7 U.S. Anticorruption Efforts in Iraq: Sustained Management Commitment is a Key to Success, 

(SIGIR–08–008, January 24, 2008). 8SIGIR 07–015T October 4, 2007 ‘‘Assessing the State of Iraqi Corruption’’ Testimony presented to the House Oversight and Government Reform Committee. 

Out of 180 countries, Transparency International ranks Iraq at 178 with a score of 

1.5. This data, while not conclusive, provides a grim independent assessment of corruption in Iraq. 

Effective anticorruption programs must include a broad range of approaches to 

address the issue. Activities to address corruption may include establishing specific 

government entities which attack existing corruption. In Iraq, this includes the 

Commission on Integrity, which is the primary agency charged with investigating 

accusations of official corruption and bringing alleged offenders to court. It is analogous to the FBI. The Board of Supreme Audit is Iraq’s analogue to the U.S. Government Accountability Office, and Iraq’s system of Inspectors General parallels U.S. 

agency IGs. Additionally, U.S. efforts address the broad spectrum of conditions facilitating corruption by identifying deficiencies in investigative techniques and improving local governance capacity. 

U.S. EMBASSY PROGRESS IN SUSTAINING HIGH LEVEL LEADERSHIP AND COMPREHENSIVE

APPROACH

In January of this year, SIGIR issued its fourth review on U.S. support to Iraq’s 

anticorruption efforts. SIGIR found that the U.S. Embassy in Iraq has taken action 

or has planned steps to address SIGIR’s previous concerns. If effectively implemented, these actions would address all recommendations contained in earlier 

SIGIR reports.7 Most notably, the Ambassador has identified actions to improve the 

oversight and coordination of the U.S. anticorruption effort and in December 2007 

proposed to the Secretary of State a reorganization of personnel and assets to elevate the importance of anticorruption programs. 

The Embassy has recognized the need to design and implement a comprehensive, 

integrated anticorruption strategy to assist the GOI and the Iraqi people in combating the corruption permeating government agencies, private business, and other 

institutions of Iraqi society. SIGIR supports these actions but notes that past efforts 

to revitalize and coordinate U.S. anticorruption efforts have been largely ineffective 

and suffered from a lack of management follow through. The success of these new 

efforts will, therefore, depend in large part on sustained management commitment, 

particularly in terms of day-to-day leadership and senior-management oversight. 

At this time, preliminary observations from our ongoing work indicate that the 

Embassy is moving forward on its December plan, albeit slowly. To illustrate, the 

new Anticorruption Coordinator’s Office has been established and initially staffed 

with six positions. An Acting Anticorruption Coordinator has been temporarily assigned until the position can be filled by a senior level U.S. government official. The 

State Department informed us that a preliminary selection has been made for this 

is position with a formal announcement imminent. 

The Anticorruption Working Group has convened several times and seven subgroups have been established in order to better manage/achieve specific goals and 

objectives. The sub-groups have been assigned specific areas to coordinate such as: 

(1) implementing and monitoring anticorruption reforms, (2) establishing standards 

to evaluate U.S. government anticorruption assistance, and (3) maintaining and accurate inventory of U.S. anticorruption assistance programs to prevent duplication 

of efforts among U.S. civilian and military entities. Several sub-groups have met 

and actions are underway in several areas, many of which stem from recommendations in prior SIGIR reports. 

GOVERNMENT OF IRAQ ANTICORRUPTION EFFORTS: CHALLENGES AND PROGRESS

I would like to address some of the challenges that I raised in my October 4, 2007 

testimony on corruption in Iraq 8 and the steps the GOI is taking to fight this corruption. 

Security 

Security concerns throughout Iraq severely limit the transparency of government 

although as SIGIR as reported in our January 2008 quarterly report, violence has 

decreased and there is continuing progress in the capacity and size of the Iraqi Security Forces. Nevertheless, violence, or threats of violence as well as political influence over many of Iraq’s public institutions remain. To demonstrate the impact of 

such conditions, I previously testified that Commission on Integrity investigators 

have been forced to reveal the details of their cases to the ministries and officials 
48 

they were investigating, placing witnesses and anticorruption officials in danger. At 

least 39 employees of the Commission have been murdered. Judges and judicial investigators have also been intimidated or killed. 

Political Leadership and the Rule of Law 

The absence of ability within the Iraqi judicial system to prosecute corruption 

cases effectively and fairly is a major obstacle to tackling the pervasive corruption 

in the country. These weaknesses stem from many factors: from the shortage of reliable judges, courtrooms and detention facilities, to political interference and the resulting culture of impunity. Article 136(b) of Iraq’s Criminal Code is a notorious 

structural obstacle impeding Iraq’s anticorruption efforts. This provision allows any 

Iraqi minister to grant, by fiat, complete immunity from prosecution to any ministry 

employee accused of wrongdoing. 

In addition, an order issued by the Prime Minister in the spring of 2007 requires 

Iraqi law enforcement authorities to obtain permission from the Prime Minister’s office before investigating current or former ministers. Although an Embassy official 

informed us that the head of the Commission on Integrity stated that the 2007 

order had not impeded his recent activities, we continue to believe that these actions 

are incompatible with a well-functioning anti-corruption program. 

Capacity 

Iraq’s anticorruption agencies, as well as government ministries charged with 

managing Iraq’s financial resources and providing necessary services to its people, 

face significant capacity and resource shortfalls. Enormous shortfalls exist in the 

areas of investigations, audit and management. Moreover, our review of efforts to 

implement a financial management information system discussed earlier in this testimony demonstrated the vulnerabilities of current conditions. In 2003, the Coalition 

Provisional Authority and the International Monetary Fund conducted assessments 

that found that the GOI financial structure provided limited ability to monitor Iraqi 

ministerial budgets and expenditures, leaving the ministries vulnerable to fraud, 

waste and abuse. 

Government of Iraq Efforts 

SIGIR continues to monitor GOI anticorruption efforts. The first Anticorruption 

Conference was held in Baghdad on January 3, 2008. Organized by Deputy Prime 

Minister Baram Saleh, the conference announced that 18 initiatives, recommended 

by the Prime Minister, would begin as part of a National Campaign for Fighting 

Administrative Corruption. These initiatives are broad and address a wide range of 

issues. To illustrate, the plan calls for the adoption of data systems to provide transparency over public fund management and the execution of projects and plans. 

Moreover, addressing laws and regulations is an integral component of the plan; 

drafting a law on administrative corruption and review existing laws and regulations affecting money laundering are included as steps that must be taken. The 

Conference announcement also provided completion dates for each of the 18 initiatives. No later than April 1, 2008, for example, the Ministry of Foreign Affairs must 

implement the United Nation’s agreement in fighting administrative corruption 

which Iraq agreed to join. Moreover, to support its anticorruption efforts, the GOI 

has created two groups: the Joint Anticorruption Council and the Council of Representation Committee on Integrity. 

CORRUPTION EFFORTS MUST BE SUSTAINED

Just as it is critical that the Government of Iraq (GOI) develop effective 

sustainment measures for the ‘‘hard’’ construction projects, so must it develop effective sustainment plans for ‘‘soft’’ programs—corruption being foremost among them. 

Efforts to improve government processes, increase transparency, strengthen the civil 

service system, bolster training, and hold individuals accountable—are even more 

important. In the area of corruption fighting—ensuring that entities such as the 

Board of Supreme Audit remain independent, resourced and politically supported, 

are also critical. We recognize that this will not be an easy task. In Iraq, as in many 

countries in transition, corruption presents a very complex challenge. 

SIGIR LESSONS LEARNED AND RECOMMENDATIONS

In concluding, SIGIR has identified the following lessons learned that relate to 

the issues we have discussed today. 

Strategy and Planning 

Include contracting and procurement personnel in all planning stages for post conflict reconstruction operations. 
49 

9Statement of Stuart W. Bowen, Jr. before the United States Senate Committee on Homeland 

Security Subcommittees, ‘‘Improving Contracting and Government Oversight of Contractors Performing Work in Contingency Operations’’, January 24, 2008. 

Clearly define, properly allocate, and effectively communicate essential contracting and procurement roles and responsibilities to all participating agencies. 

Emphasize contracting methods that support smaller projects in the early phases 

of a contingency reconstruction effort. 

Generally avoid using sole-source and limited competition contracting actions. 

These exceptional contracting actions can be used in exceptional cases, but the emphasis must always be on full transparency in contracting and procurement. 

Policy and Process 

Establish a single set of simple contracting regulations and procedures that provide uniform direction to all contracting personnel in a contingency environment. 

Develop deployable contracting and procurement systems before mobilizing for 

post-conflict efforts and test them to ensure that they can be effectively implemented in contingency situations. 

Definitize contracts as early in the process as possible. SIGIR Audit 06–019 found 

that there was a lack of clarity regarding regulatory requirements for definitization 

of task orders issued under contracts classified as Indefinite-Delivery/Indefinite 

Quantity (ID/IQ). 

Designate a single unified contracting entity to coordinate all contracting activity 

in theater. JCC–I/A has recently been designated the coordinating agency. 

Ensure sufficient data collection and integration before developing contract or 

task order requirements. 

Avoid using expensive design-build contracts that have unclear requirements and 

are awarded on a cost-plus basis, especially for simpler projects when standard 

structures are needed in large numbers over a wide geographical area such as for 

schools and clinics. 

Use operational assessment teams and audit teams to evaluate and provide suggested improvements to post-conflict reconstruction contracting processes and systems. 

SIGIR, made the following recommendations in our Contracting Lessons Learned 

Report to improve contingency contracting: 

—Explore the creation of an enhanced Contingency Federal Acquisition Regulation (CFAR). We observed that agencies have developed agency specific regulations implementing the government-wide Federal Acquisition Regulation (FAR). 

For example, the Army notes that the Department of State, which has unique 

capabilities important to expeditionary situations, has developed FAR implementing procedures that differ from DOD’s. 

—Pursue the institutionalization of special contracting programs such as the 

CERP which we noted before have unique roles in post-conflict reconstruction. 

—Include contracting and program management staff at all phases of planning for 

contingency operations. 

—Create a deployable reserve corps of contracting personnel who are trained to 

execute rapid relief and reconstruction contracting during contingency operations. 

—Develop and implement information systems for managing contracting and procurement in contingency operations. 

—Pre-compete and pre-qualify a diverse pool of contractors with expertise in specialized reconstruction areas. 

OPTIONS FOR CONGRESS TO CONSIDER

The Senate, in S. 680, has taken a number of steps to improve post-conflict contracting.9 Moreover, the Army has initiated its own review, with the Commission 

on Army Acquisition issuing an excellent report on the subject. We generally support the Commission report’s recommendations and note that many of these recommendations are tied directly to areas of concern that SIGIR identified. We look 

forward to seeing their implementation. 

We suggest that the Congress consider requiring any civilian agencies contracting 

in a contingency environment, most notably DoS and USAID, conduct their own 

comprehensive studies of their contracting operations to identify deficiencies and 

corrective actions. Specifically, we suggest these studies address their contracting 

and program and project management requirements, the status of their efforts to 

hire, train and ensure the speedy deployment of contingency contracting staff, and 

polices and procedures to manage and oversee contracts and contractors. 
50 

10GAO Letter to Congressman Ike Skelton on behalf of GAO, and the Inspectors General of 

SIGIR, DOD–IG and DOS–IG. February 7, 2007. 

Given the critical need for coordination and collaboration, we further suggest 

these studies also address how the agencies will work with their civilian, as well 

as military, counterparts in contingency operations. In this regard, I would also suggest that specific timeframes be established for identifying contracting and contract 

management problem areas and reporting to Congress their proposed solutions, including implementation plans with identified priorities of specific tasks and completion dates. 

Lastly, I would suggest to the Committee and to other committees that have oversight of U.S. reconstruction funding in Iraq that they press the various agencies 

which come before them during the budget cycle about the agency’s own plans to 

deal with the problems we have discovered in specific and systemic terms, and in 

both the medium and short terms. 

CLOSING

Let me close by thanking you for the opportunity to testify before you today on 

these important matters. On behalf of all of my colleagues, who carry out the important mandate you have assigned SIGIR, I extend thanks for your support of our 

work by providing us the resources we need to get the job done. This completes my 

statement for the record, and I look forward to responding to your questions. 

APPENDIX I.—WHAT ARE FRAUD, WASTE AND ABUSE?

Definitions.—Fraud, waste, and abuse generally relates to the U.S. taxpayers not 

receiving the full value of government funded activities. Fraud is an illegal action 

by a government or contractor officials for personal gain. Waste represents a transgression that is less than fraud and abuse and most waste does not involve a violation of law. Rather, waste relates primarily to conditions that could result in waste 

such as mismanagement, inappropriate actions or inadequate oversight. Waste involves the taxpayers as a whole not receiving reasonable value for money in connection with any government funded activities due to an inappropriate act or omission 

by players with control over or access to government resources (e.g., executive, judicial or legislative branch employees, contractors, grantees or other recipients.) Examples of waste in the acquisitions and contracting area include the following: 

—Unreasonable, unrealistic, inadequate or frequently changing requirements. 

—Proceeding with development or production of systems without achieving an 

adequate maturity of related technologies in situations where there is no compelling national security interest to do so. 

—Failure to use competitive bidding in appropriate circumstances. 

—Over-reliance on cost-plus contracting arrangements where reasonable alternatives are available. 

—Payment of incentive and award fees in circumstances where the contractor’s 

performance, in terms of cost, schedule and quality outcomes, does not justify 

such fees. 

—Failure to engage in selected pre-contracting activities for contingent events 

(e.g., hurricanes, military conflicts). 

—Congressional directions (e.g. earmarks), and agency spending actions where 

the action would not otherwise be taken based on an objective value and risk 

assessment and considering available resources. 

Abuse of authority or position involves decisions made for personal financial gains 

or for immediate or close family member or business associate. Abuse does not necessarily involve fraud or violation of law.10

Senator LEAHY. Thank you very much. 

I have one question for all of you. But before I start, just to go 

back, General Kicklighter in your testimony you mentioned the diversion of U.S. weapons to Iraqi insurgents and your efforts to stop 

it. Are you confident today that U.S. weapons are not being diverted and used to kill and wound Americans? 

General KICKLIGHTER. Senator, I am confident that both the 

United States—the coalition forces and the Iraqi Security Forces 

have put in place procedures to prevent that—accounting for weapons down to the company level, by serial number. And we went and 

looked at a lot of the nodes and down at police stations, and compa-
51 

nies, and here’s what the estimate is—is that all of the weapons 

coming through the system today, there is a major attempt to capture those weapons, and control them by serial number, and by 

weapons card down in the police station and down to the units. 

Senator LEAHY. I’m thinking of the very large number of handguns that went unaccounted for, some even showed up in Turkey. 

General KICKLIGHTER. Yes, sir. 

Senator LEAHY. Are you confident that none of the American 

weapons today are being diverted and used against us? 

General KICKLIGHTER. Yes, sir. 

I can’t say 100 percent that, you know, that any system is 100 

percent, but I believe there is a good system in place that is getting 

better day by day, and there is not a major leakage of weapons 

going into the hands of the insurgents, or to the black market. 

Senator LEAHY. Not a major leakage? 

General KICKLIGHTER. No, sir. And, but there is a—— 

Senator LEAHY. That’s not awfully comforting. And I’m not trying 

to quibble words here, but obviously the first weapons went out 

with no adequate way of checking them. We had the problem after 

the invasion that large ammunition dumps weren’t even secured. 

If you’re a family member of one of our brave men and women 

who are over there fighting, you’d be concerned if, among the weapons they’re facing, are weapons that came from the United States. 

I think you’d agree, from your own military background, that’s 

something we should all be concerned about. 

General KICKLIGHTER. We should be extremely concerned about 

tight controls of weapons, and ammunition. Making sure they don’t 

fall into the wrong hands. 

Senator LEAHY. Let me ask this question and I’ll begin with Mr. 

Walker. Five years after we invaded Iraq, after spending $44 billion to rebuild the country, do you believe that there are effective 

controls in place today to prevent the theft and loss of U.S. taxpayer funds, and Iraqi Government funds? 

Mr. WALKER. Senator Leahy, I think things are much better 

today than they were, but they’re clearly not good enough. And I 

think there is a bigger picture question—the Iraqis have a budget 

surplus. We have a huge budget deficit. 

Senator LEAHY. I’m going to be going into that, but go ahead. 

Mr. WALKER. All right. One of the questions is, who should be 

paying? 

Senator LEAHY. Well, they have $4 billion a month in oil revenues, that’s about $50 billion a year. The President’s asking for billions more in an emergency supplemental for the Iraqi reconstruction funds—any reason why we can’t use some of that $50 billion 

a year of their oil revenues? 

Mr. WALKER. Part of the problem, Senator Leahy, is that my information I have from my very capable staff is that for the calendar 

year that ended on 2007, from January through November, the 

Iraqis had spent less than 10 percent of their budget for several of 

the major ministries. 

At the same point in time, we’re all painfully aware of what is 

happening with crude oil prices. So, irrespective of what they budget, it’s not being spent for various reasons, and, needless to say, 

revenues are going up. 
52 

Senator LEAHY. Which bothers me, because we’re told in this 

country we can’t spend money to fix our infrastructure, as bad as 

it is, we can’t spend money to have our airports run well, we can’t 

spend money to do research on cancer and Alzheimer’s and diabetes and everything else, because of the war in Iraq. It seems if we 

ask for billions of dollars more for them, at some point, they ought 

to be able to pay for some of this themselves. 

General Kicklighter, could they be doing more? And covering 

more of their own reconstruction costs than they do? 

General KICKLIGHTER. Sir, I think that they are beginning to do 

more, and I know that they’re doing more in the area of paying for 

their own military equipment. They are investing in foreign military sales now, and bringing weapons systems into the country 

that they are paying for. And I think that’s certainly the trend that 

we should be following. As time goes on, they should pick up more 

and more of the expenses of their defense. 

Senator LEAHY. Including reconstruction? 

General KICKLIGHTER. Yes, sir. 

Senator LEAHY. Mr. Bowen—first, do you believe that there are 

effective controls to prevent the theft and loss of U.S. taxpayer 

funds, and Iraqi Government funds? 

And second, should the Iraqi Government be paying more of 

these reconstruction costs? 

Mr. BOWEN. As to the first question, I agree with what Comptroller General Walker said: ‘‘The controls have gotten better.’’ It’s 

something that we’ve focused on since 2004, reporting on the challenges during CPA of the lack of controls and the need to improve. 

My biggest concern on the control front is the issues related to 

direct contracting with Iraqi firms. It’s an emphasis that the 

United States Joint Contracting Command—Iraq has pushed—I 

think, properly—forward, in order to employ more Iraqis and build 

capacity and promote capital growth. 

However, those are Iraqi firms executing projects involving U.S. 

funds, and I continue to raise questions about that. 

Senator LEAHY. During these past 5 years, has there been anyone from the Iraqi Government held accountable for the theft or 

loss of U.S. taxpayer funds? 

Mr. BOWEN. That issue has not come to the fore. My concern on 

prosecution of Iraqis is there haven’t been any, to speak of. The 

largest one—— 

Senator LEAHY. There hasn’t been any corruption, or there hasn’t 

been any prosecution? 

Mr. BOWEN. Prosecution. 

Senator LEAHY. I wanted to make sure. 

Mr. BOWEN. Prosecution. 

Senator LEAHY. As a former prosecutor, I know the difference. 

Mr. BOWEN. Yes. The most notable case came to court 1 week ago 

in Baghdad, involving the deputy minister of health. There was significant evidence related to the sale of prescription drugs on the 

black market that had been ongoing within that ministry. The case 

was dismissed, because witnesses had been intimidated and did not 

show. That’s the sign of a rule of law system that is not strong. 

Frankly, the corruption issue is a symptom of that weak rule of law 

system. 
53 

Senator LEAHY. Well, it’s also costing American taxpayers a great 

deal of money, because they won’t police their own corruption. It 

creates a real problem here. 

Mr. BOWEN. Well, that’s right. With respect to the oil revenue, 

that was the leading issue pointed out in our latest quarterly report that this windfall, as a result of this last quarter’s maximum 

production level since the invasion, the maximum export level since 

the invasion, and the highest oil prices in history, all of these coalesced into an enormous revenue windfall for the Iraqi Government. They estimated revenues of $35 billion last November, and 

it’s estimated to be closer to $60 billion. And that certainly gives 

them resources to carry forward with an extensive reconstruction 

plan. 

Also, it makes it all the more important that Prime Minister 

Maliki carry forward since he’s declared the year 2008 to be the 

year of reconstruction and anti-corruption on both of those fronts. 

Senator LEAHY. I want more than decoration, I’d like to see them 

actually do it. Because we have to spend more for our aid because 

of the oil prices, they ought to be able to use some of their oil revenues to pay these costs, and not keep sending the bill to the United 

States. 

Senator Cochran. 

Senator COCHRAN. Mr. Chairman, thank you. I gather from the 

testimony of David Walker, that U.S. operations are not nearly as 

troublesome in terms of breaking down the system, procurement, 

safeguarding property, and all the rest. 

I wondered if you have heard about the fact that the Army is 

moving to upgrade its oversight capabilities, and whether or not 

you had an opportunity to look into what they’re doing. 

Mr. WALKER. Well, first, Senator Cochran, let me clarify. I believe what I said was, was that with regard to fraud and corruption, that is a major problem with regard to the Iraqi Government 

and Iraqi funds. There is some with regard to U.S. personnel and 

U.S. funds, but not significant. The real problem is waste. 

With regard to the issue that you raise, yes. In response to GAO 

recommendations, in response to the Gansler report, which undoubtedly, you’re familiar with, the Army and the Department of 

Defense had started to send more contracting personnel and to try 

to add training and additional oversight capability. They’ve still got 

a ways to go, but they are taking steps. 

Senator COCHRAN. And, Mr. Kicklighter, the Secretary of the 

Army specifically responded to the need to improve contracting 

work and established a commission to review these efforts. And I’m 

told the work of the Army’s contracting forces activities were put 

under very close scrutiny. 

And they announced last week that they were establishing a new 

contracting command, headed by a two-star general. What’s your 

impression of the effort that’s being made by the Army? Do you 

think these efforts will achieve the results that are intended? 

General KICKLIGHTER. The short answer, sir, is that they will. 

The Army has had both the Gansler Commission, and they’ve also 

had a task force headed up by Lieutenant General Ross Thompson, 

and Kathy Condon, a deputy commander at Army Material Command. 
54 

These two independent bodies looked at how well we were organized to oversee and support contract operations around the world, 

but particularly in southwest Asia. 

And those two bodies, which we kind of over-watched, came up 

with very similar recommendations. The Army has moved out, 

smartly. But a lot of the problems will not be able to be corrected 

overnight. 

For example, they were woefully understaffed in personnel. That 

report calls for, I think, an additional thousand career civilians to 

be put against this problem, and 400 military, to bring military in 

the process much earlier in their career. Better training for both 

military and civilians—they have really moved out, but it will take 

some time to do the kinds of thing that are necessary, in my opinion. 

Senator COCHRAN. Mr. Bowen, your office has prepared a series 

of ‘‘lessons learned’’ reports, in the areas of human capital management, contracting and procurement, and program and project management. Is there evidence that they have led to reducing incidents 

of fraud and waste? 

Mr. BOWEN. Yes, there is evidence, in this regard. Our early audits revealed the contracting process during CPA was in disarray. 

Our audits, I think, helped lead to the formation of the Joint Contracting Command—Iraq, which gave a centralized point for the 

oversight of $13 billion in hard construction contracts, and several 

billion dollars more in nonconstruction spending which was part of 

the Iraq Relief and Reconstruction Fund. 

We also recommended that the CERP doctrine be institutionalized, and be formalized, and be provided more oversight. That has 

begun to happen. CERP has expanded along the way, as well, and 

I think more attention in that regard would be helpful. 

Our chief recommendation on contracting was the implementation of an enhanced contingency Federal acquisition regulation, and 

the Office of Federal Procurement Policy acknowledged that it 

would be useful. It also adopted a number of our recommendations 

on Federal contracting across the board, and I think those have 

been salutary events. 

Senator COCHRAN. Your most recent quarterly report describes 

2008 as ‘‘the Year of Transfer’’ of Iraq, as the Government of Iraq 

assumes greater responsibility for the financing and management 

of reconstruction efforts, are you working with them to help ensure 

that they benefit, also, from the lessons learned that your agency 

has documented? 

Mr. BOWEN. The U.S. mission in Iraq is doing that and is seeking 

to build capacity. I think capacity-building is the point of the support spear, if you will, in Iraq, with respect to how the ministries 

operate. And it’s all the more compelling an issue now, in light of 

this windfall in oil revenues. 

I think the Year of Transfer involves transferring responsibility 

for planning, executing, and funding reconstruction and relief operations, and transferring responsibility for the remaining nine provinces, to Iraqi security control—nine have already transferred—and 

transferring responsibility. I’ve said this before, today the 

sustainment of what we build is to ensure that, collectively, the 

fledging Iraqi democracy can continue to grow. 
55 

Senator COCHRAN. Thank you very much. 

Thank you, Mr. Chairman. 

Senator LEAHY. Thank you, Senator Cochran. 

Senator Murray, you were next, but I—— 

Senator MURRAY. Well, Mr. Chairman, Senator Dorgan has done 

an incredible amount of work on this, and I know the Byrd rule 

on seniority, but I would prefer to let Senator Dorgan ask his questions first, now. 

Senator LEAHY. Certainly, Senator Dorgan has spent a lot of 

time working on this. He’s been an extremely strong voice for accountability of Iraq Reconstruction funds. 

Senator Dorgan, we’ll yield to you, and then after the next Republican, we’ll go to Senator Murray. 

Senator DORGAN. Mr. Chairman, I thank the Senator for the 

courtesy. I’m not going to ask questions so much of this panel. I’m 

going to ask a lot of questions of the next witness. I want to thank 

all three who have come today. This is a lot of good work. I’ve met 

with Mr. Bowen in my office, and talked about SIGIR and the work 

you’re doing. I had an opportunity to spend some time with Mr. 

Kicklighter. In fact, he just released an IG report yesterday that 

I think is very important. And of course, Mr. Walker has done, just 

terrific work in these areas. 

So, I want to thank all of you. You are so important to us at this 

point. 

I want to make a couple of comments, if I might. I really appreciate this hearing being held. I think for 5 years, frankly, Congress 

has done a miserable job of oversight, just a miserable job. And 

we’ve just shoveled money out the door, and it is the greatest 

waste, fraud, and abuse in the history of this country, I’m convinced. I’m convinced the American taxpayers have been stolen 

blind. 

Let me give you just a couple of examples. I hold up a chart that 

shows a comment by Mr. Will Granger. He was in charge of all 

water quality for Iraq. We paid him for that. He worked for KBR, 

the Halliburton Corporation, they had a contract to provide water 

to military bases. 

This is from an internal memorandum of the Halliburton Corporation that I was able to get a hold of. In it, he talks about the 

problems—they weren’t testing water. 

And Mr. Granger—this is an employee of Halliburton—says, 

‘‘This event should be considered a near miss, as the consequences 

of these actions could have been very severe, resulting in mass 

sickness or death.’’ 

This is a 21-page internal report by the company that was paid 

to test water, and didn’t do it. 

The company denies this happened, and the Pentagon didn’t care 

much about it, regrettably. 

Mr. Kicklighter, thank you for the inspector general report that 

finally tells us, this is a set of facts that’s very important. 

Let me just also hold up Ms. Greenhouse’s testimony. She talks 

about when the LOG/CAP and the RIO projects were originally 

given. This is the highest civilian contracting officer in the U.S. 

Army Corps of Engineers. She came to the Congress and she said, 

‘‘I can unequivocally state that the abuse related to the contracts 
56 

awarded to KBR represents the most blatant and improper contract abuse I’ve witnessed during the course of my career.’’ This is 

the highest civilian official at the Corps of Engineers. You know 

what she got for that honesty? Demoted. And, of course, now for 

4 years, 3 years, that’s been kicking around in the Pentagon. 

Frank Willis, let me show you Frank Willis. He came forward. 

He was in a building in Iraq, and he showed us how money was 

saran-wrapped into football-sized packets. He said they used to 

throw them around. This money went to Custer Battles Corporation. They were told to ‘‘bring a bag, because we pay cash.’’ This 

happens to be $2 million in $100 bills. And Frank Willis told us 

the way money was distributed, and he said it was the most unbelievable waste that he’d ever seen. 

Now, let me show you a tiny little example. Mr. Henry Bunting 

showed up. I held 12 hearings in the Senate Democratic Policy 

Committee, because other committees weren’t holding them. Henry 

Bunting showed up with this towel. This towel, as you see, is a 

white towel. Henry Bunting worked for KBR, he was supposed to 

order towels for the military, because now we contract everything 

out, even the buying of towels. So, he made an order for a towel, 

ordered a white towel. 

The supervisor said, ‘‘No, you can’t do that, you need to order a 

towel with KBR embroidered on it.’’ He said, ‘‘The problem is, that 

will triple or quadruple the price.’’ His supervisor says, ‘‘It doesn’t 

matter, this is a cost-plus contract, taxpayers pay for that.’’ 

So, this is the towel the troops got, with ‘‘KBR’’ embroidered on 

it. 

Now this is a tiny little issue. The fact is, this wouldn’t be part 

of any investigation that’s going on. But it’s just a profound waste 

of taxpayers money. 

And let me also say, that today we will hear from a witness, of 

the next panel, in which we will hear that U.S. tax dollars—stolen 

through corruption in Iraq—are funding the forces that have killed 

American soldiers. We’ll hear that directly from someone who was 

in Iraq, and involved in this issue. 

We’ll hear from a witness who said that he showed up and was 

given $11 million in cash—$11 million in cash—and all he had to 

do was to give them a name, a photo ID, and an address. That’s 

less documentation than you need to give to cash a $25 check in 

this country. $11 million which was, by the way, later stolen. 

So, you know, we see these things—there was a question, I think, 

about are the Iraqis paying now, beginning to pay for their own defense equipment? We’ll have testimony today, as well, that says, 

‘‘Well, yeah, they are. In fact, they’re ordering new tanks and 

planes and so on, some of which are never delivered, some of which 

are delivered as old equipment. And the former minister of defense 

cannot account for—and he’s now gone, of course, with substantial 

property holdings in London—cannot account for $4 billion—$4 billion—that went through his hands. But I know where some of it 

is. 

If I sound upset by this—I think what’s happening here is unbelievable. 

Mr. Kicklighter, the inspector general’s report you released yesterday describes, I think, an undermining of our solders, even as 
57 

the American taxpayers are being fleeced. And we don’t have nearly the resources that we need. 

Inspector General Bowen, this is your third quarter report from 

last year, I’ve kept it on my desk, now, for 4 months. We have 967 

water projects, right now that we’re funding in Iraq. We have 478 

electricity projects—you’ve done some awfully good work, delineating exactly what projects are ongoing, that are being funded 

with American tax dollars. And I appreciate your coming today to 

talk about them. We are a country that’s up to its neck in debt, 

shoveling billions of dollars out the door, sending $100 bills over by 

C–130s on pallets. We are finally, at long, long, last, maybe going 

to give the taxpayer some feeling that there’s some accountability 

and oversight? I wonder. I’m not certain of that, but I wonder. 

This hearing is a very important hearing, it’s the tip of the iceberg, and the three of you have done really excellent work. 

I’m sorry to use my time just to talk, because you’ve got a lot to 

say, and I know that and I’ve read your reports and have kept 

pretty close track of this, having done 12 hearings. But, the next 

witness, I’m going to ask a lot of questions of the next witness. And 

I think this ought to be the first of a dozen or two dozen hearings, 

at which we put the—all the spotlights on the same spot, and demand on behalf of the America taxpayers and demand on behalf of 

soldiers, who strapped on body armor this morning, and went out 

and risked their lives—demand accountability. Because I think we 

have been cheated. And Congress needs to do and can do much, 

much better. 

One final point. The Truman Committee that was established at 

the start of the Second World War—they held 60 hearings a year. 

They started with $15,000, they saved $15 billion for this country. 

They held 60 hearings a year, demanding accountability, and this 

Congress for 5 years, has been asleep. 

So, Mr. Chairman, thank you for recognizing me. 

Senator LEAHY. I would tell the Senator from North Dakota that 

the reports that he’s brought out have been invaluable to this Senator. 

I should also note, for those who think there may be any question of partisanship—the Truman Committee, which you talked 

about, was conducted by then-Senator Truman of Missouri, during 

a Democratically controlled Congress, with a Democratic President, 

in a war that had far more support in the United States than the 

current war does. 

They still raised the questions, because—whether you support 

the war or are opposed to the war—Americans would like to think 

that money is spent wisely, and spent well. For those who have 

had family members serving there, or who have served there themselves, they want to make sure that it’s done well. 

I felt that way when my son was in the Marine Corps and got 

called up for Desert Storm. I feel that same way today, even 

though I have no family member there. 

Senator Craig, you’re next. 

Senator CRAIG. Well, Mr. Chairman, thank you very much. I totally agree that these kinds of oversight hearings are critical, there 

should be more of them, as detailed as we can possibly become by 

the information available to us, I think is important. 
58 

General Kicklighter, you mentioned the need for employees to do 

the work at hand, and you mentioned numbers of 1,000-plus accountants or auditors or that type—is it possible to find them, and 

do they want to go to Iraq? Or will they go to Iraq? 

General KICKLIGHTER. I think the problem is recruiting, training 

and preparing, and I think once that’s been done, that there is a 

willingness to go serve. And 1,000 of these will be Department of 

Defense career civilians. 

I’ve been to Iraq, I think, 11 or 12 times since the beginning, and 

every time that I’ve been there, I’ve been so impressed by the quality and the dedication and the commitment of both the military 

and the civilians that are there, and the civilians, in large part, are 

there because they want to be there, and they volunteer, but that’s 

not always the case. 

But, I think, Senator, once we’ve recruited, trained, and prepared 

these people, they will go, and they will provide the oversight we 

need, and the acquisition in the contracting world. 

Senator CRAIG. I keep hearing there is a concern about civilians 

who are there. Can they do the kind of work necessary from inside 

the green zone? I would have to think they would have to be out 

on the ground? 

General KICKLIGHTER. Sir, they do have to be out on the ground, 

and they’re all over the country. 

Senator CRAIG. Okay. 

General KICKLIGHTER. They’re in provincial reconstruction 

teams, they’re in maintenance teams, they’re in teaching teams, 

they’re in engineer groups. And they do share risk, similar to what 

our troops do, our career civilians do. 

But, to the extent possible, the same security that we can provide 

our military and our civilians, we’re attempting to do that. But 

there are risks involved. 

Senator CRAIG. Yes. 

Both the chairman and the ranking member have expressed concern about oil revenues, and effective use of those oil revenues. I 

think many of us felt, as we funded the war, that the money that 

we fund goes to the troops. And in the very beginning, we talked 

about the potential and the capability of the Iraqi people, of funding—in large part—their own reconstruction. 

Mr. Walker, first of all, thank you for your service, I understand 

you’re leaving us, soon, and going into private life. Man ̃ ana? 

Mr. WALKER. Tomorrow’s my last day. 

Senator CRAIG. Tomorrow is your last day. 

Mr. WALKER. As Comptroller General, correct. 

Senator CRAIG. Well, first and foremost, thank you for your service, it has been greatly appreciated. 

In those concerns about the potential billions of dollars that are 

now coming into Iraq, and the unwillingness or the inability to expend them and, of course, the possible waste that could occur there, 

based on the fraud and abuse that we’re now beginning to hear 

about, you mentioned the need for a strategic plan of implementation, I believe in the energy sector. 

So the Iraqis want one? Are they willing to accept it? Do they 

know what we’re talking about in that respect? And do they com-
59 

prehend the need for a path forward that is both strategic, realistic, implementable, and therefore accountable? 

Mr. WALKER. Well, Senator Craig, the Iraqis have a much more 

serious capacity problem than we do. There was a flight of talent 

from Iraq that occurred a number of years ago. Some individuals 

have come back, but not in adequate quantities to be able to address the skills and knowledge gap. 

I think the simple fact is, that if they want our money—which 

presumably they do—and if we want to make sure that the taxpayers are getting a good return on investment, then we need to 

insist on it. And, you know, one of those things that has been mentioned before is, where is the accountability? 

Senator CRAIG. Well, we need to insist on it. Are we insisting on 

it, to that degree? 

Mr. WALKER. Well, our recommendation to the State Department 

was that they needed to develop a strategic and integrated plan 

with respect to the energy sector, as well as capacity building for 

the Iraqi ministries. Their comeback to us, was, ‘‘Well, the Iraqis 

ought to do that,’’ and our comeback is, ‘‘No, it should be a shared 

responsibility, because it involved both U.S. taxpayer funds, and 

Iraqi funds, and we stand by that.’’ 

Senator CRAIG. And that’s where it stands at the moment? 

Mr. WALKER. That’s where it stands right now. 

Senator CRAIG. There’s a disagreement, so it’s not going forward? 

Mr. WALKER. Well, we’ll see. Right now, there’s a disagreement, 

and as you know, under our Constitution, we can’t force people to 

adopt our recommendations. We rely upon you and other members 

to encourage the executive branch to do the right thing. 

Senator CRAIG. Mr. Walker, General Kicklighter, Mr. Bowen— 

lessons learned. It’s my understanding that we’re supposed to see 

a compilation of those soon. 

What are some of the lessons learned that are bringing about the 

implementation that lessens the opportunity for fraud, waste, and 

abuse? All three of you, a couple of those that you have clearly 

learned and you have now effectively implemented? 

Mr. BOWEN. On the contracting front? 

Senator CRAIG. Yes. 

Mr. BOWEN. First, ensuring that there is a single database for 

contracts in theater. That has been an extremely difficult endeavor, 

something we’ve focused on through our reviews over the last 3 

years. It’s still not possible to go to a single source and find out all 

of the projects and all of the contracts—that, to me, is a basic 

building block of accountability. 

Second, ensuring that there is an understood and agreed-upon 

set of rules for contracting in theater. There are a whole variety 

of agencies contracting, and they have a whole variety of rules, 

which is a challenge for contractors operating in-country. 

Third, on the personnel front, ensuring that the right people are 

selected for the right jobs, for an extended period. During the CPA 

tenure, there was constant turnover, and that turnover problem 

has gotten better, but it’s still an issue. 

We have documented situations where a certain contract has 

had—the Parsons contract, for example, has had 16 different con-
60 

tracting officers, in just over 3 years. And that is simply a weakness in oversight that leads to waste. 

Mr. WALKER. Senator Craig. 

Senator CRAIG. Yes. 

Mr. WALKER. With regard to Iraq, one of the critical needs is to 

have more on the ground oversight capability that’s forward deployed, on the ground. 

But second, I’d like to provide for the record, with the permission 

of the chairman, a listing of the 15 longstanding, systemic, acquisition and contracting problems that exists within the Department of 

Defense. They’ve been there for years, they result in billions of 

waste every year, and that waste is accentuated, and increased, 

when you’re dealing with contingency operations. And Iraq is a 

contingency operation, just as Katrina was one, for domestic natural disaster, in the Department of Homeland Security. 

Senator CRAIG. I’m sure the chairman will accept those for the 

record, it will be important for us to see. 

[The information follows:] 

SYSTEMIC ACQUISITION CHALLENGES AT THE DEPARTMENT OF DEFENSE

Service budgets are allocated largely according to top line historical percentages 

rather than Defense-wide strategic assessments and current and likely resource limitations. 

Capabilities and requirements are based primarily on individual service wants 

versus collective Defense needs (i.e., based on current and expected future threats) 

that are both affordable and sustainable over time. 

Defense consistently overpromises and underdelivers in connection with major 

weapons, information, and other systems (i.e., capabilities, costs, quantities, and 

schedule). 

Defense often employs a ‘‘plug and pray approach’’ when costs escalate (i.e., divide 

total funding dollars by cost per copy, plug in the number that can be purchased, 

then pray that Congress will provide more funding to buy more quantities). 

Congress sometimes forces the department to buy items (e.g., weapon systems) 

and provide services (e.g., additional health care for non-active beneficiaries, such 

as active duty members’ dependents and military retirees and their dependents) 

that the department does not want and we cannot afford. 

DOD tries to develop high-risk technologies after programs start instead of setting 

up funding, organizations, and processes to conduct high-risk technology development activities in low-cost environments, (i.e., technology development is not separated from product development). Program decisions to move into design and production are made without adequate standards or knowledge. 

Program requirements are often set at unrealistic levels, then changed frequently 

as recognition sets in that they cannot be achieved. As a result, too much time 

passes, threats may change, or members of the user and acquisition communities 

may simply change their mind. The resulting program instability causes cost escalation, schedule delays, smaller quantities and reduced contractor accountability. 

Contracts, especially service contracts, often do not have definitive or realistic requirements at the outset in order to control costs and facilitate accountability. 

Contracts typically do not accurately reflect the complexity of projects or appropriately allocate risk between the contractors and the taxpayers (e.g., cost plus, cancellation charges). 

Key program staff rotate too frequently, thus promoting myopia and reducing accountability (i.e., tours based on time versus key milestones). Additionally, the revolving door between industry and the department presents potential conflicts of interest. 

The acquisition workforce faces serious challenges (e.g., size, skills, knowledge, 

and succession planning). 

Incentive and award fees are often paid based on contractor attitudes and efforts 

versus positive results (i.e., cost, quality, and schedule). 

Inadequate oversight is being conducted by both the department and Congress, 

which results in little to no accountability for recurring and systemic problems. 

Some individual program and funding decisions made within the department and 

by Congress serve to undercut sound policies. 
61 

Lack of a professional, term-based Chief Management Officer at the department 

serves to slow progress on defense transformation and reduce the chance of success 

in the acquisitions/contracting and other key business areas. 

Senator CRAIG. Are you saying that these problems that you’re 

proposing to us as examples, or as realities, still exist today? 

Mr. WALKER. They still exist today, to differing degrees. And, in 

fact, this afternoon, I’m testifying before the full Senate Armed 

Services Committee, and that will be one of the issues that I will 

talk about this afternoon. 

Senator CRAIG. Thank you. 

General Kicklighter, last one, he’s following up on a question, 

general? 

General KICKLIGHTER. Thank you, sir. That’s an excellent question, and let me just tell you, one of those things that we’re doing 

to capture the lessons learned—we’re going through all of the investigations, the audits, the inspections that have been done since 

the beginning. 

And I think that by next month, we will have done an evaluation 

of what are the themes and the lessons that we’ve learned from 

this war, and we’ll make sure, Senator, that you get a copy of that, 

and this committee gets a copy of that when we finish that report. 

But, it’s going to be extremely valuable, and it will answer the 

kind of question that you answered. 

Let me just add two points to that, and I think it reinforces what 

my colleagues have said. 

One is that I think the problems that we had in contracting is 

that where we had poor oversight, where we had poor leadership, 

where we had the lack of the proper level of leadership, and the 

fact that we didn’t have administrative support is what caused a 

lot of the problems for corruption and waste in the contracting 

world. And I think we’ve learned that lesson, and that reinforces 

what my two colleagues have said. 

The other thing I’d like to reinforce, what Mr. Walker said, and 

that is the value of a strategic plan that integrates all of the effort 

out there. This is not only a kinetic war, but it’s—the non-kinetic 

part is extremely important, in finishing this up. 

And so the lesson, I think, is that a strategic plan that integrates 

all of our effort, and Senator Leahy talked about this in the beginning, about all of the ministries and so forth, an integrated plan 

that’s updated frequently, that gives us a path for the future, I 

think, is a lesson that we’ve learned, as well. 

Senator CRAIG. Thank you, Mr. Chairman. 

Gentlemen, thank you for your service. 

Senator LEAHY. Senator Feinstein. 

Senator FEINSTEIN. Mr. Chairman, I just want to begin by thanking Senator Dorgan for the work he has done. You know, he spoke 

with an alarm in his voice, and I really hope you three gentlemen 

take note of this. 

I think that we feel that this is the greatest instance of fraud, 

waste, and abuse that any of us have ever, ever seen. And it really 

deserves some kind of extra governmental effort. 

Let me just take one of his instances, and I guess it was the AP 

that reported that dozens of U.S. troops have become ill from 

unmonitored and potentially unsafe water supplied by KBR. 
62 

Another report suggests that the company has avoided paying 

hundreds of millions of dollars in Federal Medicare and Social Security taxes by hiring workers through offshore entities based in 

the Cayman Islands. 

Is that true or false? Whoever wants to answer it? 

General KICKLIGHTER. Let me answer the water question. 

Senator FEINSTEIN. General, thank you. 

General KICKLIGHTER. That question is absolutely correct, and 

that problem was brought to this office by Senator Dorgan. He 

brought it to our attention. 

Senator FEINSTEIN. Right, respectfully, I know it was correct. 

General KICKLIGHTER. And it was absolutely correct. I do not 

know the answer to the other part of your question, but I will be 

happy to look into that, and report back to you. 

Senator FEINSTEIN. All right, do either of the two of you know 

the answer to that question? True or false is the answer, Mr. 

Bowen? 

Mr. BOWEN. I don’t know the answer. I am aware from my many 

visits to Iraq of KBR’s use of third country nationals to carry out 

a significant amount of their work. 

Senator FEINSTEIN. To avoid taxes. 

Well, it seemed to me that would be something that you ought 

to look at. I mean, they get top dollar times 100 for what they’re 

doing, and it seems to me the very least they can do is pay taxes. 

Well, let me ask you another one. It is believed that the Pentagon has known that KBR has exploited this loophole since at 

least 2004, even as the company has amassed an estimated $16 billion in contracts in Iraq. Is this true or false? 

General KICKLIGHTER. I do not know the answer to that, Senator, 

but I will look into it and get back to you. 

[The information follows:] 

USE OF OVERSEAS COMPANIES BY KELLOGG, BROWN AND ROOT (KBR) 

The Department of Defense Office of the Inspector General has not reviewed this 

issue. Under current law the practice is not illegal; however, the Defense Contract 

Audit Agency (DCAA) has conducted audits to ensure that contractors have not 

billed government contracts for taxes that were not incurred. 

Recently both the House and Senate have introduced legislation, which if enacted 

would prevent this type of situation from reoccurring. H.R. 5602 and S. 2775, ‘‘Fair 

Share Act of 2008,’’ have been introduced to amend the Internal Revenue Code of 

1986 and the Social Security Act to treat certain domestically controlled foreign persons performing services under contract with the United States Government as 

American employers for purposes of certain employment taxes and benefits. 

Senator FEINSTEIN. Okay. It has been reported that $8.9 billion 

of Iraqi oil has been essentially corrupted—in other words, put in 

somebody’s pocket. Is that true? 

Mr. BOWEN. I don’t know the answer to that number. The fact 

is that corruption has afflicted the Iraqi oil sector, particularly up 

at the Baiji Refinery with respect to the smuggling of refined fuels, 

and that was a symptom of the subsidy program that created an 

incentive for smuggling. And I know that continues to be a problem 

today based on my recent visits with Iraqi authorities. 

Mr. WALKER. Senator Feinstein, corruption has been a problem, 

in particular with regard to the energy sector. That’s where the 

money is, that’s their most valuable asset. 
63 

I might note one thing that I think is important. There are two 

pots of money—there is U.S. taxpayer money, and there’s Iraqi 

money. And there was widely reported roughly $9 billion worth of 

money that disappeared, that was improperly accounted for. That 

was Iraqi money. And, in fact, the picture that you have there— 

even though it was U.S. currency, it was probably Iraqi deposits. 

Here’s the important point. Those funds were the responsibility 

of U.S. citizens. And so, even though they were Iraqi funds, we still 

have responsibility and should have accountability. And I’ve 

worked with my counterpart, Dr. Abdul Basit, who is chairman of 

the board of supreme audit in Iraq, to try to make sure he has access to the records, to be able to do audit work to hold people accountable. 

So, even though it’s Iraqi money, we should be concerned about 

it because we were responsible. 

Senator FEINSTEIN. Absolutely, thank you. 

Some American officials have estimated that as much as onethird of what they spend on Iraqi contracts and grants, end up unaccounted for or stolen, with a portion going to Shia or Sunni militias, true or false? 

Mr. WALKER. I can’t attest to the percentage—it is significant. 

Senator FEINSTEIN. Anybody else like to add to that? 

Mr. BOWEN. I can’t attest to that percentage, either, but it is a 

significant problem. 

This is the issue I alluded to earlier, with respect to the move 

toward direct contracting with Iraqi firms. That presents a challenge because of the U.S. dollars, and they are paying a company 

that we have limited insight into and oversight of. 

Senator FEINSTEIN. Mr. Bowen, in your 2006 assessment of the 

Basrah Children’s Hospital Project, you noted that USAID had only 

one contracting officer, and one technical officer to oversee 20 

projects, worth $1.4 billion. Do any United States agencies today 

have sufficient numbers of monitoring personnel on the ground? 

I’ve heard what’s been said. But, my question is, is it sufficient 

today? 

Mr. BOWEN. A couple of things. First, as a result of those audits, 

the agencies responded by significantly expanding their presence 

and their oversight. For instance, the DynCorp contract is a parallel to the Bechtel contract, also a $1 billion contract, one that we 

reported had a significant shortfall in persons overseeing it. They 

had two persons. That simply doesn’t pass the faintest muster. 

But, they now have—I met the director of INL last week—14 

persons here, in Washington, working on that contract, and 8 in 

Iraq. So, it’s a several orders of magnitude increase. 

Then to your real question, is this sufficient? I think more oversight’s always better, and when you’re talking about extraordinarily large sums of money being spent in a war zone that’s very 

difficult to move around in—— 

Senator FEINSTEIN. Well, my question is, is it sufficient today? 

Mr. BOWEN. Right. 

Senator FEINSTEIN. And you’re sort of skirting around the question. 

Mr. BOWEN. Well, we have an ongoing audit that will update 

those previous reviews, that will specifically address that matter. 
64 

Senator FEINSTEIN. So, is the answer you don’t know? Is it no? 

What is the answer? 

Mr. BOWEN. The answer is that we don’t know whether the improvements that they’ve made are adequate to oversee the current 

contracts, but our reviews, which will be out this spring, will provide details on it. 

Senator FEINSTEIN. Thank you very much. My time is up. 

Thank you very much, Mr. Chairman. 

Senator LEAHY. Thank you. 

And, Senator Lautenberg. 

Senator LAUTENBERG. Yeah, Mr. Chairman, the litany that we 

hear here is of such a nature that you wonder—what kind of behavior dictated the theft and dishonesty with which this country of 

ours was dealt during this Iraq war? And Senator Dorgan has done 

substantial work, to his credit, it brought us face-to-face with some 

of the problems that exist. 

And I served on the Department of Homeland Security Subcommittee, and tried to get oversight hearings. And Mr. Chairman, 

I want to congratulate you for holding this hearing. I tried to get 

oversight hearings in the Department of Homeland Security Subcommittee, and sent nine letters begging for oversight hearings, 

and was told that it wouldn’t be necessary, because it would only 

be duplicative. 

And when you see the list of things that have happened, and I 

point out—what a coincidence it is that Vice President Cheney has 

un-exercised options that he had—got when he was the CEO of 

Halliburton. 

Now, I come out of the corporate world, and I understand fully 

what options are, and what they mean, and even though they’re 

supposedly going to be given to a university, to accept them, I 

think is a little less than appropriate. 

And when we look at Halliburton’s behavior, and the things that 

they neglected to do—water tested positive for e. coli, coliform bacteria, they allowed our troops in Iraq to shower, bathe, sometimes 

brush their teeth with that water—charged—Halliburton charged 

taxpayers for services it never provided, and tens of thousands of 

meals it never served—outward theft. 

You know, I served in a different war. And everybody’s conscience drove them to be as frugal, as careful, as they could be. And 

if you deviated from full and honest support for your country, it 

was considered traitorous, that you were a traitor to the cause. And 

when we see that there have been sham corporations opened in the 

Caribbean and the Cayman Islands, and then shifted to Dubai— 

and by the way, we heard in the last year or so, that Halliburton 

was thinking of moving its headquarters to Dubai—and helping, 

from that office, helping Iran derive revenues from its oil, which 

they, in turn, spent to send people to kill our troops. It’s something 

really rotten here, to develop a theme from another time in a play. 

I want to ask Mr. Walker—the United States Senate Governmental Affairs Committee from 2003 to 2006, held only one oversight hearing on Iraq contracting, with only one witness. Was that 

a sufficient amount of oversight of this multibillion dollar program? 

Mr. WALKER. Well, it’s not enough oversight, Senator Lautenberg, the question is, which committee of jurisdiction or committees 
65 

of jurisdiction should be holding it? I would respectfully suggest 

that with respect to Senate Homeland Security and Governmental 

Affairs, clearly they had responsibility for Katrina, which was a domestic contingency. Yes, they have authority to look at Government 

contracting, Government-wide. The question is, was anybody else 

doing it? 

Senator LAUTENBERG. Well, if we get to this point, and we find 

out that there’s still questions being asked, there’s still unanswered 

questions, then at what point does it get duplicative? At what point 

do we say, ‘‘Well, some other committee is doing it?’’ That’s an old 

dodge, to hide behind another committee’s jurisdiction, to say, 

‘‘Well, I thought they were doing it.’’ In good conscience, each one 

of us ought to be interested in what was taking place. And what’s 

happened to the millions and billions of dollars that was wasted. 

Mr. WALKER. Senator Lautenberg, if I can, real quickly. There 

wasn’t enough oversight, in general, during that period of time. 

Senator LAUTENBERG. Thank you very much. 

Mr. Bowen, the Washington Post raised concern about a trip that 

you took in January to Maine. They said it was interpreted as political. It quoted a State Department official who reviewed your activity as saying, ‘‘This is the kind of thing we’re taught not to do.’’ 

Did you check with the Office of Special Counsel to determine if 

this trip was an appropriate use of taxpayer funds? 

Mr. BOWEN. No, I didn’t. But I am invited to speak on Iraq reconstruction issues, and I was invited by Husson College up there, 

and I traveled up to speak to them. 

Senator LAUTENBERG. Who were—who invited you? 

Mr. BOWEN. Husson College, in Bangor, Maine. 

Senator LAUTENBERG. Husson. Did you hold press conferences 

there? Did you do editorial board meetings? 

Mr. BOWEN. I was invited to discuss our work by the editorial 

board. 

Senator LAUTENBERG. By the editorial board? 

Mr. BOWEN. Yes. 

Senator LAUTENBERG. Were you accompanied to the editorial 

board meetings? 

Mr. BOWEN. Yes, I was. 

Senator LAUTENBERG. By whom? 

Mr. BOWEN. By Senator Collins. 

Senator LAUTENBERG. By Senator Collins? I see. And they review 

the kinds of questions that we’re discussing here today? 

Mr. BOWEN. It was just a review of our continuing work, oversight work, in Iraq. 

Senator LAUTENBERG. Mr. Kicklighter—the troops who became 

sick from using unsafe water, do they have any recourse against 

Halliburton for its negligence? 

General KICKLIGHTER. Senator, I don’t know the answer to that, 

but we certainly are looking into what our recourse will be against 

Halliburton for not performing the contract as so specified. 

Senator LAUTENBERG. I have a question here that I wanted to review with either Mr. Walker or Mr. Kicklighter. 

On January 28 of this year, I sent a letter to the GAO asking 

for an investigation into a suspicious e-mail exchange indicating 

that the Army Audit Agency was told by the Army to not answer 
66 

questions about whether the cost of closing Fort Monmouth was 

higher than the Army indicated. The GAO passed the investigation 

to the Department of Justice, who passed it on to you, Mr. 

Kicklighter, and my question for you is, will you do this investigation, Mr. Kicklighter? 

General KICKLIGHTER. Sir, we will. We had a meeting the other 

night, and we are in the process of looking into it, as we speak. 

Senator LAUTENBERG. Thank you. 

And one last thing, the Pentagon auditors have classified as 

‘‘questionable’’ over $1 billion from Halliburton cost-plus log cap 

contract. Now, given this, should the Defense Department be permitted to continue to enter into cost-plus contracts which provide 

little incentive for a contractor to keep costs down? 

Mr. WALKER. Senator Lautenberg, I think we need to reduce the 

number of cost-plus contracts. And I think that to the extent that 

we enter into a cost-plus contract, it is absolutely essential that the 

Government do its part to be very specific with regard to what type 

of products and services do we expect, in what quantities, in what 

timeframe, in what locations. 

In the absence of doing that—which occurs all too frequently— 

you are essentially writing a blank check to the contractor. And 

that is wholly inappropriate. 

Senator LAUTENBERG. Do you agree, Mr. Kicklighter? 

General KICKLIGHTER. I totally agree. And to the extent possible, 

contracting should be free and open competition. 

Senator LAUTENBERG. And I just quote from Senator Feinstein’s 

comment about—this is the greatest instance, perhaps, in the history of this country—of fraud, waste, and abuse, at a time when 

people are so concerned about our mission there, and the wisdom 

in the first place, and the carrying on of this war that has demoralized this country, is incomprehensible. 

Thank you, Mr. Chairman. And I appreciate the—your patience 

in letting me go beyond that time. 

Senator LEAHY. Of course, Senator Lautenberg. 

I think we can probably wrap up this panel fairly quickly. Mr. 

Bowen, let me ask you—according to Judge al-Radhi, who will testify shortly, there are more than 3,000 pending corruption investigations in Iraq, involving more than $18 billion that may have 

been lost to fraud. Only 300, one-tenth, of these cases have been 

resolved. The Iraqi Government has passed laws and taken steps 

to immunize a number of officials. 

In 2006, you made 12 recommendations to improve the State Department’s anticorruption efforts in Iraq. A year later, you found 

little progress had been made. The State Department only implemented two of your recommendations as of last July. In January 

of this year, a couple of months ago, 10 recommendations remained 

unaddressed. Am I correct in assuming we have a serious problem 

of corruption in Iraq? 

Mr. BOWEN. Yes, Senator Leahy, you are. We have a two-fold 

problem—the problem of corruption in Iraq, and the problem of 

supporting Iraq’s anticorruption institutions effectively. 

Senator LEAHY. You’ve opened hundreds of investigations in 

cases of fraud, waste, and abuse and there are currently more than 
67 

55 open, active investigations, many of which have been referred 

to the Department of Justice. 

According to your records, the Justice Department has only 

brought charges against about 14 individuals, and recovered only 

$17 million in fraud. Do you believe the Justice Department has 

moved aggressively enough? Should we turn this over to some good 

local sheriff’s departments that might be more aggressive? 

Mr. BOWEN. Well, we’re working with—— 

Senator LEAHY. Sorry, that last may have been uncalled for, but 

I’m wearing my other hat as chairman of the Judiciary Committee. 

Mr. BOWEN. Yes. 

Senator LEAHY. I’m just wondering—it doesn’t seem like we’re 

getting an awful lot out of them? 

Mr. BOWEN. We have some significant cases that are pending, 

that I can’t address, of course. I would say that the effort by the 

Justice Department has improved over time, which is a continuing 

theme in the course of this hearing. I think that we’ll see the fruit 

of those prosecutions this summer. 

Senator LEAHY. Do DOD and Department of State still enter into 

cost-plus contracts in Iraq? 

Mr. BOWEN. Yes, they do. And I think S. 680 is a good reform 

measure to help circumscribe the overuse of cost-plus contracts. It’s 

clear—as our audits documented—that, for example, overhead was 

an extraordinarily high percentage of these cost-plus contracts. We 

have a report coming out this quarter that will show that overhead 

on one cost-plus contract was about 50 percent of the total cost of 

the contract. That’s unacceptable. 

Senator LEAHY. You’ve testified before in the Judiciary Committee in favor of the War Profiteering Prevention Act. Do you still 

support that? 

Mr. BOWEN. Yes, sir, I do. I think strengthening oversight and 

prosecutions of contractors and Government officials who engage in 

corrupt practices is a good thing. 

Senator LEAHY. Sometimes the idea that you might go to jail and 

not just get a fine might focus one’s mind? 

Mr. BOWEN. Focuses the mind, yes, sir. 

Senator LEAHY. I found that when I was in law enforcement. 

Senator Cochran, do you have any further? 

Senator COCHRAN. Mr. Chairman, I think your convening this 

hearing has been very important, and also ensures that everyone 

will know that we’re anxious to see that the funds that are appropriated by this Congress are spent for the purposes that we approved them, and without any culpability for fraud, abuse, or 

waste. And I think the gentlemen who have appeared before our 

committee today have convinced me that the best efforts in their 

offices are being made to achieve that goal. To ferret out waste, 

fraud, and abuse where it exists, and see that those who are guilty 

of it are brought to justice. And we appreciate your service in those 

ways. Thank you. 

Senator LEAHY. I noted in my introduction of the Comptroller 

General, Mr. Walker, that he has a 15-year term. He’s about twothirds of the way through that, at almost 10 years, but he’s going 

to be leaving tomorrow, if I’m correct, after 10 years of service. 

Service that I’ve been privileged to see. I’ve seen his candor, his 
68 

commitment to the Congress, and the American people, and the 

ability of both Republicans and Democrats alike to rely on what 

he’s said. 

I wish you well in your new career, but I might say, Mr. Walker, 

your service has been in the best of what one would expect of somebody serving our great country, and I commend you for that, and 

I suspect you’d find that virtually everybody else would agree. 

Mr. WALKER. Thank you so much, Senator Leahy. It’s been an 

honor and a privilege to serve. 

Senator DORGAN. Mr. Chairman? 

Senator LEAHY. Yes, Senator Dorgan? 

Senator DORGAN. Two things, just in 30 seconds. 

Let me also say, I think Mr. Walker has been an extraordinary 

public servant. He’s provided just great service to this country. I 

regret he’s leaving, but I understand the circumstances and wish 

him well. But, I thank him for his service. 

Inspector General Bowen, our next witness is going to be Judge 

Radhi. We don’t know Judge Radhi, but I understand you do. You 

have said this about him, and I want you at least for the committee’s purposes, to respond. 

You have said, ‘‘Judge Radhi is an honorable man and an effective crime fighter in Iraq,’’ saying, ‘‘it’s a loss he’s no longer there.’’ 

This is the man who was the head of the Commission on Public Integrity in Iraq. Twice his opponents have tried to kill him. He 

comes to this committee at some risk, to speak openly, but is that 

still your view of Judge Radhi? 

Mr. BOWEN. Yes, Senator Dorgan, it is. I met with him during 

every trip that I took to Iraq and was sad to see him go. 

Senator DORGAN. Well, it’s a very courageous man who shows up 

here to be our next witness, and I just wanted the committee to 

understand that he doesn’t come to us out of the blue—he comes 

to us as a very courageous man in Iraq who has risked his life to 

do good. Regrettably, he lost the battle, in many ways, there. But 

he’s going to describe some things today that are very unusual, and 

very disturbing. 

Inspector General Bowen, and Inspector General Kicklighter, 

thanks again for your service, as well. 

Senator LEAHY. I thank you all. 

Thank you, Mr. Walker, General Kicklighter, Mr. Bowen. We will 

recess for 5 minutes while we reset the table, thank you. 

We’re back in order. 

Our next witness—may I have order, please. 

Our next witness is Judge Radhi Hamza al-Radhi. 

He served as Iraq’s highest ranking anticorruption officer, Commissioner of the Iraqi Commission on Public Integrity, CPI, from 

2004 to 2007. Under his tenure, CPI successfully investigated 3,000 

corruption cases in courts for adjudication, 241 of the cases have 

been prosecuted and resulted in guilty verdicts. 

Judge al-Radhi graduated from the Judicial Institute in Iraq in 

1979, he has worked in legal affairs since. During the Iran-Iraq 

war, he was Director of Funds for Iraqi orphans. 

The Judge resigned as Commissioner of CPI in September 2007, 

citing death threats against him, and political pressure from the 

Iraqi Government. CPI is one of those institutions in Iraq created 
69 

to provide governmental oversight. Unfortunately, the Prime Minister, Nouri al-Maliki, has refused to recognize the independence of 

CPI. 

I should also note that we have a translator from the State Department, Nina Behrans, thank you. 

Then Judge, it’s great to have you here, welcome to the United 

States, not that you’re a stranger here. Please go ahead, sir. 

Senator DORGAN. Mr. Chairman? 

Senator LEAHY. Yes. 

Senator DORGAN. Before the Judge responds, I’d like to just 

make about two comments, and ask that we put, at this point, in 

the record, an article in Portfolio Magazine dated April 2008, that’s 

this current month’s magazine. It’s titled, ‘‘The Betrayal of Judge 

Radhi: He fled missile attacks in Baghdad and came to the United 

States, and now he’s on the run—how America turned its back on 

the top fraud cop in Iraq.’’ 

The reason I wanted to mention this is because this man has 

twice been the victim of attacks on his life, he’s in this country, the 

State Department has been none too pleased with what he has 

said, because he hasn’t painted the most wonderful picture of 

what’s happening in Iraq. And if you don’t paint a wonderful picture, those that want that mosaic painted don’t want to listen to 

you much, so they’re pretty upset with Judge al-Radhi, but I really 

appreciate his willingness and his courage to come forward, and 

I’m anxious to ask him a series of questions. 

[The information follows:] 

[From Conde ́ Nast Portfolio, April 2008] 

THE BETRAYAL OF JUDGE RADHI

He fled missile attacks in Baghdad and came to the United States. Now he’s on 

the run. 

HOW AMERICA TURNED ITS BACK ON ITS TOP FRAUD COP IN IRAQ

(By Christopher S. Stewart) 

On an ordinary evening in early January, Judge Radhi Hamza al-Radhi shuffles 

through the tile-and-glass canyons of the Springfield Mall in Northern Virginia. No 

one notices him. He doesn’t exactly look like a wanted man. He is a bespectacled 

63-year-old Iraqi with receding white hair, a clipped mustache, a burn scar from 

childhood on his crooked nose, and distinctive black eyebrows. Smelling faintly of 

Aramis cologne, he shambles along, searching for something to do. In his tweed coat 

and brown shoes, he looks more like a college chemistry professor than the hardened crime fighter he was before everything went wrong and he had to run. 

The judge comes here daily, sometimes twice a day—it’s a three-minute walk from 

his new suburban hideout. He spends the time walking, gazing into the storefronts, 

observing faces, but mostly he’s lost in thought. Occasionally, his eyes flicker up to 

the mall’s second floor, as if he’s looking for his enemies. But they are not there. 

We stop at a western-wear shop, where he likes a tall, black Stetson hat, and 

stroll through Target, his favorite store because it has what he needs for his new 

life and, as he says, ‘‘there are so much sales.’’ We stand near a blinking carousel 

and watch it turn. 

After an hour or so, he enters a Brookstone store and falls into a massage chair. 

As the mechanical nubs knead his back, he recalls the way his life was in Iraq, 

6,300 miles away, where he mingled with world leaders and fought the most important battle of his life. ‘‘It seems so long ago,’’ he says. ‘‘I never thought it would end 

this way.’’ 

Before he fled Iraq, Radhi was the head of Iraq’s Commission on Public Integrity, 

where he policed the country’s government and investigated its biggest cases of bribery and financial chicanery. Set up and paid for, in part, by the United States, the 

agency was Iraq’s F.B.I., and Radhi was compared to Eliot Ness, who took down the 
70 

Chicago Mob in the 1930s. Stuart Bowen, the U.S. special inspector general for Iraq 

reconstruction, described Radhi as his ‘‘most reliable partner . . . in Iraq,’’ and 

Chuck Grinnell, a senior C.P.I. adviser, remembers, ‘‘He was one of the good guys, 

one of the few in Iraq.’’ 

The judge was appointed to the post by Ambassador Paul Bremer in the summer 

of 2004, almost a year after the U.S.-led invasion. At the time, Iraq was a free-forall, with competing gangs and criminals gunning for a seemingly endless flow of reconstruction cash. The prevailing view held that the C.P.I. was vital to the advancement of the near-broke country, a sentiment reflected by President Bush in a 2005 

speech to the Council on Foreign Relations. ‘‘Listen,’’ he told a crowded ballroom at 

the Omni Shoreham Hotel in Washington, ‘‘the Iraqi people expect money to be 

spent openly and honestly, and so do the American people.’’ He would tout the C.P.I. 

again a month later, in a speech to the Veterans of Foreign Wars. 

The judge’s job was, simply put, to figure out where the money was going. Billions of dollars were being wasted or stolen outright in Iraq, including $8.8 billion that 

went unaccounted for in 2003 and 2004. Many of Iraq’s leaders were either directly 

participating in the thievery or quietly supporting it through hired guns, who later 

waged sectarian wars in the streets. Radhi was supposed to track down the criminals, stanch the hemorrhaging of money, and put an end to the corruption that was 

dubbed the ‘‘second insurgency’’ by Bowen and considered a principal source of funding for the terrorist groups that the U.S. military was trying to crush. 

The Ministry of Interior, for instance, resembled a Mafia organization. Instead of 

working to guarantee the country’s security, many of its officials, the judge discovered, were engaged in bribery, contract killing, and kidnapping. Hundreds of ghost 

workers collected wages that totaled more than $1 million a month. Meanwhile, the 

Mahdi Army, a Shiite militia devoted to cleric Moktada al-Sadr, had fully commandeered the ministries of health, trade, and transportation. Its soldiers, with the 

tacit approval of ministry employees, stole food and medical supplies, among other 

things, and resold them to fund the insurgency against the Americans and the 

Sunnis, the minority that still held power after Saddam Hussein’s ouster. Over 

time, ambulances ferried weapons and mercenaries, while hospitals became integral 

to the militia’s sectarian killing machine. Shiite soldiers executed Sunni patients 

and then killed family members listed in their medical files. 

The Oil Ministry had many of the same problems. After the invasion, President 

Bush claimed that oil revenues would pay for most of Iraq’s reconstruction. But 

even with the United States investing huge sums in oil projects, revenues weren’t 

and still aren’t covering costs, though $3 billion has been spent to date. Aging infrastructure and insurgents’ attacks on pipelines were part of the trouble. But the biggest challenge was that criminal groups were stealing from depots and hijacking 

transport trucks, sometimes in collusion with ministry officials. Monthly, the state 

oil industry lost up to $90 million, and the judge claims that more than half of the 

smuggling profits went straight into local terrorism. 

Although Radhi was officially in charge of investigating how the Iraqi government 

spent its budget, his work also uncovered how millions of American tax dollars were 

being diverted and used to bolster militia groups. The most visible way those American tax dollars ended up in the hands of the bad guys in Iraq was through U.S. 

capacity-building programs meant to help train ministry officials in everything from 

budgeting to delivering basic government services. 

A recent Government Accountability Office report shows that the United States 

invested $169 million in these programs at about half a dozen of the most critical 

ministries in 2005 and 2006. Because the militias infiltrated most, if not all, of these 

ministries, the capacity-building money is, by extension, helping build the militias. 

In other words, by funding ministries, we are working against ourselves. 

The amount of American tax money that has gone to the Iraqi militias is impossible to nail down, though Radhi says it could be tens, if not hundreds, of millions. 

So far, the United States has spent about $48 billion on Iraq reconstruction, with 

a notable chunk of that money passing through the agencies Radhi was investigating. Chris King, a former adviser to the judge at the State Department, says, 

‘‘The worst elements in Iraq smile at us and take our money, but we’re getting 

played. I went to the Justice Department guys and said, ‘You are funding and training death squads. You can’t say no one told you. I told you. You are funding death 

squads.’ I have no doubt that U.S. reconstruction cash is funding militias.’’ 

Those death squads eventually targeted the judge. As his team built cases against 

some of the country’s most powerful people—businessmen, clerics, politicians, warlords—threats came back. Grim voices muttered over cell phones, ‘‘Stop your investigations now’’ and ‘‘Do you know who you are messing with?’’ Soon his investigators 

and their families were dying: one body full of bullets, another hung on a meat 

hook, another disfigured with a power drill. There were sniper attacks and suicide 
71 

bombers. Government officials blocked his investigations. Sometimes he spent the 

night at safe houses with friends, who increasingly worried that he would be killed. 

The United States, strangely enough, did not step in. Some said the United States 

was afraid to take sides, wary of alienating its allies in the Shiite-dominated government. Others suggested that Radhi’s probes were becoming an embarrassment to 

the Bush administration, highlighting yet more trouble for a U.S. war effort that 

was already under siege. ‘‘There was a lack of due attention, political will, and support in the senior levels of the U.S. government,’’ King says. 

Still, the judge didn’t waver. He worked through the interim and transitional 

Iraqi governments and through the rise of a newly sovereign Iraq. By the summer 

of 2007, even as his close advisers ‘‘focused solely on his survival,’’ as one says, 

Radhi had launched almost 3,000 corruption cases. The accused included shady 

American companies and entrepreneurs, Iraqi ministers, and at least one member 

of Prime Minister Nuri al-Maliki’s family. The total haul: $18 billion—a number as 

mind-boggling and damning to Iraqi politicians as it was to the Bush administration. 

It was around this time that the missile came for Radhi. 

It came hurtling out of the still-dim morning sky as the judge stood in a bath 

towel on the first floor of his walled compound at the edge of Baghdad’s Green Zone. 

Around 6 a.m., the scorching late-July sun was just creeping over the mortarscarred city’s horizon. His family and bodyguards were still asleep in the two-story 

house. Everything was silent, except for some birds singing in the garden’s olive 

trees. 

When it hit, the missile made a huge thump that obliterated the morning quiet 

and convulsed the house like an earthquake. The memory of it still consumes the 

judge. He closes his eyes and tells me, ‘‘I thought I was dead.’’ The missile, launched 

from a truck and believed to be about nine feet long, was meant to kill him and 

end his investigations. Most everyone agreed on this point. Yet somehow he survived. As the noise of the blast diminished, he stood in the hall, unshaven and barefoot, shards of glass and debris on the floor. The missile had hit an empty house 

across the street, now a smoldering pile of rubble. There were prayers of thanks to 

a gracious God, but the near-hit made the judge wonder if he had pressed things 

too far. The missile strike wasn’t the last; a few weeks later, another arrived, destroying the empty house behind his, signaling to him that it was only a matter of 

time before the next rocket would hit its mark. 

He decided he couldn’t go back. He had a family—a wife and a daughter, who was 

eight months pregnant. The idea of being driven away by his enemies ate at him, 

but he felt he had no choice. ‘‘Radhi didn’t leave for himself,’’ Grinnell, the C.P.I. 

adviser, says. ‘‘He would have died in Iraq. But it became too much, and he left so 

that his family could survive.’’ 

After a trip to Washington last summer, Radhi resigned his C.P.I. job and asked 

the U.S. government for asylum. He had a couple of bags, a small amount of cash, 

and no idea where he would go. 

In October, the judge began his move from a world he knew into much more uncertain terrain. Appearing before the House Committee on Oversight and Government Reform on Capitol Hill, he testified about his findings of corruption that 

reached all the way to the prime minister’s office. 

It was a huge story. Many people called the judge a hero, but others—particularly 

officials in the State Department, which had helped create him—distanced themselves. Documents detailing Iraqi corruption were retroactively classified, and staff 

members were instructed not to talk about the judge’s allegations against the Maliki 

government. According to people involved in his case, the administration didn’t 

know what to do with a man who was painting a negative picture of its efforts in 

Iraq, where it wanted people to believe that the situation was improving. 

Things only got worse for Radhi. Soon after his arrival in the United States, the 

Iraqi government called for his arrest and prosecution, citing smuggled documents, 

corruption, and libel, and his pension was cut off. He shacked up in a budget hotel 

in a Virginia suburb but ran out of money after two weeks. An acquaintance kindly 

lent him an unfurnished townhouse. After his family and that of his security chief— 

11 people in all—were evacuated from Iraq, they joined him in Virginia. They 

shared three queen-size mattresses on the floor and coexisted amid a sad shipwreck 

scene of plastic lawn furniture, TV tables, pillows that served as couches, secondhand clothes, and donated food, most of which was shipped in by local Quakers, who 

had taken an interest in the refugees. 

His asylum proceedings stalled as the State Department instructed employees not 

to support the judge in his flight from Iraq. ‘‘Team, I have ordered our current C.P.I. 

staff not to write any letters in support of Judge Radhi,’’ one email read. When I 

called the State Department, no one wanted to comment on the judge. Once a key 
72 

U.S. partner in rebuilding Iraq, Radhi had implausibly become both a wanted man 

and a castaway. 

At night, he lay awake next to his wife on a mattress on the floor wondering what 

had gone wrong. He had suddenly become a man without a country. I first meet 

the judge a couple of weeks after his congressional hearing. He sits upright in a 

white plastic lawn chair with a cardboard box of old personal documents next to 

him. Except for the two bags of clothes, the box was nearly all he’d carried with 

him from Baghdad. It contains just about the only items that testify to his existence—family photo albums, re ́sume ́s, diplomas, and report cards from as far back 

as grade school. As Radhi pages through the files, he speaks through a translator, 

sometimes pausing to put a finger to his forehead as if in search of a distant memory. He wears a desert-brown suit with a yellow tie, and dark rings sag around his 

hard brown eyes. Though he looks as if he hasn’t slept in weeks, he is surprisingly 

upbeat. ‘‘Things will get better,’’ he tells me. ‘‘I’m hopeful.’’ 

This says a lot. 

The judge, a secular Shiite, was born in 1945, the second-youngest of 10. Hamza 

Radhi al-Ketany, his father, was a successful seed merchant; his mother, a homemaker. The family lived in a cramped house in downtown Kut, a river city of about 

a half-million in eastern Iraq. After high school, he traveled to Beirut, Lebanon, for 

college, then returned to Iraq for law school at Baghdad University. 

It was there, in the summer of 1968, that he caught his first glimpse of Saddam 

Hussein, a rising force in the Baath Party, which had recently seized power in a 

bloodless coup. Standing in front of about 1,000 law students in an auditorium, Hussein pulled out a pistol and began firing. Windows shattered and students ran. 

Although some at the time hailed the Baath Party—baath is Arabic for renaissance—as the future of Arab unity and socialism, people who didn’t join began to 

disappear, and fear infected the country. Intelligence agents were everywhere, and 

one night in 1970, at around midnight, they arrived at the 25-year-old Radhi’s house 

in Kut, where he had a private law firm. 

Radhi says that he was forced into a black Volkswagen sedan, blindfolded, and 

transported to the Palace of the End prison in Baghdad. There, he was asked why 

he had not joined the party. Radhi replied that he was not political. He was tied 

up, beaten with bats, hung upside down from a steel ceiling fan, given electric 

shocks, and thrown into a cell the size of a coffin. All night, he heard screams and 

moans emanating from prisoners in the hundreds or thousands of other cells around 

him. 

After 100 days, he was released. His keepers told him not to speak of the place, 

though he would always have jagged white scars on his arms and back, as well as 

a soft spot about the size of a quarter on his skull, where the bats had done their 

work. He attempted to return to his life. Marriage helped to some extent. He wedded his cousin, a pretty brown-haired woman with whom he had grown up in Kut, 

and they had three children. 

Later, Radhi joined the Ministry of Labor, where he inspected working conditions 

at regional factories and gained a reputation as a diligent and honest investigator. 

Seven years later, in 1977, he enrolled in the prestigious Judicial Institute, a twoyear training program for the country’s top judges and attorneys general. 

Most of the students there were aligned with the Baath Party. Radhi still wasn’t, 

which was why police returned when he was a year into the program, arrested him 

again, and interrogated him for another 10 days. 

Hussein officially came to power in the summer of 1979. The next year, the country went to war with Iran. Radhi was appointed to a social post, where he spent 

the next eight years finding housing and schooling for children whose parents were 

battlefield casualties. In 1984, two of the judge’s cousins disappeared after they 

were deemed to be communists; a third cousin, who refused to serve in the army, 

was executed by firing squad. 

Despite being on the political and social fringe, the judge was eventually hired 

by the Ministry of Justice as an attorney for a job handling mainly civil cases. As 

most of his colleagues were Baath Party members, Radhi says the position began 

to wear on him. He heard about disappearances and deaths of ‘‘traitors.’’ After three 

years, he quit, and for the next decade, he disappeared from the public sector. 

During the next few years, Radhi kept a small law practice and lived as if politics 

didn’t exist. He traveled to Yemen and Jordan searching for work, spending months 

at a time away. Nothing panned out, and his family struggled to get by. But then 

American soldiers arrived in March 2003, and after almost two decades, his hope 

returned. ‘‘I believed things were about to change,’’ he says. ‘‘The bombing happened, and Saddam was gone. And I thought that I could help rebuild. I dreamed 

of a different place.’’ 
73 

In November 2003, Bremer and his team devised the C.P.I. and began searching 

for the right person to fill its top post. Grinnell, the C.P.I. adviser, interviewed more 

than a dozen Iraqi candidates. With so much money at stake, the Americans knew 

it would probably be the most dangerous job in Iraq, pitting an unelected official 

earning $5,000 a month against the country’s strongest political players—some of 

whom commanded death squads. 

Many candidates dropped out, but Radhi was undeterred. ‘‘When we told him 

about the danger, he said to me—and I remember this vividly—‘God will not take 

me one second before he is ready to see me,’ ’’ Grinnell says. Even though what 

Radhi said was a common phrase in Arabic, Grinnell says, ‘‘that shocked me about 

Radhi, because when you look at him, he doesn’t look physically strong. But he has 

a presence that is felt.’’ The C.P.I. was charged with tracking Iraq’s $30 billion to $40 billion annual budget through the murky channels of government and determining how much of it went 

into reconstruction and how much was wasted or stolen. To get the agency off the 

ground, the United States invested between $7 million and $12 million in it. As with 

most of Iraq’s burgeoning institutions, a handful of adventurous Americans served 

as advisers. In this case, they came from the Coalition Provisional Authority and 

later the State Department. At first, the C.P.I. had only a few investigators, but its 

team in Baghdad even tually expanded to include 180 employees, with about 700 

supplemental work ers and several offices sprinkled around the country. 

And so it began. After a three-week training session, which took Radhi to the 

United States for the first time, he and his family moved into a protected house in 

Baghdad’s Green Zone, and an office was assembled in a crumbling concrete building. Almost immediately, people began referring to the office as the Zoo, because it 

and five other C.P.I. properties occupied the city’s former zoo grounds, now devoid 

of animals and overgrown with weeds. On the border with the Red Zone, as the rest 

of the city is ominously known, the Zoo was so far removed from the other buildings 

in the Green Zone that one American adviser, former New Hampshire Superior 

Court judge Arthur Brennan, described it as a ‘‘lonely outpost’’ suffused with a ‘‘Doctor Zhivago sense of bleakness and tragedy and inexplicable hope.’’ 

The days were long, starting at 6 a.m. and sometimes stretching well past midnight. Radhi would head home just as the Army snipers up in a nearby roost began 

burning their nightly fire to stay warm in the desert chill. The judge says he drank 

a lot of tea to stay alert, and the TV in his office, always tuned to CNN, supplied 

a constant soundtrack. The work was immensely complicated and was focused on 

Iraq’s ministries, staffed for the most part by people who had never run a government agency. 

It’s difficult to investigate financial corruption under the best circumstances. But 

in Iraq, where some ministries were armed to the teeth and potential witnesses 

were either complicit, beholden to someone, or too terrified to speak, the investigations took on another layer of difficulty. Expectations of basic investigative work 

didn’t take into account the ugly reality on the ground: armed bandits prowling the 

streets, sectarian militias battling for territory, insurgent warfare coming alive, 

droves of people disappearing daily, and most forms of trust nonexistent. 

Almost immediately, the responsibilities of the detective job sucked up most of 

Radhi’s time. He moved slowly, telling his men, ‘‘Shway, shway’’ (Step by step). 

Through interviews, audits, and official documents, the judge and his staff uncovered an anarchic and opaque world. Contracts were vague; nepotism and bribery 

abounded; budgets were filed the old-fashioned way, on paper; and cash by the 

truckload was vanishing abroad into private bank accounts or being funneled to militias. If you had a brain and some political connections, you could walk away from 

Iraq a millionaire. ‘‘Corruption was everywhere,’’ the judge says. ‘‘Everywhere.’’ 

It took about a year for Radhi to collect enough evidence to begin passing his 

cases to the investigative court. And then rulings and a slew of arrest warrants put 

criminals on notice. Among the most stunning of the cases was a billion-dollar heist 

from the Ministry of Defense, where the Americans had handpicked the leaders, Defense Minister Hazem Shaalan and his deputy, Ziad Tariq Cattan. Before the U.S.- 

led invasion, the two men had been exiles from Hussein’s Iraq: Shaalan was a real 

estate agent in London; Cattan lived in Poland and sold used cars. Following Hussein’s ouster, the men returned to their homeland and became high-ranking officials, 

commanding large budgets and charged with equipping the new Iraqi army. 

Months into their appointments, according to official documents, the men asked 

the Iraqi interim government, led by Prime Minister Ayad Allawi, a Shiite, for $1.2 

billion. They claimed it was for new military equipment. But the equipment that 

eventually arrived, the judge says, was cheap, old, and mostly unusable: run-down 

helicopters, knockoff machine guns, defective bulletproof vests, and ammunition 

that was on the verge of self-detonating. The judge found nebulous contracts with 
74 

fake companies, with money flowing from the ministry into secret bank accounts 

abroad. More than $360 million worth of Polish-made Sokol helicopters, contracted 

through a ‘‘storefront company,’’ were not delivered at all. 

In September 2005, arrest warrants were issued for Shaalan and Cattan, but the 

men had already vanished with an alleged $850 million. Although both were later 

convicted of corruption and sentenced to dozens of years in prison (21 others were 

eventually charged in the case), they remain abroad, beyond the reach of Iraqi 

courts. Both Shaalan and Cattan have denied any wrongdoing. Cattan has even put 

up a website in hopes of clearing his name. But no money has yet been recovered. 

The judge kept digging. By December 2005, months after a transitional Iraqi government led by Prime Minister Ibrahim al-Jaafari took over for Allawi, Radhi and 

his investigators had opened 800 cases, with more than 30 senior government officers appearing in criminal court and 91 cases scheduled to be brought before a 

judge. 

Around this time, the backlash against the C.P.I. began. There were threats 

against Radhi and his crusaders, and in March, a suicide bomber strolled into the 

C.P.I.’s Mosul office and set off his device, killing himself and one of the agency’s 

lead investigators, who had been looking into oil theft. Not long after, a C.P.I. security chief was executed on a Baghdad street along with his wife, who was seven 

months pregnant. 

Iraqi ministries, meanwhile, started to shut their doors to Radhi’s probes. It didn’t 

help that the Jaafari government, following Allawi’s lead, had restored a Husseinera law that empowered the prime minister to exempt his cabinet from prosecution 

and gave ministers the authority to exempt their employees as well. Although 

Bremer had suspended the law when he created the C.P.I., the interim Iraqi government now claimed that the judge’s cases were becoming politically motivated and 

had to be stopped. 

When I ask Radhi about it, he laughs. ‘‘No one wanted us to investigate. If I investigated Kurds, the Kurds would say, ‘You are biased. You are Arab.’ If it was 

a Shia case, they would say, ‘It’s political.’ If Sunni, they would say, ‘You are Shia. 

You don’t like us.’ The people we were chasing wanted to stop us.’’ 

Amid this mayhem, investigators occasionally ran into Americans who sought to 

make dirty deals with Iraqi opportunists. The judge’s lead investigator, Salam 

Jaddoa Adhoob, describes them as cowboys. ‘‘These guys operated with no rules. 

They came to Iraq to make fast money, and then they left with their pockets full,’’ 

Adhoob tells me one night at his own safe house in a remote Virginia town, where 

he’s lived since fleeing death threats more than six months ago. 

According to Adhoob, one American business, the Hummer manufacturer AM 

General, signed a $59 million contract with the Iraqi Defense Ministry to provide 

the army with 500 armor-plated trucks. (General Motors bought the Hummer name 

in 1999, though AM General continues to manufacture the vehicle.) However, only 

167 trucks arrived. Later, the AM General case and others involving Americans 

were, in accordance with a new policy, handed over to the inspector general’s office. 

A government official concedes that a number of investigations are under way but 

wouldn’t comment about AM General specifically except to say that ‘‘they are on everyone’s radar.’’ When I ask AM General about the allegations, Craig MacNab, a 

company spokesman, claims that he hasn’t heard anything about them but cites a 

complex production process, made more difficult by turnover within the Iraqi Ministry of Defense. The remaining trucks are due to begin arriving in the spring of 

2008—more than three years after the initial contract was signed. 

In May 2006, following the country’s parliamentary elections, Maliki became 

prime minister of the newly sovereign and Shiite-dominated Iraq. After two transitional governments and a lot of violence and lost money, Maliki promised transformation, though Radhi would come to see the ensuing months as particularly troublesome. 

While Maliki spoke publicly about eradicating corruption, privately he began lobbying to bring Radhi’s agency under his command. Maliki reenacted the controversial get-out-of-jail-free law. As a result, between September 2006 and February 

2007, various ministers blocked at least 48 corruption cases involving a total of $35 

million—not that the judge had the firepower to enter the ministries anyway. For 

those two years, Transparency International, the Berlin-based anticorruption watchdog, listed Iraq as the most corrupt country in the Middle East. Meanwhile, more 

suspected criminals fled, including 15 ministers, while more than 20 corruption-case 

judges were assassinated. 

The tipping point for Radhi came when the imam who led the Iraqi Parliament’s 

Shiite coalition demanded a meeting a few days after Saddam Hussein was executed, at the end of 2006. His name is Jala Alsaghir, but some call him the Lion. 
75 

‘‘He was the Lion because of his jaw that juts out,’’ Radhi says, ‘‘and he is a very 

dangerous man.’’ 

In a dimly lit room, the Lion, surrounded by a dozen or so bodyguards, told Radhi, 

‘‘Your cases are touching high-level Shia people. It is time for you to stop your job,’’ 

Radhi recalls. The judge took Alsaghir’s words as a threat on his life. A week or 

so later, Alsaghir stood in front of Parliament and accused Radhi of corruption. 

Though nothing was officially done about the allegations, Radhi says that Alsaghir’s 

words opened the floodgates of violence. ‘‘The people I was investigating realized 

that I was determined to keep investigating them and pursuing the rule of law,’’ 

he explains. 

By the end of 2006, 18 of Radhi’s men were dead, and by the middle of 2007, another 10 were gone. The Maliki government, which had shored up power over the 

minority Sunnis, moved to further diminish Radhi’s independence. First, the prime 

minister summoned the judge to his office to talk about his investigations of the oil 

and defense ministers and demanded that he fire Adhoob. After Radhi refused to 

comply with Maliki’s demand, an order was issued directing the judge to ‘‘stop the 

pursuit of previous and current ministers, unless done through the prime minister’s 

office.’’ Another official letter dismissed a corruption case against Maliki’s cousin, 

Salam al-Maliki, the transportation minister. 

It appeared that Maliki, whose party now dominated the country’s most moneyed 

and powerful ministries, was squeezing out the judge. Vance Jochim, an American 

adviser to the C.P.I., urged the United States to intervene. ‘‘I kept bringing this up 

to the embassy,’’ Jochim says. ‘‘Tell the Iraqis we won’t give them something. Take 

away the free gasoline in the Green Zone. But the embassy would never do that.’’ 

That’s because the State Department itself appeared to be backing away from the 

judge. ‘‘Judge Radhi went where angels feared to tread and thought he would be 

protected, but he wasn’t,’’ explains Ali Allawi, the Iraqi finance minister at the time. 

‘‘The United States decided to abandon him once his gangbusting began to affect 

a large number of people who were U.S. allies—all the ministers and top-level Iraqi 

players. He was a very courageous man, but he went after too many friends of the 

United States, and that got him in trouble.’’ 

Allawi said that if Radhi was intent on cracking down on the kingpins, ‘‘he should 

have built some political support around him. But he did not do that. He went after 

everyone at once, and that got him bombed.’’ 

Late in the spring of 2007, charges ranging from petty corruption to complicity 

in murder were leveled against Radhi in criminal court. Although the cases were 

ultimately dismissed, a radical Shiite cleric named Sheik Sabah al-Saadi, who had 

political ties to Prime Minister Maliki and oil-smuggling rings, pushed for a vote 

in Parliament to impeach Radhi. 

In July, the U.S. embassy circulated a sensitive but unclassified report detailing 

the judge’s alarming accounts of Iraqi corruption and greed, giving credence to his 

tale of the country’s meltdown. By late summer, talk of his impeachment grew louder, and then the missile came gunning for him. 

At the end of August, Radhi headed to Washington for training at the Justice Department. When he left for the airport, he kissed his wife and told her that things 

would be okay, though he feared that they would only get worse. As summer heat 

pummeled Baghdad, a missile struck the house behind his, nearly killing his family. 

On October 4, Radhi testified in front of the House Committee on Oversight and 

Government Reform. Sitting at a long table, behind microphones and bottles of 

water, he recounted the story of the crimes his team had uncovered to members of 

the investigative committee. He told them about the rampant corruption among U.S. 

allies, including the Maliki government, and the theft of billions of dollars. He explained that reconstruction had almost stopped, that the lost money was propping 

up a terrorist movement that was ripping his country apart, and that the current 

government could not be trusted. ‘‘I have led my life governed by these few words: 

‘Law is above all. No one is above the law,’ ’’ he declared. 

Comptroller General David Walker, Bowen, and Larry Butler, a deputy assistant 

secretary of state, also testified. Although Butler refused to discuss much of anything related to the judge’s findings, Walker and Bowen spoke openly about Iraq’s 

corruption problem. During his testimony, Bowen explained to the packed chamber 

that the loss of the judge was ‘‘a real blow to anticorruption efforts in Iraq. He was 

the most prominent corruption enforcer.’’ Christopher Griffith, a C.P.I. adviser at 

the Zoo, echoed this during a prehearing interview, calling the judge ‘‘the most honest government-of-Iraq official that I have met in my 21 months in the country.’’ 

There was some antagonism in the room when Republican representative Dan 

Burton, of Indiana, questioned Radhi’s authenticity. Referring to the ‘‘Saddam Hussein regime,’’ under which the judge worked as a state lawyer, Burton wondered, 

‘‘How did you get those jobs?’’ The judge, who spoke calmly through several hours 
76 

of testimony, replied that he had been given the job based on his ‘‘hard work’’ but 

that he’d refused to follow orders and then quit. He reminded Burton that the Baath 

regime put him in prison and, as he put it, ‘‘broke my head.’’ 

The testimony was a blow to General David Petraeus, the commander of the multinational forces in Iraq, and Ryan Crocker, the U.S. ambassador to Iraq, who had 

testified three weeks earlier about signs of progress in the current military surge, 

which began in January 2007 with an infusion of 30,000 troops. Following Radhi’s 

testimony, there was a lot of talk in Washington about what the death of 3,800 U.S. 

soldiers and the spending of $450 billion had actually accomplished in Iraq. Alluding 

to the judge’s testimony in a Los Angeles Times editorial, Representative Henry 

Waxman, of California, the Democratic chairman of the House Oversight Committee, wondered, ‘‘Is Maliki’s corruption worth American lives?’’ 

And even when the violence in Iraq began to ebb—which the judge warns is only 

a strategic pause—the biggest question remained: Considering Radhi’s evidence, can 

we really trust the people in power in Iraq? 

When Secretary of State Condoleezza Rice was pressed in a subsequent oversight 

hearing about Iraq, she evaded numerous questions about the judge’s testimony. For 

instance, she declined to comment on the specific allegation that the prime minister 

had obstructed a probe into a cousin’s business dealings and claimed that she didn’t 

know about Maliki’s secret immunity order, which had been circulated in Rice’s office weeks before her testimony, though she admitted that such an order would be 

‘‘deeply concerning.’’ 

Asylum for Radhi could come through in six weeks or six months. It is hard to 

know, especially considering the order prohibiting State Department employees from 

supporting the judge’s efforts. In a further twist, Bowen’s Office of the Special Inspector General for Iraq Reconstruction, one of the judge’s most prominent supporters, is now under investigation for overspending and mismanagement. 

In the meantime, the judge and his family can’t work or apply for benefits and 

must rely on others for almost everything—money, food, and transportation. 

Shortly after the judge’s testimony, the Iraqi government gave his old job to a 

Maliki crony, a man alleged to be an oil mobster, who immediately began an investigation into Radhi’s work. Since then, many say that the C.P.I. has fallen into disarray, with no clear mandate. 

The judge, for now, remains a wanted man in Iraq. 

I visit Radhi for the last time in early January, just after his relocation to a new 

two-bedroom condominium. His daughter and son-in-law also have their own place, 

right down the hall, as does his security chief’s family. 

Today, his life has slowed down, almost to a glacial pace. He spends stretches of 

the day watching a flat-screen TV, seeking news from Iraq. He also reads from a 

dictionary to improve his English and emails friends back home. His new existence is hard on him. He doesn’t enjoy depending on the $2,000 a 

month donated to him and his family by friends. His life has always been one of 

independence and dignity. As the months pass, a creeping feeling of isolation swells 

in his mind, though he doesn’t complain. Sitting in his living room, which is outfitted with secondhand furniture and items from Target, he mostly talks about how 

grateful he is that his family got out of Iraq alive. Asked if he is angry about anything that happened, he shakes his head. ‘‘I believe I did the right thing,’’ he tells 

me. 

Next to asylum, his biggest concern for the future is finding work. When I speak 

to Ali Allawi, Iraq’s former finance minister, he says that this is exactly why the 

judge’s case is tragic. A great and courageous man in his home country, Radhi is 

now a foreigner whose inability to speak English fluently renders his skills virtually 

useless. ‘‘It’s sad,’’ Allawi says. ‘‘He could end up sweeping floors on the late shift 

at a place like Wal-Mart.’’ 

During one of my conversations with the judge, I can’t resist asking a dumb question: ‘‘Did you ever think about stealing just a little bit of money for yourself?’’ 

He looks at me funny, like I’ve made a bad joke. There was so much money floating around over there, I say. Wasn’t he at all tempted to reach into the pot and 

take a little for himself? 

At first, he’s not sure if he heard me correctly. So I ask him again, and he sort 

of smiles before he becomes serious and says, ‘‘The temptation was there. Lots of 

money was offered to forget cases. But I am not that man.’’ 

This is the point. If he were that man, he would be somewhere else. Baathists 

wouldn’t have tortured him, and he wouldn’t have been forced out of his country. 

That man wouldn’t be sitting on a donated brown couch. 

So what about the $18 billion? I wonder if any of it will be recovered. The judge 

says no. It is lost. He says militias are still active in many Iraqi ministries, which 

continue to receive millions of dollars in U.S. taxpayer money. 
77 

As he sits here, he knows he still has many enemies. But he is safe now, he believes. ‘‘I don’t think there will be rockets coming for me.’’ 

Later, we go to the mall. It’s my last night with him. He takes me on a tour of 

his daily haunts. When we exit, it is late and dark. As we walk toward his apartment, through a nearly empty and silent parking lot, a low-flying helicopter suddenly and violently disrupts the suburban quiet. 

For a moment, the judge’s head angles skyward, his eyes opening wider than I’ve 

seen them. ‘‘That is the sound of Iraq,’’ he says over the noise. He nods happily. 

I ask him, ‘‘Do you ever miss it, Iraq?’’ 

‘‘Sometimes,’’ he responds, as he watches the helicopter pass overhead before it 

disappears, leaving silence again. ‘‘I miss my country. I miss my work of helping 

my country. But this is home now.’’ 

Senator LEAHY. Judge, we are delighted that you’re here. Please, 

go ahead with your statement. 

STATEMENT OF JUDGE RADHI HAMZA aL-RADHI, FORMER COMMISSIONER, COMMISSION ON PUBLIC INTEGRITY, REPUBLIC OF 

IRAQ 

Judge AL-RADHI. I am Judge Radhi Hamza al-Radhi, former commissioner of the Commission on Public Integrity, CPI, Republic of 

Iraq. 

It is an honor to be here and to thank the American people who 

have sacrificed their lives and money in order to achieve noble goal 

in Iraq of ending the suffering, and supporting democracy, thank 

you thousands of times. 

In my written testimony, I highlighted the reasons for the Commission on Public Integrity, my appointment as a Commissioner 

and my background and I summarized much of our historic work. 

Corruption in Iraq today is rampant across the Government, 

costing tens of billions of dollars, and has infected virtually every 

agency and ministry, including some of the most powerful officials. 

Corruption has been part of the failure of the Government of Iraq 

to control the militia that control parts of government. Unfortunately, today in Iraq, corruption has infected our biggest source of 

money, oil. Corruption has infected those who have the guns to restore law and order. And corruption has infected the very government officials who promise a new, better Iraq. Corruption keeps 

millions of Iraqis in inhumane living conditions, and it funds the 

killing of United States and Iraqi forces. 

I have lived my life governed by these few words: ‘‘Law is above 

all, no one is above the law.’’ This guiding principle should apply 

to all government departments and ministries, neutrally, fully, and 

without regard to sect, ethnicity, party affiliation, tribe or religion. 

Unfortunately, we have been met with major problems. Since the 

establishment of the CPI, more than 31 employees have been assassinated, as well as at least an additional 12 family members. 

In a number of cases, my staff and their relatives have been kidnapped or detained and tortured prior to being killed. Many of 

these people were gunned down at close range. This includes my 

staff member Mohanned Abd Salif, who was gunned down with his 

7-month pregnant wife. 

One of my staff members was protected by my security staff, but 

his father was kidnapped because his son worked at CPI. This staff 

member’s father was 80 years old. When his dead body was found, 

a power drill had been used to drill his body with holes. 

My head of our Mosul branch was killed by a suicide bomber in 

his office. Two weeks ago, one of my attorneys was shot and he is 
78 

now fighting for his life. Just Friday, the body of one of my investigators was found in a Baghdad trash dump. 

These are just a few examples—there are many more. And, personally, my family’s home has been attacked by missiles, and I by 

both missiles and snipers. 

Justice loses, and corruption wins. Further, the prime minister 

and his government have refused to recognize the independence of 

the commission to appoint qualified people in the ministries, and 

foster honesty. Worse, the government has formally blocked actions 

against the presidency, the council of ministers and former and 

current ministers, used the law to empower ministries and the 

prime minister to stop specific corruption cases, and promoted sectarian agendas. Importantly, it has been impossible for CPI to safely and effectively investigate oil corruption where Sunni and Shia 

militias have control of the metering, transport, and distribution of 

Iraqi oil. This has resulted in the ministry of oil effectively financing terrorism through these militias. 

I am afraid that the commission itself will now be used as a tool 

of corruption. I fear that the bravest and honest members of my 

CPI staff in Iraq are now facing a purge and being pressured into 

silence. My heart, my prayers are with them. 

Let me share with you my situation. My case for asylum is currently pending. Just as my family’s safety was at risk in Iraq, because of my work, now my words, including my words to you today, 

may add to my risk. Following my testimony before the U.S. House, 

the Iraqi prime minister himself threatened me with prosecution. 

I come before you with faith and confidence that any service to 

my country and to all like you who stand against corruption will 

not cause any punishment in the United States. 

For here in America, without protection or plan, I am but a 

feather in the wind. 

But as a Judge and crime fighter, I know that even a feather can 

be stronger than greed and violence. 

Thank you so much. 

[The statement follows:] 

PREPARED STATEMENT OF JUDGE RADHI HAMZA AL-RADHI

To Our Distinguished Chairman and Respected Members of the United States 

Senate, Ladies and Gentlemen: 

GREETINGS

I am Judge Radhi Hamza al-Radhi, former Commissioner of the Commission on 

Public Integrity (‘‘CPI’’), Republic of Iraq. It is an honor to be here among you today 

to discuss with you the most important problems facing Iraq after the recent 

change. The change which led the United States and its allies in Iraq to eliminate 

the highest dictatorship in the world, that of Saddam Hussein. The dictatorship he 

built on the corpses, money and the suffering of Iraqis. I want to thank the American people who have sacrificed their life and money in order to achieve noble goals 

that are worthy of respect. The goal for Iraqi’s rights, for the ending of their suffering and for the spread of democracy throughout Iraq, which is the key to progress 

and growth. Thank you thousands of times to everyone who participated and sacrificed for these noble goals. 

REASONS FOR AN IRAQI COMMISSION ON PUBLIC INTEGRITY

Iraq is a rich country; however its infrastructure is essentially nonexistent and 

much work needs to be done. 

Building democracy requires transparency from the Government in order for that 

government to manage socio-economic matters. 
79 

The Iraqi people are smart and hard working and are looking for progress. For 

that they deserve a fair and honest government. 

Transparency and the presence of an effective Commission on Public Integrity as 

well as The Board of Supreme Audit and the Inspectors General will encourage foreign investment in Iraq. 

The existence of these bodies dedicated to public oversight, especially CPI, would 

protect funds, and these funds would be devoted to public services for Iraqi people, 

leading to welfare and prosperity for them. This in turn would bring internal stability and would have positive impacts on regional and international stability. 

The legal authorities for these anticorruption organizations are derived from the 

Coalition of Provisional Authorities orders including Order No. (55) establishing the 

Commission on Public Integrity, Order No. (57) establishing the office of Inspector 

General in each ministry and Order No. (77) Continuing the Board of Supreme 

Audit which was established in 1927. 

APPOINTMENT AS COMMISSIONER

For these important reasons Iraq established the Commission on Public Integrity. 

I was honored to be named the Commissioner of CPI. The Iraqi Judicial Council selected three candidates for this position. Ambassador Bremer chose me to lead CPI 

because I graduated from the Judicial Institute in 1979 and I have 39 years of experience in legal affairs. Additionally, I was director of funds for Iraqi orphans during 

the Iraq-Iran war. While I consider myself an honest technocrat and judge, some 

have speculated that other credentials included the fact that I am Shia and that 

I was jailed and tortured by Saddam Hussein for refusing to join the Baath Party. 

According to the law, future commissioners will be selected from three candidates 

chosen from the Higher Juridical Council. The Prime Minister must pick one of 

these candidates and the Parliament must confirm this candidate. A Commissioner 

can only be fired for cause by a two-thirds vote of the Parliament. Therefore the 

responsibility of this power and the need for integrity in this office is great. 

OPERATION OF CPI

This Commission on Public Integrity started in June 2004. American experts have 

had a great impact in providing advice and guidance to this magnificent Commission. The American experts helped us by establishing training courses from day one 

until now. They have spent a great amount time and of money to hold this Commission accountable to disseminate and promote the ethics of integrity for my country. 

The functioning of CPI had been outstanding even under very difficult circumstances. It was able to build several important departments or directorates 

within 3 years, such as: 

—The Directorate General of Prevention and Transparency, which prepared a 

Code of Conduct for all Iraqi government employees and has also prepared a 

Financial Disclosure program to disclose the financial interests of senior employees such as the general director and superior officers. 

—The Directorate General for Non-Governmental Organization relations, which 

contacted most NGOs in Iraq in order to motivate them to achieve their objectives and solve their problems honestly. Some of these organizations have 

played a significant role in my country to develop morals and contribute to the 

reconstruction of Iraq and also to put pressure on the Government to provide 

better services to the Iraqi people. 

—The Directorate General for Education, which worked to educate government 

employees on their duties and responsibilities, including promoting the Code of 

Conduct, educating Iraqi public on their rights and responsibilities as well as 

promoting the Hotline. In conjunction with the Ministry of Education, it worked 

to develop a curriculum for Iraqi school children to promote public service and 

ethics. It had a public affairs department to work with international and domestic news media organizations. 

In addition, the Directorate General for Investigations investigated corruption in 

government departments and ministries. 

RESULTS

During these three years, there have been many results produced for an organization so young and new to my country. I will briefly expand on many of the areas 

above such as our work with educating the government ministries in the Code of 

Conduct, work on Financial Disclosure, the establishment of an INTERPOL liaison 

office, printing and distribution of educational materials for children, a Civil Service 

Reform conference and NGO conference, Investigation Department has expanded 

with the establishment of a Forensics Division, an Investigative Research Division, 
80 

a Witness Protection Program and facilities, the establishment of a Statistics Division in the Administration Department which promulgates annual reports to the 

Iraqi government and the Iraqi people on the activities of CPI, the initial establishment of a Public Integrity and Ethics Institute to professionalize the civil service 

and provide training for CPI, the Board of Supreme Audit and the Inspectors General, the establishment of an anticorruption Hotline to receive calls from Iraqi citizens for the first time in Iraq’s history, the printing and distribution Hotline promotional materials and other CPI materials. 

For the first time, perhaps in Middle East history, a government minister was arrested, in accordance with the Rule of Law in a non-political, non-sectarian manner, 

on corruption charges. This case came early in our investigation process, before the 

full force of opposition to CPI was organized. Unfortunately, of the 3,000 corruption 

cases we successfully investigated and forwarded to the courts for adjudication, according to my records, only 241 cases to date were adjudicated with guilty sentences 

ranging between six months and one hundred and twenty years. However, the cost 

of corruption that my Commission has uncovered so far across all ministries in Iraq 

has been estimated to be as high as $18 billion. 

Broken down by Iraqi government ministry, that $18 billion was distributed in 

this way: 

Ministry Total Money 

Defense ........................................................................................................................................................... $5,000,000,000 

Trade .............................................................................................................................................................. 3,000,000,000 

Electricity ........................................................................................................................................................ 3,000,000,000 

Transportation ................................................................................................................................................ 2,000,000,000 

Health ............................................................................................................................................................. 2,000,000,000 

Interior ............................................................................................................................................................ 1,000,000,000 

Communications ............................................................................................................................................. 1,000,000,000 

Housing .......................................................................................................................................................... 1,000,000,000 

Finance ........................................................................................................................................................... 500,000,000 

Oil ................................................................................................................................................................... 500,000,000 

This data represents my estimate based only on cases before the courts as of late 

2007. It does not break the numbers down by U.S. tax dollars or Iraqi dinar. While 

U.S. tax dollars may be of greater interest to this Committee, such a break down 

is very hard for me to determine. It also does not distinguish between degree of 

crime such as funds stolen and funds poorly spent due to mismanagement. It does 

not represent the cases that never made it to the courts or cases dismissed at the 

court, some of which were dismissed after judges were threatened or assassinated. 

In particular, it does not reflect the full extent of oil corruption, including metering 

fraud, theft, and smuggling. My small group of heroic investigators did not have the 

capacity to investigate all of the oil smuggling. In addition to theft by militias and 

government employees, I had received evidence of widespread smuggling including 

the reestablishment of the smuggling routes that Saddam Hussein’s regime used to 

circumvent United Nations resolutions including the Oil for Food Program. 

In addition, based on the end of year 2005 data available to me, I have attached 

for the Committee six graphs detailing how corruption was reported, our CPI caseload by ministry, the percentage of corruption cases by ministry, the disposition of 

cases, the corruption cases by kind and the demographics of the top 35 senior indicted officials. 

GUIDING PRINCIPLE

I have led my life governed by these few words, ‘‘Law is above all, no one is above 

the law.’’ This guiding principle applies to all government departments and ministries neutrally, fully and without regard to sect, ethnicity, party affiliation, tribe 

or religion. 

MAIN OBSTACLES

The main obstacles to our work are: 

—Violence, intimidation and personal attacks. Since the establishment of the 

Commission of Public Integrity, more than 31 employees have been assassinated as well as at least an additional 12 family members. In a number of 

cases, my staff and their relatives have been kidnapped or detained and tortured prior to being killed. Many of these people were gunned down at close 

range. This includes my staff member Mohanned Abd Salif who was gunned 

down on the street with his seven month pregnant wife. My Security Chief on 
81 

my staff was repeatedly threatened with death, and his father was recently kidnapped and killed because of his son’s work at CPI. His body was found hung 

from a meat hook. One of my staff members who performed clerical duties was 

protected by my security staff, but his father was kidnapped because his son 

worked at CPI. This staff member’s father was 80 years old. When his dead 

body was found, a power drill had been used to drill his body with holes. My 

head of our Mosul branch was killed by a suicide bomber in his office. Two 

weeks ago one of my attorneys was shot in the neck and in the chest, and is 

now fighting for his life. Just Friday the body of one of my investigators was 

found in a Baghdad trash dump. These are just a few examples, there are many 

more which were directed to my staff, me and our families. Personally, for example, my family’s home has been repeatedly attacked by missiles, virtually destroying all around me. I have had a sniper bullet striking near me as I was 

outside my office. We know the corrupt will stop at nothing. They are so corrupt 

that they will attack their accusers and their families with both guns and meat 

hooks as well as counter charges of corruption. So that the accusers become the 

accused in a deadly game that all of us have witnessed. 

—The Prime Minister and his government have refused to recognize the independence of the Commission on Public Integrity, even though the Iraqi Constitution sets forth the independence of CPI in point No. 102, 103. 

—The interference of the Iraqi Government in Commission matters; officials and 

agencies in the Iraqi Government sent us formal letters forbidding us to take 

any action against the presidency, council of ministries and former and current 

ministers. 

—The use of Article 136, Section B of the Criminal Procedures Law No. 23 of 

1971, which prevented us from transmitting many corrupt employees’ cases to 

court until we received permission from the minister of the agency we were investigating. This presented obvious problems. The same thing applied to corrupt 

ministers: We could not take any action until we could get the permission of 

the Prime Minister. Based on that, many corruption cases have been closed by 

the ministers and the Prime Minister, at an estimated worth of one hundred 

billion Iraqi dinar. In addition to the obstacles of Article 136, there was pressure put on the judiciary not to prosecute cases on behalf of individuals. Many 

of Iraq’s judges live in fear of torture and assassination of themselves and their 

family members if they adjudicate cases of senior government officials. 

—The Executive, Legislative and Judicial branches of the Iraqi Government did 

not work as required to promote the Rule of Law and fight corruption in Iraq. 

The executive branch often protected corrupt employees and actively attempted 

to eradicate or control the Commission. The legislative branch did not revise the 

anticorruption laws. The judiciary branch often succumbed to pressure and did 

not adjudicate corruption cases. 

—The government did not appoint leaders, particularly ministers and Inspectors 

General that would fight corruption within ministries. 

—In order to promote sectarian agendas, professional technocrats who were qualified to perform vital government services and administration were not appointed. 

—Importantly, it has been impossible for the Commission on Public Integrity to 

safely and adequately investigate oil corruption where Sunni and Shia militias 

have control of the metering, transport and distribution of Iraqi oil. This has 

resulted in the Ministry of Oil effectively financing terrorism through these militias. 

—Additionally, my small group of investigators investigated the largest number 

of cases in the Ministry of Defense and Ministry of Interior. As you might imagine, investigating the security forces of Iraq is very difficult, but necessary for 

an Iraqi future of transparency and the Rule of Law. 

THE FUTURE

As the committee can appreciate, this is not an easy situation to resolve and it 

will not be resolved quickly or completely. Obviously the Government of Iraq, with 

the help of the U.S. government, needs to resolve the specific obstacles that I have 

listed above. 

Further, the people who were dedicated and honest under my tenure at the Commission on Public Integrity need to be protected and supported and those who infiltrated the Commission for sectarian political reasons must be re-staffed with people 

who are truly committed to its mission and its guiding principle that ‘‘No one is 

above the law.’’ If this does not happen, I am afraid that the Commission itself can 

be used as a tool of oppression as well as a tool of the corrupt to further corruption, 
82 

sectarianism and an illegal consolidation of power through targeted purges of political enemies. 

Finally, the people of Iraq must see advances by the Iraqi Government on the political level, on economic reconstruction, on basic services, amenities and infrastructure, and on the rule of law. The Government of Iraq will fail and the Iraqi and 

American people will continue to suffer if the militias and militia controlled parts 

of the Iraqi government, including the security forces, are not brought under control. 

Sectarian corruption has eroded the work of the American and Iraqi people to build 

a better future for Iraq and the region. 

CONCLUSION

Let me share with you my situation—at the least to the extent I am able right 

now. I and a staff delegation from the Commission on Public Integrity of the Republic of Iraq came to the United States on August 24, 2007, for forensics and evidence 

training with the U.S. Department of Justice. During our visit, threats against me 

and my family in Iraq escalated to a point where, together with the immense pressure of the last two years from the highest levels of the Iraqi Government, regretfully and painfully caused me to seek appropriate U.S. Government protection for 

my family. My family’s safety became paramount. 

My case for asylum was filed October 3, 2007, and is currently pending. Just as 

my family’s safety was at risk in Iraq because of my work, now my words, including 

my words to you today, may add to my risk. Following my testimony before the 

United States House on October 4, 2007, the Iraqi Prime Minister himself threatened me with prosecution. Further, I am told that my former agency now has been 

directed to simply pursue charges against me and my staff and ignore the corruption in the Iraqi Government. 

My staff and their families, I and my family, know too well that honesty, democracy and justice are not purchased without a price. While those ideals are praised 

loudly, the people who fight for them daily—the law enforcers, the anti-corruption 

fighters, the whistleblowers and their advocates—are too often met with violence, 

persecution, false allegations, and indifference. I have the greatest respect for the 

work, courage and sacrifice that the American people have made on behalf of Iraq. 

I come before you with faith and confidence that my service to my country and to 

all like you who stand against corruption will not cause any retaliation in the 

United States. This is not the case in Iraq today, where I and my Commission have 

been politically, legally, financially and physically attacked. 

Now, here in America, without protection or plan, I am but a feather in the wind. 

I am a judge and a crime fighter. I don’t know politics. I worked my life for my 

country. I love and I very much miss my country, but if I return, I will be killed. 

I look forward to the day when my status is secure and my family and I can begin 

to rebuild our life. 

I see my work in uncovering billions of dollars of corruption as promoting democracy, public integrity and the rule of law in Iraq and look forward to working with 

all who will aid in this effort. 

Thank you for your attention and patience, and please feel free to ask any questions. 

Senator LEAHY. Judge, thank you very much. That was some of 

the most moving testimony that we’ve had in this room, and I appreciate that a great deal. 

You’ve reported about the 3,000 pending corruption investigations in Iraq, and again, I applaud your courage in being willing 

to go forward with those investigations and all of us regret so very, 

very much the loss of lives of those who worked with you, and their 

family members. 

You said those cases involved more than $18 billion lost to fraud. 

How much of that $18 billion, approximately, would you estimate 

came from the United States Government? 

Judge AL-RADHI. Thank you, Mr. Chairman. I repeat in Arabic, 

because there is so much information, you know. 

Senator LEAHY. Go ahead. 

Judge AL-RADHI [spoken in Arabic]. With respect to monies that 

enter Iraq, whether from revenues from oil, or from United States 

sources or other foreign monies, we consider these monies to be 
83 

Iraqi monies, and we do control—provide control, oversight on 

these monies. 

If the one who is playing with these monies is an Iraqi citizen, 

we do prosecute that Iraqi citizen and we send him for trial in 

whatever courts he is due. 

And if it’s a foreign person, we refer him then to Mr. Bowen’s 

committee, because the law under Ambassador Bremer prevented 

us from prosecuting a non-Iraqi citizen. 

And our investigations since the outset, until the day I arrived 

in the United States has been related to 3,000 cases, accounting for 

$18 billion, distributed among the various ministries. These cases 

are not being actively pursued in front of the relevant tribunals or 

courts. And this, from the first, undermines the oversight entities 

in Iraq. 

Senator LEAHY. Do you know if any of the money that came from 

the United States that was stolen has now been recovered and returned to the United States? 

Judge AL-RADHI [spoken in Arabic]. It entered into the pockets 

of the corrupt. 

Senator LEAHY. Okay, that’s what I thought. It’s obvious to me, 

Judge, that you cannot continue your—or that nobody could continue the work you’re doing, unless they were given complete and 

total security. Am I correct in that? 

Judge AL-RADHI [spoken in Arabic]. Yes, sir, you are correct in 

that. I am surprised by what was put forth by the representative 

of DOD minutes ago, that he had requested the increase of the 

number of U.S. investigators. In Iraq we have three main oversight 

entities. 

The first one, the first entity is the commission on public integrity, that has the power to refer to courts. 

And the second one, the board of supreme audit, that oversees 

the financial issues of the ministries. 

And the third body being the inspector general offices in each of 

the ministries in Iraq. 

Why were these three entities weakened? Why were these three 

entities weakened when they were undertaking good performance? 

Senator LEAHY. Thank you. 

Senator Cochran. 

Senator COCHRAN. Thank you very much for appearing before 

our hearing, we appreciate your courage. 

Senator LEAHY. If you could just hold for just one moment, Senator Cochran. I’m going to go to another meeting. 

Senator Dorgan who began all of this will fill in for me. But, I 

must say—I’m going to set the clock again for Senator Cochran— 

but I must say, Judge, I admire your courage, and I admire the 

courage of those who work with you. I think they want to see a better Iraq, and someday let us hope there will be. Thank you. 

Senator Cochran. 

Judge AL-RADHI. Thank you, Mr. Senator. 

Senator COCHRAN. Judge, you heard the testimony of the witnesses, I assume, who preceded you at this hearing today talk 

about the effort that’s being made through agencies of our Government, to be sure that funds that are appropriated and spent for 

Iraqi freedom and reconstruction are handled in ways that are 
84 

legal, and for which purposes have been approved by the countries 

that are donating, and making available these resources. 

My question—one question that comes to my mind is that, do you 

know of any countries other than the United States who are trying 

to be helpful to Iraq, who are making any efforts to ensure that 

your anticorruption efforts, the Iraqi Government’s efforts to deal 

with corruption are being supported and strengthened. Is anybody 

helping you, other than the United States? 

Judge AL-RADHI [spoken in Arabic]. Thank you for your praise for 

my work. And I came here to thank the Americans for their great 

assistance to the Iraqis. However, Your Excellency, you have heard 

about the great mistakes that have been committed, and about the 

large amounts of money that have been wasted. 

Sir, the infrastructure in Iraq is equal to zero. You heard in previous testimony about the increase in usable water. I wonder, is 

there no regular, usable water in Iraq for us to speak about? 

Half of Baghdad, and I’m talking here about the region of 

Rasalfi, and it is a populous—a large area accounting for about 4 

to 5 million people living in it—lives in the summer with no water. 

If there’s no water, how can we speak about increases in usable 

water? This doesn’t even account for the rural areas or remote 

areas that are located away from Baghdad, and their lack of water. 

If you visited Baghdad, you would see for yourself that there is 

no water, no electricity, no sewage systems, no streets—everything 

is destroyed. If this is the case in Baghdad, then, what would be 

the case of other provinces? 

The problem is that this government has failed in performing, in 

doing its duties for many reasons. One of these reasons is that this 

government has relied on blocs of sectarian cultures, if you will. It 

has distributed the ministries according to the various sects and 

groupings. Instead of employing the help of technocrats, they 

named to the various critical posts, politicians from these various 

blocs, political blocs. And you may be surprised if I tell you that 

many of these appointees have false degrees, fake college degrees, 

or bought degrees. And those who are governing Iraq today are 

doing it only to benefit their blocs, their various blocs. 

Senator COCHRAN. Thank you very much. 

I wonder, in your experience, observing the U.S. efforts to help 

reconstruct and rebuild and recover, do you notice the same kind 

of corruption among contractors who are actually given money directly from the United States to U.S.-owned firms, and U.S.-operated firms—do you see any evidence of corrupt practices among 

those companies, or are you talking about strictly those that are 

being supported by the Iraqi regime. 

Judge AL-RADHI [spoken in Arabic]. Corruption is corruption. 

And the various entities have failed in undertaking the reconstruction process. And the fraudulent contracts into which they entered 

are all contracts which violate the laws. 

The contract is usually written by a crook who manipulates the 

contract requirements. For example, the former defense minister, 

who was originally an instructor or a teacher, went to Pakistan 

and Poland and entered into contracts, and doesn’t know anything 

about the technical aspects and requirements of contracts, but 

monies were paid for a contract amounting to $113 million and an-
85 

other contract for the same amount, $113 million, and a third contract amounting to $167 million—all to purchase airplanes for Iraq. 

The monies were paid to the foreign companies, and the aircrafts 

were not delivered to Iraq. 

When we brought that case in front of the courts, senior officials 

from the Defense Ministry of Iraq were witnesses. The crooks also 

entered in contracts to acquire ambulances, but these ambulances 

were not delivered either. 

Nothwithstanding these problems, still in 2007, the Ministry of 

Defense in Iraq sent us a letter that the ministry of defense does 

not have a technical committee to inspect the weapons that are 

supposed to be received. So, no one takes a look at how many or 

quality of equipment comes to Iraq, and what does come is not inspected. And this is only a simple example. 

Senator COCHRAN. Thank you. Thank you very much. 

Senator, my time is expired. 

Senator DORGAN [presiding]. Mr. al-Radhi, Judge al-Radhi, you 

indicated that you uncovered $18 billion worth of misspent funds 

in Iraq. Is it true that the majority of those funds came from the 

United States Government? 

Judge AL-RADHI [spoken in Arabic]. Yes. That is correct, because 

most of these monies came from the DOD, so it is correct. 

Senator DORGAN. Judge al-Radhi, you indicated that some of the 

same money that this committee, this Appropriations Committee, 

has appropriated to help rebuild Iraq, had been funneled to the insurgents and the militias that have killed American soldiers. How 

does that funneling of money happen, so that you believe money 

appropriated by this committee ends up in the hands of insurgents 

with which to kill American soldiers? 

Judge AL-RADHI [spoken in Arabic]. When the ministry of defense 

buys not usable weapons, but bad weapons, how can the Iraqi army 

defend itself with such weapons? 

Ms. BEHRANS. And sir, the interpreter, for the record, would like 

to tell you that the mention, the previous mention about the ministry of defense, relates to ministry of defense and not DOD. The 

interpreter got an explanation. 

Senator DORGAN. I understand. 

Ms. BEHRANS. Thank you, sir. 

Judge AL-RADHI [spoken in Arabic]. This is on one hand. The 

other aspect is that the oil is being smuggled in Beiji from the 

Sunni militias and in Basrah, through the Shiite militias. And, of 

course, they will use this to purchase weapons. And, of course, 

these monies will target the killing of Iraqis and Americans. 

Senator DORGAN. Judge al-Radhi, when you uncovered information about waste and fraud and abuse, did you share it with U.S. 

officials in Iraq, and if so, what was their response? 

Judge AL-RADHI [spoken in Arabic]. Yes, we did share a lot with 

the U.S. officials about such discussions, because we—there is a 

U.S. representative or technical expert in each of the ministries. 

And I have wished for those experts to tell us if these ministers 

were corrupt, or to try to give us advice to end the corruption as 

we uncovered it. 

However, the opposite happened. One of those experts came to 

me and did the opposite, he tried to defend the corrupt Iraqi min-
86 

ister. Likewise, in the ministry of reconstruction and population, 

this expert came and defended those corrupt within the ministry. 

However, I must not generalize here, because some of the experts 

were very good people. However, this is what happened in some instances. 

Senator DORGAN. But you are saying in your testimony that your 

personal knowledge is that some U.S. officials or advisors were 

given evidence of corruption by you, and they did not take action, 

or they actually defended the corruption, is that your testimony? 

Judge AL-RADHI [spoken in Arabic]. Yes, correct. 

Senator DORGAN. And is that because they didn’t want to offend 

any of the ministries in the Iraqi Government, as they were trying 

to put ministries together? 

Judge AL-RADHI [spoken in Arabic]. Many reasons. I cannot really define exactly, and precisely, the motive. However, some of them 

are corrupt, some of them wanted to steal money and to benefit 

from the reconstruction, and some of them had procedures that did 

not go along with Iraqi laws. 

Senator DORGAN. Judge al-Radhi, my understanding is that you 

were given $11 million cash to start the commission on public integrity? You were told that the resources to start this commission 

on public integrity would be made available, you showed up, and 

they were made available in cash? You signed for the cash. Apparently you had a couple of people helping you load it into a car, took 

it home, had $11 million in cash in your home overnight, and then 

deposited it in a bank the next morning. My understanding is that 

$11 million disappeared while in a bank account. Can you describe 

that circumstance to us? And this, incidentally, was $11 million of 

U.S. taxpayers’ money. 

Judge AL-RADHI [spoken in Arabic]. $11 million, and this happened toward the end of the time when Ambassador Bremer was 

there. 

Advisors and experts told the Ambassador to provide this money 

to the commission on public integrity to create an academy that 

would enable the creation of studying the ethics and integrity. And 

indeed, I went to this financial entity, a U.S. financial entity when 

they were in Iraq and I received a check for over $11 million. And 

I signed it with my name, because I was the head of the CPI in 

Iraq. 

And in the same building of that entity, I went to the cashier’s 

office, and I signed for the check and he paid the money to me. And 

I had four to five bodyguards, we transferred the amount, the monies, in a Suburban car, and this happened in the afternoon of that 

day. 

So, I placed it at the directorate, at my office, and I slept in front 

of the door, that same night, along with the protection that was 

provided to me. 

The next morning, early in the morning, we took the monies to 

the bank, and it was recorded under the name of our directorate 

in the Rafidain Bank. 

After a lapse of time, the council of ministers issued an order and 

they retrieved all the monies in hard currency—foreign currency— 

from all the directorates, and one of these directorates was ours. 
87 

We told them, if you don’t approve of the hard currency, give us 

instead of this foreign money, Iraqi currency for the academy 

project. We were answered with the following answer: that the 

minister of finance did not approve or give consent to give us the 

money. And I have a letter here, showing that they received the 

money—away from the CPI, and receipts that the money was received by the Central Bank, and by the ministry of finance. 

[The information follows:] 

In the Name of God the most Gracious, Most Merciful 

Republic of Iraq 

Ministry of Finance 

Office: Accounting 

Section: Cashing 

No: 17/53 

AH date:3286 

CE date: 19/2/2006 

To: Commission of Public Integrity /Financial Office 

Subject: A Client Account 

With reference to your book No: 193 of 6/2/2006 we confirm that the amount of 

$11,988.871/-eleven million, nine hundred and eighty eight thousand, and eight 

hundred and seventy one dollars has been in our account since 30/1/2005 according 

to the Central Bank notice No: 34548 enclosed. 

With Appreciation 

MUHIB ABDUL RAZAK ABDUL AZIZ, 

General Director of the Accounting Office. 

19/2/2006 

CC to: 

—Accounting Office/none Central System Office 

—Accounting Office/cashing. 

—Out put Section 
88 

CERTIFICATION OF TRANSLATION COMPETENCE

I, Tona Rashad, hereby certify that I am fluent in both written and oral English 

and the Arabic languages, and that I have translated the foregoing documents from 

Arabic to English to the best of my skill and ability and that the translation is a 

true, accurate translation of the Arabic original. 

Tona Rashad, 

Tel 202–828–1872 

Email tona.rashad@hklaw.com 

2099 Pennsylvania Avenue, N.W. 

Suite 100 

Washington, D.C. 20006–6801 

Today’s Date: March 10, 2008 
89 

In the Name of God the most Gracious, Most Merciful 

Republic of Iraq 

Ministry of Finance 

Office: Accounting 

Section: Vouchering 

No: 902/21/1 

AH date:13074 

CE date: 21/9/2005 

To: Al Rafedein Bank/Accounting Section 

Subject: Closing Foreign Currency Accounts 

According to your book No. 2108 of 2/7/2005 where you request the approval to 

exclude the Commission of Public Integrity from the procedures to close foreign currency accounts. 

We would like to inform you that we did not get the Minister’s approval for that 

exclusion and we should depend working on item No. 3920 of 5/4/2005 to close all 

open accounts in dollars for all (Al Rafedein) Bank Offices. 

With appreciation... 

FUAD ABDULLAH, 

Ministry of Finance Agent. 

19/9/2005 

CC to: 

—Commission of Public Integrity . . . to be informed... with appreciation 

—Office of Accounting/cashing 
90 

CERTIFICATION OF TRANSLATION COMPETENCE

I, Tona Rashad, hereby certify that I am fluent in both written and oral English 

and the Arabic languages, and that I have translated the foregoing documents from 

Arabic to English to the best of my skill and ability and that the translation is a 

true, accurate translation of the Arabic original. 

Tona Rashad, 

Tel 202–828–1872 

Email tona.rashad@hklaw.com 

2099 Pennsylvania Avenue, N.W. 

Suite 100 

Washington, D.C. 20006–6801 

Today’s Date: March 10, 2008 
91 

REPUBLIC OF IRAQ 

PRIME MINISTER’S OFFICE 

Ref.: m.r.n/s/7/914 

Date: 04/01/2007 

(Personal, Confidential and very Urgent) 

To/The General Commission of Integrity 

8569 

743 

Subject/Referral 

Peace, mercy and blessings of Allah be upon you! 

It has been decided not to refer any of the following parties to the court until approval of His Excellency, the Prime Minister, is obtained: 

1. Presidential office 

2. Council of Ministers 

3. Current and previous ministers 

With appreciation 

Signed by DR. TARIQ NAJIM ABDULLAH, 

Prime Minister’s Office Manager. 

04/01/2007 

A copy to/ 

—Presidential office-Diwan/Please be informed... With appreciation 

—Both Prime Minister Deputies/Please be informed... With appreciation 

—Ministers’ Cabinet Secretary General’s Office/Please be informed... With appreciation 

—Organizing unit 

—Follow up 

—Issued correspondence file 
92 

CERTIFICATION OF TRANSLATION COMPETENCE

I, Tona Rashad, hereby certify that I am fluent in both written and oral English 

and the Arabic languages, and that I have translated the foregoing documents from 

Arabic to English to the best of my skill and ability and that the translation is a 

true, accurate translation of the Arabic original. 

Tona Rashad, 

Tel 202–828–1872 

Email tona.rashad@hklaw.com 

2099 Pennsylvania Avenue, N.W. 

Suite 100 

Washington, D.C. 20006–6801 

Today’s Date: March 10, 2008 
93 

REPUBLIC OF IRAQ 

PRIME MINISTER’S OFFICE 

Ref.: m.r.n/s/7/923 

Date: 04/02/2007 

(Personal, Confidential and very Urgent) 

To/The General Commission of Integrity 

[Stamp of the General Commission of Integrity] 

8568 

743 

Subject/Directive 

[Stamp of the Investigations office] 

Ref.: 6348 

Date: 04/12/2007 

Peace, mercy and blessings of Allah be upon you! 

Your letter ref. no. s/78 dated 03/01/2007. 

His Excellency, the Prime Minister, directed to emphasize our attached letter with 

ref. no. m.r.n./s/7/914 dated 04/01/2007, which directs to stop the pursuit of previous 

and current ministers, unless done through the Prime Minister’s office, and our attached letter no. m.r.n./s/7/282 dated 02/04/2007, which refers to the authorization 

from the Prime Minister’s office for ownership. 

With appreciation 

Attachments: 

—The two above mentioned letters from the Prime Minister’s Office 

Signed by PRIME MINISTER NORI KAMIL AL-MALIKI’S OFFICE

DR. TARIQ NAJIM ABDULLAH, 

Prime Minister’s Office Manager, 

04/02/2007 

A copy to/ 

—Organizing unit 

—Follow up 
94 

Republic of Iraq 

Office of the Prime Minister 

Number: M. R. N / S / 7 / 282 

Date: 4/2/2007 

[Stamp: Office of the Deputy Chairman of the Commission; Incoming; Number 686; 

Date 7/2/2007] 

[Stamp: Commission of Public Integrity; (illegible) Iraq; (illegible) 226; (illegible) 7 

2 7] 

(Private and Confidential) 

To: Commission of Public Integrity 

Re: Transfer of Ownership 
95 

May the Peace, Mercy and Blessings of God be upon you. 

His Excellency, the Prime Minister, has given the order that the Office of the 

Prime Minister has no objection to the procedures in place for the transfer of ownership of the residential housing owned by the Iraqi Ports Company, among which is 

the house registered in the name of Mr. Salam Audah Faleh, the former Minister 

of Transportation, on the basis of the acceptance of the General Secretariat of the 

Council of Ministers, as stated in its letter numbered Qaf/2/1/25/13796 of 20/9/2005 

and pursuant to which transfer of ownership operations were properly conducted. 

Regards. 

Enclosures: 

—Aforementioned Letter of General Secretariat of the Council of Ministers 

—Record of Sale (Transfer of Ownership) of house number 190 Ajnadin Street 

Office of Nouri Kamel Al-Maliki, 

Prime Minister. 

DR. TAREK NIJM ABDALLAH, 

Director of the Office of the Prime Minister. 

4/2/2007 

Our Office/Urgent 

To be referred to the Basra Branch (private and confidential). 

A copy thereof is to be kept with us along with the enclosures. 

(signature) 

CC to: 

—Ministry of Transportation—Office of the Minister For your information. Regards. 

—General Secretariat of the Council of Ministers—Office of the Secretary/Your 

above letter. Regards. 

—Honorable Mr. Salam Audah Faleh/Former Minister of Transportation/For your 

information. Regards. 

—Outgoing letters file. 

To: Office of the Judge 

NO: Q/2/1/39/14708 

Date: 3/9/2007 

Ministries/Minster Office 

Offices not related to Ministry/Office of Chief of Unite 

Subject/Commission of Public Integrity 

The Commission on Public Integrity’s area of expertise is limited according to 

Order 55 of 2004 including the following: 

1. Investigation of corruption cases and it has to be exposed to the Investigate 

Judge. 

2. Refer all information related to possible violations of the code of conduct where 

either the violating employee or the one they suspect in him to the Minster, the 

Chief of Office not related to the Ministry to the Inspector General. 

3. Publish structured lists to have officials reveal their financial assess. 

4. Propose legislation related to anti corruption. 

5. As a result, the Commission cannot request information, files or any other 

thing, yet they can investigate the Management and Corruption after it happens 

and when evidences presented against the accused. It could also refer all the received information about the information related to possible violations of the code 

of conduct to the Minister, the Chief of Office not related to the Ministry or the Inspector General where either the violating employee or the one they suspect for purposes of making an Investigation. And it doesn’t have the right to stop or prevent 

it from happening if it related to the Ministry under investigation or the Office of 

the Inspector General. 

We hope observance... with appreciation 

DR. FARHAD NEMA ALLAH HUSSEIN, 

Secretarial General of the Ministries Council. 

30/8/2007 

CC: 

—Prim Minister Office/to be informed... with appreciation. 
96 

—Office of Secretarial General of the Ministries Council/to be informed... with 

appreciation. 

—The Commotion of Public Integrity/Chief of Office/according to your book numbered T/detective/548//2007/4888 in 14/8/2007 for mentioned purpose... with 

appreciation. 

CERTIFICATION OF TRANSLATION COMPETENCE

I, Tona Rashad, hereby certify that I am fluent in both written and oral English 

and the Arabic languages, and that I have translated the foregoing documents from 

Arabic to English to the best of my skill and ability and that the translation is a 

true, accurate translation of the Arabic original. 

Tona Rashad, 

Tel 202–828–1872 

Email tona.rashad@hklaw.com 

2099 Pennsylvania Avenue, N.W. 
97 

Suite 100 

Washington, D.C. 20006–6801 

Today’s Date: March 10, 2008 

Senator DORGAN. Judge al-Radhi, that was $11 million of American taxpayer’s money—do you have any notion of how it was 

spent? 

Judge AL-RADHI [spoken in Arabic]. The council of ministers took 

that money, and it was spent in a waste—in a public money waste 

fashion. 

Senator DORGAN. My understanding, Judge al-Radhi, is that the 

American money that was given in large quantities to all of the 

ministries, was something called capacity building money. And you 

have indicated that, because virtually all of the ministries have 

been infiltrated by some of the militia, that so-called ‘‘capacity 

building’’ funding from the United States is the funding that has 

ended up, and been diverted into the militia’s hands, is that correct? 

Judge AL-RADHI [spoken in Arabic]. That is correct because the 

ministries were distributed according to the various political parties. 

For instance, the ministry of health portfolio was given to one of 

the Shiite parties, so if there was an ill person from a different 

sect, ill and residing in a hospital, staying in a hospital, that ill 

person would be kidnapped from that hospital. 

And this led to the loss of monies through such practices. The officer himself would sell his gun. And just as you have heard from 

the previous panel that testified minutes ago, such weapon have 

reached the frontier of Turkey. 

And this is one of the reasons that undermined and weakened 

our institution, because we did track down the corrupt and we did 

give a diagnosis for corruption in the country, and for the first 

time, our institution, the CPI, for the first time in the Middle East, 

it would refer ministers to the courts for prosecution for nonpolitical reasons, but for the reasons of corruption. 

Senator DORGAN. Judge al-Radhi, I want to hold up a chart that 

has the copy of a letter that I believe you received, it is in Arabic, 

and then translated to English. My understanding is it’s a letter 

that came from the prime minister’s office, and it says to you, 

‘‘Peace, mercy and blessings of Allah be upon you, it has been decided not to refer any of the following parties to the court, until approval of his excellency, the prime minister, is obtained, presidential office, council of ministers, current and previous ministers, 

with the previous appreciation.’’ 

What, apparently, this means—you might confirm it—what, apparently, this means is as you began digging in to crime and corruption, and as I want to refer again to the description by the special inspector general who said you are an honorable man and an 

effective crime fighter in Iraq. As you began to dig into corruption 

and understand that some of the ministries were corrupt and misusing money, the prime minister’s office said to your office, you are 

not able to refer any parties dealing with corruption to a court, unless the prime minister would give approval, is that correct? 
98 

Judge AL-RADHI [spoken in Arabic]. That is correct, and that directive violates the constitution, because we are considered an 

independent entity, based on article 102 of the Iraqi constitution. 

Senator DORGAN. And do you believe this happened because you 

started talking about, well, for example, Mr.—I believe it was Mr. 

Hussan, the minister of defense where $4 billion was unaccounted 

for, I mean, they couldn’t account for $4 billion of spending. Do you 

believe that because you were digging into that, the prime minister’s office then came up with a letter of this type, to stop what 

you were doing? 

Judge AL-RADHI [spoken in Arabic]. Yes, because of our investigations that included investigating practices from the ministry of oil, 

and the ministry of defense. Accordingly, we received this letter. 

Senator DORGAN. Judge al-Radhi, let me conclude today by 

thanking you for being here. I must say to you, I’m embarrassed 

at the attendance of this committee, this committee room is full 

when we appropriate money. There seems to be less enthusiasm for 

oversight to determine how that money is spent. I appreciate the 

Senators who did attend, and my colleague, Senator Cochran, has 

been here for the whole period, and former chair and others, so I 

appreciate those who came. 

But, frankly, this is a very significant issue. It should command 

a great deal of attention by this Congress, and I regret it has not. 

I know they have tried to kill you, personally, you do this at 

great risk. And I also want to say one other thing. I’m very unhappy with the U.S. State Department, and the way that you have 

been treated, personally, since you came to this country. The State 

Department, I believe, has sort of set you loose over here with no 

help and guidance, and apparently no action on your asylum request, and your message is not in accordance with the message 

that some tell us about. 

I think there are good things going on in Iraq and improvements 

going on in Iraq, and I think there’s a lot of corruption and fraud 

and abuse—I think both represent an accurate story. The story you 

tell is not—is not welcomed by some. They don’t want to hear those 

facts, and that interpretation and that information, so I believe you 

have not been treated well by the U.S. State Department, and I 

think that’s a shame. I hope that one of these days the State Department will do what it should do for a man of your courage and 

your integrity. 

Taking on the job as head of the commission on public integrity 

in a country in Iraq where so many have been assassinated and 

murdered, and their families have been threatened. And I read the 

account, by the way, of you standing in your house when a missile 

hit in that neighborhood and your house collapses around you and 

you were fortunately unhurt. But you’re a man of great personal 

courage I believe, and there came a time when you couldn’t continue to do your job in Iraq. And you come to this country and tell 

us what you see and what you know, that I think is very helpful 

to our United States Congress. And as one Member of the United 

States Senate, I want to tell you how much I appreciate your courage, your work, and your willingness to come today. 

Thank you very much. 

Judge AL-RADHI. Thank you so much. 
99 

1The IAMB is an independent audit oversight body for the Development Fund for Iraq (DFI) 

established pursuant to U.N. Security Council Resolution 1483 to help ensure that the DFI is 

used in a transparent manner for the benefit of the people of Iraq and export sales of petroleum 

products are made consistent with international best practices. The IAMB’s terms of reference, 

approved in October 2003, allow it to oversee the completeness of deposits into the DFI, the 

management of the funds in the DFI and the use of DFI resources in the spending ministries, 

together with the power to complete special audits. 2GAO, Stabilizing Iraq: DOD Cannot Ensure that U.S.-Funded Equipment Has Reached Iraqi 

Security Forces, GAO–07–711 (Washington, D.C.: July 31, 2007). 

ADDITIONAL COMMITTEE QUESTIONS

Senator DORGAN. Any members wishing to submit questions to 

the witnesses may do so and they will all be printed in the record. 

[The following questions were not asked at the hearing, but were 

submitted to the witnesses for response subsequent to the hearing:] 

QUESTIONS SUBMITTED TO DAVID M. WALKER

QUESTIONS SUBMITTED BY SENATOR ROBERT C. BYRD

Question. Mr. Walker, a recent State Department report stated that in early 2006, the Iraqi oil ministry estimated that ten percent of the $4–5 billion in fuel imported 

for public consumption in Iraq at subsidized rates in 2005 was smuggled internally 

and out of the country for resale at market rates. Further, approximately ten percent of all oil smuggling profits were estimated to go to insurgents. Conservatively, 

those facts suggest that insurgents in Iraq have approximately $100 million per 

year available to them from that single source. Should we be concerned about this 

and can you estimate for us the total revenues available to the insurgents? 

Answer. Yes. Congress should be concerned. GAO has previously reported that 

corruption is widespread and a problem for the Iraqi government. We do not have 

an estimate of the amount available to insurgents from petroleum-related corruption, but our report ‘‘Stabilizing Iraq: Armed Groups in Iraq Rely on Resources Generated in Iraq to Sustain High Levels of Violence’’ (GAO–07–782C) provides further 

information. The report title is unclassified but the body of the report is classified. 

A copy of this report is available to the Committee. 

Question. Mr. Walker, since March 2004, experts have been urging Iraq to install 

control systems to measure and account for the amount of oil pumped out of Iraqi 

oil fields and processed at Iraqi refineries, as the best way to prevent corruption 

and the diversion of oil and oil revenues to insurgents and other unauthorized individuals. As recently as February 2008, such control measures were still being recommended. Why have control systems not been installed? 

Answer. The lack oil metering in Iraq has been a problem since 1996 when the 

United Nations first cited the issue during the Oil for Food Program. In 2004, the 

Coalition Provisional Authority took steps to install a metering system, but lack of 

security stopped completion of this work. In 2006, the Iraqi government took steps 

to establish, within the next 2 years, a measuring system for Iraq’s oil, gas, and 

related products within Iraq and export and import operations. However, we reported in 2007 that security continued to pose a challenge to Iraq’s oil and electricity sectors and has led to project delays and increased costs. As of February 

2008, the International Advisory and Monitoring Board (IAMB) reported that some 

metering at oil terminals had been installed, but there is an absence of a comprehensive system of metering, including no metering in the oil fields.1

Question. Mr. Walker, do you feel that there are sufficient controls over the accountability of the weapons the United States provides to Iraqi security forces? 

Please explain. 

Answer. No. As of March 2008, the Department of Defense (DOD) had not implemented GAO’s recommendations to improve accountability over the U.S. program to 

train and equip Iraqi security forces.2 We recommended that the Secretary of Defense determine which DOD accountability procedures apply or should apply to the 

program. We also recommended that after defining the required accountability procedures, DOD ensure that sufficient staff, functioning distribution networks, standard operating procedures, and proper technology are available to meet the requirements. 

Question. Mr. Walker, do we have confidence that the use of Development Fund 

for Iraq deposit accounts can be reconciled with income and spending? 

Answer. GAO cannot determine the extent to which the Iraqi government is 

spending its $10.1 billion capital projects budget for 2007 because of wide discrep-
100 

3GAO, Iraq Reconstruction: Better Data Needed to Assess Iraq’s Budget Execution, GAO–08– 

153 (Washington, D.C.: Jan. 15, 2008). 

ancies between Iraq and U.S. reports on Iraqi expenditures. The discrepancies highlight the uncertainty about Iraqi expenditures.3 In addition, U.S. agencies, the 

World Bank, and independent auditors report serious internal control weaknesses 

in Iraqi government accounting procedures. For example, the World Bank reported 

that reconciliation of government of Iraq accounts is impossible. GAO plans to review issues related to Iraqi income and spending under the authority of the Comptroller General, based on a request from the Senate Armed Services Committee. 

Question. Mr. Walker, is Iraq in possession of financial assets not accounted for 

in the Development Fund for Iraq accounts, and if so, where are these resources and 

do discrepancies exist in these accounts? 

Answer. GAO has not examined whether the Iraq government has financial assets 

not accounted for in the Development Fund for Iraq (DFI). However, IAMB is responsible for overseeing the completeness of deposits into the Development Fund for 

Iraq. IAMB reported that auditors will finalize the 2007 audit of the DFI and report 

to IAMB during 2008. 

Question. Mr. Walker, have there been any discrepancies noted between the Development Fund for Iraq balance reports and actual bank holdings, and if so, where? 

Answer. GAO has not examined any potential discrepancies between the DFI balance reports and actual bank holdings. However, the International Monetary Fund 

reported in January 2008 that audits of the DFI noted large un-reconciled differences regarding oil extraction, production, and export sales. Also, the World Bank 

has reported that the government of Iraq lacks consolidated information on the 

exact number of government bank accounts it has and the balances in them. As part 

of a future GAO review referred to under question 8, GAO is planning to address 

some of these issues. 

Question. Mr. Walker, is Iraq holding gold or other monetary assets that might 

not be accounted for in their deposit accounts? 

Answer. GAO has not examined whether the government of Iraq is holding gold 

or other monetary assets not accounted for in DFI deposit accounts. 

Question. Mr. Walker, I am concerned about what happens from year-to-year regarding unobligated funds due to Iraq’s reported budget execution problems. If unobligated funds are rolled over from year to year, what is the confidence level that 

such funds are actually available for obligation and execution? 

Answer. GAO cannot determine how much the Iraqi government has actually 

spent because U.S. and Iraqi reports show widely disparate spending data. Moreover, the IAMB, International Monetary Fund, and World Bank have concerns about 

whether Iraq government accounts can be reconciled. As a result, it is uncertain 

whether unused funds approved by Iraq’s budget laws are actually available for obligation and execution the following year. 

QUESTIONS SUBMITTED BY SENATOR DIANNE FEINSTEIN

Question. On March 6, 2008, the Boston Globe ran a story entitled ‘‘Top Iraq Contractor Skirts U.S. Taxes Offshore.’’ In the story, the authors noted that ‘‘more than 

21,000 people working for KBR in Iraq—including about 10,500 Americans—are listed as employees’’ of two shell companies for KBR registered in the Caribbean. The 

story also states: ‘‘the Defense Department has known since at least 2004 that KBR 

was avoiding taxes by declaring its American workers as employees of Cayman Islands shell companies, and officials said the move allowed KBR to perform the work 

more cheaply, saving Defense dollars.’’ However, the article estimates a roughly 

$500 million shortfall in lost Social Security and Medicare revenue as a result of 

the practice. 

Many employees did not know that they were employed by the shell companies, 

not KBR, and those employees have lost eligibility for Social Security, unemployment, and other government services as a result of these practices. KBR has 

amassed an estimated $16 billion in contracts in Iraq. On March 13th, Senator John 

Kerry (D-MA) introduced legislation to treat foreign subsidiaries of U.S. companies 

performing services under contract with the United States government as American 

employers for the purpose of Social Security and Medicare payroll taxes. 

Can you comment on whether or not the Government Accountability Office has 

reviewed this issue and any findings that have come as a result of the review? If 

not, does the GAO plan to review the issue? 

Answer. We have not reviewed KBR’s hiring of personnel through companies registered in the Caribbean and have no ongoing work specifically related to this issue. 
101 

4GAO, International Taxation: Information on Federal Contractors With Offshore Subsidiaries, GAO–04–293, (Washington, D.C.: Feb. 2, 2004). 5GAO, International Taxation: Tax Haven Companies Were More Likely to Have a Tax Cost 

Advantage in Federal Contracting, GAO–04–856, (Washington, D.C.: June 30, 2004). 6GAO, Federal Contracting: Use of Contractor Performance Information, GAO–07–1111T, 

(Washington, D.C.: July 18, 2007). 7GAO, Military Operations: DOD’s Extensive Use of Logistics Support Contracts Requires 

Strengthened Oversight, GAO–04–854 (Washington, D.C.: July 19, 2004). 8GAO, Defense Logistics: High-Level DOD Coordination Is Needed to Further Improve the 

Management of the Army’s LOGCAP Contract, GAO–05–328 (Washington, D.C.: March 21, 

2005). 9GAO, 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). 

We have, however, previously reported on issues associated with federal contractors 

with offshore subsidiaries. For example, we reported in February 2004 that 59 of 

the 100 largest publicly traded federal contractors in fiscal year 2001, including Halliburton (then the parent company of KBR), reported having a subsidiary in a tax 

haven country.4 We subsequently reported in June 2004 that large tax haven contractors were more likely to have a tax cost advantage in federal contracting than 

large domestic contractors.5

Question. With the multitude of reports raising questions about KBR’s performance as a contractor in Iraq, why is the U.S. military still doing business with the 

company? 

Answer. DOD may be in a better position to address its use of specific contractors 

or how it used past performance information when awarding specific contracts. We 

would like to note, however, that contracting is important to how many agencies accomplish their missions, and therefore it is critical that agencies focus on buying 

the right things the right way. This includes ensuring that contracts are awarded 

only to responsible contractors, and that contractors are held accountable for their 

performance. As we noted in July 2007, the use of contractor performance information is a key factor in doing so.6

Question. What actions has the GAO taken to address past problems with KBR 

and can you name the instances where the DOD has cancelled a large contact in 

Iraq due to mismanagement? 

Answer. GAO has made multiple recommendations in previous reports aimed at 

improving DOD’s oversight and management of contractors supporting deployed 

forces, including KBR. For example, GAO issued a report in July 2004 addressing 

the need for DOD to strengthen oversight of logistics support contracts such as the 

Army Logistics Civil Augmentation Program (LOGCAP).7 In March 2005, GAO 

issued a report calling for high-level DOD coordination to improve the management 

of the LOGCAP contract.8 And in December 2006, GAO issued a comprehensive report on contractor support to deployed forces that called for high-level DOD action 

to address long-standing problems with DOD’s management and oversight of contractors supporting deployed forces.9

We do not have complete information on the extent to which DOD may have cancelled a large contract in Iraq due to mismanagement. We are aware of several instances in which DOD cancelled or terminated, at least in part, contracts or task 

orders for work in Iraq due to poor management and higher than expected costs For 

example, in May 2006, the U.S. Army Corps of Engineers announced that the contract with Parsons Global Services to build primary health care centers was partially terminated due to insufficient progress and escalating costs. 

In a January report to Congress, the Congressional Research Service (CRS) recommended that Congress consider requiring that ‘‘the Defense Department use 

more fixed-price contracting in Iraq, task and delivery orders [be matched to] certain dollar constraints, and larger contracts be divided into smaller contracts, with 

better-defined discrete tasks.’’ 

Question. In your opinion, does the size of the contracts used in Iraq inhibit proper oversight of those contracts? 

Answer. The size of a contract can be a factor in determining the extent and nature of oversight required, but in and of itself does not inhibit proper oversight. 

Rather, we and others have reported that DOD simply does not have a sufficient 

number of acquisition and contracting personnel to provide effective oversight over 

the range of contracts and contractors it employs in Iraq, thereby limiting its ability 

to obtain reasonable assurance that contractors were meeting contract requirements 

efficiently and effectively. 

Question. Would a system similar to the one outlined by CRS help increase oversight of Iraq contracts? 
102 

10See, for example, GAO, Defense Contract Management: DOD’s Lack of Adherence to Key 

Contracting Principles on Iraq Oil Contract Put Government Interests at Risk, GAO–07–839 

(Washington, D.C.: July 31, 2007) and Iraq Contract Costs: DOD Consideration of Defense Contract Audit Agency’s Findings, GAO–06–1132 (Washington, D.C.: Sept. 25, 2006). 

Answer. While we have not specifically assessed the options proposed by CRS in 

its January 2008 report, our work provides insights into some of the underlying 

issues that these proposals attempt to address. For example, we have reported that 

reconstruction and support contracts are often cost-reimbursement type contracts, 

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

costs to the extent prescribed in the contracts. Such contracts are generally used 

when uncertainties involved in contract performance, such as when the government’s requirements or needs are not well-defined, do not allow the work to be 

priced on a fixed-price basis. In some cases, we found that the lack of well-defined 

requirements resulted in DOD using business arrangements that increased the government’s risk, such as by allowing contractors to begin work before key contract 

terms and conditions, such as the scope of the work and its price, were fully defined.10 Consequently, the extent that DOD is able to better define its requirements 

should enable it to increase its use of fixed-price contracts and enable it to definitize 

its contracts on a more timely basis. 

The increased use of fixed-price contracts and the more timely definitization of 

contracts, however, does not obviate the need for effective management and oversight. In other words, if contracts are not effectively managed and given sufficient 

oversight, the government’s risk is likely to increase. In that regard, DOD still 

needs to improve its capacity to manage and oversee contractor performance, including assuring that it has sufficient contract oversight personnel to provide effective 

oversight. We have made a number of recommendations aimed at strengthening 

DOD’s management and oversight of contractor support at deployed locations, and 

the department has agreed to implement many of those recommendations. However, 

we have found that DOD has made limited progress implementing some key recommendations. 

Question. What other barriers prevent the GAO or Inspectors General from improving oversight of these contracts? 

Answer. Despite improvement since last year, the security situation in Iraq continues to hamper contract oversight. Operating within this environment, we and the 

other accountability organizations will continue to coordinate our oversight efforts 

to avoid duplication and leverage our resources. 

QUESTIONS SUBMITTED BY SENATOR JUDD GREGG

Question. Has the Prime Minister or any other senior Iraqi government official 

taken any action to interfere with GOI investigations into cases of corruption? If so, 

please describe in detail the circumstances. 

Answer. GAO has not examined allegations of senior Iraqi government officials 

interfering with government of Iraq investigations of corruption. 

Question. What factors limit the ability of the CPI, the Board of Supreme Audit, 

and respective Ministry IGs from investigating and prosecuting cases of corruption? 

Answer. Violence, intimidation, and attacks against staff are a major obstacle to 

investigations according to the former head of the Commission on Public Integrity 

(CPI). Aggravating this situation, we have reported that corruption within the ministries is widespread and the Iraqi civil service remains hampered by staff with political and sectarian loyalties. Also, Iraqi law is an obstacle. Article 136(b) of Iraq’s 

Criminal Code allows any Iraqi minister to grant complete immunity of prosecution 

to any ministry employee accused of wrongdoing. These factors create a difficult environment to investigate charges of corruption. 

Question. Have any documents in the possession of the U.S. Mission been altered 

by U.S. Government officials by removing the names of Iraqi leaders because the 

documents implicate those leaders in cases of corruption? 

Answer. GAO has not investigated this issue. 

Question. Has the U.S. Mission ever retroactively classified anticorruption or rule 

of law reports after Congress has requested such reports? 

Answer. The U.S. Mission retroactively classified rule of law reports and documents GAO used as a source in our report ‘‘Stabilizing and Rebuilding Iraq: U.S. 

Ministry Capacity Development Efforts U.S. Ministry Capacity Development Efforts 

Need an Overall Integrated Strategy to Guide Efforts and Manage Risk’’ (GAO–08– 

117). We subsequently had to remove text and information from our unclassified report and reissue the report so it would remain unclassified. 
103 

QUESTIONS SUBMITTED TO CLAUDE M. KICKLIGHTER

QUESTIONS SUBMITTED BY SENATOR ROBERT C. BYRD

Question. General Kicklighter, the Department of Defense, through the Commander’s Emergency Response Program, administers the Concerned Local Citizen 

program in Iraq. Reportedly, within that program there are about 80,000–90,000 individuals being paid about $350 per month; that amounts to about $30 million in 

total per month. Can you tell me how that money is distributed and what audit controls are in place to ensure that each individual actually exists and receives the 

amount intended to go to them? 

Answer. The DODIG has not specifically reviewed the CERP program in Iraq. 

However, on February 28. 2007, we issued DOD IG report D–2007–0064, ‘‘Implementation of the Commanders’ Emergency Response Program in Afghanistan.’’ The 

overall objectives of the audit were to evaluate management’s administration of the 

Commanders’ Emergency Response Program (CERP), and determine whether the internal controls set up for the CERP in the Afghanistan area of responsibility protect 

DOD assets. We found that the Commander, Combined Forces Command Afghanistan established controls over the CERP; however, they were not effective in all 

cases. As a result: 

—Of the 16 pay agents, 15 did not have appropriate physical security for storing 

cash, the sixteenth pay agent did not hold cash because she is collocated with 

a finance office. Of the 16 pay agents, 2 inappropriately disbursed cash. 

—Some of the projects we reviewed did not fully achieve the intent of the CERP. 

—Weaknesses in administrative processes led to inconsistent program implementation, unnecessary requirements, and insufficient documentation. 

Question. General Kicklighter, do you believe that effective risk mitigation measures are in place to prevent the flow of funds from corrupt practices from reaching 

insurgents and militias and if not, what recommendations can you make to correct 

the problem? 

Answer. We are conducting numerous audits that review the controls of funds. 

However, those reviews examine the control of funds from the time the funds are 

appropriated until the time those funds are obligated and expended. When funds 

are provided to the Iraq Security Forces (ISF), we do not review controls after the 

transfer of the funds to the ISF and therefore cannot comment on risk mitigation 

standards from that point onwards. Within DOD, we have found numerous instances of a lack of controls over funding, especially when funds used are cash. 

There is always a high risk of corruption when dealing with cash. Because there 

is not a sophisticated financial infrastructure in Iraq, many transactions are conducted with cash. I do not believe we will be able to effectively mitigate the risks 

of funds from corrupt practices reaching insurgents and militias until there is a sophisticated funding infrastructure in Iraq. In the meantime, we will review cash 

controls to ensure the most effective mitigation measures possible at this time are 

in use. 

We will continue our investigative mission to identify and investigate corrupt 

practices with an anticipated result of prevent the ‘‘flow of funds’’ to anywhere other 

than their intended contractual purposes. 

Question. General Kicklighter, how many actual Department of Defense audit and 

investigative employees, not counting contractors, but from the office of the Inspector General, are actually stationed in Iraq? 

Answer. As of March 11, 2008, the Department of Defense Office of the Inspector 

General had 5 core staff auditors and 2 agents forward deployed in Iraq. Three auditors are located in the International Zone and two are located in Camp Victory. In 

addition, we had 2 agents in Kuwait and will soon have 2 agents in Afghanistan. 

To accomplish our oversight mission, we have adopted a strategy that is based 

on maintaining the right size presence in-theater but which also recognizes that 

much of our work can be done out of Iraq. We have adopted an expeditionary workforce model to support efforts throughout all of Southwest Asia. We have 20 core 

staff forward deployed at all times. The core contingent is comprised of individuals 

serving between 6 and 12 month deployments. Expeditionary team members will deploy for as long as needed to complete the task, but no longer. The actual number 

of auditors, investigators, and inspectors in Southwest Asia and Iraq fluctuates on 

a daily basis depending on requirements. 

We are increasing our presence in Southwest Asia and currently have 279 personnel dedicated to Southwest Asia operations and are deployable as mission requirements dictate. Currently we have 22 people deployed to Southwest Asia. Utilizing both domestic and in theater assets we have 28 ongoing Iraq related audits 

and inspections and 102 ongoing Iraq related investigations. 
104 

Question. General Kicklighter, there have been reports of ‘‘ghost employees’’ within the Ministry of the Interior that may total up to 20–30 percent of the force. Since 

that ministry, ironically, executes the law enforcement functions in Iraq, what is the 

extent of the problem and what steps are underway within Iraq to reconcile salary 

payments with physical employees? 

Answer. The oversight responsibilities of the Office of the Inspector General extend to DOD appropriated funds in support of Defense operations to include Operation Iraqi Freedom. Our office has not done work regarding the employment 

records of the Iraq Ministry of Interior because our oversight authority does not include oversight of the Iraqi government. 

Question. General Kicklighter, has a weapons accountability system been established to track weapons and other military equipment transferred from the United 

States to Iraq and if so, have weapons provided for prior to 2005 been located or 

otherwise accounted for? 

Answer. The objectives of the DODIG Assessment Team on Munitions Accountability are to: 

—Determine whether the DOD currently has adequate accountability and control 

over U.S.-purchased munitions before formal turnover to the ISF. 

—Determine whether the ISF currently has adequate accountability and controls 

over U.S.-purchased munitions under their control. 

The team is chartered to review the current situation on the ground not what occurred in the past. The team concluded the DOD and the ISF currently have a system in place for controlling and accounting for weapons and ammunition being supplied to the ISF; however, there still remains work to be done. As the U.S. supply 

of munitions to Iraq shifts to Foreign Military Sales (FMS), the United States needs 

to put the FMS program on a war-time footing while also assisting the ISF in building their logistics sustainment base. 

—FMS systems and processes provide increased levels of accountability and control over munitions. 

—U.S. military transition teams are working with their Iraqi military and police 

counterparts to strengthen ISF logistics, and related munitions accountability 

and control. 

—Both these actions are underway and will greatly enhance the control and accountability of munitions. 

The assessment report is currently being staffed for management comments. In 

addition, the assessment team deployed back to Iraq to review the status of corrective actions taken on the report’s recommendations, and assess the current status 

of munitions control and accountability, FMS, and the Iraqi Logistics Sustainment 

base. They will return to Washington, DC in the late May/early June timeframe. 

Question. General Kicklighter, does the Iraqi Ministry of Defense have a physical 

inventory system in place to track physical assets purchased with or provided by 

the United States or Development Fund for Iraq funds and have there been problems with inventory loss? 

Answer. We have not and do not look at the methodology of tracking assets after 

those assets have been transferred to a foreign government. Report No. D–2008– 

026, ‘‘Management of the Iraq Security Forces Fund in Southwest Asia—Phase III,’’ 

November 30, 2007 found that the Multi-National Security Transition Command— 

Iraq had problems accounting for physical inventory purchased with ISF funds before the transfer of those assets to ISF. Those problems are currently being addressed and we plan to conduct a follow-up audit early next year. 

Question. General Kicklighter, in hearings last month, we learned that as of December 31, 2007, there were 163,540 private contractors in Iraq, and that 17 percent 

of those were Americans, with the rest being local nationals or Third Country Nationals. At the same hearing, Ambassador Kennedy testified that security contractors in Iraq receive an average of $1,222 per day, for an average yearly salary of 

$445,000. Recognizing that not all contractors are security personnel; can you provide the Committee with the total amount spent on contractors last year and the 

average daily and annual compensation rates for different categories of contract 

jobs? 

Answer. We have not conducted an audit that would validate the number of private security contractors, the nationality breakdown of security contractors in Iraq, 

or average salary of security contractors in Iraq. We plan to begin an audit of private security contractors used in support of OIF. The overall objective will be to determine whether private security services contracts have clearly defined requirements and whether those requirements are being fully met by contractors. Specifically, we will determine whether contract statements of work were clear, definite, 

and certain, and whether the contract terms and conditions for private security 

services were clearly defined in the contracts. Within the scope of that audit, we 
105 

can address the average salaries of security contractors working on the judgmental 

sample of contracts that will be reviewed but will not be able to project those 

amounts to all Iraqi contracts. We simply do not have the resources to review all 

security contracts in Iraq or a statistical sample of Iraqi security contracts. 

The Federal Procurement Data System shows that in excess of $315 billion was 

spent on DOD contracting in fiscal year 2007. We are not aware of a reliable source 

for average daily and annual compensation rates for different categories of contract 

jobs. 

Question. General Kicklighter, some previous testimony from former private contractors and other sources suggests that Third Country Nationals hired as private 

contractors in Iraq by U.S. companies are not always paid or provided benefits on 

par with those provided to American contract personnel. Do you have any evidence 

to prove or disprove these reports and if true, is that payment differential reflected 

in the payments to the contracting company? 

Answer. We have heard allegations on this issue but have not conducted audits 

or planned to conduct audits that would address the issue. This is not an area that 

contains clear criteria on the responsibilities of contractors. Many legal issues regarding international law and labor rates would have to be addressed before a substantive audit could be conducted. In addition, because many Third Country Nationals are hired as subcontractors, the legal issue of contract privity between DOD and 

the subcontractors would be a major issue. 

Question. General Kicklighter, do you believe that effective risk mitigation measures are in place to prevent corruption in the use of U.S. and Iraqi funds, and if 

not, what recommendations can you make? 

Answer. Effective risk mitigation requires a combination of efforts to include the 

oversight provided by the DOD IG, GAO, State IG, USAID IG, and SIGIR. In addition to the oversight community, the honesty and integrity of the federal and contractor workforces also play a large role in effective risk mitigation. However, no 

matter how many controls are put in place corruption will still exist. It is our mission to work with the resources provided by the Congress to assess risk and place 

our resources in areas that help to minimize that risk. 

Section 842, ‘‘Investigation of Waste, Fraud, and Abuse in Wartime Contracts and 

Contracting Processes in Iraq and Afghanistan,’’ of the Act (Public Law 110–181) 

requires the DOD IG to conduct, ‘‘thorough audits . . . to identify potential waste, 

fraud, and abuse in the performance of—Department of Defense contracts, subcontracts, and task and delivery orders for the logistical support of coalition forces 

in Iraq and Afghanistan.’’ As a result of these concerns and due to the complex operational environment in Southwest Asia, we have established an Office for Strategic 

Plans and Operations for the Global War on Terror (GWOT). The new component 

is focused on GWOT and other high value, high visibility assessment missions. The 

establishment of this new office will supplement the efforts currently being undertaken by DOD IG components. This initiative is part of an ongoing Organizational 

Development Project that was initiated in January 2008 to assess corporate-level 

strategies, organizational alignments, geographical locations, personnel development, business practices, culture, and performance to best position the DOD IG to 

execute current, emerging and future missions. 

Another initiative was the realignment of internal core mission assets within the 

Office of the Deputy Inspector General for Auditing to form the Joint and Overseas 

Operations Directorate to support Southwest Asia audit operations. This expeditionary audit directorate was formed in November 2007 to address corruption, 

fraud, waste, and abuse in Southwest Asia; combat illegal and improper expenditures; and improve accountability of DOD resources that support operations in 

Southwest Asia. To accomplish this mission, we expanded our presence in Qatar, 

Afghanistan, and Iraq; established a field office in Korea; and are establishing field 

offices in Germany and Hawaii. 

Senate Report 110–77, to accompany the National Defense Authorization Act 

(NDAA) for Fiscal Year 2008, addresses funding for the Office of the Inspector General, Department of Defense (DOD IG) stating that, ‘‘The committee is concerned 

that funding levels for this important independent audit and investigative function 

is not keeping pace with the demands for Inspectors’ General services in the global 

war on terror.’’ The report also directs the IG to, ‘‘provide to the defense committees, 

by March 31, 2008, an analysis of the current and future personnel, organization, 

technology, and funding requirements of the OIG’’ to include, ‘‘a comprehensive and 

detailed master plan, with annual objectives and funding requirements, that provides the fastest possible increase in audit and investigative capabilities.’’ This report was provided to the congressional Defense oversight committees on April 14, 

2008. 
106 

Based on our analysis, the funding requirement for the DOD IG for fiscal year 

2009 is $25.24 million above the level provided in the President’s budget for fiscal 

year 2009. That $25.24 million is directly linked to requests by Congress to increase 

both audit and investigative efforts regarding Southwest Asia and the Global War 

on Terror. In fiscal year 2009, we estimate that the President’s budget will allow 

for an increase to 1,474 FTEs. This would account for 37 of the 481 FTEs outlined 

in our DOD IG growth plan through fiscal year 2015, closing the gap for the desired 

end state to 444 FTEs, but falling 134 short of the 1,608 FTEs that we require for 

fiscal year 2009 in order to provide the fastest possible increase in our audit and 

investigative capabilities. Additional fiscal year 2009 funding will allow us to continue to increase our oversight efforts related to GWOT, contract management and 

acquisitions; and would support DOD IG audits conducted in response to Sec. 842 

of the fiscal year 2008 NDAA, as mentioned above. 

This growth, if supported by Congress, will enable us to perform our statutory duties and to provide additional coverage of the high risk and high impact areas of 

DOD contracting, major weapons system acquisitions, information technology, information security, human capital, charge cards, personnel and medical readiness, financial management, and homeland security. It will also allow for enhanced investigative support to Joint Terrorism Task Forces (JTTFs) located throughout the 

United States; establishment of new offices in geographic locations that have been 

previously neglected due to limited staffing; enhanced investigative support to the 

GWOT; and increased emphasis on investigating crimes in areas that have dropped 

in priority and have been largely neglected because of the new demands of today’s 

environment. 

QUESTIONS SUBMITTED BY SENATOR DIANNE FEINSTEIN

Question. On March 6, 2008, the Boston Globe ran a story entitled ‘‘Top Iraq Contractor Skirts U.S. Taxes Offshore.’’ In the story, the authors noted that ‘‘than 

21,000 people working for KBR in Iraq—including about 10,500 Americans—are listed as employees’’ of two shell companies for KBR registered in the Caribbean. The 

story also states: ‘‘the Defense Department has known since at least 2004 that KBR 

was avoiding taxes by declaring its American workers as employees of Cayman Islands shell companies, and officials said the move allowed KBR to perform the work 

more cheaply, saving Defense dollars.’’ However, the article estimates a roughly 

$500 million shortfall in lost Social Security and Medicare revenue as a result of 

the practice. 

Many employees did not know that they were employed by the shell companies, 

not KBR, and those employees have lost eligibility for Social Security, unemployment, and other government services as a result of these practices. KBR has 

amassed an estimated $16 billion in contracts in Iraq. On March 13th, Senator John 

Kerry (D-MA) introduced legislation to treat foreign subsidiaries of U.S. companies 

performing services under contract with the United States government as American 

employers for the purpose of Social Security and Medicare payroll taxes. 

Can you comment on whether or not the DOD Inspector General’s office has reviewed this issue and any findings that have come as a result of the review? If not, 

does the office plan to review the issue? 

Answer. The Department of Defense Office of the Inspector General has not reviewed this issue. Under current law the practice is not illegal; however, the Defense Contract Audit Agency (DCAA) has conducted audits to ensure that contractors have not billed government contracts for taxes that were not incurred. 

As you know, recently both the House and Senate have introduced legislation, 

which if enacted would prevent this type of situation from reoccurring. H.R. 5602 

and S. 2775, sponsored by Senator Kerry, ‘‘Fair Share Act of 2008,’’ have been introduced to amend the Internal Revenue Code of 1986 and the Social Security Act to 

treat certain domestically controlled foreign persons performing services under contract with the United States Government as American employers for purposes of 

certain employment taxes and benefits. 

Question. With the multitude of reports raising questions about KBR’s performance as a contractor in Iraq, why is the U.S. military still doing business with the 

company? 

Answer. The decision to contract with a specific company is made by the Department and the DOD IG has no input into that decision. 

The Federal Acquisition Regulations state that the prior performance of a company must be considered when awarding a new contract. However, there are no specifics on how to judge the prior performance of a large defense contractor. KBR has 
107 

not been debarred from Federal contracts and absent such action, there is no reason 

for a contracting officer not to consider KBR proposals for contract awards. 

Question. What actions has the Pentagon taken to address past problems with 

KBR and can you name the instances where the DOD has cancelled a large contact 

in Iraq due to mismanagement? 

Answer. The DODIG has no information on this topic and no knowledge of any 

instances of DOD cancelling a large contact in Iraq due to mismanagement because 

we have not conducted audits involving either of these situations. 

QUESTIONS SUBMITTED TO STUART W. BOWEN, JR. 

QUESTIONS SUBMITTED BY SENATOR ROBERT C. BYRD

Question. Mr. Bowen, we have heard accounts which suggest that during the Coalition Provisional Authority period, projects were paid in full, up front, in cash, before work was begun on projects. Is this true, and was it commonplace? 

Answer. From August to December 2004, the Inspector General of the Coalition 

Provisional Authority (CPA) audited the Control of Cash Provided to South-Central 

Iraq (Report Number 05–006). The auditors encountered instances in which one contractor was paid in full up front, in cash, before work was begun on projects. In that 

case at least 8 contracts worth $1,978,810 were paid in full up front. In addition, 

at least 23 grants, including 2 worth $950,000 each, were paid up front to the grant 

recipient prior to services being rendered or expenses incurred. 

These instances involved the use of cash from the Development Fund for Iraq (for 

the most part this money was a combination of Seized and Vested assets and proceeds from the sale of Iraqi oil), and not from U.S. appropriated funds. The instances mentioned above involved contracts awarded to Mr. Phillip Bloom (contractor) and paid by Mr. Robert Stein (CPA employee). Our investigation of this 

anomaly resulted in Mr. Bloom and Mr. Stein pleading guilty to conspiracy, bribery, 

and money laundering in connection with a scheme to defraud the CPA. Both are 

currently in prison. 

In our work to date, SIGIR has not encountered any instances involving U.S. appropriated funds in which contractors were paid in full, up front, in cash, before 

work was begun on projects 

During the previously-mentioned audit of the Control of Cash Provided to SouthCentral Iraq, we also encountered instances in which local contractors were paid 

half of contract amounts up front before work was begin on projects. This practice 

was commonplace in the South-Central Region at the time. We believe that it was 

a factor in the overall poor value received for contracts awarded by the South-Central Region at that time. 

In our work to date, we have encountered no instances involving U.S. appropriated funds in which contractors were paid half of contract amounts up front before work was to begin on projects. 

Question. Mr. Bowen, have investigations or audits been performed to establish 

that the recipients of these U.S. funds are legitimate contracting entities such as 

builders, contractors, engineers, and so forth, and are such investigations standard 

procedure? 

Answer. SIGIR has not performed audits with the issue discussed in the question 

as a particular objective. However, in each contract audit we focus on potential 

fraud, waste and abuse. In so doing, we have not to date identified the conditions 

you describe in any of our audits. 

Question. Mr. Bowen, since the end of the tenure of the Coalition Provisional Authority in 2004, have investigations or audits been performed by U.S. or Iraqi entities to establish that the recipients of U.S. funds are legitimate contracting entities 

such as builders, contractors, engineers, and so forth, and if not, why? 

Answer. SIGIR established an Inspections Directorate in the summer of 2005 to 

address these and other concerns. 

As of our January 2008 Quarterly Report to Congress, the Inspections Directorate 

had visited and reported on 108 reconstruction sites throughout Iraq. Since then, 

the Inspections Directorate has visited an additional 10 sites and will be reporting 

on those sites in the future. 

The Inspections Directorate has assessed contracted work of U.S. and non-U.S. 

contractors, large and small contractors, contractors in all reconstruction sectors, as 

well as on-going and completed construction work. 

While the Inspections Directorate has found numerous instances of poorly designed and performed contracted work, no instances have been detected in which 
108 

builders, contractors, engineers, and so forth were not legitimate entities or did not 

exist. 

The Inspections Directorate notes that prime contractors frequently subcontract 

a portion of project work. For example, electrical or plumbing subcontractors have 

been encountered on sites. But in such instances, the subcontractors have existed 

and been on site performing work. It should also be noted that contractors have 

been encouraged to use subcontractors as a means of employing larger numbers of 

Iraqis. 

In addition, in each contract audit we focus on potential fraud, waste and abuse. 

We have not identified the conditions described in the question in any of our audits. 

Question. Mr. Bowen, do you believe that effective risk mitigation measures are 

in place to control corruption in the use of U.S. and Iraqi funds and if not, what 

measures would you suggest? 

Answer. Regarding the effectiveness of risk mitigation measures, we need to differentiate clearly funds that are under U.S. control and funds that are under Iraqi 

control. SIGIR has testified that we have found little fraud when the United States 

has been managing its funds. In our audits, waste has been the much bigger problem but has diminished as managers have applied lessons learned (e.g., moving 

from expensive design-build cost-plus contracts to direct, fixed-price contracts). 

Nonetheless, SIGIR has identified serious lapses in U.S. government oversight that 

create a significant risk of fraud in those contracts. 

To mitigate the risk from corruption within the Iraqi government, the United 

States provides only small amounts of U.S. funding directly to Iraqis and primarily 

through small grants or micro-loans. Furthermore, when U.S. awards contracts to 

Iraqi entities, U.S. government entities maintain oversight responsibility for the applicable funds. 

Question. Mr. Bowen, oil production metering has been recommended consistently 

since at least March 2004. What are the obstacles to fully implementing a comprehensive metering system? What are the estimates of revenue loss due to the lack 

of a comprehensive metering system? 

Answer. SIGIR’s Inspections Directorate has reviewed this issue in Baghdad and 

reports that the Government of Iraq (GoI) has a plan to implement a comprehensive 

metering system and is in the process of implementing the plan. The GoI plan calls 

for the acquisition of meters in 2007 and 2008 and installation of the meters in 

2009. The Ministry of Finance, recognizing the significance that meters play in controlling the significant GoI revenue involved, has created a Department of Metering 

to administer and regulate meters. 

Obstacles to the GoI’s plan include: 

—The difficulties that the GoI has in making acquisitions. In reaction to allegations of corruption, the GoI has instituted an extremely bureaucratic acquisition 

process requiring an exhaustive number of approvals. This bureaucratic approval process is exacerbated by the number and complexity of meters required 

to implement a comprehensive metering system. 

—A comprehensive metering system requires accurate meters throughout the entire production and distribution system. The GoI has effective meters at the Al 

Basrah Oil Terminal (ABOT) where oil produced in the south is sold. It also 

has effective meters at the Ceyhan Facility in Turkey where oil produced in the 

north is sold. However, it does not have effective meters to determine how much 

oil is produced or whether oil is being lost or stolen as it is transmitted through 

dozens and dozens of processing points and hundreds of miles of pipelines to 

refineries or to the ABOT and Ceyhan sales facilities. To effectively control its 

oil, the GoI needs accurate meters at each of its Gas Oil Separation Plants, 

pumping stations, pressure monitoring stations, pipe connections, refineries etc. 

—The meters that are currently in use by the GoI are manual, not electronic meters. The manual meters require that GoI personnel visit remote locations to 

obtain meter readings. In Iraq this is an inherently dangerous practice. Equally, 

if not more importantly, the manual readings do not provide the real time information that electronic meters would provide and that is needed throughout the 

system to detect leaks, thefts of oil, and malfunctioning equipment that result 

in loss of oil as it flows through the system. The GoI needs to implement its 

plan to acquire new electronic meters and tie them into central control facilities. 

—The GoI has to acquire, keep calibrated, and protect hundreds of expensive meters. As previously noted the meters are at remote locations subject to tampering, theft and destruction. 

Without an effective metering system, it is not possible to estimate the loss of revenue to the GoI. The GoI only knows how much oil it is selling, it does not have 

accurate information on the amount of oil it produces, uses internally, or loses due 

to leaks, inefficient processing, and malfunctioning equipment. 
109 

Question. Mr. Bowen, is there reason to believe that smuggled and or stolen oil 

resources might have been diverted to militias or other insurgent forces? 

Answer. I testified before the Committee that ‘‘. . . corruption has afflicted the 

Iraqi oil sector, particularly up at the Baiji refinery, with respect to the smuggling 

of refined fuels. . . . I know that that continues to be a problem today, based on 

my recent visits with Iraqi authorities.’’ The smuggling and corruption problems 

often involve the use or threat of violence and, although we do not have specific 

findings, it is possible that such resources might have been diverted to militias or 

insurgents not part of Iraq’s security forces. Oil is a commodity that has been relatively easy for criminals to acquire illicitly and dispose of. 

Question. Mr. Bowen, Prime Minster Maliki last year ordered Iraqi security 

forces, backed up by U.S. forces, to replace the security force at the Baiji refinery 

with a new civilian force. Reportedly, corruption is ‘‘down significantly.’’ Can you 

further characterize this situation, in terms of production increases or significant reductions in the volume of fuel being diverted to insurgents, or if not, why not? 

Answer. Assessing the security situation or diversion of assets to insurgents is beyond the scope of SIGIR’s legislative authority. I do not have any additional information beyond what I provided in response to question 6. 

Question. Has a system that electronically tracks funds and projects been established and fully implemented in Iraq or to what degree is it in place? 

Answer. DOD agencies in Iraq track funds and monitor the status of their projects 

in the Iraq Reconstruction Management System (IRMS); the Department of State 

and U.S. Agency for International Development monitor contract status in their own 

internal systems. The need to track such information was recognized in 2004 when 

the then-existing Project and Contracting Office (PCO) initiated an information 

technology management reporting system. By mid 2005, however, the system was 

only partially operational and not being utilized by all of the agencies receiving 

amounts from the Iraq Relief and Reconstruction Fund account. In response, in September 2005 the U.S. Army Corps of Engineers, Gulf Region Division (GRD) and 

PCO officials recommended consolidating information from multiple sources into a 

single database, namely the IRMS. This system is in place today. Nevertheless, 

SIGIR reported in April 2006 that agencies inputting the data lacked internal controls to ensure the accuracy of the data they were providing, and civilian agencies 

maintain their own data systems. An audit that will be released this quarter looking 

at Terminations for Convenience and Terminations for Default will also address ongoing shortfalls in the electronic tracking of projects and U.S. funds for Iraq Reconstruction. 

Question. Mr. Bowen, do you know what the unreconciled difference is between 

the $13 billion in Coalition Provisional Authority project money, money from U.S. 

taxpayers, provided to the Iraqi government and evidence of project completion? 

Answer. In January 2005 SIGIR reported that the Coalition Provisional Authority 

(CPA) internal controls over approximately $8.8 billion in Development Fund for 

Iraq (DFI) monies disbursed to Iraqi ministries through the CPA’s national budget 

process failed to provide sufficient accountability for the use of those funds. These 

monies were not U.S. taxpayer funds—they were Iraqi funds in the hands of CPA 

officials. 

Question. Mr. Bowen, is there evidence that any Coalition Provisional Authority 

funds or resources purchased with these U.S. funds were diverted to private or insurgent use? Can you provide details or estimates? 

Answer. SIGIR’s investigative work involving CPA funds was initiated as a result 

of the Audit work performed under the ‘‘Audit of Cash Controls Over Disbursing Officers in Southern Iraq,’’ Audit Number D2004–DCPAAF–0034. These funds were 

Development Fund for Iraq (DFI) funds, that is, they were Iraqi funds in the hands 

of CPA officials. (We are not aware that any of those funds have been diverted to 

insurgents.) 

SIGIR’s investigative work involving these CPA funds resulted in the following indictments and convictions: 

—On February 2, 2006, Robert Stein, the former CPA Comptroller and Funding 

Officer in Hilla, Iraq, pleaded guilty to conspiracy, bribery, money laundering, 

possession of machine guns, and being a felon in possession of a firearm. Stein 

was the primary co-conspirator with Philip Bloom, funneling numerous fraudulent contract payments to Bloom in exchange for kickbacks and bribes. Stein 

also admitted to facilitating the purchase and possession of at least 50 weapons, 

including machine guns, gun barrel silencers and grenade launchers with misappropriated CPA funds. On January 29, 2007, Stein was sentenced to nine 

years in prison and three years of supervised release. Additionally, he was ordered to pay $3.6 million in restitution and forfeit $3.6 million in assets. 
110 

—On March 9, 2006, Philip Bloom, a U.S. citizen, who resided in Romania and 

Iraq, pleaded guilty to conspiracy, bribery, and money laundering in connection 

with a scheme to defraud the CPA. Bloom admitted that from December 2003 

through December 2005, he, along with Robert Stein and numerous public officials, including several high-ranking U.S. Army officers, conspired to rig bids 

for federally-funded contracts awarded by the CPA-South Central Region (CPA– 

SC) so that all of the contracts were awarded to Bloom. The total value of the 

contracts awarded to Bloom exceeded $8.6 million. Bloom admitted paying Stein 

and other public officials over $2 million from proceeds of the fraudulently 

awarded contracts and an additional at least $2 million in stolen money from 

the CPA. On February 16, 2007, Bloom was sentenced to 46 months in prison 

and two years of supervised release. Additionally, he was ordered to pay $3.6 

million in restitution and forfeit $3.6 million in assets. 

—On August 4, 2006, Faheem Mousa Salam, an employee of a government contractor in Iraq, pleaded guilty to a violation of the Foreign Corrupt Practices 

Act for offering a bribe to an Iraqi police official. Salam is a naturalized U.S. 

citizen employed by Titan Corporation and was living in Baghdad, Iraq. According to court filings, Salam offered a senior Iraqi police officer $60,000 for the 

official’s assistance with facilitating the purchase by a police training organization of approximately 1,000 armored vests and a sophisticated map printer for 

approximately $1 million. On February 2, 2007, Salam was sentenced to three 

years in prison, two years of supervised release and 250 hours of community 

service. 

—On August 25, 2006, Bruce D. Hopfengardner, a Lieutenant Colonel in the 

United States Army Reserve, pleaded guilty to conspiracy to commit wire fraud 

and money laundering in connection with the Bloom-Stein scheme. In his guilty 

plea, Hopfengardner admitted that while serving as a special advisor to the 

CPA–SC, he used his official position to steer contracts to Philip H. Bloom, a 

U.S. citizen who owned and operated several companies in Iraq and Romania. 

In return, Bloom provided Hopfengardner with various items of value, including 

$144,500 in cash, over $70,000 worth of vehicles, a $2,000 computer and a 

$6,000 watch. Hopfengardner and his coconspirators laundered over $300,000 

through various bank accounts in Iraq, Kuwait, Switzerland and the United 

States. Finally, Hopfengardner admitted that he stole $120,000 of funds designated for use in the reconstruction of Iraq from the CPA–SC and that he 

smuggled the stolen currency into the United States aboard commercial and 

military aircraft. On June 25, 2007, Hopfengardner was sentenced to 21 months 

in prison followed by 3 years supervised release, and ordered to forfeit $144,500. 

—On February 7, 2007, U.S. Army Colonel Curtis G. Whiteford, U.S. Army Lt. 

Colonels Debra M. Harrison and Michael B. Wheeler and civilians Michael Morris and William Driver were indicted for various crimes related to the BloomStein scheme in Hilla, Iraq. Whiteford, who was Stein’s deputy in the comptroller’s office, was charged with one count of conspiracy, one count of bribery and 

11 counts of honest services wire fraud. Harrison, at one time the acting Comptroller at CPA–SC who oversaw the expenditure of CPA–SC funds for reconstruction projects, was charged with one count of conspiracy, one count of bribery, 11 counts of honest services wire fraud, four counts of interstate transport 

of stolen property, one count of bulk cash smuggling, four counts of money laundering and one count of preparing a false tax form. Wheeler, an advisor for CPA 

projects for the reconstruction of Iraq, was charged with one count of conspiracy, one count of bribery, 11 counts of honest services wire fraud, one count 

of interstate transport of stolen property and one count of bulk cash smuggling. 

Morris, who was alleged to have worked for Bloom as a middle-man in the 

criminal scheme, was charged with one count of conspiracy and 11 counts of 

wire fraud. Driver, who is Harrison’s husband, was indicted on four counts of 

money laundering. The trial for Whiteford, Morris and Wheeler was scheduled 

to start on March 11, 2008; however, it has been rescheduled to begin in September 2008. It is anticipated that Harrison and Driver will be added to the 

list of defendants in this trial. In this connection we note that an indictment 

is merely an allegation. Defendants are presumed to be innocent until proven 

guilty. 

—On February 16, 2007, Steven Merkes, a former U.S. Air Force Master Sergeant 

working for the Department of Defense in Germany, pleaded guilty in U.S. District Court for accepting illegal bribes from Phillip Bloom. Merkes accepted the 

bribes in exchange for furnishing Bloom with sensitive contract information 

prior to awarding contracts to Bloom. Merkes was sentenced on February 16, 

2007, to 12 months and one day in prison and ordered to pay restitution of 

$24,000. 
111 

1 Iraqi Security Forces: Weapons Provided by the U.S. Department of Defense Using the Iraq 

Relief and Reconstruction Fund (SIGIR–06–033, October 28, 2006). 2 U.S. Anticorruption Efforts in Iraq: Sustained Management Commitment is a Key to Success, 

(SIGIR–08–008, January 24, 2008). 

Question. Mr. Bowen, since the end of the tenure of the Coalition Provisional Authority in 2004, what is the unreconciled difference between the project money provided to Iraq and the evidence of project completion? 

Answer. Very little in the way of U.S. appropriated funds have been provided directly to Iraq. Rather, appropriated funds have for the most part been allocated on 

specific contracts for specific projects and managed by one or more U.S. agency. In 

these cases, SIGIR has reported instances where monies were spent and projects 

were incomplete, such as for Primary Healthcare Centers. Recently, the United 

States has put in place a new strategy to provide modest sums of money for discrete 

purposes to local governmental entities and private individuals through, for example, the Commander’s Emergency Response Program (CERP) and microloan programs. Through the end of fiscal year 2007, Congress had appropriated about $2.3 

billion for CERP activities. The microloan program was funded at about $40 million 

as of January 2008. 

Question. Mr. Bowen, since the end of the tenure of the Coalition Provisional Authority in 2004, is there evidence that any U.S. funds or resources purchased with 

these funds were diverted to private or insurgent use? 

Answer. The United States has not turned substantial U.S. funds over to the Iraqi 

government (for example, in the form of cash assistance for balance of payments 

support, as is done for some countries). In almost all cases the United States purchases goods or services and makes them available for the purpose of developing 

Iraq. Once those goods and services are made available to the Iraqi government, the 

United States sees them as property of Iraq and as Iraq’s responsibility to safeguard. 

SIGIR has helped the U.S. Department of Justice bring charges against individuals for diversion of U.S. resources to private use prior to those resources having 

been transferred to Iraq’s government. In additional cases, we believe corruption has 

occurred but insufficient evidence was available to make a case in U.S. courts. Other 

investigations are ongoing. 

SIGIR has not determined via any of its audits that U.S. funds or resources purchased with these funds were diverted to insurgent use. We respectfully suggest this 

question can be best addressed by the Multi-National Forces-Iraq and U.S. intelligence agencies. Nevertheless, a SIGIR 2006 audit on weapons provided the GoI 

with U.S. funds found that not all weapons were properly accounted for by either 

DOD or the GoI, which raised security concerns.1

Question. Mr. Bowen, has there been any effort, to your knowledge, from the 

United States to hold anyone from the Iraqi government accountable for the diversion or loss of U.S. taxpayers’ funds since the beginning of the post-war period? 

Answer. We have no knowledge of any actions holding anyone from the Iraqi Government accountable for the diversion or loss of U.S. taxpayers’ funds. SIGIR’s investigations have primarily focused on contracting irregularities in connection with 

the expenditure of U.S. funds. 

Question. Mr. Bowen, do you believe that effective risk mitigation measures are 

in place to prevent funds derived from corrupt practices from reaching insurgents 

and militias, and if not, what recommendations can you make? 

Answer. I have repeatedly stated that corruption is tantamount to a second insurgency in Iraq. Moreover, the Government of Iraq is not poised to address the problem sufficiently as it lacks the training, staff, and in some cases the political will 

to do so. SIGIR has consistently addressed the need for the U.S. assistance program 

to pursue more aggressively its anticorruption program and made a series of recommendations to improve coordination and elevate the importance of its efforts. In 

January 2008 SIGIR reported that the Embassy had taken some specific steps to 

reinvigorate and improve the coordination of its diverse anticorruption activities 

which range from training judges to institutionalizing anticorruption entities such 

as the Board of Supreme Audit and Commission on Integrity.2

QUESTIONS SUBMITTED BY SENATOR FRANK R. LAUTENBERG

Question. What was the schedule and complete itinerary for your trip to Maine 

in January 2008? 

Answer. My schedule/itinerary for the Maine trip was as follows: 
112 

Schedule Itinerary 

Wednesday, January 2, 2008 

10:10–11:45 AM .......................................... USAir flight #3902 from Washington National to Portland, ME (coach class) 

12:55–2:00 PM ............................................ Lunch with Sen. Collins, Mac’s Grill, Auburn, ME 

2:15 PM–3:15 PM ........................................ Maine Watch taping, MPBN Studio, Lewiston 

6:30 PM–8:00 PM ........................................ Dinner with Bill Beardsley, President of Husson College, Mrs. Beardsley, and 

Sen. Collins at Perri House Restaurant, Bangor 

RON .............................................................. Sheraton Four Points Bangor, Bangor (government rate) 

Thursday, January 3, 2008 

7:05 AM ....................................................... Call to WVOM Radio 

7:30–9:00 AM .............................................. Husson Business Breakfast, Husson College, Bangor 

9:30–10:00 AM ............................................ Bangor Daily News Editorial Board Meeting, Bangor 

12:10–1:30 PM ............................................ Lunch with Senator Collins and David Offer (retired Editorial Director/contributing columnist, Kennebec Journal), Vignola’s, Portland 

1:45–2:15 PM .............................................. Portland Press Herald Editorial Board Meeting, Portland Press Herald, Portland 

5:06–6:52 PM .............................................. Depart Portland on USAir flight #3477 from Portland to Washington National 

(coach class) 

Question. Please individually specify with what funds the following costs were 

paid with on the trip: Lodging, travel, and food. 

Answer. Travel and Lodging were paid with SIGIR funds. 

Food was paid for as follows: 

—(1) On January 2, 2008, I purchased my lunch. 

—(2) On January 2, 2008, the President of Husson College paid for my dinner. 

—(3) On January 3, 2008, breakfast was provided at Husson College, as the presentation was part of a breakfast meeting sponsored by the College. 

—(4) On January 3, 2008, Senator Collins paid for my lunch. 

The meals mentioned above are the only meals I had during my trip. 

In accordance with government travel rules, I claimed a pro-rata share of my per 

diem reimbursement for the lunch I purchased on January 2, 2008. I did not claim 

reimbursement from the government for any of the other meals. 

The other meals fall within exceptions to the gift rule restrictions, i.e., employees 

may accept meals that are provided on the day they are speaking in their official 

capacity (5 CFR 2635.204(g)(1)) (meal 3) and gifts of less than $20 (5 CFR 

2635.204(a)) (meal 2). 

Moreover, the lunch purchased by Senator Collins (meal 4) does not fall under the 

gift statute, as she is not a prohibited source. (5 CFR 2635.203(d)). 

Question. Did the SIGIR General Counsel clear your trip to make sure that it 

complied with the Hatch Act, 5 U.S.C. §§ 7321–7326? 

Answer. The Designated Agency Ethics Officer reviewed the invitation from 

Husson College and the draft itinerary; he approved the trip. Office of General 

Counsel staff advised me before my trip that I should not participate in any political 

activity during my visit to Maine, pursuant to Hatch Act requirements. My activities were analyzed by Office of General Counsel staff after my return, and I was 

advised that there were no Hatch Act violations. 

Question. Have you debriefed the SIGIR General Counsel on your activities during 

the trip to verify that you complied at all times with the Hatch Act and other applicable laws? If not, will you? 

Answer. Upon my return from Maine, I reported on my activities to SIGIR’s Office 

of General Counsel and, specifically, that I did not engage in any political activity 

during the trip. I provided specific information about the trip to the Designated 

Agency Ethics Officer to ensure compliance with ethical restrictions regarding gifts. 

SIGIR’s Office of General Counsel advised that there were no violations of the 

Hatch Act. 

Question. Who informed you of the opportunity to speak at Husson College? 

Answer. Senator Collins. 

Question. Who invited you to speak at Husson College? 

Answer. I received a written invitation from William H. Beardsley, President of 

Husson College. 

Question. What newspaper editorial boards did you speak with on the trip? 

Answer. Bangor Daily News and The Portland Press Herald. 

Question. Who invited you to speak before those editorial board(s)? 

Answer. The boards’ invitations were conveyed from Senator Collins’s staff to my 

staff. 
113 

Question. Were you asked to speak to other members of the media? If so, by 

whom? 

Answer. Yes. Senator Collins’ staff conveyed invitations to my staff for me to be 

interviewed on ‘‘Maine Watch’’, on WVOM radio, and by a columnist for the Kennebec Journal. 

Question. Please identify similar domestic trips that you have taken during your 

time as SIGIR. 

Answer. I have spoken at the following colleges or universities: The George Washington University Law School, Washington, DC; The University of Texas at Austin, 

Lyndon B. Johnson School of Public Affairs, Austin, TX; St. Vincent College, Latrobe, PA; The University of the South, Sewanee, TN; and St. Mary’s University 

School of Law, San Antonio, TX. 

In addition, I have given presentations to numerous industry and public interest 

groups. 

Question. How many speeches have you given across the country similar to your 

event at Husson College? Please provide specifics. 

Answer. See above. 

QUESTIONS SUBMITTED BY SENATOR JUDD GREGG

Question. To date, what concrete accomplishments have been achieved by the U.S. 

Mission’s Anti-Corruption Working Group in combating corruption in Iraq? 

Answer. The Mission’s Anticorruption Working Group (ACWG) is a coordinating 

entity whose function is to provide direction and strategy to the numerous 

anticorruption-related programs managed by U.S. agencies in Iraq. Since 2006, 

SIGIR has reported in several reviews that the ACWG has lacked sustained management commitment and oversight, that efforts to revitalize and coordinate U.S. 

anticorruption efforts have been largely ineffective and suffered from a lack of management follow-through, and that the Embassy has lacked a comprehensive, integrated strategy that ties anticorruption support to the overall strategy of the U.S. 

Embassy in Iraq, with metrics to measure progress. As of January 2008, only two 

of SIGIR’s 12 previous recommendations to improve management of the 

anticorruption program have been implemented. For example, the ACWG does not 

maintain an adequate inventory of ongoing anticorruption programs nor does it 

have established metrics to evaluate results. 

In our January 2008 audit report reviewing United States Embassy’s anti-corruption programs, SIGIR concluded that a December 2007 Mission plan to reinvigorate 

the ACWG and other anticorruption efforts appeared on a positive track but we cautioned that, as with previous efforts, the new approach needs sustained management commitment to leadership, additional resources, and program oversight to succeed. 

Question. Given reported infiltration of certain Iraqi Ministries by elements hostile to U.S. interests, is there any evidence that the current leadership or offices of 

the Commission on Public Integrity (CPI), the Board of Supreme Audit or respective 

GOI Offices of Inspector General have been compromised by such elements? 

Answer. SIGIR regularly meets with the leadership of the Board of Supreme 

Audit and the Commission on Integrity (COI, as the CPI is now known), and we 

have played an intermittent role in providing advice and direction to the several 

Iraqi Inspectors General. Neither the President of the BSA nor the Commissioner 

of the COI has ever evinced concerns about infiltration of their respective offices by 

elements hostile to the United States. Both of these entities are particularly receptive to U.S. support and SIGIR’s relations with both have been exceptionally good. 

Unfortunately, elements hostile to the United States helped force out Judge Rahdi 

al Rahdi, the previous CPI/COI Commissioner. Over 30 CPI/COI employees have 

been killed over the past four years by hostile elements. The Iraqi IGs are a mixed 

bag, and SIGIR believes that there could be a potential problem with infiltration 

in the IG offices at ‘‘Sadrist ministries’’ (e.g., Ministry of Health). 

The U.S. Embassy in Iraq has responsibilities concerning each of these entities 

and thus a question to the Embassy staff on this issue could be beneficial. 

Question. How many CPI employees, including family members, have been murdered as a result of efforts to combat corruption in Iraq, and what steps are the 

GoI and the U.S. Mission taking to provide physical security for CPI employees and 

their family members? 

Answer. In our meetings with the CPI/COI, SIGIR has learned that over 30 CPI 

personnel and family members have been killed over the past five years. The U.S. 

Embassy in Iraq has responsibilities concerning each of these entities and thus a 

question to the Embassy staff on this issue could be beneficial. 
114 

1 U.S. Anticorruption Efforts in Iraq: Sustained Management Commitment is a Key to Success 

(SIGIR–08–008, January 24, 2008). 

Question. What is the current role of the U.S. Mission’s Office of Transparency 

and Accountability (OTA) in combating corruption in Iraq? 

Answer. The Office of Accountability and Transparency (OAT) was subsumed into 

the Anticorruption Coordination Office in January 2008 as part of the Ambassador’s 

new anticorruption strategy.1 SIGIR reported that the OAT had been established to 

strengthen the Iraqi anticorruption institutions—the Board of Supreme Audit 

(BSA), the Office of the Inspector General (IG) at each ministry, and the then-Commission on Public Integrity (CPI)—and had accomplished a number of noteworthy 

achievements. These accomplishments included: providing a full-time advisor for the 

Iraqi IGs, providing a full-time advisor for the Board of Supreme Audit, and assisting in the development of a charter for the Joint Anticorruption Council. The new 

Anticorruption Coordination Office is now responsible for all for all anticorruption 

activities. 

Question. What is the anticipated future role of OTA in combating corruption in 

Iraq? 

Answer. OAT’s role is covered in our response to the question above. 

Question. Has the Prime Minister or any other senior Iraqi government official 

taken any action to interfere with GOI investigations into cases of corruption? If so, 

please describe in detail the circumstances. 

Answer. SIGIR has received reports that investigations into corruption allegations 

within the GOI have been subject to political influence, but we do not have definitive proof of such influence having been asserted. In March 2007, the Prime Minister’s Office issued an order requiring that any proposed investigation of any GOI 

minister or former minister must first obtain the permission from the Prime Minister’s Office before proceeding. This directive apparently is still in effect today. This 

problematic directive augments the problematic statute in Iraqi Law, Article 136b, 

which provides that any minister can, by fiat, exempt any ministry employee from 

investigation for corruption. The CPI/COI discussed with SIGIR the widespread use 

and abuse of this provision to protect potentially guilty ministry employees. 

Question. What factors limit the ability of the CPI, the Board of Supreme Audit, 

and respective Ministry IGs from investigating and prosecuting cases of corruption? 

Answer. There remains much to be done on the legislative front to ensure a harmonized set of laws under which the Iraqi government can effectively prosecute 

cases of corruption. Amending Article 136b and revoking the Prime Minister’s 

March 2007 directive are two needed reforms. In addition to these legal challenges, 

there are also implementation and capacity challenges, e.g., ensuring that the CPI/ 

COI investigators have weapons permits; ensuring that the Iraqi IGs receive sufficient training and resources to do their jobs; and providing the BSA with access to 

the information it needs to provide adequate oversight. The U.S. Embassy and international organizations, such as the World Bank, are working to provide technical 

assistance to the GOI to improve its investigative and prosecutorial capabilities, but 

more needs to be done. The new CPI/COI Commissioner told me during my February visit with him that his investigators need more training before they are ready 

to really assume responsibly for full-blown investigations. 

Question. Have any documents in the possession of the U.S. Mission been altered 

by U.S. Government officials by removing the names of Iraqi leaders because the 

documents implicate those leaders in cases of corruption? 

Answer. It has been widely reported that certain draft documents internal to the 

U.S. Embassy addressing the issue of corruption, which included the names of Iraqi 

officials, have been revised due to diplomatic concerns. It should also be noted that 

the accuracy of any statements contained in such documents developed by U.S. advisors is potentially unverifiable. SIGIR has not performed a detailed study of this 

issue, however, and is unable to speak authoritatively on all documents. To the extent that we review specific documents related to corruption in our audits, our findings are contained within our audits. A new audit on anti-corruption efforts will be 

released at the end of April and copies will be provided to this committee as well 

as to the other committees to which we report. 

Question. Has the U.S. Mission ever retroactively classified anticorruption or rule 

of law reports after Congress has requested such reports? 

Answer. SIGIR is aware of reports that draft documents were made available to 

the media and that subsequently drafts were marked as classified. SIGIR has not 

formally reviewed these incidents, however, and we would encourage the committee 

to discuss the issue with the U.S. Mission. 
115 

QUESTIONS SUBMITTED BY SENATOR LARRY CRAIG

Question. You estimated that Iraq will have upwards of a $50 billion windfall in 

the coming year, even as the Comptroller General estimates that Iraq spent as little 

as 24 percent of its capital project budgets and 4.4 percent of its investment budgets 

in 2007. As the United States and Iraq continue the ‘‘Year of Transfer,’’ where is 

Iraq most capable of assuming financial control of reconstruction projects? 

Answer. Given the current price of oil and record levels of Iraqi exports, the GOI 

is poised to realize over $60 billion in revenue for 2008, well above the $35 billion 

that Iraq estimated it would receive when it developed its $48 billion 2008 budget. 

In addition, there is $30 billion in reserves in the Central Bank of Iraq and at least 

$7 billion rolled over in unspent funds from 2007. Regarding these funds, there exists a continuing question about the government’s capacity to obligate and expend 

that money on capital projects. There have been recent improvements in Iraq’s procurement and contracting regulations aimed at enhancing the GOI’s ability to invest 

in reconstruction. Some progress has been reported by U.S. officials on Iraq’s willingness and ability to assume an increased role in funding its own needs. 

It is important to also note that SIGIR inspections and audits generally find that 

projects that are jointly funded and administered are better quality and have a 

higher sustainment probability. 

Question. If the United States began a targeted decrease in certain types of reconstruction funding, would the Iraqi government be able to balance that decrease with 

its own funds effectively? 

Answer. The key issue is one of unmatched priorities. The Iraqi government has 

its own internal set of priorities concerning how it wants to spend its money. If the 

United States were to cease funding a particular project, the Iraqi government may 

in principle have the money to take over the funding, but may not want to invest 

in that particular project. The question then becomes how strategically important 

does the United States view that project and what are the chances that Iraq also 

sees that project as strategically important. 

QUESTIONS SUBMITTED TO JUDGE RADHI HAMZA AL-RADHI

QUESTIONS SUBMITTED BY SENATOR ROBERT C. BYRD

Question. Judge Radhi, do you believe that effective risk mitigation measures are 

in place to control corruption in the use of Iraqi funds and if not, what actions 

would you suggest? 

Answer. There are effective risk mitigation measures with CPI, the Board of Supreme Audit and Inspectors General Offices. However, these agencies lack the independence mandated under Iraq’s constitution. Furthermore, corruption mitigation 

requires cooperation between these three agencies and the various local and national government organizations. This cooperation allowing the three public integrity organizations to function effectively is largely absent at the present time. 

Question. Judge Radhi, do you believe that effective risk mitigation measures are 

in place to prevent funds from corrupt practices from reaching insurgents and militias and if not, what recommendations can you make to improve the situation? 

Answer. No arrangements exist to prevent funds gained through corrupt practices 

from reaching insurgents and militias. Therefore, you can see the Sunni insurgents 

and militias controlling roads in the West areas. They are stealing and looting Ministry of Oil trucks and Ministry of Trade food trucks. Likewise, you can see Shee’s 

Militias smuggling in the South areas. 

Millions of dollars are stolen monthly due to smuggling according to our information from collation forces. My suggestion, difficult as it may be, is to remove weapons from militias while going through the lengthy process of removing sectarian influences from the Ministry of Interior and Ministry of Defense. 

Question. Judge Radhi, the Third Interim Report of the International Advisory 

and Monitoring Board (IAMB) on Iraq, covering the year 2007, notes that the IAMB 

is scheduled to conclude its oversight role of the financial positions of the Development Fund for Iraq (DFI) by mid-December 2008. The IAMB will hand off its oversight role to the Committee of Financial Experts (COFE), established by the Council 

of Ministers in October 2006. The COFE is led by the President of the Board of Supreme Audit and includes two independent experts ‘‘chosen by and reporting to the 

Council of Ministers.’’ Based on your experience as the head of the Commission on 

Public Integrity, do you believe that the COFE will be able to operate effectively, 

independently, and securely in such a critical oversight position, and if not, what 

would you recommend to strengthen it? 
116 

Answer. No. While the sectarian distribution exists, these oversight agencies cannot work independently. The executive branch of the Iraqi government consistently 

interferes in the duties and limits the authority of oversight bodies and the judiciary. Article 136 is a clear example of this interference. 

Question. Judge Radhi, has the United States and the international community 

put sufficient energy and resources behind the establishment and operation of Iraqi 

oversight and audit bodies and if not, what recommendations would you make to 

improve the situation? 

Judge Radhi, in previous testimony, you have obliquely referred to corruption 

with non-governmental organizations operating in Iraq. In your testimony before the 

House of Representatives last October, you noted that the CPI established a Directorate General for Non-Governmental Organization Relations, ‘‘which contacted 

most non-governmental organizations in Iraq in order to motivate them to achieve 

their objectives and solve their problems honestly.’’ What problems have you observed within the non-governmental organizations in Iraq, and what recommendations, if any, do you have? 

Judge Radhi, do you have any further recommendations to make in order to ensure the effective functioning of Iraq’s oversight bodies? 

Answer. The United States and the international community put a lot of sufficient 

energy and resources behind the establishment and operation of Iraqi oversight and 

audit bodies. These audit and oversight bodies have hundreds of good officials who 

are technocrats and non-sectarian. These technocrats manage their work, but are 

consistently blocked and face strong interference from the executive government. 

Additionally, these oversight bodies are not able to function sufficiently due to the 

terrorists and militias. For example, in 2004, the president of Board of Supreme 

Audit was killed by terrorists. The professional cadre of this agency was effectively 

intimidated and sufficient transparency has not appeared in this agency. 

Question. Judge Radhi, during your tenure, the Commission on Public Integrity (CPI) uncovered $18 billion worth of misspent funds. A majority of these funds came 

from the U.S. government, with additional contributions from Iraq oil sales, and 

contributions from other nations. It was CPI’s mission to monitor the Iraqi government’s use of these funds and investigate any related instances of waste, fraud, or 

abuse. Is that all correct? Please explain. 

Answer. CPI’s job was to follow the law as laid out in Order 55. I refer you to 

that document. 

CPI started their work in 2004. Eventually 30 teams were formed to investigate 

each specific ministry and governmental body. Our investigations were launched 

after carefully evaluating information provided to CPI via our corruption hotline, informants, the Inspectors General offices, Parliament and occasionally from citizens 

walking into our offices. 

Investigtions were evaluated and prioritized by my Director General for Investigations who met with me daily on the status of investigations and management of his 

department. Once CPI determined that a case had merit and had developed a sufficient level of evidence, this case was forwarded the courts. Under the Iraqi legal 

system, an investigative judge was then supposed to be assigned who was responsible for the court investigation, interviewing of witnesses, issuance of arrest warrants, and other aspects relating to the prosecution of a case. This investigative 

judge would then bring the corruption case before a trial judge who would determine guilt or innocence and penalties as appropriate. and prosecution of the case. 

had developed a case in consultation with me. 

CPI presented 3,000 cases to investigative judges. Trial judges presided over 250 

cases. Some cases were closed by investigative judges citing a lack of sufficient evidence. However, the majority or cases were formally or informally closed by the 

Prime Minister. Additionally, many investigative and trial judges were under severe 

pressure and threats to close cases. Also many accused of crimes escaped the country due to the weakness, indifference or neglect by the Ministry of Interior. 

CPI and the judiciary received many letters and received many visitors from the 

Prime Minster’s office for preventing investigations of current and former ministers, 

minister’s council or presidency council. Ultimately, CPI’s work was completely 

stopped preventing follow up on cases included the 18 billion U.S. dollars. 

Question. Judge Radhi, during its existence, the Coalition Provisional Authority 

(CPA) managed the distribution of funds for reconstruction contracts to the Iraqi 

government. An American finance office in the CPA handled each of the Iraqi government’s requests for money. The CPA would often give cash to individual Iraqi 

ministries for operations and to complete reconstruction projects. Is that correct? 

Please explain. 

Answer. That is correct. CPA managed the distribution of funds for reconstruction 

contracts to the Iraqi government. CPA managed the distribution of funds by pro-
117 

viding checks to the officials responsible in each ministry. These checks were exchanged for cash inside the CPA’s financial office. This process resulted in a lot of 

money being stolen or handled in a corruption manners. Given the situation as it 

existed, CPI’s position was that all funds should be transferred to the Ministry of 

Finance for further distribution in accordance with the schedule written by the Ministry of Planning. 

Question. Judge Radhi, after the CPA dissolved, the U.S. Embassy was responsible for distributing funds to the Iraqi government. Some of these funds came from 

the State Department’s office in the U.S. Embassy and some came from Department 

of Defense’s office in the Embassy. Each Iraqi ministry office had an American ‘‘expert’’ from the U.S. Embassy who served as a liaison to these offices. Is it your understanding that most of these experts knew that the ministries had corruption but 

you are not aware of any examples of the U.S. government cutting off funds to an 

Iraqi entity due to corruption? 

Answer. This information is correct. We did not see oversight done by some experts at the time the funds were distributed by the U.S. embassy. Some of these 

experts were good, others were not active, and the third kind would stand with the 

corrupted ministers. 

Question. Judge Radhi, on the last day of its existence, the CPA gave you funds 

to establish an academy to train Iraqis to investigate corruption, is that correct? 

Can you tell us how that payment was made? 

Answer. An American expert came to me at the last days before CPA dissolved. He informed me that $11 million was to be transferred to CPI to establish an academy to train Iraqis to work in corruption investigation. I went to the CPA financial 

office in the Green Zone the cash this check. The funds were locked in my office 

and I personally, with a team of armed guards, protected these funds until it could 

be transported and deposited in the Al-Rafideen Bank the next morning. I ensured 

that I received an accurate receipt from the bank to document that the entire 

amount was deposited. Later, the Minister’s Council ordered the Ministry of Finance 

to transfer all government budgets containing U.S. dollars to a central fund. CPI 

was one of these ministries whose funds were taken. The Ministry of Finance refused our exclusion request and later refused our second request to exchange the 

same amount of funds for Iraqi dinars for the establishment of the Public Integrity 

and Ethics Institute. 

Question. During its existence, the Coalition Provisional Authority (CPA) managed the distribution of funds for reconstruction contracts to the Iraqi government. 

An American finance office in the CPA handled each of the Iraqi government’s requests for money. The CPA would often give cash to individual Iraqi ministries for 

operations and to complete reconstruction projects. Is that correct? Please explain. 

Answer. That is correct. My understanding is that most ministries spent the 

funds illegally and in a corrupt manner. 

Question. Judge Radhi, it is my understanding you told U.S. officials that direct 

payments to the ministries and cash transactions were the wrong way to disburse 

money in Iraq. And you recommended instead that it was better for all American 

funds to go to the Ministry of Finance instead of directly to each individual ministry. Is that correct? Please explain. Do you believe the other ministries did the 

same due diligence with their cash payments? Are you aware of any follow-up by 

the U.S. government to make sure that similar steps were taken by other ministries? Are you aware of any oversight of CPA’s funds once they were distributed? 

Answer. Absolutely Not. I do not believe that CPA could control or monitor funds 

after cash payments were made. If there was any monitoring of CPA funds, the situation only further deteriorated after the disestablishment of CPA. 

Question. Judge Radhi, besides Iraqi Prime Minister Nouri Al-Maliki’s continued 

threats of prosecution, have you or your CPI staff ever been threatened personally 

by Prime Minister Nouri Al-Maliki? 

Answer. Yes. I was personally threatened by Prime Minister Nouri Al-Maliki. I 

was personally threatened by the head of the coalition bloc, Sheik Jala Al-deen AlSagher. I was also personally threatened by Sabah Al-Sa’ady, a member of Al-Fadila 

party. Additionally, I received a phone threat from Sheiaa militia when we started 

our investigation into oil smuggling in Basra. Furthermore I received a direct phone 

threat from Al-Qaida. My staff received many more threats. Finally, we lost 32 investigators and other CPI officials. 

Question. Judge Radhi, your asylum case has been pending for over five months 

since October 3, 2007. How are you doing in the United States? 

Answer. I am awaiting the decision on my asylum case. 

Question. Judge Radhi, you have told us that many additional cases against government officials were not prosecuted because the government would not allow it. 

And that because of corruption, despite billions and billions of American dollars, 
118 

Iraq has completed less than one-tenth of its reconstruction projects. Is that true? 

Please explain. 

Answer. That is correct. An American expert came to me one day and asked me 

why I was investigating the Ministry of Defense but not following up the Ministry 

of Oil issues in Beji. He traveled to Beji with big convoys. We did investigate the 

Ministry of Oil, but how could I send my small number of unarmed investigator to 

that place? 

Question. Judge Radhi, is it true that the various militias also benefit from reconstruction funds, often taking resources by force? That in the area of Beiji, Sunni militias commandeer Iraqi government oil tankers and the militias then sell the oil 

on the black market, buying weapons with the proceeds? 

Answer. I simply highlight that Shia and Sunni militias benefited by the actions 

of Ziad Al-Qatan and Naier Al-Jumaily. The latter was the last link between AlQaida and the defense ministry under the former minister Hazim Al-Shallan. Naier 

Al-Jumaily, who is also related to the current defense ministry, transferred millions 

of dollars to Jordan and Lebanon. The current minister is there to continue what 

Hazim did. 

The Ministry of Defense purchased weapons made in 1975 with $1.6 billion. This 

amount far exceeds the actual value of the weapons. One senior American officer 

correctly observed that Iraqi forces can not successfully fight against well armed militias with old weapons. 

The Shiaa militias do not have the same problems as the Sunni militias however 

since their leaders control the Iraqi government and support them with money and 

weapons. 

Question. Judge Radhi, is it true that millions and millions of dollars from the 

Iraqi government have been funneled to the militias? 

Judge Radhi, are there problems or corruption at the Ministry of Electricity? 

Please explain. 

The Ministry of Electricity has been given millions and millions of dollars but still 

provides less than 10 percent, maybe only 5 to 6 percent of the country’s needed 

electricity. Is that correct? Please explain. 

The Minister of Electricity, Aiham Alsammarae, did not register all of the funds 

he received, which is why the Bureau of Supreme Audit wrote 13 ‘‘comments’’ about 

him and the CPI filed a case against Alsammarae. When the court convicted him, 

the American security company responsible for his protection smuggled him out of 

the country to the United States. Is that correct? Please explain. 

Answer. Questions of electricity ministry. 

Three ministers led this ministry and spent billions of dollars on electricity. The 

result is no power for Iraqi citizens beyond, perhaps, an average of three hours a 

day. 

CPI received information from the Board of Supreme Audit which prompted CPI 

to start investigations against Ayham Al-Samarai and Muhsin Shalash. The courts 

prosecuted and found them guilty. Ayham Al-Samarai escaped Iraq with the help 

of an American security company. Shalash also escaped Iraq. Both cases were referred to Interpol. 

Question. Judge Radhi, is the Minister of Finance, Bayan Jabr, involved in corruption? Please explain. 

Judge Radhi, does Minister Jabr also head the militant wing of the al-Dawa 

party? When the United States recommended to the Ministry that it set up a modern accounting system, did Jabr prevent it from being established and when the 

Iraqi parliament asked Jabr to account for funds from the 2007 budget, he was unable to provide accurate information. Is that your understanding? Please explain in 

as great detail as possible. 

Answer. Bayan Jabur the current finance minister is an engineer. A decision to 

appoint him as housing and constructor minister would therefore have been more 

understandable. His political position and his Sheaa abilities were paramount in 

being chosen for the finance position by the Shia coalition bloc despite not being otherwise technically qualified for the position. 

Ministry of Finance failed to promote of the Iraqi dinar despite Iraq’s oil riches. 

They failed in adhering to a budget and in making that budget reflect the needs 

of Iraq. 

The Minister of Finance is corrupted since he couldn’t give the parliament any 

reason for missing the 2007 budget. He uses his power instead of using his knowledge. 

One example illustrating the problems in the Ministery of Finance under the current minister has to do with the ‘‘e-system.’’ It is a good system that was brought 

by the Americans. It provides efficiency and transparency. The ministry shut down 
119 

the e-system. Excuses were made that the system failed due to the advisor being 

kidnapped even though hundreds of people had been trained on the system. 

Finally, a huge problem occurred with a mysterious fire that burned all of the 

central bank official papers. Now nobody can explain the spending schedule of the 

Iraqi money. The fire was quickly registered as an accident. 

There is no integrity without transparency. 

Question. Does former Iraqi Minister of Defense, Hazim Sha’lan provide an example of the nature of government corruption in Iraq? Please explain. 

Judge Radhi, is it true that Minister Sha’lam and his friends would establish 

front companies to bid on Ministry projects. Is that correct? Please explain in detail. 

Judge Radhi, one example you recounted to the Committee prior to the hearing 

was the al-Ain al-Jariya (Flowing Spring) company, which received contracts to provide military equipment from Poland to the Iraqi government. The company was 

owned by a relative of the Deputy Prime Minster, Roz Nouri Shawis, and stole 

money from these contracts with the support of Ministry staff. Is that correct? 

Please explain. 

Judge Radhi, you also recounted that the Deputy Prime Minister’s brother-in-law 

laundered the money from these transactions to banks in Jordan from Iraq. Millions 

of dollars went missing from the Ministry, and Sha’lan was unable to account for 

$4 billion worth of expenditures. Sha’lan was eventually charged with fraud, but 

fled to London before being prosecuted. Shal’an’s former deputy is now Minister of 

Defense. Is that all true? Please explain. 

Answer. These statements are correct. Hazim Al-shalan is corrupt. His actions 

caused the loss of defense ministry money during a time when he should have been 

working to protect the Iraqi people. U.S. forces came to Iraq to free our people from 

a dictator regime. Al-Qaeda then fought against Iraqi and U.S. forces. While this 

was happening, defense ministry officials transferred reconstruction money to Jordan and Lebanon. Some of this money was transferred by Nori Shawees in his own 

brief case. The Secretary General is the brother of the vice president. Furthermore 

Ziad Al-Qatan and Nair Al-Jumaily are related to the current defense minister. 

Abdulhameed Mirza is Nori Shawes’s brother in law. Abdulhameed helped this corruption as the Director General of Al-Ayeen Al-Jaria construction company. Later 

they rebuilt the scheme under the Sifeen Company. They built all these companies 

to make their defense contracts appear to be legal, while functioning as an intermediary between Poland and Ministry of Defense. The Ministry of Defense, using 

contracts to these companies, bought useless airplanes, tanks and ambulances from 

Hungary. The total purchase funds were provided in the beginning of the contracts. 

However, the equipment never received, useless or overpriced. 

The court prosecuted and found guilty 26 officials for this corruption. However, 

the Iraqi government helped them to escape the country. Hazim Al-Shalan is a U.K. 

citizen. Ziad Al-qatan he is in Paris living like a prince. 

It appears that the current minister of defense will finish what Hazim started. 

He formally worked as a body guard Saddam’s son-in-law, Hussain Kamil. He spent 

time in jail for theft. He is totally corrupted. 

Question. Judge Radhi, prior to the hearing, you have told us the Ministry of Defense also received inferior equipment from contractors. There were three contracts 

for Iraqi Army planes, the first two for $113 million and the third for $170 million. 

General Babekar al-Zibari, an Iraqi Army commander, later testified that the proper 

planes were never delivered. A report issued by a technical committee in the Ministry of Defense stated that among other things, the company was delivering old 

tanks to the Ministry of Defense and even old planes from the 1960s. Is that correct? And these weapons deals were engineered by former Ministry of Defense procurement office Ziad Cattan, who has since fled the country, is that also correct? 

Please explain in as much detail as possible. 

Answer. That is correct. Babikr Zebari, as Forces General Chief, sent an official 

letter to the Prime Minster explaining this in detail including the names of the corrupt officials involved. This letter, sent in March 2008, was published on the internet. 

All what I said is notary public in the criminal court and the CCCI. 

COMMITTEE RECESS

Senator DORGAN. This hearing is recessed. 

[Whereupon, at 1:10 p.m., Tuesday, March 11, the committee was 

recessed, to reconvene subject to the call of the Chair.] 

(121) 

EXAMINING THE EFFECTIVENESS OF U.S. EFFORTS TO COMBAT CORRUPTION, WASTE, 

FRAUD, AND ABUSE IN IRAQ 

WEDNESDAY, JULY 23, 2008 

U.S. SENATE, 

COMMITTEE ON APPROPRIATIONS, 

Washington, DC. 

The committee met at 10:40 a.m., in room SD–106, Dirksen Senate Office Building, Hon. Robert C. Byrd (chairman) presiding. 

Present: Senators Byrd, Leahy, Murray, Dorgan, Feinstein, Cochran, Craig, and Allard. 

OPENING STATEMENT OF SENATOR ROBERT C. BYRD

Chairman BYRD. The committee will come to order. 

We meet, today, to examine the adequacy of Defense contract 

oversight in Iraq and Afghanistan and to hear testimony from the 

Deputy Secretary of Defense, Gordon England, Acting Inspector 

General for the Department of Defense (DOD), Gordon Heddell, 

and commanding officer of U.S. Army Materiel Command, General 

Benjamin Griffin. 

Before we begin, I wish to recognize a special observer at today’s 

hearing, Mr. Michael Thibault, the co-chairman of the new Commission on Wartime Contracting. Co-chairman Thibault has a special interest in today’s hearing, given his Commission’s 2-year charter to study wartime contracting in Iraq and Afghanistan. 

Secretary England, General Griffin, and Mr. Heddell, thank you 

for appearing before the committee today. Each of you is responsible for organizations charged with carrying out, managing, or auditing the massive contracts to companies that supply our forces in 

the field with everything from ammunition and fuel right down to 

barracks and food. These companies also carry out reconstruction 

projects throughout Iraq and Afghanistan. 

This is the second hearing of the full Appropriations Committee 

this year on the topic of fraud, waste, abuse, and corruption in Iraq 

and Afghanistan. In the first hearing, we examined the scope and 

the scale of the problem, which is appalling, frankly. Appalling. 

Tens of billions of taxpayer dollars have been lost—gone. Worse, 

some of those funds and unaccounted for weapons are believed to 

have made their way to insurgent groups that have used them 

against our soldiers. 

Now, Benjamin Franklin once observed that ‘‘a little neglect may 

breed mischief.’’ In this case, I’m afraid neglect has bred a lot of 

mischief. 
122 

The Department of Defense and the Department of Justice have 

failed to aggressively investigate, and failed to prosecute, fraud and 

abuse. And I know that my colleagues have specific questions about 

specific cases. Hopefully, our witnesses are prepared to answer 

these questions fully so that we can learn from these specific examples how to avoid similar mistakes in the future. 

My own concerns include specific examples of neglect, but I also 

want to know how the system broke down, and where the system 

broke down, and how and why the oversight processes that were 

in place failed to operate. 

Now, many have rightfully blamed President Bush and Secretary 

of Defense Donald Rumsfeld and the Director of Reconstruction and 

Humanitarian Assistance for Postwar Iraq, Paul Bremer, for the 

unexpectedly difficult occupation of Iraq. But, Army commanders, 

as well as those in the other services, also deserve serious criticism 

for failing to grasp the strategic situation in Iraq and for failing to 

plan properly to implement the massive logistical requirements associated with sustained combat and postcombat operations. 

It was General Dwight Eisenhower who said, ‘‘You will not find 

it difficult to prove that battles, campaigns, and even wars have 

been won or lost primarily because of logistics.’’ The ability to keep 

troops well supplied is absolutely critical to every campaign. 

If appropriate plans had been in place before we went to war, we 

would not have witnessed the scramble to support our troops with 

drivers, cooks, fuel, armored vehicles, bulletproof vests, and other 

tools. Commanders in Iraq should not have had to invent, on the 

spot, the networks of assistance for the new Iraqi Government. 

Had better planning been done, we might not have had to sign 

huge, open-ended, cost-plus contracts with civilian companies 

whose eyes must always be first on profits and dividends for stockholders before service to the troops and thrift for the taxpayer. 

Because that planning was not done, we found ourselves—and, 

yes, we continue to find ourselves—totally dependent upon profitoriented companies for even the day-to-day basics of feeding and 

housing our troops, as well as for carrying out a myriad of other 

functions of the mission, including security. These kinds of contracts open the door for every manager to game the system in order 

to maximize profits. Had better planning been conducted, and had 

better oversight been instituted from the very beginning, we might 

not be holding this hearing today. 

Secretary England, in your prepared testimony, you focus on the 

progress that has been made. But, a report issued by the inspector 

general’s office, just 5 days ago, on July 18, 2008, says, and I quote, 

that ‘‘the DOD oversight community and the Government Accountability Office (GAO) continue to report that longstanding problems 

continue to hinder DOD oversight of contractors at deployed locations.’’ 

In another report, released just 2 months ago, the Defense Criminal Investigative Service found that there had been only limited review of the completeness, the accuracy, and the propriety of contingency payment vouchers, and that there existed the potential—a 

great potential for fraud, waste, and abuse. 
123 

Now, failing to come to grips with the scope and the magnitude 

of this problem and failure to recognize the urgency of this problem 

points to a lack of leadership. 

It is evident that our oversight resources have been strained past 

the breaking point. Army contracting dollars and actions have increased more than 350 percent over the last 11 years, while the 

contracting workforce has decreased by more than 50 percent. Too 

few auditors and too few contract managers are being asked to 

oversee too many contracts. Some individuals are responsible for 

contracts totaling in the billions of dollars. That’s not shutting the 

barn door after the horses are gone, that’s like taking the barn 

doors off the hinges and starting a stampede and saying, ‘‘Go to it. 

Yeah, man.’’ This lack of planning on the part of the services, not 

only puts our treasure, but it also put our troops, in peril. 

Too few investigators are being tasked with bringing perpetrators of fraud, perpetrators of waste, and perpetrators of corruption 

to justice and with recovering the billions of dollars that have been 

stolen from the American taxpayers. There are individuals living 

high on the hog, in the United States and in the cities of the Middle East, on these stolen funds. 

The Federal Bureau of Investigation (FBI) has a grand total of 

five investigators in Iraq and Afghanistan working these cases. 

Five. As a result of our hearing in March, we included a significant 

increase for FBI investigators, in the supplemental appropriations 

act, to address these problems. But, for too long the barn door has 

been wide open. This is a failure of leadership. 

As a result of the lack of enforcement actions, more individuals 

think that they can get away with bilking the U.S. Government or 

the Iraqi Government, embezzling funds, taking and making 

bribes, and substituting inferior goods or inferior workmanship, or 

just plain, old-fashioned stealing. This illegal activity takes money 

directly away from pressing needs of our troops and the needs of 

the Iraqi and the Afghan people. 

We need to make ‘‘collars and dollars,’’ our motto—more arrests, 

more indictments, and more funds recovered. We need to be more 

aggressive about minimizing the waste, fraud, and the corruption 

associated with these wars. If that requires a reallocation of resources or if it requires new legislation, I am certainly open to 

hearing from each of you about what is needed, as long as it results 

in prosecutions and the recovery of the hard-earned dollars that 

have been stolen from the American people. 

Members will be recognized for statements and questions for up 

to 7 minutes in order of seniority. 

I now turn to my distinguished friend and very able and learned 

colleague Senator Thad Cochran for any opening remarks he may 

wish to make. 

STATEMENT OF SENATOR THAD COCHRAN

Senator COCHRAN. Mr. Chairman, thank you very much. I’m 

pleased to join you in welcoming our distinguished panel of witnesses this morning. We are interested in learning more about 

what the Department of Defense and related agencies are doing to 

make sure that our contracting efforts in support of the global war 
124 

on terrorism, and specifically our activities in Iraq and Afghanistan, are successful. 

The United States is engaged in a serious conflict. It’s very different from nation-against-nation war that many of us grew up understanding. But, in this new era, our forces have had to work with 

emerging governments, and, in some cases, in the absence of governments, in countries that are besieged with terrorism and graft 

and unusual challenges. They’ve had to rely on the support of commercial vendors, in many cases, to provide everything our soldiers 

and civilian employees there need—daily hotel, food services, even 

military equipment, maintenance services, construction assistance, 

transportation, personal security. These efforts have been carried 

out in a very dangerous area of the world, and they’ve been enormously challenging for the Department of Defense. And I think we 

need to acknowledge that right away. 

Last year, there was a report by the Gansler Commission that 

concluded—after the great struggle with the Soviet Union, it was 

assumed that Defense budgets would decrease, urgency would decrease, and hence, a drawdown in acquisition capabilities could be 

made. But, then 9/11 changed all that. The Department of Defense 

had to add quickly to the workforce. In 1990, there were 500,000 

people in the Department’s workforce for acquisition, but that has 

decreased by more than half. 

During the last few years, the need for those skills has grown exponentially. In fact, the Defense Department has executed almost 

98,000 contracts in Iraq alone. There’s been an expertise shortage. 

Mistakes have been made. Problems have arisen. A small number 

of people have been identified as just plain crooks. Some have been 

unscrupulous and have violated trust. There has been cheating of 

our servicemen and women. The American taxpayer and the citizens of our Nation, however, are supporting our military efforts to 

restore peace and opportunity in that troubled part of the world 

and to help protect our own national security interests in the process. 

I think the Department of Defense and the Department of Justice have gotten together now, trying to determine the best ways 

to root out corruption and fraud, put an end to it, prosecute those 

who have profited illegally. There’s still much work to be done, and 

I’m confident we’ll learn more about that at this hearing. 

And, for that, we’re grateful for your willingness to be here, the 

work you’re doing, and we are anxious to hear your views about 

what our Congress can do to help support you more fully. 

You know, our committee was scheduled to mark up two fiscal 

year appropriations bills tomorrow, as well as a second supplemental bill. We need to do our work, too. And we are now learning 

that that’s been put off, postponed indefinitely. Markup has been 

canceled. I don’t want to change the topic for debate today, but I 

need to express my personal disappointment that we’re not meeting 

in this committee to do our work, as we were scheduled to do tomorrow. Bills that we were supposed to mark up, very important 

to our Nation’s well-being and to the success of our efforts in the 

war on terrorism. 

But, I am, again, grateful for the witnesses being here and telling us what their reactions are to some of the things that are hap-
125 

pening in the region that are under their responsibility and that 

are the subject of the hearing today. 

Thank you very much. 

Chairman BYRD. Thank you, Senator Cochran. 

I share the view that the committee ought to do its work. That’s 

exactly why I insisted on the committee marking up the war supplemental, and we’ve marked up 9 of the 12 fiscal year 2009 bills 

to date. That’s why the committee has had multiple hearings on 

the President’s budget and on his supplemental request and on 

fraud and corruption in Iraq. 

Regrettably, the House of Representatives has not passed a single appropriations bill. Not one. As a result, it was necessary to 

delay the Thursday markup. But, I will continue to work with the 

House and Senate leadership so that we can mark up the supplemental and the three remaining 2009 bills. 

I now turn to our witnesses—the Deputy Secretary of Defense, 

Gordon England, Acting Inspector General for the Department of 

Defense, Gordon Heddell, and commanding officer of the Army Materiel Command, General Benjamin Griffin—for their testimony. 

I thank each of the witnesses. 

Secretary England. 

STATEMENT OF HON. GORDON ENGLAND, DEPUTY SECRETARY OF DEFENSE, DEPARTMENT OF DEFENSE 

ACCOMPANIED BY SHAY ASSAD, DIRECTOR, DEFENSE PROCUREMENT, 

DEPARTMENT OF DEFENSE 

Mr. ENGLAND. Chairman Byrd, I thank you for the opportunity 

to be here—— 

Chairman BYRD. We’ve spent billions of dollars on going to the 

Moon, putting a man on the Moon, and we haven’t been able to 

come up with a good public address system. 

Mr. ENGLAND. Let’s try again, here, Mr. Chairman, now that 

the—I think the other mikes are off here on the table. Maybe 

that’ll be better and we’ll be able to proceed. 

Chairman BYRD. Yes, all right. 

Mr. ENGLAND. So, I do thank you, and I thank the distinguished 

members of the committee, for the opportunity to be here. I mean, 

hopefully we can answer your questions clearly, and also provide 

a perspective on an update of the progress, both how we got here, 

a little bit, and also an update of the progress that we’re making 

regarding our contracting activities and the oversight of those activities, particularly in Iraq. 

As you commented, I am pleased to have my distinguished colleagues with me. Gordon Heddell, from the Department of Defense, 

the Acting IG, will be able, I think, as part of his opening statement, to give you some specific statistics, in terms of convictions 

and investigations underway, so we are holding people accountable. 

He will cover that for you. 

I’m also pleased that the commanding general of the U.S. Army 

Materiel Command, General Ben Griffin, is with us, and also Mr. 

Shay Assad, who’s the Director of Defense Procurement. I believe 

those gentlemen also—we have representatives, at your request, 

from the Defense Contract Audit Agency and the Defense Contract 

Management Agency with us, so I’m hopeful we will be able to ad-
126 

dress your issues and concerns, many of which you’ve already 

raised. 

I do have a written statement for the record, and, of course, we’re 

all prepared to answer your questions now. 

As you are aware, and as you commented, the Department has 

struggled with our expeditionary contracting and the oversight of 

that contracting. Our expeditionary contracting overseas—in this 

case, specifically, in Iraq—we have struggled with that. And by 

way of perspective, since January 2003 we’ve obligated approximately $71 billion through those contracts. And, as was commented, there’s been 98,000 expeditionary contract actions since 

2003. And, unfortunately, this extraordinarily large volume of activity was not anticipated. The Department’s hindsight today is 

much better than was its ability to predict, back in 2003, not to 

mention, of course, that much of this work was performed in a war 

zone, a dangerous and a very difficult environment. 

Now, that said, the Department takes our contract accountability 

and contract oversight responsibilities very seriously. Multiple Department of Defense (DOD) agencies have engaged in literally 

thousands of aggressive reviews, audits, and oversight, and, in so 

doing, they have, indeed, uncovered instances of fraud and abuse. 

Those reviews have also led to recommended meaningful corrective 

actions, coupled with holding people accountable, and along with 

structural organizational changes. Now, many of those changes are 

centered in the Army and in our agencies, and you’ll be hearing 

about them during this hearing. 

Now, the Department will continue to improve the effectiveness 

and the efficiency of our contracting across the entire enterprise, 

but I do need to comment that it will take time to rebuild our acquisition and contracting workforce. As was commented, these personnel were dramatically reduced during the 1990s—some by congressional direction; I expect, some from Department initiatives. 

And these professional personnel are hard to replace. It’s a lengthy 

training time involved to bring them up to their professional status. So, even today, it will likely take a few more years before all 

of these critical skills are fully replenished. 

Looking back, we have learned that there are many demands on 

an expeditionary force. As you will recall, many of the discussions 

regarding length of deployments and dwell times for our military, 

well, those same considerations are applicable to our military and 

civilian contracting personnel. A deployable rotational force presents unique challenges and significantly more personnel than was 

anticipated back in 2003. 

Now, the Department is certainly wiser today. We have benefited 

from our own experience, from independent studies, and from the 

results of the thousands of audits that I mentioned earlier. And I 

can assure you that we will continue to be aggressive in the pursuit of excellence, and, as you said, we owe no less to the American 

people. 

Now, yesterday was another step forward in this process. Yesterday, I did have the pleasure and opportunity to swear in the new 

special inspector general for Afghanistan reconstruction, Major 

General Arnie Fields, United States Marine Corps (retired). I’m 

confident Arnie Fields will help to do in Afghanistan for the De-
127 

1Source: Defense Finance and Accounting Service, Cost of the Global War on Terror Monthly 

Report as of May 2008. 2 Contract actions include: contract awards, modifications, and purchase/delivery orders above 

$25,000. 

partments of Defense and State what Stu Bowen has been able to 

accomplish over the past several years in Iraq as part of his special 

investigative status. 

So, Mr. Chairman and members of the committee, I do thank you 

for your support of the outstanding men and women who wear the 

cloth of our Nation, and their families. I also want to thank the 

people who deployed, and who are deployed today, who do this contracting work for America. While the Department has problems 

with some of its processes, we are extraordinarily grateful to the 

brave men and women who deploy to Iraq to accomplish this very 

difficult mission. 

And so, I do look forward to your questions, and hopefully we can 

provide some more visibility during this hearing, Mr. Chairman 

and members. 

Chairman BYRD. Thank you. 

[The statement follows:] 

PREPARED STATEMENT OF GORDON ENGLAND

Chairman, Members of the Senate Committee on Appropriations, we deeply appreciate your concern and steadfast support of our military and welcome the opportunity to appear here today to provide an update on progress and improvements 

being made to the oversight of defense contracts for Operation Iraqi Freedom (OIF). 

We are pleased to report that while much work remains to be completed, meaningful progress has been made. 

This is now the ninth congressional hearing in which the Department has participated on this subject, in addition to five briefings and six interviews. Additionally, 

the Department has submitted almost 250,000 pages of documentation to the various oversight committees. This committee is to be commended for the extraordinary 

amount of time and attention you have given to this very important issue. 

We’re delighted to have with us Department of Defense Acting Inspector General 

Gordon Heddell, Commanding General, U.S. Army Materiel Command, General Ben 

Griffin, and Director of Defense Procurement, Acquisition Policy and Strategic 

Sourcing, Mr. Shay Assad. Also, at the request of this committee, I’m joined by representatives from the Defense Contract Audit Agency and the Defense Contract 

Management Agency. 

In addition to this statement for the record, the DOD Acting Inspector General, 

Mr. Gordon Heddell will be submitting a copy of the Department of Defense Inspector General’s (DOD IG) Report No. D–2008–086, summarizing 302 Operations Enduring and Iraqi Freedom-related audit reports and testimonies issued by the Defense oversight community—including the DOD OIG, the Army Audit Agency, the 

Naval Audit Service, the Air Force Audit Agency, the Special Inspector General for 

Iraq Reconstruction (SIGIR), and the Government Accountability Office (GAO)—beginning fiscal year 2003 through fiscal year 2007. 

OVERSIGHT OF DOD CONTRACTS FOR OIF

Since January 2003, DOD has obligated over $450 billion in support of OIF1. The 

majority of these funds have been spent on non-contract related items, such as personnel costs. However, of this total amount, approximately $78.8 billion has been 

obligated through 103,000 contract actions.2 The Department of Defense (DOD) has 

obligated over 90 percent of these funds—roughly $71 billion—through nearly 

98,000 contract actions. 

Obviously, the volume and complexity of contracts have increased with the war, 

and DOD takes the accountability and oversight of these contracts very seriously. 

The Department’s approach has been to conduct and support thorough reviews and 

investigations of programs and operations, to rapidly identify problem areas, and develop and implement improvement plans. As such, multiple DOD agencies have engaged in aggressive reviews and oversight, uncovering instances of fraud, waste, and 

abuse—as well as recommending corrective actions. Since the start of the war in 
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2003, the Defense oversight community and GAO have performed over 300 audits 

related to the Global War on Terror (GWOT). To date, DOD has implemented or 

is in the process of resolving most of the more than 980 proposed recommendations. 

In addition, the largest DOD audit operation—the Defense Contract Audit Agency 

(DCAA) has performed in excess of 2,500 GWOT-related contract audits, taking exception to $12 billion as either not acceptable or not supported. The monetary result 

has been savings and restitutions in excess of $1.3 billion. 

DEPARTMENT OF DEFENSE INSPECTOR GENERAL’S REPORT

The DOD IG’s report summarizes 302 reports and testimonies issued by the Defense oversight community and GAO, detailing the systemic challenges that have 

been identified, and prospectively summarizing corrective actions taken and still 

pending, as well as other management initiatives taken or underway that impact 

DOD operations supporting Operation Enduring Freedom (OEF) and OIF. 

SYSTEMIC CHALLENGES BY FUNCTIONAL AREA

The DOD IG’s report categorizes the systemic challenges into four areas: Contract 

Management, Logistics, Financial Management, and Other. 

Contract Management—the Defense oversight community and GAO all reported 

on the challenges DOD has experienced with the lack of adequate oversight over 

contractors in both OEF and OIF. 

Logistics—the Defense oversight community and GAO all reported on the challenges DOD has experienced with the logistics operations (accountability and visibility of assets, properly equipping forces, etc.) supporting OEF and OIF. 

Financial Management—DOD experienced numerous challenges in providing accurate and reliable cost reporting for OEF and OIF operations. 

SYSTEMIC CHALLENGES ACROSS FUNCTIONAL AREAS

Aside from challenges in each functional area, the DOD IG’s report also identified 

common challenges across functional areas. Specifically, training and policy and procedure challenges were identified in more than one of the functional areas: Contract 

Management, Logistics, and Financial Management. 

DOD INITIATIVES

The Department has initiated many actions to address contract-related challenges 

in OEF and OIF. These initiatives included establishing and revising guidance, 

fielding a new contractor accountability system, adding new contingency contracting 

training at DOD academic institutions, and looking at contracting challenges 

through commissions and task forces. Additional details are available in the DOD 

IG report. 

DOD AUDIT COMMUNITY INITIATIVES

The Defense oversight community has also instituted its own initiatives to address the challenges presented to DOD in OEF and OIF operations. These initiatives include focused workforces, focused coordination groups, and comprehensive 

and coordinated oversight plans in response to statutory requirements. Additional 

details are available in the DOD IG report. 

DEFENSE CONTRACT AUDIT AGENCY (DCAA)

DCAA is an integral part of the oversight and management controls instituted by 

DOD to ensure integrity and regulatory compliance by contractors performing on 

government contracts. DCAA’s services include audits and professional advice to acquisition officials on accounting and financial matters to assist them in the negotiation, award, administration, and settlement of contracts. Decision-making authority 

on DCAA recommendations resides with contracting officers within the procurement 

organizations who work closely with DCAA throughout the contracting process. 

DCAA is the largest DOD audit operation and has, on average, 24 temporary duty 

personnel stationed in Iraq and Kuwait. To carry out its audit mission, DCAA established an office in Iraq in May 2003 and performs Iraq reconstruction audits at over 

60 CONUS office locations. DCAA anticipates completing nearly 400 audits in fiscal 

year 2008, using approximately 100 work-years, to support Iraq Reconstruction efforts. 

As mentioned earlier, to date, DCAA has performed in excess of 2,500 GWOT-related contract audits, taking exception to $12 billion as either not acceptable or not 

supported. As of March 30, 2008, DCAA is responsible for auditing contracts at 105 
129 

contractors. These contractors hold 226 prime contracts with obligated funding of 

over $51 billion. The monetary result has been savings and restitutions in excess 

of $1.3 billion. 

SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION (SIGIR)

The SIGIR, was created by Congress to provide oversight of the Iraq Relief and 

Reconstruction Fund (IRRF) and all obligations, expenditures, and revenues associated with reconstruction and rehabilitation activities in Iraq. SIGIR oversight is accomplished via independent audits, field inspections, and criminal investigations 

into potential fraud, waste, and abuse of funds. 

Currently, SIGIR has 13 auditors (5 additional auditors are in-processing), 5 inspectors (3 additional inspectors are in-processing), and 4 investigators (1 additional 

investigator is in-processing) in Iraq. To date, SIGIR has produced over 230 audits 

and inspections that have uncovered instances of waste and inefficiency. 

SIGIR auditors report on every major fund supporting the Iraq reconstruction program including the Commanders’ Emergency Response Program (CERP), IRRF, Iraq 

Security Forces Fund (ISSF), and Economic Support Fund (ESF). SIGIR inspectors 

also travel across Iraq to provide on-site reports of project progress. 

SIGIR made the following recommendations in its Contracting Lessons Learned 

Report to improve contingency contracting: 

—Explore the creation of an enhanced Contingency Federal Acquisition Regulation (CFAR). SIGIR observed that agencies have developed agency specific regulations implementing the government wide Federal Acquisition Regulation 

(FAR). 

—Pursue the institutionalization of special contracting programs such as the 

CERP which SIGIR noted before have unique roles in post conflict reconstruction. 

—Include contracting and program management staff at all phases of planning for 

contingency operations. 

—Create a deployable reserve corps of contracting personnel who are trained to 

execute rapid relief and reconstruction contracting during contingency operations. 

—Develop and implement information systems for managing contracting and procurement in contingency operations. 

—Pre-compete and prequalify a diverse pool of contractors with expertise in specialized reconstruction areas. 

ACTIONS STEMMING FROM SIGIR CONTRACTING LESSONS LEARNED RECOMMENDATIONS

SIGIR recommendations were key to informing the development of updating 

Emergency Acquisition guidance issued by the Office of Management and Budget 

Office of Federal Procurement Policy in May 2007. The guide is designed to help 

agencies prepare the acquisition workforce for emergencies and includes a number 

of management and operational best practices that should be considered in planning 

related to contingency operations, anti-terrorism activities, and national emergencies. SIGIR lessons learned directly contributed to the development of the guide. 

In addition, the recently passed fiscal year 2008 Supplemental Appropriations bill 

includes three provisions requiring improvements in Iraq reconstruction programs 

that were recommended in SIGIR Audits, namely: Improvements in Asset Transfer 

processes and coordination with GOI, provisions to strengthen development and implementation of a comprehensive anti-corruption strategy, and development of a 

longer-term strategy to guide the future of Provincial Reconstruction Teams in Iraq. 

GANSLER COMMISSION REPORT

On September 12, 2007, the Secretary of the Army established an independent 

Commission on Army Acquisition and Program Management in Expeditionary Operations, headed by former USD (AT&L) Jacques Gansler. Dr. Gansler released the 

Gansler Commission Report on November 1, 2007. 

Subsequently, the Department, led by Under Secretary of Defense (AT&L), established the DOD Task Force for Contracting and Contract Management in Expeditionary Operations to pursue the Commission recommendations so that future military operations achieve greater effectiveness, efficiency, and transparency. The 

DUSD (A&T) then established a Steering Committee of Senior Leaders from OSD, 

the Military Departments, the Joint Staff, and the JCC–I/A to provide visibility, 

oversight, and to ensure timely completion of Task Force initiatives. The Task Force 

evaluated the applicability of the recommendations and developed long-term, enterprise-wide solutions. Today, in order to maintain the momentum achieved to date, 

the Steering Committee continues to oversee and monitor the work of the Task 
130 

Force. Also, to ensure accomplishment of the stated efforts/milestones, the Task 

Force is exchanging information every two weeks on the current status of efforts, 

roadblocks to accomplishment, and changes in reported estimated completion dates. 

DOD and the Army reported to Congress on June 2, 2008, providing implementation plans and status for the recommendations—many of them long-term efforts— 

provided in the Gansler Commission Report. To date, DOD and the Army have completed almost half of the 40 total recommendations, including the addition of military and civilian structure and senior leadership oversight. Recommendations being 

implemented include the following: 

—On January 30, 2008, the Army decided to establish a new two-star level Army 

Contracting Command under the Army Materiel Command. The new Command 

(Provisional stood-up March 31, 2008) includes two subordinate commands: 

—Expeditionary Contracting Command 

—Mission and Installation Contracting Command 

—The Army established a new task force on February 29, 2008 to insure full analysis and fielding of long-term solutions to Army contracting. The work of this 

Task Force is ongoing and will continue as part of the Army Contracting Campaign Plan. 

—The Army conducted an intensive review of more than 18,000 contract actions 

executed in Kuwait from 2003–2006 resulting in the settlement of claims that 

saved the Government over $10.4 million. 

—AMC deployed a team of contracting professionals to review contracts at the 

U.S. Contracting Command Southwest Asia-Kuwait issued between 2003 and 

2006 to determine if there may be any additional fraudulent activity. Several 

contract actions were referred to the Army CID for further evaluation. 

Progress towards completing the remaining Gansler Report recommendations is 

ongoing, including some recommendations requiring Congressional action, such as 

the authority to acquire products and services produced in a contingency theater of 

operations outside the United States. 

DEFENSE CONTRACT MANAGEMENT AGENCY (DCMA)

DCMA’s mission is to perform Contract Administration Services for DOD, other 

Federal Agencies, foreign governments, and authorized international organizations. 

As the eyes and ears of the Department in contractor facilities, and as a Combat 

Support Agency, DCMA is responsible for ensuring the integrity of the government 

contracting process and providing a broad range of acquisition management services. DCMA services include acquisition planning support, contract management, 

quality assurance and product acceptance, engineering support services, software acquisition management, and property management. DCMA’s contract management 

mission provides acquisition life-cycle support to our military services worldwide, as 

well as contingency contract support in Iraq and Afghanistan. 

In fiscal year 2008 alone, DCMA has conducted over 14,500 on-site quality assurance visits in Iraq and Afghanistan, discovering 13,000 quality defects and issuing 

128 corrective reports. 

Based on recommendations by the Gansler Commission, DOD is re-examining 

DCMA’s staffing to determine if they are appropriately resourced to manage the current level of activity and their expanded role in support of contingency contracting. 

EXCELLENCE IN THE PURSUIT OF PERFECTION

There is one point that I would like to emphasize in this statement for the record. 

The Department of Defense, consisting of our military Services and inter-agency and 

industry partners, constitutes one of the largest and most complex enterprises in the 

world. So, despite our best efforts, it is inevitable that problems will occur and people will make mistakes—intentionally or otherwise. Nevertheless, our goal is to 

achieve excellence in the pursuit of perfection. So, we very much appreciate the 

many, dedicated people who spend countless hours carefully performing audits to 

help identify issues and problems that must be resolved and recommending actions 

to be taken. Without question, the audit process makes our system better. 

We also appreciate the hard work of the hundreds of people who administer contracts on behalf of the Department of Defense. These individuals have a responsibility to serve the warfighting needs of our men and women in uniform, while protecting the best interests of the American taxpayers. By having DOD auditors work 

in partnership with these contracting officers as they negotiate, administer, and settle contracts we’re better able to ensure all charges and claims are valid. 
131 

COMBATING CORRUPTION, WASTE, FRAUD, AND ABUSE IN IRAQ

Unfortunately, in an imperfect world—there will be people who will attempt to 

abuse the system through fraud, corruption, theft, or other criminal behavior. But, 

what is important is that the Department has a system and a process in place that 

ensures we are alerted to any violations and we are able to identify, prosecute, and 

convict the offenders. 

Investigations of possible offenses are conducted by DOD IG’s Defense Criminal 

Investigative Service (DCIS) and partnering federal enforcement agencies, including 

Air Force Office of Special Investigations (AFOSI), Army Criminal Investigation 

Command (CID), U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), 

FBI, Immigration and Customs Enforcement (ICE), IRS–CID, Naval Criminal Investigative Service (NCIS), SIGIR, USAID–OIG, and USDA–OIG. 

In total, since May 2003, there have been over 160 criminal investigations resulting in 22 indictments, 32 informations, and 32 convictions. 124 of those investigations are currently ongoing within DOD IG and its partner enforcement agencies. 

The majority of investigations were performed jointly with other enforcement agencies, including Army CID and SIGIR. 

In accordance with Generally Accepted Government Auditing Standards, DCAA 

auditors have a responsibility to refer matters that raise a reasonable suspicion of 

fraud to the appropriate investigative agency. DCAA takes this responsibility very 

seriously and has established comprehensive procedures to report all potential instances of fraud. In addition, DCAA auditors support fraud investigations. During 

the first nine months of fiscal year 2008, DCAA auditors were involved in 84 completed investigations which resulted in DOD recovering $97 million. 

While the cases of fraud found in Iraq have been deplorable, their discovery and 

the subsequent indictments and convictions of offenders, sends a clear message that 

abuse of this kind will not be tolerated. 

CONCLUSION

Overall, the many lessons learned in the areas of human capital management, 

contracting and procurement, and program and project management have led to significant process and organizational improvements across the Department. 

On today’s modern battlefield, ‘‘contracting’’ has clearly become one of many Battlefield Operational Systems. Improving the quality of this system is not just the 

responsibility of contracting officers, auditors, and investigators; rather it’s the responsibility of all officers and military planners. To this end we are placing increased emphasis in our schools on every officer’s knowledge of and responsibility 

for ensuring a quality contracting system. 

DOD has increased oversight and accountability of deployed contractors and 

project requirements in expeditionary operations. The formation of the Joint Contracting Command-Iraq (JCC-Iraq) has provided a centralized point for the oversight of $13 billion in hard construction contracts and several billion more in nonconstruction spending that was part of the Iraq Relief and Reconstruction Fund. 

Other contractor-related initiatives have included establishing an Executive Director 

for LOGCAP—a more than $30 billion Services program—to provide program management oversight of logistical support. In an effort to expand transparency, the Department has also granted SIGIR direct access to JCC-Iraq’s electronic contractual 

documents, thus allowing for real-time review and oversight of contractual actions. 

In February 2007, I—as Deputy Secretary of Defense, established the Cost of War 

Senior Steering Group to oversee the timely resolution of policy, system, and procedural issues that impact the reporting of the cost of war. The objective is to improve 

the credibility, transparency, and timeliness of Cost of War reporting, to include the 

Commanders’ Emergency Response Program (CERP). The Department has also deployed finance support teams to assist forward-deployed DOD elements, and we’re 

reviewing and revising our federal financial management regulations to ensure 

proper and sufficient oversight and accountability of funds. 

The Department continues to strive for excellence. In pursuit of this goal, the Department has made meaningful progress in efforts to address the challenges posed 

by oversight of defense contracts. We will continue to make improvements to ensure 

better effectiveness, efficiency, and accountability of resources and efforts across 

U.S. forces. 

Chairman, Members of the Committee, thank you again for your continued and 

generous support of the outstanding men and women of our armed forces and their 

families. We look forward to your questions. 

Chairman BYRD. Mr. Heddell. 
132 

STATEMENT OF HON. GORDON S. HEDDELL, ACTING INSPECTOR GENERAL, DEPARTMENT OF DEFENSE 

ACCOMPANIED BY MARY UGONE, DEPARTMENT OF DEFENSE 

Mr. HEDDELL. Yes, sir, Mr. Chairman and distinguished members of this committee. Thank you for the opportunity to appear before you this morning. 

My name is Gordon Heddell, and I am, as of last week, the Acting Inspector General for the Department of Defense. 

The magnitude and complexity of the Department of Defense requires nothing less than a full-time effort. We are in a time of war, 

and our work not only saves taxpayer dollars, but also, and much, 

much more importantly, the lives of U.S. servicemembers. 

The Department of Defense Inspector General has the primary 

responsibility within the Department of Defense for providing oversight of programs and appropriated funds. We spearhead the DOD 

oversight community in auditing, investigating, and inspecting accountability processes and internal controls. We work in close partnership with other oversight organizations, such as the Government Accountability Office, the Special Inspector General for Iraq 

Reconstruction, the Department of State, and the U.S. Agency for 

International Development. 

The global war on terror, especially operations in Southwest 

Asia, continues to be a top priority of the DOD inspector general. 

We have 238 ongoing or completed projects that provide oversight 

of various functions and activities, such as acquisition, contracts 

and contract fraud, readiness, logistics, funds management, accountability, theft, corruption, and intelligence efforts. 

IG STRATEGY

We have adopted an expeditionary workforce model to support efforts throughout Southwest Asia. We have core staff forward deployed to our field offices in Iraq, Afghanistan, Qatar, and Kuwait. 

Expeditionary team members deploy to complete reviews. The 

number fluctuates on a daily basis depending on requirements. 

During April, May, and June, we had an average of 55 personnel 

in theater supporting Operation Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF), and at one point during May, we 

had over 100 personnel in theater. As inspector general, I will 

evaluate our current and planned staff levels for our presence in 

Southwest Asia, and will make adjustments as necessary. 

The goals of our expeditionary model are to minimize disruption 

to the warfighter, facilitate timely reviews and reports, and minimize risk to personnel. 

We have completed, or are conducting, audit oversight efforts 

that cover approximately $158.9 billion related to DOD efforts in 

Iraq. Currently, we have 38 ongoing Iraq-related audit projects reviewing mission-critical support functions. 

As of June 30, 2008, the Defense Criminal Investigative Service 

(DCIS) had 124 ongoing investigations related to Southwest Asia. 

These investigations involved 286 subjects. Thirty-two of these 

DCIS investigations have been adjudicated, resulting in 22 Federal 

criminal indictments, 32 Federal criminal informations, and 32 felony convictions. The adjudications have resulted in 54 years con-
133 

finement, 44 years probation, debarment of 10 individuals and four 

companies, and suspension of 28 persons. The U.S. Government 

has accepted three settlement agreements, received $13.5 million 

in restitution, levied $374,125 in fines and penalties, received $1.76 

million in forfeitures, and seized another $2.65 million in assets. 

SECTION 842

On June 18, 2008, my office released the Comprehensive Audit 

Plan for Southwest Asia. The plan was facilitated by the DOD IG 

Joint Planning Group Southwest Asia, and includes the individual 

audit plans of my office and the inspectors general of the Department of State and USAID, as well as the Special Inspector General 

for Iraq Reconstruction, the Army Audit Agency, the Air Force 

Audit Agency, and the Defense Contract Audit Agency. The audits 

in the plan will help to identify abuses and defects in contracts, 

systems, and processes. The plan will be updated on a periodic 

basis. 

LESSONS LEARNED AND INITIATIVES

On July 18, 2008, we issued a reported entitled ‘‘Challenges Impacting OIF and OEF Reported by Major Oversight Organizations 

Beginning in Fiscal Year 2003 Through Fiscal Year 2007.’’ We compiled 302 reports and testimonies, given or issued, by the Defense 

oversight community and GAO. 

Our analysis identified that, over the course of OIF and OEF, the 

Department of Defense experienced recurring challenges in contract management, logistics, and financial management. 

We also captured many of the initiatives that DOD has underway, such as issuing updates to the Federal acquisition regulations 

and DOD policies regarding the oversight of deployed contractors, 

increasing the oversight of contractors performing logistical support 

work, deploying Defense finance and accounting service personnel 

to Southwest Asia to support personnel in financial operations, and 

assessing which business operations can be removed from in theater. 

I would like to submit these two reports for the record. 

In closing, thanks to your budgetary support, we are able to dedicate more resources to fight waste, fraud, and abuse. The office is 

on a firm footing to provide the necessary oversight. We look forward to working with this committee, and we will continue to keep 

Congress and our leadership fully and promptly informed. 

Thank you for the opportunity to appear before the committee 

today to address our ongoing oversight work regarding Iraq. 

Chairman BYRD. Thank you. 

[The information follows:] 

PREPARED STATEMENT OF GORDON S. HEDDELL

Mr. Chairman, Senator Cochran, and distinguished members of this committee, 

thank you for the opportunity to appear before you this morning and address corruption, fraud, waste, and abuse in Iraq. This testimony will cover the accomplishments of the Department of Defense Office of the Inspector General (DOD IG) and 

the other DOD organizations that have the mission to combat illegal and improper 

expenditures and to improve accountability of DOD resources that support operations in Iraq. Since February 2003, the United States has obligated an estimated 
134 

1Source: Defense Finance and Accounting Service, Cost of the Global War on Terror Monthly 

Report as of May 2008. 

$435 billion in support of Operation Iraqi Freedom 1. The U.S. military presence in 

Iraq is aimed at providing a secure environment which will enable the Iraqi people 

to establish a stable government that upholds the rule of law and good governance. 

Corruption undermines the efforts of both the Iraqi people to establish effective institutions of government and undermines the United States ability to support this 

effort. 

As this committee knows, the DOD IG has the primary responsibility within the 

Department of Defense for providing oversight of defense programs and funds appropriated to the Department at home and around the world, to include Southwest 

Asia (SWA). In this role, the DOD IG office oversees, integrates, and attempts to 

ensure there are no gaps in the stewardship of DOD resources. We spearhead the 

DOD oversight community in auditing, investigating, and inspecting accountability 

processes and internal controls, in areas such as acquisition, contracting, logistics, 

and financial management. Collectively, the community has dedicated over 470 

auditors and over 190 investigators that have reviewed a wide range of issues pertaining to SWA. We also work in close partnership with other oversight organizations, such as the Government Accountability Office (GAO), the Special Inspector 

General for Iraq Reconstruction (SIGIR), the Department of State, and the U.S. 

Agency for International Development (USAID). In addition, we provided the core 

staff for the Coalition Provisional Authority IG, and later assisted the stand-up of 

the SIGIR. Since 2003 the DOD IG has provided 141 full or part-time personnel in 

support of both organizations. 

Adequate management controls and oversight to verify that proper safeguards are 

in place and working as intended are essential in the fight controls are severely 

lacking or proper oversight is minimal create opportunities for corruption, fraud, 

waste, and abuse. Additionally, individuals must be held accountable for violating 

laws and regulations and for mismanagement of DOD resources. 

OIG STRATEGY

To accomplish its oversight mission, the DOD IG has adopted a strategy that is 

based on maintaining the optimal presence in theater, but which also recognizes 

that much of our work can be done away from the war zones. This strategy minimizes disruption to the warfighter ensuring they can meet their primary mission 

to fight and win the war, facilitates timely reviews and reporting of results in theater, as well as ensures the safety of personnel. An important part of our oversight 

effort is to improve inter-service and interagency coordination and collaboration to 

minimize duplication of effort and ensure that we have only the staff needed in theater to accomplish the mission. 

The DOD IG has adopted an expeditionary workforce model to support efforts 

throughout all of SWA. The DOD IG has core staff forward deployed at all times. 

The core contingent is composed of individuals serving between 6 and 12 month deployments. Expeditionary team members deploy on temporary duty orders for as 

long as needed to complete reviews. The actual number of auditors, investigators, 

and inspectors in SWA fluctuates on a daily basis depending on the requirements. 

In June 2008, the DOD IG had 46 personnel in theater supporting OIF/OEF. 

To provide a more effective and efficient oversight role, the DOD IG has established field offices in strategic SWA locations and continues key placement of DOD 

IG personnel in SWA. Our SWA field offices have been extremely active in supporting the personnel deployed into theater as well as their own assignments being 

performed. 

In Iraq, our full time staff are working a joint audit with the Multi-National 

Force—Iraq Inspector General on Equipment Status for deployed forces. The auditors in Iraq also provide support to DOD IG teams based in the continental United 

States performing oversight related to Iraq such as the Munitions Assessment 

Team—II, management of contractor issues within SWA, and the validation of contracted construction projects. 

In Afghanistan, our full time staff have been working two audits as well as providing support to our other teams coming into the country to perform other oversight work in areas such as Afghanistan Security Forces Funds, Controls over Army 

Cash and Other Monetary Assets, Contractor Common Access Cards in SWA, and 

Medical Equipment. 

The following is a discussion of our SWA field offices. 
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Iraq Field Offices 

In coordination with the Commanding General, Multi-National Force—Iraq and 

the U.S. Central Command, the DOD IG established field offices in Iraq at Camp 

Victory and the International Zone. The Iraq offices are staffed with up to five auditors at a time. In addition, the DOD IG has assigned auditors in Iraq to provide 

the Defense Criminal Investigative Service (DCIS) support for ongoing criminal investigations pertaining to contract fraud. The DCIS has established a permanent 

presence in Iraq. Two special agents are currently assigned to Iraq. An additional 

special agent has been temporarily deployed to support a special cell investigating 

issues relating to weapons accountability. 

Afghanistan Field Office 

In coordination with the U.S. Central Command, the DOD IG established a field 

office in Afghanistan at Bagram Air Base. The DOD IG Afghanistan Field Office is 

staffed by three full time auditors, who, along with expeditionary teams conduct 

projects in Afghanistan. One Special Agent was deployed to Afghanistan in April 

2008. Two additional special agents will be deployed to Afghanistan in August of 

2008. These agents will work alongside partner agencies, such as the U.S. Army 

Criminal Investigation Command and the Federal Bureau of Investigation to investigate fraud, waste, and abuse impacting theater operations. 

Qatar Field Office 

The DOD IG established a field office in Qatar collocated with the U.S. Central 

Command Air Forces on Al Udeid Air Base, Qatar. The Qatar office provides administrative operations support to the DOD IG SWA field offices. The Qatar office can 

also conduct audits as required in Iraq, Afghanistan, or throughout the U.S. Central 

Command area of responsibility. Additionally, the Qatar office staff facilitates, and 

may augment, other teams that require temporary travel in theater to conduct specific reviews. 

Kuwait Field Office 

The DOD IG field office in Kuwait is staffed by two DCIS special agents who are 

focused on contract fraud and other potential criminal activities in Kuwait that impact SWA efforts. 

NEW OIG INITIATIVES

GWOT, especially operations in SWA, continues to be a top priority of the DOD 

IG and its five operational components. Our Auditing, Investigations, Intelligence, 

Policy and Oversight, and Special Plans and Operations components have 238 ongoing or completed projects; 84 in Auditing, 124 in Investigations, 13 in Intelligence, 

13 in Policy and Oversight, and 4 in Special Plans and Operations,. Those 238 

projects provide oversight of various functions and activities such as contracts and 

contract fraud, readiness, logistics, funds management, accountability, theft, corruption, and intelligence efforts. DOD IG has completed or is conducting audit oversight 

efforts that cover approximately $158.9 billion related to DOD efforts in SWA. 

Establishment of the Special Plans and Operations Component 

Our support to the Department of Defense involves a complex operational environment that includes changing requirements and the need for rapid and focused 

responses to challenging issues. As a result, we established a new Component, the 

Office for Special Plans and Operations (SPO) to augment the GWOT work being 

currently conducted by the DOD IG components. The new component is headed by 

the Principal Deputy Inspector General, who also serves as the Special Deputy Inspector General for SPO. The component focuses on the Global War on Terror and 

other high-value, high-visibility assessment missions as assigned. This office performs quick-assessment missions on critical, time-sensitive national security issues 

identified by the Secretary of Defense, Deputy Secretary of Defense, Chairman of 

the Joint Chiefs of Staff, and other members of the senior DOD leadership, as well 

as members of Congress. The goal of SPO is to focus on issues of critical importance 

to management and in a relatively short time provides answers to questions regarding a specific issue such as ‘‘What is the status?’’ and ‘‘What is going on right now?’’ 

SPO was established by realigning current OIG resources and is composed of 

twenty interdisciplinary staff, evenly divided between civilian and military personnel. SPO has completed one project and currently has two others ongoing. The 

Inspector General and the Principal Deputy Inspector General have both been actively involved in the work being performed by SPO. The completed and ongoing 

work within the SPO directorate is discussed later in the testimony. 
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Section 842 

The fiscal year 2008 National Defense Authorization Act requires the DOD IG and 

the Special Inspectors General for Iraq Reconstruction and Afghanistan Reconstruction to develop comprehensive plans for a series of audits respective to their outlined areas of oversight responsibilities in Iraq and Afghanistan (Public Law 110– 

181, Section 842, ‘‘Investigation of Waste, Fraud, and Abuse in Wartime Contracts 

and Contracting Processes in Iraq and Afghanistan’’). 

In response to this statutory requirement, on June 18, 2008, the DOD IG, on behalf of the member Federal and DOD oversight agencies included in the plan, released the ‘‘Comprehensive Audit Plan for Southwest Asia.’’ The plan was facilitated 

by the DOD IG Joint Planning Group—SWA and includes the individual audit plans 

of my office and the Inspectors General the Department of State and USAID and 

SIGIR. It also includes the planned audit work of the Army Audit Agency, Air Force 

Audit Agency, and Defense Contract Audit Agency because their major contributions 

to improve the efficiency and effectiveness of support to the military. 

The audits in the plan will help to identify abuses and defects in contracts, systems and processes that can be promptly remedied. Developing the plan has enabled 

us to expand and refocus our audit efforts to support the war fighters. The plan will 

be updated on a periodic basis. Updates will include the Special Inspector General 

for Afghanistan Reconstruction plan. 

The group identified areas or gaps in need of audit coverage. Examples of areas 

that require audit work are: maintenance service contracts, security service contracts, air transportation contracts, DOD financial systems used in Iraq and Afghanistan, and staffing and training of contract oversight personnel. 

With the development of the Section 842 plan, our number of planned GWOT related audits increased 96 percent (from 27 planned projects in fiscal year 2008 to 

53 planned projects identified in response to Section 842). However, since issuing 

the comprehensive Section 842 plan, other external factors have caused us to defer 

nine Section 842 projects. External factors include performing statutory requirements (such as the continuation of reviews on Interagency Purchases) and Congressional requested projects (such as DOD and DOD Contractor Efforts to Prevent Sexual Assault/Harassment Involving Contractor Employees in OEF/OIF), and performing the necessary audit work to opine on DOD financial statements (such as 

the Defense Information Systems Agency General Fund and Working Capital Fund 

Balance Sheets as of September 30, 2007). We deferred five planned Section 842 

projects to assign 50 DOD IG auditors to perform the audit field work necessary to 

opine on the Defense Information Systems Agency financial statement. 

Lessons Learned and Initiatives 

On July 18, 2008, the DOD IG issued a summary report entitled, ‘‘Challenges Impacting Operations Iraqi Freedom and Enduring Freedom Reported by Major Oversight Organizations Beginning fiscal year 2003 through fiscal year 2007.’’ The summary effort compiles 302 reports and testimonies given by the Defense Oversight 

Community and GAO. Our analysis identified that over the course of conducting Operations Enduring and Iraqi Freedom, DOD experienced, at times, significant and 

recurring challenges in contract management; logistics; and financial management. 

These areas have been reported as challenges within DOD since the early 1990s so 

it is not surprising that DOD is experiencing these challenges in Iraq and Afghanistan. 

We also have captured many of the initiatives that DOD has underway that we 

believe address the challenges DOD is experiencing in its Iraq and Afghanistan operations. These DOD initiatives include issuing updates to the FAR and DOD policies regarding the oversight of deployed contractors, increase in oversight of contractors performing logistical support work, deploying DFAS personnel to Iraq, Afghanistan, and Kuwait to support the deployed personnel in financial operations, and assessing which business operations can be removed from the dangerous areas in theater and be performed outside of the dangerous areas. 

ONGOING OVERSIGHT WORK

Investigations 

The DCIS, the criminal investigative arm of the DOD Inspector General, has been 

engaged in investigating waste, fraud, abuse, and corruption pertaining to the Iraqi 

theater since the start of the war, and will continue to prioritize investigations involving the SWA theater. While the Inspector General Act of 1978 provides DCIS 

with broad criminal investigative jurisdiction regarding DOD programs and operations, effectively countering fraud in SWA requires the cooperative efforts of other 
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DOD investigative agencies, Federal law enforcement partners, and the audit community. 

DCIS has primary jurisdiction over matters involving most contract and procurement actions awarded by Defense Agencies, Office of the Secretary of Defense components, and field activities. Additionally, DCIS has jurisdiction over, ‘‘any allegations [involving DOD] that the IG DOD considers appropriate for investigation by 

DCIS.’’ This broad authority affords DCIS the ability to easily partner with other 

agencies in an effort to protect the integrity of the entire DOD procurement and acquisition process—from countering fraud impacting initial research and development, to investigating fraud during contract execution, to ensuring the appropriate 

disposal of products no longer needed by DOD components. The Service-specific 

Military Criminal Investigative Organizations—the Army Criminal Investigation 

Command (USACIDC or Army CID), the Naval Criminal Investigative Service 

(NCIS), and the Air Force Office of Special Investigations (AFOSI) typically focus 

upon allegations involving the award of contract and procurement actions of their 

respective military department. Non-DOD law enforcement partners in Iraq include 

the FBI, which has overarching authority to investigate violations of various Federal 

statutes relating to fraud and corruption; U.S. Department of State, Office of the 

Inspector General; the SIGIR; and the USAID Office of the Inspector General. 

DCIS protects America’s warfighters by vigorously investigating alleged and suspected procurement fraud, corruption, and other breaches of public trust that impact 

critical DOD programs. Our investigations focus on matters such as bribery, theft, 

procurement fraud, illegal receipt of gratuities, bid-rigging, defective and substituted products, and conflicts of interest. DCIS’ investigative activities in the region have identified corrupt business practices, loss of U.S. funds through contract 

fraud, and theft of critical military equipment. For example, DCIS is a participating 

agency in a task force operation, initiated in January 2004, which investigates matters pertaining to the LOGCAP III contract awarded to Kellogg Brown and Root 

(KBR) in December 2001. This is a 10-year contract, administered by the Army Containment Command in Rock Island Arsenal, Illinois, that incorporates various task 

orders for support of Operation Iraqi Freedom. The task force is comprised of DCIS, 

FBI, Army CID, Internal Revenue Service, Defense Contract Audit Agency, U.S. Attorney’s Office for the Central District of Illinois, and the Department of Justice 

Criminal and Civil Divisions. The task force is organized into five major categories: 

kickbacks; food service; reutilization of Iraq oil or RIO; qui tams; and other allegations. The task force has processed approximately 50 separate matters for investigation and initiated approximately 30 investigations resulting in 9 criminal indictments, 6 criminal informations, and 10 convictions. The convictions have resulted 

in approximately 6 years confinement and 14 years probation. 

DCIS works closely with other components of the IG DOD and our federal and 

military partners to oversee ongoing operations in SWA relative to fraud and corruption. DCIS plays a significant and pivotal role with partner agencies in the National Procurement Fraud Task Force (NPFTF) and the International Contract Corruption Task Force (ICCTF). Under the auspices of the Department of Justice, the 

NPFTF was created in October 2006 to promote the prevention, early detection, and 

prosecution of procurement fraud nationwide and abroad. This multi-disciplinary 

and multi-agency coalition comprised of agencies from the Federal Inspectors General, U.S. Attorneys Offices, and Federal law enforcement agencies such as the FBI, 

has been extremely effective in fostering and better coordinating procurement fraud 

investigations. 

The ICCTF, an offshoot of the NPFTF, was formed in November 2006, to specifically target fraud and corruption involving SWA. The primary goal of the ICCTF 

is to combine the resources of multiple investigative agencies to effectively and efficiently investigate and prosecute cases of contract fraud and public corruption related to U.S. Government spending in Iraq, Kuwait, and Afghanistan. The participating agencies in the ICCTF are DCIS; Army CID’s Major Procurement Fraud 

Unit; the FBI; the Department of State Office of the Inspector General, USAID Office of the Inspector General, and SIGIR. Formation of the ICCTF has resulted in 

unprecedented cooperation in detecting, investigating, and prosecuting corruption 

and contract fraud. The ICCTF established a Joint Operations Center (JOC) in furtherance of achieving maximum interagency cooperation. 

The JOC, which is located in Washington, D.C., serves as the nerve center for the 

collection and sharing of intelligence regarding corruption and fraud relating to 

funding for the GWOT. The JOC coordinates intelligence-gathering, de-conflicts case 

work and deployments, disseminates intelligence, and provides analytical and 

logistical support, such as laboratory services, polygraphs, and specialized equipment. The JOC is the vital link into the intelligence community and provides a repository from which to disseminate intelligence indicators of criminal activity. Case 
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information and criminal intelligence are shared without reservation, and statistical 

accomplishments are reported jointly. The agency heads meet regularly to collectively provide policy, direction, and oversight. 

In addition to investigating allegations of fraud, waste, and abuse, DCIS launched 

a proactive project which will analyze over $14 billion in payment vouchers related 

to U.S. Army purchases in Iraq. The vouchers are currently stored at the Defense 

Finance & Accounting Service (DFAS), Rome, NY. The project is being coordinated 

with DFAS, the DOD IG’s Audit component, the Defense Contract Audit Agency, the 

U.S. Army Audit Agency, and the FBI. The project will attempt to identify fraudulent activity related to the war effort in Iraq and Afghanistan through data mining 

techniques. To date, more than 90,000 payment vouchers, amounting to $1.5 billion, 

have been scanned into a searchable database, representing 11 percent of the total 

800,000 records that will be reviewed for fiscal completeness or propriety. The recent hiring of 60 temporary DFAS employees to scan documents will eliminate the 

accumulated historical records at DFAS—Rome, NY, while current documents are 

being scanned in theater. While the initiative is in its infancy, several questionable 

transactions have been identified and referred for preliminary review or further investigation. In addition to these analytical efforts to develop cases, the investigative 

team assigned to the project is also supporting ongoing investigations involving 

fraud and corruption in Iraq. 

From May 2003 through October 2004, DCIS deployed teams of two to three 

agents to Baghdad. From October 2004 to present, the DCIS European Post of Duty 

and multiple CONUS DCIS offices have conducted a wide variety of investigations 

related to Iraq and the SWA theater. In September 2006, DCIS re-established a permanent presence in Iraq by deploying four special agents to the theater—two special 

agents are currently assigned to Iraq and two special agents are assigned to Kuwait. 

A special agent has been deployed to Iraq to lead a special cell investigating issues 

relating to weapons accountability with a second agent identified to report in September. One special agent is currently deployed to Afghanistan and will be replaced 

by two special agents in August/September 2008. These in-theater agents are the 

forward-deployed elements of the 85 DCIS special agents in CONUS and OCONUS 

participating in SWA investigations. 

As of June 30, 2008, DCIS has 124 ongoing investigations related to SWA; 12 are 

being investigated by agents in theater; and 112 are being investigated by DCIS offices in CONUS and Germany. DCIS attempts to transfer investigations developed 

in SWA to an appropriate CONUS venue as soon as practical to maximize the best 

use of in-theater investigative resources and to facilitate prosecution efforts. 

As previously mentioned, investigations conducted in SWA are cooperative efforts. 

Of the 85 DCIS special agents working on SWA investigations, 78 special agents 

(CONUS and OCONUS) are jointly working the majority (97 percent) of these investigations in conjunction with one or more law enforcement partner agencies. DCIS’ 

primary partner in countering DOD-related fraud in SWA is the Army CID’s Major 

Procurement Fraud Unit (MPFU). The MPFU conducts investigations into allegations of fraud associated with the Army’s major acquisition programs. The hiring of 

an additional 43 special agents and 5 staff has provided DCIS the opportunity to 

plan for expanded operations in theater with our U.S. Army partners. 

DCIS is currently investigating 286 subjects, both U.S. and foreign personnel. 

Thirty-two DCIS investigations have been adjudicated, resulting in 22 federal criminal indictments, 32 federal criminal informations, and 32 felony convictions. The adjudications have resulted in a total of 54 years confinement and 44 years probation. 

Ten individuals and four companies have been debarred from contracting with the 

U.S. Government, and twenty-eight persons have been suspended from contracting 

with the Government. The U.S. Government has accepted three settlement agreements, received $13.5 million in restitution, levied $374,125 in fines and penalties, 

received $1.76 million in forfeitures, and seized another $2.65 million in assets. 

Much more is anticipated as investigation ready for prosecution mount. 

Investigations in a war zone are affected by countless challenges, such as the complexity of the fraud or corruption scheme, the prevalence of conspiracies, the multinational and multi-cultural aspect of investigations involving foreign contractors, 

working with foreign governments and foreign security forces, operational tempo requirements and insurgent activity, translation and evaluation of foreign evidence, 

and precautionary transportation restrictions imposed by the U.S. Forces. Despite 

these challenges, DCIS aggressively pursues its important mission to investigate 

DOD-related criminal activity concerning fraud and public corruption and to devote 

substantial resources to projects and investigations designed to proactively identify 

potential fraud, waste, and abuse relating to SWA operations. 
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AUDIT

Our expeditionary model combined with our regional strategy in approaching our 

work in Iraq raises issues that often require solutions at the systemic level, as already illustrated by the munitions assessment team findings and recommendations. 

Further, we continue to evolve our comprehensive plan for audits of contracts, subcontracts, and task and delivery orders in support of coalition forces in Iraq and Afghanistan. Given that the Army Audit Agency is focusing on the Commander’s 

Emergency Response Program and contracts for basic life support activities and that 

SIGIR focus is on reconstruction contracts, we have begun and will to continue to 

conduct a series of audits and report on financial and contracting systems in Iraq 

that support Coalition Forces and Iraq operations including contracts for maintenance service, transportation, and fuel. 

Additionally, we continue to focus on the training and equipping of the Iraqi military and police mission, acquisitions of key operational support assets such as body 

armor, fielding of mine resistant ambush protected vehicles, medical equipment, use 

of GWOT supplemental funds, controls over cash, monitoring of sensitive equipment, and out-of-country payments to name a few. 

In November 2007, we realigned internal core mission assets to support SWA 

audit operations by establishing an expeditionary audit division comprised of about 

30 people. This audit division is complemented by other work conducted by U.S. 

based teams. In total, we have 218 personnel conducting audits related to Iraq. In 

June 2008, we had 32 audit personnel deployed in support of OIF/OEF. 

We have 38 ongoing Iraq-related audit projects reviewing mission-critical support 

functions that directly impact the warfighter, such as: contract surveillance, contract 

payments, resetting of returning U.S. forces equipment, and acquisition of armored 

vehicles. Our audits also include oversight of cash and other monetary assets within 

Iraq and Afghanistan as well as the whether the funds processed through the foreign military trust fund are managed properly. A complete list of completed reports, 

on-going projects, and planned projects is attached to this statement. 

The following are examples of significant completed and ongoing planned audits 

supporting DOD SWA operations. 

Completed 

Internal Controls Over Payments Made in Iraq, Kuwait and Egypt (D–2008–098). 

Contract and vendor payments lacked minimum supporting documentation and information for proper payment. When payments were not properly supported, the 

Army lacked assurance that funds were used as intended. On May 20, 2008 we testified on this project before the Committee on Oversight and Government Reform 

United States House of Representatives. 

Management of the Iraq Security Forces Fund in Southwest Asia—Phase III (D– 

2008–026). The Multi-National Security Transition Command—Iraq was not able to 

demonstrate proper accountability for and management of the Iraq Security Forces 

Fund and could not always demonstrate that the delivery of services, equipment, 

and construction was properly made to the Iraq Security Forces. As a result, the 

Multi-National Security Transition Command—Iraq was unable to provide reasonable assurance that Iraq Security Forces Fund achieved the intended results, that 

resources were used in a manner consistent with the mission, and that the resources were protected from waste and mismanagement. On May 20, 2008 we testified on this project before the Committee on Oversight and Government Reform 

United States House of Representatives. 

Potable and Nonpotable Water in Iraq (D–2008–060). We identified deficiencies in 

water operations and government oversight at three contractor-operated facilities 

and two military-operated facilities. Contractors provided bottled drinking water 

and bulk water to U.S. forces. Military water purification units only provided bulk 

water. From March 2004 to February 2006, the quality of water provided by contractors, through treatment or distribution at three of the sites we visited, was not 

maintained in accordance with field water sanitary standards as specified in Department of Army guidance. Although required, KBR did not maintain the quality 

of the water it distributed to point-of-use storage containers at Camp Ar Ramadi, 

Camp Q-West, and Camp Victory. 

Additionally, at Camp Q-West, KBR improperly provided chlorinated wastewater 

from its Reverse Osmosis Water Purification Unit to personal hygiene facilities. Specifically, operators of the military water production sites we visited were not performing all required quality control tests nor did they maintain appropriate production, storage, and distribution records. 

Because of corrective actions taken, contractor processes for providing potable and 

nonpotable water were adequate as of November 2006 when internal quality control 
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procedures and DOD oversight were in place to provide quality assurance for the 

processes of water production, production site storage, distribution, and storage at 

point-of-use facilities. However, military water purification units at LSA Anaconda 

and Camp Ali did not perform required quality control tests and did not maintain 

appropriate records of water produced, stored, and issued during the period reviewed. Therefore, water suppliers exposed U.S. forces to unmonitored and potentially unsafe water. Although there was no way to determine whether water provided by the contractors and military water purification units caused disease, contractors and military units responsible for water operations must always ensure 

that water provided to the forces meets all established standards and is safe to use. 

Ongoing 

Controls Over the Contractor Common Access Card Life Cycle in Southwest Asia. 

We have two ongoing audits related to Common Access Cards (CAC) issued to contractors. The first CAC audit is being performed in the United States to determine 

whether controls over CACs provided to contractors are in place and work as intended. Specifically, we will determine whether DOD officials issue CACs to contractors, verify the continued need for contractors to possess CACs, and whether cards 

are being revoked or recovered from contractors in accordance with DOD policies 

and procedures. The team has visited 67 CAC-related sites in the United States. 

The second audit on the Contractor CAC lifecycle was conducted in Iraq, Afghanistan, Kuwait and Qatar. The objective is to determine if CAC issued to contractors 

were done in accordance with policies and instructions as set forth by DOD and Federal Regulations. This audit also includes a review of the Contractor Verification 

System, the system set forth as the DOD way of implementing Homeland Security 

Presidential Directive–12. Prior to returning to the United States, the staff provided 

memorandums to the commanders in the field addressing issues we found present 

in SWA. 

The importance of this series of reviews is to also ensure we are not providing 

contractors access to benefits that are not called for in specific contracts. For example, over compensating contractors by providing them daily expenses for basic life 

support items and simultaneously issuing them an improper CAC providing the 

same life support items for free. 

War Reserve Materiel.—From April 28, 2008 through May 30, 2008, we deployed 

an 8 person team (6 auditors and 2 investigators) to Oman, Qatar, Bahrain, and 

Kuwait to examine whether Air Force contracting officials managed and administered the DynCorp International War Reserve Materiel contract (valued at over 

$600 million) in accordance with Federal and DOD contracting policies. The War Reserve Materiel contract ensures U.S. Air Force Central Command readiness to support deployed forces by pre-positioning, maintaining, reconstituting, deploying and 

supporting war reserve materiel required to support U.S. Central Command operational plans and contingencies. The audit was initiated based on issues identified 

during a DCIS investigation. The team has visited U.S. Air Force Central Command 

headquarters, the Air Force contract oversight officials in Oman, the DynCorp program office in Oman, and two war reserve materiel storage facilities in Oman. Additionally, they visited war reserve materiel storage facilities in Qatar, Bahrain, and 

Kuwait. The team is continuing to focus on the administration and oversight of the 

contract by the Air Force. 

Medical Equipment Used to Support Operations in Southwest Asia.—From April 

23, 2008 through May 24, 2008, we deployed a four person team to SWA to evaluate 

the internal controls over medical equipment used to support operations in SWA. 

Specifically, we are determining whether controls are in place for acquiring missionessential medical equipment and whether the recording and reporting of medical 

equipment are accurate and complete. The scope of this audit not only includes the 

medical equipment necessary for our military and coalition forces, but also the medical equipment necessary for detainees. During deployment, our auditors made site 

visits to medical facilities in Baghdad, Balad, Mosul, Al Taqaddum Iraq; Bagram, 

Afghanistan; as well as to a detainee medical facility in Baghdad, Iraq. Additionally, 

we visited medical logistics sites in Baghdad and Balad, Iraq; Bagram, Afghanistan, 

and Qatar. The team continues to work issues related to the audit objectives, and 

inconsistencies noted during site visits in the procurement, inventory, and maintenance processes. Additionally, we will focus on the incompatibility between the information systems used by the military departments to support the management of 

medical equipment and those processes. 

Funds Appropriated for Afghanistan and Iraq Processed Through the Foreign 

Military Sales Trust Fund Funds appropriated for Afghanistan and Iraq processed 

through the Foreign Military Sales Trust Fund.—The overall objective is to determine whether funds appropriated for the security, reconstruction, and assistance of 
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Afghanistan and Iraq and processed through the Foreign Military Sales Trust Fund 

are being properly managed. Specifically, we will determine whether the transfer of 

appropriated funds from the Army’s accounts into the Foreign Military Sales Trust 

Fund was properly authorized, accounted for, and used for the intended purpose. In 

addition, we will verify whether the appropriated funds are properly reported in 

DOD financial reports. 

Assignment and Training of Contracting Officer’s Representatives at Joint Contracting Command-Iraq/Afghanistan.—This audit is being accomplished by our 

auditors forward-deployed in Iraq. The DOD IG is determining whether personnel 

assigned to the Joint Contracting Command—Iraq/Afghanistan as Contracting Officer’s Representatives have the training and expertise to perform their duties. There 

are approximately 825 Contracting Officer’s Representatives performing contractual 

efforts within Iraq. The audit team will review the process for assigning Contracting 

Officer’s Representatives to the Joint Contracting Command in Iraq. We will review 

their records to determine what training they completed and whether they had prior 

experience as Contracting Officer’s Representatives. The team will conduct audit 

fieldwork within the Victory Base Complex and the International Zone in Iraq. 

Afghanistan Security Forces Fund Phase III Air Force Real Property Accountability.—The initial DOD IG Expeditionary Team was in Afghanistan from February 23 to June 28, 2008. The team is conducting the third phase of a multiphase 

audit in response to Public Law 109–234, which directed the Inspector General to 

provide oversight of the Afghanistan Security Forces Fund (ASFF). The objective is 

to determine whether organizations in SWA that the U.S. Central Command assigned with the responsibility for managing the ASFF properly accounted for the 

goods and services purchased for the Afghanistan Security Forces (ASF) using the 

ASFF and whether the goods and services were properly delivered to the ASF. 

Based out of Camp Eggers and accompanied by staff from the Command, the team 

visited forward operating bases in Bagram, Gardez, Herat, Kandahar, Mazir-eSharif and Shindan, Afghanistan. We reviewed construction projects from three of 

the five Public Laws (109–13, 109–234, and 109–289) that appropriated about $4.7 

billion to the ASF Fund. We reviewed 44 contract sites totaling $524.7 million. In 

addition, we reviewed the accountability of vehicles, communication equipment including computers and radios, and weapons. The senior U.S. military commanders 

were briefed on the preliminary findings and recommendations and we intend to 

issue the draft reports in the Fall. 

Class III Fuel Procurement and Distribution in Southwest Asia.—The second DOD 

IG Expeditionary Team is scheduled to be in SWA from August 2008 to December 

2008. The DOD IG is determining whether fuel used for ground operations in SWA 

to support Operations Iraqi Freedom and Enduring Freedom is procured and distributed efficiently and effectively. The audit team is reviewing 29 Defense Energy 

Supply Center contracts used to procure fuel in support of operations in SWA. The 

team will determine whether fuel is procured at fair and reasonable prices, whether 

fuel is distributed economically and efficiently to operational commands, and whether fuel supply points maintain accurate inventories. The team will conduct audit 

fieldwork in Kuwait, Afghanistan, Iraq and select forward operating locations. 

POLICY AND OVERSIGHT

Beginning in November 2003, the DOD IG assigned Policy and Oversight inspectors and evaluators as advisors to Iraq—first to augment the Coalition Provisional 

Authority, then to support the SIGIR operation, then to facilitate the Embassy’s 

Iraqi Reconstruction Management Office mission, and since July 2005, to provide resources for the Multi-National Security Transition Command—Iraq (MNSTC–I) 

transition teams. The advisors detailed to MNSTC–I assisted the Iraqi Ministers of 

Defence and Interior to establish, coordinate and develop a viable, self-sustaining 

Inspector General system—which was designed to help combat corruption, fraud, 

waste, and mismanagement. During this long-term effort, the advisors facilitated 

training for the respective IG staffs and mentored their leadership in the development of operating policies and procedures. In addition, the Inspections and Evaluations Directorate established a ‘‘Reach-Back’’ office to support the in-country advisors. 

The following are examples of significant completed and ongoing planned audits 

supporting DOD SWA operations. 

Completed 

In addition to the deployment of advisors to Iraq, the Policy and Oversight component completed eight projects in support of the U.S. mission in SWA. Most of these 

projects were interagency engagements or included augmentees and subject matter 

experts external to the DOD IG organization. Overall, our partnerships with other 
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departments and agencies served to promote U.S. security interests through improved coordination, planning, and implementation for reconstruction and stabilization assistance for OIF and OEF. The following project titles provide an overview 

of the scope and breadth of these completed assessments: 

—Interagency DOD–DOS IG Assessment of Iraqi Police Training; 

—Combined Forces Command—Afghanistan Management Decision Model [for the 

Afghanistan National Army]; 

—Evaluation of Support to Mobilized Army National Guard and U.S. Army Reserve Units; 

—Interagency DOD/DOS Assessment of Afghan National Police; 

—Interagency [DOD, DOS, DOJ] Assessment of the Counternarcotics Program in 

Afghanistan; 

—Review of the Investigative Documentation Associated with the Death of Army 

Corporal Stephen W. Castner in Iraq; 

—Observations and Critique of the DOD Task Force on Mental Health; 

—DOD/VA Care Transition Process for Service Members Injured in OIF/OEF; and 

—Review of an Army investigation into a shooting by U.S. Forces in Baghdad that 

injured a Reuter’s cameraman and killed a Reuter’s driver. 

Overall, these reports included over 110 recommendations to improve DOD strategies and program processes. 

Ongoing Projects 

Policy and Oversight has four ongoing projects related to DOD’s activities in SWA 

and the global war on terrorism. 

Assessment of the Section 1206 of the National Defense Authorization Act, Global 

Training and Equipment Program.—Requested by the Joint Staff and Office of the 

Under Secretary of Defense for Policy, the purposes of this project are to examine 

management’s compliance with the legislation and identify recommendations for 

program improvements. Section 1206 authorized DOD to obligate up to $200 million 

in fiscal year 2006 and $300 million annually in fiscal years 2007 and 2008 to help 

partner nations combat terrorism or to cooperate with the U.S. military in stabilization or other military operations. As of fiscal year 2007, 44 countries are participating in the Section 1206 program. 

Examination of Allegations Involving Outreach Efforts by the DOD Public Affairs 

Office.—The allegations were reported in the New York Times on April 20, 2008, 

and the review was requested by members of Congress. We are examining the allegations that the DOD Public Affairs Office gave special treatment to retired military 

personnel who provided media commentary on Global War on Terror policies and 

strategies. We are also investigating the allegation that these personnel were employed by Defense contractors and their special access to Pentagon leaders gave 

them a competitive advantage. 

Review of Contracting Actions Relating to an Electrocution Fatality in Iraq.—This 

review was requested by the Deputy Under Secretary of Defense for Acquisition and 

Technology, in response to a memo from Congressman Jason Altmire. The fatality 

occurred on January 2, 2008, when the soldier was taking a shower. Our review will 

examine the relevant facility management, contracting, and maintenance actions 

prior and subsequent to the electrocution. We have also reviewed investigations conducted by service investigative agencies into electrocution deaths of other service 

members. 

Evaluation DOD Management of Sexual Assault Complaints in Combat Areas.— 

The objectives are to determine whether DOD policies and procedures are adequate 

to respond to sexual assault complaints involving U.S. contractors and to ensure 

complaints are properly processed and referred for investigation. 

SPECIAL PLANS AND OPERATIONS

The SPO Component has completed one assessment and is currently working on 

two additional reviews. The two ongoing reviews will result in three separate reports. The following are descriptions of the completed and ongoing planned SPO 

work supporting DOD SWA operations. 

Completed Project 

Assessment Team on Munitions Accountability I (MAT I).—From September 4, 

2007 through October 22, 2007, the twenty-two person, interagency Assessment 

Team on Munitions Accountability deployed to Afghanistan, Kuwait, Qatar and Iraq 

to review the accountability and control of munitions being supplied by the United 

States to the Iraq Security Forces. While in Iraq, the team also reviewed the development of the Iraqi logistics sustainment base and the U.S.-managed Foreign Military Sales program. 
143 

This assessment was triggered, in part, by a Hotline complaint that a senior U.S. 

Army officer was receiving illegal gratuities and allegations from the Government 

of Turkey that munitions we had supplied the Iraq Security Forces were finding 

their way into the hands of terrorists, insurgents and criminals in Turkey. Subsequently, the Secretary of Defense and Congress requested that the DOD IG review 

the current state of arms and ammunition accountability and control in Iraq. 

The team visited the Multinational Forces—Iraq, Multinational Security Transition Command—Iraq, Multinational Corps—Iraq, and elements of the Iraqi Ministry 

of Defense and the Iraqi Ministry of Interior. Members visited Abu Ghraib warehouse, Taji National Depot, Baghdad International Airport, the Baghdad Police College, the Logistics Management Control Center and several Iraqi Army and police 

units and installations. 

A key finding was that DOD and the Iraq Security Forces have a system in place 

for controlling and accounting for weapons and ammunition being supplied to the 

Iraq Security Forces; however, there still remains work to be done. As the team deployed, it out-briefed senior in-country leadership who initiated immediate corrective actions in response to the preliminary observations and recommendations. The 

team’s report was signed by the Inspector General on July 3, 2008 and copies were 

provided to the Secretary, Deputy Secretary, Chairman of the Joint Chiefs, and 

Under Secretaries for Policy and AT&L. It included 45 recommendations, with 

which management concurred with 42 (91 percent) of those recommendations. 

Progress has been made implementing all in-country recommendations. 

Ongoing Projects 

Munitions Assessment Team II (MAT II).—At the request of the Secretary of Defense, the Munitions Assessment Team returned to Iraq and Afghanistan from April 

5 to May 25, 2008 to conduct a six-month follow-up. Specifically, the team reviewed 

the status of corrective actions initiated by management in response to MAT I’s preliminary observations and recommendations in the areas of the current status of 

munitions accountability and control in Iraq and Afghanistan, the Foreign Military 

Sales program in Iraq and Afghanistan, and the development of the logistics 

sustainment bases, including the status of medical logistics capability for the security forces in Iraq and Afghanistan. The team out-briefed senior U.S. military commanders in both Iraq and Afghanistan upon its departure. The team continues to 

analyze the data collected and is preparing two draft reports covering approximately 

50 observations and more than 100 recommendations. 

Pakistan Assessment Team I.—The Pakistan Assessment Team visited Pakistan 

from April 16–26, 2008 to assess certain DOD funded programs supporting the Government of Pakistan. Congressional concern has been raised, reinforced by press reporting, that U.S. security assistance programs were not sufficiently well-focused to 

advance U.S. counter-terrorism interests in Pakistan and its Federal Administered 

Tribal Area (FATA) along the border with Afghanistan. In response to requests from 

the Secretary of Defense, U.S. Ambassador to Pakistan, Chairman, Joint Chief of 

Staff, USD(P), USD(C), and the Commander, U.S. Central Command, the DOD IG 

deployed an assessment team to Pakistan. The team assessed a number of DOD 

funded and managed bilateral assistance programs that support Pakistan’s security 

development. Specifically, this included Coalition Support Funds, the Section 1206 

Global Train and Equip program, Section 1206-like Train and Equip program for 

the Frontier Corps, International Military Education and Training, Foreign Military 

Financing, Counterterrorism Fellowship Program, and Counternarcotics. The team 

also reviewed the organizational capabilities and structure of the Office of Defense 

Representative—Pakistan, which is the umbrella organization for most DOD elements in Pakistan. The Secretary, Deputy Secretary and Chairman of the Joint 

Chiefs have been briefed on the preliminary findings and recommendations. The report is in the final stage of drafting. 

INTELLIGENCE

The Office of Intelligence has organized multiple, narrowly focused GWOT evaluation projects around one core objective. That core objective is to assess how the DOD 

intelligence community is supporting the warfighter in Operation Enduring Freedom and Operation Iraqi Freedom. The plan is dynamic and may be readily modified based on changing national priorities (including taskings from Congress) and 

the operations tempo in the respective areas of operation. 

We have 5 ongoing GWOT-related intelligence projects reviewing mission-critical 

functions that directly impact the warfighter, such as: intelligence collection activities, intelligence resources, and analytic and language training programs. 
144 

INTERAGENCY OVERSIGHT

The DOD IG is the lead oversight agency for accountability in DOD, and as such, 

is committed to maintaining an effective working relationship with other oversight 

organizations to minimize duplication of efforts and to provide more comprehensive 

coverage. Effective interagency coordination, collaboration, and partnerships within 

the oversight community are essential to providing comprehensive reviews of wartime expenditures to identify whether critical gaps exist, and then to recommend 

actions to fix those gaps. 

Southwest Asia Joint Planning Group 

The DOD IG has jointly established and chairs an interagency SWA Joint Planning Group that meets quarterly and provides oversight of fraud, waste, abuse, and 

criminal activities in the SWA region. The JPG provides a chance for collaboration 

and teamwork with the organizations engaged in this effort, including the military 

inspectors general and service auditors general, combatant commands inspectors 

general, the Defense Contract Audit Agency, the Defense Finance and Accounting 

Service, the Defense Contract Management Agency, the Inspectors General of State 

and the USAID, and the SIGIR. The mission of the JPG is to better coordinate and 

integrate oversight activities in the region. The SWA JPG leads the coordination 

and oversight required to identify and recommend improved mission support to military units conducting operations. 

In conjunction with the SWA Joint Planning Group, the DOD IG also participates 

in the Afghanistan Working Group and the Iraq Inspectors General Council. 

—The Afghanistan Working Group was established by the DOD IG, along with 

the Government Accountability Office, the Department of State Inspector General, and the USAID, established a working group on oversight activities in Afghanistan to minimize the impact on forward command operations, eradicate 

overlapping and duplicate oversight requests, and facilitate the exchange of 

oversight information. The DOD IG, as the Department of Defense representative of the group, also incorporates the ongoing and planned Afghanistan-related oversight efforts of the Service Auditors General into the working group. 

—The Iraq Inspectors General Council chaired by the SIGIR, was established to 

minimize the impact on forward command operations, deconflict overlapping 

and duplicate oversight requests, and facilitate the exchange of oversight information unique to Iraq. 

GWOT Cost of War Senior Steering Group 

The DOD IG is an invited observer to the GWOT Cost of War Senior Steering 

Group that DOD established on February 26, 2007, to improve and standardize cost 

of war reporting. Attending the meetings helps the DOD IG remain apprised of 

DOD efforts for cost of war reporting and furthers its oversight regarding financial 

aspects of GWOT to ensure timeliness and value to the DOD. DOD IG representatives attended the December 2007 and March 2008 meetings. In December 2007, the 

DOD IG was invited by the Under Secretary of Defense (Comptroller) to perform 

quick-look reviews of the execution of GWOT funding patterns. Our support efforts 

were included in the Comptroller overall focused analysis of execution of funding. 

According to Comptroller officials, Comptroller personnel now perform monthly 

analysis of DOD execution of funding and reports the results to the Comptroller. 

The monthly analysis provides timely awareness of funding trends and potential 

funding execution concerns to the attention of the Comptroller. 

Panel on Contracting Integrity 

The DOD IG participates in the Panel on Contracting Integrity which was established under Section 813 of the National Defense Authorization Act for Fiscal Year 

2007. The Panel is chaired by the Deputy Under Secretary of Defense for Acquisition, Technology, and Logistics to conduct reviews of DOD progress in eliminating 

vulnerabilities in the Defense contracting systems that allow fraud, waste, and 

abuse and affect Operations Iraqi and Enduring Freedom. The DOD IG representative is a member of the overall Panel on Contracting Integrity, a member of the subcommittee on Adequate Pricing, and is Chairperson of the Procurement Fraud Indicators subcommittee. The Procurement Fraud Indicators subcommittee is identifying 

what these indicators are and how they should best be addressed and used for the 

contracting/acquisition workforce. 

Joint Investigative Partnerships 

DCIS works jointly with other federal law enforcement agencies, participates in 

various working groups and has agents assigned to FBI Joint Terrorism Task Forces 
145 

throughout the nation. Examples of partnerships between DCIS and other agencies 

include: 

—Joint cases with the Federal Bureau of Investigation; Immigrations and Customs Enforcement; United States Secret Service; United States Marshals Service; Alcohol Tobacco and Firearms; United States Postal Inspection Service; and 

various IGs including National Aeronautics and Space Administration; General 

Services Administration; Health and Human Services; Veterans Affairs; Department of Transportation; Department of State; Housing and Urban Development; 

and the Military Criminal Investigative Organizations including the United 

States Army Criminal Investigation Command; Naval Criminal Investigative 

Service; and Air Force Office of Special Investigations. 

—Member of the National Procurement Fraud Task Force, created in October 

2006 to promote the prevention, early detection and prosecution of procurement 

fraud. 

—Member of the International Contract Corruption Task Force with full time 

agent assigned to the Joint Operations Center. 

—Member of the Defense Enterprise Working Group. 

—Excellent working relationships with agencies in the SWA theater of operations. 

CLOSING

Thanks to Congressional support, we are dedicating more resources to provide 

oversight on munitions control and accountability, acquisition, corruption, waste, 

fraud, abuse, and expanding our footprint SWA. We will continually evaluate the 

lessons learned. We are providing effective and meaningful oversight that assists 

DOD to address its challenges in conducting operations, safeguarding and deterring 

taxpayer monies from waste, fraud, and abuse, and most importantly, ensuring our 

brave military, civilian, coalition, contractors and the Iraqi and Afghanistan citizens 

supporting a free and sovereign democratic state are as safe as possible. We recognize there is a vast and important mission to support DOD’s efforts and are proud 

to be part of this historic and important effort. This office is on firm footing to provide the necessary oversight. We look forward to working with this Committee. We 

will continue to keep Congress and our leadership fully and promptly informed. 

Thank you for the opportunity to appear before the committee today to address 

our ongoing oversight work regarding Iraq. 

COMPREHENSIVE AUDIT PLAN FOR SOUTHWEST ASIA

JUNE 2008. 

Additional copies of this Audit Plan can be obtained by contacting: Office of the 

Deputy Inspector General for Auditing, Attn: Corporate Planning Branch, Room 

801, 400 Army Navy Drive, Arlington, VA 22202–2884. (703) 604–9142 (DSN 664– 

9142) 

This plan is also available on our Web site at: http://www.dodig.mil/audit 

If you need additional information for the following agencies, please contact them 

directly. 

Inspector General, Department of State 

(202) 663–0378 

http://oig.state.gov/ 

Inspector General, U.S. Agency for International Development 

(202) 712–1020 

http://www.usaid.gov/oig 

Special Inspector General for Iraq Reconstruction 

(703) 428–1058 

www.sigir.mil 

U.S. Army Audit Agency 

(703) 681–8178 

www.hqda.army.mil/aaaweb 

Air Force Audit Agency 

(703) 696–7904 

www.afaa.hq.af.mil 

Defense Contract Audit Agency 

(703) 767–2236 

www.dcaa.mil 
146 

FOREWORD

The Fiscal Year 2008 National Defense Authorization Act Section 842, ‘‘Investigation of Waste, Fraud, and Abuse in Wartime Contracts and Contracting Processes 

in Iraq and Afghanistan,’’ January 28, 2008, requires the Inspector General of the 

Department of Defense to develop a comprehensive plan for a series of audits of Department of Defense contracts, subcontracts, and task and delivery orders for the 

logistical support of coalition forces in Iraq and Afghanistan. The Act also requires 

that the Special Inspector Generals for Iraq Reconstruction and Afghanistan Reconstruction develop a comprehensive plan for a series of audits of Federal agency contracts, subcontracts, and task and delivery orders for the performance of security 

and reconstruction functions in Iraq and Afghanistan. 

We have expanded this audit plan beyond the statutory mandate to show all of 

the audit work for Iraq and Afghanistan, including other key issue areas, such as 

financial management, systems contracts, and human capital for contract administration. This plan incorporates the planned audit work of the Inspectors General of 

the Department of State and the U.S. Agency for International Development and 

the Special Inspector General for Iraq Reconstruction. It also includes the planned 

audit work of the Army Audit Agency, Air Force Audit Agency, and Defense Contract Audit Agency because of the major contributions they make to improve the efficiency and effectiveness of support to the military. We continue to coordinate audit 

plans through existing working groups and councils. 

INSPECTOR GENERAL, DEPARTMENT OF DEFENSE

PLANNED PROJECTS

Third Quarter Fiscal Year 2008 Start 

Award of Urgent Procurements for Linguistics in Support of the Global War on 

Terror. Objective: To review whether the awards of urgent procurements for linguistics were properly justified and whether prices were appropriately established as 

fair and reasonable. 

Contract Award and Administration of Security Services Contracts for Afghanistan. Objective: To determine whether security services contracts for Afghanistan 

are awarded and administered in accordance with the Federal Acquisition Regulation. 

Contracting for Clothing Requirements for Civilian and Contractor Personnel Deployed to Iraq and Afghanistan. Objective: To determine how much the Central 

Issuing Facilities contracts fulfill the clothing requirement for both DOD civilian 

and contractor personnel deployed to Iraq and Afghanistan; how contract requirements, terms, and conditions were developed; and the adequacy of cost controls. 

Contractor Reimbursement for Medical Care Provided by the Military in Southwest Asia. Objective: To examine the monetary burden on the military medical community in country to provide health care for contractor personnel as well as review 

contracts to determine whether reimbursement arrangements are addressed when 

contracts are bid and awarded. There are more civilians, particularly contractor personnel, than military personnel in Iraq and Afghanistan, and if these persons are 

injured and require medical attention or require refills for their medicines, those 

medical needs are provided by the military hospitals and trauma centers. 

Contractors Indebted to the U.S. Government Performing Work in Support of the 

Global War on Terror. Objective: To review the DOD contractor debt collection process and the controls associated with the List of Contractors Indebted to the United 

States who are performing work in support of the Global War on Terror. Specifically, we will also identify if the Government is in a position to collect monies due 

to the Government prior to making any contract payments. 

Controls over Contractor Common Access Cards in the U.S. Central Command. 

Objective: To evaluate the controls over the issuance, revocation, reverification, and 

recovery of contractor common access cards in the U.S. Central Command area of 

responsibility. We also plan to determine whether the CAC database will be a good 

source to identify the number of contractors in-country. 

Defense Finance and Accounting Service Personnel Support for the Global War on 

Terror. Objective: To determine whether the current level of Defense Finance and 

Accounting Service personnel assigned to support the mission in Iraq, Afghanistan, 

and Kuwait is adequate to ensure accurate and timely accounting and contract payments. 

Deferred Maintenance on DOD Weapon Systems as a Result of the Global War 

on Terror. Objective: To assess the extent and causes of deferred maintenance that 

result from the Global War on Terror. 
147 

DOD Compliance with Federal Tax Reporting Requirements for Contractors Supporting Global War on Terror. Objective: To determine whether payments to contractors and individuals performing work in support of the Global War on Terror 

were properly reported to the Internal Revenue Service. 

Equipment Repairs and Maintenance Contracts in Support of Operation Iraqi 

Freedom and Operation Enduring Freedom. Objective: To evaluate the development 

of contract requirements, award of contracts and task orders, and the administration of the contracts and task orders for equipment repairs and maintenance within 

Iraq and Afghanistan. 

Funds for Iraq Processed through the Security Assistance Program. Objective: To 

determine whether funds for Iraq processed through the Security Assistance Program and the Foreign Military Sales Trust Fund are properly managed. 

Information Assurance of the Outside the Continental United States Navy Enterprise Network as it Relates to the Global War on Terror. Objective: To assess the 

integrity, confidentiality, and availability of the Outside the Continental United 

States Navy Enterprise Network particularly as it is used in Global War on Terror 

deployments. The information assurance testing will include examining continuity, 

enclave boundary defense, identification and authentication, personnel, security design and configuration, enclave computing environment, vulnerability and incident 

management, and physical and environmental information assurance control subject 

areas. 

Marine Corps Military Pay in Support of the Global War on Terror. Objective: To 

determine whether Marine Corps military payroll disbursed in support of the Global 

War on Terror is paid in accordance with established laws and regulations. 

Requirements Determination at the Defense Supply Center Columbus. Objective: 

To determine whether quantities of items being purchased by the Defense Supply 

Center Columbus matched anticipated Global War on Terror requirements and 

whether internal management controls over the determination of the procurement 

requirements were effective. 

Review of Funds Transferred to Iraq and Afghanistan Security Forces through the 

State and Justice Departments. Objective: To evaluate the DOD oversight procedures over funding for the Iraq and Afghanistan Security Forces made through the 

Department of Justice and the State Department. 

Transition Planning for the Logistics Civil Augmentation Program IV Contract. 

Objective: To determine whether the Army properly planned for acquisition transition from Logistics Civil Augmentation Program III contract to the Logistics Civil 

Augmentation Program IV contract. 

Fourth Quarter Fiscal Year 2008 Start 

Accounting Systems Used in Southwest Asia. Objective: To determine the adequacy of the accounting systems used in Southwest Asia to include capability for 

processing properly supported and recorded transactions. 

Acquisition Workforce at the Defense Contract Management Agency. Objective: To 

assess the amount of DOD civilian, military, foreign national, and contracted support services within the Defense Contract Management Agency devoted to support 

the Global War on Terror. We will also evaluate whether the Defense Contract Management Agency Acquisition Workforce is adequately trained and certified. 

Army and Air Force Military Pay in Support of the Global War on Terror. Objective: To determine whether the Army and Air Force military payroll disbursed in 

support of the Global War on Terror is paid in accordance with established laws and 

regulations. 

Civilian Pay in Support of Global War on Terror. Objective: To determine whether 

civilian pay disbursed in support of the Global War on Terror is paid in accordance 

with established laws and regulations. 

Controls Over the Funds to Refit Equipment at the Army Depots. Objective: To 

evaluate controls over the funds to refit equipment at the Army depots. 

Controls Over Unliquidated Obligations on Contracts Supporting the Global War 

on Terror. Objective: To determine the amount of unliquidated obligations on contracts and whether DOD has established adequate management controls over the 

unliquidated obligations. 

DOD Counter Narcoterrorism Technology Program Office, Program and Operations Support, Indefinite Delivery/Indefinite Quantity Contract. Objective: To determine whether the DOD Counter Narcoterrorism Technology Program Office support contract for Southwest Asia is consistent with the Federal Acquisition Regulation. 

Durability and Sustainability of Body Armor. Objective: To evaluate the durability 

and sustainability of body armor. Specifically, we will evaluate the life cycle management of body armor components to include maintenance, repair, and durability. 
148 

Ground Standoff Mine Detection System Contract. Objective: To evaluate the 

manner in which Ground Standoff Mine Detection System contract requirements 

were developed, the procedures under which contracts or task or delivery orders 

were awarded, and the efficiency of DOD management and oversight of the contract. 

High Mobility Multipurpose Wheeled Vehicle Contract. Objective: To determine 

whether American General charged fair and reasonable prices for noncommercial 

modifications under contract DAAE07–01–C–S001. 

Internal Controls over Contract Systems Used in Southwest Asia. Objective: To 

determine the adequacy of internal controls of contracting systems used in Southwest Asia. 

Logistics Support for the U.S. Special Operations Command. Objective: To determine whether contracts providing logistics support to the U.S. Special Operations 

Forces were properly awarded and administered. 

Military Construction Projects Executed Through the Army’s Logistics Civil Augmentation Program Contract. Objective: To survey the military construction projects 

for Iraq and Afghanistan performed under the Army’s Logistics Civil Augmentation 

Program contracts and determine which projects need reviews. 

Mine Resistant Ambush Protected Repair and Maintenance Contracts. Objective: 

To determine whether contracts for maintenance and repair of Mine Resistant Ambush Protected vehicles were properly awarded and administered. 

Operation and Maintenance of Permanent Facilities in Afghanistan. Objective: To 

review the award and administration of contract W912ER–04–D–0003 task order 

0015 for the operation and maintenance of facilities in Afghanistan. 

Purchasing and Leasing of Vehicles in Support of Operation Iraqi Freedom and 

Operation Enduring Freedom. Objective: To examine contracts and task orders for 

vehicles either purchased or leased to support Operation Iraqi Freedom and Operation Enduring Freedom and to evaluate the development of the requirements, 

award of the contract or task order, the administration of the contract or task order, 

and the reasonableness of the cost to DOD. 

Quality Assurance Procedures for Kevlar Helmets. We are initiating this project 

as a result of a Congressional request. Objective: To determine whether DOD was 

aware of prior defects with Kevlar helmets produced by Sioux Manufacturing, and 

whether DOD provided oversight to ensure the contractor met quality standards. 

Rapid Development and Fielding of Material Solutions Within the Navy. Objective: To evaluate the management of the Navy process used to rapidly develop and 

field material solutions to meet urgent needs in support of the Global War on Terror. Selection of Mode of Transportation of Materials in Support of Operation Iraqi 

Freedom and Operation Enduring Freedom. Objective: To examine contracts and 

task orders for ground, air, and sealift transportation modes and evaluate how the 

shipping requirements were determined, the procedures used to select the transporting company, the terms of the contract and task orders, and the oversight provided. 

Survey of Kellogg Brown and Root Services Logistics Support for Contingency Operations. Objective: To determine the full extent of Kellogg Brown and Root Services 

logistics efforts and associated DOD costs in support of Contingency Operations. 

Times and Material Contracts in Southwest Asia. Objective: To determine whether time and material contracts were awarded and administered in accordance with 

the Federal Acquisition Regulation. 

U.S. Central Command Government Purchase Card Program. Objective: To assess 

whether the U.S. Central Command’s use of government purchase cards complies 

with applicable laws and regulations. The audit helps meet the statutory mandate 

to perform periodic audits of the Department of Defense management of purchase 

cards per Title 10, United States Code, Section 2784. 

Use of Contractor to Provide Food Service or Food in Support of Operation Iraqi 

Freedom and Operation Enduring Freedom. Objective: To examine contracts and 

task orders awarded for the Army Subsistence Program and evaluate whether the 

Defense Personnel Support Center, Philadelphia, PA, properly defined the requirements, awarded the contracts, and administered the contracts in support of Operation Iraqi Freedom and Operation Enduring Freedom. 

Use of Contracts to Provide Fuels in Support of the Warfighter. Objective: To determine the extent to which contractors are providing fuels instead of the Defense 

Energy Supply Center; how contract requirements, terms and conditions were developed; and the adequacy of cost controls. 

Use of Other Transaction Authority for Prototypes. Objective: To determine 

whether the Military Departments and Defense Agencies are properly using the 

other transactions for prototypes to bring new contractors into the Department to 

support the Global War on Terror efforts. 
149 

First Quarter Fiscal Year 2009 Start 

Contracting for Facilities Operations Support Services for Operation Iraqi Freedom and Operation Enduring Freedom. Objective: To examine contracts and task orders for facilities operations support services (housekeeping, trash/garbage removal, 

landscaping, etc.), development of contract requirements, award of contracts and 

task orders, and the administration of the contracts and task orders. 

Controls Over Contractor Common Access Cards in the U.S. European Command. 

Objective: To evaluate the controls over the issuance, revocation, reverification, and 

recovery of contractor common access cards in the European theater. 

Controls Over Unliquidated Obligations on U.S. Army Corps of Engineers Contracts Supporting the Global War on Terror. Objective: To determine the amount of 

unliquidated obligations on contracts and whether the U.S. Army Corps of Engineers has established adequate management controls over the unliquidated obligations. 

Management and Accountability of Class III Bulk JP–8 Fuel Supporting the U.S. 

Central Command Operations in Qatar. Objective: To evaluate the management of 

Bulk Class III JP–8 fuel operations in Qatar supporting U.S. Central Command 

Global War on Terror missions. 

Medical Prime Vendor Contracts in Support of Operation Iraqi Freedom and Operation Enduring Freedom. Objective: To examine contracts and task orders under 

the Defense Supply Center-Philadelphia Medical Prime Vendor Program for terms 

and conditions, price controls given increased demand, and the ability of contractors 

to provide supplies in a timely manner to the warfighter. 

Private Security Contractors Use in Operation Iraqi Freedom. Objective: To determine whether terms and conditions for private security services are clearly defined 

in contracts, whether security services are performed in accordance with the requirements of the contract, and whether oversight of security contracts is adequate. 

Use of Priority Air Cargo Transportation to Provide Materials and Supplies in 

Support of Operation Iraqi Freedom and Operation Enduring Freedom. Objective: 

To evaluate how the shipping requirement was determined in the award and terms 

of contracts and delivery orders and associated costs for the use of priority air transportation. 

ONGOING PROJECTS

Reports Projected Third Quarter Fiscal Year 2008 

Contingency Construction Contracting Procedures Implemented by the Joint Contracting Command—Iraq/Afghanistan (D2007–D000LQ–0261 .000). Objective: To determine the efficiency of contingency construction contracting procedures implemented by the Joint Contracting Command—Iraq/Afghanistan in the Afghanistan 

Area of Operations. Specifically, we will review the effectiveness of practices related 

to solicitation, award, quality assurance, oversight, and final acceptance of constructions projects. 

DOD Supplemental and Cost of War Execution Report Sections Pertaining to Procurement and Research, Development, Test, and Evaluation Funds (D2006– 

D000AE–0241.001). Objective: To determine how effectively the Office of the Secretary of Defense and the DOD Components prepared the DOD Supplemental and 

Cost of War Execution Report for procurement and research, development, test, and 

evaluation funds. 

DOD Use of Global War on Terror Supplemental Funding Provided for Procurement and Research, Development, Test, and Evaluation (D2006–D000AE–0241.002). 

Objective: To evaluate the adequacy of the DOD financial controls over use of Global 

War on Terror supplemental funding provided for procurement and research, development, test, and evaluation. 

Internal Controls and Data Reliability in the Deployable Disbursing System 

(D2007–D000FL–0252.000). Objective: To determine whether the internal controls 

over transactions processed through the Deployable Disbursing System are adequate 

to ensure the reliability of the data processed. The audit will include financial information processed by disbursing stations supporting the Global War on Terror and 

will also include the recording of related obligations. This audit is a follow up on 

our ‘‘Audit of Internal Controls Over Out-of-Country Payments,’’ D2006–D000FL– 

0208.000. 

Summary of Issues Impacting Operations Iraqi Freedom and Enduring Freedom 

Reported by Major Oversight Organizations Beginning Fiscal Year 2003 Through 

Fiscal Year 2007 (D2007–D000XA–0249.000). Objective: To summarize contract, 

funds management, and other accountability issues identified in audit reports and 

congressional testimonies that discuss mission critical support to Operations Iraqi 

Freedom and Enduring Freedom. 
150 

Reports Projected Fourth Quarter Fiscal Year 2008 

Contracts for Supplies Requiring Use of Radio Frequency Identification (D2008– 

D000AS–0022.000). Objective: To determine whether DOD Components are complying with policies on radio frequency identification. Specifically, we will determine 

whether DOD Components have prepared and implemented plans to use radio frequency identification. Additionally, we will assess whether DOD contracts issued 

since January 1, 2005, include requirements for using passive and active radio frequency identification tags and whether contractors are complying with those requirements. 

Controls Over the Contractor Common Access Card Life Cycle (D2007–D000LA– 

0199.001). Objective: To determine whether controls over Common Access Cards 

provided to contractors are in place and work as intended. Specifically, we will determine whether DOD officials issue Common Access Cards to contractors, verify 

the continued need for contractors to possess Common Access Cards, and revoke or 

recover Common Access Cards from contractors in accordance with DOD policies 

and procedures. 

Defense Hotline Allegations Concerning Contracts Issued by U.S. Army TACOM 

Life Cycle Management Command to BAE Systems Land and Armaments, Ground 

Systems Division (D2007–D000CK–0256.000). Objective: To review the allegations 

to the Defense Hotline concerning contracts issued by U.S. Army TACOM Life Cycle 

Management Command to BAE Systems Land and Armaments, Ground Systems 

Division. Specifically, we will determine whether contract award and administrative 

procedures were in compliance with Federal and DOD policy. 

Distribution of Funds and the Validity of Obligations for the Management of the 

Afghanistan Security Forces Fund—Phase II (D2007–D000LQ–0161.001). Objective: 

To determine whether the distribution of the $1.9 billion from the Afghanistan Security Forces Fund complied with the 11 provisions of Public Law 109–234 and applicable appropriations law. In addition, we will determine whether the Afghanistan 

Security Forces Fund was obligated in accordance with legislative intent and applicable appropriations law. 

DOD Training for U.S. Ground Forces Supporting Operation Iraqi Freedom 

(D2007–D000LH–0108.001). Objective: To determine whether U.S. Ground Forces 

supporting Operation Iraqi Freedom are receiving training necessary to meet operational requirements. This project is addressing the adequacy of equipment levels 

at Army and Marine Corps combat training centers and mobilization stations for 

ground forces units deploying in support of Operation Iraqi Freedom. 

Expeditionary Fire Support System and Internally Transportable Vehicle Programs (D2008–D000AB–0091.000). Objective: To determine whether contract competition and program administration for the United States Marine Corps Expeditionary Fire Support System and Internally Transportable Vehicle were in accordance with the Federal Acquisition Regulation and supporting DOD guidance. 

Funds Appropriated for Afghanistan and Iraq Processed Through the Foreign 

Military Sales Trust Fund (D2007–D000FD–0198.000). Objective: To determine 

whether the funds appropriated for the security, reconstruction, and assistance of 

Afghanistan and Iraq and processed though the Foreign Military Sales Trust Fund 

are being properly managed. Specifically, we will determine whether the transfer of 

appropriated funds from the Army’s accounts into the Foreign Military Sales Trust 

Fund was properly authorized, accounted for, and used for the intended purpose. We 

will also determine whether Foreign Military Financing funds granted to Afghanistan and Iraq are properly accounted for and used for their intended purpose. In 

addition, we will verify whether the appropriated funds are properly reported in 

DOD financial reports. 

Hiring Practices Used to Staff the Iraqi Provisional Authorities (D2007–D000LC– 

0051.000). Objective: To evaluate the hiring practices that DOD used to staff personnel to the provisional authorities supporting the Iraqi government from April 

2003 to June 2004. Specifically, we will determine the Process DOD used to assign 

personnel to the Office of Reconstruction and Humanitarian Assistance and the Coalition Provisional Authority in Iraq. 

Joint Follow-on Evaluation of Equipment Status (D2008–D000LQ–0111.000). Objective: To determine whether forces deployed in support of Operation Iraqi Freedom 

have the equipment to complete their missions and to evaluate whether units completing combat missions had the proper equipment in accordance with mission requirements. 

Marine Corps’ Management of the Recovery and Reset Programs (D2007– 

D000LD–0129.000). Objective: To evaluate the effectiveness of the Marine Corps’ 

Recovery and Reset Programs for selected equipment. Specifically, we will review 

how the Marine Corps met its equipment requirements through the Reset and Re-
151 

covery Programs, whether it effectively repaired or replaced selected equipment, and 

whether the Marine Corps used funds for their intended purpose. 

Military Construction Funds Related to the Global War on Terror (D2007– 

D000CK–0201.000). Objective: To determine whether DOD Components followed requirements for using operations and maintenance funds for Global War on Terror 

military construction. Specifically, we will determine whether DOD followed proper 

procedures for administering, executing, and reporting the use of operations and 

maintenance funds on Global War on Terror military construction contracts. 

Procurement and Delivery of Joint Service Armor Protected Vehicles (D2007– 

D000CK–0230.000). Objective: To determine whether the Mine Resistant Ambush 

Protected vehicle program office is procuring armored vehicles in accordance with 

the Federal Acquisition Regulation and DOD requirements. Specifically, we will review Mine Resistant Ambush Protected program administration to determine 

whether the program office is taking appropriate actions to accelerate vehicle delivery to users. An additional objective will be to review the Services’ requirements for 

Mine Resistant Ambush Protected and High Mobility Multipurpose Wheeled Vehicles. 

Procurement and Use of Nontactical Vehicles at Bagram Air Field (D2008– 

D000LQ–0063.000). Objective: To determine the effectiveness of the process for procuring and leasing nontactical vehicles at Bagram Air Field, Afghanistan. We will 

also review the cost of operating and maintaining nontactical vehicles and determine whether the amount of use complies with DOD guidance. 

Security Over Radio Frequency Identification Information (D2008–D000AS– 

0044.000). Objective: To determine whether DOD implemented security controls to 

protect radio frequency identification information. Specifically, we will assess the 

implementation and effectiveness of those security controls over the information. 

Small Arms Ammunition Fund Management in Support of the Global War on Terror (D2008–D000FJ–0014.000). Objective: To determine whether the Military Departments properly managed small arms ammunition funds in support of the Global 

War on Terror. Specifically, we will determine whether financial management officials fully supported and properly incurred obligations and expenditures. We will 

also determine whether funds for small arms ammunition were accurately recorded 

in financial systems for reporting to the Office of the Secretary of Defense. 

Reports Projected Fiscal Year 2009 

Acquisition of Ballistic Glass Contracts for the High Mobility Multipurpose 

Wheeled Vehicle Variants (D2008–D000CE–0187.000). Objective: To determine 

whether the award and administration process of the High Mobility Multipurpose 

Wheeled Vehicle ballistic glass contracts comply with the Federal Acquisition Regulation. 

Air Force Combat Search and Rescue Helicopter (D2008–D000AB–0133.000). Objective: To determine whether changes to Combat Search and Rescue Helicopter Key 

Performance Parameters were made in accordance with applicable DOD and Air 

Force acquisition guidelines. Specifically, we will determine whether key performance parameter changes were properly designated and appropriately vetted through 

the Joint Requirements Oversight Council. In addition, we will determine whether 

key performance parameter changes will affect Air Force special operations capabilities in the Global War on Terror. 

Air Force Contract Augmentation Program in Southwest Asia (D2008–D000JC– 

0202.000). Objective: To evaluate controls over Air Force Contract Augmentation 

Program. We will determine what contracts have been awarded, whether contracts 

were properly awarded, whether contracted services were provided in accordance 

with the statement of work and whether contract payments were appropriate. 

Assignment and Training of Contracting Officer’s Representatives at Joint Contracting Command—Iraq/Afghanistan (D2008–D000JC–0203.000). Objective: To determine whether personnel assigned as Contracting Officer’s Representatives to the 

Joint Contracting CommandIraq/Afghanistan have proper training and expertise to 

perform their duties. 

Class III Fuel Procurement and Distribution in Southwest Asia (D2008–D000JC– 

0186.000). Objective: To determine whether fuel used for ground operations in 

Southwest Asia to support Operations Iraqi Freedom and Enduring Freedom is procured and distributed efficiently and effectively. Specifically, we will determine 

whether fuel is procured at fair and reasonable prices, whether fuel is distributed 

economically and efficiently to operational commands, and whether fuel supply 

points maintain accurate inventories. 

Control Over the Reporting of Transportation Costs in Support of the Global War 

on Terror (D2008–D000FI–0083.000). Objective: To evaluate the effectiveness of controls over the reporting of transportation costs related to the Global War on Terror. 
152 

Controls Over the Department of the Navy Military Payroll Disbursed in Support 

of the Global War on Terror (D2008–D000FC–0189.000) Objective: To determine 

whether the Department of the Navy is disbursing military payroll in support of the 

Global War on Terror in accordance with established laws and regulations. Specifically, we will determine whether the Department of the Navy maintains adequate 

support for payments related to deployments to an active combat zone. 

Defense Emergency Response Fund for the Global War on Terror (D2008– 

D000FE–0106.000). Objective: To determine if the Defense Emergence Response 

Fund is used as intended and in adherence to the Office of Management and Budget 

guidance for the use of the funds. We will also determine if DOD has the ability 

to track the use of the Defense Emergency Relief Fund. 

Defense Logistics Agency Contracts for Combat Vehicle Parts in Support of the 

Global War on Terror (D2008–D000FD–0214.000). Objective: To determine whether 

the Defense Logistics Agency used appropriate and effective contracting procedures 

to provide to customers the combat vehicle parts to support the Global War on Terror. 

Distribution of Funds and the Validity of Obligations for the Management of the 

Afghanistan Security Forces Fund—Phase III (D2007–D000LQ–0161.002). Objective: To determine whether organizations in Southwest Asia that the U.S. Central 

Command assigned with the responsibility for managing the Afghanistan Security 

Forces Fund properly accounted for the goods and services purchased for the Afghanistan Security Forces using the Afghanistan Security Forces Fund and whether 

the goods and services were properly delivered to the Afghanistan Security Forces. 

Marine Corps Implementation of the Urgent Universal Need Statement Process 

for Mine Resistant Ambush Protected Vehicles (D2008–D000AE–0174.000). Objective: To determine whether the Marine Corps decision making process responded appropriately and timely to Urgent Universal Need Statements submitted by field 

commanders for Mine Resistant Ambush Protected vehicles. 

Organic Ship Utilization in Support of the Global War on Terror (D2008– 

D000AB–0193.000). Objective: To evaluate the effectiveness of policies and procedures used to ensure that activated Government-owned and Government-chartered 

vessels are used to the maximum extent prior to procuring commercial transportation to Southwest Asia. 

Price Reasonableness for Contracts at U.S. Special Operations Command (D2008– 

D000CG–0123.000). Objective: To determine whether pricing of contracts at U.S. 

Special Operations Command complied with Federal Acquisition Regulation requirements for determining price reasonableness. 

War Reserve Materiel Contract (D2008–D000CK–0161.000). Objective: To determine whether Air Force contracting officials managed and administered the 

DynCorp International War Reserve Materiel contract in accordance with Federal 

and DOD contracting policies. 

INSPECTOR GENERAL, DEPARTMENT OF STATE

PLANNED PROJECTS

Third Quarter Fiscal Year 2008 Start 

Audit 

Personal Security Detail Contracts—Blackwater (Iraq) (with the Special Inspector 

General for Iraq Reconstruction)—(Financial Related & Performance Audit) 

New Embassy Compound Phase I (Performance Audit) 

New Embassy Compound Phase II (Performance Audit) 

Fourth Quarter Fiscal Year 2008 Start Audit 

Economic Support Fund—Afghanistan (Financial Related Audit) 

Middle East Regional Office 

Personal Security Detail Contracts—Dyncorp and Triple Canopy—Iraq (Performance Audit) 

—Kennedy Report on Worldwide Personal Protective Services—Private Security 

Contractors—Iraq (Program Evaluation) 

—Role, Staffing, and Effectiveness of Diplomatic Security—Iraq (Performance 

Audit) 

First Quarter Fiscal Year 2009 Start 

Audit 

Property Inventory and Accountability at Embassy Baghdad (Performance Audit) 

(concurrent w/Office of Inspections Inspection of Embassy Baghdad) 
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Middle East Regional Office 

Effectiveness of Worldwide Personal Protective Services contractors in Jerusalem 

Emergency Action Plan of Embassies Baghdad and Kabul (Program Evaluation) 

Second Quarter Fiscal Year 2009 Start 

Audit 

Personal Security Detail Contracts—Dyncorp and Triple Canopy (Iraq) (Financial 

Related) 

Middle East Regional Office 

Personal Security Detail (Worldwide Personal Protective Services) Contracts— 

Blackwater, Dyncorp, Triple Canopy Afghanistan 

—Kennedy Report on Worldwide Personal Protective Services—Private Security 

Contractors—Afghanistan 

—Role, Staffing, and Effectiveness of Diplomatic Security—Afghanistan (Financial 

Related and Performance Audit) 

Third Quarter Fiscal Year 2009 Start 

Inspection 

De-mining Programs in Iraq and Afghanistan (Program Evaluation) 

Fourth Quarter Fiscal Year 2009 Start 

Audit 

Economic Support Funds—West Bank 

Logistics Civil Augmentation Program Task Order #100 

Middle East Regional Office 

Refugee Assistance and Human Rights in Afghanistan (Performance Audit) 

Governing Justly and Democratically in Afghanistan (Performance Audit) 

Embassy Baghdad/DOD Transition Plan (Joint with Inspector General, DOD) 

(Program Review) 

Future Starts 

Iraq 

Economic Support Funds—Iraq 

Verbal Notices to Proceed (Task Orders)—Worldwide Personal Protective Services 

Diplomatic Security Armored Vehicle Procurement 

Local Security Guard Program 

Public Diplomacy Programs in Iraq 

Democracy and Education Programs in Iraq 

Follow-up Evaluations of Iraq Police Training 

Follow-up Evaluations of Iraq Rule-of-Law Programs 

Follow-up Evaluation of Anticorruption Programs in Iraq 

Role, Function, and Effectiveness of Regional Embassy Offices in Iraq 

Rightsizing (Staffing) of Embassy Baghdad 

Follow-up on Role and Effectiveness of Provincial Reconstruction Teams in Iraq 

Management of Iraq Security Programs 

Review of Anti-Corruption Training and Development Programs in Iraq 

Follow-up Review of Rule of Law Programs in Iraq 

Review of Communications Security at Embassy Baghdad 

Democracy Building: National Endowment for Democracy 

Implementation of International Cooperative Administrative Support Services— 

Iraq 

Afghanistan 

Public Diplomacy Programs in Afghanistan 

Middle East Partnership Initiative 

Follow-up Evaluation of Afghanistan Police Training 

Follow-up Evaluation of Afghan Rule-of-Law Programs 

Effectiveness of Counter Narcotic Programs in Afghanistan 

Effectiveness of Security Assistance in Afghanistan 

Management of Afghanistan Security Programs 

Implementation of International Cooperative Administrative Support Services— 

Afghanistan 

Pakistan 

Democracy and Education Programs in Pakistan 
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Federally Administered Tribal Areas in Pakistan 

Effectiveness of Counter-narcotics Programs in Pakistan 

Effectiveness of Security Assistance in Pakistan 

Other 

Middle East Partnership Initiative 

Democracy and Education Programs in Lebanon 

Security Assistance in Lebanon 

ONGOING PROJECTS

Iraqi Special Immigrant VISA (Special Immigrant Visa) (Program Evaluation) 

Iraqi Refugee Processing (Program Evaluation) 

INSPECTOR GENERAL, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

PLANNED AUDITS—IRAQ

Performance Audits 

USAID/Iraq’s Community Stabilization Program. Objectives: (1) Is USAID/Iraq’s 

Community Stabilization Program achieving its intended result with regard to activities in the community infrastructure and essential services component? (2) How 

has USAID/Iraq designed and implemented its Community Stabilization Program to 

help ensure that Iraqis continue to benefit from its activities after USAID involvement has ended? (Completed. Audit Report No. E–267–08–001–P, issued March 18, 

2008) 

USAID/Iraq’s Management of the Marla Ruzicka Iraqi War Victims Fund. Objective: Is USAID/Iraq complying with provisions contained in public laws to help ensure that funds appropriated for the Marla Fund are used as intended? (Completed. 

Audit Report No. E–267–08–002–P, issued April 3, 2008) 

USAID/Iraq’s Community Action Program II. Objectives: (1) Is USAID/Iraq accurately measuring the jobs created by its community action program activities? (2) 

Are USAID/Iraq’s community action program activities achieving intended results 

and what has been the impact? 

USAID/Iraq’s Monitoring and Evaluation Performance Program. Objectives: (1) Is 

the Monitoring and Evaluation Performance Program, Phase II program producing 

monitoring and evaluation reports that are timely, relevant, and useful for performance management? (2) Is USAID/Iraq using Monitoring and Evaluation Performance 

Program, Phase II program results to manage its portfolio? 

USAID/Iraq’s Management of Its Official Vehicle Fleet. Objective: Has USAID/ 

Iraq acquired, utilized, and disposed of its official vehicles in accordance with 

USAID’s Automated Directives System? 

Followup Audit of USAID/Iraq’s Local Governance Activities. Objective: Are 

USAID/Iraq’s local governance activities achieving intended results and what has 

been the impact? 

USAID/Iraq’s National Capacity Development Program. Objective: Is USAID/ 

Iraq’s national capacity development program achieving its intended results and 

what has been the impact of this program? 

Followup Audit of Provincial Reconstruction Teams in Iraq. Objectives: (1) Are 

USAID/Iraq provincial reconstruction team representatives performing their roles as 

activity managers as intended? (2) How is USAID/Iraq assisting the provincial reconstruction teams in the transition to traditional USAID activities? 

USAID/Iraq’s Agribusiness Program. Objective: Is USAID/Iraq’s agribusiness program achieving intended results and what has been the impact? 

USAID/Iraq’s Provincial Economic Growth Program. Objectives: (1) Have USAID/ 

Iraq’s provincial economic growth activities created an enabling environment for 

business operations and what has been the impact? (2) Are USAID/Iraq’s grant activities under its provincial economic growth program achieving intended results 

and what has been the impact? 

Financial Audits 

Objectives: Financial audit objectives include determining whether (1) costs incurred and billed by the recipient are allowable, allocable and reasonable, (2) the 

recipient’s internal control structure is adequate, and (3) the recipient complies with 

agreement terms and applicable laws and regulations. Audits are performed by the 

Defense Contract Audit Agency at the request of OIG, who then reviews and issues 

the reports to USAID with applicable recommendations. The following financial audits are planned for fiscal year 2008: 
155 

—Direct Costs Incurred and Billed by Research Triangle Institute under Contract 

No. GHS–I–04–03–00028–00 from April 26, 2005 to December 31, 2006. (Completed. OIG Report No. E–267–08–001–D, issued October 4, 2007) 

—Costs Incurred and Billed by Sallyport Global Services Ltd. under its Subcontracts with The Louis Berger Group, Inc. under USAID Contract Nos. 267– 

C–00–04–00417–00 for the Period September 27, 2004 through September 30, 

2005 and 267–C–00–04–00435–00 for the Period August 1, 2005 through March 

31, 2007. (Completed. OIG Report No. E–267–08–002–D, issued December 12, 

2007) 

—Costs Incurred and Billed by America’s Development Foundation under Contract No. GEW–C–00–04–00001–00 from October 1, 2006 through June 30, 

2007. (Completed. OIG Report No. E–267–08–003–D, issued January 23, 2008) 

—Costs Incurred and Billed by Creative Associates International, Inc. under Contract No. EPP–C–00–04–00004–00 from July 1, 2005 through February 28, 

2007. (Completed. OIG Report No. E–267–08–004–D, issued February 4, 2008) 

—Costs Incurred and Billed by Management Systems International under USAID 

Contract No. AEP I–00–00–00024–00, Task No. 08, from June 26, 2003 through 

May 31, 2005. (Completed. OIG Report No. E–267–08–005–D, issued February 

4, 2008) 

—Costs Incurred and Billed by Bechtel National, Inc. under Contract Nos. EEE– 

C–00–03–00018–00 (Phase I) and SPU–C–00–04–0000 1–00 (Phase II) from November 1, 2006 to September 30, 2007. (Completed. OIG Report No. E–267–08– 

006–D, issued February 12, 2008) 

—Cost Incurred and Billed by IntraHealth International, Inc. under its Subcontract No. 15–330–0208954 with Research Triangle Institute Contract No. 

GHS–1–04–03–00028–00 for the Period April 26, 2005 through December 31, 

2006. (Completed. OIG Report No. E–267–08–007–D, issued February 24, 2008) 

—Costs Incurred and Billed by International Business and Technical Consultants, 

Inc. (IBTCI) under Contract No. 267–C–00–05–00508–00 from January 1, 2006 

through December 31, 2006. (Completed. OIG Report No. E–267–08–008–D, 

issued March 6, 2008) 

—Costs Incurred and Billed by BearingPoint, Inc. under Contract No. 267–C–00– 

04–00405–00 for the Period October 1, 2006 through September 30, 2007. (Completed. OIG Report No. E–267–08–009–D, issued April 15, 2008) 

—Costs Incurred and Billed by Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance under USAID Cooperative Agreement No. AFP–A–00–03–00003 for the Period August 1, 2004 through 

March 31, 2007. 

—Costs Incurred and Billed by the International Foundation for Election Systems 

through the Consortium for Election and Political Process Strengthening under 

[1] USAID Agreement No. 267–A–00–04–00405–00 for the period October 1, 

2005 through June 30, 2007, [2] USAID Agreement No. AFP–A–00–04–00014– 

00 for the period July 9, 2004 through June 30, 2006, and [3] USAID Agreement No. REE–A–00–04–0005 0–00 for the period July 26, 2004 through July 

31, 2006. 

—Costs Incurred and Billed by America’s Development Foundation under USAID 

Contract No. GEW–C–00–04–00001–05 for the Period October 1, 2006 through 

June 30, 2007. 

—Costs Incurred and Billed by International Relief & Development, Inc. under 

USAID Agreement No. AFP–A–00–03–0002–00 for the Period November 1, 2005 

through March 31, 2007. 

—Costs Incurred and Billed by Cooperative Housing Foundation International 

under USAID Agreement No. AFP–A–00–0300004–00 for the Period August 1, 

2005 through April 30, 2007 and under USAID Agreement No. 267–A–00–06– 

00507–00 for the Period September 30, 2006 through September 30, 2007. 

—Costs Incurred and Billed by Mercy Corps under USAID Agreement No. AFP– 

A–00–03–00001–00 for the Period August 1, 2004 through March 31, 2007. 

—Costs Incurred and Billed by Save the Children Federation under USAID 

Agreement No. AFP–A–00–03–00005–00 for the Period August 1, 2004 through 

April 1, 2006. 

—Agreed-upon Procedures Review of Direct and Indirect Costs Incurred by Research Triangle Institute under USAID Contract Nos. EDG–C–00–00010–00, 

267–C–00–05–00505–00, and GHS–I–04–03–00028–00 Relating to Payments to 

Business Systems House during the Period March 26, 2003 through September 

30, 2007. 

—Costs Incurred and Billed by International Relief & Development, Inc. under 

USAID Agreement No. 267–A–00–06–00503–00 for the Period May 29, 2006 

through September 30, 2007. 
156 

—Costs Incurred and Billed by BearingPoint, Inc. under USAID Contract No. 

267–C–00–04–00405–00 for the Period August 1, 2005 through September 30, 

2006. 

—Costs Incurred and Billed by Louis Berger Group/The Services Group, Inc. 

under USAID Contract No.267–C–00–04–00435–06 for the Period October 1, 

2006 through September 30, 2007. 

—Costs Incurred and Billed by Management Systems International under USAID 

Contract No. AEP–I–01–05–00221–00 for the Period July 27, 2006 through September 30, 2007. 

—Agreed-Upon Procedures Review of Requests for Equitable Adjustments Related 

to Excusable Delays by Bechtel National, Inc. under USAID Contract No. SPU– 

C–00–04–00001–00 for the Period January 5, 2004 through March 31, 2007 and 

Contract No. EEE–C–00–03–00018–00 for the Period April 17, 2003 through 

February 28, 2006. 

—Costs Incurred and Billed by International Resources Group under USAID Contract No. 517–C–00–04–00106–00 for the Period November 1, 2006 through December 31, 2007. 

—Costs Incurred and Billed by Research Triangle Institute under USAID Contract No. 267–C–00–05–00505–00 for the Period January 1, 2007 through December 31, 2007. 

—Costs Incurred and Billed by Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance under USAID Cooperative Agreement No. AFP–A–00–03–00003 for the Period August 1, 2004 through 

March 31, 2007. 

—Costs Incurred and Billed by Louis Berger Group, Inc. for the Period May 14, 

2007 through May 13, 2008. 

—Costs Incurred and Billed by the International Foundation for Election Systems 

through the Consortium for Election and Political Process Strengthening under 

USAID Agreement No. 267–A–00–04–00405–00 from July 1, 2007 through June 

30, 2008. 

—Costs Incurred and Billed by International Business & Technical Consultants, 

Inc. under USAID Contract No. 267–C–00–05–00508–00 for the Period January 

1, 2007 through December 31, 2007. 

PLANNED PROJECTS—AFGHANISTAN

Performance Audits 

USAID/Afghanistan’s Agriculture, Rural Investment and Enterprise Strengthening Program. Objective: Was USAID/Afghanistan’s Agriculture, Rural Investment 

and Enterprise Strengthening Program achieving its intended results and what has 

been the impact? (Completed. Audit Report No. 5–306–08–001–P, issued January 

22, 2008) 

USAID/Afghanistan’s Alternative Development Program—Southern Region. Objective: Did USAID/Afghanistan’s Alternative Development Program/South achieve 

planned results, and what has been the impact? (Completed. Audit Report No. 5– 

306–08–003–P, issued March 17, 2008) 

USAID/Afghanistan’s Accelerating Sustainable Agriculture Program. Objective: 

Did USAID/Afghanistan’s Accelerating Sustainable Agriculture Program achieve 

planned results, and what has been the impact? 

USAID/Afghanistan’s Technical Assistance Services to Implement the Small and 

Medium Sized Enterprise Development Activity in Afghanistan. Objective: Did 

USAID/Afghanistan’s Technical Assistance Services to Implement the Small and 

Medium Sized Enterprise Development Activity achieve planned results, and what 

has been the impact? 

USAID/Afghanistan’s Higher Education Project. Objective: Did USAID/Afghanistan’s Higher Education Project achieve planned results, and what has been the impact? 

USAID/Afghanistan’s Local Governance and Community Development Project in 

Northern and Western Regions of Afghanistan. Objective: Did USAID/Afghanistan’s 

Local Governance and Community Development Project achieve planned results, 

and what has been the impact? 

USAID/Afghanistan’s Building Capacity Program. Objective: Did USAID/Afghanistan’s Building Capacity Program achieve planned results, and what has been the 

impact? 

USAID/Afghanistan’s School and Health Clinic Buildings Completed Under the 

Schools and Clinics Construction and Refurbishment Program. Objective: Did 

USAID/Afghanistan’s School and Health Clinic Buildings Completed under the 
157 

Schools and Clinics Construction and Refurbishment Program achieve planned results, and what has been the impact? 

Selected Activities Funded Under USAID/Afghanistan’s $1.4 Billion Infrastructure 

Rehabilitation Program. Objective: Did Selected Activities Funded under USAID/Afghanistan’s $1.4 billion Infrastructure Rehabilitation Program achieve planned results, and what has been the impact? 

Financial Audits 

Objectives: Financial audit objectives include determining whether (1) costs incurred and billed by the recipient are allowable, allocable and reasonable, (2) the 

recipient’s internal control structure is adequate, and (3) the recipient complies with 

agreement terms and applicable laws and regulations. Audits are performed by the 

Defense Contract Audit Agency or non-Federal auditors. The OIG reviews and 

issues the reports to USAID with applicable recommendations. The following financial audits are planned for fiscal year 2008: 

—Local Costs incurred by the Louis Berger Group, Inc. to Implement the Rehabilitation of Economic Facilities and Services Program, USAID/Afghanistan 

Contract No. 306–C–00–02–00500–00, for the Period from April 1, 2007, to June 

30, 2007. (Completed. OIG Report No. 5–306–08–001–N, issued November 27, 

2007) 

—Closeout Audit of the Project Titled ‘‘Business Advisory Services to Small and 

Medium-Sized Enterprises (SMEs) in Afghanistan,’’ USAID/Afghanistan Cooperative Agreement No. 306–A–00–04–00570–00, Managed by Acap Management 

Limited, for the Period from September 30, 2004, to March 29, 2007. (Completed. OIG Report No. 5–306–08–019–R, issued April 25, 2008) 

—Costs Incurred by DEG (Deutsche Ivestitions Entwicklungsgesellschaft mbH), 

USAID/Afghanistan Agreement No. 306–A–00–05–005 12–00, for the Period 

from February 3, 2005, to August 2, 2008 

—Costs incurred by Bearing Point, Inc. to Implement the Economic Governance 

in Afghanistan (BP I), USAID/Afghanistan Contract No. 306–C–00–03–00001– 

00, for the Period from November 17, 2002, to December 15, 2005 

—Costs incurred by PTS (Program-e Tahkim-e Solh) to Implement the National 

Commission For Peace and Reconciliation, USAID/Afghanistan Agreement No. 

306–PIL–07–3060004–00, for the Period from April 1, 2007, to March 31, 2008 

—Costs incurred by Bearing Point, Inc. to Implement the Strengthening Private 

Sector through Capacity Building (BP III), USAID/Afghanistan Contract No. 

GEG–I–00–04–00004–00, for the Period from September 26, 2005, to December 

31, 2007 

—Costs incurred by AEAI-Advance Engineering Associates, International to Implement the Afghanistan Energy Assistance Project, USAID/Afghanistan Contract No. EPP–I–OO–03–00004–00, for the Period ended December 31, 2007 

—Quarterly Audits of Local Costs incurred by the Louis Berger Group, Inc. to Implement the Afghanistan Infrastructure Reconstruction Program (AIRP), 

USAID/Afghanistan Contract No. 306–I–00–06–00517–00 

PLANNED PROJECTS—REST OF ASIA

Performance Audits 

USAID/Indonesia’s Tsunami-Related Housing Construction Activities Implemented by Cooperative Housing Foundation International. Objective: Were USAID/ 

Indonesia’s tsunami-related housing construction activities being implemented by 

the Cooperative Housing Foundation International (CHF) achieving planned results? (Completed. Audit Report No. 5–497–08–002–P, issued January 31, 2008) 

USAID/Pakistan’s Education Sector Reform Assistance Program. Objective: Did 

USAID/Pakistan’s Education Sector Reform Assistance program achieve intended 

results and what has been the impact? (Completed. Audit Report No. 5–391–08– 

004–P, issued March 28, 2008) 

USAID/India’s Greenhouse Gas Pollution Prevention Project. Objective: Did 

USAID/India’s Greenhouse Gas Pollution Prevention Project achieve planned results, and what has been the impact? 

USAID/Mongolia’s Economic Policy Reform and Competitiveness Project. Objective: Did USAID/Mongolia’s Economic Policy Reform and Competitiveness Project 

achieve planned results, and what has been the impact? 

USAID/Nepal’s Health Program. Objective: Did USAID/Nepal’s Health Program 

achieve planned results, and what has been the impact? 

Critical USAID/Philippines’ Activities under its Growth with Equity in Mindanao 

II Program Implemented by Louis Berger Group, Inc. Objective: Did Critical USAID/ 
158 

Philippines’’ Activities under its Growth with Equity in Mindanao II Program 

achieve planned results, and what has been the impact? 

Financial Audits 

Objectives: Financial audit objectives include determining whether (1) costs incurred and billed by the recipient are allowable, allocable and reasonable, (2) the 

recipient’s internal control structure is adequate, and (3) the recipient complies with 

agreement terms and applicable laws and regulations. Financial audits are conducted primarily of non-U.S. based organizations throughout the rest of Asia by 

non-Federal auditors. Non-U.S. recipients are required to have financial audits done 

if they spend more than $300,000 of USAID funds during their fiscal year. Financial 

audit reports conducted by non-Federal auditors are reviewed by the OIG office in 

Manila, Philippines, and the reports transmitted with applicable recommendations 

to the responsible USAID mission in the region. OIG expects to issue over 30 financial audit reports to USAID missions in the region, in addition to Iraq and Afghanistan, during fiscal year 2008. 

SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

PLANNED PROJECTS

Third Quarter Fiscal Year 2008 Start 

Follow-on Review of Iraq Security Forces Strength Accounting Methodologies, Including Use of Automated Systems (8024). 

Follow-on Review of the Transition of Iraq Reconstruction Projects to the Government of Iraq (8022). 

Iraq Reconstruction Management System (8027). 

Progress and Plans to Transition Infrastructure Development for Iraqi Security 

Forces to the Iraqi Government (8026). 

Reconstruction Contracts/Task Orders Terminated for Convenience or Default 

(8020) (follow-on to 7029). 

Survey of Department of State and U.S. Agency for International Development 

Contracts and Grants for Democracy Building Projects in Iraq (8025). 

Survey of Overall Economic Support Fund Programs Management and Expenditures (8021). 

Triple Canopy Private Security Contract—Department of State (8028). Note: Assignment expected to identify agency unique focus on security contracting issues related to Iraq reconstruction under Section 842 legislation as well as identify issues 

that may require more in-depth audit focus on a cross-agency basis once results of 

this review are considered along with results from other ongoing reviews. 

Start (To Be Determined) 

Assessing Progress, Trends, and Cross-Program Coordination Related to Economic 

Development in Iraq (include DOD economic development efforts). 

Individual U.S. Agency for International Development Democracy Building Program (Program Effectiveness Reviews). Placeholder for potential future program review of individual democracy building programs that may be identified in ongoing 

survey of Department of State and U.S. Agency for International Development contracts and grants management of democracy building programs related to Iraq reconstruction (see project code 8025) 

Iraq Related Operating Expenses of U.S. Agencies Supporting Iraq Reconstruction 

Ministerial Capacity Development Follow-on. 

Progress in Improving Infrastructure Security Across Key Sectors (oil, electricity, 

water, sewer, etc.). 

Provisional Reconstruction Teams/Provisional Reconstruction Teams Follow-on 

Selected Commander Emergency Response Program Contracts. (Placeholder for 

individual audits of selected contracts related to construction and on-construction 

projects 

Selected Gulf Region Division Economic Support Fund Contracts. (Placeholder— 

priorities TBD based on results of project code 8025) 

Selected Iraq Security Forces Fund Contracts. (Placeholder—priorities TBD based 

on other ongoing Iraq Security Forces Fund Contract work) 

Selected Programs’ Cash Controls and Cash Payments 

Selected Security Contracts and Subcontracts. (Placeholder pending developing of 

listing of contracts and subcontracts to develop a sample of contracts and subcontracts to review) 

Selected U.S. Agency for International Development Economic Support Fund Contracts. (Placeholder—priorities TBD based on results of project code 8025) 

Survey of Present Use of Sole Source and Limited Competition in Contracting. 
159 

Triple Canopy Private Security Contracts—DOD. Note: Assignment expected to 

identify agency unique focus on security contracting issues under Section 842 legislation related to Iraq reconstruction as well as identify issues that may require more 

in-depth audit focus on a cross-agency basis once results of this review are considered along with results from other ongoing reviews. 

Washington International and Black and Veatch Contracts—Water Sector. 

ONGOING PROJECTS

Aegis Private Security Contract (8017). Note: Assignment is expected to be used 

to identify DOD/GRD unique security contracting and subcontracting issues that 

will help frame future security contracting reviews, particularly at the subcontractor 

level. 

First 100 Audit Reports—Capping Report. 

Joint SIGIR Department of State Inspector General Review of Spending Under 

Blackwater Contracts (7018). 

Spending and Performance Under Development Alternatives Inc. (DAI) Contracts—Economic Development (7026). 

Spending and Performance Under KBR Contracts—Oil Sector (8003). 

Spending of United States Government Funds in Support of Iraq Reconstruction: 

Fluor-AMEC Joint Venture in the Electric and Public Works/Water Sectors (7022). 

Spending of United States Government Funds in Support of Iraq Reconstruction: 

Research Triangle Institute (7023). 

Spending of United States Government Funds Under Parsons, Inc., Iraq Reconstruction Contracts (S&J) (8006). 

Survey of U.S. Government Contracts Related to the Performance of Security 

Functions in Iraq (8016). Note: Assignment expected to lead to fuller identification 

of contractors and subcontractors—and data needed to identify individual potential 

contract audits to be done under the Section 842 legislation related to Iraq reconstruction—as well as individual reviews of selected program and policy issues as 

may be required. 

U.S. ARMY AUDIT AGENCY

PLANNED PROJECTS

Third Quarter Fiscal Year 2008 Start 

Army Reserve Post—Mobilization Training (A–2008–FFS–0504.000). Objective: (1) 

Are post-mobilization training requirements adequately identified and executed for 

the Army Reserve? (2) Are all necessary unit and individual training requirements 

identified and completed prior to deployment? (3) Did post-mobilization training requirements unnecessarily duplicate pre-mobilization training? 

Contracting Operations at the Joint Contracting Command—Iraq/Afghanistan— 

Kabul (A–2008–ALL–0401.000). Objective: Determine if goods and services acquired 

under contract were properly justified, awarded, and administered. 

Follow up Audit of Logistics Civil Augmentation Program III Audits (A–2008– 

ALL–0321.000). Objective: Determine if the Army implemented agreed to recommendations and corrected the problems identified in the previous audit. 

Long Lead Items for Reset (A–2008–ALM–0102.000). Objective: Are long lead 

items requirements valid and aimed at obtaining materiel just in time to meet the 

Army’s needs? 

National Guard Post—Mobilization Training (A–2008–FFS–0505.000). Objective: 

(1) Are post-mobilization training requirements adequately identified and executed 

for the National Guard? (2) Are all necessary unit and individual training requirements identified and completed prior to deployment? (3) Did post-mobilization training requirements unnecessarily duplicate pre-mobilization training? 

Sustainment of Left Behind Equipment (A–2008–ALM–0247.000). Objective: Did 

the Army effectively and efficiently manage accountability and maintenance of its 

Continental United States left behind equipment? 

Fourth Quarter Fiscal Year 2008 Start 

Class V Retrograde Operations (A–2008–ALL–0397.000). Objective: (1) Determine 

if the Army has adequate processes and procedures in place to properly retrograde 

ammunition from Southwest Asia. (2) Determine if the Army has adequate accountability and visibility over ammunition. 

Contracting Operations at the Joint Contracting Command—Iraq/Afghanistan— 

Fallujah (A–2008–ALL–0400.000). Objective: Determine if goods and services acquired under contract were properly justified, awarded, and administered. 
160 

Controls Over Logistics Civil Augmentation Program—White Property (A–2008– 

ALL–0398.000). Objective: Determine if the Logistics Civil Augmentation Program 

contractor properly managed and accounted for government acquired property. 

Controls Over Vendor Payments—Kuwait (A–2008–ALL–0501.000). Objective: 

Evaluate the controls over vendor payments made on contracts awarded in Kuwait. 

Housing Contracts-Area Support Group—Kuwait (A–2008–ALL–0403.000). Objective: (1) Determine whether the housing program in Kuwait is properly managed. 

(2) Determine if property or assets provided by the Government and acquired by the 

contractor are adequately managed. 

Managing Reset, U.S. Army Pacific (A–2008–FFP–0506.000). Objective: Evaluate 

development and execution of reset requirements. 

Retrograde Exit Strategy (A–2008–ALL–0402.000). Objective: Evaluate the Army’s 

exit strategy to determine if high volume equipment and supply retrograde operations were adequately planned and executable for Southwest Asia. 

First Quarter Fiscal Year 2009 Start 

Single Channel Ground and Airborne Radio System Requirements (A–2008–ALA– 

0468.000). Objective: Determine the proper alignment of Single Channel Ground 

and Airborne Radio System requirements to short-term needs; and modernization 

plans to transition to the Joint Tactical Radio System. 

Second Quarter Fiscal Year 2009 Start 

Controls Over Vendor Pay—Joint Contracting Command (Iraq) (A–2008–ALL– 

0399.000). Objective: Evaluate the controls over vendor payments made on contracts 

awarded in Iraq. 

Government Purchase Card Program in Southwest Asia. Objective: Evaluate the 

effectiveness of management controls over the government purchase card program. 

Specifically, determine if use of purchases cards were in accordance with established 

guidance, and goods and services acquired were adequately accounted for. 

Information Assurance and Infrastructure in Southwest Asia. Objective: Determine whether the Army’s controls and procedures protect and defend the integrity, 

confidentiality and availability of information and information systems during a contingency operation. 

Logistics Civil Augmentation Program Operations IV in Support of Operation Enduring Freedom. Objective: To determine if services awarded under Logistics Civil 

Augmentation Program IV in Afghanistan were managed in a reasonable and costeffective manner. 

Logistics Civil Augmentation Program Operations IV in Support of Operation 

Iraqi Freedom. Objective: To determine if services awarded under Logistics Civil 

Augmentation Program IV in Iraq were managed in a reasonable and cost-effective 

manner. 

Requirements Validation for Continental United States Based Mobilized Soldiers 

(A–2008–FFS–0443.000). Objective: (1) Determine if Soldiers mobilized to support 

contingency operations outside of theater continue to have valid mission essential 

requirements. (2) Determine the force structure impacts of the continued use of Soldiers mobilized to support contingency operations outside of theater operations. 

Reserve Component Mobilization Strategy. Objective: Is the Reserve Component 

training strategy viable to meet Army Force Generation goals and the 12 month mobilization limitations? 

Retrograde Exit Strategy—Continental United States. Objective: Evaluate the 

Army’s exit strategy to determine if high volume equipment and supply retrograde 

operations were adequately planned and executable for Southwest Asia. 

Transition from Logistics Civil Augmentation Program Operations to Sustainment 

Contracts—Iraq. Objective: Determine if the Army implemented best business practices to transition work performed under the Logistics Civil Augmentation Program 

contract to sustainment contracts. 

Unit Training to Defeat Improvised Explosive Devices (A–2008–FFF–0081.000). 

Objective: Are units conducting appropriate training to counter the Improvised Explosive Devices threat? 

Use of Non-Tactical Vehicles—Iraq. Objective: Determine if the Army effectively 

utilized its non-tactical vehicle fleet in a contingency environment. 

ONGOING PROJECTS

Reports Projected Third Quarter Fiscal Year 2008 

Accounting for Seized and Developmental Fund—Iraq Fund Balances (A–2007– 

FFM–0882.000). Objective: (1) What are the residual balances for seized and Developmental Fund—Iraq funds? (2) Are the balances reasonable and ready for transfer? 
161 

Advanced Training for Explosive Ordnance Disposal Soldiers (A–2008–FFD– 

0098.000). Objective: (1) Has Improvised Explosive Device defeat methods been fully 

integrated into advanced training for Explosive Ordnance Disposal Soldiers? (2) Has 

training for new equipment fielded during OIF/OEF been fully integrated into advanced training for Explosive Ordnance Disposal Soldiers? 

Battle Loss Computations (A–2007–ALM–0305.000). Objective: Did the Army 

properly identify and adjust requirements and funding to replace Operational 

losses? 

Billing for Container Detention Penalties (A–2007–ALR–0259.002). Objective: Are 

container detention charges relating to the Global War on Terror billed to the responsible activity? 

Body Armor Requirements (A–2007–FFD–0067.000). Objective: (1) Has the Army 

established adequate quantitative requirements for the procurement of body armor? 

Does the Army have an adequate fielding plan for body armor? 

Contracting Operations at the Joint Contracting Command—Iraq/Afghanistan— 

Baghdad (A–2007–ALL–0887.001). Objective: Determine if goods and services acquired under contract were properly justified, awarded, and administered. 

Contracting Operations at the Joint Contracting Command—Iraq/Afghanistan— 

Victory (A–2007–ALL–0887.002). Objective: Determine if goods and services acquired under contract were properly justified, awarded, and administered. 

Contract Operations U.S. Army Accessions Command—Southwest Asia—Kuwait 

(A–2007–ALL–0329.000). Objective: (1) Evaluate the effectiveness of contracting operations at U.S. Army Contracting Command Southwest Asia-Kuwait. (2) Determine 

whether contracting operations were performed in accordance with appropriate laws 

and regulations. 

Followup Audit of Asset Visibility and Container Management (A–2007–ALL– 

0081.002). Objective: Determine if the U.S. Central Command implemented agreed 

to recommendations and fixed the problems identified in the previous audit report. 

Management and Use of Contractor Acquired Property Under the Logistics Civil 

Augmentation Program Contract—Power Generators (A–2007–ALL–0212.001). Objective: Determine if power generators (property) acquired were effectively managed 

and used under the Logistics Civil Augmentation Program contract. 

Management of Shipping Containers in Southwest Asia—Afghanistan (A–2007– 

ALL–0081.005). Objective: Determine if the Army maintained adequate visibility 

over shipping containers to, within, and from the Southwest Asia Theater of Operations. 

Management of Shipping Containers in Southwest Asia—Continental United 

States (A–2007–ALL–0081.006). Objective: Determine if the Army maintained adequate visibility over shipping containers to, within, and from the Southwest Asia 

Theater of Operations. 

Management of Shipping Containers in Southwest Asia—Kuwait (A–2007–ALL– 

0081.003). Objective: Determine if the Army maintained adequate visibility over 

shipping containers to, within, and from the Southwest Asia Theater of Operations. 

Management of Shipping Containers in Southwest Asia—Summary (A–2007– 

ALL–0081.000). Objective: Determine if the Army maintained adequate visibility 

over shipping containers to, within, and from the Southwest Asia Theater of Operations. 

Retrograde Operations in Southwest Asia—Iraq (A–2006–ALL–0397.000). Objective: (1) Determine whether retrograde operations in the Southwest Asia area of operations are managed in an effective and cost-efficient manner. (2) Determine 

whether adequate accountability and visibility were maintained over retrograded 

materiel and equipment. 

Retrograde Operations in Southwest Asia—Kuwait (A–2007–ALL–0858.000). Objective: (1) Determine whether retrograde operations in the Southwest Asia area of 

operations are managed in an effective and cost-efficient manner. (2) Determine 

whether adequate accountability and visibility were maintained over retrograded 

materiel and equipment. 

Retrograde Operations in Southwest Asia—Kuwait (Rear Support) (A–2007–ALL– 

0858.001). Objective: (1) Determine whether retrograde operations in the Southwest 

Asia area of operations are managed in an effective and cost-efficient manner. (2) 

Determine whether adequate accountability and visibility were maintained over 

retrograded materiel and equipment. 

Temporary Change of Station Orders and Housing for Mobilized Soldiers (A– 

2007–FFS–0917.000). Objective: (1) Are policy and procedures governing the development of Temporary Change of Station orders adequate to ensure valid travel entitlements and proper authorizations? (2) Are policy and procedures governing the approval for payment of travel vouchers adequate to ensure care and prudent use of 
162 

travel funds for mobilized Soldiers? (3) Do Army installations have sufficient and 

cost-effective lodging to support Soldiers mobilizing to the National Capital Region? 

Theater Maintenance Processes in Europe (A–2008–ALE–0071.000). Objective: 

Were theater maintenance processes structured and administered to meet reset 

goals and provide the best value? 

Use of Role Players at Combat Training Centers (A–2007–FFF–0415.000). Objective: (1) Is the Army’s process for acquiring role-players for the Combat Training 

Centers effective and efficient? (2) Is the logistical support provided for role-players 

at the Combat Training Centers consistent and cost-effective? (3) Does the Army 

adequately manage its role-players at the Combat Training Centers? 

Reports Projected Fourth Quarter Fiscal Year 2008 

Accountability of Contractors on the Battlefield (A–2007–FFS–0553.000). Objective: (1) Has the Army established direct authority and identified the roles and responsibilities for accountability of contractors on the battlefield? (2) Does the Synchronized Predeployment and Operational Tracker provide accurate, complete and 

relevant information for functional management of deployed Army contractor assets 

in theater? (3) Are the existing and proposed new processes and procedures for accounting for Army contractors within Iraq and Kuwait adequate? 

Contracting Operations at the Joint Contracting Command—Iraq/Afghanistan— 

Bagram (A–2008–ALL–0320.001). Objective: Determine if goods and services acquired under contract were properly justified, awarded, and administered. 

Contracting Operations at the Joint Contracting Command—Iraq/Afghanistan— 

Balad (A–2008–ALL–0319.000). Objective: Determine if goods and services acquired 

under contract were properly justified, awarded, and administered. 

Establishing Rates for Shipping Containers (A–2007–ALR–0259.001). Objective: 

Are customer billing rates for break-bulk and container shipments based on appropriate costs? 

Follow Up of Offline Purchases (A–2008–ALL–0466.000). Objective: Determine if 

the Army implemented agreed to recommendations and corrected the problems identified in the previous audit. 

Government Property Provided to Contractors—Kuwait Base Operations (A– 

2008–ALL–0204.000). Objective: Determine whether the Army has adequate management and visibility over Government property provided to contractors for base 

support operations. 

Impact of Mine Resistant Ambush Protected Vehicle Acquisitions on Other Systems (A–2007–ALA–0978.000). Objective: Did the Army adequately plan, assess, and 

adjust its requirements for new and existing vehicle systems impacted by the acquisition and deployment of the Mine Resistant Ambush Protected vehicle system? 

Operational Purchases of Information Technology Equipment, Systems and Services—Forces Command (A–2005–FFI–0487.000). Objective: (1) Were controls over 

operational purchases and leases of information technology and communications 

equipment, systems, and services by U.S. Army Forces Command deploying units 

effective and operating? (2) Did units utilize appropriate funding sources for information technology and communications equipment purchases made in support of deployments? 

Operational Purchases of Information Technology Equipment, Systems and Services—Iraq and Kuwait (A–2005–FFI–0487.001). Objective: Were controls over purchases and leases of information technology and communications equipment, systems, and services in place and operating effectively for units deployed in support 

of Operation Iraqi Freedom? 

Reset Metrics (A–2007–ALM–0733.000). Objective: Did the Army have adequate 

processes to accurately report the status of reset and associated funding to Congress? 

U.S. Army Corps of Engineer Contract Functions in Iraq (A–2008–ALL–0318.000). 

Objective: (1) Determine if contract requirements were correctly identified and resulted in acquisitions that met the needs of the Army. (2) Determine if deliverables 

were monitored to ensure products and services were provided in accordance with 

the terms of the contract. (3) Determine if contract closeout practices for terminated 

contracts were adequate and in the best interest of the Army. (4) Determine if contract award fee practices were adequate. 

Reports Projected First Quarter Fiscal Year 2009 

Army Reserve Pre-mobilization Training (A–2008–FFS–0101.000). Objective: (1) 

Are pre-mobilization training requirements adequately identified and executed for 

the Army Reserve? (2) Are all necessary unit and individual training requirements 

completed prior to mobilization? (3) Are training requirements maximized at premobilization in order to minimize post-mobilization training? 
163 

Automatic Reset Items (A–2008–ALM–0312.000). Objective: (1) Is the Automatic 

Reset Induction effectively supporting equipment requirements in the Army Force 

Generation model? 

Contracts for Reset (A–2007–ALM–0306.000). Objective: Did the Army have adequate oversight of field level reset requirements to effectively plan for contract 

maintenance support? 

National Guard Pre-mobilization Training (A–2008–FFS–0353.000). Objective: (1) 

Are pre-mobilization training requirements adequately identified and executed for 

the National Guard? (2) Are all necessary unit and individual training requirements 

completed prior to mobilization? (3) Are training requirements maximized at premobilization to minimize post-mobilization training? 

Property Book Unit Supply Enhanced, 3rd Infantry Division (A–2008–ALR– 

0307.000). Objective: Determine if units used the Property Book Unit Supply Enhanced system to properly account for equipment and maintain accurate data. 

Property Book Unit Supply Enhanced, 10th Mountain Division (A–2008–ALR– 

0360.000). Objective: Determine if units used the Property Book Unit Supply Enhanced system to properly account for equipment and maintain accurate data. 

Property Book Unit Supply Enhanced, I Corps (A–2008–ALR–0357.000). Objective: Determine if units used the Property Book Unit Supply Enhanced system to 

properly account for equipment and maintain accurate data. 

Property Book Unit Supply Enhanced; Summary Report (A–2008–ALR–0039.000). 

Objective: Determine if units used the Property Book Unit Supply Enhanced system 

to properly account for equipment and maintain accurate data. 

Rapid Fielding Initiative (A–2007–ALA–0410.000). Objective: Validate: rapid fielding initiative requirements; the adequacy of the process used to resource rapid fielding initiative acquisitions; and plans to institutionalize rapid fielding initiative. 

Use of Role Players Armywide (less Combat Training Centers) (A–2008–FFF– 

0148.000). Objective: (1) Is the Army’s process for acquisition and use of Role-players for training cost-effective? (2) Is the logistical support provided to Role-Players 

consistent and cost effective? (3) Is the oversight and administration of Role-Player 

contractors adequate? 

Reports Projected Second Quarter Fiscal Year 2009 

Army Foreign Language Program—Contracting (A–2007–ZBI–0344.003). Objective: (1) Determine if the Army Foreign Language Program adequately identifies 

and receives contracted linguists to support mission requirements. (2) Determine if 

procedures and practices for awarding and justifying language contracts were adequate and in the best interest of the Army. 

Directorate of Logistics Workload Supporting Reset (A–2008–ALM–0311.000). Objective: Did Army garrisons have an adequate process in place to identify and meet 

field level reset requirements in support of the Army Force Generation model? 

Management of the Prepositioned Fleet at Combat Training Centers (A–2008– 

FFF–0044.000). Objective: (1) Are the pre-positioned fleets adequately configured? 

(2) Are rotational units effectively using the pre-positioned fleets? (3) Are the maintenance costs for the pre-positioned fleets reasonable? 

AIR FORCE AUDIT AGENCY

PLANNED PROJECTS

Third Quarter Fiscal Year 2008 Start 

AFCENT Deployed Locations Information Technology Equipment Accountability 

and Control (Project Number F2008–FD3000–0418). Objective: To evaluate United 

States Central Command Air Forces (AFCENT) information technology equipment 

accountability and control. Specifically, evaluate equipment requirements determination; accountability and control; and disposal. 

AFCENT Management of Controlled Drugs (Project Number F2008–FD2000– 

0411). Objective: To determine whether medical personnel properly manage controlled drugs. Specifically, determine whether personnel properly receive, issue, 

store, and protect controlled drugs. 

AFCENT Area of Responsibility Construction (Project Number F2008–FD1000– 

0419). Objective: To determine if AFCENT area of responsibility construction efficiently and effectively meets mission requirements. Specifically, determine if construction projects provide in-theater benefits and meet desired mission capabilities; 

personnel utilize existing, temporary, or movable facilities when possible; and personnel properly program, authorize, and document operations and maintenance 

funding for construction. 
164 

ONGOING PROJECTS

Reports Projected Third Quarter Fiscal Year 2008 

AFCENT Aerial Port Operations (Project Number F2007–FD3000–0725). Objective: To determine whether Air Force personnel effectively managed aerial port operations within the CENTCOM area of responsibility. Specifically, determine whether Air Force personnel efficiently utilized airlift capacity, effectively managed cargo 

and passenger travel reimbursements in the area of responsibility, and effectively 

managed cargo and passenger movement. 

AFCENT Civil Engineering Material Acquisition (Project F2007–FD1000–0830). 

Objective: To determine whether AFCENT effectively managed Civil Engineering 

material at deployed locations. Specifically, determine whether Civil Engineering 

personnel properly approved material purchases, obtained the most cost effective 

materials, and accounted for materials. 

Reports Projected Fourth Quarter Fiscal Year 2008 

AFCENT Munitions Management (Project Number F2007–FD3000–0777). Objective: To determine whether Air Force personnel properly manage munitions in the 

AFCENT Area of Responsibility. Specifically, determine whether personnel (a) properly account for, store and secure munitions inventories; and (b) accurately forecast 

munitions requirements. 

AFCENT Deployed Locations War Reserve Materiel (Project Number F2007– 

FD3000–0781). Objective: To determine whether AFCENT personnel effectively 

manage war reserve materiel in the AFCENT Area of Responsibility. Specifically, 

determine whether AFCENT personnel accurately maintain war reserve materiel 

quantities on-hand to meet anticipated mission needs; appropriately use war reserve 

materiel assets for intended purposes; and properly manage war reserve materiel 

inventory by accounting for, maintaining, marking and storing on-hand war reserve 

materiel assets. 

Pallet Management (Project F2007–FC4000–0034). Objective: To evaluate pallet 

management effectiveness. Specifically, evaluate requirements computation accuracy 

and retrograde effectiveness. 

DEFENSE CONTRACT AUDIT AGENCY

DCAA’s services include professional advice to acquisition officials on accounting 

and financial matters to assist them in the negotiation, award, administration and 

settlement of contracts. 

Customer Requested Audits: 

Many of DCAA’s audits are performed at the request of contracting officers and 

are most commonly performed during the negotiation and award phase. DCAA has 

no control over the number or timing of these audits and must immediately respond 

to the audit requests as its top priority. DCAA issued 57 of these reports between 

October 2007 and March 2008. The major categories of audit services are described 

below. 

Price Proposals.—Audits of price proposals submitted by contractors in connection 

with the award, modification, or re-pricing of Government contracts or subcontracts. 

Agreed-Upon Procedures Price Proposal.—Evaluations of specific areas, including 

actual labor and overhead rates and/or cost realism analysis, requested by customers in connection with the award of Government contracts or subcontracts. 

Other Special Requested Audits.—Audit assistance provided in response to special 

requests from the contracting community based on identified risks. 

Preaward Accounting Surveys.—Preaward audits to determine whether a contractor’s accounting system is acceptable for segregating and accumulating costs under 

Government contracts. 

Contract Required Audits: 

DCAA’s audits of cost-reimbursable contracts represent a continuous effort from 

evaluation of proposed prices to final closeout and payment. DCAA is able to plan 

the extent and timing of most of the audits performed after the initial contract 

award. Audits of contractor business system internal controls and preliminary testing of contract costs are carried out to provide a basis for provisional approval of 

contractor interim payments and early detection of deficiencies. Comprehensive contract cost audits are performed annually throughout the life of the contract and are 

used by the contracting activity to adjust provisionally approved interim payments 

and ultimately to negotiate final payment to the contractor. DCAA issued 81 of 

these reports between October 2007 and March 2008. As of April 1, 2008 DCAA had 

285 audits in process and another 68 audits planned for fiscal year 2008. 
165 

Description of audit area 

Fiscal year 2008 

In Process Planned 

Incurred Cost 1 .......................................................................................................... 70 6 

Labor Timekeeping 2 .................................................................................................. 37 13 

Internal Controls 3 ..................................................................................................... 63 20 

Purchase Existence and Consumption 4 ................................................................... 22 6 

Cost Accounting Standards 5 .................................................................................... 62 17 

Other 6 ........................................................................................................................ 31 6 

Total .............................................................................................................. 285 68 

1 Incurred Cost.—Audits of costs charged to Government contracts to determine whether they are allowable, allocable, and reasonable. 2 Labor Timekeeping.—Audits to determine if the contractor consistently complies with established timekeeping system policies 

and procedures for recording labor costs. 3 Internal Controls.—Audits of contractor internal control systems relating to the accounting and billing of costs under Government contracts. 4 Purchase Existence and Consumption.—The physical observation of purchased materials and services and related inquiries regarding their documentation and verification of contract charges. 5 Cost Accounting Standards.—Audits of Contractor Disclosure Statements and compliance with Cost Accounting Standards. 6 Other.—Significant types of other audit activities include compliance with the Truth in Negotiations Act, and audits of economy 

and efficiency of contractor operations. 

REPORT NO. D–2008–086 

JULY 18, 2008 

INSPECTOR GENERAL, UNITED STATES DEPARTMENT OF DEFENSE

CHALLENGES IMPACTING OPERATIONS IRAQI FREEDOM AND ENDURING FREEDOM REPORTED BY MAJOR OVERSIGHT ORGANIZATIONS BEGINNING FY 2003 THROUGH FY 

2007 

ADDITIONAL INFORMATION AND COPIES

To obtain additional copies of this report, visit the Web site of the Department 

of Defense Inspector General at http://www.dodig.mil/audit/reports or contact the 

Secondary Reports Distribution Unit at (703) 604–8937 (DSN 664–8937) or fax (703) 

604–8932. 

SUGGESTIONS FOR AUDITS

To suggest ideas for or to request future audits, contact the Office of the Deputy 

Inspector General for Auditing at (703) 604–9142 (DSN 664–9142) or fax (703) 604– 

8932. Ideas and requests can also be mailed to: ODIG–AUD (ATTN: Audit Suggestions), Department of Defense Inspector General, 400 Army Navy Drive (Room 801), 

Arlington, VA 22202–4704. 

ACRONYMS AND ABBREVIATIONS

AAA—Army Audit Agency 

AFAA—Air Force Audit Agency 

CENTCOM—U.S. Central Command 

CERP—Commanders’ Emergency Response Program 

DAU—Defense Acquisition University 

DCAA—Defense Contract Audit Agency 

DCMA—Defense Contract Management Agency 

DFAS—Defense Finance and Accounting Service 

DOD OIG—DOD Office of Inspector General 

GAO—U.S. Government Accountability Office 

GWOT—Global War on Terror 

LOGCAP—Logistics Civil Augmentation Program 

OEF—Operation Enduring Freedom 

OIF—Operation Iraqi Freedom 

OUSD(AT&L)—Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics 

OUSD(C)—Office of the Under Secretary of Defense (Comptroller) 

SIGIR—Special Inspector General for Iraq Reconstruction 

SPOT—Synchronized Predeployment and Operational Tracker 

UCMJ—Uniform Code of Military Justice 
166 

INSPECTOR GENERAL, 

DEPARTMENT OF DEFENSE, 

ARLINGTON, VIRGINIA 22202–4704, JULY 18, 2008. 

MEMORANDUM FOR DISTRIBUTION: 

SUBJECT: Report on Challenges Impacting Operations Iraqi Freedom and Enduring Freedom Reported by Major Oversight Organizations Beginning FY 2003 

Through FY 2007 (Report No. D–2008–086) 

We are providing this report for your information and use. We did not issue a 

draft report because this report summarizes material that was already published. 

This report contains no recommendations; therefore, no written response to this report is required. 

Questions should be directed to Mr. Paul Granetto at (703) 604–8905 or Mr. J.T. 

‘‘Mickey’’ McDermott at (703) 604–8903. The team members are listed inside the 

back cover. 

MARY L. UGONE, 

Deputy Inspector General for Auditing. 

Distribution: 

Secretary of Defense 

Deputy Secretary of Defense 

Secretary of the Army 

Secretary of the Navy 

Secretary of the Air force 

Under Secretary of Defense for Acquisition, Technology, and Logistics 

Director, Defense Procurement and Acquisition Policy 

Under Secretary of Defense for Personnel and Readiness 

Under Secretary of Defense for Policy 

Under Secretary of Defense (Comptroller)/Chief Financial officer 

Commander, U.S. Central Command 

Commander, Multi-National force—Iraq 

Commander, Multi-National Security Transition Command—Iraq 

Commander, Joint Contracting Command—Iraq/Afghanistan Commander, Combined Joint Task Force—101 

Commander, Combined Security Transition Command—Afghanistan Chief, National Guard Bureau 

Assistant Secretary of Defense for Networks and Information Integration/DOD 

CIO 

Assistant Secretary of the Air Force (Financial Management and Comptroller) 

Director, Joint Staff 

Director, Defense Contract Audit Agency 

Director, Defense Contract Management Agency 

Director, Defense Finance and Accounting Service 

Director, Defense Logistics Agency 

Director, Defense Security Cooperation Agency 

Naval Inspector General 

Auditor General, Department of the Army 

Auditor General, Department of the Navy 

Auditor General, Department of the Air force 

Special Inspector General for Iraq Reconstruction 

Office of Management and Budget 

Government Accountability Office 

RESULTS IN BRIEF: CHALLENGES IMPACTING OPERATIONS IRAQI FREEDOM AND ENDURING FREEDOM REPORTED BY MAJOR OVERSIGHT ORGANIZATIONS BEGINNING

FISCAL YEAR 2003 THROUGH FISCAL YEAR 2007 

WHAT WE DID

We summarized 302 Operations Enduring and Iraqi Freedom related audit reports and testimonies issued by the Defense oversight community and GAO beginning fiscal year 2003 through fiscal year 2007. Based on the content of the reports 

and testimonies, we categorized the reports and testimonies into four areas: Contract Management, Logistics, Financial Management, and Other. 

Within the four categories, we retrospectively identified systemic challenges. We 

then prospectively summarized corrective actions taken and still pending, as well 

as other management initiatives taken or underway, within the identified functional 

areas that impact DOD operations supporting Operations Enduring and Iraqi Freedom. 
167 

WHAT WE FOUND

Over the course of conducting Operations Enduring and Iraqi Freedom, DOD experienced, at times, significant and recurring challenges in the following functional 

areas: 

—Contract Management: Contract Oversight and Resource Limitations; 

—Logistics: Asset Accountability, Visibility, and Equipping the Force; and 

—Financial Management: Accuracy of Cost Reporting and Accountability. 

Further, there were challenges that were common in more than one of the functional areas. Specifically, shortfalls in DOD training and policy and procedures were 

challenges in more than one functional area. 

DOD ACTION TAKEN

DOD took action to resolve Operations Enduring and Iraqi Freedom Contract 

Management, Logistics, and Financial Management, and ‘‘Other’’ challenges reported by the oversight organizations. 

—From fiscal year 2003 through fiscal year 2007, the Defense oversight community and GAO issued 983 recommendations to improve DOD operations in Operations Enduring and Iraqi Freedom. 

—DOD has resolved most of the recommendations as of September 30, 2007. We 

plan to report on progress made after September 30, 2007, in a future report. 

DOD ONGOING INITIATIVES

Continuing action is underway to support various initiatives within DOD to address the challenges DOD faces for operations supporting Operations Enduring and 

Iraqi Freedom. For example, DOD has: 

—Increased oversight and accountability over deployed contractors and over assessing the needs of its contracting workforce in expeditionary operations; 

—Established an Executive Director to provide program management oversight 

over contractor logistical support; and 

—Deployed financial support teams to assist the theater Commanders accountability over funds. 

The DOD oversight community has restructured its workforce models and developed a comprehensive oversight plan for Operations Enduring and Iraqi Freedom 

which includes logistical support, financial management, and contract administration. 

INTRODUCTION

OBJECTIVES

The overall audit objective was to summarize Operation Enduring Freedom (OEF) 

and Operation Iraqi Freedom (OIF) related audit reports and testimonies issued beginning fiscal year 2003 through fiscal year 2007 by the Defense oversight community. This community includes the DOD Office of Inspector General (DOD OIG), the 

Army Audit Agency (AAA), the Naval Audit Service, the Air Force Audit Agency 

(AFAA), the Special Inspector General for Iraq Reconstruction (SIGIR) and the Government Accountability Office (GAO). Retrospectively, we identified systemic challenges and prospectively, reported on the corrective actions taken and still pending 

as well as other management initiatives within the identified functional areas to improve DOD operations. See Appendix A for a discussion of the scope and methodology and Appendix B for the OEF and OIF related reports and testimonies we included in developing this summary. See Appendix C for definitions used to categorize OEF and OIF related report information. 

BACKGROUND

Global War on Terror 

The United States is engaged in a comprehensive effort to protect and defend the 

homeland and defeat terrorism. After the terrorist attacks of September 11, 2001, 

military operations began Operation Enduring Freedom, which takes place principally in and around Afghanistan, but also covers operations in the Horn of Africa, 

the Philippines, and elsewhere. In 2003, DOD began Operation Iraqi Freedom, 

which takes place in and around Iraq. According to GAO estimates, as of December 

2007, DOD total cumulative reported obligations for the Global War on Terror 

(GWOT) were about $527 billion, of which about $406.2 billion is for operations for 
168 

1GAO Report No. 08–557R. 

2For fiscal year 2007, the Department has chosen to produce an alternative to the consolidated Performance and Accountability Report called the Agency Financial Report. 3Quadrennial Defense Review, February 6, 2006. 

Operation Iraqi Freedom, and about $92.9 billion is for operations for Operation Enduring Freedom.1

Systemic Challenges Facing the Department 

This report summarizes the most prevalent of the systemic management and performance challenges facing the Department of Defense as identified in the audit reports issued fiscal years 2003 through 2007. Annually, the DOD OIG summarizes 

what it considers the most serious management and performance challenges. The 

DOD OIG summary and a brief assessment of the Department’s progress in addressing those challenges are reported in the DOD Agency Financial Report.2 In the 

fiscal year 2007 Agency Financial Report, the DOD OIG identified and reported, as 

it has in previous years, contract management and financial management as two 

challenge areas that have an impact on OEF and OIF as well as on GWOT. 

Contract Management.—In the fiscal year 2007 Agency Financial Report, the DOD 

OIG reported that the Department continued to experience the management challenge to provide required materiel and services that are superior in performance, 

high in quality, sufficient in quantity, and within the time frames needed by the 

warfighter while balancing the cost concerns for the taxpayer. With the war, the volume and complexity of purchases have obviously increased. DOD spending in fiscal 

year 2007 (with supplementals) exceeded $600 billion, which is more than double 

the spending from fiscal year 2000. The sheer number of contracting actions and the 

pressures on contracting officials to award procurements faster make the challenge 

of correcting the problems more difficult. 

Although the problems encountered in the contracting process are not unique to 

the wartime environment, the risk of critical gaps in the contracting process increases during contingency operations. The challenge in a wartime environment is 

to mitigate these gaps. Gaps occurred when: user requirements were not met, funds 

were not spent appropriately and were unaccounted for, goods and services were not 

properly accounted for, delivery of goods and services were not made properly, individuals involved in the acquisition process lacked integrity, and adequate documentation was not retained or prepared. 

Financial Management.—In the fiscal year 2007 Agency Financial Report, the 

DOD OIG stated that the Department faced financial management challenges that 

are complex and long-standing, and pervade virtually all its business operations. 

The DOD OIG had previously identified and reported on several material control 

weaknesses that reflect some of the pervasive and long-standing financial management issues faced by DOD. These weaknesses, which also affect the safeguarding 

of assets and proper use of funds and impair the prevention and identification of 

fraud, waste, and abuse, include the following: Inventory and Government–Furnished material and contractor acquired material. 

Logistics.—In the fiscal year 2005 Performance and Accountability Report, the 

DOD OIG stated the challenge of logistics is to provide the right force the right personnel, equipment, and supplies in the right place, at the right time, and in the 

right quantity, across the full range of military operations. The 2006 Quadrennial 

Defense Review Report discussed efforts to improve visibility into supply chain logistics costs and performance. It also stated that DOD sought to: 

—establish a Defense Coalition Support Account to fund and, as appropriate, 

stockpile routine defense articles such as helmets, body armor, and night vision 

devices for use by coalition partners; 

—expand Department authority to provide logistics support, supplies, and services 

to allies and coalition partners to enable coalition operations with U.S. forces; 

—expand Department authority to lease or lend equipment to allies and coalition 

partners for use in military operations in which they are participating with U.S. 

forces; and 

—expand the authorities of the Departments of State and Defense to train and 

equip foreign security forces best suited to internal counterterrorism and 

counter-insurgency operations. 

The 2006 Quadrennial Defense Review Report also outlined initiatives to address 

challenges such as Radio Frequency Identification technologies, which will play a 

key role in achieving the Department’s vision for implementing knowledge-enabled 

logistics support to the warfighter through automated asset visibility and management.3
169 

4GAO Report No. 07–310, ‘‘High-risk Series: An Update,’’ January 2007. 

5 Reports and testimonies that were identified as outside Contract Management, Logistics, and 

Financial Management functional areas were categorized as ‘‘Other.’’ 

High-Risk Areas 

Since 1990, the GAO has periodically reported on Government programs and operations that it identifies as ‘‘high risk.’’ These efforts bring focus to a targeted list 

of major challenges that impede effective Government and cost the Government billions of dollars each year. Since 1990, GAO has identified DOD Contract Management, Logistics, and Financial Management as high-risk areas. Historically, highrisk areas have been so designated because of traditional vulnerabilities related to 

their greater susceptibility to fraud, waste, abuse, and mismanagement. As the 

high-risk program has evolved, the high-risk designation draws attention to areas 

associated with broad-based transformations needed to achieve greater economy, efficiency, effectiveness, accountability, and sustainability of selected key Government 

programs and operations. The DOD has eight of its own high-risk areas and shares 

responsibility for six Government-wide high-risk areas.4

Oversight 

The Defense oversight community and GAO issued 314 reports and testimonies 

between October 1, 2002, and September 30, 2007, that support OEF and OIF. Of 

the 314 reports and testimonies, 12 reports are classified and not included in this 

report. 

We reviewed the 302 reports and testimonies (246 reports and 56 testimonies) and 

categorized them into three main functional areas (Contract Management, Logistics, 

and Financial Management) 5 based on our review of the pertinent areas covered in 

the reports and the subsequent recommendations. We identified 983 recommendations that addressed one or more functional areas to improve operations that support OEF and OIF. Table 1 shows the number of reports and recommendations 

within the three main functional areas. 

TABLE 1.—OEF AND OIF RELATED REPORTS AND TESTIMONIES(FISCAL YEAR 2003-FISCAL YEAR 

2007) 

Functional Area 

Number of Reports and Testimonies 1

Recommendations 

Contract Management ............................................................................................................. 103 302 

Logistics .................................................................................................................................. 119 332 

Financial Management ............................................................................................................ 133 264 

Other ........................................................................................................................................ 73 119 

1 The total will exceed 302 because reports and testimonies may cover multiple function areas. 

Since fiscal year 2003, the Defense oversight community and GAO have steadily 

increased their oversight of OEF and OIF operations (see Table 2). The oversight 

community has provided a balanced review of Contract Management, Logistics, and 

Financial Management areas supporting OEF and OIF. 
170 

Recommendations 

As of September 30, 2007, sufficient actions have been taken on 699 of the 983 

recommendations (71 percent) and these recommendations are considered completed. We did not report on any recommendations that were closed after September 

30, 2007, but will do so in a future report. Of the 284 recommendations open as 

of September 30, 2007, 55 recommendations were to agencies and activities outside 

of DOD. Table 4 shows the overall status of recommendations as of September 30, 

2007. 

Initiatives 

In addition to the actions on OEF and OIF related recommendations, DOD has 

taken other actions, whether required by public law or self-initiated, to address 

challenges in Operations Enduring and Iraqi Freedom. For the purpose of this report, we focus on discussing initiatives that DOD has reported to us that we believe 

should directly help overcome DOD challenges in Contract Management, Logistics, 

and Financial Management. 

CHAPTER 1. SYSTEMIC CHALLENGES DURING WARTIME CONTINGENCY OPERATIONS

FOR CONTRACT MANAGEMENT, LOGISTICS, AND FINANCIAL MANAGEMENT

Over the course of conducting Operations Enduring and Iraqi Freedom, DOD experienced significant and recurring systemic challenges in the following functional 

areas: 

—Contract Management: Contract Oversight and Resource Limitations; 

—Logistics: Asset Accountability, Visibility, and Equipping the Force; and 

—Financial Management: Accuracy of Cost Reporting and Accountability. 

Further, systemic challenges were common in more than one of the functional 

areas. Specifically, shortfalls in training and in policy and procedures were systemic 

challenges reported in more than one functional area. The Defense oversight community and GAO have identified hundreds of millions of dollars in assets that DOD 

was unable to demonstrate adequate accountability for as well as more than a billion dollars in inaccurate cost reporting. 

CONTRACT MANAGEMENT

DOD has experienced challenges since fiscal year 2003 in providing an adequate 

number of personnel to perform contractor oversight and in providing adequate 

training to the personnel that were performing oversight of contractors supporting 

Operations Enduring and Iraqi Freedom. The DOD OIG, AAA, AFAA, SIGIR, and 
171 

6GAO Report No. 07–145. 

7DOD OIG Report No. D–2004–057. 

8GAO Report No. 04–605. 

9 AFAA Report No. F–2007–0005–FD3000. 

10SIGIR Report No. 07–001. 11DOD Instruction 3020.41, ‘‘Contractor Personnel Authorized to Accompany the U.S. Armed 

Forces,’’ October 2005. 12GAO Report No. 07–145. 13DOD OIG Report No. D–2004–057. 

GAO all reported on the challenges DOD has experienced with the lack of adequate 

oversight over contractors in both OEF and OIF. As reported by the DOD oversight 

community and GAO, DOD has taken action since fiscal year 2003 to improve its 

guidance on the use of contractors to support deployed forces. However, the DOD 

oversight community and GAO continue to report that long-standing problems continue to hinder DOD oversight of contractors at deployed locations. 

Contract Oversight Personnel 

DOD has experienced challenges in providing an adequate number of personnel 

to perform contractor oversight for OEF and OIF. As reported by GAO, a lack of 

adequate contract oversight personnel was a DOD-wide problem; the problem was 

more severe for more demanding contracting environments such as Iraq and Afghanistan, and it presented unique difficulties. Without an adequate number of personnel to perform oversight of the contractors, DOD increases its risks that contractors are not meeting contract requirements.6

For example, the DOD OIG identified the lack of adequate contractor surveillance in fiscal year 2003 for 13 of 24 contracts, valued at $122 million. These contracts 

were awarded by the Defense Contracting Command—Washington to support the 

Office of Reconstruction and Humanitarian Assistance.7 In fiscal year 2004, the 

GAO also identified that the lack of adequate staffing presented challenges to several agencies and resulted in inadequate contractor oversight. GAO stated that although agencies took action, some of these early contract administration issues were 

not fully resolved.8 In fiscal year 2007, AFAA identified that U.S. Air Forces Central 

personnel at three of four locations in Southwest Asia did not adequately monitor 

contract performance for seven (out of ten) contracts valued at $27.4 million.9 SIGIR 

discussed, in fiscal year 2007, the difficulty in recruiting qualified Contracting Officer’s Technical Representatives for appointment in support of Logistics Civil Augmentation Program (LOGCAP) Task Order 130. During the SIGIR audit, the Defense Contract Management Agency (DCMA) did appoint 18 Contracting Officer’s 

Technical Representatives to oversee the task order.10 GAO also stated in fiscal year 

2007 that although DOD took action to improve its guidance on the use of contractors to support deployed forces since fiscal year 2003, a number of long-standing 

problems continued to hinder DOD management and oversight of contractors at deployed locations. Although DOD issued the first DOD-wide instruction 11 on the use 

of contractors to support deployed forces, which addressed some of the problems that 

were previously raised, there were concerns that DOD Components were not implementing this instruction. Ultimately, while DOD new guidance was a good first step 

towards improving the Department’s management and oversight of contractors, the 

Department continued to face problems, including: 

—limited visibility over contractors and contractor activity, 

—lack of adequate contract oversight personnel, 

—limited collection and sharing of institutional knowledge, and 

—limited or no information on contractor support in predeployment training.12

As stated by the DOD OIG, appropriate Government surveillance of contractor 

performance is required to give reasonable assurance that efficient methods and effective cost controls are being used.13

Contract Training 

DOD experienced challenges to provide adequate training necessary for contract 

oversight personnel to perform their respective oversight functions. The DOD OIG 

reported that without adequate contract training for personnel assigned oversight 

duties, DOD cannot be assured that it paid fair and reasonable prices for goods and 

services purchased. For example, the DOD OIG identified the lack of adequate 

training of personnel in fiscal year 2003 at the Defense Contract Command—Washington. Specifically, Defense Contract Command—Washington personnel, who did 

not have contract backgrounds or contract-related training, inappropriately approved 13 out of 24 contracts without validating the cost data. The DOD OIG determined that Defense Contract Command—Washington personnel approved and 

signed $7 million invoiced by a contractor without verifying whether the Govern-
172 

14DOD OIG Report No. D–2004–057. 15 AAA Report No. A–2006–0018–ALL. 16 AFAA Report No. F–2007–0005–FD3000. 17 AFAA Report No. F–2004–0060–FDE000. 18GAO Report No. 04–305R. 19 AFAA Report No. F–2005–0058–FDE000. 20 AAA Report No. A–2006–0188–ALL. 21 AFAA Report No. F–2007–0004–FC4000. 22 AAA Report No. A–2007–0061. 

ment received the material.14 In another example, in fiscal year 2006, AAA identified that although the LOGCAP Support Unit had taken sufficient actions to improve training and its effectiveness, the training process did not provide enough 

practical exercises on determining and validating requirements and on preparing 

Statements of Work and Independent Government Cost Estimates.15 In fiscal year 

2007, AFAA identified that quality assurance personnel were not provided necessary 

training before they assumed quality assurance responsibilities.16

LOGISTICS

Before OEF and OIF, DOD experienced challenges in logistics business processes 

capabilities and responsibilities. Specifically, DOD logistics policies and procedures 

were inadequate to fully support the OEF and OIF contingency operations. A lack 

of clear and focused policies and procedures led to inconsistencies and inefficiencies 

including challenges in accountability and visibility over DOD assets and equipment 

destined for the sovereign governments of Afghanistan and Iraq. 

The Defense oversight community and GAO have all reported on the challenges 

DOD has experienced with the logistics operations supporting OEF and OIF. The 

Defense oversight community and GAO have identified more than a billion dollars 

in assets that DOD was unable to demonstrate adequate accountability or visibility 

over. Since the 1990s, DOD supply chain management has been identified as a highrisk area because of high inventory levels and a supply system that was not responsive to the needs of the warfighter. 

Logistics Accountability and Visibility 

DOD could not demonstrate adequate accountability for more than $1.3 billion in deployed assets and could not demonstrate visibility over $318 million in assets as 

reported by the Defense oversight community. Accounting for location and disposition of assets, including munitions-related assets, was a challenge during OEF and 

OIF. Logistics accountability includes recommendations made to improve establishing or maintaining records to identify, acquire, account for, control, store, or 

properly dispose of assets. 

ASSET ACCOUNTABILITY

DOD experienced challenges in demonstrating accountability over DOD, Government-Furnished, and Iraq and Afghanistan assets. The DOD oversight community 

and GAO identified about $1.3 billion in assets that DOD did not demonstrate adequate accountability over. 

DOD Assets.—In fiscal year 2004, AFAA identified that an air expeditionary 

wing’s accountability records did not include all weapons on hand, did not reflect 

accurate serial numbers for weapons on hand, but included weapons that were not 

on hand.17 In fiscal year 2004, GAO identified a $1.2 billion discrepancy in supplies 

sent to theater versus what DOD theater personnel reported.18 In fiscal year 2005, 

AFAA discussed another air expeditionary wing that could not locate 14 equipment 

assets valued at $8.7 million and did not record more than 400 on-hand equipment 

assets on accountable records.19 In fiscal year 2006, AAA found that property 

records maintained by division units did not always accurately account for left-behind equipment and equipment returning from OEF and OIF. AAA also found that 

the property book records for 99 out of 879 vehicles contained discrepancies.20 Again 

in fiscal year 2007, AFAA identified that the Air Force did not adequately account 

for deployed assets and that estimated activities Air Force-wide lost accountability 

of 5,800 deployed assets valued at $108 million.21 In fiscal year 2007, AAA found 

that 8 percent of sampled returning equipment was not verified as accounted for on 

unit property records because some Army Reserve unit and installation personnel 

did not follow established procedures and best practices to process equipment transactions during the mobilization, deployment, demobilization, and redeployment process.22 The lack of asset accountability impeded DOD visibility over deployed assets. 

Government-Furnished Property and Equipment.—Contractors in theater did not 

always properly account for Government-Furnished property and equipment. In fis-
173 

23 AAA Report No. A–2006–0083–ALL. 24GAO Report No. 07–308SP. 25GAO Report No. 07–711. 26SIGIR Report No. 06–033. 27GAO Report No. 07–444. 28 AAA Report No. A–2006–0188–ALL; AAA Report No. A–2007–0061. 

cal year 2006, AAA identified a systemic problem with the accountability and visibility of Government-Furnished equipment that the Army transferred to the 

LOGCAP contractor. Specifically, the contractor’s property administrator stated he 

did not notify the Army when they removed an asset from their property book.23

Government of Iraq and Afghanistan Assets.—DOD had a challenge accounting for 

U.S.-provided equipment. Specifically, GAO reported that DOD and Multi-National 

Force—Iraq may not be able to account for Iraqi Security Forces receipt of about 

90,000 rifles and about 80,000 pistols that were reported as issued but were not recorded during the earlier phases of training and equipping Iraqi Forces (2004 

through 2006).24 GAO later reported that although DOD took action in December 

2005 to establish a centralized record of all equipment distributed to Iraqi forces, 

DOD could not account for 190,000 weapons, 135,000 items of body armor, and 

115,000 helmets reported as issued to Iraqi forces as of September 2005.25 In fiscal 

year 2006, SIGIR identified that DOD did not have adequate accountability procedures in place over small arms procured for Iraq Security Forces. Specifically, SIGIR 

identified material weaknesses because not all weapons procured for the Iraq Security Forces were properly accounted for. This may indicate physical security concerns over weapons and the lack of accountability procedures to track and maintain 

visibility of small arms, to include those transferred.26 In fiscal year 2007, GAO indicated that the overwhelming size and number of conventional munitions storage 

sites in Iraq, combined with certain prewar planning assumptions that proved to be 

invalid, resulted in U.S. Forces inadequately securing those sites and in widespread 

looting, according to field unit, lessons learned, and intelligence reports. Not securing these conventional munitions storage sites was costly because, as Government 

reports indicated, looted munitions were used to make Improvised Explosive Devices 

that killed or maimed many people and would likely continue to support terrorist 

attacks in the region. As of October 2006, according to Multi-National Corps—Iraq, 

some remote sites were not revisited to verify whether they posed any residual risk 

or whether they were physically secured. DOD did not appear to have conducted (in 

fiscal year 2007) a theater-wide survey and assessment of the risk that unsecured 

conventional munitions represent to U.S. forces and others.27 Internal sources other 

than our universe of completed reports and testimonies show that in July 2007 the 

DOD OIG initiated and led an effort to assess the status of the lack of accountability over munitions in Iraq and Afghanistan. 

As stated above in the accountability reports, the lack of accountability over assets affects DOD visibility over these assets, which can impact DOD ability to transfer equipment to units preparing to deploy. 

ASSET VISIBILITY

DOD had challenges in demonstrating asset visibility, including visibility of about 

$318 million in assets. Without asset accountability, asset visibility was compromised because records identifying the location of equipment were not adjusted 

to reflect the redisposition of the assets. Although major combat operations were 

successful during the initial phases of OIF, there were substantial logistics support 

problems. Asset visibility is achieved by using timely and accurate information systems that track the distribution of assets. Visibility begins at the point from which 

materiel is shipped to the theater of operations and continues until it reaches the 

user. Critical to visibility is the capability to update source data dynamically with 

the near real-time status of shipments from other combat service support systems 

until the shipments arrive at their ultimate destinations. Units operating in the theater could not track equipment and supplies adequately. The inaccurate records 

caused DOD personnel to spend unnecessary time and energy locating equipment 

needed for units preparing to deploy. According to AAA and AFAA reports, highertiered asset systems did not contain asset visibility data used by Army and Air 

Force decision makers. 

For example, in fiscal year 2006 and fiscal year 2007, AAA found that U.S. Army 

Forces Command used data recorded in asset visibility tools, such as Command 

Asset Visibility and Equipment Redistribution System, to identify and transfer 

equipment to units preparing to deploy. This process was compromised because of 

the erroneous supporting records.28 In fiscal year 2007, AFAA reported that Air 
174 

29 AFAA Report No. F2007–0004–FC4000. 30DOD OIG Report No. D–2007–010. 31DOD OIG Report No. D–2007–049. 32GAO Report No. 07–308SP. 33 Referred to in previous DOD Inspector General reports as the Tank-Automotive and Armaments Command. 34DOD OIG Report No. D–2007–107. 

Force leaders did not have total asset visibility and were not always able to determine whether the right assets were at the right locations to meet mission requirements. AFAA estimated that activities Air Force-wide incorrectly coded deployed locations for 15,373 assets, valued at $213.2 million, and incorrectly reported the deployment status of 2,689 assets, valued at $104.7 million.29

The reports show that besides challenges in maintaining adequate visibility over 

assets on-hand, DOD experienced some challenges in providing its forces with the 

equipment necessary to conduct its missions. 

Equipping the Force 

DOD faced challenges in properly equipping its forces supporting OEF and OIF. 

Specifically, U.S. military forces experienced shortages in supplying necessary 

amounts of equipment such as small arms, armor for vehicles, and body armor. The 

DOD OIG and GAO highlighted various challenges for equipping military forces. 

For example, in fiscal year 2007, the DOD OIG identified that the Army equipped 

its deployed forces in support of OIF with the small arms necessary to meet Combatant Commanders requirements. However, before deployment, some units were 

not fully equipped with the types of small arms required to do their assigned mission and had to obtain those small arms from other sources, such as nondeployed 

units. Nondeployed units faced a potential shortage of small arms and may not have 

had the ability to adequately train and maintain equipment and personnel readiness at an acceptable level.30

In fiscal year 2007, the DOD OIG surveyed about 1,100 Service members who 

supported OEF and OIF. The DOD OIG found that Service members experienced 

shortages of force-protection equipment, such as up-armored vehicles, electronic 

countermeasure devices, crew-served weapons, and communications equipment. As 

a result, Service members were not always able to effectively complete their missions; they had to perform missions without the proper equipment, use informal procedures to obtain equipment and sustainment support, and cancel or postpone missions while waiting to receive equipment.31

DOD also experienced challenges in equipping its forces with armored trucks and 

body armor. Acquisition-related issues caused shortages in meeting DOD armored 

trucks and body armor requirements. Specifically, DOD did not adequately leverage 

acquisition opportunities between Army and Marine Corps truck armor procurements. In addition, the increased requirement for new body armor exceeded the 

manufacturing increased-production capabilities. 

Armored and Tactical Vehicles.—GAO identified that U.S. military forces in Iraq 

experienced shortages of truck armor. GAO also found that although truck armor 

requirements were determined in November 2003, the Army did not produce all the 

armor kits until February 2005 and did not install the kits to meet the initial requirements until May 2005.32 In fiscal year 2007, the DOD OIG reported that the 

Marine Corps Systems Command continued to award contracts for armored vehicles 

to contractors who repeatedly failed to meet contractual delivery schedules for getting vehicles to the theater. In addition, the DOD OIG found that TACOM Life 

Cycle Management Command 33 awarded a contract for crew protection kits to another contractor that did not meet the Federal Acquisition Regulation definition of 

a responsible prospective contractor. Specifically, the contractor did not have the 

necessary production control procedures, property control systems, and quality assurance measures in place to meet contract requirements for crew protection kits. 

As a result, the TACOM Life Cycle Management Command received crew protection 

kits with missing and unusable components. This increased the kit installation time 

and required additional kit inspections.34

Body Armor.—DOD did not have an adequate supply of the new body armor in 

support of its expanded body armor requirements for Operation Iraqi Freedom. In 

fiscal year 2005, GAO reported that new Interceptor body armor was not available 

in sufficient quantities to U.S. Military forces in Iraq sometime between October 

2002 and September 2004. But, according to U.S. Central Command (CENTCOM) 

officials, all personnel in Iraq had the new armor by January 2004. GAO also reported that because of the shortages, CENTCOM officials stated they had prioritized 

the issue of the new body armor to those who were most vulnerable. Body armor 

was also not available for all support personnel, such as the Army’s 377th Theater 
175 

35GAO Report No. 05–275. 36 Chief Financial Officers Act of 1990, Section 902. 37GAO Report No. 05–8 82. 38 Naval Audit Service Report No. N2005–0018. 

Support Command, while insurgents were attacking and interdicting supply routes 

in Iraq. GAO further stated that because of the shortages, many individuals bought 

body armor with personal funds. The Congressional Budget Office estimated that as 

many as 10,000 personnel purchased vests and as many as 20,000 purchased plates 

with personal funds; it estimated the total cost to reimburse them would have been 

$16 million in 2005.35

FINANCIAL MANAGEMENT

DOD experienced numerous challenges in its processes for recording and reporting 

its war-related costs. The challenges included long-standing deficiencies in DOD financial management systems and business processes, the use of estimates instead 

of actual cost data, and the lack of adequate supporting documentation. DOD took 

some steps to address these challenges, but problems remain. Without transparent 

and accurate cost reporting, Congress and DOD will not have reliable information 

on how much the war costs, sufficient details on how appropriated funds are spent, 

and the historical data needed to consider future funding needs. Reporting the cost 

of war, internal controls over cash, and DOD budget and obligation requirements 

are notable accountability challenges in Financial Management. 

Accuracy of Cost Reporting 

DOD experienced challenges in providing accurate and reliable cost reporting for 

OEF and OIF operations. The inadequate processes for recording and reporting 

GWOT costs raised concerns that these data may not accurately reflect the true nature of the cost. Specifically, neither DOD nor Congress can reliably know how 

much the war is costing or know the details on how appropriated funds are being 

spent, or have historical data useful in considering future funding needs. The Chief 

Financial Officers Act of 1990 requires agencies to ‘‘. . . develop and maintain an 

integrated agency accounting and financial system, including financial reporting and 

internal controls, which... provides for the development and reporting of cost information.’’ 36 DOD Financial Management Regulation, volume 12, chapter 23, paragraph 230104, as of September 2007, requires that controls, accounting systems, and 

procedures provide in financial records the proper identification and recording of 

costs incurred in supporting contingency operations. 

For example, in fiscal year 2005, GAO found numerous problems in DOD processes for recording and reporting costs for GWOT, raising significant concerns about 

the overall reliability of DOD reported cost data. Factors affecting the reliability of 

DOD reported costs included long-standing deficiencies in DOD financial systems, 

the lack of a systematic process to ensure that data were correctly entered into 

those systems, inaccurately reported costs, and difficulties in properly categorizing 

costs. In at least one case, reported costs may have been materially overstated. Specifically, GAO reported that DOD then-reported obligations for mobilized Army reservists in fiscal year 2004 were based primarily on estimates rather than actual 

information and differed from related payroll information by as much as $2.1 billion. 

In addition, GAO found inadvertent double counting in the Navy and Marine Corps’ 

portion of DOD reported costs amounting to almost $1.8 billion from November 2004 

through April 2005. GAO also found some incremental base operations costs that 

appeared, at best, incidental to the support of GWOT. In summary, although GAO 

identified significant data reliability problems, GAO did not determine the extent 

that total costs were misstated because it was not feasible to examine all reported 

costs.37

In addition to the double counting GAO found, in fiscal year 2005, the Naval 

Audit Service reported that 17 of the 44 Marine Corps System Command contracts 

(valued at $93.3 million) from fiscal year 2003 and fiscal year 2004 did not contain 

the proper Special Interest Codes. The Special Interest Codes indicated that the contracts supported OIF, would be reported as OIF-related expenses, and the Service 

would receive reimbursement for the OIF-related expenses.38

In fiscal year 2006, SIGIR found that the U.S. Army Corps of Engineers over re- ported its obligations by $362 million for Project and Contracting Office obligations 

recorded in U.S. Army Corps of Engineers financial records. The $362 million in obligations were recorded under the vendor name ‘‘Dummy Vendor,’’ which does not 

constitute proper obligations. This also is not consistent with a 1995 decision by the 

Comptroller General of the United States on appropriations availability, the GAO 

Appropriations Law Manual, and the DOD Financial Management Regulation re-
176 

39SIGIR Report No. 06–037. 40GAO Report No. 04–668. 41GAO Report No. 04–915. 42GAO Report No. GAO–05–882. 43GAO Report No. GAO–07–076. 44GAO Report No. GAO–07–814. 

quirements for the recording and reviewing of commitments and obligations. These 

funds would expire if proper obligations actions were not taken by September 30, 

2006.39

Financial Accountability 

DOD had challenges in demonstrating financial accountability in OEF and OIF. 

The GAO, DOD OIG, and SIGIR have reported on accountability challenges. 

In fiscal year 2004, GAO reported its concerns over transparency and accountability over DOD GWOT cost reporting. It also reported that DOD cost reporting 

included large amounts of funds that were reported as obligated in miscellaneous 

categories and thus provided little insight on how those funds were spent. GAO 

highlighted that an earlier fiscal year 2004 report 40 identified that 35 percent of 

obligations DOD reported in the fiscal year 2003 Operation and Maintenance account were in ‘‘other supplies and equipment’’ and ‘‘other services and miscellaneous 

contracts.’’ 41

In fiscal year 2005, GAO reported that DOD modified its guidance to define more 

clearly some of the cost categories and DOD took additional steps to strengthen the 

oversight and program management of cost reporting. GAO reported individual commands took steps to control costs and DOD policy advised its officials of their financial management responsibilities to ensure the prudent use of contingency funding. 

However, GAO also had concerns that DOD did not systematically call for all commands involved in GWOT to take steps to control costs, set general parameters to 

guide cost-control efforts, and keep the Under Secretary of Defense (Comptroller) informed of those steps and their success. DOD agreed to most recommendations; 

however, it did not agree to establish DOD-wide guidance on cost controls.42

In fiscal year 2007, GAO reported that DOD and the Military Services took specific steps intended to improve the accuracy and reliability of their reported GWOT 

obligation data; however, some problems remained with transparency over certain 

costs and inaccuracies in reported obligations. In August 2005, the DOD Comptroller issued guidance to help DOD Components more accurately and consistently 

report obligations for contingencies such as GWOT. It directed DOD Components to 

perform a monthly variance analysis to review and validate that their reported obligations were accurate and provided a fair representation of ongoing activities. The 

DOD Comptroller also issued guidance that directed submitting DOD Components 

to attest to the accuracy of their monthly obligation data in DOD Supplemental and 

Cost of War Execution Report and affirm that the report provided a fair representation of ongoing activities. However, because these efforts were in the early stages 

of implementation, GAO did not fully evaluate the impact.43

Again, in fiscal year 2007, GAO reported on its concerns about the lack of detail 

in accounting for obligations and expenditures in the DOD procurement account. 

GAO stated the detailed accounting would provide Congress with the visibility it 

needs to identify the types of equipment procured with the reset funds it appropriates, such as aircraft, vehicles, or communication and electronic equipment.44

Commanders’ Emergency Response Program.—DOD experienced challenges in 

CERP, such as maintaining program accountability over its CERP funding. AAA, 

SIGIR, GAO, and DOD OIG identified accountability-related challenges with the 

CERP program in Iraq and Afghanistan. The CERP supports OEF and OIF by providing ground commanders a source of funds to respond to urgent humanitarian relief and reconstruction requirements in their areas of responsibility by carrying out 

programs that immediately assist the local population. Table 3 shows the funds appropriated or requested (fiscal year 2008) for CERP, in billions of dollars. 
177 

45Fiscal Year 2007 Emergency Supplemental Request for the Global War on Terror, DOD, 

February 2007. 46 AAA Report No. A–2005–0173–ALE. 47 AAA Report No. A–2005–0332–ALE. 48SIGIR Report No. 05–0 14. 49SIGIR Report No. 07–006. 50GAO Report No. GAO–07–699. 

TABLE 3.—FUNDING FOR COMMANDERS’ EMERGENCY RESPONSE PROGRAM 

Fiscal year— 

GWOT total 

2005 2006 2007 2008 

Iraq .......................................................................................... .7 .7 .7 .8 2.9 

Afghanistan ............................................................................. .1 .2 .2 .2 1 .8 

Total ........................................................................... .8 .9 1.0 1.0 3.7 

1 The apparent discrepancy for Afghanistan is due to rounding. 

Source: CERP data as reported by the Deputy Secretary of Defense during testimony before the House Budget Committee on July 31, 2007. 

For fiscal year 2006 and fiscal year 2007, including DOD fiscal year 2007 CERP supplemental increase of $.5 billion, the CERP programs for OEF and OIF combined 

was about $1.9 billion.45 In fiscal year 2005, AAA reported challenges with MultiNational Security Transition Command—Iraq documentation in the CERP files. It 

identified shortfalls in documenting and maintaining results of coordination with 

others, cost estimates from subordinates, Statements of Work, and requirement requests.46 A followup report that AAA issued later in fiscal year 2005 showed that 

Multi-National Security Transition Command—Iraq had implemented previous recommendations, but still had opportunities to improve oversight of its CERP program.47 Also during fiscal year 2005, SIGIR issued similar findings; it concluded 

that while CERP-appropriated funds were properly used for the intended purposes, 

controls over the distribution of appropriated funds were not consistently followed 

and required documents were not consistently used to maintain accountability of 

projects.48

By April 2007, SIGIR found that while Multi-National Corps—Iraq had improved 

its controls over fund accountability for CERP in Iraq, project documentation was 

still a weakness.49 Also in fiscal year 2007, GAO reported that DOD needed to provide greater transparency on the use of CERP funds for condolence payments by 

clarifying the definitions as to what should be reported in the two CERP categories: 

(1) condolence payments and (2) battle damage payments. GAO further stated DOD 

needed to include document reference numbers for payments to allow DOD to determine whether expenditures of CERP funds were appropriately categorized and to 

permit DOD to obtain detailed information for analysis and reporting, as appropriate.50 Further, in fiscal year 2007, the DOD OIG reported that for CERP in Afghanistan, 15 of the 16 pay agents reviewed did not have appropriate physical security for storing cash; the other pay agent did not hold cash because she was collocated with a finance office. Of the 16 pay agents, 2 inappropriately disbursed cash. 

SYSTEMIC CHALLENGES ACROSS FUNCTIONAL AREAS

Aside from the challenges in each functional area previously discussed, in summarizing this report we identified common challenges across the functional areas. Specifically, from our review of the Defense oversight community and GAO reports and 

testimonies, training and policy and procedures challenges were identified in more 

than one of these functional areas: Contract Management, Logistics, and Financial 

Management. 

Training 

The Defense oversight community and GAO issued 39 reports and testimonies 

that discuss various training challenges DOD faced in conducting OEF and OIF operations. In the three functional areas, we identified: 15 reports and testimonies 

that discuss Contract Management training challenges; 15 reports and testimonies 

that discuss Logistics training challenges; and 9 reports and testimonies that discuss Financial Management training challenges. 

Policies and Procedures 

The Defense oversight community and GAO issued 121 reports that discuss various policy and procedure challenges DOD faced in conducting OEF and OIF operations. In the three functional areas, we identified: 29 reports that discuss Contract 
178 

51Office of Management and Budget Circular A–50, September 29, 1982. 52GAO–07–731G Government Auditing Standards, July 2007, Chapter 7 ‘‘Field Work Standards for Performance Audits,’’ Section 7.36 ‘‘Previous Audits and Attestation Engagements.’’ 

Management policy and procedure challenges; 53 reports that discuss Logistics policy and procedure challenges; and 39 reports that discuss Financial Management 

policy and procedure challenges. 

CHAPTER 2. RESPONSIVE ACTIONS TAKEN BY MANAGEMENT TO ADDRESS

RECOMMENDATIONS

As of September 30, 2007, sufficient actions had been taken on 699 of the 983 recommendations (71 percent); these recommendations are considered completed. We 

did not report on any recommendations that were closed after September 30, 2007, 

but will do so in a future report. Of the 284 recommendations open as of September 

30, 2007, 55 recommendations were to agencies and activities outside of DOD. Table 

4 shows the overall status of recommendations as of September 30, 2007. 

TABLE 4.—OVERALL STATUS OF RECOMMENDATIONS 

Recommendations Closed Percent 

Closed Open Percent Open 

Fiscal year: 

2003 ............................................................ 28 27 96.4 1 3.6 

2004 ............................................................ 105 96 91.4 9 8.6 

2005 ............................................................ 257 211 82.1 46 17.9 

2006 ............................................................ 282 220 78.0 62 22.0 

2007 ............................................................ 311 145 46.6 166 53.4 

Total ....................................................... 983 699 71.1 284 28.9 

STANDARDS FOR FOLLOWUP ON RECOMMENDATIONS

Office of Management and Budget Circular A–50 ‘‘Audit Followup,’’ September 29, 

1982, states that audit followup is an integral part of good management and is a 

shared responsibility of agency management officials and auditors. Each agency 

must establish systems to ensure the prompt and proper resolution and implementation of audit recommendations. These systems must provide for a complete record 

of action taken on both monetary and nonmonetary findings and recommendations.51

Generally accepted government auditing standards prescribe followup requirements for audit findings and recommendations. Accordingly, for performance audits, 

generally accepted government auditing standards state that auditors should evaluate whether the audited entity has taken appropriate corrective action to address 

findings and recommendations from previous engagements that are significant. 

Auditors should use this information in assessing risk and determining the nature, 

timing, and extent of current work, including determining the extent to which testing the implementation of the corrective actions applies to the current engagement 

objectives.52

DOD Directive 7650.3, ‘‘Follow-up on General Accounting Office (GAO), DOD Inspector General (DOD IG), and Internal Audit Reports,’’ October 18, 2006, provides 

guidance for GAO, DOD OIG, and other DOD internal audit organizations. Followup 

is an integral part of good management and is a responsibility shared by DOD managers and auditors. Each agency implements its own followup program in accordance with the prescribed standards. Further, as described by SIGIR officials, in general, SIGIR attempts to follow up on open recommendations semiannually to provide 

current data in the required semiannual reports to Congress. According to the 

SIGIR Deputy Assistant Inspector General for Audit, as of April 2008, SIGIR was 

developing an automated followup tracking system. 

CHAPTER 3. INITIATIVES TAKEN BY DOD TO ADDRESS CONTRACT MANAGEMENT, 

LOGISTICS, AND FINANCIAL MANAGEMENT CHALLENGES

Besides taking action on OEF and OIF related recommendations, DOD took other 

actions, whether required by public law or self-initiated, to address challenges in 

Operations Enduring and Iraqi Freedom. For the purpose of this report, we focus 

on discussing initiatives that DOD reported to us that we believe should directly 
179 

53We are not attesting to the adequacy or effectiveness of the DOD initiatives reported. 

help overcome challenges in DOD Contract Management, Logistics, and Financial 

Management in OEF and OIF.53

CONTRACT MANAGEMENT INITIATIVES

DOD initiated many actions to address contract-related challenges in OEF and 

OIF. These initiatives included establishing and revising guidance, fielding a new 

contractor accountability system, adding new contingency contracting training at 

DOD academic institutions, and looking at contracting challenges through commissions and task forces. 

Guidance on Oversight of Contractors.—DOD has issued additional guidance to 

address contracting-related challenges in OEF and OIF, which includes jurisdiction 

over contractors in contingency areas of operations, tracking contractors performing 

work outside the United States, as well as managing and integrating contractor support in joint and contingency areas of operations. 

—On October 17, 2006, the Uniform Code of Military Justice (UCMJ) was amended to extend UCMJ jurisdiction over persons serving with or accompanying U.S. 

Armed Forces in the field in times of declared war or contingency operations. 

The Secretary of Defense’s March 10, 2008, memorandum, UCMJ Jurisdiction 

Over DOD Civilian Employees, DOD Contractor Personnel, and Other Persons 

Serving With or Accompanying the Armed Forces Overseas During Declared 

War and in Contingency Operations, provides additional guidance to commanders on exercising their UCMJ authority over civilians and contractors during contingency operations, including those supporting the GWOT. 

—In November 2006, DOD issued implementation for Procedures, Guidance and 

Information No. 225–74, ‘‘Solicitation and Award of Contracts for Performance 

in a Foreign Country or Delivery to any Unified Combatant Command Theater 

of Operation.’’ It requires Combatant Command Contracting offices to establish 

and maintain a Web page listing all prevailing regulations, policies, requirements, host nation laws, Orders/Fragmentary Orders, Combatant Commander’s 

directives, unique clauses, and other considerations necessary for soliciting and 

awarding contracts for performance in or delivery to that Combatant Command 

area of responsibility. 

—In January 2007, the Deputy Under Secretary of Defense (Logistics and Materiel Readiness) and the Deputy Under Secretary of Defense (Program Integration) issued guidance instructing the use of the Synchronized Predeployment 

and Operational Tracker (SPOT) as the central repository for information on 

contractors deploying with U.S. Forces. On March 19, 2007, the Director, Defense Procurement and Acquisition Policy issued implementing guidance and instructed the use of SPOT. On January 28, 2008, the Director, Defense Procurement and Acquisition Policy issued guidance that requires that DOD contractor 

personnel data be entered into SPOT for the CENTCOM area of responsibility 

by August 1, 2008. 

—In October 2007, the acting Under Secretary of Defense for Acquisition, Technology, and Logistics issued a memorandum with procedures for contracting, 

contract concurrence, and contract oversight for Iraq and Afghanistan. This 

memo and subsequent policy, procedures, and guidance, issued by the Director, 

Defense Procurement and Acquisition Policy, instructs contracting officers to 

have the Joint Contracting Command—Iraq and Afghanistan review and clear 

Statements of Work and terms and conditions of all contracts requiring performance in Iraq or Afghanistan before awarding a contract. Also, upon award 

of any contract, the procuring contracting officer must assign to the Joint Contracting Command—Iraq and Afghanistan Federal Acquisition Regulation 

(FAR) Part 42 and Defense Federal Acquisition Regulation Supplement 

(DFARS) Part 242 contract administration of the contract portions that relates 

to performance in Iraq or Afghanistan. 

—In March 2008, DOD issued DFARS 225.3, ‘‘Contracts Performed Outside the 

United States.’’ It requires contracting officers, when using the clause Federal 

Acquisition Regulation 52.225–19, ‘‘Contractor Personnel in a Designated Operational Area or Supporting a Diplomatic or Consular Mission Outside the 

United States,’’ to inform the contractor that SPOT is the appropriate automated system to use for the list of contractor personnel required by paragraph 

(g) of the clause. 

—DOD drafted Joint Publication 4–10, ‘‘Operational Contract Support in Joint 

Operations,’’ which contains detailed content on contracting and contractor 

management in joint operations. The draft joint publication defines key per-
180 

54Deputy Director, Program Acquisition and Contingency Contracting, Defense Procurement 

and Acquisition Policy, April 28, 2008. 55 Ibid. 56Panel on Contracting Integrity, Quarterly Progress Update, March 31, 2008. 57 Contingency Contracting: A Joint Handbook. 58Mr. Gary Motsek, Assistant Deputy Under Secretary of Defense, Office of Program Support, 

before the Subcommittee on Oversight and Investigations, U.S. House of Representatives, on 

April 25, 2007. 59 Honorable James Finley, Deputy Undersecretary of Defense for Acquisition and Technology, 

before the Subcommittee on Readiness and Management Support, Senate Armed Services Committee, April 2, 2008. 

sonnel involved in the contracting process and includes a Contracting Support 

Plan Checklist and a Contractor Integration Plan Checklist. The Contracting 

Support Plan Checklist covers the key requirements associated with orchestrating and managing contracting efforts in a joint operations area, including 

a requirement to ensure that there are adequately trained Contracting Officer 

Representatives and Contracting Officer Technical Representatives to assist in 

managing contract performance. The Contractor Integration Plan checklist covers the key requirements associated with managing contractor personnel in a 

joint operations area and providing Government-Furnished support, when such 

support is required. DOD expects to issue the joint publication July 2008.54

—DOD is updating DOD Instruction 3020.41, ‘‘Integrating Operational Contract 

Support into Contingency Operations’’ (formerly entitled ‘‘Contractor Personnel 

Authorized to Accompany the U.S. Armed Forces’’). The update provides an authoritative and comprehensive roadmap of policy and procedures applicable to 

contractor personnel authorized to accompany the U.S. Armed Forces. The revised version contains significant changes to the existing instruction including 

incorporating lessons learned from current operations, requirements for developing contractor oversight plans, and requirements for adequate military personnel needed to execute contract oversight.55

SPOT.—DOD developed SPOT, an automated system, to track contractors. SPOT, 

hosted in the Army network domain (https://spot.altess.army.mil/default.aspx) and 

operated by a contractor, has been designated as the Joint Enterprise contractor 

management and accountability system to provide a central source of contingency 

contractor information in accordance with DOD Instruction 3020.41, ‘‘Contractor 

Personnel Authorized to Accompany the U.S. Armed Forces,’’ October 3, 2005. Contractor companies are required to maintain by name (of each employee) accountability in SPOT while Government representatives use SPOT for oversight of the 

contractors they deploy. 

Contingency Contracting: A Joint Handbook.—Beginning the first quarter of fiscal 

year 2008, DOD distributed Contingency Contracting: A Joint Handbook (the Contingency Contracting Joint Handbook) to the contingency contracting workforce.56

The Contingency Contracting Joint Handbook, authorized by the Director, Defense 

Procurement and Acquisition Policy and Strategic Sourcing, provides a consolidated 

source of information for contingency contracting officers conducting contingency 

contracting operations in a Joint environment. The hardcopy book and accompanying DVD are intended to be used for training at home stations, for reference 

during deployment, and for training while deployed. The handbook and DVD provide useful tools, templates, and training that enable the contingency contracting officer to be effective in any contracting environment. The Contingency Contracting 

Joint Handbook was prepared by the Office of the Under Secretary of Defense for 

Acquisition, Technology, and Logistics (OUSD[AT&L]), Defense Acquisition, Technology, and Logistics contingency contracting staff, the Defense Acquisition University, and the Air Force Logistics Management Agency.57

Contingency Contract Training.—Under the fiscal year 2007 National Defense Authorization Act, DOD has expanded contingency contracting training modules 

through the Defense Acquisition University (DAU) as required by Section 854 of the 

Act.58 DAU has redesigned the contingency contracting curriculum to improve training supporting ‘‘journeyman-level’’ contingency contracting operations. This will enable experienced contingency contracting officers to be deployable worldwide and be 

effective immediately upon arriving at the site.59 One example of specific training 

DAU already provides is the Construction Contract Management course prepared by 

DAU for the Joint Contracting Command—Iraq and Afghanistan. DAU has revised 

the program of instruction for the Joint Contingency Contracting Course, CON 234, 
181 

60Panel on Contracting Integrity, Quarterly Progress Update, March 31, 2008. 61Mr. John Young, Under Secretary of Defense for Acquisition, Technology, and Logistics, before the House Committee on Armed Services, on April 2, 2008. 62Mr. Richard Ginman, Deputy Director, Program Acquisition and Contingency Contracting, 

Defense Procurement and Acquisition Policy, April 28, 2008. 

using the Joint Contingency Contracting Handbook.60 DAU is also developing an advanced contingency contracting course.61

DAU also hosts the Joint Contingency Contracting Community of Practice on its 

Web site to facilitate collaboration and sharing of learning and job support assets, 

which will result in improved efficiencies and support. This initiative also serves as 

a repository for policy and guidance information, predeployment information, tools, 

and after action reports. This community of practice as a Web-based tool enables 

connects the contingency contracting community to share expertise and experience. 

Significant findings concerning contingency contracting from staff assistant visits or 

internal self-inspection programs, as well as after action reports and lessons 

learned, must be posted to the DAU Web site.62 Additional information on DAU contingency contracting related matters can be found at https://acc.dau.mil/contingency. 

Panel on Contracting Integrity.—On February 16, 2007, the OUSD(AT&L) established the Panel on Contracting Integrity in accordance with the requirements of 

Section 813 of the fiscal year 2007 National Defense Authorization Act (Section 

813). 

As required by Section 813, the Panel is reviewing DOD progress to eliminate 

areas of vulnerability that allow fraud, waste, and abuse to occur. The Panel established 10 subcommittees to support the review of contracting integrity issues: Current Structure of Contracting Integrity; Sustained Senior Leadership; Capable Contracting Workforce; Adequate Pricing; Appropriate Contracting Approaches and 

Techniques; Sufficient Contract Surveillance; Contracting Integrity in a Combat/ 

Contingent Environment; Procurement Fraud Indicators; Contractor Employee Conflicts of Interest; and Recommendations for Change. Each subcommittee completed 

a formal report documenting the review of their designated focus areas and presented recommendations to enhance contracting integrity. The Panel reviewed the 

requirements of Section 813; the findings and 20 recommendations in the March 

2005 Report of the Defense Science Board; and the recommendations of GAO Report 

GAO–06–838R, ‘‘Contract Management: DOD Vulnerabilities to Contracting Fraud, 

Waste and Abuse,’’ July 7, 2006. In its first annual report to Congress (December 

2007), the Panel identified 21 initial actions in 2008 in the following areas. 

—Reinforce functional independence of contracting personnel and promptly fill 

contracting leadership positions with qualified leaders of integrity who expect 

and enforce ethical behavior. 

—Determine appropriate size of the contracting workforce and ensure that it has 

the appropriate skills to effectively and efficiently price, award, and manage 

more than $300 billion in annual contracts. 

—Develop a DOD-wide consistent contract policy-execution review plan, strengthen contracting approaches, and reinvigorate contract surveillance techniques. 

—Improve planning and training for contracting in combat/contingent environments. 

On March 31, 2008, OUSD(AT&L) issued an internal quarterly progress update. 

Additional internal quarterly updates on Panel initiatives are scheduled to be issued 

through the remainder of 2008. The March issue provided an update on the Panel 

and its subcommittees’ efforts. The overview and efforts of the subcommittees on 

Contracting Integrity in a Combat/Contingent Environment and Procurement Fraud 

Indicators are discussed below. 

Contracting Integrity in a Combat/Contingent Environment Subcommittee.—The 

Contracting Integrity in a Combat/Contingent Environment subcommittee is chaired 

by the Director, Defense Procurement and Acquisition Policy and Strategic Sourcing. 

For fiscal year 2008, the Contracting Integrity in a Combat/Contingent Environment 

subcommittee will improve training by leveraging Marine Corps and Air Force 

training capabilities; improve training on how to run a contracting office in a combat/contingent environment; and review Fraud Indicator Training and Contracting 

Office Transition Plan. In the March 2008 Quarterly Progress Update, the subcommittee reported that the Department has taken numerous steps forward in improving the quality of training offered to contingency contracting workforce members in DOD. For example, the Army revised its Functional Area 51 Contracting Officer Leader Development program and developed a new training strategy after 

closely reviewing the programs of instruction offered by both the U.S. Marine Corps 

and Air Force. For Fraud Indicator Training, the subcommittee reviewed the Contingency Contracting Joint Handbook and reported that with the use of the hand-
182 

63DOD OIG Handbook 7600.3, ‘‘Handbook on Fraud Indicators for Contract Auditors,’’ March 

31, 1993. 

book and DAU training contracting officers will be able to identify specific indicators 

of contract fraud found most prevalent in a contingency environment. The subcommittee also reported that Chapter 4 of the Joint Contingency Contracting Handbook provides the initial elements of training to prepare the contingency contracting 

officer for transition planning. 

Procurement Fraud Indicators Subcommittee.—The Procurement Fraud Indicators 

Subcommittee is chaired by the Assistant Inspector General, Acquisition and Contract Management, DOD OIG. The Executive Director for the Panel on Contracting 

Integrity initiated this subcommittee to identify what the procurement indicators 

are and how they should be addressed. The increased level of DOD spending, especially in a contingency or expeditionary environment and without a comparable increase in procurement staffing levels, has increased procurement risks. The March 

2008 Quarterly Progress Update stated that recently reported fraud cases have increased visibility in this area. The membership of this subcommittee includes representatives nominated by the Inspectors General of the Military Departments. Further, in its update, the subcommittee reported it plans to evaluate previously developed information on procurement fraud indicators both within and outside of the 

Department and determine the best avenues for presenting the information to the 

procurement community. The following are examples of the subcommittee plans. 

—Identify all relevant source material previously developed on procurement fraud 

indicators and: 

—determine the need for a Procurement Fraud Indicators handbook for acquisition personnel similar to the IG Procurement Fraud Indicators Handbook 63

for auditors; 

—review best practices from existing training courses to determine the potential 

for a training module for insertion into DAU training; and 

—pursue the feasibility of an acquisition Web site. 

—Conduct research and analysis by implementing the following. 

—Subcommittee members will gather best practices from their own and other 

organizations. 

—Subcommittee will establish tasks necessary to review the best available information, review the revised IG Procurement Fraud Indicators Handbook, 

determine the need and contents of a separate acquisition handbook, analyze 

existing training segments, determine focus and content for DAU training 

module, and determine the potential for a one-stop acquisition Web site for 

procurement fraud indicators. 

Commissions and Task Forces.—In an effort to improve its support of OEF and 

OIF and for future contingency operations, DOD has established many commissions 

and task forces. The following highlight a few facts on key commissions and task 

forces. 

Commission on Army Acquisition and Program Management in Expeditionary Operations.—The Secretary of the Army established a 45-day commission led by 

Jacques Gansler, former Under Secretary of Defense for Acquisition, Technology, 

and Logistics (the Gansler Commission). The Gansler Commission will ‘‘. . . review 

the Army’s policies, procedures, and operations regarding acquisition and program 

management in expeditionary operations and make findings and recommendations 

as to their effectiveness and compliance with applicable laws and regulations.’’ In 

October 2007, the Commission issued its report, ‘‘Urgent Reform Required: Army 

Expeditionary Contracting,’’ which states: 

—The expeditionary environment requires more trained and experienced military 

officers and noncommissioned officers. As of October 2007, only 3 percent of 

Army contracting personnel were active duty military, and Army contracting career General Officer positions no longer existed. 

—The Army’s acquisition workforce was not adequately staffed, trained, structured, or empowered to meet the Army needs of 21st-century deployed 

warfighters. Only 56 percent of the military officers and 53 percent of the civilians in the contracting career field were certified for their then-current positions. 

—In spite of a seven–Fold workload increase and greater complexity of contracting, the Institutional Army did not support this key capability (effective 

contract management). 

—In spite of almost as many contractor personnel in the Kuwait/Iraq/Afghanistan 

Theater as there are U.S. military personnel, the Operational Army had not yet 

recognized the impact of contracting and contractors in expeditionary operations 

and on mission success. 
183 

64Mr. John Young, Under Secretary of Defense for Acquisition, Technology, and Logistics, before the House Committee on Armed Services, on April 2, 2008. 

—Contracting (from requirements definition, through contract management, to 

contract closeout) was treated as an operational and institutional side issue instead of as a core competence. 

Task Force on Contracting and Contract Management in Expeditionary Operations.—The Under Secretary of Defense for Acquisition, Technology, and Logistics 

established the Task Force on Contracting and Contract Management in Expeditionary Operations to address the specific Gansler Commission recommendations 

and to integrate activities responding to the Gansler Commission’s recommendations with the many other relevant activities already underway in DOD. The task 

force is guided by senior leaders in the Acquisition, Technology, and Logistics organization, including the Deputy Under Secretary (Acquisition and Technology); the 

Director, Defense Procurement, Acquisition Policy, and Strategic Sourcing; and his 

Principal Deputy. These senior leaders are working closely with the Deputy Under 

Secretary (Logistics and Materiel Readiness) and the Assistant Deputy Under Secretary of Defense (Program Support). Membership of this task force includes representatives from all of the Services, the DCMA, the Joint Staff, the Joint Contingency Contracting cell for Iraq and Afghanistan, and various elements of the Office 

of the Secretary of Defense. The task force meets weekly for progress-tracking purposes, meets periodically with the Services and DCMA to ensure a coordinated and 

consistent DOD approach, and meets about once a month with Dr. Gansler to discuss any points of clarification regarding the Gansler Commission’s recommendations. 

The task force actions implement Section 849 of the fiscal year 2008 National Defense Authorization Act, which directed the Secretary of Defense, in consultation 

with the Joint Chiefs of Staff, to evaluate the Gansler Commission’s recommendations to determine the extent to which such recommendations are applicable to the 

other Armed Forces.64

Army Contracting Initiatives.—The Army has implemented several initiatives to 

address contracting challenges. Specifically, in February 2008, the Army announced 

the Army Contracting Campaign Plan to address findings and recommendations 

from two previous independent reviews from the Gansler Commission and the Army 

Contracting Task Force. The Army Contracting Campaign Plan will enable the Secretary of the Army to execute recommended improvements to Army contracting. 

Further, the Secretary of the Army directed the establishment of the Army Contracting Command as a major subordinate command of the Army Materiel Command and the realignment of the Army Contracting Agency under the Army Materiel Command. The Army Contracting Agency provides contracting services for installation-level services and supplies, and common-use information technology hardware, software, and services. The realignment of Army Contracting Agency to Army 

Materiel Command places the majority of the Army’s contracting resources into one 

Army command, which will provide a full range of contracting services. 

LOGISTICS INITIATIVES

According to the Executive Director for LOGCAP, the following are initiatives in 

the logistics support program. 

In April 2007, the Army created the Executive Director for LOGCAP, a more than 

$30 billion Services program, which reports to the Commanding General of the 

Army Sustainment Command. Establishing this position provides program management oversight of LOGCAP augmentation to combat support/combat service support 

functions for supported units in OEF and OIF. The Executive Director has overall 

executive responsibility for LOGCAP, under which contractors from the private sector provide a broad range of logistical and life support services to U.S. and allied 

forces during combat operations. The Executive Director also stated he provides liaison LOGCAP planners for Army Service Component Command worldwide operation 

planning for support of logistical and life support services. 

As of March 2008, LOGCAP is supported by 66 reserve officer billets from the 

LOGCAP Support Unit. One of the LOGCAP initiatives is to increase this unit to 

137 personnel, broken out into five detachments for worldwide deployment. A detachment or its elements would deploy with the newly established Army contract 

support brigades to assist in developing requirements. 

The program currently consists of Deputy Program Directors deployed in Iraq, Afghanistan, and Kuwait supported by members of the LOGCAP Support Unit, the 

DCMA, and from members of the LOGCAP support contractor. According to the Ex-
184 

65OUSD(C) Memorandum, ‘‘Certified Commercial Payments in Contingency Operations,’’ September 14, 2007. 66DOD Financial Management Regulation, Volume 10, Chapter 8 ‘‘Commercial Payment 

Vouchers and Supporting Documents,’’ May 2008. 

ecutive Director, he also uses continental U.S. assets to augment the requirements 

of the forward deployed elements. 

Development of Future Doctrine for Logistical Support.—Concurrent to providing 

management support for logistic services, the program is also developing planning 

doctrine on including contractor logistical services in future contingency operations. 

The emphasis is ‘‘How to plan for, and include, LOGCAP services in operational 

support plans.’’ The goal is to align LOGCAP operational planners with the contract 

support brigades to assist the decision-making process for when to use and in developing requirements for LOGCAP services. 

Exercises and Deployment.—LOGCAP participates in military training exercises to 

teach awareness of LOGCAP efforts. LOGCAP also provides outreach support and 

awareness to logistics support personnel and DCMA officers deploying in theater. 

In-theater Support.—LOGCAP provides in-theater support to military operations. 

LOGCAP personnel provide an overview of the program to military commanders, 

the Joint Contracting Command—Iraq and Afghanistan, regional contracting centers, and forward operating base mayors. The LOGCAP program personnel meet 

with division and garrison commands to educate them on the process used to seek 

the services of LOGCAP when organic logistics services cannot be used. This includes developing requirements, providing support for forward operating bases, operating dining facilities, or providing a multitude of field services. 

Award Fee.—Because LOGCAP operates in different military operations and 

world-wide, the program has established an initiative to standardize the evaluation 

process across the various groups that assess contractors’ performances in Iraq, Afghanistan, and Kuwait. It also includes an assessment of what efforts the contractors are making to improve the quality of operations. 

FINANCIAL MANAGEMENT INITIATIVES

DOD Components have implemented many initiatives to address financial management challenges in wartime contingency operations such as OEF and OIF. The 

Office of the Under Secretary of Defense (Comptroller) (OUSD[C]) has implemented 

several initiatives such as issuing additional financial guidance and focused funding 

execution reviews, and establishing a senior steering group. The Director, Defense 

Finance and Accounting Service (DFAS) has implemented several initiatives such as 

deploying personnel in August 2007 to assist forward-deployed DOD elements in 

preparing and maintaining supporting documentation voucher transactions. In addition, DFAS initiatives implemented includes reducing the burden on units in Iraq 

and Kuwait and improve controls over documentation supporting commercial payments and payments to foreign governments. For some of the DFAS initiatives, the 

U.S. Army partnered with DFAS in implementing the initiative. 

Under Secretary of Defense (Comptroller).—The OUSD(C) has initiated several actions to address cost and execution of funds challenges in OEF and OIF. Specifically, the OUSD(C) has issued additional financial management related guidance for 

contingency operations, performed focused analysis on funding monthly execution, 

and established the Cost of War Senior Steering Group. 

Additional Financial Management Guidance.—The OUSD(C) wrote that because 

of recent reviews of commercial payments for goods and services in Iraq and Afghanistan, in September 2007 the OUSD(C) published guidance emphasizing the requirements for proper payments in contingency operations. The OUSD(C) memorandum prescribes certification guidelines for payments made in contingency operation areas including 11 types of information that certifying officers will typically 

use to certify and make payments.65 In May 2008, the OUSD(C) updated the DOD 

Financial Management Regulation to incorporate the certification guidelines for 

commercial payments in contingency operations from the September 2007.66

Monthly Funding Execution Analysis.—In December 2007, the OUSD(C) initiated 

an effort to increase its overview of DOD execution of OEF and OIF related funding. 

As part of this effort, to gauge whether DOD can properly execute the funding requested for the specific fiscal years, the Comptroller invited personnel from other 

DOD Components, such as the DOD OIG, to perform quick-look reviews on the execution of GWOT funding patterns. These support efforts were included in the 

OUSD(C) overall focused analysis of execution of funding. According to OUSD(C) officials, OUSD(C) now performs a monthly analysis of DOD execution of funding and 

reports the results to the Under Secretary of Defense (Comptroller). The monthly 
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67See memorandum OSD 01647–07. 68Such as the Multi-National Corps—Iraq, Multi-National Security Transition Command— 

Iraq, Combined Joint Task Force-82, and 336th Financial Management Company Kuwait. 

analysis provides timely awareness of funding trends and potential funding execution concerns to the attention of the Comptroller. 

Cost of War Senior Steering Group.—In February 2007, the Deputy Secretary of 

Defense established the Cost of War Senior Steering Group to provide governance 

for the timely resolution of policy, system, and procedural issues that impact the reporting of the cost of war. The objective is to improve the credibility, transparency, 

and timeliness of the Cost of War reporting, to include CERP. The Cost of War Senior Steering Group is to: establish and charter the GWOT Cost of War Project Management Office; evaluate and approve plans and recommendations for the resolution 

of policy, system, and procedural issues that impact the credibility of Cost of War 

reporting; facilitate adoption of Cost of War reporting best business practices 

throughout DOD; and provide oversight and direction to the GWOT Cost of War 

Program Management Office on key metrics, trends, and initiatives that measure 

the improvements in Cost of War reporting.67

Defense Finance and Accounting Service.—The Director, DFAS has initiated a 

proactive effort both in theater and in the continental United States, to support the 

warfighter and mitigate challenges DOD has in OEF and OIF operations. According 

to the DFAS GWOT Program Management Office, since August 2007, DFAS has implemented the following financial related initiatives. 

The DFAS GWOT Program Management Office: mapped processes and developed 

standard operating procedures for funding and reporting; improved tracking of 

GWOT funds and budget execution by Services leading to greater reliability of data 

incorporated in the GWOT Cost of War report; documented Components’ legacy 

GWOT reporting business practices; implemented accuracy and compliance measures and scorecard; implemented GWOT Cost of War Status of Funds reporting; 

achieved a Green progress rating on the President’s Management Agenda scorecard; 

established proactive, aggressive communication channels for GWOT audits; established a viable theater support program; and developed a repeatable process for 

monitoring GWOT audits, which is considered a ‘‘Best Practice’’ in addressing 

GWOT and financial audits for DOD. 

In-Theater Support: 

—Worked with theater commanders 68 to support finance operations and have deployed support teams to: perform finance functions; assist with in-depth reviews 

of commitments, obligations, and disbursements;—assist with conducting joint 

reviews; retrograde finance functions back to DFAS continental U.S. operations 

and free soldiers to perform other missions; provide training support on accounting, vendor pay, military pay disbursing, and supporting systems; keep 

lines of communication flowing between theater finance and DFAS to troubleshoot problems; support audit inquiries; and provide supplemental support during unit rotations. 

—Included actions the Program Management Office performed in support of 

GWOT operations in the theater: improved payment controls and documentation in theater; implemented electronic imaging of documents in the theater of 

operations to improve the efficiency of reporting and to reduce risk to soldiers 

who transport documentation; issued guidance and updated policy regulations 

to improve the communication of requirements in the theater; assisted commands in executing and reporting GWOT budget execution; and participated in 

training units deploying to the theater. 

DOD AUDIT COMMUNITY INITIATIVES

In addition to actions taken by the DOD Components, the Defense oversight community has instituted its own initiatives to address the challenges presented to 

DOD in OEF and OIF operations. Some of the initiatives within the Defense oversight community are focused workforces, focused coordination groups, and comprehensive and coordinated oversight plans in response to statutory requirements. 

The Defense oversight community is increasing its partnerships and providing 

support within the Defense community for oversight efforts. For example, the DOD 

OIG and AAA are conducting a joint review of the Joint Contracting Command— 

Iraq and Afghanistan. In addition, the U.S. Army Corps of Engineers and AAA have 

provided personnel to support DOD OIG oversight efforts. The Naval Audit Service 

and AFAA have provided support to the DOD OIG munitions accountability assessment effort. 
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69We define expeditionary workforce as mobile personnel dedicated to a specific mission and 

deployable to worldwide locations to conduct oversight to complement permanent workforce efforts. 

Audit Plan for Support of Coalition Forces in Iraq and Afghanistan.—The fiscal 

year 2008 National Defense Authorization Act, Section 842, ‘‘Investigation of Waste, 

Fraud, and Abuse in Wartime Contracts and Contracting Processes in Iraq and Afghanistan,’’ January 28, 2008, requires the Inspector General of the Department of 

Defense to develop a comprehensive plan for a series of audits of DOD contracts, 

subcontracts, and task and delivery orders for the logistical support of coalition 

forces in Iraq and Afghanistan. The Act also requires that the Special Inspector 

General for Iraq Reconstruction and the Special Inspector General for Afghanistan 

Reconstruction develop a comprehensive plan for a series of audits of Federal agency 

contracts, subcontracts, and task and delivery orders for the performance of security 

and reconstruction functions in Afghanistan and Iraq. 

To show all of the audit work for Afghanistan and Iraq, the DOD OIG has expanded the audit plan beyond the statutory mandate to include other key issue 

areas for Afghanistan and Iraq, such as financial management, and human capital 

for contract administration. The plan includes the planned audit work of the Inspectors General of the Department of State and the U.S. Agency for International Development and the Special Inspector General for Iraq Reconstruction. The plan also 

includes the planned audit work of the Army Audit Agency, Air Force Audit Agency, 

and Defense Contract Audit Agency because of the major contributions they make 

to improve the efficiency and effectiveness of support to the military. 

The Inspectors General of Department of Defense, Department of State, Agency 

for International Development, and the Special Inspector General for Iraq Reconstruction are coordinating their audit plans through existing working groups and 

councils. Coordination will include the Special Inspector General for Afghanistan 

Reconstruction when, and if, one is appointed. 

Workforce.—Within the Defense oversight community, the AAA, AFAA, and DOD 

OIG have instituted an expeditionary workforce structure.69 The AAA and DOD 

OIG maintain a footprint of personnel on the ground in Afghanistan, Iraq, and Kuwait, whereas the focus of the Special Inspector General for Iraq Reconstruction is 

limited to Iraq. The AFAA has no permanent presence in Southwest Asia; however, 

it uses about 10 percent of available auditors per year on GWOT-related audits in 

the United States Air Forces Central overseas area of responsibility. The audit work 

is accomplished by using 24 person temporary teams twice a year to perform mobile 

audits for 7 to 8 weeks. 

Coordination Groups.—The DOD OIG is the lead oversight agency for accountability in DOD and, as such, is committed to maintaining an effective working relationship with other oversight organizations to minimize duplication of efforts and 

to provide more comprehensive coverage. Effective interagency coordination, collaboration, and partnerships within the oversight community are essential to providing 

comprehensive reviews of wartime expenditures to identify whether critical gaps 

exist, and then to recommend actions to close those gaps. 

SWA Joint Planning Group.—The DOD OIG has jointly established and chairs an 

intra- and interagency Southwest Asia Joint Planning Group that meets quarterly. 

The Group provides oversight of fraud, waste, abuse, and criminal activities in the 

Southwest Asia region. The Southwest Asia Joint Planning Group provides a chance 

for collaboration and team work with organizations engaged in this effort, including 

the Military Inspectors General and Service Auditors General, Combatant Commands Inspectors General, DCAA, DFAS, DCMA, the Inspectors General of State 

and the U.S. Agency for International Development, SIGIR, and GAO. The mission 

of the Southwest Asia Joint Planning Group is to better coordinate and integrate 

oversight activities in the region. The Southwest Asia Joint Planning Group leads 

the coordination and oversight required to identify and recommend improved mission support to military units conducting operations. 

Afghanistan Working Group.—A subgroup of the Southwest Asia Joint Planning 

Group is the Afghanistan Working Group. The DOD OIG, along with the GAO, the 

Inspectors General of State, and the U.S. Agency for International Development, established the Working Group to minimize the impact on forward command operations, deconflict overlapping and duplicate oversight requests, and facilitate the exchange of oversight information related to Afghanistan. The DOD OIG, as the DOD 

representative, also incorporates the ongoing and planned Afghanistan-related oversight efforts of the Service Auditors General into the Working Group. The Afghanistan Working Group has convened to discuss ongoing, planned, and completed 

projects that address issues related to Afghanistan operations. This group has 
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70The DOD OIG issues the Semiannual Report to Congress in accordance with the Inspector 

General Act of 1978, as amended. 

briefed congressional committees and members of the ongoing, planned, and completed Afghanistan oversight projects. 

Iraq Inspectors General Council.—In conjunction with the Southwest Asia Joint 

Planning Group, the DOD OIG also participates in the Iraq Inspectors General 

Council chaired by SIGIR to minimize the impact on forward command operations, 

deconflict overlapping and duplicate oversight requests, and facilitate the exchange 

of oversight information unique to Iraq. 

The DOD OIG provides an overview of the DOD oversight community in its Semiannual Reports 70 to Congress. The DOD OIG Semiannual Report includes a chapter 

on the DOD oversight community’s efforts for GWOT and Southwest Asia. Please 

see http://www.dodig.mil/sar/index.html for our published Semiannual Reports to 

Congress, including DOD oversight community’s efforts on GWOT and Southwest 

Asia. 

DOD OIG INITIATIVES

The DOD IG is committed to supporting the GWOT and the needs of the men and 

women fighting this war. Overall, the DOD IG is responsible for providing oversight 

to more than $655 billion in funds dedicated for the GWOT. The DOD OIG identifies 

and helps correct critical mission support problems that impact OEF and OIF. The 

DOD IG has established the following GWOT-related goals: 

—Goal 1.—Increase the DOD OIG presence in Southwest Asia to work on priority 

issues directly supporting efforts for OEF and OIF. 

—Goal 2.—Expand coverage of the DOD GWOT-related programs and operations 

by providing oversight in fundamental areas: contract surveillance, financial 

management, accountability of resources, as well as training and equipping of 

personnel and developing a logistics sustainment base. 

—Goal 3.—Increase efforts to prevent the illegal transfer of strategic technologies 

and U.S. Munitions List items to prohibited nations, terrorist organizations, 

and other criminal enterprises. 

Besides developing a comprehensive plan for a series of audits as required by the 

fiscal year 2008 National Defense Authorization Act, Section 842, ‘‘Investigation of 

Waste, Fraud, and Abuse in Wartime Contracts and Contracting Processes in Iraq 

and Afghanistan,’’ January 28, 2008, the DOD OIG initiated several other actions 

to support OEF and OIF. The DOD OIG established field offices in four countries 

in Southwest Asia, created an expeditionary workforce, and participated in interagency focus groups. To accomplish its oversight mission, the DOD OIG has adopted 

a strategy that is based on maintaining the right-size presence in theater but also 

recognizes that much of its work can be done out of Iraq and Afghanistan. An important part of the DOD OIG oversight effort is to improve interservice and interagency coordination and collaboration to minimize duplication of effort and ensure 

that DOD OIG has only the staff needed in theater to accomplish the mission. 

Southwest Asia Field Offices.—The DOD OIG has established field offices in Afghanistan, Iraq, Kuwait, and Qatar and continues key placement of DOD OIG personnel in Southwest Asia. DOD OIG presence facilitates timely reviews and reporting of results in theater and minimizes disruption to the warfighter. 

Workforce.—The DOD OIG has adopted an expeditionary workforce model to support efforts throughout all of Southwest Asia. The DOD OIG has core staff forward 

deployed at all times. The core contingent is composed of individuals serving deployments of 6 to 12-months. Expeditionary team members deploy for as long as needed 

to complete the review. 

Panel on Contracting Integrity.—The DOD OIG participates in the DOD Panel on 

Contracting Integrity. Established under Section 813 of the fiscal year 2007 National Defense Authorization Act, the Panel is chaired by the Deputy Under Secretary of Defense for Acquisition, Technology, and Logistics to conduct reviews of 

DOD progress made in eliminating areas of vulnerability in the Defense contracting 

system. The DOD OIG is a member of the overall Panel on Contracting Integrity, 

a member of the subcommittee on Adequate Pricing, and is Chair of the Procurement Fraud Indicators subcommittee. The Procurement Fraud Indicators subcommittee is identifying what these indicators are and how they should best be addressed and used for the contracting/acquisition workforce. 

GWOT Cost of War Senior Steering Group.—The DOD OIG is an invited observer 

to the GWOT Cost of War Senior Steering Group that DOD established on February 

26, 2007, to improve and standardize cost of war reporting. Attending the Senior 

Steering Group meetings helps the DOD OIG remain apprised of DOD efforts for 
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cost of war reporting and furthers its oversight regarding financial aspects of GWOT 

to ensure timeliness and value to the DOD. 

Federal Bureau of Investigation Joint Terrorism Task Forces.—As of March 2008, 

the DOD OIG has personnel supporting more than 40 joint terrorism task forces, 

full-time or part-time. These task forces were formed to maximize interagency cooperation and coordination by creating cohesive units capable of addressing both 

international and domestic terrorism. 

National Procurement Fraud Task Force.—The DOD OIG has been a member of 

the National Procurement Fraud Task Force since 2006. This task force promotes 

the prevention, early detection, and prosecution of procurement fraud. 

International Contract Corruption Task Force.—The DOD OIG is a member of the 

International Contract Corruption Task Force. DOD OIG personnel are assigned 

full-time to the task force’s Joint Operations Center. The International Contract 

Corruption Task Force was formed to specifically target fraud and corruption involving Southwest Asia. The primary goal of the task force is to combine the resources 

of multiple investigative agencies and to partner with the Department of Justice to 

effectively and efficiently investigate and prosecute cases of contract fraud and public corruption related to U.S. Government spending in Iraq, Kuwait, and Afghanistan. 

DFAS-Rome, New York Project.—The DOD OIG initiated this proactive effort to 

analyze more than $10 billion in payment vouchers related to U.S. Army purchases 

in Iraq. The vouchers as of March 2008, were stored at DFAS-Rome, New York. This 

DOD OIG effort includes the Defense Criminal Investigative Service, DOD OIG Auditing, AAA, DCAA, and the Federal Bureau of Investigation. 

ARMY AUDIT AGENCY INITIATIVES

Since June 2002, AAA has been actively involved in audit work in support of OEF 

and OIF. AAA maintains a significant presence in the CENTCOM area of responsibility to assist commanders in GWOT and has continuously had between 10 to 30 

auditors deployed in Afghanistan, Iraq, and Kuwait since May 2005. 

Audits in theater have focused primarily on logistics and contracting issues. Since 

the beginning of OEF and OIF, AAA has issued 31 reports addressing various aspects of Logistics Civil Augmentation Program (LOGCAP) operations, and 40 other 

reports addressing issues such as logistics, military pay, and fund management. 

In June 2007, the AAA Auditor General accompanied a congressional delegation 

to Iraq and Kuwait that assessed contracting operations in theater. The delegation 

invited the AAA Auditor General because of the Auditor General’s testimony to the 

Senate Armed Services Committee on April 19, 2007, about the AAA LOGCAP audit 

work. The delegation met with top Army officials and key representatives from the 

oversight community. 

Currently, AAA is conducting audits in Afghanistan, Iraq, and Kuwait of contracting operations, retrograde operations, container management, and accountability of contractors on the battlefield. This work in theater stems from requests 

from the Secretary of the Army; the Commander, Multi-National Force—Iraq; U.S. 

Army Criminal Investigation Command; the Commanding General, Third U.S. 

Army and U.S. Army Forces Central Command; and the Commander, Joint Contracting Command—Iraq and Afghanistan. 

AAA has been proactive in helping senior Army leadership improve contracting 

operations in Southwest Asia. 

—At the request of the Secretary of the Army, AAA assessed contracting operations at the Kuwait Contracting Office. Essentially, AAA recreated contracting 

events associated with the operation and oversight of the Office from fiscal year 

2002 through fiscal year 2007. The review identified contracting weaknesses 

and provided the Secretary with critical information needed to assess whether 

personnel with oversight responsibilities over the Office’s operations performed 

their duties properly. The Secretary used the results of the review to initiate 

immediate corrective actions in Army contracting operations for current and future wartime contingencies. Moreover, the results were instrumental in the Secretary establishing the Army Contracting Task Force. 

—AAA materially assisted the operations of the Army Contracting Task Force 

during fiscal year 2008. Task force members reviewed a statistical sampling of 

contracts awarded by the Kuwait Contracting Office between fiscal year 2003 

and fiscal year 2006 that were valued at more than $25,000. To assist the task 

force, AAA provided the sample size, evaluated the methodology task force 

members used to review contracts and assess fraud indicators, and provided 

task force members with training on contract fraud and how to identify fraud 

indicators. 
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AAA has also been extremely active in assisting criminal investigators and Federal attorneys in support of contract fraud cases related to Southwest Asia operations. 

—AAA provided, and continues to provide, extensive support to the International 

Contract Corruption Task Force. This task force includes members from U.S. 

Army Criminal Investigation Command, Defense Criminal Investigative Service, DCAA, DOD OIG, the Federal Bureau of Investigation, Department of Justice, and SIGIR. To support this task force, AAA extracted data from Army 

automated contracting and financial systems. AAA organized this information 

into usable databases, provided memorandums describing the scope and methodology used to extract the data from the systems, and trained task force members on how to use the contract and contract payment databases as an investigative tool. 

—AAA provided, and continues to provide, extensive support to the Department 

of Justice’s National Procurement Fraud Task Force to help obtain indictments 

and prosecutions related to procurement fraud cases in Southwest Asia. AAA 

obtained documentary evidence and analyzed data needed to prosecute several 

major procurement fraud cases. AAA also provided the task force a compilation 

of all the contract and payment information available in Army and DFAS automated systems to support contract and payment amounts for multiple contracts. 

These contracts were at the center of a nationally publicized procurement fraud 

case involving about $14 million of kickbacks allegedly paid to a military contracting officer. 

—Currently, AAA is performing a major data-mining effort involving vendor payments in Kuwait. This effort is geared to identify potentially fraudulent payments and control weaknesses in automated and manual contract payment 

processes. This work supports both the International Contract Corruption Task 

Force and the Army Task Force on Contracting. 

Establishing the Expeditionary Support Audit Team.—In October 2007, AAA realigned its staff and established the Expeditionary Support Audit Team to enhance 

audit support for overseas contingency operations. Establishing the team enabled 

AAA to improve its efficiency and responsiveness to Army leaders and combatant 

commanders on the ground in Southwest Asia in support of OEF and OIF. 

AAA built the team exclusively from volunteers willing to serve in a deployed environment. The team consists of about 40 full-time (core) members, half of whom 

are deployed to Southwest Asia at any given time. The AAA continuously augments 

the core team with about 5 to 10 additional volunteers who deploy and work with 

the core members for 180-day assignments. This enables AAA to continuously operate with about 25 to 30 deployed staff and provide timely, relevant audit service in 

Southwest Asia. In fiscal year 2008 and fiscal year 2009, the Expeditionary Support 

Audit Team will concentrate its efforts in Southwest Asia on contracting and logistics operations. 

Coordinating and Sharing with Other Oversight Activities.—Senior AAA officials 

have actively participated in the DOD Southwest Asia Joint Audit Planning Group 

since its inception. The planning group provides a forum for DOD auditors, inspectors, and investigators to share ideas and audit schedules to maximize coverage in 

the theater while avoiding duplication of effort. The AAA has also loaned auditors 

to assist the DOD OIG on several audit initiatives in Iraq. Likewise, AAA has maintained close coordination with the SIGIR. AAA is an active member of the Iraq Inspectors General Council that meets quarterly to discuss and coordinate audit coverage in Iraq. AAA also routinely shares audit information with senior Army officials, including U.S. Army Corps of Engineers Gulf Region Division personnel in 

Iraq, through regular teleconferences convened by the Assistant Secretary of the 

Army (Acquisition, Logistics, and Technology). 

Army Contracting Campaign Plan Task Force.—The Army Contracting Campaign 

Plan Task Force is a proactive Army response to weaknesses identified in Army acquisition and contracting processes and to the findings and recommendations of the 

Gansler Commission on Army Acquisition and Program Management in Expeditionary Operations and the Army Contracting Task Force. The Army Contracting 

Campaign Plan Task Force is led by the Assistant Military Deputy to the Assistant 

Secretary of the Army (Acquisition, Logistics, and Technology). Its mission is to 

operationalize and institutionalize Army Contracting to provide an Army-wide 

standard for global contracting capability in support of warfighter needs across the 

full spectrum of military operations. 

The Acting Under Secretary of the Army established the Army Contracting Campaign Plan Task Force and the task force held its ‘‘kick-off’’ meeting on March 26, 

2008. The task force is ongoing and is supported by acquisition, contracting, and 

support personnel participating in working-level and decision-making forums such 
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as a two-star General Officer Steering Committee, Council of Colonels, and individual Implementation Planning Teams. AAA representatives have met with the 

task force director and he has requested that AAA provide independent and objective audit and attestation services as needed to support the development and implementation of the Army Contracting Campaign Plan. AAA personnel also attended 

the initial meetings of the Implementation Planning Team and the Council of Colonels. 

AIR FORCE AUDIT AGENCY INITIATIVES

Since October 2005, AFAA has taken several initiatives in support of OEF and 

OIF. First, AFAA realigned branches of the Air and Space Operations Division to 

assign a program manager and four audit managers the responsibility to perform 

Air Force-wide audits focusing on operations in the U.S. Air Forces Central area of 

responsibility. As of April 2008, the branch has performed 11 multi-site audits focused exclusively or primarily on U.S. Air Forces Central operations. This branch 

also assisted other AFAA divisions in performing five multi-site audits with U.S. Air 

Forces Central area of responsibility involvement in functional areas such as health 

care, environmental and engineering, and supply. 

Second, AFAA developed expeditionary audit teams to provide audit services in 

the U.S. Air Forces Central area of responsibility. The AFAA deploys an expeditionary audit team of volunteer civilian auditors into the U.S. Air Forces Central 

area of responsibility about twice a year. The audit team, consisting of 12 to 16 

auditors and 3 team chiefs, deploys for about 45 days and performs audits at 5 to 

7 area-of-responsibility installations. The AFAA will deploy its fifth expeditionary 

audit team in June 2008. Audits from the past four expeditionary audit teams have 

resulted in 72 installation-level audit reports and 17 Air Force audit reports, and 

have identified more than $75 million in potential monetary benefits. 

Finally, AFAA participates in the Southwest Asia Joint Planning Group. The 

group’s initial meeting was April 2007 and convenes approximately quarterly. The 

Planning Group coordinates various audit activities impacting Southwest Asia. During the meetings, representatives from the GAO, DOD OIG, DCAA, SIGIR, and the 

Service audit agencies, briefed recently completed, ongoing, and planned audits pertaining to operations in the CENTCOM area of responsibility. Attendees included 

the Combatant Command Inspectors Generals from Special Operations Command, 

Pacific Command, and CENTCOM. Information discussed during the meetings provided valuable input to AFAA audit efforts in the U.S. Air Forces Central area of 

responsibility. 

DEFENSE CONTRACT AUDIT AGENCY INITIATIVES

To better inform the contracting community on the services DCAA can provide 

during contingency contracting operations, DCAA coordinated closely with DAU representatives to revise DAU Course 234, Contingency Contracting. DCAA also provided extensive support for coordinating the draft Expeditionary Contracting Policy, 

which establishes uniform policies and procedures for DOD contingency contracting 

officers deploying to a contingent environment. In addition, DCAA provided input 

and coordinated on the recently issued Joint Contingency Contracting Handbook, a 

pocket-sized handbook and accompanying compact disk, that provides the essential 

information and tools to operate and train effectively in a contingency contracting 

environment. 

SIGIR INITIATIVES

The Special Inspector General for Iraq Reconstruction has two initiatives to assist 

in challenges in OIF. Specifically, SIGIR is capturing its own lessons learned as well 

as performing capping reports. 

Lessons Learned.—SIGIR is carrying out an initiative to capture the lessons 

learned in Iraq reconstruction. The initiative is designed to enhance continuing 

work in Iraq and to inform future U.S. reconstruction efforts. On each of these 

issues, SIGIR is gathering information from extensive research and interviews, collating and distilling the information into white papers, and gathering panels of experts in three forums to evaluate the findings and make recommendations. The Lessons Learned Initiative focuses on three key subject areas: 

—‘‘Iraq Reconstruction: Lessons in Human Capital Management,’’ February 2006, 

is the product of SIGIR audits, other research, and the Lessons Learned Forum 

held in September 2005 at Johns Hopkins University’s Washington, D.C., campus. The document identifies and discusses four key components of effective 

human resource management: policy alignment, workforce planning, recruitment, and continuity. 
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—‘‘Iraq Reconstruction: Lessons in Contracting and Procurement,’’ July 2006, begins by examining contracting activity early in the Iraq program and traces its 

evolutionary development through the effort’s succeeding phases. The concluding section lays out a series of key lessons followed by six recommendations 

for improving the U.S. Government’s capacity to support and execute contracting and procurement in contingency environments. 

—‘‘Iraq Reconstruction: Lessons in Program and Project Management,’’ March 

2007, focuses on program and project management during the U.S.-led reconstruction mission, and tracks the evolution of the three organizations responsible for providing the strategic oversight and tactical direction of the reconstruction effort: the Office of Reconstruction and Humanitarian Assistance, the 

Coalition Provisional Authority, and the U.S. Mission—Iraq. 

Capping Reports.—As reported in its January 30, 2008, report, SIGIR plans to 

present a series of performance audit capping reports that summarize the accomplishments in each of these reconstruction sectors: security and law enforcement; 

justice, public safety infrastructure, and civil society; electric; oil; water resources 

and sanitation; transportation and telecommunications; roads, bridges, and construction; private sector development; and education, refugees, human rights, democracy, and governance. 

These reports will build on the information obtained in the focused contracting 

reviews conducted in fiscal year 2008 and provide detailed descriptions of the 

projects completed in each sector and the associated costs. SIGIR will also assess 

how well the Iraqis are maintaining the projects and assess the impact of each 

project on local communities. 

APPENDIX A. SCOPE AND METHODOLOGY

The Defense oversight community—the DOD Office of Inspector General (OIG), 

the Army Audit Agency (AAA), the Naval Audit Service, the Air Force Audit Agency 

(AFAA), and the Special Inspector General for Iraq Reconstruction (SIGIR)—and the 

Government Accountability Office (GAO) issued 314 reports and testimonies (302 

unclassified and 12 classified) beginning fiscal year 2003 through fiscal year 2007 

that support Operation Enduring Freedom (OEF) or Operation Iraqi Freedom (OIF). 

This non-audit service report summarizes 302 OEF and OIF related reports and 

testimonies from fiscal year 2003 through fiscal year 2007 issued and given by the 

Defense oversight community and GAO. We reviewed the OEF and OIF related reports and testimonies obtained, but we did not review the supporting documentation 

for any of the reports. Based on our review, we created functional areas (main categories) to categorize the reports and testimonies. The categories resulting from our 

review of the 314 OEF and OIF-related reports and testimonies issued by the audit 

agencies are: Contract Management, Logistics, Financial Management, and Other. 

The team then reviewed the causes of the recommendations in the unclassified 

reports in order to determine systemic challenges in the reports. See Appendix C 

for the definitions the team used for each category. The categories resulting from 

our review of causes of the recommendations are as follows. 

—Contract Management: Contract Administration; Policy and Procedure; 

Sourcing; Requirements; and Other/Strategic. 

—Logistics: Policy and Procedure; Accountability; Sustainability; Requirements; 

and Other. 

—Financial Management: Overall Financial Management; Internal Controls; Obligations; and Execution. 

—Other: Policy and Procedure; Planning; Accountability; and Other. 

The audit team also counted the recommendations in each report and determined 

the status of each recommendation. We obtained the status of the DOD OIG and 

GAO recommendations from the Defense Automated Management Information System; the AAA, AFAA, and Naval Audit Service status from representatives at those 

agencies; and the SIGIR status from the SIGIR January 30, 2008, quarterly report. 

The audit team also validated the status of GAO recommendations obtained from 

the Defense Automated Management Information System with GAO representatives. 

We then sent the results of categorizing the causes of the recommendations into 

issue areas, the number of recommendations in each report, and the status of those 

recommendations to GAO, DOD OIG, AAA, Naval Audit Service, AFAA, and SIGIR 

for them to verify. Based on the other agencies’ comments to our initial results, we 

updated our initial categorizations of the causes, number of recommendations, and 

status of the recommendations for the reports and testimonies. 

Using the audit agencies’ input of the categorization of the 302 unclassified reports and testimonies, the team reviewed the reports in the respective categories to 
192 

determine whether any systemic or recurring challenges in the categorized areas 

exist. The team also reviewed the status of the recommendations in those reports 

and determined whether DOD took appropriate action to address the 983 recommendations by determining how many recommendations remain open at the end 

of each fiscal year. 

We sought out DOD initiatives regarding Contract Management, Logistics, and 

Financial Management challenges in OEF and OIF. We contacted the Office of the 

Deputy Under Secretary of Defense for Acquisition, Technology, and Logistics; 

OUSD(C); Executive Director for LOGCAP Program, Army Sustainment Command; 

DFAS GWOT Program Management Office; and DCAA. We also sought out initiatives by the DOD oversight community and contacted AAA, Naval Audit Service, 

AFAA, DCAA, and SIGIR. 

Use of Computer-Processed Data.—We relied on data that were entered into the 

Defense Automated Management Information System to determine the status of the 

DOD OIG and GAO report recommendations. We did not perform any tests of the 

validity of the data manually entered into the Defense Automated Management Information System by DOD OIG personnel when compiling information for this report. 

APPENDIX B. OEF AND OIF REPORTS AND TESTIMONIES FISCAL YEAR 2003 THROUGH

FISCAL YEAR 2007 

From fiscal year 2003 through fiscal year 2007, the Defense oversight community 

and GAO have issued 314 reports and testimonies that relate to Operations Enduring Freedom or Iraqi Freedom. Where possible, hyperlinks to the complete reports 

are provided. The reports and testimonies are listed by agency, by issue date. The 

twelve classified reports are marked with an asterisk (*). 

Army Audit Agency 

The Army Audit Agency issued 77 audit reports or testimonies pertaining to Operations Enduring Freedom and Iraqi Freedom. To obtain copies of the Army Audit 

Agency reports, visit their Web site at https://www.aaa.army.mil. The site is available only to military domains and the Government Accountability Office. Other activities may request copies of Agency reports by contacting the Army Audit Agency 

Audit Coordination and Followup Office at 703–693–5679. Where possible, 

hyperlinks to the complete Army Audit Agency reports are provided below. 

Army Audit Agency Report No. A–2007–0204–ALL, ‘‘Audit of Defense Base Act Insurance for the Logistics Civil Augmentation Program, Audit of Logistics Civil Augmentation Program Operations in Support of Operation Iraqi Freedom,’’ September 

28, 2007 

Army Audit Agency Report No. A–2007–0215–FFS, ‘‘Contractor Support and Mobilization Stations—Ft. Bragg, North Carolina,’’ September 18, 2007 

Army Audit Agency Report No. A–2007–0210–FFS, ‘‘Contractor Support and Mobilization Stations—Ft. Carson, Colorado,’’ September 10, 2007 

Army Audit Agency Report No. A–2007–0191–FFM, ‘‘Agreed-Upon Procedures Attestation of the Results of the 2007 National Defense Authorization Act Audit on 

Wounded in Action Soldier Pay Accounts, Attestation Report,’’ August 15, 2007 

Army Audit Agency Report No. A–2007–0184–FFM, ‘‘Civilian Pay in Support of 

Operation Enduring Freedom and Operation Iraqi Freedom,’’ August 15, 2007 

Army Audit Agency Report No. A–2007–0190–ALM, ‘‘Resource Requirements for 

Reset (FOUO),’’ August 8, 2007 

Army Audit Agency Report No. A–2007–0149–ALL, ‘‘Audit of the Army’s Theater 

Linguist Program in Afghanistan, Operation Enduring Freedom,’’ July 23, 2007 

Army Audit Agency Report No. A–2007–0152–ALR, Time-Sensitive Report, Audit 

of Container Detention Billing for Global War on Terrorism, June 14, 2007 

Army Audit Agency Report No. A–2007–0131–ALA, ‘‘Rapid Equipping Force Initiative,’’ May 18, 2007 

Army Audit Agency Report No. A–2007–0126–ALL, ‘‘Asset Visibility in Support of 

Operation Iraqi Freedom and Operation Enduring Freedom—Army Reserve Equipment,’’ May 9, 2007 

Army Audit Agency Report No. A–2007–0104–ALL, ‘‘Summary Audit Report on 

the Cost-Effectiveness of Transitioning Work Under the Logistics Civil Augmentation Program Contingency Contract to Sustainment Contracting, Audit of Logistics 

Civil Augmentation Program Operations in Support of Operation Iraqi Freedom,’’ 

March 23, 2007 

Army Audit Agency Report No. A–2007–0093–ALL, ‘‘Audit of the Cost-Effectiveness of Transitioning Selected Functions Performed at the Theater Distribution 

Center (Task Order 87) From Contingency to Sustainment Contracting, Audit of Lo-
193 

gistics Civil Augmentation Program Operations in Support of Operation Iraqi Freedom,’’ March 9, 2007 

Army Audit Agency Report No. A–2007–0088–ALE, ‘‘Reset of Aviation Assets; 

U.S. Army Aviation and Missile Life Cycle Management Command (FOUO),’’ August 8, 2007 

Army Audit Agency Report No. A–2007–0075–ALL, ‘‘Asset Visibility in Support of 

Operation Iraqi Freedom and Operation Enduring Freedom,’’ February 15, 2007 

Army Audit Agency Report No. A–2007–0071–ALE, ‘‘Reconstitution of Secondary 

Items,’’ February 12, 2007 

Army Audit Agency Report No. A–2007–0061–ALL, ‘‘Asset Visibility in Support of 

Operation Iraqi Freedom and Operation Enduring Freedom—Army Reserve Equipment,’’ January 30, 2007 

Army Audit Agency Report No. A–2007–0053–ALE, ‘‘Reconstitution—Supply Management Operations in U.S. Army, Europe and Seventh Army,’’ January 19, 2007 

Army Audit Agency Report No. A–2007–0052–ALE, ‘‘Reconstitution—Direct Support and Below Maintenance in U.S. Army, Europe and Seventh Army,’’ January 

17, 2007 

Army Audit Agency Report No. A–2007–0040–ALL, ‘‘Audit of Procedures for Managing the Overaged Reparable Items List at the Tactical Wheeled Vehicle Refurbished Center,’’ January 16, 2007 

Army Audit Agency Report No. A–2007–0039–FFP, ‘‘Global War on Terrorism 

Supplemental Funding,’’ December 21, 2006 

Army Audit Agency Report No. A–2007–0019–ALL, ‘‘Distribution Functions, Audit 

of Logistics Civil Augmentation Program Operations in Support of Operation Iraqi 

Freedom,’’ November 21, 2006 

Army Audit Agency Report No. A–2007–0011–ALL, ‘‘Nontactical Vehicle Usage in 

the Iraq Area of Operations, Audit of Logistics Civil Augmentation Program Operations in Support of Operation Iraqi Freedom,’’ November 16, 2007 

Army Audit Agency Report No. A–2007–0015–ALE, ‘‘Maintenance of Left Behind 

Equipment in U.S. Army, Europe and Seventh Army,’’ October 31, 2006 

Army Audit Agency Report No. A–2007–0005–FFP, ‘‘Audit of Logistics Support for 

Operation Enduring Freedom—Philippines,’’ October 12, 2006 

Army Audit Agency Report No. A–2006–0254–ALL, ‘‘Audit of Procedures for 

Transferring Property During the Base Closure Process in Support of Operation 

Iraqi Freedom,’’ September 29, 2006 

Army Audit Agency Report No. A–2006–0237–ALE, ‘‘Funding Reset of Aviation 

Assets in Europe,’’ September 29, 2006 

Army Audit Agency Report No. A–2006–0253–ALL, ‘‘Cost-Effectiveness of 

Transitioning the General Support Supply Activity (Task Order 87) From Contingency to Sustainment Contracting, Audit of Logistics Civil Augmentation Program 

Operations in Support of Operation Iraqi Freedom,’’ September 28, 2006 

Army Audit Agency Report No. A–2006–0246–ALL, ‘‘Cost-Effectiveness of 

Transitioning Task Order 66—Kuwait Naval Base Camp Support From Contingency 

to Sustainment contracting, Audit of Logistics Civil Augmentation Program Operations In Support of Operation Iraqi Freedom—Phase II (Kuwait),’’ September 27, 

2006 

Army Audit Agency Report No. A–2006–0233–ALL, ‘‘Clothing Issue Facilities, 

Audit of Logistics Civil Augmentation Program Operations in Support of Operation 

Iraqi Freedom,’’ September 22, 2006 

Army Audit Agency Report No. A–2006–0188–ALL, ‘‘Asset Visibility in Support of 

Operation Iraqi Freedom and Operation Enduring Freedom,’’ August 11, 2006 

Army Audit Agency Report No. A–2006–0168–ALL, ‘‘Report on the Subsistence 

Prime Vendor Contract, Audit of Logistics Civil Augmentation Program Operations 

in Support of Operation Iraqi Freedom,’’ August 4, 2006 

Army Audit Agency Report No. A–2006–0158–ALL, ‘‘Report on Class IX (Aviation) 

Warehouse Staffing, Camp Anaconda, Audit of Logistics Civil Augmentation Program Operations in Support of Operation Iraqi Freedom,’’ July 11, 2006 

Army Audit Agency Report No. A–2006–0136–ALL, ‘‘Management Controls Over 

Offline Purchases,’’ June 13, 2006 

Army Audit Agency Report No. A–2006–0077–ALE, ‘‘Reconstitution—General 

Support Maintenance Within U.S. Army, Europe and Seventh Army,’’ June 2, 2006 

Army Audit Agency Report No. A–2006–0099–ALL, ‘‘Audit of Program Management in the Iraq Area of Operations, Audit of Logistics Civil Augmentation Program 

Operations in Support of Operation Iraqi Freedom,’’ April 25, 2006 

Army Audit Agency Report No. A–2006–0067–FFM, ‘‘Military Pay for Operation 

Enduring Freedom/Operation Iraqi Freedom—Active Component,’’ April 5, 2006 
194 

Army Audit Agency Report No. A–2006–0091–ALL, ‘‘Audit of Management of the 

Theater Transportation Mission (Task Order 88), Audit of Logistics Civil Augmentation Program Operations in Support of Operation Iraqi Freedom,’’ April 4, 2006 

Army Audit Agency Report No. A–2006–0090–ALE, ‘‘Followup Audit II of the 

Commanders’ Emergency Response Program and Quick Response Fund,’’ March 31, 

2006 

Army Audit Agency Report No. A–2006–0083–ALL, ‘‘Audit of Retrograde Operations (Task Order 87), Audit of Logistics Civil Augmentation Program Operations 

in Support of Operation Iraqi Freedom,’’ March 21, 2006 

Army Audit Agency Report No. A–2006–0081–ALL, ‘‘Audit of Unliquidated Obligations, Audit of Logistics Civil Augmentation Program Operations in Support of 

Operation Iraqi Freedom,’’ March 17, 2006 

Army Audit Agency Report No. A–2006–0073–ALL, ‘‘Management of Force Provider Modules: Logistics Civil Augmentation Program,’’ March 20, 2006 

Army Audit Agency Report No. A–2006–0046–ALA, ‘‘Fund Accountability for Fiscal Year 2004 Iraq Relief and Reconstruction Funds: Project and Contracting Office, 

Washington, DC,’’ January 31, 2006 

Army Audit Agency Report No. A–2006–0047–ALL, ‘‘Base Closure Process in the 

Iraq Area of Operations,’’ January 11, 2006 

Army Audit Agency Report No. A–2006–0038–FFM, ‘‘Reserve Component Pay— 

OIF/OEF (FOUO),’’ May 25, 2006 

Army Audit Agency Report No. A–2006–0022–ALL, ‘‘Logistics Civil Augmentation 

Program: U.S. Army Materiel Command,’’ November 28, 2005 

Army Audit Agency Report No. A–2006–0018–ALL, ‘‘Logistics Civil Augmentation 

Program Support Unit Training: Logistics Civil Augmentation Program Support 

Unit Headquarters Fort Belvoir, Virginia,’’ November 17, 2005 

Army Audit Agency Report No. A–2005–0332–ALE, ‘‘Followup Audit of the Commanders’ Emergency Response Program and Quick Response Fund: Multi-National 

Security Transition Command—Iraq,’’ September 30, 2005 

Army Audit Agency Report No. A–2005–0264–FFP, ‘‘Audit of Military Pay in Support of Operation Enduring Freedom/Operation Iraqi Freedom,’’ August 23, 2005 

Army Audit Agency Report No. A–2005–0250–ALE, ‘‘Class IX Spare Parts—Operation Iraqi Freedom,’’ August 15, 2005 

Army Audit Agency Report No. A–2005–0197–ALE, ‘‘Asset Visibility and Container Management—Operation Iraqi Freedom,’’ July 5, 2005 

Army Audit Agency Report No. A–2005–0206–FFG, ‘‘Validation of the Statement 

of Accountability, Attestation of Disbursing Station Symbol Number 8551: 336th Finance Command, Camp Arifjan, Kuwait,’’ June 29, 2005 

Army Audit Agency Report No. A–2005–0194–ALA, ‘‘Program Management in 

Support of Iraq Reconstruction: Project and Contracting Office, Washington, DC,’’ 

May 26, 2005 

Army Audit Agency Report No. A–2005–0177–ALS, ‘‘Internal Controls Over Cargo 

Container Payments: Military Surface Deployment and Distribution Command,’’ 

May 12, 2005 

Army Audit Agency Report No. A–2005–0173–ALE, ‘‘Commanders’ Emergency Response Program and Quick Response Fund: Multi-National Security Transition 

Command—Iraq,’’ May 2, 2005 

Army Audit Agency Report No. A–2005–0172–ALE, ‘‘Functionality of Logistics 

Automated Systems—Operation Iraqi Freedom,’’ April 27, 2005 

Army Audit Agency Report No. A–2005–0168–ALE, ‘‘Theater Distribution Capabilities—Operation Iraqi Freedom,’’ April 26, 2005 

Army Audit Agency Report No. A–2005–0078–FFG, ‘‘Coalition Provisional Authority Travel Process,’’ March 2, 2005 

Army Audit Agency Report No. A–2005–0095–FFG, ‘‘Vested and Seized Assets, 

Operation Iraqi Freedom,’’ February 16, 2005 

Army Audit Agency Report No. A–2005–0043–ALE, ‘‘Logistics Civil Augmentation 

Program in Kuwait,’’ November 24, 2004 

Army Audit Agency Report No. A–2005–0052–ALS, ‘‘Validation of Material Weakness In-transit Visibility Policies and Standards,’’ November 23, 2004 

Army Audit Agency Report No. A–2004–0463–FFC, ‘‘Fiscal Year 2003 Supplemental Funds and Cash Flow,’’ August 27, 2004 

Army Audit Agency Report No. A–2004–0438–AML, ‘‘Definitization of Task Orders—Audit of Logistics Civil Augmentation Program,’’ August 12, 2004 

Army Audit Agency Report No. A–2004–0426–IMU, ‘‘Audit of Base Camp Commercial Communications,’’ July 28, 2004 

Army Audit Agency Report No. A–2004–0305–FFG, ‘‘Time Sensitive Report, Audit 

of Vested and Seized Assets, Operation Iraqi Freedom,’’ May 18, 2004 
195 

Army Audit Agency Report No. A–2004–0271–IMU, ‘‘Observations of Mine Clearing Operations Made at Bagram Airfield, Afghanistan,’’ May 3, 2004 

Army Audit Agency Report No. A–2004–0243–IMU, ‘‘Operation Enduring Freedom—Base Camp Construction and Master Plan,’’ April 15, 2004 

Army Audit Agency Report No. A–2004–0156–IMU, ‘‘Operation Enduring Freedom—Logistics Civil Augmentation Program,’’ February 27, 2004 

Army Audit Agency Report No. A–2004–0066–IMU, ‘‘Operation Enduring Freedom—Management and Use of Shipping Containers,’’ December 9, 2003 

Army Audit Agency Report No. A–2004–0053–IMU, ‘‘Operation Enduring Freedom—Management of Class I Supplies,’’ December 5, 2003 

Army Audit Agency Report No. A–2004–0033–IMU, ‘‘Management of Resources,’’ 

October 23, 2003 

Army Audit Agency Report No. A–2004–0013–IMU, ‘‘Audit of Operation Enduring 

Freedom—Class IX Aviation Spare Parts,’’ October 7, 2003 

Army Audit Agency Report No. A–2003–0400–IMU, ‘‘Audit of Operation Enduring 

Freedom—Class IX Aviation Spare Parts,’’ August 19, 2003 

Army Audit Agency Report No. A–2003–0371–IMU, ‘‘Audit of Operation Enduring 

Freedom—Use of Automatic Identification Technology for In-Transit Visibility,’’ July 

24, 2003 

Army Audit Agency Report No. A–2003–0370–IMU, ‘‘Audit of Operation Enduring 

Freedom—In-Transit Visibility,’’ July 24, 2003 

Army Audit Agency Report No. A–2003–0324–FFF, ‘‘Mobilization and Pay Record 

Discrepancies in the Reserve Component,’’ June 30, 2003 

Army Audit Agency Report No. A–2003–0294–IMU, ‘‘Operation Enduring Freedom—Property Accountability,’’ June 2, 2003 

Army Audit Agency Report No. A–2003–01 10, ‘‘Logistics Civil Augmentation Program, A–2003 –011 0–IMU,’’ December 31, 2002 

Naval Audit Service 

The Naval Audit Service issued one audit report pertaining to Operations Enduring Freedom and Iraqi Freedom. To obtain copies of Naval Audit Service reports, 

please contact the Naval Audit Service FOIA Office at (202) 433–5757 or by e-mail 

to navaudsvc.foia@navy.mil. 

Naval Audit Service Report No. N–2005–0018, ‘‘Marine Corps Systems Command 

Contracts Supporting Operation Iraqi Freedom,’’ December 22, 2004 

Air Force Audit Agency 

The Air Force Audit Agency issued 15 audit reports or testimonies pertaining to 

Operations Enduring Freedom and Iraqi Freedom. Unrestricted Air Force Audit 

Agency reports can be accessed at this Web site address: https://www.afaa.hq.af.mil/ 

afck/plansreports/reports.shtml. Where possible, hyperlinks to the complete Air 

Force Audit Agency reports are provided below. To obtain releasable copies of Air 

Force Audit Agency reports, please fax your FOIA request to the Air Force Audit 

Agency FOIA Manager at (703) 696–7776 or e-mail to afaafoia@pentagon.af.mil. 

Air Force Audit Agency Report No. F–2007–0008–FD3000, ‘‘Central Command Air 

Forces Deployed Locations Government-Wide Purchase Card Program,’’ June 27, 

2007 

Air Force Audit Agency Report No. F–2007–0007–FD3000, ‘‘Theater Battle Management Core System—Unit Level,’’ June 8, 2007 

Air Force Audit Agency Report No. F–2007–0006–FD4000, ‘‘Civilian Deployments,’’ March 15, 2007 

Air Force Audit Agency Report No. F–2007–0006–FD3000, ‘‘Central Command Air 

Forces Deployed Locations Ground Fuels Management,’’ April 27, 2007 

Air Force Audit Agency Report No. F–2007–0005–FD3000, ‘‘Central Command Air 

Forces Deployed Locations Services Contract Management,’’ April 20, 2007 

Air Force Audit Agency Report No. F–2007–0004–FC4000, ‘‘Deployed Assets,’’ 

January 26, 2007 

Air Force Audit Agency Report No. F–2006–0007–FD3000, ‘‘Central Command Air 

Forces Deployed Locations Blanket Purchase Agreements,’’ August 21, 2006 

Air Force Audit Agency Report No. F–2006–0006–FD3000, ‘‘Central Command Air 

Forces Deployed Locations Cash Management,’’ August 3, 2006 

Air Force Audit Agency Report No. F–2005–0058–FDE000, ‘‘Equipment Accountability 380th Air Expeditionary Wing Al Dhafra AB, United Arab Emirates,’’ June 

1, 2005’’ 

Air Force Audit Agency Report No. F–2005–0053–FDE000, ‘‘Blanket Purchase 

Agreements 380th Air Expeditionary Wing Al Dhafra AB,’’ United Arab Emirates, 

June 1, 2005 
196 

Air Force Audit Agency Report No. F–2005–0043–FDE000, ‘‘Equipment Accountability 379th Air Expeditionary Wing Al Udeid AB, Qatar,’’ April 1, 2005 

Air Force Audit Agency Report No. F–2005–0035–FDE000, ‘‘Blanket Purchase 

Agreements 1st Expeditionary Red Horse Group Al Udeid AB, Qatar,’’ March 14, 

2005 

Air Force Audit Agency Report No. F–2005–0011–FB1000, ‘‘Global War on Terrorism Funds Management,’’ June 20, 2005 

Air Force Audit Agency Report No. F–2004–0060–FDE000, ‘‘Small Arms 379th Air 

Expeditionary Wing Al Udeid AB, Qatar,’’ July 1, 2004 

Air Force Audit Agency Report No. F–2004–0057–FDE000, ‘‘Blanket Purchase 

Agreement 379th Air Expeditionary Wing Al Udeid AB, Qatar,’’ June 22, 2004 

DOD Inspector General 

The DOD OIG issued 28 audit reports or testimonies pertaining to Operations Enduring Freedom and Iraqi Freedom. To obtain electronic copies of DOD OIG reports 

and testimonies, please visit http://www.dodig.mil/Audit/reports/index.html. Where 

possible, hyperlinks to the complete DOD OIG reports are provided below. 

DOD OIG Testimony, ‘‘Accountability During Contingency Operations: Preventing 

and Fighting Corruption in Contracting and Establishing and Maintaining Appropriate Controls on Materiel,’’ September 19, 2007 

DOD OIG Report No. D–2007–107, ‘‘Procurement Policy for Armored Vehicles,’’ 

June 27, 2007 

DOD OIG Report No. D–2007–105, ‘‘United States Transportation Command 

Compliance with DOD Policy on the Use of Commercial Sealift,’’ June 21, 2007 

DOD OIG Testimony, ‘‘Trafficking in Persons,’’ June 21, 2007 

DOD OIG Testimony ‘‘War Profiteering and Other Contractor Crimes Committed 

Overseas,’’ June 19, 2007 

DOD OIG Report No. D–2007–090, ‘‘Managing Prepositioned Munitions in the 

U.S. European Command,’’ May 3, 2007 

DOD OIG Testimony, ‘‘Investigations by the Office of the Inspector General, Department of Defense, Concerning the Death of Corporal Patrick Tillman and the 

Rescue of Private First Class Jessica Lynch,’’ April 24, 2007 

DOD OIG Testimony, ‘‘Combating War Profiteering: Are We Doing Enough to Investigate and Prosecute Contracting Fraud and Abuse in Iraq,’’ March 20, 2007 

DOD OIG Report No. D–2007–064, ‘‘Implementation of the Commanders’ Emergency Response Program in Afghanistan,’’ February 28, 2007 

DOD OIG Report No. D–2007–060, ‘‘Management of the Iraq Security Forces 

Fund in Southwest Asia—Phase II,’’ February 12, 2007 

DOD OIG Report No. D–2007–049, ‘‘Equipment Status of Deployed Forces Within 

the U.S. Central Command’’ [CLASSIFIED, however, click here for an unclassified 

summary] January 25, 2007 

DOD OIG Testimony, ‘‘Audit of Reconstruction and Support Activities in Iraq,’’ 

January 18, 2007 

DOD OIG Report No. D–2007–030, ‘‘Management of the Iraq Security Forces 

Fund in Southwest Asia—Phase I,’’ December 8, 2006 

DOD OIG Report No. D–2007–010, ‘‘The Army Small Arms Program that Relates 

to Availability, Maintainability, and Reliability of the Small Arms Support for the 

Warfighter,’’ November 2, 2006 

*DOD OIG Report No. D–2007–001, ‘‘Information Operations Activities in Southwest Asia’’ [CLASSIFIED], October 6, 2006 

DOD OIG Report No. D–2006–010, ‘‘Contract Surveillance for Service Contracts,’’ 

October 28, 2005 

DOD OIG Testimony ‘‘Iraq Reconstruction, Governance and Security Oversight,’’ 

October 18, 2005 

DOD OIG Report No. D–2006–007, ‘‘Contracts Awarded to Assist the Global War 

on Terrorism by the U.S. Army Corps of Engineers,’’ October 14, 2005 

DOD OIG Report No. D–2005–095, ‘‘DOD Patient Movement System,’’ July 27, 

2005 

DOD OIG Report No. D–2005–045, ‘‘Emergency Supplemental Funding for the Defense Logistics Agency’’ (FOUO), May 9, 2005 

DOD OIG Report No. D–2005–053, ‘‘Fiscal Year 2004 Emergency Supplemental 

Funding for the Defense Information Systems Agency’’ (FOUO), April 29, 2005 

DOD OIG Report No. D–2005–024, ‘‘DOD Management of Navy Senior Enlisted 

Personnel Assignments in Support of Operation Iraqi Freedom,’’ December 15, 2004 

*DOD OIG Report No. D–2004–090, ‘‘Defense Hotline Allegations Concerning C– 

130 Aircraft Use in the U.S. Central Command Area of Responsibility’’ [CLASSIFIED], June 17, 2004 
197 

DOD OIG Report No. D–2004–086, ‘‘Management of Marine Corps Enlisted Personnel Assignments in Support of Operation Iraqi Freedom,’’ June 16, 2004 

DOD OIG Report No. D–2004–057, ‘‘Contracts Awarded for the Coalition Provisional Authority by the Defense Contracting Command—Washington,’’ March 18, 

2004 

*DOD OIG Report No. D–2004–045, ‘‘Coalition Support Funds’’ [CLASSIFIED], 

January 16, 2004 

DOD OIG Report No. D–2003–070, ‘‘DOD Involvement in Export Enforcement Activities’’ (FOUO), March 28, 2003 

*DOD OIG Report No. D–2003–028, ‘‘Summary Report on Homeland Defense, 

Chemical/Biological Defense, and Other Matters Related to Counter-Terrorist Military Operations’’ [CLASSIFIED], November 25, 2002 

Special Inspector General for Iraq Reconstruction 

The Special Inspector General for Iraq Reconstruction issued 91 audit reports or 

testimonies pertaining to Operations Enduring Freedom and Iraqi Freedom. To obtain electronic copies of the reports or testimonies, please visit http://www.sigir.mil/ 

reports/audit.aspx. 

SIGIR Report No. 07–005, ‘‘Fact Sheet on Sources and Uses of U.S. Funding Provided in Fiscal Year 2006 for Iraq Relief and Reconstruction,’’ July 27, 2007 

SIGIR Report No. 07–008, ‘‘Fact Sheet on the Roles and Responsibilities of U.S. 

Government Organizations Conducting IRRF-funded Reconstruction Activities,’’ July 

26, 2007 

SIGIR Report No. 07–003, ‘‘Cost-to-Complete Reporting for Iraq Reconstruction 

Projects,’’ July 26, 2007 

SIGIR Report No. 07–014, ‘‘Status of the Provincial Reconstruction Team Program 

Expansion in Iraq,’’ July 25, 2007 

SIGIR Report No. 07–004, ‘‘Transferring Iraq Relief and Reconstruction Fund 

Capital Projects to the Government of Iraq,’’ July 25, 2007 

SIGIR Report No. 07–009, ‘‘Review of Bechtel’s Spending under Its Phase II Iraq 

Reconstruction Contract,’’ July 24, 2007 

SIGIR Report No. 07–007, ‘‘Status of U.S. Government Anticorruption Efforts in 

Iraq,’’ July 24, 2007 

SIGIR Report No. 07–001, ‘‘Logistics Civil Augmentation Program Task Order 

130: Requirements Validation, Government Oversight, and Contractor Performance,’’ June 22, 2007 

SIGIR Report No. 07–012, ‘‘Review of Iraq Relief and Reconstruction Fund Unmatched Disbursements at the Department of State,’’ April 26, 2007 

SIGIR Report No. 07–006, ‘‘Management of the Commander’s Emergency Response Program in Iraq for Fiscal Year 2006,’’ April 26, 2007 

SIGIR Report No. 07–002, ‘‘Status of the Advanced First Responder Network,’’ 

April 25, 2007 

SIGIR Report No. 06–045, ‘‘Status of Ministerial Capacity Development in Iraq,’’ 

January 30, 2007 

SIGIR Report No. 06–044, ‘‘Fact Sheet on Major U.S. Contractors’ Security Costs 

Related to Iraq Relief and Reconstruction Fund Contracting Activities,’’ January 30, 

2007 

SIGIR Report No. 06–043, ‘‘Review of Iraq Relief and Reconstruction Fund Unmatched Disbursements,’’ January 30, 2007 

SIGIR Report No. 06–040, ‘‘Improper Obligations Using the Iraq Relief and Reconstruction Fund (IRRF 2),’’ January 30, 2007 

SIGIR Report No. 06–030, ‘‘Status of Medical Equipment and Other Non-construction Items Purchased for PHCs,’’ January 30, 2007 

SIGIR Report No. 06–029, ‘‘Review of DynCorp International, LLC, Contract 

Number S LMAQM–04–C–0030, Task Order 0338, for the Iraqi Police Training Program Support,’’ January 30, 2007 

SIGIR Report No. 06–039, ‘‘Review of USAID/Bechtel National, Inc., Property 

Management Controls for Contract SPU–C–00–04–00001–00,’’ January 29, 2007 

SIGIR Report No. 06–036, ‘‘Follow-up on SIGIR Recommendations Concerning the 

Development Fund for Iraq (DFI),’’ January 29, 2007 

SIGIR Report No. 06–034, ‘‘Status of the Provincial Reconstruction Team Program 

in Iraq,’’ October 29, 2006 

SIGIR Report No. 06–033, ‘‘Iraqi Security Forces: Weapons Provided by the U.S. 

Department of Defense Using the Iraq Relief and Reconstruction Fund,’’ October 28, 

2006 

SIGIR Report No. 06–032, ‘‘Iraqi Security Forces: Review of Plans to Implement 

Logistics Capabilities,’’ October 28, 2006 
198 

SIGIR Report No. 06–031, ‘‘Management of the Iraqi Interim Government Fund,’’ 

October 27, 2006 

SIGIR Report No. 06–035, ‘‘Interim Audit Report on Inappropriate Use of Proprietary Data Markings by the Logistics Civil Augmentation Program (LOGCAP) Contractor,’’ October 26, 2006 

SIGIR Report No. 06–028, ‘‘Review of Administrative Task Orders for Iraq Reconstruction Contracts,’’ October 23, 2006 

SIGIR Report No. 06–038, ‘‘Unclassified Summary of SIGIR’s Review of Efforts to 

Increase Iraq’s Capability to Protect Its Energy Infrastructure,’’ September 27, 2006 

SIGIR Report No. 06–037, ‘‘Interim Audit Report on Improper Obligations Using 

the Iraq Relief and Reconstruction Fund (IRRF–2),’’ September 22, 2006 

SIGIR Report No. 06–026, ‘‘Review of the U.S. Agency for International Development’s Management of the Basrah Children’s Hospital Project,’’ July 28, 2006 

SIGIR Report No. 06–025, ‘‘Review of the Medical Equipment Purchased for the 

Primary Healthcare Centers Associated with Parsons Global Services, Inc., Contract 

Number W914NS–04–D–0006,’’ July 28, 2006 

SIGIR Report No. 06–023, ‘‘Changes in Iraq Relief and Reconstruction Fund Program Activities—January through March 2006,’’ July 28, 2006 

SIGIR Report No. 06–021, ‘‘Joint Survey of the U.S. Embassy—Iraq’s 

Anticorruption Program,’’ July 28, 2006 

SIGIR Report No. 06–020, ‘‘Review of the Advanced First Responder Network,’’ 

July 28, 2006 

SIGIR Report No. 06–019, ‘‘Review of the Use of Definitization Requirements for 

Contracts Supporting Reconstruction in Iraq,’’ July 28, 2006 

SIGIR Report No. 06–017, ‘‘Transition of Iraq Relief and Reconstruction Fund 

Projects to the Iraqi Government,’’ July 28, 2006 

SIGIR Report No. 06–024, ‘‘Joint Cash Count: Iraq National Weapons Card Program,’’ July 26, 2006 

SIGIR Report No. 06–018, ‘‘Survey of the Status of Funding for Iraq Programs Allocated to the Department of State’s Bureau of International Narcotics and Law Enforcement Affairs as of December 31, 2005,’’ July 2006 

SIGIR Report No. 06–016, ‘‘Interim Audit Report on the Review of the Equipment 

Purchased for Primary Healthcare Centers Associated with Parsons Global Services, 

Contract Number W914NS–04–D–0006,’’ April 29, 2006 

SIGIR Report No. 06–011, ‘‘Management of the Primary Healthcare Centers Construction Projects,’’ April 29, 2006 

SIGIR Report No. 06–007, ‘‘U.S. Agency for International Development: Management of the Transfer of Iraq Relief and Reconstruction Fund Projects to the Iraqi 

Government,’’ April 29, 2006 

SIGIR Report No. 06–006, ‘‘Multi-National Security Transition Command—Iraq: 

Management of the Transfer of IRRF-funded Assets to the Iraqi Government,’’ April 

29, 2006 

SIGIR Report No. 06–015, ‘‘Iraqi Armed Forces Seized Assets Fund: Review of 

Contracts and Financial Documents,’’ April 28, 2006 

SIGIR Report No. 06–013, ‘‘Briefing to the International Advisory and Monitoring 

Board for Iraq: Management Controls Over the Development Fund for Iraq,’’ April 

28, 2006 

SIGIR Report No. 06–012, ‘‘Development Fund for Iraq Cash Accountability Review: Joint Area Support Group-Central/Falluja,’’ April 28, 2006 

SIGIR Report No. 06–010, ‘‘Review of the Multi-National Security Transition 

Command—Iraq Reconciliation of the Iraqi Armed Forces Seized Assets Fund,’’ 

April 28, 2006 

SIGIR Report No. 06–009, ‘‘Review of Task Force Shield Programs,’’ April 28, 

2006 

SIGIR Report No. 06–008, ‘‘Development Fund for Iraq—Cash Accountability Review: Joint Area Support Group—Central,’’ April 28, 2006 

SIGIR Report No. 06–005, ‘‘Follow-up on Recommendations Made in SIGIR Audit 

Reports Related to Management and Control of the Development Fund for Iraq,’’ 

April 28, 2006 

SIGIR Report No. 06–004, ‘‘Changes in Iraq Relief and Reconstruction Fund Program Activities—October through December 2005,’’ April 28, 2006 

SIGIR Report No. 06–003, ‘‘Review of Data Entry and General Controls in the 

Collecting and Reporting of the Iraq Relief and Reconstruction Fund,’’ April 28, 2006 

SIGIR Report No. 06–001, ‘‘Management of Iraq Relief and Reconstruction Fund 

Program: The Evolution of the Iraq Reconstruction Management System,’’ April 24, 

2006 

SIGIR Report No. 06–002, ‘‘Prompt Payment Act: Analysis of Expenditures Made 

From the Iraq Relief and Reconstruction Fund,’’ February 3, 2006 
199 

SIGIR Report No. 05–027, ‘‘Methodologies for Reporting Cost-to-complete Estimates,’’ January 27, 2006 

SIGIR Report No. 05–026, ‘‘Issues Related to the Use of $50 Million Appropriation 

to Support the Management and Reporting of the Iraq Relief and Reconstruction 

Fund,’’ January 27, 2006 

SIGIR Report No. 05–029, ‘‘Challenges Faced in Carrying Out Iraq Relief and Reconstruction Fund Activities,’’ January 26, 2006 

SIGIR Report No. 05–028, ‘‘GRD–PCO Management of the Transfer of IRRF-funded Assets to the Government of Iraq 05–028,’’ January 23, 2006 

SIGIR Report No. 05–025, ‘‘Management of the Commander’s Emergency Response Program for Fiscal Year 2005,’’ January 23, 2006 

SIGIR Report No. 05–024, ‘‘Management of the Mansuria Electrical Reconstruction Project,’’ January 23, 2006 

SIGIR Report No. 05–023, ‘‘Management of Rapid Regional Response Program 

Contracts in South-Central Iraq,’’ January 23, 2006 

SIGIR Report No. 05–020, ‘‘Management of the Contracts, Grant, and Micro-Purchases Used To Rehabilitate the Karbala Library,’’ October 26, 2005 

SIGIR Report No. 05–016, ‘‘Management of the Contracts and Grants Used To 

Construct and Operate the Babylon Police Academy,’’ October 26, 2005 

SIGIR Report No. 05–015, ‘‘Management of Rapid Regional Response Program 

Grants in South-Central Iraq,’’ October 26, 2005 

SIGIR Report No. 05–017, ‘‘Award Fee Process for Contractors Involved in Iraq 

Reconstruction,’’ October 25, 2005 

SIGIR Report No. 05–022, ‘‘Managing Sustainment for Iraq Relief and Reconstruction Fund Programs,’’ October 24, 2005 

SIGIR Report No. 05–021, ‘‘Management of Iraq Relief and Reconstruction Fund 

Programs—Cost-to-Complete Estimate Reporting,’’ October 24, 2005 

SIGIR Report No. 05–018, ‘‘Acquisition of Armored Vehicles Purchased Through 

Contract W914NS–05–M–1189,’’ October 21, 2005 

SIGIR Report No. 05–014, ‘‘Management of Commanders’ Emergency Response 

Program for Fiscal Year 2004,’’ October 13, 2005 

SIGIR Report No. 05–019, ‘‘Attestation Engagement Concerning the Award of 

Non-Competitive Contract DACA63–03–D–0005 to Kellogg, Brown, and Root Services, Inc.,’’ September 30, 2005 

SIGIR Report No. 05–013, ‘‘Controls Over Equipment Acquired by Security Contractors,’’ September 9, 2005 

SIGIR Report No. 05–011, ‘‘Cost-to-Complete Estimates and Financial Reporting 

for the Management of the Iraq Relief and Reconstruction Fund,’’ July 26, 2005 

SIGIR Report No. 05–010, ‘‘Interim Briefing to the Project and Contracting Office—Iraq and the Joint Contracting Command—Iraq on the Audit of the Award Fee 

Process,’’ July 26, 2005 

SIGIR Report No. 05–012, ‘‘Policies and Procedures Used for Iraq Relief and Reconstruction Fund Project Management Construction Quality Assurance,’’ July 22, 

2005 

SIGIR Report No. 05–009, ‘‘Reconciliation of Reporting Differences of the Source 

of Funds Used on Contracts After June 28, 2004,’’ July 8, 2005 

SIGIR Report No. 05–008, ‘‘Administration of Contracts Funded by the Development Fund of Iraq,’’ April 30, 2005 

SIGIR Report No. 05–007, ‘‘Administration of Iraq Relief and Reconstruction Fund 

Contract Files,’’ April 30, 2005 

SIGIR Report No. 05–006, ‘‘Control of Cash Provided to South-Central Iraq,’’ April 

30, 2005 

SIGIR Report No. 05–005, ‘‘Compliance with Contract No. W911S0–04–C–003 

Awarded to Aegis Defense Services Limited,’’ April 20, 2005 

SIGIR Report No. 05–004, ‘‘CORRECTED—Oversight of Funds Provided to Iraqi 

Ministries through the National Budget Process,’’ January 30, 2005 

SIGIR Report No. 05–003, ‘‘Memorandum Report regarding audit of Task Order 

0044 of the Logistics Civil Augmentation Program III Contract,’’ November 23, 2004 

SIGIR Report No. 05–002, ‘‘Accountability and Control of Materiel Assets of the 

Coalition Provisional Authority in Kuwait,’’ October 25, 2004 

SIGIR Report No. 05–001, ‘‘Coalition Provisional Authority Control of Appropriated Funds,’’ October 22, 2004 

SIGIR Report No. 04–008, ‘‘Coalition Provisional Authority Control Over Seized 

and Vested Assets,’’ July 30, 2004 

SIGIR Report No. 04–009, ‘‘Coalition Provisional Authority Comptroller Cash 

Management Controls Over the Development Fund for Iraq,’’ July 28, 2004 
200 

SIGIR Report No. 04–004, ‘‘Task Orders Awarded by the Air Force Center for Environmental Excellence in Support of the Coalition Provisional Authority,’’ July 28, 

2004 

SIGIR Report No. 04–013, ‘‘Coalition Provisional Authority’s Contracting Processes Leading Up to and Including Contract Award,’’ July 27, 2004 

SIGIR Report No. 04–011, ‘‘Audit of the Accountability and Control of Materiel 

Assets of the Coalition Provisional Authority in Baghdad,’’ July 26, 2004 

SIGIR Report No. 04–007, ‘‘Oil for Food Cash Controls for the Office of Project 

Coordination in Erbil, Iraq,’’ July 26, 2004 

SIGIR Report No. 04–005, ‘‘Award of Sector Design-Build Construction Contracts,’’ 

July 23, 2004 

SIGIR Report No. 04–006, ‘‘Corporate Governance for Contractors Performing Iraq 

Reconstruction Efforts,’’ July 21, 2004 

SIGIR Report No. 04–003, ‘‘Federal Deployment Center Forward Operations at 

the Kuwait Hilton,’’ June 25, 2004 

SIGIR Report No. 04–002, ‘‘Management of Personnel Assigned to the Coalition 

Provisional Authority in Baghdad, Iraq,’’ June 25, 2004 

SIGIR Report No. 04–001, ‘‘Coalition Provisional Authority Coordination of Donated Funds,’’ June 25, 2004 

Government Accountability Office 

GAO issued 102 reports or testimonies pertaining to Operations Enduring Freedom and Iraqi Freedom. To obtain electronic copies of GAO reports and testimonies, 

please visit http://www.gao.gov/docsearch/featured/oif.html. Where possible, 

hyperlinks to the complete GAO reports are provided below. To request hardcopies 

of GAO reports, please visit http://www.gao.gov/cgi-bin/ordtab.pl, or call 202–512– 

6000 or fax to 202–512–6061. 

GAO Report No. GAO–07–1048R, ‘‘Enemy-Initiated Attacks in Iraq,’’ September 

28 2007 

GAO Report No. GAO–07–814, ‘‘DEFENSE LOGISTICS: Army and Marine Corps 

Cannot Be Assured That Equipment Reset Strategies Will Sustain Equipment 

Availability While Meeting Ongoing Operational Requirements,’’ September 19, 

2007 

GAO Report No. GAO–07–1235T, ‘‘DOD CIVILIAN PERSONNEL: Medical Policies for Deployed DOD Federal Civilians and Associated Compensation for Those 

Deployed, September 18, 2007 

GAO Report No. GAO–07–1195, ‘‘SECURING, STABILIZING, AND REBUILDING IRAQ: Iraqi Government Has Not Met Most Legislative, Security, and Economic Benchmarks,’’ September 4, 2007 

GAO Report No. GAO–07–839, ‘‘Defense Contract Management: DOD’s Lack of 

Adherence to Key Contracting Principles on Iraq Oil Contract Put Government Interests at Risk,’’ July 31, 2007 

GAO Report No. GAO–07–711, ‘‘STABILIZING IRAQ: DOD Cannot Ensure That 

U.S.-Funded Equipment Has Reached Iraqi Security Forces,’’ July 31, 2007 

*GAO Report No. GAO–07–853C, ‘‘Military Readiness: DOD Needs to Set Forth 

an Action Plan, with Measurable Results, to Improve Army and Marine Corps Unit 

Readiness,’’ July 20, 2007 

GAO Report No. GAO–07–836, ‘‘Unmanned Aircraft Systems: Advance Coordination and Increased Visibility Needed to Optimize Capabilities,’’ July 11, 2007 

GAO Report No. GAO–07–759, ‘‘Defense Acquisitions: Analysis of Processes Used 

to Evaluate Active Protection Systems’’ June 8, 2007 

GAO Report No. GAO–07–801SP, ‘‘Securing, Stabilizing, and Reconstructing Afghanistan: Key Issues for Congressional Oversight,’’ May 24, 2007 

GAO Report No. GAO–07–699, ‘‘Military Operations: The Department of Defense’s 

Use of Solatia and Condolence Payments in Iraq and Afghanistan,’’ May 23, 2007 

GAO Report No. GAO–07–783R, ‘‘Global War on Terrorism: reported Obligations 

for the Department of Defense,’’ May 18, 2007 

GAO Report No. GAO–07–677, ‘‘Rebuilding Iraq: Integrated Strategic Plan Needed to Help Restore Iraq’s Oil and Electricity Sectors,’’ May 15, 2007 

GAO Report No. GAO–07–832T, ‘‘Defense Acquisitions: Improved Management 

and Oversight needed to Better Control DOD’s Acquisition of Services,’’ May 10, 

2007 

GAO Report No. GAO–07–827T, ‘‘Stabilizing And Rebuilding Iraq: Coalition Support and International Donor Commitments,’’ May 9, 2007 

GAO Report No. GAO–07–906R, ‘‘GAO Findings and Recommendations Regarding 

DOD and VA Disability Systems,’’ May 5, 2007 

GAO Report No. GAO–07–662R, ‘‘Defense Logistics: Army and Marine Corps’s Individual Body Armor System Issues,’’ April 26, 2007 
201 

GAO Report No. GAO–07–525T, ‘‘Stabilizing And Rebuilding Iraq: Conditions in 

Iraq Are Conducive to Fraud, Waste and Abuse,’’ April 23, 2007 

*GAO Report No. GAO–07–377C, ‘‘Defense Management: A Strategic Plan Is 

Needed to Guide the Joint Improvised Explosive Device Defeat Organization’s Efforts to Effectively Accomplish Its Mission,’’ March 28, 2007 

GAO Report No. GAO–07–639T, ‘‘Operation Iraqi Freedom: DOD Should Apply 

Lessons Learned Concerning the Need for Security Over Conventional Munitions 

Storage Sites to Future Operations Planning,’’ March 22, 2007 

GAO Report No. GAO–07–637T, ‘‘Stabilizing Iraq: Preliminary Observations on 

Budget and Management Challenges of Iraq’s Security Ministries,’’ March 22, 2007 

GAO Report No. GAO–07–444, ‘‘Operation Iraqi Freedom: DOD Should Apply Lessons Learned Concerning the Need for Security over Conventional Munitions Storage Sites to Future Operations Planning,’’ March 22, 2006 

GAO Report No. GAO–07–612T, ‘‘Stabilizing Iraq: Factors Impeding the Development of Capable Iraqi Security Forces,’’ March 13, 2007 

GAO Report No. GAO–07–582T, ‘‘Operation Iraqi Freedom: Preliminary Observations on Iraqi Security Forces’ Logistical Capabilities,’’ March 9, 2007 

*GAO Report No. GAO–07–120C, ‘‘Operation Iraqi Freedom: Preliminary Observations on Iraqi Security Forces’ Support Capabilities,’’ March 7, 2007 

GAO Report No. GAO–07–426T, ‘‘Rebuilding Iraq: Reconstruction Progress Hindered by Contracting, Security, and Capacity Challenges,’’ February 15, 2007 

GAO Report No. GAO–07–144, ‘‘Defense Logistics: Improved Oversight and Increased Coordination needed to Ensure Viability of the Army’s Prepositioning Strategy,’’ February 15, 2007 

GAO Report No. GAO–07–439T, ‘‘Defense Logistics: Preliminary Observations on 

the Army’s Implementation of Its Equipment Reset Strategies,’’ January 31, 2007 

GAO Report No. GAO–07–385T, ‘‘Securing, Stabilizing, And Rebuilding Iraq: GAO 

Audit Approach and Findings,’’ January 18, 2007 

GAO Report No. GAO–07–308SP, ‘‘Securing Stabilizing, And Rebuilding Iraq: Key 

Issues for Congressional Oversight,’’ January 9, 2007 

*GAO Report No. GAO–07–71C, ‘‘Operation Iraqi Freedom: DOD Should Apply 

Lessons Learned Concerning the Need for Security Over Conventional Munitions 

Storage Sites to Future Operations Planning,’’ December 20, 2006 

GAO Report No. GAO–07–145, ‘‘Military Operations: High-Level DOD Action 

needed to Address Long-standing Problems with Management and Oversight of Contractors Supporting Deployed Forces,’’ December 18, 2006 

GAO Report No. GAO–07–30R, ‘‘Rebuilding Iraq—Status of DOD’s Reconstruction 

Program,’’ December 15, 2006 

GAO Report No. GAO–07–78, ‘‘Afghanistan Drug Control: Despite Improved Efforts, Deterioration Security Threatens Success of U.S. Goals,’’ November 15, 2006 

GAO Report No. GAO–07–76, ‘‘Global War On Terrorism: Fiscal Year 2006 Obligation Rates Are Within Funding Levels and Significant Multiyear Procurement 

Funds Will Likely Remain Available for Use in Fiscal Year 2007,’’ November 13, 

2006 

GAO Report No. GAO–07–40, ‘‘Rebuilding Iraq: Status of Competition for Iraq Reconstruction Contracts,’’ October 6, 2006 

GAO Report No. GAO–06–1085, ‘‘DOD Civilian Personnel: Greater Oversight and 

Quality Assurance Needed to Ensure Force Health Protection and Surveillance for 

Those Deployed,’’ September 29, 2006 

GAO Report No. GAO–06–1130T, ‘‘Rebuilding Iraq: Continued Progress Requires 

Overcoming Contract Management Challenges,’’ September 28, 2006 

GAO Report No. GAO–06–1132, ‘‘Iraq Contract Costs: DOD Consideration of Defense Contract Audit Agency’s Findings,’’ September 25, 2006 

GAO Report No. GAO–06–1094T, ‘‘Stabilizing Iraq: An Assessment of the Security 

Situation,’’ September 11, 2006 

GAO Report No. GAO–06–928R, ‘‘Defense Logistics: Changes to Stryker Vehicle 

Maintenance Support Should Identify Strategies for Addressing Implementation 

Challenges,’’ September 5, 2006 

*GAO Report No. GAO–06–673C, ‘‘Briefing on Iraq Stabilization,’’ July 27, 2006 

GAO Report No. GAO–06–885T, ‘‘Global War On Terrorism: Observations on 

Funding, Costs, and Future Commitments,’’ July 18, 2006 

GAO Report No. GAO–06–953T, ‘‘Rebuilding Iraq: More Comprehensive National 

Strategy Needed to help Achieve U.S. Goals and Overcome Challenges,’’ July 11, 

2006 

GAO Report No. GAO–06–788, ‘‘Rebuilding Iraq: More Comprehensive National 

Strategy Needed to Help Achieve U.S. Goals,’’ July 11, 2006 
202 

GAO Report No. GAO–06–274, ‘‘Defense Logistics: Lack of Synchronized Approach 

between the Marine Corps and Army Affected the Timely Production and Installation of Marine Corps Truck Armor,’’ June 22, 2006 

GAO Report No. GAO–06–865T, ‘‘Rebuilding Iraq: Actions Still Needed to Improve 

the Use of Private Security Providers,’’ June 13, 2006 

GAO Report No. GAO–06–397, ‘‘Post-Traumatic Stress Disorder: DOD Needs to 

Identify the Factors Its Providers Use to make Mental Health Evaluation Referrals 

for Service Members,’’ May 11, 2006 

GAO Report No. GAO–06–711T, ‘‘United Nations: Oil for Food Program Provides 

lessons for Future Sanctions and Ongoing Reform,’’ May 2, 2006 

GAO Report No. GAO–06–697T, ‘‘Rebuilding Iraq: Governance, Security, Reconstruction, and Financing Challenges,’’ April 25, 2006 

GAO Report No. GAO–06–330, ‘‘United Nations: Lessons Learned from Oil for 

Food Program Indicate the Need to Strengthen U.N. Internal Controls and Oversight Activities,’’ April 25, 2006 

GAO Report No. GAO–06–604T, ‘‘Defense Logistics: Preliminary Observations on 

Equipment Reset Challenges and Issues for the Army and Marine Corps,’’ March 

30, 2006 

GAO Report No. GAO–06–160, ‘‘Defense Logistics: Several Factors Limited the 

Production and Installation of Army Truck Armor during Current Wartime Operations,’’ March 22, 2006 

GAO Report No. GAO–06–428T, ‘‘Rebuilding Iraq: Stabilization, Reconstruction, 

and Financing Challenges,’’ February 8, 2006 

GAO Report No. GAO–06–134, ‘‘Military Personnel: DOD Needs Action Plan to 

Address Enlisted Personnel Recruitment and Retention Challenges,’’ November 17, 

2005 

*GAO Report No. GAO–06–217C, ‘‘Rebuilding Iraq: DOD reports Should Link Economic, Governance, and Security Indicators to Conditions for Stabilizing Iraq,’’ October 31, 2005 

*GAO Report No. GAO–06–152C, ‘‘Rebuilding Iraq: DOD Reports Should Link 

Economic, Governance, and Security Indicators to Conditions for Stabilizing Iraq,’’ 

October 31, 2005 

GAO Report No. GAO–06–179T, ‘‘Rebuilding Iraq: Enhancing Security, Measuring 

Program Results, and Maintaining Infrastructure Are Necessary to Make Significant and Sustainable Progress,’’ October 18, 2005 

GAO Report No. GAO–05–819, ‘‘Defense Transportation: Air Mobility Command 

Needs to Collect and Analyze Better Data to Assess Aircraft Utilization,’’ September 

29, 2005 

GAO Report No. GAO–05–882, ‘‘Global War On Terrorism: DOD Needs to Improve 

the Reliability of Cost Data and Provide Additional Guidance to Control Costs,’’ September 21, 2005 

GAO Report No. GAO–05–932R, ‘‘Rebuilding Iraq: U.S. Assistance for the January 

2005 Elections,’’ September 7, 2005 

GAO Report No. GAO–05–872, ‘‘Rebuilding Iraq: U.S. Water and Sanitation Efforts Need Improved Measures for Assessing Impact and Sustained Resources for 

Maintaining Facilities,’’ September 7, 2005 

GAO Report No. GAO–05–672, ‘‘Radiological Sources In Iraq: DOD Should Evaluate its Source Recovery Effort and Apply Lessons Learned to Future Recovery Missions,’’ September 7, 2005 

GAO Report No. GAO–05–775, ‘‘Defense Logistics: DOD Has Begun to Improve 

Supply Distribution Operations, but Further Actions Are Needed to Sustain These 

Efforts,’’ August 11, 2005 

GAO Report No. GAO–05–876, ‘‘Rebuilding Iraq: Status of Funding and Reconstruction Efforts,’’ July 28, 2005 

GAO Report No. GAO–05–742, ‘‘Afghanistan Reconstruction: Despite Some 

Progress, Deterioration Security and Other Obstacles Continue to Threaten Achievement of U.S. Goals,’’ July 28, 2005 

GAO Report No. GAO–05–737, ‘‘Rebuilding Iraq: Actions needed to Improve Use 

of Private Security Providers,’’ July 28, 2005 

GAO Report No. GAO–05–575, ‘‘Afghanistan Security: Efforts to Establish Army 

and Police Have Made Progress, but Future Plans need to be Better Defined,’’ June 

30, 2005 

GAO Report No. GAO–05–293, ‘‘Defense Management: Processes to Estimate and 

Track Equipment Reconstitution Costs Can Be Improved,’’ May 5, 2005 

GAO Report No. GAO–05–280R, ‘‘Defense Base Act Insurance: Review Needed of 

Cost and Implementation Issues,’’ April 29, 2005 

GAO Report No. GAO–05–201, ‘‘Interagency Contraction: Problems with DOD’s 

and Interior’s Orders to Support Military Operations,’’ April 29, 2005 
203 

GAO Report No. GAO–05–275, ‘‘Defense Logistics: Actions Needed to Improve the 

Availability of Critical Items during Current and Future Operations,’’ April 8, 2005 

GAO Report No. GAO–05–328, ‘‘Defense Logistics: High-Level DOD Coordination 

Is Needed to Further Improve the Management of the Army’s LOGCAP Contract,’’ 

March 21, 2005 

GAO Report No. GAO–05–431T, ‘‘Rebuilding Iraq: Preliminary Observations on 

Challenges in Transferring Security Responsibilities to Iraqi Military and Police,’’ 

March 14, 2005 

GAO Report No. GAO–05–392T, ‘‘United Nations: Sustained Oversight Is Needed 

for Reforms to Achieve Lasting Results,’’ March 2, 2005 

GAO Report No. GAO–05–125, ‘‘Military Pay: Gaps in Pay and Benefits Create 

Financial hardships for Injured Army National Guard and Reserve Soldiers,’’ February 17, 2005 

GAO Report No. GAO–05–346T, ‘‘United Nations: Oil for Food Program Audits,’’ 

February 15, 2005 

GAO Report No. GAO–05–79, ‘‘Army National Guard: Inefficient, Error-Prone 

Process Results in Travel Reimbursement Problems for Mobilized Soldiers,’’ January 

31, 2005 

GAO Report No. GAO–05–120, ‘‘Defense Health Care: Force Health Protection 

and Surveillance Policy Compliance Was Mixed, but Appears Better for Recent Deployments,’’ November 12, 2004 

GAO Report No. GAO–04–1031, ‘‘Military Personnel: DOD Needs to Address 

Long-term Reserve Force Availability and Related Mobilization and Demobilization 

Issues,’’ September 15, 2004 

GAO Report No. GAO–04–1006, ‘‘Foreign Regimes’ Assets: The United States 

Faces Challenges in Recovering Assets, but Has Mechanisms That Could Guide Future Efforts,’’ September 14, 2004 

GAO Report No. GAO–04–915, ‘‘Military Operations: Fiscal Year 2004 Costs for 

the Global War on Terrorism Will Exceed Supplemental, Requiring DOD to Shift 

Funds from Other Uses,’’ July 21, 2004 

GAO Report No. GAO–04–854, ‘‘Military Operations: DOD’s Extensive Use of Logistics Support Contracts Requires Strengthened Oversight,’’ July 19, 2004 

GAO Report No. GAO–04–609, ‘‘Defense Infrastructure: Factors Affecting U.S. Infrastructure Costs Overseas and the Development of Comprehensive Master Plans,’’ 

July 15, 2004 

GAO Report No. GAO–04–953T, ‘‘United Nations: Observations on the Oil for 

Food Program and Areas for Further Investigation,’’ July 8, 2004 

GAO Report No. GAO–04–902R, ‘‘Rebuilding Iraq: Resource, Security, Governance, Essential, Services, and Oversight Issues,’’ June 28, 2004 

GAO Report No. GAO–04–880T, ‘‘United Nations: Observations on the Oil for 

Food Program and Iraq’s Food Security,’’ June 16, 2004 

GAO Report No. GAO–04–869T, ‘‘Contract Management: Contracting for Iraq Reconstruction and for Global Logistics Support,’’ June 15, 2004 

GAO Report No. GAO–04–403, ‘‘Afghanistan Reconstructions: Deteriorating Security and Limited Resources Have Impeded Progress; Improvements in U.S. Strategy 

Needed,’’ June 2, 2004 

GAO Report No. GAO–04–605, ‘‘Rebuilding Iraq: Fiscal Year 2003 Contract 

Award Procedures and Management Challenges,’’ June 1, 2004 

GAO Report No. GAO–04–746R, ‘‘Iraq’s Transitional Law,’’ May 25, 2004 

GAO Report No. GAO–04–668, ‘‘Military Operations: DOD’s Fiscal Year 2003 

Funding and reported Obligations in Support of the Global War on Terrorism,’’ May 

13, 2004 

GAO Report No. GAO–04–559, ‘‘State Department: Issues Affecting Funding of 

Iraqi National Congress Support Foundation,’’ April 30, 2004 

GAO Report No. GAO–04–730T, ‘‘United Nations: Observations on the Management and Oversight of the Oil for Food Program,’’ April 28, 2004 

GAO Report No. GAO–04–484, ‘‘Operation Iraqi Freedom: Long-standing Problems Hampering Mail Delivery need to be Resolved,’’ April 14, 2004 

GAO Report No. GAO–04–651T, ‘‘United Nations: Observations on the Oil for 

Food Program,’’ April 7, 2004 

GAO Report No. GAO–04–562T, ‘‘Military Propositioning Observations on Army 

and Marine Corps Programs During Operation Iraqi Freedom and Beyond,’’ March 

24, 2004 

GAO Report No. GAO–04–579T, ‘‘Recovering Iraq’s Assets: Preliminary Observations on U.S. Efforts and Challenges,’’ March 18, 2004 

GAO Report No. GAO–04–305R, ‘‘Defense Logistics: Preliminary Observations on 

the Effectiveness of Logistics Activities during Operation Iraqi Freedom,’’ December 

18, 2003 
204 

GAO Report No. GAO–03–1088, ‘‘Military Operations: Fiscal Year 2003 Obligations Are Substantial, but May Result in Less Obligations Than Expected,’’ September 17, 2003 

GAO Report No. GAO–03–980T, ‘‘Foreign Assistance: Observations on Post-Conflict Assistance in Bosnia, Kosovo, and Afghanistan,’’ July 18, 2003 

GAO Report No. GAO–03–792R, ‘‘Rebuilding Iraq,’’ May 15, 2003 

APPENDIX C. DEFINITIONS USED FOR CATEGORIZATION OF OEF AND OIF REPORTS

AND TESTIMONIES FISCAL YEAR 2003 THROUGH FISCAL YEAR 2007 

To categorize the 302 OEF and OIF reports and testimonies, we developed definitions to categorize the causes that resulted in the recommendations issued by the 

Defense oversight community and GAO. We provided our definitions to the other 

oversight agencies when we vetted our initial categorizations. Our goal was to create 

categories and definitions that were simple and easily understood to provide common reference points as follows: 

Contract Management 

Administration.—This category includes recommendations that address oversight 

responsibilities, including Quality Assurance, Performance Monitoring, and Results, 

to ensure that the contractor provides the requirements requested. We consider this 

category as Government specific function. 

Policy and Procedure.—This category includes recommendations that address implementing guidance, policy, and procedures for future contracts and is not limited 

to one specific contract. 

Sourcing.—This category includes recommendations that address improving the 

negotiation and documentation of actions between the Government (customer) and 

the contractor (developer). This function involves both Government and contractor. 

Requirements.—This category includes recommendations that address the development of requirements (what is needed by the customer). This function is Government specific with no contractor involvement in developing the requirements. 

Other.—This category includes recommendations that are more general and address a more strategic approach to resolving systemic challenges. 

Logistics 

Policy and Procedures.—This category includes the recommendations made to improve the general goals and directives of a program, process, or plan including the 

steps, activities, and decisions made to accomplish those goals and directives. 

Accountability.—This category includes recommendations made to improve establishing or maintaining records to identify, acquire, account for, control, store, or 

properly dispose of assets; including whether the cause addressed equipment on 

hand or on order, the status of the equipment, and the location of the equipment. 

Sustainability.—This category includes recommendations to ensure maintaining a 

certain level or state of a process, program, or activity. It includes what needs to 

be done in order to keep a process, program, or activity running smoothly and efficiently. 

Requirements.—This category includes recommendations made in order to improve determining the needs or conditions to meet a specific outcome. This includes 

required equipment, storage facilities, supplies, and personnel. 

Other.—This category includes causes categorized as Other. (1) The causes do not 

specifically relate to Policy and Procedures, Accountability, Sustainability, or Requirements. (2) Many of the causes were very specific to a certain program and 

could not be applied to any other program. (3) Some of the recommendations were 

not tied to a specific cause, so those recommendations were categorized as Other. 

Financial Management 

Overall Financial Management.—This category includes overall financial management. The cause addressed by the recommendation covers the category of financial 

management but the cause was not specific enough to be classified in one of the 

other categories. 

Internal Controls.—This category addresses anything that could involve the lack 

of checks and balances in the system. The Yellow Book describes internal controls 

as ‘‘The extent to which internal controls that are significant to the audit depend 

on the reliability of information processed or generated by information systems.’’ We 

used this Yellow Book definition to guide our judgment. 

Obligations.—This category addresses a cause that is directly related to obligations or involved obligation type challenges, for example, if a report spoke about 

command not doing a sufficient job of planning for a known expenditure. We considered information from the DOD Comptrollers office as it pertained to the Planning, 
205 

Programming, Budgeting, and Execution system. In particular, the Budgeting phase 

(formulation and justification) as it provides a platform for a detailed review of a 

program’s pricing, phasing, and overall capability to be executed on time and within 

budget. The budgeting process addresses the years to be justified in the President’s 

budget (including the current and upcoming execution years) and provides a forum 

to develop the Secretary’s budget position. 

Execution.—This category addresses the execution phase and everything involved 

with the actual spending of funds. 

Other 

Policy and Procedures.—This category addresses a cause related to general goals 

and directives of a program, process, or plan including the steps, activities, and decisions made to accomplish those goals and directives. 

Planning.—This category includes a cause if it addressed providing a framework 

for developing anything; including processes for setting goals, developing strategies, 

and outlining tasks and schedules to accomplish a goal. 

Accountability.—This category includes a cause that addressed establishing or 

maintaining records to identify, acquire, account for, control, store, or properly dispose of assets; including if the cause talked about equipment on hand or on order, 

the status of the equipment, and the location of the equipment. 

Other.—This category includes causes that do not specifically relate to policy and 

procedures, planning, or accountability and causes that were very specific to a certain program and could not be applied to any other program. 

TEAM MEMBERS

The Department of Defense Office of the Deputy Inspector General for Auditing 

prepared this report. The following personnel of the Department of Defense Office 

of Inspector General significantly contributed to this report: Joseph S. Dobish, Michael J. Guagliano, Cathy M. Mitchell, William G. Vannurden. 

Additional contributors within the DOD OIG were: Jack L. Armstrong, Donald. 

A. Bloomer, Bruce A. Burton, Erin S.-E. Hart, James L. Kornides, Andrew L. 

McRell, Craig W. Michaels, Timothy E. Moore, Monica Noell, David K. Steensma, 

Richard B. Vasquez. 

Members from Southwest Asia Joint Planning Group also contributed to this summary report: Mr. J.T. Mickey McDermott, Chair—Joint Planning Group, Southwest 

Asia/GWOT; Mr. Joseph P. Mizzoni, U.S. Army Audit Agency; Mr. John D. 

Lombardo, U.S. Army Audit Agency; Mr. James Durbin, Naval Audit Service; Mr. 

Charles E. Atkinson, Jr., U.S. Air Force Audit Agency; Mr. Joe Garcia, Defense Contract Audit Agency; Mr. Greg Schmalfeldt, Defense Finance and Accounting Service. 

Chairman BYRD. General Griffin. 

STATEMENT OF GENERAL BENJAMIN S. GRIFFIN, COMMANDING GENERAL, U.S. ARMY MATERIEL COMMAND 

ACCOMPANIED BY: 

JEFFREY PARSONS, EXECUTIVE DIRECTOR, U.S. ARMY MATERIEL 

COMMAND 

LEE THOMPSON, PROGRAM DIRECTOR, LOGISTICS CIVIL AUGMENTATION PROGRAM, U.S. ARMY SUSTAINMENT COMMAND 

General GRIFFIN. Yes, sir. 

Chairman Byrd, Senator Cochran, and distinguished members of 

the committee, thank you for the opportunity to be here today with 

our Deputy Secretary of Defense, The Honorable Gordon England, 

and other key members of the Department of Defense, to discuss 

the adequacy of Defense contract oversight for Operation Iraqi 

Freedom. 

As you know, our Nation has been at war for over 6 years. The 

length of the conflict and the operational requirements for our 

forces have created significant challenges in sustaining our 

warfighters. 

I will state up front that we are not where we want to be today, 

in terms of contracting, but we have made significant progress. 
206 

We are committed to improve our ability and capability to provide not only first-class expeditionary contracting, but also to implement improvements across the entire contracting system. 

I want to assure you that we are continuously improving our 

ability to meet the needs of our troops in conflict and are implementing many of the recommendations identified by the Gansler 

Commission and the Army Contracting Task Force. 

As the commanding general of the U.S. Army Materiel Command 

(AMC), my number one priority is support to soldiers, sailors, airmen, and marines who are warfighters. In pursuit of that goal, our 

contracting employees play a critical role in supporting our Nation 

at war. We have never fought an extended conflict that required 

such extensive reliance on contractor support. This is not to say 

that we have not had contractors since the Revolutionary War. We 

have extensive contract support inside of the United States and 

overseas supporting the global war on terrorism—food, maintenance, and security, a couple of things you mentioned, Mr. Chairman. These dedicated people are working 24/7 in Iraq and Afghanistan. Many have been severely wounded, and some have made the 

ultimate sacrifice in service to our Nation. 

We are aggressively moving out to implement many of the 

Gansler Commission’s recommendations. AMC’s most significant 

action is the recent establishment of the Army Contracting Command, which we stood up in March. And the new Director sits to 

my left. The Army Contracting Command includes two subordinate 

commands, a deployable, one-star-level Expeditionary Contracting 

Command focused on support to forward-deployed forces, and a 

one-star-level Installation Contracting Command focused on support for Conus installations and other missions support. 

The Expeditionary Contracting Command will include our contracting support brigades, contingency contracting battalions, senior contingency contracting teams, and contingency contracting 

teams. Our five major contracting centers that support our Army 

Materiel Commands, Life Cycle Management Commands, and 

other major subordinate commands will also be realigned under 

this new command. All of this is designed to improve contracting, 

Army-wide. 

Additionally, Army Materiel Command will realign the Logistics 

Civil Augmentation Program (LOGCAP) office as a direct-report to 

the Army Contracting Command executive director. 

Today, the Army Sustainment Command has the following structure in place to provide management and overwatch of LOGCAP in 

Iraq and Afghanistan: a colonel in Iraq, a colonel in Afghanistan, 

and a GS–15 on the ground in Kuwait, leading over 100 personnel 

in the oversight of LOGCAP. In addition, the Defense Contracts 

Management Agency (DCMA) has 97 personnel, primarily in Iraq 

and Afghanistan, performing LOGCAP contract management. It 

has appointed over 500 contracting officer representatives in Iraq 

and Afghanistan from operational supporting units to assist in dayto-day oversight of contractor performance. 

We also assigned two senior executive service personnel to further enhance our leadership and management of LOGCAP. One is 

responsible for LOGCAP program management—Mr. Lee Thompson, who sits to Mr. Parsons’s left—and one is responsible for the 
207 

acquisition center that awards and manages the LOGCAP contract. 

The alignment of the LOGCAP program under the new Army Contracting Command places emphasis on a single advocate with accountability and responsibility for contracting in theater and for expanding our surge and contingency capability. I think everybody 

here understands you need accountability, responsibility, and authority. 

Here with me today are Mr. Jeff Parsons, the executive director 

of the newly established Army Contracting Command, and Mr. Lee 

Thompson, the program director for the Logistics Civil Augmentation Program, LOGCAP. These gentlemen are an integral part of 

Army Materiel Command’s contracting role in Iraq. 

We are also working with the Department of the Army and the 

Secretary of Defense in the implementation of other Gansler Commission recommendations to improve doctrine, training, and workforce development. To that end, we have developed a number of 

training initiatives to better prepare our military and civilian contract personnel, prior to their deployment, to support the Joint 

Contracting Command in Iraq and Afghanistan. We are capturing 

lessons learned as the soldiers and civilians return from deployments in Iraq and Afghanistan, and are using this feedback to improve our training. 

I appreciate the Senate’s support of our Army’s efforts to provide 

our Nation’s warfighters and allies with quality products and services. We need your support for our efforts to increase the size, the 

structure, and the training of our Government contracting workforce, both military and civilian, as outlined in my written statement, which I respectfully request be submitted for the record. 

You have my commitment that we will continue to pursue improvements in our contracting process and workforce. Our 

warfighters and our taxpayers deserve no less. 

I look forward to your questions. 

Thank you. 

Chairman BYRD. Without objection, the item will be included in 

the record. 

General GRIFFIN. Thank you, sir. 

[The statement follows:] 

PREPARED STATEMENT OF GENERAL BENJAMIN S. GRIFFIN

Mr. Chairman, Senator Cochran, and members of the Committee, I thank you for 

the opportunity to appear before you today to discuss the adequacy of defense contract oversight for Operation Iraqi Freedom. To do this, I will describe how AMC 

is addressing the issues identified by the Commission on Army Acquisition and Program Management in Expeditionary Operations, which released its final report, 

‘‘Urgent Reform Required: Army Expeditionary Contracting,’’ on October 31, 2007; 

and by the Army Contracting Task Force which completed its work in March 2008. 

Before I begin, however, I would like to ensure that the Committee understands 

the role of the Army Materiel Command’s contract oversight and authority in U.S. 

Central Command’s theater of operations. As shown in Table 1, Command authority 

flows from the Central Command (CENTCOM) Commander to the Multi National 

Force—Iraq (MNF–I) Commander, to the Joint Contracting Command Iraq-Afghanistan (JCC–I/A) Commander. Contracting authority flows from the Secretary of the 

Army to the Assistant Secretary of the Army, Acquisition, Logistics, and Technology, 

designated as the Army Senior Procurement Executive to the Head of the Contracting Activity. 

The Army Heads of Contracting Activities engaged in the writing and the execution of contracts in support of Operation Iraqi Freedom: the Joint Contracting Command Iraq-Afghanistan (JCC–I/A); the Army Materiel Command’s Life Cycle Man-
208 

agement Commands; the Army Materiel Command’s Army Sustainment Command; 

and the U.S. Army Corps of Engineers. Today, neither the Army Materiel Command 

nor the Army Contracting Command has contracting authority for any of these contracting activities. 

Army Materiel Command’s engagement in the CENTCOM theater of contracting 

operations primarily consists of the management and execution of the Logistics Civil 

Augmentation Program (LOGCAP) III contract, managed by the Army Sustainment 

Command located at Rock Island Arsenal, Illinois, a subordinate command of the 

Army Materiel Command. Additionally, equipment, maintenance and repair contracts are managed by the Army Materiel Command’s Life Cycle Management Commands. These 2-star commands receive their contracting authority and oversight directly from the Assistant Secretary of the Army for Acquisition, Logistics, and Technology who is also the Army Senior Procurement Executive. 

The Defense Contract Management Agency (DCMA), one of the Defense Contracting Agencies under the authority of the Under Secretary of Defense for Acquisition, Technology and Logistics has the responsibility for contract management of 

task orders awarded by the Army Sustainment Command under the LOGCAP III 

contract. 

As you are aware, Secretary Geren chartered the Commission on Army Acquisition and Program Management in Expeditionary Operations chaired by Dr. Jacques 

Gansler, the former Under Secretary of Defense for Acquisition, Technology and Logistics, on August 30, 2007. The Gansler Commission provided an independent, 

long-term, strategic assessment of the Army’s acquisition and contracting system 

and its ability to support expeditionary operations and sustain high operational demand in an era of persistent conflict. 

To complement the work of the Commission, the Army Contracting Task Force 

was established in early September 2007, co-chaired by LTG N. Ross Thompson III, 

Military Deputy to the Assistant Secretary of the Army for Acquisition, Logistics 

and Technology and Ms. Kathryn Condon, Executive Deputy to the Commanding 

General at the Army Materiel Command. The task force mission was to take an intensive look at current Army operations and future plans for providing contracting 

support to contingency or other military operations. The task force findings and recommendations were consistent with those of the Gansler Commission. The Army 

Contracting Task Force final report was completed on March 17, 2008 and was presented to the Secretary of the Army. 

The details of the report were included in the Army’s submission of Section 849 

of the National Defense Authorization Act for Fiscal Year 2008’s report to Congress 

which also addresses all of the Army’s actions underway to address Gansler Commission recommendations. Additionally, the report is being utilized by the Army 

Contracting Campaign Plan Task Force, established by Secretary of the Army in 

February 2008, to ensure that the Task Force and Gansler Commission’s finding 

and recommendations are implemented as quickly as possible without the loss of 

momentum. This Army-wide contracting campaign plan will improve doctrine, organization, training, leadership, materiel, personnel and facilities. Achieving this objective will require resources, time, and sustained leadership focus. 

The Gansler Commission made four overarching recommendations to ensure the 

success of future expeditionary operations: (1) increase the stature, quantity, and career development of military and civilian contracting personnel, particularly for expeditionary operations; (2) restructure organizations and restore responsibility to facilitate contracting and contract management; (3) provide training and tools for 
209 

overall contracting activities in expeditionary operations; and (4) obtain legislative, 

regulatory, and policy assistance to enable contracting effectiveness in expeditionary 

operations. 

With regard to the first Gansler Commission recommendation—to increase the 

stature, quantity, and career development of the Army’s contracting personnel—we 

have a number of initiatives underway. In June 2006, the Army approved a new 

force design structure consisting of 19-person Contracting Support Brigades, 8-person Contingency Contracting Battalions, 4-person Senior Contingency Contracting 

Teams, and 4-person Contingency Contracting Teams composed of Active Duty, Reserve, and Army National Guard personnel. Each Contracting Support Brigade will 

be commanded by a colonel. These brigades oversee Contingency Contracting Battalions commanded by lieutenant colonels, and Contingency Contracting Teams in the 

execution of the Army Service Component Commander’s contracting support plan. 

Prior to the Gansler Commission and the work of the Army Contracting Task 

Force, AMC had already taken action to increase the number of Contracting Support Brigades from four to seven; the number of Contingency Contracting Battalions 

from six to eleven; the number of Senior Contingency Contracting Teams from 15 

to 18; and Contingency Contracting Teams from 105 to 153. This represents a potential increase of over 300 military personnel for a total of over 900 deployable military officers and non-commissioned officers. Sourcing for the proposed increases is 

currently being worked as part of the Department of Army Total Army Analysis 

process. Based upon the scope of the mission, we plan to augment the Contracting 

Support Brigades with deployable civilian personnel, including support from Army 

Criminal Investigative Division agents and Army Audit Agency officials to enhance 

and improve our ability to execute and manage contracts for expeditionary operations. Contracting Support Brigades will be located in the United States and overseas supporting operations in Southwest Asia, Korea, Europe, Africa, the Pacific, 

South America, and North America. 

This new contingency contracting structure will provide ample professional development and growth opportunities for our military officers and non-commissioned officers, allowing them to progress in capability and experience from captains and sergeants, to colonels and sergeants major. This structure did not exist prior to Operation Enduring Freedom and Operation Iraqi Freedom. Not only will it enhance the 

development of our military contracting personnel, but also increase their stature 

once they are fully resourced. 

Army Materiel Command has also identified the need to establish a Contracting 

Warrant Officer Corps. The Department is currently assessing this requirement. 

The technical expertise of Warrant Officers, coupled with contracting training and 

experience, would make them exceptionally qualified to fulfill the contract management and oversight role. If approved, this Warrant Officer Corps will consist of approximately 150 deployable military personnel with contracting expertise. 

When deployed, Contracting Support Brigades, Battalions, and Teams will coordinate and integrate their plans with our seven Army Field Support Brigades, located 

in Afghanistan, Iraq, Korea, Hawaii, Germany, Fort Bragg, North Carolina, and 

Fort Hood, Texas, which provide logistical equipment support to deployed commanders—Army Materiel Command’s face-to-the-field. These two brigade designs 

support the Army modular force in the execution of acquisition support, logistics, 

and technology activities needed to support and enable the full spectrum of operations. 

In terms of career development, plans are also underway to move the accession 

point for contracting military officers two to three years earlier immediately following their Branch qualification at the captain level. This allows professional development and experience to begin earlier. For contracting non-commissioned officers, the accession point will occur upon achieving the rank of sergeant. We must 

also ensure the requisite training is accomplished prior to deploying on an expeditionary contracting mission, and it is our intent to defer deployment of military 

members during their first year in contracting. 

In keeping with the Gansler Commission’s second recommendation—to restructure Army contracting organizations and restore responsibility to better facilitate 

contracting and contract management in expeditionary and U.S. based operations— 

the Army Materiel Command, based upon direction from Secretary Geren on January 30, 2008, took action to establish a 2-star Army Contracting Command. At the 

same time, the Secretary directed the realignment of the Army Contracting Agency 

from the Assistant Secretary of the Army for Acquisition, Logistics, and Technology 

to the Army Materiel Command to become part of the Army Contracting Command. 

This new command is a major subordinate command to the Army Materiel Command. On March 13, 2008, the Army Contracting Command was activated in a provisional status, and on July 15, 2008 the Department of the Army approved the con-
210 

cept plan for the new command. When fully resourced, this plan will increase our 

civilian personnel by more than 900 and our military personnel by more than 500. 

We anticipate initial operational capability on October 1, 2008 with a goal of full 

operational capability on October 1, 2009. 

Our challenge will be to quickly resource and fill these new positions. This will 

take time. We are actively recruiting civilians and increasing accessions of military 

officers and non-commissioned officers into the Army Acquisition Corps. To enhance 

our hiring ability of civilian contracting personnel, we are pursuing direct hire authority from the Office of Personnel Management. 

The Army Contracting Command includes two subordinate commands—a 

deployable 1-star level Expeditionary Contracting Command focused on support to 

forward deployed forces (including providing contracting personnel support for the 

Joint Contracting Command—Iraq and Afghanistan) and OCONUS installations; 

and a 1-star level Installation Contracting Command focused on support for CONUS 

installations and other mission support. The Expeditionary Contracting Command 

will include our Contracting Support Brigades, Contingency Contracting Battalions, 

Senior Contingency Contracting Teams, and Contingency Contracting Teams. Our 

five major acquisition contracting centers will be realigned under the Army Contracting Command to facilitate appropriate training, manning and work force development. 

Additionally, the Army Materiel Command will realign the LOGCAP Program Office from the Army Sustainment Command to the Army Contracting Command as 

a direct report to the Executive Director. This realignment will place emphasis on 

a single advocate with the accountability and responsibility for contracting in addition to expanding our surge and contingency capability to resource staffing requirements with trained, skilled, designated and responsive expeditionary contracting capability. 

The Army is moving out quickly to implement the third Gansler Commission recommendation—to provide training and tools. The Army is assessing opportunities 

to improve contingency contracting training at our Combined Training Centers. In 

April 2008, one of our Contingency Contracting Battalions participated in a situational training exercise held at the Battle Command Training Center on Fort Lewis, 

WA. This exercise focused on preparing military contingency contracting officers for 

rotation and integration into the Joint Contracting Command—Iraq/Afghanistan’s 

current battle rhythm and contracting methodology. Training included tasks such 

as preparing a contracting support plan, coordinating with supported units, and the 

award, administration and close-out of service contracts. Through this exercise, participants gained ‘‘cradle to grave’’ knowledge of the contracting process in theater. 

Detailed after action reports are conducted after each training exercise and a survey 

is conducted 3–4 months after deployment to capture lessons learned. Our intent is 

to institutionalize such training in our Combined Training Centers and Battle Command Training Programs. 

Several training and doctrine initiatives are underway and have continued to be 

a major focus for the Army. A final draft of the Joint Publication 4–10, Operational 

Contract Support was completed. The completion date for Field Manual Interim 4– 

93.42, Contract Support Brigade, was accelerated. The Army also worked with the 

Department of Defense to distribute the recently released ‘‘Joint Contingency Contracting Handbook.’’ Leader education related to contracting and contractor management was accelerated. Development of FM 4–10, Commander’s Guide to Contracting 

and Contractor Management was also accelerated. 

The Army is continuing to modify and expand its leadership education curriculum 

related to the planning and management of Operational Contract Support with an 

enhanced focus on expeditionary operations. We have modified or added sixteen officer and non-commissioned officer professional military education courses to improve 

knowledge and skills in Operational Contract Support. The Army is also developing 

a 2-week resident course to train selected staff members (Brigade through Army 

Service Component Command levels) on how to plan for and manage Operational 

Contract Support and how to develop requirements packages. 

To reduce knowledge gaps in training venues, the U.S. Army Training and Doctrine Command has developed a concept plan to add acquisition personnel to the 

Battle Command Training Program to support the Combat Training Centers. This 

new collective training capability will stimulate commanders and their staffs to 

solve expeditionary related tactical problems, will apply emerging doctrine to these 

tactical situations, and will promote a better appreciation of the challenge of integrating contractor support into military operations for both the Contingency Contracting Officer and the unit requiring the contract support. 

At present the Army has put into place an intensive training and management 

program for our Contracting Officer Representatives which requires all Army Con-
211 

tracting Officer Representatives to complete the Defense Acquisition University’s online continuous learning module, ‘‘COR with a Mission Focus,’’ prior to appointment. 

Army Materiel Command is working with the Department of the Army to ensure 

enforcement of this training. 

In addition, Army Materiel Command has implemented a three-day Contracting 

Officer Representative training course for deployed forces in Kuwait. This training 

course requires nominated personnel to complete the Defense Acquisition University 

on-line training prior to attending onsite training. A performance assessment is conducted three to four weeks after a Contracting Officer Representative’s (COR) appointment to evaluate how well he/she comprehends his/her roles and responsibilities in contract performance oversight. Since October 1, 2007, 485 CORs have been 

trained in Kuwait and as of June 1, 2008, 100 percent of service contracts in Kuwait 

have trained and appointed CORs providing contractor oversight. 

To improve our contingency contracting training and doctrine, the Army is formally interviewing units as they return from theater to capture ‘‘expeditionary contracting’’ lessons learned and incorporate the findings into doctrine, training guides, 

and user handbooks. We are accelerating efforts to enhance leader education in contracting and contractor management and re-examining the training curriculum and 

timing for all newly accessed acquisition officers and civilians. 

AMC is developing and fielding a Virtual Contracting Enterprise to provide electronic, web-based tools to enable visibility and analysis of our worldwide contracting 

mission. 

In response to the fourth Gansler Commission recommendation regarding legislative proposals, the Army worked with the staff of the Office of the Secretary of Defense to develop legislative proposals to improve contracting effectiveness in expeditionary operations, including the Army’s legislative proposal to establish five new 

general officer positions. Army Materiel Command requested three of those general 

officer positions for the Army Contracting Command; one, a seasoned contracting expert, would serve as a Major General Commander. This proposal will be presented 

to Congress during this session. 

The work of the Army’s Contracting Task Force has culminated in the implementation of significant reforms and corrective actions to eliminate deficiencies. These 

reforms and corrective actions resulted in significant improvements in the Kuwait 

contracting operations. Several new leaders are now in place; staffing was increased 

from 27 to 55 personnel through temporary duty assignment (TDY) augmentation 

and volunteers, including dedicated lawyers; ten additional military officers were 

sent to Kuwait for 90 days to review prior contracts; and new internal control processes for effective checks and balances were developed. 

We also established a U.S. based office at the Army Materiel Command’s Army 

Sustainment Command, located in Rock Island, Illinois to provide contracting support to Kuwait operations in the management and execution of $800 million in active contracts. Army Sustainment Command established a dedicated 15-member 

team, supported by legal professionals, charged to assist in resolving a number of 

claims, definitizing unpriced actions, and negotiating new contracts for requirements in ways that will result in significant cost avoidance or savings. The establishment of this capability leverages Army Materiel Command leadership and expertise. Our work continues with the orderly transfer of additional existing and future 

major contract actions from Kuwait to the Army Sustainment Command and eventually to the Army Contracting Command. 

Finally, prior to the efforts of the Gansler Commission and the Army Contracting 

Task Force, Army Materiel Command recognized the need to make improvements 

in its contracting support to Operation Iraqi Freedom and Operation Enduring Freedom. We have learned many lessons from our early experiences with LOGCAP and 

are taking necessary steps to improve the execution and management of LOGCAP. 

In 2004, Army Materiel Command took aggressive action to increase the number 

of personnel in the LOGCAP program office to better manage and execute the program. This allowed us to eliminate billions in unpriced task orders and reduce the 

cost risk to the Government. 

In early 2005, the Army established a Senior Executive Service position to serve 

as the contracting and program director and provide overarching leadership/AMC 

established program offices in Iraq, Kuwait, and Afghanistan that are managed by 

Deputy Program Directors, who are all acquisition logistics professionals. In April 

2007, the Army established a second Senior Executive Service position to separate 

contracting support from program management. This further enhanced our ability 

to provide oversight. 

Additionally, we worked with the Defense Contract Management Agency to increase its support in theater. Today, there are 97 Defense Contract Management 

Agency personnel deployed in Southwest Asia augmenting our LOGCAP program of-
212 

fices with contract management personnel. In addition to conducting reviews of the 

contractor’s purchasing, billing, estimating, procurement and property systems, field 

personnel augment the program management teams with administrative contracting 

officers, quality assurance representatives, and property administrators whose responsibility it is to ensure contract compliance with contract terms and conditions. 

We also took action to deploy in excess of 50 U.S. Army Reserve Logistics Support 

Officers who augment the program office by assisting supported command units in 

developing their requirements. Furthermore, there are over 500 Contracting Officer 

Representatives, provided by the supported command units, who provide daily oversight of contractor performance. 

Award fee boards are conducted every six months evaluating the contractor’s performance, identifying areas for improvement, and assessing overall performance as 

it is measured against the award fee criteria. Board Membership consists of representatives from the supported commands, the LOGCAP Deputy Program Directors 

and the Defense Contract Management Agency. It is chaired by LOGCAP Program 

Director. Besides the Award Fee Evaluation Boards conducted every six months, 

there are monthly performance evaluation boards chaired by the supported unit. 

The Department of the Army also established a Contractor Acquired Property Review Board that ensures excess contract property is distributed to needed locations. 

Based on lessons learned under the LOGCAP III contract, the Army developed a 

new acquisition strategy for LOGCAP IV that will utilize the services of three performance contractors to execute LOGCAP requirements and one contractor to support the LOGCAP Program Director in the management of the program and to conduct worldwide planning. LOGCAP IV contracts were awarded and task orders will 

be competed among the three performance contractors to ensure competitive pricing 

for required services. The award to three performance contractors provides the 

Army with increased capacity to respond to other contingencies foreign or domestic. 

The additional performance contractors minimize risk and ensure combat support/ 

combat service support capability is responsive to worldwide contingencies. 

In conclusion, while I primarily address the initiatives and resources AMC is pursuing to improve our Expeditionary Contracting capability, the success of future operations is a joint responsibility and will require DOD solutions and resourcing. To 

this end, we continue to work with our sister Services, the Joint Staff and other 

defense agencies. 

Expeditionary military operations in Iraq and Afghanistan have placed extraordinary demands on our contracting system and the people who make it work. The 

vast majority of our military and civilian contracting personnel perform well in 

tough, austere conditions. We know that the success of our warfighters and those 

who lead them is linked directly to the success of our contracting workforce, and 

we are working hard to ensure that contracting is a core competency within the 

Army. The Army’s focus on contracting is not just for contracting professionals. 

Warfighters set requirements and help manage contract execution—their involvement in the contracting process is critical. 

My number one priority is support to our Soldiers, Sailors, Airmen and Marines. 

Our contracting professionals are focused on supporting these warfighters and inspiring the confidence and trust of the American people. We must never lose sight 

of the outstanding work to support the war in Iraq and Afghanistan that our contracting and contractor personnel are doing 24/7. This support at times results in 

the potential for and reality of loss of life and injury. 

Our challenge is to ensure we have adequate structure, policy, and personnel who 

are trained to do the job in the right place at the right time—continually performing 

at an ethical standard that upholds Army values. This will not be easy. It will take 

time, but getting it done is essential. We cannot and will not fail—our warfighters 

and our taxpayers deserve no less. 

Thank you for providing us with this opportunity to address the Army’s oversight 

of contracting to support expeditionary operations. I look forward to answering your 

questions. 

WEAPONS MISPLACED IN IRAQ

Chairman BYRD. Secretary England, in a July 2007 report, the 

Government Accountability Office found that unclear DOD guidance, inadequate staff, and insufficient technology resulted in poor 

accountability of over 190,000 weapons provided to Iraqi security 

forces. DOD concurred with GAO’s recommendation to identify accountability procedures with a program to train and equip the Iraqi 
213 

security forces. However—I stress this, and I want to speak loudly 

and clearly—however, as of March 2008, DOD had not developed 

the necessary procedures. 

Can you tell the committee whether or not those procedures have 

been developed and implemented yet? Have all the missing weapons been accounted for? And what additional oversight is planned 

to ensure that weapons accountability continues? 

Mr. ENGLAND. Chairman Byrd, as I recall, we started this investigation, we turned it over to the DOD IG, because there were some 

fundamental issues. We did work to put procedures in place in parallel, but I can’t tell you today exactly if they went out or not, so 

I don’t have the specific status; I will have to get back with you 

on that. 

[The information follows:] 

The National Defense Authorization Act, 2008, Public Law No. 110–181, Section 

1228, requires the President to implement a policy to control the export and transfer 

of defense articles into Iraq, including the implementation of a registration and 

monitoring system. The Department of Defense, through Multi-National Force—Iraq 

(MNF–I) has implemented many policies and procedures which will help meet the 

intent of this law as it comes into effect in late July 2008. First, Multi-National Security Transition Command—Iraq (MNSTC–I) implemented a database tracking 

system for weapons accountability. Following the Government Accountability Office 

(GAO) report of July 2007, MNSTC–I requested that the Department of Defense Inspector General (DODIG) conduct an inspection in October 2007. In implementing 

GAO and DODIG recommendations, MNSTC–I reconciled serial numbers of weapons and created a weapons database. All small arms procured for the Government 

of Iraq (GoI) through MNSTC–I, either from Iraqi Security Forces Fund (ISFF) or 

Foreign Military Sales (FMS), are now registered by serial number in this database, 

which is managed by MNSTC–I logistics personnel. Additionally, 100 percent serial 

number inventories were completed on all weapons held at Taji National Depot and 

Abu Ghraib Warehouse, enabling reconciliation of the database. MNF–I has worked 

to establish an unbroken chain of custody for the accountability and control of munitions under U.S. control from entry into Iraq to issuance to the ISF. The number 

of logistics and property accountability specialists in country (in MNSTC–I, in particular) has increased and increased security procedures throughout the chain of 

custody have been implemented. MNF–I has worked with the ISF to build their 

property accountability systems and structures. In July 2007, MNF–I partnered 

with the ISF to establish an M–16 Biometrics Program that links individual soldiers 

to the particular weapons they are issued. Prior to weapons issue, each soldier is 

required to provide biometric data in the form of a retinal scan, a voice scan, and 

fingerprints. In addition, soldiers’ personnel and payroll data are verified before a 

weapon is issued. The final step in the process is to take a picture of each soldier 

holding his new weapon with the serial number visible. Similar biometric procedures have been implemented for Iraqi police badge and weapon issue, as well, and 

the Ministry of Interior requires policemen to present their identification card and 

weapon in order to receive monthly pay. The fidelity of data and level of detail captured in these accountability procedures are significant. 

In coordination with the Iraqi Ground Forces Command (IGFC), MNSTC–I established an Iraqi/Coalition joint inspection team in October 2007 to inspect and assess 

Iraqi Divisions’ equipment records and verify on-hand quantities. MNSTC–I was 

able to establish a baseline of where weapons are located and provide an operational 

snapshot of accountability in several Iraqi divisions. This data was utilized to reconcile the Coalition issue log with Iraqi hand receipts and assess the effectiveness 

of ISF accountability procedures. 

Contractor delivery of weapons in theater has been further regulated. Since September 13, 2007, the Joint Contracting Command Iraq/Afghanistan (JCC–I/A) has 

ensured that all weapons contracts to procure and deliver munitions include a number of clauses to increase accountability. Contracts now require vendors and shippers to do the following: deliver munitions to Iraq through U.S. controlled ports of 

entry within Iraq; provide serial number lists electronically in advance of any weapons shipments to Iraq; post serial numbers on the inside and outside of weapons 

shipping containers; and provide en route visibility of weapons and munitions, to 

include the arrival dates and times of munitions cargo being delivered to Iraq. 
214 

Mr. ENGLAND. I do know there’s a specific effort that was underway by the DOD IG to look into this whole matter. The impression 

I have is that we did take the corrective action to track those, and 

we do have a requirement, I believe, now by the National Defense 

Authorization Act (NDAA) to actually track those individual weapons. So, I will get back with you on the specific status, but I believe 

that was a requirement of last year’s NDAA, in terms of tracking 

of each individual weapon in Iraq—not just pistols, but every kind 

of weapon. So, I will get back with you, sir, on the specific status 

in complying with that legislation. 

Chairman BYRD. Do you know if the 190,000 weapons have been 

recovered? 

Mr. ENGLAND. Mr. Chairman, I recall these conversations, but, 

I’ll tell you, I can’t—I cannot tell you the specifics right now. I 

mean, this is—I was—I’m just not prepared to discuss that subject 

with you. That’s not something I looked at in preparation for this 

hearing. Maybe one of my colleagues here has a specific on—— 

We’ll just—I expect we’ll have to get back with you on this subject, unless somebody has a very detailed status today. 

Chairman BYRD. Can somebody answer that question? 

[No response.] 

Mr. ENGLAND. Looks like we’ll have to get back with you on that, 

Senator. So, we will close the loop with you after this hearing. 

Chairman BYRD. All right. 

LOSS OF U.S. COALITION PROVISIONAL AUTHORITY FUNDS IN IRAQ

Secretary England, a few months ago the Appropriations Committee held a hearing on fraud and corruption in Iraq. Several 

issues were raised relating to missing Coalition Provisional Authority (CPA) funds. But, DOD’s responses to these questions remain 

unclear. Unclear. There was the suggestion that these funds were 

Iraqi funds and were no concern to the Department of Defense. 

But, when these funds disappeared, U.S. taxpayers were, and they 

continue to be, called upon to pay for Iraqi reconstruction. Since, 

at the time those funds disappeared, the Coalition Provisional Authority was answerable to the Department of Defense, I want to 

ask you to tell me the amount of Coalition Provisional Authority 

assistance and reconstruction funds doled out prior to the transition of power in Iraq that cannot be accounted for, and who is responsible for ensuring that those funds are accounted for, and what 

level of confidence is there that these funds did not make their way 

into—to join insurgent groups or militias. 

Mr. ENGLAND. So, Mr. Chairman, I would tell you the person 

best capable of answering that is Mr. Stu Bowen, the special investigator for the Iraq reconstruction, so the SIGIR. And in my discussions with Stu Bowen in my office, this is one of the issues that 

they investigated in detail. And so, I would recommend we have 

Stu Bowen address that in detail with you, because that was specifically under his purview, and I believe—that is covered in one 

of his reports. So, there’s been a number of reports by the SIGIR. 

I have to go back and take a look at those reports, but I believe 

that that is one of the issues that was covered by Stu Bowen, and 

I’ll be happy to talk to Stu Bowen and get that data together for 

you. 
215 

[The information follows:] 

The Coalition Provisional Authority (CPA) funds to which you refer are the $8.8 

billion Development Fund for Iraq (DFI), an account that includes oil export sales 

from Iraq, balances from the U.N. Oil-for-Food Program, and frozen Saddam-era 

funds. The CPA, operating in a high threat environment, distributed DFI money to 

reconstruction projects and to Iraqi ministries. 

Since December 2003, under U.N. mandate, the International Advisory and Monitoring Board (IAMB) has served as the oversight body for the DFI. The IAMB’s July 

15, 2004 audit report, after reviewing the CPA’s management of DFI funds, concluded that all known oil proceeds, reported frozen assets, and transfers from the 

Oil-for-Food Program have been properly and transparently accounted for in the 

DFI. 

Acknowledging that CPA operated under challenging circumstances, the IAMB report noted that the lack of oil metering and other problems made it difficult to determine that all DFI disbursements were made for the purposes intended. 

Chairman BYRD. Senator Cochran. 

Senator COCHRAN. Mr. Chairman, thank you. 

General Griffin, last fall the Gansler report was released, and it 

contained some recommendations for changes in personnel, organization, and training of the Army’s contracting forces. I understand 

that, in response to this report, the Army recently established a 

new Contracting Command that reports directly to you. Can you 

tell us how this effort will improve the Army’s contracting oversight efforts? 

ARMY CONTRACTING COMMAND

General GRIFFIN. Yes, sir. There were four areas that the 

Gansler Commission recommended: legislative, personnel, structure, and training. The Secretary of the Army wrote a letter transferring the Army Contracting Agency from the Assistant Secretary 

of the Army (Acquisition, Logistics, and Technology (ASA/ALT)) to 

AMC. With that transfer, we picked up the Army Contracting 

Agency. 

We stood up the command. It’ll be led by a future two star. 

Today, Mr. Parsons is the Senior Executive Service member who 

sits in that leadership position. We have come back to the Congress, now, asking for five general officer positions in the area of 

acquisition and contracting. One of those positions will be a twostar general officer who will follow Mr. Parsons. In addition, we 

have two subordinate commands there, one in charge of installation 

contracting and one in charge of expeditionary contracting. 

This organization will give us a leadership contracting expertise 

level that we have not had before. We asked for 1,500 additional 

personnel; 900 of those are civilians and 500-and-some military. It 

will give us noncommissioned officers, officers, and now, for the 

first time, we’ve asked for warrant officers, and we will bring in a 

warrant officer corps, which will give us a technical level of expertise, not unlike what we have in our aviation community, that 

we’ve not had in the past. 

On the personnel side, we’ve asked for direct-hire authority. 

That’s now with the Office of Personnel Management (OPM). We’ve 

asked for direct-hire authority to speed up the process of bringing 

these folks onboard. But, we have a concept plan that’s been approved inside the Department of the Army, which gets at the structure. The recommendation I made to the Secretary of the Army, 

and he approved, was a 3-year plan, which would bring the folks 
216 

on, get them trained, and start getting them into the field. That 

will tremendously augment the capability we have around the 

world today, both Conus and overseas, to augment our contracting. 

Senator COCHRAN. One observation has been made, by someone 

in the region, that a major problem was the lack of adequately 

trained personnel. These are Army people who are involved in contracting with individuals and concerns in Iraq and Afghanistan. Do 

you have in place now a contracting process that is staffed with 

people who are better trained, or who will be? How have you addressed this concern? 

ACQUISITION WORKFORCE TRAINING

General GRIFFIN. Well, for the training aspect, which I mentioned in my opening statement, we’re capturing lessons learned 

from units as they redeploy. What we’re trying to do is incorporate 

that into our training centers. We’ve expanded our training program in Kuwait for contracting-officer representatives who go into 

theater. I think we’ve trained in the neighborhood of 500, now, of 

those personnel. We’ve expanded some training at the Defense Acquisition University. But, across the board, we’ve looked at training 

at each level where we need the expertise. 

What the Army Contracting Command will give us, which we’ve 

not had in the past, is the expertise and the oversight and a command structure for our acquisition workforce—for, really, contracting folks, unlike we’ve had in the past. And it’ll help us, both 

from an expeditionary, as well as an installation, because we have 

some challenges, from an installation standpoint, as well in contractor oversight. 

Senator COCHRAN. Secretary England, let me ask you if, departmentwide, there has been an effort to look at lessons learned, in 

terms of well-trained, capable contracting officers in the region to 

deal with this issue across the Department of Defense. Apparently, 

the Army has made changes, and is making an effort to deal with 

some of these problems. What’s being done at the Department 

level? 

Mr. ENGLAND. So, Senator, as you comment, the primary responsibility is in the Army, because they are the agent for the Department of Defense to do that. So, almost all the responsibility lies 

within the Army, but we have—in response to the Army, adjust 

whatever policies we need to, to support ’em. So, for example, they 

need more general officer slots, and so, legislation has come forward to the Congress to provide those particular slots in the Army. 

So, whenever we need DOD actions—we meet regularly on this 

subject—whenever there’s actions needed at the Office of the Secretary of Defense (OSD) level, we work to support the Army, in 

terms of broader policies or legislation. We will continue to do that. 

If we need to expand—for example, IG or other organizations, 

DCMA or organizations like that—then we handle—agree with 

that—we handle the budget, we make sure they have slots available. So, we do whatever we can to facilitate the actions that people feel they have to do to have broader capability across the Department. But, it is specifically within the Army, in this case. And 

then the oversight, of course, are in many agencies, including the 

investigative agencies, while our primary investigative agency is 
217 

the Defense investigative agencies—we have those in the Air Force, 

in the Army, in the Navy—so, we have a number of investigative 

services. They are also all involved in this process, obviously, when 

we’re going to have convictions or investigations. So, however we 

can work across that whole range of capabilities, we do so at the 

OSD level. 

Senator COCHRAN. Great, thank you. 

Thank you, Mr. Chairman. 

Chairman BYRD. Senator Leahy. 

Thank you. Thank you. 

LACK OF OVERSIGHT OF U.S. CONTRACTS IN IRAQ

Senator LEAHY. Thank you, Mr. Chairman. 

Chairman, I’m a strong believer in the inspectors general procedures in the various departments. When they work effectively, I 

think they’re very, very good. 

Secretary England, I know you’ve expressed similar views. And, 

seeing Mr. Heddell here, I have a couple of questions—there’s a recent audit by the Inspector General’s Office that examined more 

than $10 billion spent on various commercial contracts related to 

the war in Iraq, found, out of those $10 billion, about $1.4 billion 

didn’t have sufficient documents showing how the money was 

spent, more than $7 billion failed to meet the Defense Department’s own requirements for payments. They ended up referring 1 

out of every 25 of them for criminal investigations. And that’s 

shocking enough, but that’s on a very small sample even, about 1 

percent of the total payments. 

And, according to the same audit, more than 180,000 similar 

payments were never reviewed or audited, and those could involve 

billions of dollars of losses. When will those remaining payments 

be audited? 

Mr. HEDDELL. Senator Leahy, any inspector general—and, I 

think, particularly the inspector general for the Department of Defense—would be very concerned about any of these. And, of course, 

with Defense we’re talking about extremely large amounts. And we 

have a number of ongoing initiatives. Some are in the criminal investigative arena, many others are in the audit arena. 

To give you a complete answer, referring to some of the things 

that you specifically mentioned, I’m going to, with your permission, 

ask Deputy Inspector General Mary Ugone—— 

Senator LEAHY. And my—— 

Mr. HEDDELL [continuing]. To answer part of that—— 

Senator LEAHY [continuing]. My basic—— 

Mr. HEDDELL [continuing]. If it’s okay, but—— 

Senator LEAHY [continuing]. My basic question is, Will these others be audited? 

Mr. HEDDELL. The answer to that is, yes, sir. We are concerned 

about any issues that you mention, and they’re concerns to us. 

[The information follows:] 

Defense Finance and Accounting Service—Rome retains approximately 800,000 

vouchers pertaining to the contingency expenditures for the military’s activities in 

Iraq, Kuwait and Afghanistan. These vouchers contain over 8 million pages of 

records with an approximate value of $14 billion. The effort that would be required 

to do a full audit of each voucher is not practical. To perform a full audit of each 

voucher would require an inordinate amount of our audit resources at the cost of 
218 

other ongoing projects. Instead of individually auditing each voucher we will be utilizing digitized versions of the records and applying data mining techniques, as well 

as traditional investigative methods to review the records. 

To accomplish this, we have initiated a cooperative effort with the Defense Finance and Accounting Service. The Defense Finance and Accounting Service is the 

documents. These records, once scanned will be readily available for the Defense 

Criminal Investigative Service (DCIS), the criminal investigative arm of the DOD 

IG, and DOD IG auditors to review. 

The Defense Finance and Accounting Service agreed that all of these historical 

records need to be scanned into a searchable database. This database is known as 

the Corporate Electronic Data Management System. Scanning the documents is a 

labor intensive process that is very time consuming. This spring, DFAS hired 65 

summer employees to prepare and scan the vouchers into the Corporate Electronic 

Data Management System. 

Once the vouchers are scanned, federal oversight organizations (to include DCIS) 

will be able to search millions of pages of records for information specific to subjects 

of investigations and other reviews. The DOD IG auditors and the Army Audit 

Agency are developing data mining protocols based upon the experience of the 

agents in the field. These offices are working together to avoid duplication of effort 

and to increase the likelihood of detecting fraud. Once fully developed the data mining protocols will be used by investigative and audit organizations to identify suspect vouchers and payments. The suspect vouchers will then be reviewed for sufficiency and appropriateness of the payments. All suspected illegal payments that are 

identified will be investigated. 

While we are not performing a 100 percent review of all the vouchers, we feel our 

current approach is the best use of our time and resources. DFAS is in the process 

of scanning all voucher documentation which will allow oversight organizations 

ready access to all support documentation and will also enable the use of data mining protocols on a near real time basis. This will enable oversight organizations to 

identify potentially suspect payments much earlier in the process. 

Senator LEAHY. And how long was that going to take? 

Mr. HEDDELL. Well, I’d have to look at each individual issue. 

Mary, here, may be able to answer specifically on each one, but 

these audits, I can tell you, generally take—from beginning to end, 

you’re talking at least 6 months. I know that’s a long time. It depends on the issues, the scope of the audit, and what kinds of resources are available. But, these are very important issues to us, 

and so, they would get top priority. 

Senator LEAHY. But, your testimony today is that they all will 

be completed. 

Mr. HEDDELL. They will be, yes, sir. 

Senator LEAHY. Ms. Ugone, did you want to add anything to 

that? 

Ms. UGONE. I just wanted to say, the context of that audit, it was 

started in May 2006 because the Defense Criminal Investigative 

Service (DCIS) was concerned about $10.7 billion of vouchers in a 

warehouse, Defense Finance and Accounting Service (DFAS) room. 

And we came in to look at completeness and accuracy. We drew a 

statistical sample, based on dollars, and we had a 90-percent confidence level. But, we were still working with our agents. The 

agents and DFAS are scanning every voucher. That’s going to take 

quite a bit of time, I think—if you work two shifts, it might take— 

24 hours a day—it would probably take 9 months to look at it. So, 

it’s been a joint effort. 

And the issue with us was, these are commercial vouchers, mostly, that we looked at that were out of Kuwait. We were concerned 

with the supporting documentation to provide the basis for a payment. So, we are going to be looking at it from an Office of the Inspector General (OIG) standpoint, yes. 

Senator LEAHY. Do you need more—— 
219 

Ms. UGONE. Scanning every payment voucher—— 

Senator LEAHY. Do you need more investigators? I mean, if we’re 

talking about billions of dollars that may have been wasted or lost 

in fraud, do you need more investigators? Because I think most 

taxpayers would say it would be kind of nice to find out who defrauded whom and that somebody should go to jail. 

Mr. HEDDELL. Senator Leahy, you know, any inspector general is 

going to say that they need more resources. But, when you look— 

I mean, the answer to your question is, yes, sir—but, when you 

look at the responsibility that the inspector general covers at the 

DOD, when you’re talking about issues like defective products, terrorism, technology transfer, healthcare, financial crimes, the whole 

range of issues, those are just on the criminal side—— 

Senator LEAHY. Mr. Heddell, I’m—you know, I’m aware of that. 

And I’m aware of how they—the criminal law works. I was a prosecutor for 8 years, and I know that you can’t cover every single 

thing. But, if these audits show, already, the potential of billions 

of dollars that’s lost and defrauded, I’m far more worried about 

that than I am that somebody who may have, at a military base 

somewhere, topped off their personal car and—although with the 

price of gas today, I guess that does mount up. But, somebody who 

did that improperly—I’m far more interested in these billions of 

dollars, I’m far more interested if there were people, whether in the 

contractors or individual subcontractors or whatever, thought they 

could get away with it. And I’m far more interested in seeing some 

people, not just have to pay back a fine, which they may consider 

just a cost of doing business, but I’d like to see some people go to 

jail. You know, again, I—maybe I’m putting my own background of 

a prosecutor, but I always felt that, in some of these major commercial frauds, people are very willing to pay a fine, it’s the cost 

of doing business; when they actually thought they were going to 

spend some time behind bars, they tightened up their procedure. 

So, are we going to get to those kind of things? 

Mr. HEDDELL. Well, I’d like to tell you yes, and I intend to make 

it possible, Senator Leahy, but a lot of these investigations are led 

by the United States attorneys’ offices, and so, the timelines, to 

some extent, are affected—— 

Senator LEAHY. Well, then let me ask you—— 

Mr. HEDDELL [continuing]. By that. 

EXTENDING THE STATUTE OF LIMITATIONS

Senator LEAHY [continuing]. About that, because during past 

wars, we found—World War I, World War II—we’ve been in Iraq 

now longer than we were in World War II—but in World War I, 

World War II, when Congress was afraid that auditors might not 

be able to complete the investigation of contracting fraud in time— 

remember the Truman Commission, things of that nature—they 

passed a law to suspend the statute of limitations during wartime, 

to make sure no one illegally profited by fraud. And I have introduced, along with Senator Grassley, bipartisan legislation, the 

Wartime Enforcement Fraud Act, S. 2892, that would extend the 

statute of limitations, just as we’ve done in past wars. 

So, my question is, would such legislation give you enough of a 

breather and give you more time to do your investigations? 
220 

Mr. HEDDELL. I’m aware of that legislation, sir. And absolutely 

that proposal would be very beneficial to my office, and probably 

other inspectors general. 

Senator LEAHY. Secretary England, do you agree? 

Mr. ENGLAND. Sounds appropriate—Senator, it sounds appropriate to me. I mean, there’s no question, we don’t want waste, 

fraud, and abuse, and if people are guilty of it, they need to be 

prosecuted and indicted and convicted. So, whatever facilitates 

that, I’ll definitely support. 

Senator LEAHY. And I understand, in a war zone, it’s not easy 

to complete these, and that’s why I want to give you more time. 

Thank you. 

Thank you, Mr. Chairman. 

[The statement follows:] 

PREPARED STATEMENT OF SENATOR PATRICK J. LEAHY

Today, the Appropriations Committee continues rigorous oversight of how the Defense Department has spent more than $600 billion authorized for the wars in Iraq 

and Afghanistan. The stories of billions lost to fraud, waste, and abuse during these 

wars are now all too familiar. This Committee, as one of the main checks on this 

administration’s wasteful war spending, must not only follow-up on these outrageous reports, but dig deeper and ask tougher questions to make sure that those 

who are responsible for this fraud, waste, and abuse are held accountable under the 

law. 

I want to thank Chairman Byrd for calling this hearing, and I will continue to 

support his longstanding and consistent efforts to make sure this Committee carries 

out its oversight duties, particularly over wasteful wartime spending. 

Just two months ago, the Defense Department’s Inspector General issued a new 

audit of $10.7 billion in payments on basic commercial contracts during the wars 

in Iraq and Afghanistan. This audit confirmed yet again that American taxpayers 

have no clear picture of how billions of dollars have been spent in Iraq and Afghanistan. This audit found that there were no documents to show how $1.4 billion was 

spent, and more than $7 billion was spent without following the law or the Defense 

Department’s rules. In some cases, there was no invoice showing what services were 

provided; in other cases, there was no record of who received the payment or for 

what purpose. These individual contracts often involved millions of taxpayer dollars, 

yet the Defense Department had no record of how the money was spent. The findings were so serious that the Inspector General referred one out of every 25 contracts for criminal investigation. This is unacceptable, this is wrong, and this is another example of this administration’s mismanagement of the wars in Iraq and Afghanistan. 

We need to do more than ask tough questions. We need to start holding those responsible for this fraud accountable, and I hope our witnesses today will shed new 

light on the steps being taken to investigate and prosecute those who improperly 

received money or defrauded the government. I was particularly concerned that this 

audit was based on a review of only a small sample of contracts, less than 1 percent 

of the total. According to the audit, there are still more than 180,000 similar contracts to review that would lead to more than 700 new criminal investigations involving hundreds of millions of dollars. I hope that our witnesses today will explain 

what efforts they have taken to carefully review all these remaining contracts, particularly where there’s such a high risk for fraud. 

I expect that we will also hear today how the task for reviewing and investigating 

these contracts during times of war is difficult and time-consuming. While this may 

be true, it is no less important that we continue these reviews. I have introduced 

legislation to give the government more tools to address this problem. In the last 

three Congresses, I have introduced the War Profiteering Prevention Act, which 

would give prosecutors and investigators the ability to pursue war profiteers overseas and those who take advantage of so-called ‘‘cost plus’’ contracts to defraud our 

Nation. 

Along with Senator Grassley, I have also introduced the Wartime Enforcement of 

Fraud Act, which would extend the statute of limitation for contract fraud offenses 

during wartime. In past wars, Congress has suspended the criminal statute of limitations in order to give auditors and investigators more time to complete their re-
221 

views of wartime contracts. This bill would do the same thing for the wars in Iraq 

and Afghanistan. 

This bill is important to make sure that those who have taken advantage of our 

nation during times of war shall not escape unpunished. 

I look forward to hearing from out witnesses today, and I encourage them to redouble their efforts to combat fraud, waste, and abuse in Iraq and Afghanistan, it 

continues to undermine the efforts of our troops and to squander American’s hard 

earned money overseas. 

Chairman BYRD. Senator Craig. 

Senator CRAIG. Mr. Chairman, thank you. 

ARMY REQUESTS ADDITIONAL GENERAL OFFICERS

General Griffin, our ranking member has discussed the Gansler 

Commission and its recommendation, and you’ve responded, speaking to the needed positions—five general officers recommendations 

sent up and four other proposals that you’ve mentioned. Let me 

fast-forward here. Given the uncertainty of legislative movement 

on The Hill at this time, and a near shutdown by Congress on any 

further activity this year, would you fast-forward for me, Who are 

you working with? I assume, the Armed Services Committee. And 

do you have any commitments to move this forward? And what is 

the importance of the timeliness of these actions so that you can 

proceed with those recommendations? 

General GRIFFIN. Well, sir, the Secretary and the Chief made a 

decision very early on to move some senior personnel to the Army 

Contracting Command. So, those three leadership positions inside 

of the Army Contracting Command are filled today; one by a twostar equivalent SES, Mr. Parsons, one by a colonel newly promotable acquisition contracting officer, and one by a one-star SES 

equivalent acquisition contracting expert. So, first I want to leave 

you with the idea that they are, all three—very competent people 

there today. 

The plan for the future, with the five general officer (GO) positions, is to have a position where we will promote a general officer 

into that two-star level that would be the commander of the Army 

Contracting Command. And we’re still working this, in the specific 

allocations, but we envision two other GO positions in that Army 

Contracting Command—two one-star positions. Then, a fourth general officer position would be in the ASA/ALT from the Office of the 

Army Staff, Assistant Secretary of the Army (Acquisition, Logistics, 

and Technology) and that would be a two-star position. And one, 

I believe the plan is to put it in the Corps of Engineers. We submitted the request through OSD, and it was sent over to the Office 

of Management and Budget (OMB). And OMB now has passed it 

to the Congress. But, sir, I don’t know the status of it right now, 

but we—I will come back to you. But, we are aggressively working 

the resourcing of those five GO positions. 

[The information follows:] 

On March 14, 2008, the Secretary of the Army, Pete Geren submitted a memorandum for the General Counsel of the Department of Defense on submission of legislative proposal to implement recommendations of the Commission on Army Acquisition and Program Management in Expeditionary Operations (Gansler Report). 

This memorandum requested the establishment of five new Army General Officer 

positions in the Active Component and requested that it be staffed and submitted 

as a fiscal year 2009 legislative proposal. Prior to submission this request was re-
222 

viewed by the Office of the Judge Advocate General, Army, the Officer of Army General Counsel, and coordinated with Army leadership. 

On June 27, 2008, Acting General Counsel of the Department of Defense, Daniel 

J. Dell’Orto submitted formal correspondence to the President of the Senate, the 

Honorable Richard B. Cheney and Speaker of the House of Representatives, the 

Honorable Nancy Pelosi that Congress enact the request for five new Army General 

Officer positions as part of the National Defense Authorization Bill for fiscal year 

2009. 

Senator CRAIG. Well, my point here is, as we shut down for—— 

General GRIFFIN. Yes, sir. 

Senator CRAIG [continuing]. In late September—— 

General GRIFFIN. Yes, sir. 

Senator CRAIG [continuing]. Obviously, and we may not be 

back—— 

General GRIFFIN. Yes, sir. 

Senator CRAIG [continuing]. Until early next year, or the Congress may not, depending—I would hope that—if there is some 

sense of urgency, it’s expressed, and we can work with the chairmen of the appropriate committees to make this happen. 

General GRIFFIN. Thank you. Thank you. 

Senator CRAIG. Mr.—Heddell, is it? 

Mr. HEDDELL. Yes, sir, it is. 

CONSTRUCTION CONTRACTS IN AFGHANISTAN

Senator CRAIG. GAO cited serious problems with construction 

contracts in Afghanistan as far back as 2005, buildings that had 

not been started, had been left unfinished, even though the contractor involved had been paid for a completed project. Where I’m 

headed here is that, if we are moving personnel into Iraq, if there 

is going to be an intensive—a more intensive effort there, where 

are we with the facilities now? Where are you going, or have you 

looked forward into that situation to understand exactly where we 

might be—where these delays have put us? And are we prepared 

to meet those needs? 

Mr. HEDDELL. I appreciate that question, Senator Craig. Being 

relatively new at the DOD, I’m aware of the issues that you’ve 

mentioned. I’d like to ask, with your permission, Deputy Inspector 

General Ugone, who is aware of that and can answer that question. 

Senator CRAIG. Thank you. 

Please. 

Ms. UGONE. Thank you, sir. 

With respect to Afghanistan, we have ongoing coverage. Particularly of importance to us is the Afghanistan Security Forces Fund, 

which is used to equip the Afghan police and army forces. We have 

ongoing work now. The team just redeployed back to the States. 

They spent 4 months there, looking at various types of issues, real 

property transfer, equipment accountability, and we also coordinated with the munitions assessment team on weapons accountability. And we think that’s a very important country in the region. 

We have a regional strategy when we do our audit work, and we 

also are looking at contractor common-access cards, which, frankly, 

give contractors access to pretty much any facility here in the 

States, as well as forward, and that’s of importance to us, as well. 

So, there’s quite a bit of initiatives that we’re moving into Afghanistan, and we plan to also increase in Iraq, as well. 
223 

I hope that answers your question. 

Senator CRAIG. Well, I—it may. You talk about what you’re 

doing. Where are the problems you now see that need to be corrected if there are some that relate to a potential surge or a substantial deployment of U.S. personnel additionally into Afghanistan? 

Ms. UGONE. Well, the issue that we have is similar to the issues 

that we have identified in a summary report. And as we’ve said before, we haven’t reported out yet. We haven’t drafted our report. 

Our preliminary observations, we have alerted the command in 

country, Combined Security Transition Command. We’ve alerted 

them to some preliminary issues. And those issues are not dissimilar to what we’ve already identified in our summary report, 

lessons learned. We have not yet drafted our report. Our team just 

returned at the end of June, and they had been there 4 months. 

Senator CRAIG. When do you expect that report to be drafted and 

available? 

Ms. UGONE. We’re going to be doing a series of reports, draft reports. Normally, what happens is, in accordance with our standards, as well as to obtain management comments, there will be a 

series of drafts, starting in July, then August, then September; 

finals should be coming out beginning in, I believe, September, for 

the real property transfer issue that we are working on. 

Senator CRAIG. Thank you. 

Thank you, Mr. Chairman. 

Ms. UGONE. Thank you, sir. 

Chairman BYRD. Thank you. 

Senator Murray. 

ACCOUNTABILITY FROM U.S. CONTRACTORS

Senator MURRAY. Thank you very much, Mr. Chairman, for holding this really critical committee hearing. Obviously, this committee appropriates a lot of money, and we have a responsibility for 

oversight, and I really appreciate your taking the time to allow us 

to look at this closely. 

I know my colleague Senator Dorgan has done an incredible 

amount of work on the issue of electrocution, and is going to focus 

on some of that in his questioning. And I want to thank him publicly for his work on that. I look forward to his—your responses to 

his questions. 

But, let me ask a broader question to you, Secretary England. 

And I understand that this contract oversight is very difficult for 

our military. You’re—you’ve been asked to fight two wars in a period of immense transition, and I—we know the military doesn’t 

have the resources to carry out every task associated with this conflict. And that is, of course, why we do have contractors today. 

Ideally, they provide a service for a cheaper amount for taxpayers, and do it well. But, I think we’re all deeply concerned about 

the stories that we’re hearing about tax dollars being wasted on 

fraudulent billing, on dead-end projects, on lack of accountability. 

And I understand that Defense contractors don’t have to respond 

to the same chain of command as our servicemembers, and the 

oversight is difficult. However, it’s just difficult for me to believe 
224 

that the DOD is helpless in using any kind of leverage against 

these—in order to secure favorable outcomes from them. 

Can you tell us, or describe to this committee, what processes or 

leverages you do have in order to have accountability and make 

sure that tax dollars are being spent more wisely than what we— 

what it appears we have been seeing? 

Mr. ENGLAND. Certainly, Senator. 

Senator, first let me say—I mean, I firmly believe almost all of 

our contractors are forthright, honest, and do a very good job for 

us. The ones we hear about are the cases where people do bad 

things, and that’s the way it always is; you always hear about the 

bad things, but there’s a lot of good things. And without the contractors, frankly, we couldn’t do these jobs that we do, in terms of 

DOD and for our military. 

A comment about a lot of the functions that the contractors do 

for us when our military is not as large as it was, but also, it’s now 

an All Volunteer Force, and, frankly, a lot of these types of jobs 

contractors do, our military people did not join the military to do 

these kind of jobs. They joined the military to be fighters and do 

a military job. So, we have come to rely on contractors. And, frankly, I believe that is appropriate as an adjunct to an All Volunteer 

Force. 

That said, there are always situations where people either misbill—maybe deliberately, sometimes inadvertently—maybe they 

don’t have sufficient data. A lot of these cases are looking for sufficient justification. It’s not that they’ve done something wrong, it’s 

there’s not sufficient justification, so we need to have additional 

justification for the billing. 

But, we have contracts that we have DCMA, here, our audit— 

not the audit agency, but our contracting, across the board, that assists—and they can discuss this somewhat—that assists all of our 

contract personnel. But, when people overbill, one, we correct that, 

and we get those monies back. So, if there’s been an error, or even 

deliberate, we get that money back. So, if there’s an overbilling, it 

comes back to us. 

Now, if people do something fraudulent—I mean, if they break 

the law—and there are people who obviously break the law, like 

they do in any other endeavor—then we do have investigative 

agencies, starting with the Defense Criminal Investigative Agency 

that comes under IG. And, as I’ve said, we have those in all of our 

services. 

Senator MURRAY. Well, yeah, I understand that. Is—— 

Mr. ENGLAND. And we prosecute—— 

Senator MURRAY [continuing]. It is a problem—are you—— 

Mr. ENGLAND. And we prosecute—— 

Senator MURRAY. And are we—— 

Mr. ENGLAND [continuing]. Those people. It just—— 

AGRESSIVE PROSECUTION OF WRONGDOING

Senator MURRAY [continuing]. Aggressive about that? I mean, I 

can see a case where the military is very reliant now on private 

contractors to do an incredible amount of work, and it’s important—I can see a tendency for the military not to aggressively pros-
225 

ecute or go after any of these contractors because of the close reliant relationship. Should that be a concern? 

Mr. ENGLAND. Senator, I hope it’s not a concern. I mean, when 

we know of cases of people who break the law, we have investigations, and we work with the Department of Justice, and we work 

to go prosecute those cases. I mean, I, somebody made that comment—I guess, Senator Leahy—I mean, we do make examples of 

people, so people understand that this system works appropriately 

and properly. And so, we do prosecute people, every opportunity, 

and when we have the information. I will say, sometimes it’s harder in a war zone, so maybe the data’s not—you know, it’s harder 

to come by, in some circumstances. But, I can tell you, all the discussions I’ve had—I mean, this has been a very serious effort by 

all of our IG and investigative agencies to make absolutely certain 

that we prosecute people who have willfully done something wrong. 

Senator MURRAY. Okay. Well, I—and I know Senator Dorgan’s 

going to ask about the electrical situation, but it seems like when 

you’ve known something for that long, the question is, Where has 

the aggressiveness been? But, I want to let him focus on that question to you, unless you want to answer it really quickly here. 

Mr. ENGLAND. No, I—I mean, we will talk about the—I think Mr. 

Shay Assad is better qualified than I am. But, in the electrical 

issue, I mean, the data is right, but not fully, I think, understood. 

While there have been significant—well, 16 people electrocuted—I 

mean, it’s for a variety of causes, and I think it’s important that 

we sit down and understand the variety of causes. I mean, we do 

have the one case of a fellow in the shower, but the cases are not 

people in showers. I mean, people sometimes grabbing a hot electrical wire when they’re in their Humvee in the combat zone. 

There’s people who literally fall into electrical wires. There’s people 

working on the equipment. So, I think it’s important to understand 

the source of all that. Mr. Assad has more of that to deal with. 

If there is criminal negligence, then we definitely follow up on 

that. I mean, in most cases, when we investigate, we find out—— 

Senator MURRAY. Yeah. And my question was to—— 

Mr. ENGLAND [continuing]. That’s not the case. 

Senator MURRAY [continuing]. To the larger point, that there’s a 

very close relationship now between the military and these private, 

very large companies, and your reliance on them to provide essential services for our military. Does that put the military in a tough 

situation in trying to prosecute any fraud that occurs with those, 

because of that important relationship? 

Mr. ENGLAND. Senator, I would say not. I would say that companies themselves—they’re like us, they do not want fraudulent people on their payrolls. I mean, they want to do the job right, because 

they’re in business, most of these companies, for a long time. I 

mean, they want to do business with us, so they try to do a very 

high-quality, excellent job for us every day. And when they have 

employees that break the law or do inappropriate things, they have 

the same incentive we have, to go prosecute those people. I mean, 

they do not want people—I would say that’s true with companies 

across America, you do not want employees that are not honest and 

forthright, in terms of doing their job every day. So, I think those 
226 

companies are aligned with us, in terms of prosecuting people who 

break the law. 

Senator MURRAY. Well, thank you, Mr. Chairman. My time is up. 

I appreciate it. 

Chairman BYRD. Senator Dorgan. 

Senator DORGAN. Mr. Chairman, thank you. And thank you for 

holding this hearing. 

Chairman BYRD. Thank you. 

Senator DORGAN. Mr. Secretary, thank you for being here, and— 

appreciate all the witnesses. 

POORLY EXECUTED CONTRACTS ENDANGER OUR TROOPS

I must say, I find all of this a pretty depressing situation. We 

are shoveling money out the door, and have been for a long while— 

almost three-quarters of $1 trillion, at this point, with very little 

oversight. We’ve barely scratched the surface on oversight. And the 

cases that I am well aware of—you know, the—it gives me precious 

little confidence that we’re doing the right thing to address these 

issues. And I—what I’d like to do is ask questions about several 

areas. I don’t know that we’ll have sufficient time to get through 

them all. 

But, on the issue of electrocutions, two mothers came to a hearing I held—I’ve held 17 hearings on these issues, only because 

there are precious few oversight hearings—two mothers came, 

whose sons were electrocuted in Iraq—one power-washing a 

Humvee, the other taking a shower. Originally, the Army suggested maybe the one taking a shower had taken a small portable 

appliance into the shower with him. It turns out that, of course, 

was not true. But, we had electricians, hired by the company that 

was involved in the electrical contracting, who left the company because they were upset about what the company was doing. They indicated that Kellogg Brown & Root was hiring people who were not 

qualified, didn’t even know what basic grounding was, and so on. 

The testimony was pretty depressing, actually. 

And so, it’s clear that there was a lot of problems with the electrical wiring, and the contractor that had that contract—people 

have been electrocuted. And now, General Petraeus has asked the 

contractor that is the subject of allegations of shoddy work by employees who work for the contractor—has asked that contractor to 

go back now and do a review of all the wiring in Iraq. 

Mr. Secretary, do you think that’s an appropriate way to do a review of what’s happening, to have the contractor that’s the subject 

of the allegations go back and take a look at whether the work is 

good work? 

Mr. ENGLAND. Senator, again, I’ll let Mr. Assad cover this in 

more detail, but my understanding is, we’re not going to just do 

that, we actually are going to have a group that will go out and 

independently audit, at least on a sample basis, to make sure that 

this work is being done appropriately. But, I think it’s also to 

under—I think we do need to understand, maybe more fundamentally, how this whole system works with KBR and also the facilities, et cetera, because they do not have master electricians—I 

mean, everyone’s not a master electrician. I mean, typically the 
227 

way they work anywhere—and, I think, even here in housing and 

all—there would be a master electrician, and people work for them. 

That said, we are going to go audit this. We’ve also asked our 

organizations to go off and look at other buildings and start sampling other buildings in Iraq, not necessarily ones that KBR contracted. A lot of the buildings were just there when our military 

and personnel showed up. So, there is a lot of independent auditing 

that will be accomplished to ensure the safety of those buildings. 

And perhaps I could have Mr. Assad say a few more words about 

that. 

But, I agree with you, we want to have absolute confidence before our people use these facilities—— 

Senator DORGAN. Well—— 

Mr. ENGLAND [continuing]. That they’re safe. 

Senator DORGAN. Well, was General Petraeus not—I mean, my 

understanding is that General Petraeus made a decision and issued 

an order that KBR should go back and do a review of all the wiring 

contracted in Iraq. Is that not the case? 

Mr. ENGLAND. No, I believe that’s the case, but I believe that, 

also, the decision’s been made that we will also then have other 

people sample that work to make absolutely certain it’s been done 

correctly. 

And so, can—someone else has more detail, I think, and—— 

Senator DORGAN. Well—— 

Mr. ENGLAND [continuing]. Can you help me, Assad? 

So, we will sample that work to make sure that it is appropriate. 

Mr. ASSAD. We’re actually going to do two things: the sampling 

that the Secretary talked about and ensuring that we get more 

folks, from the Army Corps of Engineers and maybe Navy Facilities 

Command, on the ground who, in fact, can oversee the electrical 

work that is being done. 

The principal work that KBR is doing, in the opinion of DCMA, 

was that the most important thing to do was to get an idea of what 

exactly was the total problem. And so, the most immediate way to 

do that was to get the contractor who is responsible for the maintenance of the buildings—most of the buildings that KBR oversees, 

they didn’t construct, nor have they, frankly, done a lot of work in. 

They oversee the maintenance, and the maintenance is done primarily on an on-call basis. What we’re doing is, we’re changing 

that. In fact, we’re inspecting all of the buildings, ground up, not 

just for electrical, but all safety issues, and then—— 

Senator DORGAN. Mr. Assad, my question—I apologize for interrupting. 

Mr. ASSAD. Yeah. 

Senator DORGAN. I may only get one question asked, if this is the 

case. My question was, Do you think it appropriate to ask the contractor, whose own employees have turned whistleblowers, saying 

that the contractor, among other things, is hiring third-country nationals who can’t do the work because they don’t know what to do, 

they’re not skilled and qualified—to ask that contractor to go back 

and review the work? I—it just seem illogical to me. 

Mr. ASSAD. I think it’s appropriate to ensure that the contractor 

has qualified folks to do that work. And then—it’s just as appropriate—and we will oversee what it is he’s doing. And, as the Sec-
228 

retary mentioned, on a sample basis, ensure that those inspections 

that he did are, in fact, accurate. 

AEY AMMUNITION CONTRACTS

Senator DORGAN. Let me go to another case, if I might. Let me 

show a picture of Efraim Diveroli. This was an embarrassment, regrettably, on the front page of the New York Times, a 22-year-old 

chief executive officer of a company that was—essentially had been 

a shell company of the man’s father in Florida, doing operations 

from behind a—an unmarked door in Miami Beach. He’s 22 years 

old. He’s the CEO of the company. He has a vice president that 

was a massage therapist, named David Packouz, 25 years old. And 

so, these two folks got $300 million in contracts. They’re now— 

they’ve now been charged criminally. 

But, I had Mr. Parsons in, in fact, with Mr.—with General 

Mortensen, the previous Deputy Commanding General of the Army 

Materiel Command, and the more I have looked at this, the more 

disgusted I have become. In fact, Mr. Parsons, you indicated—to 

me, I believe—that this company, AEY, looked good on paper, and 

you look at companies, not individuals. In fact, you and General 

Mortensen told me that even if the criminal charges were dropped, 

the Army Sustainment Command could reinstate the contract. 

Let me ask a question about this. How is it that a $300 million 

set of contracts goes to a company that has a 22-year-old CEO and 

a 25-year-old massage therapist as a vice president, and they’ve 

done small contracting with the State Department, and found to be 

unfit, and, at that point, they get contracts for the Army 

Sustainment Command? Is that an embarrassment? It should be, 

in my judgment. 

Mr. PARSONS. Sir, I’ll address that. Yes, it is. After taking more 

time, looking at the investigation of this, we did find a flaw in the 

procurement process, in that we only require contracting officers to 

do past-performance reporting on contracts from $5 million. At the 

time, this company had held a lot of smaller-dollar contracts, where 

they had not performed well. That information was not in what we 

call our past-performance information retrieval system. So, when 

the contracting officer was making the selection of this contractor, 

that poor-past-performance information was not visible to her. 

Now that we’ve seen that, we’ve seen that that is a—that’s a mistake—it’s a flaw in the process. The Army has initiated action, and 

so has the Office of the Secretary of Defense, to fix that. In the future, regardless of the dollar value, if somebody’s performance results in a termination for default or a determination for cause, that 

information will be, now, included in the past-performance information retrieval system. I’m confident that if the contracting officer 

had seen that information, her decisions in that selection would 

have been different. 

Senator DORGAN. Well, that’s a different answer than you and 

General Mortensen gave to me in my office, is it not? 

Mr. PARSONS. Yes, it is, sir. After we had met with you, we were 

still trying to gather additional data on AEY. That’s when we discovered they had a lot of small-dollar contracts. Many of these were 

$3,000, $13,000, $200,000. And, again, because of that reporting 
229 

threshold requirement of only $5 million and above, these things 

weren’t annotated in our database. 

Senator DORGAN. Yeah. 

Mr. PARSONS. And it is a flaw. And we appreciate your interest 

in it. It identified the flaw we had in that system. We’ve taken action to fix that in the future. 

FAIR TREATMENT OF WHISTLEBLOWERS?

Senator DORGAN. And it just lacks common sense. I mean, it 

seems to me you’d take a look at a record of a company. And this 

just, on its face, looked foolish. I—you know, Mr. Secretary, you indicated that there’s a lot of investigation going on, but, I have to 

tell you, I talked to you personally about the Bunnatine Greenhouse 

case. We’ve since had a case with Charles Smith. Bunnatine Greenhouse had the courage to speak publicly. She said the original contracts that were awarded over at the Corps of Engineers—she was 

the highest civilian contract official in the Corps—it was the most 

blatant contract abuse she had witnessed in her career. 

And, incidentally, I called the person that hired her. She was, by 

all accounts, a terrific contracting officer. I called General Ballard, 

since retired, at home at night, and said to him, ‘‘General Ballard, 

tell me about Bunnatine Greenhouse, because she’s just lost her job 

for speaking publicly about contracting abuse.’’ And he said she 

was one of the finest people that he had ever hired. She was replaced by a person that had no contracting experience, and they 

had to send that person to school at night to get some experience. 

So, she was demoted because she spoke publicly about contracting 

abuse. 

Now, 1 week ago—2 weeks ago, Charles Smith, who was the contracting officer for LOGCAP III, told us he was demoted, he lost 

his job—from General Johnson, by the way, who I’ll mention in a 

moment—he lost his job because he indicated there was $1 billion 

of billing from Kellogg Brown & Root that was unsupported, and 

he was going to hold up the billing. And the folks from KBR said 

to him, ‘‘That’s not going to happen.’’ The next morning, he found 

he was demoted by General Jerome Johnson. 

So, do you understand why someone who looks—— 

Mr. ENGLAND. So—— 

Senator DORGAN [continuing]. At all this and understands it, and 

gets no responses, really, is—— 

Mr. ENGLAND. So—— 

Senator DORGAN [continuing]. Concerned about it? 

Mr. ENGLAND. So, Senator—but, that’s not the way I remember 

it. Now—— 

Senator DORGAN. All right. 

Mr. ENGLAND [continuing]. I know you called me about the young 

lady who was, at that time, talking—and I guess her name was 

Greenhouse; this was, maybe, 2 years ago, I’m not sure exactly— 

but, at your request, I did go back, and I had the whole case investigated. It turns out that particular lady was an SES, and 2 years 

prior to her testimony, she had gotten an unsatisfactory or something rating. That requires, if you have two or three of those ratings, that you be reduced to a GS–15 level. So, that action was be-
230 

fore her testimony. I mean, it was not as a consequence of a—reporting contract abuse. I mean, it was before that incident. 

But, I did ask the Army to investigate it. The Army IG looked 

at the case. In addition, it was reviewed by another party on—several times—because I wanted to make absolutely certain that we 

were not taking action against somebody because they were reporting issues. And I was convinced that what was happening was fair 

and equitable, in terms of the ratings, based on prior performance. 

So, I did not ever see a connection between those cases. And, I’ll 

tell you, I was very scrupulous, in terms of working that with the 

Army at that time. So, I mean, I understand we disagree on that 

subject, but, at least from my point of view, I felt like we did investigate that thoroughly to make sure there was no connection. 

CHARLES SMITH ALLEGATIONS

Senator DORGAN. If I might—I know I’m taking some extra time 

here; if you—if I might, I’ve seen all of those performance evaluations, and they started—she had ‘‘outstanding’’ performance evaluations—they started turning sour when the general who was 

heading the Corps of Engineers had a—the top contracting officer 

say, ‘‘You can’t have these companies in the room while you’re talking about the kind of contract you’re going to construct for them. 

That’s improper.’’ And she began to blow the whistle. At that point, 

he began to decide, ‘‘You know what? We need to get her out of 

here, and so I’ll do that with bad performance reviews.’’ 

But, even if one sets that aside, address the issue of Charles 

Smith, also on the front page of the New York Times, who was dismissed—in fact, never told he was dismissed, he simply showed up 

at a meeting, and General Jerome Johnson had replaced him overnight because he contested $1 billion in billings he thought were 

inappropriate from Kellogg Brown & Root. 

General GRIFFIN. Senator, based upon Mr. Smith’s allegations, 

which we take very seriously, the Department of the Army IG is 

investigating that incident, and I would—I would ask you that— 

once that investigation is complete, we’ll come back to you and update you on the status. 

Senator DORGAN. General, I appreciate that. And if I might just 

make two other comments. 

As you know, we have contractors, that are doing work for the 

Department of Defense, that are employing their employees 

through the Cayman Islands. That is, U.S. employees being employed through the Cayman Islands in order to avoid paying payroll taxes. I wrote to the Secretary about that, and—I mean, I don’t 

know why we would hire contractors who decide that they’re going 

to have their employees paid through Cayman Island subsidiaries, 

through a postal box, in order to avoid paying payroll taxes. I 

think, simply, if I were running the Defense Department, I’d say, 

‘‘You know what? You want to contract with us? You hire Americans. You run’ em through your company in this country, and do 

it now.’’ That ought to stop immediately. That’s also an embarrassment. And I just—I don’t understand why that continues. 

And one more point. In this very room, General Jerome Johnson 

sat at that table and testified to the Senate Armed Services Committee that the issue—and this is just another issue, one of a dozen 
231 

or so—the issue of providing contaminated water to the Army 

camps in Iraq—we know that happened, by KBR, because of a 21- 

page internal report, and that was done by Will Granger, who was 

in charge of that function for the entire company, paid for by the 

taxpayer—he said this was a near miss, could have caused mass 

sickness or death, because they were providing water to the Army 

camps that were twice as contaminated as raw water from the Euphrates River. We had three whistleblowers from that company, an 

internal report from the company, and the company—and the Department of the Army said it never happened, it did not happen. 

So, the—we knew it happened, because we had the internal document—in this case, from KBR—and three whistleblowers. Never 

happened. 

So, the Army sent General Jerome Johnson to come to that table 

to tell the Senate Armed Services Committee it never happened. 

I asked the inspector general to investigate it. Took the inspector 

general about 11⁄2 years, and they issued the report. They said it 

did happen, and soldiers got sick as a result of it. And further, they 

said something very important. They said, ‘‘We notified the Department of Defense of our interim report 3 weeks before General Johnson came to the—this room to,’’ apparently, deceive the Congress, 

saying it never happened. 

I don’t understand all these things. I don’t understand why there 

wouldn’t be a furious anger about contaminated water going to the 

troops or about someone being electrocuted in a shower because 

somebody forgot to ground a—I mean, I just—you know, I—my 

point is, we are spending so much money, and we need so much 

better work, in my judgment, both by the Department of Defense 

and the United States Congress in oversight. We just do. This not 

only fleeces the taxpayers, what’s happening, but I think it undermines and disserves our soldiers. 

You run a Pentagon, and you also—you’ve got a lot of folks serving in uniform. We deeply admire them. You know, these soldiers 

protect America. And I—my concern here, and my anger about all 

this, is not directed at our soldiers, it is, I think, a process that is 

undermining the work of our soldiers. 

Mr. ENGLAND. Yes, sir. 

Senator DORGAN. It—— 

Mr. ENGLAND. Senator, let me just say, I do not disagree. I mean, 

look, I do not disagree. I mean, by and large, I think all of our people and our contractors try to do what’s right for America, and 

there are instances where people don’t do what’s right. And, in 

those cases, we do try, to the best of our ability, to find out what 

the problem is, correct it, and then put new processes in place so 

those problems won’t happen again. I think we diligently work at 

that, and we have an enormous number of people who work that, 

in terms of our oversight. I don’t know how many tens and tens 

of thousands of people just try to do that, to make this system better. I’ll tell you, that’s why we’re all here, to make the system better. 

So, all I can tell you is, we work at this. It is our fundamental 

responsibility to make the system work right. It doesn’t always 

work right, but we do try to fix the problems when they are identified in a systemic way. 
232 

Senator DORGAN. But, in most cases, they deny—I mean, the 

young woman whose son was killed taking a shower, she was so 

upset, because they said, ‘‘Well, maybe he took an electrical appliance into the shower.’’ That’s not what happened to him. He was 

killed because of bad wiring. And yet, the Army was the one who 

said, ‘‘You know, we think it was something else.’’ 

And then, when I see General Johnson show up here and—so, 

you understand my angst about this. 

Mr. ENGLAND. No, I understand. I mean, I hope you’re dealing 

with the exceptions, though, and not the way the process works 

every day, Senator. I’m—— 

Senator DORGAN. Yeah, except that when Mr. Parsons tells me 

the way they used to select companies for these contracts, and you 

get a 22-year-old with precious experience, who’s been defaulting— 

I don’t know, defaulting—but has been deemed not to have been a 

good contractor on small contracts in the State Department, and he 

gets a much bigger contract from DOD—I’m saying the processes 

are broken and don’t work, and we need to do better. 

Mr. ENGLAND. And I’m telling—and I agree with you. I mean, I 

think that is an embarrassment, that shouldn’t happen. I mean, 

I’m sort of shocked that that happened, frankly, that that could 

happen in our system. And when something that shocking happens, 

we take action to fix it, because it’s a great embarrassment and 

shock to us. I mean, look, I don’t disagree with you on that. When 

we have those kind of problems, we absolutely have to fix them. 

And what I can tell you is, we work every day to do that. I mean, 

we do work every day to do that. I hope what you’re hearing are 

the exceptions. By and large, I believe the system works well, but 

there are exceptions, and we work very hard to fix those. 

Senator DORGAN. I think—— 

Mr. ENGLAND. And we will continue to do that, Senator. I mean, 

that’s—— 

Senator DORGAN. When General Mortensen came to see me, I 

mean, it was circle-the-wagons time, ‘‘They did everything right in 

this case. In fact, they’d do it again.’’ And I said, ‘‘Are you kidding 

me?’’ That’s unbelievable. 

Mr. ENGLAND. Senator, let me just make one comment. When I 

was confirmed, in 2001 before the committee, I said, every time, we 

will be forthright, honest, and direct with everybody in every circumstance, and I tell this to everybody in the Department of Defense every day—forthright, honest, and direct, ‘‘You have a problem, deal with it, and—just deal with it. That’s the way it is.’’ So, 

I can tell you that is the way we try to run this Department. If 

there’s exceptions, we also deal with that, because they’re not acceptable to us. 

Senator DORGAN. Well, you know that I like you and have been 

happy to be supportive of your nominations, so it’s not about you. 

But, let me just—one final point. 

Mr. Heddell, would you confirm that you all did the investigation 

in which the Army and the contractor said nothing happened, and, 

in fact—— 
233 

KBR WATER ALLEGATIONS

General GRIFFIN. We’ve—Senator, we’ve got the investigation— 

I’ve got the—March 2007 memoranda, and I’ve got it—answers to 

where actions were taken in each case. We’ve also got the March 

2008 final IG report. I’ve got that with me. We’ve been through 

that. 

General Johnson is being investigated by the DOD IG with respect to your comments on his testimony. And then, at the end of 

that investigation, then I would be able to tell you more about that. 

But, we have the results of the IG inspection you’re talking about. 

I’ve got exactly what was done in theater. And we’ve got, now, the 

latest report, as well. 

Senator DORGAN. Mr. Chairman, thank you for holding this hearing. Congress needs to do a lot more, and we need to expect a lot 

more. And I think the Pentagon, the Army, and the inspector general—Mr. Inspector General, you’re new. You and I have visited, 

but good luck on your work. We need your help badly. 

Mr. HEDDELL. Well, I appreciate that, Senator. And I appreciate 

the conversation we had the other day. The issues you brought to 

my attention, I consider very important, and I’m addressing them. 

Senator DORGAN. Mr. Secretary, thanks for your indulgence. 

And, Mr. Chairman, I’ve well run out the clock, here, and you 

and the Senator from Mississippi have been very good to let me 

take the time. 

Chairman BYRD. Thank you, Senator. 

Mr. ENGLAND. Senator, I do appreciate your comments. I do appreciate ’em. They’re helpful, and I appreciate your comments. And 

I appreciate your good work. Thank you. 

Chairman BYRD. By prior agreement, Secretary England needs to 

leave at this time, but the other witnesses are prepared to continue 

for any further questions. 

Senator Cochran. 

Senator COCHRAN. Mr. Chairman, I have no further questions. 

Chairman BYRD. General Griffin, given the large dollar amount 

of unaccounted-for expenditures, why has KBR been permitted to 

continue to contract with the Department of Defense? 

LOGCAP IV ACQUISITION STRATEGY

General GRIFFIN. Sir, I will attempt to answer that, and then I 

will ask Mr. Parsons to also help me, here. 

Chairman BYRD. All right. 

General GRIFFIN. As you’re aware, we have—now have a 

LOGCAP IV. And under LOGCAP IV, we have three major suppliers of contract services. And so, we are not dependent upon a 

single contractor for services, as we are today under LOGCAP III. 

We believe that, under LOGCAP IV, with three different suppliers of services, we will be able to, number one, have a different 

leverage with respect to the services that are provided to us, and 

hopefully get a better product at a very competitive price. But, we 

went at LOGCAP IV because of some of the problems we were having in only having a single contractor supplying those services. 

With that, I will turn it over to Mr. Parsons, let him specifically 

talk about KBR today. 
234 

Mr. PARSONS. Sir, I would just add that, you know, anytime one 

of these incidents is brought to our attention, where it appears that 

there’s some egregious act or some kind of an issue going on with 

the LOGCAP contract, that we do take those seriously and look 

into them. 

What we tend to find when we really start peeling the onionskin 

back is that there may not have been a real clarity in the definition 

of the requirements, there’s not always a real clarity in the contract scope of work, in the statement of work. And so, trying to, you 

know, find the KBR totally accountable for some of these actions 

isn’t always the case. In fact, in many cases, it’s a shared responsibility, because of some of the work that we did on the Government 

side, getting back to why we need to better train our people, we 

need to get more people on board to execute this work. 

And, as General Griffin said, you know, we initiated action, back 

in late 2004, early 2005, to come up with a new acquisition strategy so that we’re no longer dependent upon one single contractor. 

We’re confident, in the future as we compete these actions, that the 

competition will force better cost control, better quality, and better 

performance. 

Chairman BYRD. So, a good question to end on, 

Senator Dorgan, you have another question? 

Senator DORGAN. Mr. Chairman, just one additional question. 

Maybe it’s to Mr. Assad. 

I described the issue of Mr. Peter—Mr. Smith, rather, who was 

replaced by General Johnson the morning after the Halliburton or 

KBR folks told him, ‘‘Well, we will get this—we will get this judgment changed.’’ He was—he said there was about a billion—$1 billion that was not justifiable, or at least the evidence didn’t—wasn’t 

available for payment. And, the next morning, he came to a meeting and discovered that he was no longer in his position, he had 

been demoted. And it—he discovered something else, and that was 

that the DCAA, the audit agency, would also be replaced, and the 

auditing of that would be done by a private contractor. 

Who can tell me about why that would have happened? And my 

understanding is, some of that still occurs on LOGCAP IV. But, is 

the Defense Contracts Audit Agency (DCAA) not capable of doing 

those audits? Why would a private company have—brought in to 

do the audits, who—— 

RCI AUDIT ASSISTANCE

Mr. PARSONS. Sir, I’ll address that concern. I think you’re making reference to RCI/SERCO. They—— 

Senator DORGAN. Yes. 

Mr. PARSONS [continuing]. Did not replace DCAA in the auditing 

of KBR’s books. They were brought in to assist the Government. 

They brought some technical expertise in to the Government during that timeframe to determine, one, what should a reasonable 

amount of money be paid for many of the costs that had been incurred by KBR, but, more importantly, to come up with an estimate for us, in the Government, help us develop an estimate on 

what the estimate to complete that work was. So, they did not replace DCAA, they came in to provide some technical expertise that 

we just lacked in the Government, again getting back to the impor-
235 

tance of finding ways to increase our personnel and increase our 

training so that we develop that expertise in the future. And 

they’re filling that void, and, to some extent, filling that void today. 

But, assuredly, we did not replace DCAA—— 

Senator DORGAN. I’m going to submit a list of questions on that 

subject to DCAA and to you. 

And we also had testimony from, oh, for example, a KBR employee named Rory, who was a food service supervisor, saying that 

they were charging for—his company was charging for 10,000 

meals a day and serving 5,000 meals a day. You know, the more 

public allegation, of 42,000 meals being charged every day, when 

14,000 meals were served—I don’t know what the disposition of 

that was, but that’s 28,000-meals-a-day overcharge. 

You know, I don’t—we have sent all of that over to the DOD. 

Some of it goes in—I get letters back, saying, ‘‘We’re looking into 

this. The Criminal Investigation Service is looking into it.’’ And 

some of this is 4 years old, 3 years old, and you never hear back. 

And my hope is that, Mr. Inspector General, you’ll be able to take 

a look at some of those older cases, because it seems to me that 

one of the lessons here from Mr. Smith and Ms. Greenhouse, is, if 

you speak up about this and complain about it, you’re going to 

quickly lose your job. And I think that’s an awful lesson for those 

in public service. I would hope we have people that have the courage to say—you know what? If we’ve got sweetheart contracts 

being awarded, we’ve got payments being made that aren’t supportable, I hope we’ve got people that are willing to speak up. At least 

the two that have testified publicly did so at the cost of their job, 

regrettably. 

General GRIFFIN. Senator, I would—— 

Mr. PARSONS. Senator—— 

General GRIFFIN [continuing]. Appreciate copies of anything like 

that you get, and I promise you we’ll sort out the response and—— 

Senator DORGAN. I’ll be happy to do that. And thanks—you have 

just taken over the Army Sustainment Command, I believe. Is 

that—— 

General GRIFFIN. No, sir. Actually, General Radin took it over, 

a year ago. 

Senator DORGAN. Oh. 

General GRIFFIN. So, General Johnson changed command at 

the—almost a year to date. So, General—Major General Radin 

is—— 

Senator DORGAN. All right. 

General GRIFFIN [continuing]. Is the commander. 

Senator DORGAN. Does General Mortensen report to you? 

General GRIFFIN. Sir, General Mortensen is—has also retired. 

Senator DORGAN. He’s retired, yes. 

General GRIFFIN. And General Dunwoody replaced General 

Mortensen. 

Senator DORGAN. Mr. Chairman, thank you very much. 

And I thank the witnesses. 

General GRIFFIN. Yes, sir. 

Senator DORGAN. Thanks for being here. 

Chairman BYRD. Thank you, Senator. 
236 

Mr. Heddell, in response to my second question, concerning lost 

CPA funds, Secretary England referred the matter to Stuart 

Bowen, our Iraq inspector general. It was Stuart Bowen who testified before this committee in March about the lost funds. Given 

that the CPA funds may have found their way into the hands of 

insurgents who wish to do our soldiers harm, are you committed 

to tracking down those lost funds? 

Mr. HEDDELL. Absolutely, Mr. Chairman. That obviously—it concerns me. I will say that, on that particular matter, the special inspector general for Iraqi reconstruction is investigating that. However, we’re concerned about anything along that line that we become aware of. 

Now, the fact that they are looking at that, we would defer to 

them to complete what they are doing so as not to confuse the 

issue. But, yes, sir, we would take any action that we can to save 

the American taxpayers’ money; that shouldn’t be wasted, lost, stolen, or abused. 

Chairman BYRD. All right. 

I thank each of the witnesses for appearing before the committee 

today. This committee cannot allow taxpayers’ money to be wasted 

or stolen, nor can we tolerate the diversion of funds or weapons to 

insurgents or terrorists. Therefore, we will continue to aggressively 

investigate the matter. 

ADDITIONAL COMMITTEE QUESTIONS

I’d ask that all members of the committee submit statements and 

questions for the record by close of business on Friday, July 25, 

2008. 

[The following questions were not asked at the hearing, but were 

submitted to the Department for response subsequent to the hearing:] 

QUESTIONS SUBMITTED TO HON. GORDON ENGLAND

QUESTIONS SUBMITTED BY SENATOR ROBERT C. BYRD

Question. Secretary England, in a July 2007 report, the Government Accountability Office (GAO) found that ‘‘unclear DOD guidance, inadequate staff, and insufficient technology resulted in poor accountability over 190,000 weapons provided to 

Iraqi security forces. DOD concurred with GAO’s recommendation to identify accountability procedures for the program to train and equip the Iraqi security forces. 

However, as of March 2008, DOD had not developed the necessary procedures.’’ Can 

you tell the Committee if those procedures have been developed and implemented 

yet, have all of the missing weapons been accounted for, and what additional oversight is planned to ensure that weapons accountability continues? 

Answer. The National Defense Authorization Act, 2008, Public Law No. 110–181, 

Section 1228, requires the President to implement a policy to control the export and 

transfer of defense articles into Iraq, including the implementation of a registration 

and monitoring system. The Department of Defense, through Multi-National 

Force—Iraq (MNF–I) has implemented many policies and procedures which will 

help meet the intent of this law as it comes into effect in late July 2008. First, 

Multi-National Security Transition Command—Iraq (MNSTC–I) implemented a 

database tracking system for weapons accountability. Following the Government Accountability Office (GAO) report of July 2007, MNSTC–I requested that the Department of Defense Inspector General (DODIG) conduct an inspection in October 2007. 

In implementing GAO and DODIG recommendations, MNSTC–I reconciled serial 

numbers of weapons and created a weapons database. All small arms procured for 

the Government of Iraq (GoI) through MNSTC–I, either from Iraqi Security Forces 

Fund (ISFF) or Foreign Military Sales (FMS), are now registered by serial number 

in this database, which is managed by MNSTC–I logistics personnel. Additionally, 
237 

100 percent serial number inventories were completed on all weapons held at Taji 

National Depot and Abu Ghraib Warehouse, enabling reconciliation of the database. 

MNF–I has worked to establish an unbroken chain of custody for the accountability 

and control of munitions under U.S. control from entry into Iraq to issuance to the 

ISF. The number of logistics and property accountability specialists in country (in 

MNSTC–I, in particular) has increased and increased security procedures throughout the chain of custody have been implemented. MNF–I has worked with the ISF 

to build their property accountability systems and structures. In July 2007, MNF– 

I partnered with the ISF to establish an M–16 Biometrics Program that links individual soldiers to the particular weapons they are issued. Prior to weapons issue, 

each soldier is required to provide biometric data in the form of a retinal scan, a 

voice scan, and fingerprints. In addition, soldiers’ personnel and payroll data are 

verified before a weapon is issued. The final step in the process is to take a picture 

of each soldier holding his new weapon with the serial number visible. Similar biometric procedures have been implemented for Iraqi police badge and weapon issue, 

as well, and the Ministry of Interior requires policemen to present their identification card and weapon in order to receive monthly pay. The fidelity of data and level 

of detail captured in these accountability procedures are significant. 

In coordination with the Iraqi Ground Forces Command (IGFC), MNSTC–I established an Iraqi/Coalition joint inspection team in October 2007 to inspect and assess 

Iraqi Divisions’ equipment records and verify on-hand quantities. MNSTC–I was 

able to establish a baseline of where weapons are located and provide an operational 

snapshot of accountability in several Iraqi divisions. This data was utilized to reconcile the Coalition issue log with Iraqi hand receipts and assess the effectiveness 

of ISF accountability procedures. 

Contractor delivery of weapons in theater has been further regulated. Since September 13, 2007, the Joint Contracting Command Iraq/Afghanistan (JCC–I/A) has 

ensured that all weapons contracts to procure and deliver munitions include a number of clauses to increase accountability. Contracts now require vendors and shippers to do the following: deliver munitions to Iraq through U.S. controlled ports of 

entry within Iraq; provide serial number lists electronically in advance of any weapons shipments to Iraq; post serial numbers on the inside and outside of weapons 

shipping containers; and provide en route visibility of weapons and munitions, to 

include the arrival dates and times of munitions cargo being delivered to Iraq. 

Question. Secretary England, a few months ago, the Appropriations Committee 

held a hearing on fraud and corruption in Iraq. Several issues were raised relating 

to missing Coalition Provisional Authority funds, but DOD’s responses to these 

questions remain unclear. There was the suggestion that these funds were Iraqi 

funds and of no concern to the Department of Defense. However, when these funds 

disappeared, U.S. taxpayers were—and continue to be—called upon to pay for Iraqi 

reconstruction. Since at the time those funds disappeared the Coalitional Provisional Authority was answerable to the Department of Defense, I would like you to 

tell me the amount of Coalition Provisional Authority assistance and reconstruction 

funds doled out prior to the transition of power in Iraq that cannot be accounted 

for, who is responsible for ensuring that these funds are accounted for, and what 

level of confidence is there that these funds did not make their way to insurgent 

groups or militias? 

Answer. The Coalition Provisional Authority (CPA) funds to which you refer are 

the $8.8 billion Development Fund for Iraq (DFI), and account that includes oil export sales from Iraq, balances from the U.N. Oil-for-Food Program, and frozen Saddam-era funds. The CPA, operating in a high threat environment, distributed DFI 

money to reconstruction projects and to Iraqi ministries. 

Since December 2003, under U.N. mandate, the International Advisory and Monitoring Board (IAMB) has served as the oversight body for the DFI. The IAMB’s July 

15, 2004 audit report, after reviewing the CPA’s management of DFI funds, concluded that all known oil proceeds, reported frozen assets, and transfers from the 

Oil-for-Food Program have been properly and transparently accounted for in the 

DFI. 

Acknowledging that CPA operated under challenging circumstances, the IAMB report noted that the lack of oil metering and other problems made it difficult to determine that all DFI disbursements were made for the purposes intended. 

Question. At what point does the development of information that suggests that 

stolen funds may have found their way to the insurgents or militias shift from an 

inspection mission to an operational issue? Since in this case, the SIGIR can only 

point to their findings, it would seem that at some point operational, intelligence, 

or enforcement actions would fall to the Coalition military forces. 

Answer. [Deleted]. 
238 

Question. Secretary England, who specifically are the Iraqi and U.S. officials responsible for ensuring that Iraqi oil and oil revenues are not stolen and that oil production is metered and not diverted to the insurgents, as has been reported by GAO 

and others? 

Answer. The Iraqi Ministry of Interior (MoI) is responsible for security at oil facilities. Over the past year, the MoI has consolidated the disparate oil security entities—most recently the Strategic Infrastructure Brigades—into as single Oil Protection Force. This step, along with other ministry-wide reforms, will continue to improve both professionalism and performance. In support, the Multi-National Security Transition Command—Iraq (MNSTC–I) provides small amounts of police equipment and training assistance. 

Oversight of oil distribution and oil revenues is the responsibility of the Iraqi Ministry of Oil (MoO) and the individual state-owned operating companies. The MoO’s 

metering department, which is best positioned to identify theft and smuggling, receives training in administration and financial accounting through USAID’s ministerial capacity building program. 

Question. Secretary England, since smuggled oil may have been funding both insurgents and terrorists over the last 5 years, I expect that stopping this is a key 

priority in the Department of Defense and therefore I expect that you should be able 

to answer this question: When can we expect to see effective metering and accounting process in place to ensure that all of the oil pumped from the ground in Iraq 

is accounted for? 

Answer. Oil metering is essential to achieve financial transparency and accountability over oil resources in Iraq. The Iraqi Ministry of Oil (MoO), which is responsible for oil metering policy, and the individual state-owned companies, which install 

and use the metering systems, all have developed timelines to install and use oil 

meters. The Government of Iraq (GoI) is making slow but steady progress on installing oil meters at terminals across the country. However, USG advisors report that 

none of these timelines are being closely followed and that it cannot be determined 

when all planned meters will be in place and able to account for all of Iraq’s oil. 

Moreover, while the South Oil Company is using the metering system in Al 

Basrah for fiscal purposes, most individual operating companies use what meters 

have been installed monitor oil flow and not reconcile accounts. The MoO gathers 

and summarizes reports from the individual operating companies but does not verify 

the accuracy of the data or reconcile the quantities with the records maintained by 

the companies. 

To address these issues, USAID provides training in administration and financial 

accounting to the MoO’s metering department. 

Question. Secretary England, because of the snail’s pace at which investigations 

are initiated or are moving, the statute of limitation on many of the contracting offenses that have occurred in Iraq and Afghanistan will soon expire. Do you support 

current Congressional efforts to extend the statutes of limitation in cases involving 

these war zones? 

Answer. The Department of Defense strongly believes that persons who commit 

crimes should be held accountable as appropriate. To the extent that an applicable 

statute of limitations serves to impede that effort, it should be extended to enable 

that effort to be successful. 

Question. Secretary England, on July 18, 2008, just days after Senator Dorgan 

held a hearing about the electrocution deaths of 13 American personnel in Iraq due 

to faulty electrical work, the New York Times provided additional insight into the 

shoddy electrical work performed by U.S. contractors in Iraq. The article, citing internal Army documents, noted that in one six-month period from August 2006 

through January 2007, at least 283 electrical fires destroyed or damaged American 

military facilities in Iraq and killed at least 3 other soldiers. In addition to the 13 

deaths by electrocution, many more personnel have been injured, some seriously, by 

electrical shocks. Internal Army reports said KBR did a study and found a ‘‘systemic 

problem’’ with electrical work, although a KBR spokeswoman said the company 

found no evidence of a link between its work and the electrocutions. A Defense Contract Management Agency official, however, testified in a sworn statement that KBR 

and Army officials were well aware of the widespread electrical problems, including 

at the locations where individuals were killed. How is it that these widespread problems that rendered our troops unsafe in their own barracks were permitted to continue for so long, and what are you doing to correct the problem, jail those responsible for creating or permitting unsafe conditions to exist, and recover the payments 

made for this defective work? 

Answer. Facilities contracts for Iraq and Afghanistan that the Army is responsible 

for are administered by three agencies: the Joint Contracting Command—Iraq/Afghanistan; the Army Corps of Engineers; and the Army Sustainment Command (a 
239 

subordinate Command of the Army Materiel Command). Each of these three contracting activities receive their Contracting Authority from the Senior Procurement 

Executive, the Assistant Secretary of the Army for Acquisition, Logistics and Technology, Mr. Dean Popps. I have been asked to answer these questions on behalf of 

the Army. 

The overall responsibility for life, health and safety issues for soldiers in Iraq 

within the U.S. Central Command’s area of operations (USCENTCOM AOR) rests 

with the Multi-National Force—Iraq (MNF–I). AMC’s involvement with electrical 

issues within the USCENTCOM AOR is confined to the management of LOGCAP 

III contract with KBR (Kellogg Brown and Root Services). Under that contract, KBR 

is responsible for maintaining a multitude of facilities across Iraq in accordance 

with the terms and conditions of the base contract and applicable Statements of 

Work under specific Task Orders. The current Task Order, Number 139, spells out 

the various maintenance levels for facilities to be maintained by KBR. These levels 

of maintenance were established by the customer, Multi-National Corps—Iraq 

(MNC–I). 

Actions taken: 

—As a result of SSG Maseth’s tragic death, the LOGCAP Executive Director in 

conjunction with DCMA (Defense Contract Management Agency) coordinated 

the inspection and repair of a number of facilities across the RPC (Radwaniyah 

Palace Complex). 

—In addition, the LOGCAP Executive Director and the Army Sustainment Command commander are actively engaged with MNF–I as a member of Task Force 

SAFE (Safety Awareness for Fire and Electrical) which was stood up in order 

to understand the electrical and fire hazards in theater and develop the plan 

and critical tasks to ensure the future safety of military and civilian personnel 

in buildings and facilities in theater. 

In order to ensure properly trained and certified personnel are provided by KBR 

in the performance of their maintenance requirements, the LOGCAP Procurement 

Contracting Officer modified the LOGCAP III contract to clearly define the Army’s 

expectations for properly trained and certified personnel. This modification was 

issued on July 22, 2008. 

Currently, there is not enough known information on defective work on any 

LOGCAP contract to determine what remedies will be taken. As current assessments are conducted, and it is determined there are contract remedies that are appropriate these actions will be pursued. 

We are working hard to document the audit trail of events that led to these tragic 

events and will take appropriate action based on our findings. 

Question. Secretary England, in a recent article in the Journal of Public Integrity, 

it was reported that the Army CID’s Major Procurement Fraud Unit concluded by 

late 2005 that for a number of reasons, conditions in Iraq were highly conducive for 

fraud. Similarly, a recently published Defense Criminal Investigative Service assessment found that there had been only limited review of the completeness, accuracy, 

and propriety of contingency payment vouchers and that there existed the potential 

for fraud, waste, and abuse. While these reports were just recently published, both 

examined periods of time prior to June 2006. Over two years have passed. Can you 

explain what specifically has been done in your organizations to change these conditions and what is being done to identify and prosecute individual cases of fraud that 

occurred during this period? 

Answer. In June of 2006, a key problem was inconsistency by Field Ordering Officers in the interpretation of authority for use of Standard Form 44 purchase orders. 

In response, DCMA now works closely with ordering officers to provide oversight 

and administration of the contracting and ordering agreements process to include 

the establishment of Task Force—Business and Stability Operations. This Task 

Force reviews purchase orders on a monthly basis to ensure proper use of and interpretation of contractual authorities. 

Question. The Special Inspector General for Iraq Reconstruction (SIGIR) has testified about one problem in contracting in which large contracts are repeatedly 

‘‘descoped’’ or scaled back by the government so that projects can be declared complete and the contractor rewarded although only a small percentage of the work 

originally envisioned has been completed. The Army Corps of Engineers was responsible for a number of these contracts. One notable case involved a $243 million contract for 150 primary healthcare centers in Iraq awarded to Parsons Global, Inc., 

in March 2004. By March 2006, despite the expenditure of $186 million, only six 

centers had been completed and 135 were partially constructed. The Army Corps of 

Engineers then issued a ‘‘termination for convenience’’ of the contract for 121 of the 

135 partially completed centers, requiring the contractor to deliver only 20 of the 

original 150 centers, including the 6 that had already been accepted. As of April 
240 

2007, only 15 of the now-planned 142 health centers were completed, and only 8 

were open to the public. Secretary England, can you update the committee on the 

status of this program, and can you estimate the loss to taxpayers for projects initiated in Iraq but never completed? 

Answer. We do not believe the facts show that contracts have been repeatedly 

descoped or scaled back for the purpose of declaring projects as complete or for the 

purpose of rewarding the contractor. In the most part, projects have been descoped 

or scaled back to ensure that projects remain within budgeted costs. In many cases, 

contracts have been terminated so that more cost-effective alternatives can be undertaken to achieve the goals of the program. 

For the Primary Healthcare Centers (PHC) program, the Army Corps of Engineers (COE) terminated Parsons for convenience due to cost overruns caused by construction delays. The termination of Parsons has allowed the U.S. Government to 

continue construction of the PHCs through firm fixed price contracts with local Iraqi 

contractors. 

As of August 7, 2008, COE has a new contract; 117 PHC have now been completed and turned over to the Iraq Ministry of Health. Another two PHCs are awaiting acceptance by the Iraq Ministry of Health. The final target is to complete 132 

centers. The last of these is expected to be completed in September 2008. Ten centers have since been deprogrammed due to security issues. 

In a challenging and constantly changing environment such as Iraq, there will inevitably be some projects that do not meet original goals or cannot be completed by 

other means. In these cases, we work with Iraqi officials to try to achieve the best 

outcome for U.S. taxpayers. In a number of cases, the Iraqis have stepped up to 

complete projects using Iraq funds. In such cases, we do not consider that they represent a loss to the U.S. taxpayer. 

Question. Secretary England, what is the number of contracts awarded in connection with the wars in Iraq and Afghanistan that were considered complete only because the original contract was significantly descoped? 

Answer. We have no way to readily determine to what extent, if any, contracts 

awarded in connection with our operations in Iraq and Afghanistan may have been 

considered complete as a result of a reduction in scope. The Department of Defense 

uses the Federal Procurement Data System—Next Generation (FPDS–NG), the 

database for Federal procurement actions, to record contract actions. Unfortunately, 

FPDS–NG, while collecting up to 200 separate data elements on each contract, does 

not contain this specific information. 

Question. Secretary England, can you tell the Committee how many investigations 

are pending at the agencies you are responsible for, and is this number the total 

of all investigations that have been referred to these agencies, or just the number 

they can reasonably execute with available resources? 

Answer. It is my understanding that in fiscal year 2007, the DOD IG through its 

Defense Criminal Investigative Service (DCIS) initiated 622 criminal investigative 

cases and projects. In fiscal year 2008, through July 31, 2008, DCIS initiated 543. 

Presently, the DCIS has a total of 1,685 investigative actions pending, a number 

which closely follows their historical trend. 

Question. Secretary England, in October 2007, the report of the Commission on 

Army Acquisition and Program Management in Expeditionary Operations stated 

that the Army lacked the leadership and military and civilian personnel to provide 

sufficient contracting support to either expeditionary or peacetime missions. According to the Commission, Army contracting personnel experienced a 600 percent increase in their workload and were performing more complex tasks, while the number of Army civilians and military in the contracting workforce had remained stagnant or declined. As a result, post-award contract management was rarely being 

done. The Commission recommended that the Army increase the number of civilian 

and military personnel in its contracting workforce by 1,400 individuals. Has the 

number increased, by how much, and what more needs to be done to rectify this 

problem? 

Answer. As a result of the Gansler Commission recommendations, the Secretary 

of the Army directed the Army Materiel Command on January 30, 2008, to establish 

a two-star level Army Contracting Command (ACC). The Secretary also directed the 

transfer of the Army Contracting Agency from the Assistant Secretary of the Army 

(Acquisition Logistics and Technology) to AMC. The ACC was established in a provisional status on March 13, 2008 and a concept plan to implement the new command 

was approved by the Army on July 15, 2008. That concept plan creates two new 

commands: the Mission and Installation Contracting Command and the Expeditionary Contracting Command which will be led by brigadier generals and provide 

the leadership and focus necessary to support the peacetime and expeditionary contracting missions. This concept plan, when fully implemented, will provide an addi-
241 

tional 921 civilians and 523 military personnel to improve contracting operations in 

contracting organizations that execute 70 percent of all Army contracting dollars. 

The ACC has established a three year plan to fill these new requirements. To date, 

approximately 300 additional civilians have been hired and the Army continues to 

fill authorized military positions with the qualified personnel that are currently 

serving. In order to fill the remaining military positions, we need to access additional military personnel into the Acquisition Corps. A request for direct hire authority is currently at OPM for consideration. The Department of Defense has requested Congress to enact legislation that will provide Direct Hire Authority to the 

Department of Defense for acquisition personnel. The Department also requests 

Congressional support in enacting legislation to authorize an increase of 5 General 

Officer positions within the Army to fill contracting leadership positions. The Department’s legislative proposal for these General Officer positions was submitted to 

Congress on June 27, 2008. 

Question. Secretary England, I am aware of at least one case of a U.S. company, 

Wye Oak Technologies, in which a U.S. contractor went to Iraq, contracted with the 

Iraqi government for services amounting to $25 million, performed the work, and 

never received payment. While the contract involved Iraqi government, U.S. military 

officials acted as advisors on the project. When the contract was completed, the payment was made, in full, to an Iraqi intermediary assigned by the Iraqi government 

who did not pass on any of the payment to the U.S. company. When Wye Oak officials returned to Iraq to collect their payment, they were murdered, and the Iraqi 

intermediary to whom the money had been paid fled the country and is believed to 

be in Jordan. 

How common is this situation, and what recourse do American contractors have 

when they contract with the Iraqi government rather than the U.S. government? 

Was there an investigation into this matter and if not, why? 

Answer. Wye Oak Technologies did not receive DOD funding and therefore would 

not be under the Department’s purview. The company in question contracted directly with the Iraq government, who in turn appointed the Iraqi intermediary. 

Question. Secretary England, how many contractors, as a result of their performance or practices, have been barred from future contracts and what types of issues 

were involved? 

Answer. Since 2005, the Army has suspended 50 individuals and companies based 

on allegations of fraud and misconduct in Iraq in accordance with Federal Acquisition Regulation (FAR) 9.407. In addition, the Army has proposed 32 individuals and 

companies for debarment under FAR 9.406, resulting in 18 finalized debarments at 

this time. The Army is the Executive Agency for contracting in Iraq, and the Army 

Procurement Fraud Branch monitors in-theater fraud investigations, coordinates 

remedies with the Joint Contracting Command—Iraq/Afghanistan and the Department of Justice, and recommends to the Army Suspension and Debarment Official 

appropriate administrative remedies for perfected fraud cases. The types of cases 

most frequently occurring in Iraq relate to payment of bribes and kickbacks to U.S. 

military and civilian personnel, theft, false claims, false statements, and incomplete 

or deficient contract performance. The Procurement Fraud Branch also has processed a limited number of product substitution cases. Also notable are a number of 

actions involving the theft of fuel by military personnel and local nationals and the 

payment of kickbacks associated with management of warehouses for the Iraqi 

armed forces and police, resulting in multiple suspension and debarment actions 

over the past 12 months. The Department of the Navy’s Acquisition Integrity Office 

has placed one individual on the Excluded Parties List System for offenses related 

to contracting in Iraq. That individual was a Marine Gunnery Sergeant who entered 

a guilty plea at a Special Court-Martial to two specifications of violations of Article 

107 of the Uniform Code of Military Justice (UCMJ) and three specifications of violations of Article 134 of the UCMJ. The Air Force has debarred 11 companies and 

individuals. These relate to a company that was found to have sham subsidiaries 

and used a non-existing company to submit fraudulent invoices in furtherance of a 

scheme to overcharge the Coalition Provisional Authority. It also includes one individual who was found to have had a conflict of interest with respect to a personal/ 

business relationship with a U.S. Government contractor. Defense Logistics Agency 

has had no cases involving conduct or misconduct related to an Iraq contract. 

Question. Secretary England, the recent AEY case represents all that is wrong in 

defense contracting. A small, unqualified 3-person firm with minimal experience in 

arms exports, either inaccurately or fraudulently misidentified as a small disadvantaged business is awarded a contract worth almost $300 million to supply ammunition to Afghan security forces, even though its performance history was not very 

good. AEY then goes through suspected arms traffickers to Albania to purchase 

aged ammunition made in China, a clear violation of U.S. law, and repackages it 
242 

as Hungarian. It appears that the American ambassador to Albania may have endorsed a plan to remove evidence of the Chinese origin of the ammunition. AEY has 

been barred from future contracts, and its president, Efraim Diveroli, has been indicted, but what further efforts are underway to uncover and indict other individuals involved in perpetrating this fraud and to improve the contractor review and 

approval process? 

Answer. During AMC’s review of the AEY, Inc. contract award, AMC discovered 

that the Procuring Contracting Officer (PCO) was not aware of AEY, Inc.’s previous 

poor performance on other Government contracts. This occurred because DOD policy 

did not require the reporting of a contractor’s performance on contract actions under 

$5 million. As a result, there were numerous small dollar contracts where AEY, Inc. 

had been terminated for cause that were not reported into the Contractor Performance Assessment Reporting System which feeds the DOD Past Performance Information Retrieval System. After AMC notified the Department of the Army and the 

Director of Defense Procurement, Acquisition Policy and Strategic Sourcing (DPAP) 

of this issue, DPAP promulgated new policy guidance on July 23, 2008, that now 

requires contracting officers to report all contracts terminated for cause or terminated for default, regardless of dollar value, to the DPAP. This policy change will 

allow a PCO to see all negative past performance information for future actions regardless of dollar value. This was not the case when the AEY contract was awarded. 

In addition, in June 2008, the Department of Justice also indicted three of Mr. 

Diveroli’s business associates, including Mr. David Packouz (Director and Vice 

President of AEY), Mr. Alexander Podrizki (an agent of AEY stationed in Albania) 

and Mr. Ralph Merrill (a business associate who provided financial and managerial 

assistance to AEY). AMC began working with law enforcement agencies on AEY 

more than 12 months prior to these indictments. 

To preclude some of these problems in the future, the Commander, Joint Munitions and Lethality, Life-Cycle Management Command formed a Non-Standard 

Ammo Task Force (NSA–TF), with members from all key organizations, to implement policy and command guidance. To date we have accomplished the following: 

—Developed general specifications for non-standard ammunition that provides 

among other things criteria for technical data package identification, quality assurance requirements, reliability thresholds, test requirements, and packaging/ 

transportation requirements. PEO Ammo also has created a database of technical data (commercial & WARSAW specs), performance parameters, sources of 

manufacture, etc. for Non-Standard Ammunition (NSA). 

—The Defense Contract Management Agency (DCMA) is conducting Source inspection at both CONUS and OCONUS sites. Point of inspection can be either 

a depot/staging area or the place of manufacture. The DCMA will have ‘‘eyes 

on’’ the NSA prior to it being delivered into the theatre. 

—We are conducting theater visits to work the new specifications/standards/procedures with all the parties in the theater involved. 

—We held an industry day with over 20 companies to get industry feedback on 

the generic specification concept and requirements. 

—We created a database of all current NSA contracts specifying item, delivery 

dates, location and place of manufacture ensuring efficiency of inspection prior 

to shipment to theatre. 

—We arranged for a team of subject matter experts (SMEs) to tour Arsenal Inc., 

in Bulgaria who is a major supplier of NSA. The TF will visit other major NSA 

suppliers as well. 

—We are working to stand-up a Product Director’s office within Program Executive Office for Ammunition to manage NSA issues and concerns. We expect this 

office to implement the appropriate program discipline and execution that we 

have with our US programs. 

—We are working with outside agencies like DCMA, who provide QA/QC before 

and after the contract, to share lessons learned. 

Question. Secretary England, what changes have occurred in the organizations 

under your command to improve contract management and oversight, and do you 

require any legislative assistance to meet your workload or to improve your operations? 

Answer. The Department has taken a myriad of actions, spanning the domains 

of policy, doctrine, organization, training, material, leadership, education, and personnel, to better manage contracted support in deployed operations. These efforts 

are being overseen at the enterprise level, with broad participation of the Military 

Departments, Defense Agencies, and Joint Staff, to ensure the Department derives 

holistic solutions. Key actions are detailed in the report to Congress on the Department of Defense Program for Planning, Managing and Accounting for Contractor 

Services and Contractor Personnel during Contingency Operations that was sub-
243 

mitted in April 2008 in response to section 854 of the National Defense Authorization Act for Fiscal Year 2007 (NDAA–07) and the report to Congress on the Department of Defense Task Force on Contracting and Contractor Management in Expeditionary Operations that was submitted in response to section 849 of NDAA–08. 

In its October 2007 report, the Commission on Army Acquisition and Program 

Management in Expeditionary Operations (the ‘‘Gansler Commission’’) expressed 

concern about post-award contract management in theater. At the time, in-theater 

contracting resources were focused on awarding contracts, primarily due to staffing 

constraints. Since then, the Department has made much progress on this issue. 

Based on a December 2007 workload and resource analysis conducted by the Joint 

Contracting Command—Iraq/Afghanistan (JCC–I/A) and the Defense Contract Management Agency (DCMA), DCMA significantly increased its personnel in-theater to 

meet the current contract management and oversight needs. In June 2008, JCC– 

I/A and DCMA re-evaluated the resources needed in theater to provide theater-wide 

contract administration. A Joint Contracting Command Joint Manning Document 

has been put into place, and the Military Departments are in the process of taking 

over about half of those positions. In addition to resource analysis, the Department 

has been working with key organizations responsible for large (over $1 million) intheater contracts for services for purposes of sharing data, lessons learned, and 

business rules to enable effective conduct of post-award administration in the theater of operations. 

Question. Secretary England, are you aware of any White House involvement or 

queries in the Halliburton or KBR contract awards? 

Answer. I am not aware of any White House involvement in the Halliburton or 

KBR contract awards. 

Question. Secretary England, we keep hearing that Halliburton and KBR were the 

only companies with the necessary infrastructure to perform the original massive 

Iraq support contracts. However, once Halliburton and KBR were awarded the contracts, they then went out and subcontracted or hired everyone to perform the contract. Could those contracts have been bid as multiple smaller contracts, allowing 

more qualified companies to participate? 

Answer. In the case of LOGCAP III, MNC–I is the primary customer for contract 

requirements generated in Iraq through their Joint Acquisition Review Board 

(JARB). The JARB process is designed to find alternate ways to satisfy requirements before resorting to LOGCAP. This includes the execution of smaller ‘‘theater’’ 

level contracts issued by the Joint Contracting Command—Iraq/Afghanistan. While 

many requirements have been executed through ‘‘theater’’ level contracts, MNC–I 

continues to rely upon LOGCAP in the execution of their larger contract requirements, in part, because the LOGCAP prime contractor plays a critical role by integrating and overseeing the complementary efforts of many subcontractors. With the 

recent award of three performance contracts in support of LOGCAP IV, the Army, 

working with its customers, will begin executing new contract requirements through 

the competition of task orders amongst three contractors. The size of the requirements for each contract will still be determined by the customer. 

Question. Secretary England, we have received reports that companies contracting 

with DOD are off-shoring their assets and hiring to avoid providing benefits to U.S. 

citizens and paying payroll, unemployment, Medicare, and income taxes. In many 

cases, these hiring practices are deceptive, with the employee believing that he is 

working for a U.S. company. We have also heard that DOD condones this practice 

as a cost saving matter. The fiscal year 2009 National Defense Authorization bill 

will make it unlawful for companies engaging in this practice to receive an unfair 

competitive advantage because of this practice. Other proposals would ban these 

companies from contracting with DOD. 

Do you support these legislative measures and if not, why? 

Answer. While we understand the concern expressed by the committee regarding 

the practice of U.S. companies using off-shore subsidiaries to avoid certain taxes and 

costs, the manner in which a corporation organizes itself for tax purposes is not 

within the control of the Department of Defense. We note, however, that section 302 

of the ‘‘Heroes Earnings Assistance and Relief Tax Act of 2008,’’ Public Law 110– 

245, enacted on June 17, 2008, closes many of the off-shore tax ‘‘loopholes’’ identified 

by the committee. Section 302 will require that any foreign entity that is part of 

a U.S. ‘‘controlled group’’ (as defined for tax purposes) and that has employees performing services under a contract with the U.S. government, shall be treated as an 

American employer for purposes of FICA and Social Security taxes. Incorporating 

a subsidiary off-shore will no longer allow companies to avoid these employment 

taxes on U.S. government contracts. This provision should abrogate the necessity for 

language in the DOD authorization legislation. 
244 

QUESTIONS SUBMITTED BY SENATOR BYRON L. DORGAN

Question. At the hearing, you stated that you had determined that Bunnatine 

Greenhouse’s demotion stemmed entirely from poor performance reviews that she 

received prior to her becoming a whistleblower. 

Were you aware that that those poor performance reviews initiated when Ms. 

Greenhouse began to internally challenge contracting improprieties in the Pentagon, 

beginning in 2002? 

Answer. Ms. Greenhouse was employed by the Army Corps of Engineers and the 

Army is unable to respond to this question because this matter is in active litigation 

at the Department of Justice. 

Question. How do you reconcile Ms. Greenhouse’s excellent evaluations for years 

after her appointment by General Ballard to the much different evaluations she received in the ramp-up to the Iraq war? 

Answer. Ms. Greenhouse was employed by the Army Corps of Engineers and the 

Army is unable to respond to this question because this matter is in active litigation 

at the Department of Justice. 

Question. In your consideration of Ms. Greenhouse’s case, did you consult with the 

officers who had written Ms. Greenhouse’s excellent performance reviews from 1999 

to 2002? 

Answer. Ms. Greenhouse was employed by the Army Corps of Engineers and the 

Army is unable to respond to this question because this matter is in active litigation 

at the Department of Justice. 

Question. Quite apart from the question of whether Ms. Greenhouse suffered retaliation for being a whistleblower, how do you respond to her core allegations that 

KBR received inappropriate favoritism in the awarding of the RIO contract, as described in her testimony of June 27, 2005? 

Answer. There was no inappropriate favoritism exercised in the awarding of the 

RIO contract and all requirements of the Federal Acquisition Regulation (FAR) were 

strictly followed. KBR was determined to be the only contractor in a position to provide the services within the required timeframe given classified prewar planning requirements. Both the acquisition strategy and the supporting source selection plan 

were thoroughly reviewed and approved by various Army officials. In separate reviews, both the Government Accountability Office (GAO) and the Special Inspector 

General for Iraq Reconstruction (SIGIR) have found that the sole source justification 

and approval was properly conducted. 

The RIO contract was always intended to be a bridge to a competitive contract 

award arrangement and was structured accordingly. In fact, the follow-on contracts 

were competitively awarded in January 2004. Task orders issued under the RIO 

contract were restricted to work required in the near term, leaving as much as possible for performance under the competitively awarded contracts. KBR’s performance under the RIO contract has no relationship with their efforts under the 

LOGCAP contract. 

Question. At the hearing, you testified that the Army would send ‘‘a group that 

will go out and independently audit, at least on a sample basis,’’ the electrical work 

that KBR is doing. Mr. Assad added that this would include personnel from the 

Army Corps of Engineers and possibly Facilities Command. 

Please state how many Army personnel you plan to send to Iraq and Afghanistan 

to supervise the electrical work that KBR is assigned to do. 

Answer. For technical clarification, the Department of Defense does not supervise 

the work effort of KBR personnel; this is the responsibility of KBR management, 

acting in its capacity as an employer to its personnel or as a contractor to its subcontractors. The Department of Defense performs quality assurance oversight of 

KBR’s contract support operations under the Logistics Civil Augmentation Program 

(LOGCAP) contract. 

The Multi-National Force—Iraq (MNF–I) recently established Task Force—SAFE 

(Safety Action for Fire and Electricity). The Task Force (TF) SAFE mission is to assess and analyze fire and electrical safety issues, and to direct action to reduce risk 

throughout the MNF–I area of operations. 

TF SAFE is developing action plans to reduce the risk of electrocution, shocks, 

and electrical fires. Part of this effort involves an assessment of resources needed 

to address overall fire and electrical safety, which includes the numbers of government representatives available to monitor electrical work performed by KBR or 

other contractors in theater. The U.S. Army Corps of Engineers is now working with 

MNF–I to quantify and furnish the projected resource needs to support the overall 

TF SAFE mission. The Army expects to use both internal personnel and contractor 

support to staff these resource requirements. 

Question. Please describe the sampling methodology being used for this audit. 
245 

Answer. Task Force Safety Action for Fire and Electricity (SAFE) will inspect all 

buildings to a point where a baseline is established for proper applications of 

grounding and bonding procedures, and adherence to electrical codes. The inspection 

sampling plan will be based upon the relative occurrences of noted non-conformance 

and the unit prioritization scheme while considering occupancy and operational importance. 

Question. Please quantify the ratio of KBR personnel doing electrical work to 

Army personnel supervising that work. 

Answer. For technical clarification, the Department of Defense does not supervise 

the work effort of KBR personnel; this is the responsibility of KBR management, 

acting in its capacity as an employer to its personnel or as a contractor to its subcontractors. The Department of Defense performs quality assurance oversight of 

KBR’s contract support operations under the Logistics Civil Augmentation Program 

(LOGCAP) contract. 

The fluid environment and changing requirements in Iraq render it difficult to establish the ratio of government to contractor personnel with accuracy. Additionally, 

as indicated in response to a previous question, the U.S. Army Corps of Engineers 

is currently working with the Multi-National Forces—Iraq (MNF–I) to quantify projected resource needs to support the Task Force SAFE (Safety Action for Fire and 

Electricity) mission with government and contractor personnel to perform electrical 

and fire inspection oversight. Current information indicates that KBR has approximately 847 electrical positions in the U.S. Central Command (CENTCOM) area of 

responsibility. 

Question. As I mentioned earlier in the hearing, the Department of Defense Inspector General conducted a survey of U.S. troops in Iraq with respect to water 

quality problems, which helped to determine that KBR had improperly treated and 

tested water at multiple U.S. military facilities in that theater. The IG visited four 

military installations and conducted a survey of hundreds of troops. 

Have you conducted, are you conducting, or do you plan to conduct a similar survey of U.S. troops in Iraq to determine the incidence and frequency of electrical 

shocks (whether fatal or non-fatal) experienced by U.S. troops and civilians in Iraq? 

Answer. It is my understanding that the Inspector General of the Department of 

Defense is not currently engaged in nor are they planning to conduct a survey to 

determine the incidences and frequency of electrical shocks experienced by U.S. 

troops and civilians in Iraq. Such a review would not be the best use of resources, 

because the risks associated with the electrical infrastructure within Iraq is already 

known. 

The Department recognizes that additional work needs to be done to correct these 

issues. We have initiated the following actions to mitigate the risks to troops and 

civilians in Iraq: 

(The DOD IG does not have a complete or current list of actions initiated by the 

Department regarding electrocutions; however, we do know that work is ongoing. 

Below are excerpts from testimony that occurred last month, suggest contacting 

these organizations for updates on what is ongoing.) 

SAC, 7–23–2008 

Part of a question raised by Senator Dorgan, during a SAC hearing on contractor oversight in Iraq and Afghanistan 

‘‘it’s clear that there was a lot of problems with the electrical wiring, and the contractor that had that contract—people have been electrocuted. And now, General 

Petraeus has asked the contractor that is the subject of allegations of shoddy work 

by employees who work for the contractor—has asked that contractor to go back 

now and do a review of all the wiring in Iraq.’’ 

SAC, 7–23–2008 

Deputy Secretary England response to a question raised by Senator Dorgan regarding ongoing reviews of electrical systems in Iraq. 

‘‘my understanding is, we’re not going to just do that, we actually are going to 

have a group that will go out and independently audit, at least on a sample basis, 

to make sure that this work is being done appropriately.’’ 

‘‘We’ve also asked our organizations to go off and look at other buildings and start 

sampling other buildings in Iraq, not necessarily ones that KBR contracted. A lot 

of the buildings were just there when our military and personnel showed up. So, 

there is a lot of independent auditing that will be accomplished to ensure the safety 

of those buildings.’’ 
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SAC, 7–23–2008 

Comments made by Shay Assad, Director, Defense Procurement in further response to a question raised by Senator Dorgan. 

‘‘We’re actually going to do two things: the sampling that the Secretary talked 

about and ensuring that we get more folks, from the Army Corps of Engineers and 

maybe Navy Facilities Command, on the ground who, in fact, can oversee the electrical work that is being done. 

The principal work that KBR is doing, in the opinion of DCMA, was that the most 

important thing to do was to get an idea of what exactly was the total problem. And 

so, the most immediate way to do that was to get the contractor who is responsible 

for the maintenance of the buildings—most of the buildings that KBR oversees, they 

didn’t construct, nor have they, frankly, done a lot of work in. They oversee the 

maintenance, and the maintenance is done primarily on an on-call basis. What we’re 

doing is, we’re changing that. In fact, we’re inspecting all of the buildings, ground 

up, not just for electrical, but all safety issues . . .’’ 

HOGR, 7–30–2008 

Opening Remarks of Jeffrey P. Parsons, Executive Director, Army Contracting 

Command, U.S. Army Materiel Command during HOGR hearing on electrical deficiencies in Iraq. 

‘‘We are also aware that there were previous contracts for the O&M of this facility 

prior to the task order issued under LOGCAP III. The U.S. Army Corps of Engineers awarded three previous contracts starting in November 2003 that required the 

O&M of the facilities. 

Knowing that there were additional contracts requiring O&M of facilities in Iraq, 

we are in the process of identifying the scope of their contractual requirements. This 

review should provide us with a holistic picture. The electrical issues in Iraq involve 

more than just the LOGCAP III contract. 

As a result of our investigations, we have taken a number of corrective actions. 

We are working with the U.S. Army Corps of Engineers to obtain additional expertise in the oversight of electrical work by our contractors. 

Furthermore, we are working with the Corps of Engineers, DCMA, and the customer to develop a plan to conduct inspection verifications of those buildings recently inspected by KBR for life, health, and safety issues. We will utilize a third 

party to validate those inspections. 

The LOGCAP program director also met with KBR officials to discuss their hiring 

practices and requirements for electricians to include certification requirements. 

Following this meeting, the contracting officer issued a contract modification to the 

LOGCAP III contract on July 21, 2008, to more clearly specify personnel and certification requirements. 

KBR was also directed to submit a ‘‘Trades Certificate and Validation Plan’’ to the 

government describing the process they will use to recruit, train and retain qualified 

personnel. The plan must address the criteria through which personnel, including 

non-U.S. citizens, will be qualified and/or certified as a master, journeyman or apprentice, and the proposed schedule for implementing the plan. This requirement 

is also applicable to all subcontractors.’’ 

Question. Are you conducting any such survey in Afghanistan? 

Answer. It is my understanding that the Inspector General of the Department of 

Defense is not currently engaged in nor are they planning to conduct a survey to 

determine the incidences and frequency of electrical shocks experienced by U.S. 

troops and civilians in Afghanistan. 

Question. You testified that KBR typically ‘‘does not have master electricians,’’ 

and hires a number of lesser qualified electricians. We understand that in the case 

of Staff Sergeant Ryan Maseth, the shower facility in which he was electrocuted had 

been the subject of numerous prior complaints of electric shocks. We further understand that KBR sent third-country nationals to fix those problems, and that KBR 

and the Army could not say whether these workers were certified electricians or not. 

Please describe the qualifications of each KBR employee who performed electrical 

work at the camp where Sergeant Masseth was electrocuted. 

Answer. There were ten KBR electricians that worked on electrical projects on the 

camp. The information received from KBR described the electricians from the employee resumes as follows: 

—Former work experience as an electrician. 

—Texas Electrical License; Journeyman license; apprenticeship program with 

Electrical Training Center. 

—Attended Universal Technical Institute; former experience as journeyman. 
247 

—U.S.C.G. Class A Electrician Mate School; former work experience as an electrician. 

—Certificate of 720 hours of basic electricity; former work experience as an electrician. 

—Master and journeyman license; graduated from a technical college; possesses 

Electrical Contractor SC License; former work experience. 

—4 year apprenticeship; former work experience as journeyman. 

—California state certified journeyman; graduated from Associated Builders and 

Contractors; former work experience as an apprentice and journeyman. 

—Direction of studies—Technical Electrician, High Voltage. Former work experience. 

—High School degree. ‘‘Electro-technical IV degrees’’. 

From this information it appears there was one Master Electrician, four with 

‘‘journeyman’’ experience and nine with former work experience as an electrician. 

Question. To the extent that KBR typically does not have master electricians, 

please explain the basis for continuing to rely on KBR for electrical maintenance 

in Iraq. 

Answer. DOD continues to utilize KBR as one contractor to perform electrical 

work in the AOR because they utilize experienced electricians. Standard procedure 

in the United States, as well as in Iraq, is to have one Master Electrician per site. 

Master Electricians are supervisory and do not normally perform the hands-on electrical work as this type of work is accomplished by Journeyman and Apprentice 

Electricians. All ten employees performing electrical work at the camp where Sergeant Masseth was electrocuted were electricians: A review of the qualifications of 

the Apprentice Electricians indicated that they were just as or more qualified than 

the normal Apprentice Electricians utilized in the United States. 

Question. Please identify how widely the Army distributed KBR’s February 10, 

2007 report about electrical problems at U.S. facilities in Iraq—specifying command 

levels and individuals notified. 

Answer. We understand the question to refer to the KBR electrical department 

technical inspection (TI) performed on the Radwaniyah Palace D9. We are unable 

to identify distribution of this TI beyond the scope of KBR, the Logistics Civil Augmentation Program (LOGCAP) contract support operations within the Army 

Sustainment Command (ASC), the Defense Contract Management Agency (DCMA), 

and most recently, the DOD and Congressional investigative bodies looking into 

matters related to the January 2, 2008 electrocution incident. 

In general, technical inspection (TI) reports under the LOGCAP contract cover 

electrical, heating/ventilation/air conditioning (HVAC), plumbing, carpentry, and 

structural assessments. Technical inspections are generally done on two occasions: 

new work and maintenance level changes. When a unit requests support, the 

LOGCAP contractor prepares a TI, which is the basis for a Project Planning Estimate (PPE). The PPE is submitted to the requesting unit and the Army 

Sustainment Command (ASC) Logistics Support Officer to support government approval and funding determinations. 

Question. To the extent that such notification has taken place, please describe 

what steps U.S. troops and civilian personnel have been advised to take in order 

to detect an electrical hazard. 

Answer. Incoming military personnel receive required fire and electrical safety 

and reporting procedures briefings upon checking in at reception bases in theater. 

Training examples include do’s and don’t’s of electrical and fire safety, contact numbers and methods for fire, police and ambulance assistance and specific safety issues 

unique to each location. Training also includes essential personal safety activities 

such as the safe use of power strips, reducing local electrical loads when equipment 

is not in use, practices to reduce the likelihood of fires due to electrical equipment 

failures and how to recognize defective or counterfeit equipment. Currently there is 

a theater-wide education program being simultaneously presented through the chain 

of command and safety channels. Units are required to report all electrical and fire 

incidents to a centralized group in order to analyze the information and make corrective actions through education, training, contracting, materiel, or command actions. Safety products are presented to commanders as well as being presented on 

Armed Forces Network (AFN) radio/TV, local newspapers (regular and special editions), computer screen savers, placed in living and work areas as well as dining 

facilities. The campaign will continue to mature as root-cause analysis shows areas 

of improvement in behaviors, policies or electrical construction. 

Question. Provide examples of any such written notification. 

Answer. The most recent examples are found in the August 22, 2008 Multi-National Force—Iraq (MNF–I) Safety Bulletin. A copy is provided. 
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250 
251 
252 
253 
254 

Question. In hindsight, is there anything that the Pentagon would have done differently with respect to the contracting out of electrical maintenance at U.S. military facilities? 

Answer. Hindsight will always allow room for improvement as further assessment 

has proven regarding electrical safety issues. Based on the discussion and analysis 

performed by the MNF–I established 2-star Task Force (TF)—SAFE (Safety Action 

for Fire and Electricity) there are various ways to reduce future risk. 

The TF will continue to work on developing and implementing action plans aimed 

at reducing the risk of electrical accidents. For instance, the U.S. Army Combat 

Readiness Center from Fort Rucker, AL recently deployed a team to promote an 

independent risk management assessment. We are awaiting results and in the interim, MNF–I is taking action along three lines of operation: Awareness; Plans, Policies and Standards; and Facilities. Leaders at every level are focused on finding and 

correcting conditions such as overloaded circuits. Commitment to awareness on hazard mitigation will significantly reduce risks. We are continuing to work on pro-
255 

moting safety tips focused on fire and electrical safety to multiple media outlets, including Armed Forces Network radio, unit newspapers and other Command Information channels. We will continue to establish and eventually implement a baseline 

electrical code for the theater. The Department is going to continue to look for ways 

to promulgate future risk. We are committed to government oversight capability and 

building an inspection system focused on life-saving measures. 

Question. In hindsight, were the 16 known deaths of U.S. military and civilian 

personnel in Iraq due to electrocution preventable? 

Answer. Based on initial DOD IG review, the 16 electrocutions were preventable 

accidents. Nine of the 16 cases involved contact with power lines during military 

or construction operations. In some of these cases, the contact was inadvertent. In 

other cases, Servicemembers moved obstructive power lines by hand, apparently 

without knowing that the lines were electrified. 

The remaining 7 electrocutions occurred while Service members were making electrical repairs and/or resulted from improper grounding of electrical equipment. In 

four of these cases, individuals were working with or attempting to repair electrical 

appliances (e.g., air conditioner, generator, power washer). In the remaining three 

cases, systems became electrified due to equipment failure coupled with lack of 

proper grounding. The DOD IG is still reviewing the circumstances of these 7 cases 

at the request of the House Oversight and Government Committee. 

Question. Please identify the number of U.S. military and civilian personnel in Afghanistan who have died due to electrocution. 

Answer. There are no U.S. military and civilian personnel in Afghanistan who 

have died due to electrocution. 

QUESTIONS SUBMITTED BY SENATOR FRANK R. LAUTENBERG

Question. Earlier this year, I wrote a law to establish a special inspector general 

devoted to reviewing U.S. assistance to Afghanistan. In May, President Bush appointed Major General Arnold Fields to the post and last month, $7 million was appropriated for the office. Has this office begun its work? If not, when will this office 

begin operating? 

Answer. The DOD OIG is working with the Special Inspector General for Afghanistan Reconstruction in commencing its mission. The Special Inspector General for 

Afghanistan Reconstruction will be included in the next update of the Comprehensive Audit Plan for Southwest Asia. The planned oversight work of the Special Inspector General for Afghanistan Reconstruction will be included along with the 

planned work of the respective oversight Agencies with Afghanistan related oversight responsibilities. In addition, the Special Inspector General for Afghanistan Reconstruction is invited to attend the August 20, 2008, Southwest Asia Joint Planning Group, which will facilitate being apprised of ongoing and planned Afghanistan 

related oversight efforts as well as integrating the Special Inspector General for Afghanistan Reconstruction into the future oversight of Afghanistan efforts. 

Question. Last month, Charles Smith, a contracting official who was removed from 

his position as the Director of the Army’s field Contracting Division after objecting 

to paying KBR over $1 billion in questionable costs spoke out publicly for the first 

time. This is the second high profile demotion of a whistleblower exposing KBR’s 

outrageous overcharges. Will you commit to ensure an environment at DOD where 

employees are free to report waste, fraud and abuse without putting their jobs at 

stake? 

Answer. I support the effective implementation of whistleblower protection laws. 

I am committed to creating an environment in which service members, civilian employees, and contractors feel free to report allegations of waste, fraud, and abuse 

without fear of reprisal. I also support the role of the Inspector General to accept 

such allegations and encourage anyone with knowledge of waste, fraud, or abuse to 

report that to the Inspector General. Information can be provided to Service Inspectors General or to the Inspector General of the Department of Defense’s Hotline at 

800–424–9098 (e-mail: hotline@dodig.mil). 

Question. What mechanisms are being implemented to ensure that whistleblowers 

are not being retaliated against? 

Answer. Our most effective means to prevent whistleblower retaliation is to 

proactively expand awareness of the protections available. The DOD Directives that 

implement 10 U.S.C. 1034 and 10 U.S.C. 1587 charge the Military Departments 

with the responsibility to disseminate information regarding whistleblower protections; and we recently requested that 10 U.S.C. 2409 be amended to include the requirement to inform Defense contractor employees in writing of their protections 

against retaliation for reporting wrongdoing. In addition, the IG, DOD, distributes 
256 

posters for display in IG offices service-wide that provide contact information for reporting wrongdoing or retaliation; and in every workshop we present on the standards for conducing reprisal investigations, the IG, DOD also reminds the Service IG 

representatives of their responsibilities to help their commanders avoid even the appearance of retaliation. 

The Inspector General, Department of Defense (IG, DOD) has the statutory responsibility for conducting and overseeing whistleblower reprisal investigations submitted by members of the Armed Forces (10 U.S.C. 1034), Defense contractor employees (10 U.S.C. 2409), and nonappropriated fund employees (10 U.S.C. 1587). Although the majority of military reprisal investigations are conducted by Service IGs, 

the IG, DOD is the final approval authority and ensures the investigations are thorough and unbiased. 

For most civilian appropriated fund employees, the U.S. Office of Special Counsel 

has jurisdiction for investigating whistleblower reprisal complaints under Title 5 

U.S.C. 2301 and 2302. However, Title 5 does not provide whistleblower protections 

for employees of certain intelligence agencies. To provide whistleblower protections 

for employees of DOD intelligence agencies, as well as for other DOD civilian appropriated fund employees, the IG, DOD, has accepted complaints for administrative 

investigation under Section 7 of the IG Act, as amended (5 USC Appx. 7(a), (c)). 

QUESTIONS SUBMITTED BY SENATOR MITCH MCCONNELL

Question. Does the Navy stand by its fiscal year 2009 budget request for the DDG 

1000? If not, what are the reasons for the change in the Navy’s position (both from 

the perspective of cost and of military requirements)? 

Answer. The Navy’s plan is to complete construction of the DDG 1000 ships currently under contract and the third DDG 1000 included in the President’s fiscal year 

2009 budget submission. This plan will provide stability for the industrial base and 

continue the development of advanced surface ship technologies such as radar systems, stealth, magnetic and acoustic quieting, and automated damage control. 

Further, the Navy intends to reprogram funds to support DDG 51 class material 

procurement and related planning activities in fiscal year 2009. This will provide 

the dual benefits of buying additional spares at an economical price while also protecting future options for restarting DDG 51 production. 

Question. Does the DDG 1000 class destroyer have greater capability than the 

current DDG 51 destroyer with regard to land attack operations, integrated power 

systems, radar suites and other key technologies? 

Answer. The way ahead for surface combatant production in fiscal year 2010 and 

beyond will be determined by the Department of Defense’s continuing assessment 

of existing and evolving threats, ensuring that it delivers those capabilities best 

suited to meet our national security needs both now and in the foreseeable future. 

This will include, but not be limited to, defense against missile threats and the challenging requirement to operate in littoral environments. As the Department of Defense develops its fiscal year 2010–2015 budget, all of these considerations will be 

weighed to ensure we build the right Navy for the future. 

Question. Concern has been expressed that cost overruns for DDG 1000 might adversely affect the Navy’s shipbuilding plan, and that restarting the DDG 51 program would pose less risk. Is that the Navy’s position? If so, how would the risk 

associated with the DDG 51 be less? 

Answer. The Navy’s plan is to complete construction of the DDG 1000 ships currently under contract and the third DDG 1000 included in the President’s fiscal year 

2009 budget submission. This plan will provide stability for the industrial base and 

continue the development of advanced surface ship technologies such as radar systems, stealth, magnetic and acoustic quieting, and automated damage control. 

Further, the Navy intends to reprogram funds to support DDG 51 class material 

procurement and related planning activities in fiscal year 2009. This will provide 

the dual benefits of buying additional spares at an economical price while also protecting future options for restarting DDG 51 production. 

The way ahead for fiscal year 2010 and beyond will of course be determined by 

the Department of Defense’s continuing assessment of existing and evolving threats, 

ensuring that it delivers those capabilities best suited to meet our national security 

needs both now and in the foreseeable future. This will include, but not be limited 

to, defense against missile threats and the challenging requirement to operate in littoral environments. Acquisition risk will also be an important consideration. As the 

Department of Defense develops its fiscal year 2010–2015 budget, all of these considerations will be weighed to ensure we build the right Navy for the future. 
257 

Question. Restarting the DDG 51 production program would appear to pose some 

logistical drawbacks such as the unavailability of parts and equipment obsolescence. 

If the Navy is giving serious consideration to restarting the DDG 51, how does the 

Navy intend to ameliorate these potential concerns? 

Answer. The Navy’s plan is to complete construction of the DDG 1000 ships currently under contract and the third DDG 1000 included in the President’s fiscal year 

2009 budget submission. This plan will provide stability for the industrial base and 

continue the development of advanced surface ship technologies such as radar systems, stealth, magnetic and acoustic quieting, and automated damage control. 

Further, the Navy intends to reprogram funds to support DDG 51 class material 

procurement and related planning activities in fiscal year 2009. This will provide 

the dual benefits of buying additional spares at an economical price while also protecting future options for restarting DDG 51 production. 

The most significant vendor issue for a restart is the DDG 51 reduction gear 

which would be about 50 weeks longer than the traditional reduction gear fabrication. However, both shipbuilders have indicated to the Navy that the lead time challenges inherent in restarting the production of DDG 51 Main Reduction gear sets 

can be mitigated with advance procurement and an adjusted build sequence. Regarding the combat systems, the last production contracts were awarded in 2006. 

The cost and ease of restarting those production lines is a function of time, and 

parts availability on military specification items. 

The way ahead for fiscal year 2010 and beyond will of course be determined by 

the Department of Defense’s continuing assessment of existing and evolving threats, 

ensuring that it delivers those capabilities best suited to meet our national security 

needs both now and in the foreseeable future. This will include, but not be limited 

to, defense against missile threats and the challenging requirement to operate in littoral environments. As the Department of Defense develops its fiscal year 2010– 

2015 budget, all of these considerations will be weighed to ensure we build the right 

Navy for the future. 

QUESTION SUBMITTED BY SENATOR WAYNE ALLARD

Question. During a hearing before this Committee earlier this year, it was said 

that integrated plans between the DOD, Iraqi ministries, and other U.S. agencies 

was lacking. The absence of a comprehensive plan created waste and a misuse of 

funds. 

Since then, what steps have you taken to address the integration of agencies? Is 

there now a comprehensive strategy that eliminates some of those loopholes that 

you were facing? 

Answer. In March 2008, to further leverage the improved security situation, the 

U.S. Department of State appointed Ambassador Lawrence Benedict as Coordinator 

for Anti-Corruption Initiatives. As an Advisor to Ambassador Ryan Crocker at U.S. 

Embassy Baghdad, Ambassador Benedict is responsible for integrating U.S. Government support to the Government of Iraq’s anti-corruption efforts. 

Through the Office of the Coordinator for Anti-Corruption Initiatives, staff from 

the Department of State, Multi-National Security Transition Command—Iraq 

(MNSTC–I), USAID, and Ministry of Interior (MoI) and Ministry of Defense (MoD) 

Inspectors General have improved coordination on anti-corruption efforts, including 

inspections and audit trainings. 

USG and GoI planning for a comprehensive Iraqi anti-corruption strategy that 

eliminates redundancies, fraud and waste is currently underway. As part of that 

strategy, in July 2008, the Iraqi Ministries of Interior and Defense hosted and AntiCorruption Strategic Planning Conference. At the conference, GoI officials presented 

a draft strategic plan for MoI and MoD Inspectors General, which was developed 

with the assistance of Ambassador Benedict and MNSTC–I. The USG will continue 

to engage the GoI at the highest levels to implement this long-term strategy. 

QUESTIONS SUBMITTED TO GENERAL BENJAMIN S. GRIFFIN

QUESTIONS SUBMITTED BY SENATOR ROBERT C. BYRD

Question. General Griffin, because of the snail’s pace at which investigations are 

initiated or are moving, the statute of limitation on many of the contracting offenses 

that have occurred in Iraq and Afghanistan will soon expire. Do you support current 

Congressional efforts to extend the statutes of limitation in cases involving these 

war zones? 
258 

Answer. Senator Byrd, I would welcome any tool, statutory or investigatory, that 

would allow us to improve the delivery of goods and services to our warfighters, and 

assist us in our stewardship over taxpayer dollars, including extension of the statute 

of limitations. I realize that there are many policy issues that must be considered 

as part of the legislative decision-making process, and I would defer these issues 

to the OSD Office of General Counsel, the Attorney General and the Justice Department. 

Question. General Griffin, given the large dollar amount of unaccounted-for expenditures, why has KBR been permitted to continue to contract with the Department of Defense? 

Answer. The Army has policy, regulations, and procedures in place designed to 

prevent awarding of contracts to companies who fail to demonstrate compliance with 

the terms and conditions of their contract. Prior to a contract award contracting officers are required to make a responsibility determination. As part of the determination they are required to assess the contractor records as a ‘‘responsible contractor.’’ 

The Excluded Parties List System should be reviewed to determine if the contractor 

had previously been suspended or debarred. The contracting officer is also required 

to review the contractor’s past performance data in the Contractor Performance Assessment Reporting System. Contracting officers are required to reference this data 

as part of the contract award process. This guidance, if routinely followed, is designed to ensure contracts are awarded only to companies with a responsible performance history, thereby helping to ensure the Army manages its resources efficiently and effectively. 

The United States Army, in conjunction with the Defense Contract Audit Agency, 

continuously monitors and audits Kellogg, Brown, and Root Services Incorporated’s 

(KBR) incurred costs. Currently, out of $26.515 billion in billings of incurred costs, 

the Army has withheld or suspended $114.553 million from KBR. KBR is working 

with the Army to resolve these issues. If they are not satisfactorily resolved, KBR 

will not be paid. This process is no different than the process would be for any other 

defense contractor and protects the Government’s interests. 

The Logistics Civil Augmentation Program (LOGCAP) III competition resulted in 

a single contract award to KBR in December 2001. As such, KBR is the only source 

for services under the LOGCAP III contract. 

The competition for LOGCAP IV resulted in awards to three companies, including 

KBR, determined to offer the Best Value to the Government. Thus, there will be 

three sources for logistics support services task order awards under the LOGCAP 

IV contracts and the three companies will compete for each task order. 

Question. General Griffin, we are still receiving a steady stream of reports about 

contract problems in Iraq. What improvements have been made in awarding and 

overseeing these contracts and why do these reports continue? 

Answer. The complexity of contracting in Expeditionary Operations, especially 

Iraq, is a challenge to the entire Department of Defense. As was noted in the 

Gansler Commission Report entitled ‘‘Urgent Reform Required: Army Expeditionary 

Contracting’’, a number of improvements are needed to better prepare the Army for 

future Expeditionary Operations. The Army has already moved out on a number of 

the Gansler Commission recommendations as reported to Congress by the Army in 

response to Section 849 of the fiscal year 2008 National Defense Authorization Act. 

To this end, the Army Materiel Command has established a two-star level Army 

Contracting Command that will execute approximately 70 percent of all Army contract dollars. This new command also includes a one-star Expeditionary Command 

that is focused upon providing contracting support to forward deployed forces. This 

deployable one-star command consists of Contracting Support Brigades, Contingency 

Contracting Battalions, Senior Contingency Contracting Teams, and Contingency 

Contracting Teams. Once fully staffed, this Expeditionary Contracting Command 

will have over 1,100 military contracting personnel in the active, Army Reserve, and 

Army National Guard force. This new and expanded expeditionary contracting capability will improve the Army’s ability to execute and manage contracts in future expeditionary operations. 

In support of current contracting activity in Iraq, the Army Materiel Command 

is working closely with the Joint Contracting Command—Iraq/Afghanistan to improve the quality and training of our contracting military personnel before they deploy to Iraq and Afghanistan. We are capturing lessons learned through the Army’s 

Acquisition, Logistics, and Technology Initiatives Office. These lessons learned are 

being used to improve our training and develop scenarios for our deploying personnel to exercise at our Combined Training Centers prior to deployment. The Army 

is also instituting blocks of contracting and contractor management training in 

courses for non-acquisition personnel. For example, all new Logistics commanders 

now receive a block of instruction on contracting and contractor management. The 
259 

Army is also expanding Contracting Officer Representative (COR) training to ensure 

Army personnel are trained and equipped to perform contract oversight. To date, 

over 500 Army personnel have received COR training in Kuwait. 

To improve our execution of the Logistics Civil Augmentation Program 

(LOGCAP), the Army Materiel Command assigned two senior executive service personnel to further enhance our leadership and management of the program. In addition, the Army Sustainment Command has the following structure in place to provide management and oversight of LOGCAP in Iraq, Afghanistan and Kuwait: a 

Colonel in Iraq; a Colonel in Afghanistan; and a GS–15 on the ground in Kuwait, 

leading over 100 personnel in the oversight of LOGCAP. The Defense Contract Management Agency has 97 personnel, primarily in Iraq and Afghanistan, performing 

LOGCAP contract management, and has appointed over 500 contracting officer representatives in Iraq and Afghanistan from operational units to assist in day-to-day 

oversight of contractor performance. DCMA is also going to increase their number 

of personnel in theater providing quality assurance and quality control for LOGCAP 

by December 2008 to 127. 

Finally we are working as quickly and smartly to transition from LOGCAP III to 

LOGCAP IV which addresses the structural issues and challenges that we experienced with LOGCAP III. 

Question. General Griffin, of 23 inspections performed by May 2007 by the Special 

Inspector General for Iraq Reconstruction (SIGIR) on Parsons Global, Inc., contract 

specifications were not met and deficiencies were noted in 15 of the 23 sites, which 

included the Baghdad Police College, the Al Basra Oil Terminal, the Iraqi Civil Defense Headquarter and the Erbil Maternity and Pediatric Hospital. Parsons Global, 

Inc., was also involved in the costly effort to construct 150 primary healthcare centers in Iraq, of which only 15 were delivered and only 8 were open to the public 

as of April 2007. The Army Corps of Engineers has also, in the past, terminated 

work Parsons has done on other Iraqi hospitals and prisons because of schedule 

slips and cost overruns. Given that track record, should the United States government award any further contracts to Parsons and if so, why? 

Answer. The Army’s responsibility for awarding contracts does not extend to other 

government agencies and departments. However, the Army is the Executive Agent 

for the Department’s contracting activities in Iraq and Afghanistan and as such is 

directly engaged in supporting our military forces. 

The Army has policy, regulations, and procedures in place designed to prevent 

awarding of contracts to companies who fail to demonstrate compliance with the 

terms and conditions of their contract. Prior to a contract award contracting officers 

are required to make a responsibility determination. As part of the determination 

they are required to assess the contractor records as a ‘‘responsible contractor.’’ The 

Excluded Parties List System should be reviewed to determine if the contractor had 

previously been suspended or debarred. The contracting officer is also required to 

review the contractor’s past performance data in the Contractor Performance Assessment Reporting System. Contracting officers are required to reference this data 

as part of the contract award process. These processes are designed to ensure contracts are awarded only to companies with a responsible performance history, thereby helping to ensure the Army manages its resources efficiently and effectively. 

QUESTIONS SUBMITTED BY SENATOR BYRON L. DORGAN

Question. Please respond in detail to the allegations raised by former KBR electricians Debbie Crawford and Jefferey Bliss at the hearing held by the Senate 

Democratic Policy Committee on Friday 11, 2008, to the effect that KBR did not provide adequate electrical services. Be sure to include the allegations that KBR hired 

supervisors with little or no experience as electricians. 

Answer. The terms and conditions of the LOGCAP III contract require KBR to 

provide all resources and management necessary to perform the mission in accordance with the basic contract and task order scopes of work. 

The Defense Contract Management Agency (DCMA) has the responsibility of overseeing KBR’s performance in the theater. The original contract did not require specific levels of expertise KBR employees or its supervisors must have. The contract 

is performance based and requires KBR to perform to set standards. It is our understanding that KBR’s standards for recruiting electricians requires a minimum of 5 

years experience and KBR’s policy required these electricians to be placed under the 

supervision of a licensed KBR electrician once in theater. On occasion, an electrician 

will report to someone with a background in another trade or craft. This generally 

occurs when multiple crafts are involved in a single job. 
260 

After reviewing the contract language and in collaboration with DCMA, the Contracting Officer modified the basic contract on July 21, 2008, to add specific language for Personnel Certifications and Qualifications as follows: 

—The contractor shall ensure that Contractor personnel assigned to perform specific functions possess a license, certification, training and/or education commensurate with the level of assigned duties. 

—Contractor’s personnel will be licensed, certified, trained and/or educated in accordance with the requirements of (1) any U.S. Government or U.S. Government 

recognized program applicable to the trade being performed, (2) any State or 

local government recognized program applicable to the trade being performed, 

or (3) any non-U.S. program that is deemed by the Contracting Officer to be 

equivalent to or in excess of any Government, State or local government program applicable to the trade being performed. 

—The Contractor is required to submit a Trades Certificate and Validation Plan 

to the Government that describes the process to be used by the Contractor to 

recruit, train and retain personnel in accordance with the requirements of the 

clause. 

—Upon receipt of the Validation Plan, the Government shall review and, if acceptable, approve the Plan, including the schedule for implementation. 

Question. Please respond in detail to the allegations raised by former KBR electricians Debbie Crawford and Jefferey Bliss at the hearing held by the Senate 

Democratic Policy Committee on Friday 11, 2008, to the effect that KBR did not provide adequate electrical services. Be sure to include the allegations that KBR hired 

third-country electricians who did not speak English and were not familiar with 

U.S. and British electrical standards. 

Answer. The LOGCAP III contract requires all contractor employees to either be 

literate in English or have a translator available at all times to the extent of being 

able to read, speak, and understand the language in order to ensure all safety, 

health, and security requirements are met to include understanding instructions 

concerning equipment to the extent that duties requires operation, maintenance 

and/or repair, However KBR did hire third country nationals who do not speak 

English. 

KBR’s policy is to screen foreign national candidates for English competency in 

pre-employment interviews. A second screening is conducted during pre-deployment 

training in Houston. Employees with basic competency have translators available in 

theater. 

KBR provides on-the-job skills training to ensure all employees understand specific work performance requirements to perform their tasks. Employees are familiarized with trade specific systems that do not conform to American standards; such 

as 220V electrical systems that conform to British Standards. New hire electricians 

are teamed with an experienced senior electrician who introduces them to the working environment, for example, provides instruction regarding the use of power generation, 220/440V—50Hz, 3-phase power. The contractor provides employees Hazard 

Awareness and Safety Briefs on a daily basis. 

Question. Please respond in detail to the allegations raised by former KBR electricians Debbie Crawford and Jefferey Bliss at the hearing held by the Senate 

Democratic Policy Committee on Friday 11, 2008, to the effect that KBR did not provide adequate electrical services. Be sure to include the allegations that KBR provided inadequate equipment to its electricians. 

Answer. The terms and conditions of the LOGCAP III contract require KBR to 

provide all resources, management and equipment necessary to perform the mission 

in accordance with the basic contract and task order scopes of work. 

DCMA is the agency responsible for oversight of the LOGCAP contract. DCMA 

has not issued any Corrective Action Reports (CARs) related to the contractor providing inadequate equipment to its electricians. The Army is not aware of any instances where KBR did not provide adequate equipment to its electricians. 

Question. Please describe how much KBR is being paid to conduct the comprehensive review of electrical safety at U.S. facilities in Iraq that DCMA has requested. 

Answer. The LOGCAP III contract is a cost reimbursable contract where KBR is 

reimbursed for all reasonable, allocable, and allowable costs incurred. The technical 

inspection being conducted by KBR was directed by the Defense Contract Management Agency. In accordance with the contract KBR will be reimbursed for all costs 

incurred. KBR will perform the inspections utilizing existing task order resources. 

Specific cost information when completed can be obtained from the LOGCAP Procuring Contracting Officer (PCO) located at ASC in Rock Island, IL. 

Question. Please explain why under the LOGCAP IV contract, the Pentagon has 

announced that it will not issue task orders until 2010. 
261 

Answer. To the best of our knowledge, the Pentagon never announced that task 

orders under LOGCAP IV would not be issued until 2010. 

We are looking to transition to LOGCAP IV as quickly and as smoothly as possible without disrupting support to combat operations. 

The current plan is to transition work geographically in Southwest Asia. Kuwait 

was identified as the first area of operation to be competed under LOGCAP IV. Kuwait has three task orders to be competed, the largest of which is the Kuwait Area 

of Operation. The acquisition phase included an on-site country visit, by the 

LOGCAP IV contractors, of all facilities and operations contained in the Performance Work Statement. This was accomplished in July of this year. 

A Request for Proposal is planned to be released to the LOGCAP IV contractors 

at the end of this month for the competition of the first Kuwait task order. Award 

is planned to be made in late October 2008 and the physical transition to begin 

shortly thereafter. The remaining two task orders will be competed starting in September with awards planned for early December. All three task orders will be physically transitioned to LOGCAP IV by the end of March 2009. 

In parallel, the planning and Theater coordination for Afghanistan and Iraq will 

be underway starting in September and October, 2008. Close coordination will be 

made with Theater Commanders to minimize operational impacts and to minimize 

performance risk, as well as to maximize competitive opportunities and the efficient 

use of resources. 

In addition, any new requirements outside of the current LOGCAP III Task Orders will be awarded under LOGCAP IV. 

Question. Until new task orders are issued under the LOGCAP IV contract, will 

LOGCAP services be provided entirely by KBR? 

Answer. The Army will continue to utilize LOGCAP III, with KBR as the single 

contractor, for support work until LOGCAP IV task orders are awarded. 

We plan are issuing the Request for Proposal for the formal competition of the 

first of three Kuwait task orders. Award is to be made in late October and the physical transition to begin shortly thereafter. All three task orders will be physically 

transitioned to LOGCAP IV by the end of March 2009. 

In parallel, the planning and Theater coordination for Afghanistan and Iraq will 

be underway starting in September and October, 2008. Close coordination will be 

made with Theater Commanders to minimize operational impacts and to minimize 

performance risk, as well as to maximize competitive opportunities and the efficient 

use of resources. 

In addition, any new requirements outside of the current LOGCAP III Task Orders will be awarded under LOGCAP IV. 

Question. Please explain in detail the specific functions that RCI (now part of the 

Serco Group) was contracted to perform in connection with determining the proper 

payment amount for the $1 billion in charges by KBR that DCAA had questioned. 

Specify the contractual terms for those services, including the amount of any compensation. 

Answer. The Task Order for the RCI services was signed September 27, 2004 by 

the Navy Contracting Officer in Philadelphia PA. 

The Statement of Work for the RCI Task Order to support the LOGCAP III 

definitization is provided below in its entirety. 

Statement of Work—00001.7 Engineering Based Cost Analysis 

The contractor will assemble a team to serve as an adjunct to a Government special cost analysis team (SCAT). The contractor shall perform analyses requiring special efforts in support of the U.S. Army definitization effort under contract 

DAAA09.02–D–0007, Logistics Civil Augmentation Program (LOGCAP). The contractor shall assist the customer as needed in analyses such as, but not limited to, 

the following: Performance Based Logistical (PBL) analysis; Physical Configuration 

Audits; Work Breakdown Structure; Supply operations; Facility engineering and 

Construction; Contractor Logistics Support; Professional level technical/logistical assistance; Value analysis; and Food Service Analysis. 

In execution of this task, various methodologies and technical disciplines may be 

applied. These may include, but are not limited to Engineering, Mathematics, Statistics, Computing, Logistics, Production, Economics, and Business Process Re-engineering. 

Work under this task order will commence following a post award conference to 

be convened at the discretion of the Army Field Support Command shortly after the 

award date. The target completion date is 60 days from the date of the post award 

conference. This date is subject to change. 

Specifically, the contractor team will perform a comprehensive independent evaluation of Kellogg, Brown and Root’s cost proposal for task order 59 under the 
262 

LOGCAP contract. The contractor’s evaluation will take into account all Government cost evaluations including, but not limited to, audit reports issued by the Defense Contract Audit Agency (DCAA) and technical evaluations issued by the Defense Contract Management Agency (DCMA). The SCAT leader ‘‘will provide all the 

pertinent Government reports required to support this task. 

The contractor will submit its findings in a written report. The written report will 

be furnished in Microsoft Word format. All supporting calculations will be furnished 

in a working Microsoft Excel cost model. The report will address the KBR proposal 

and the corresponding position as expressed in the various Government audit and 

technical evaluations on a line item basis. The contractor will formulate an independent cost estimate for those elements of cost that have been questioned or set 

aside as unresolved/unsupported in the Government evaluations. 

Supporting details will be properly cross-referenced to the cost elements. For the 

KBR and DCAA/Technical positions, the basis of estimate will be described sufficiently to allow the reader to understand the pertinent points. The contractor position will be supported with an explanation detailing every aspect of how the estimate was derived. This will include, at a minimum, the basis of estimate including 

assumptions and rationale. The basis of estimate will give the complete detail of 

sub-elements including, but not limited to, quantities, unit costs, labor types, hours 

required, hourly rates, overhead costs and profit. The contractor’s cost estimate 

must be sufficiently documented to allow the Government to fully understand the 

basis of estimate. 

At AFSC (for clarification, this is the former acronym for the Army Sustainment 

Command) request, the contractor may participate in negotiations. 

Travel is anticipated in support of this task. The contractor shall participate in 

fact-finding visits and other site visits as required to meet Price Fighter and customer requirements. Notification lead times may be as short as one (1) day to initiate performance designated in this delivery order. Travel sites may include but are 

not limited to supplier facilities in Houston, TX and Program office in Rock Island, 

IL. The authorized per diem rate shall be the same as the prevailing per diem rate 

allowed by the Defense Joint Travel Regulations, Volume 2 for Civilian Personnel. 

Delivery of Final Report.—Delivery of the final report shall be accomplished not 

later than November 19, 2005. 

The estimated cost and fixed fee negotiated for the Task Order are as follows: 

Amount 

Estimated cost ..................................................................................................................................................... $1,425,063 

Fixed Fee .............................................................................................................................................................. 72,150 

Total ........................................................................................................................................................ 1,497,213 

The Defense Contract Audit Agency has not completed the final audit of these 

costs. 

Question. Identify whether any of these services has previously been performed 

by DCAA in connection with this or any other U.S. government contract. 

Answer. DCAA has and still does provide their audit services for the LOGCAP 

contracts. 

The services RCI provided to the government were a supplement to the Special 

Cost Analysis Team in which DCAA also participated. RCI participated as part of 

the overall cost analysis process and provided a further in-depth analysis to assist 

the Contracting Officer in making an informed decision. 

Question. Explain in detail why you deemed that RCI was better suited than 

DCAA to perform these functions. 

Answer. The services RCI provided to the government were a supplement to the 

Special Cost Analysis Team in which DCAA also participated. RCI participated as 

part of the overall cost analysis process and provided a further in-depth analysis 

to assist the Contracting Officer in making an informed decision. The use of an 

independent cost estimator allowed the Government to make an objective assessment of cost reasonableness in instances where financial data was unavailable in 

the contractor’s records. RCI was able to use analyses techniques such as Parametric and Regression analyses to construct estimates to assist the Contracting Officer in making a decision. They were able to take the information provided by DCAA, 

research and analyze the data to assist the Contracting Officer in making a final 

determination. DCAA issues their findings but does not provide recommendations 

or perform detailed analyses when data is inconclusive or incomplete. DCAA then 

and now provides their audit services for the LOGCAP contracts. 

The services provided by RCI included: 
263 

—Analyses of audits, operations, food services and work breakdown structure; 

—Comprehensive independent evaluation of KBR’s cost proposal for TO 59; 

—Determination of cost drivers for each task; 

—Cost estimating expertise in performing parametric and regression analyses; 

—Expertise in all aspects of large-scale food service (OCONUS) that included facilities management, developing logistics and budget requirements, quality assurance and inspections, and customer service; and 

—Provided statistically viable method to overcome lack of reliable data. 

At no time were the services provided by RCI in lieu of functions that are performed by DCAA. RCI efforts were in concert with DCAA efforts. 

Question. Charles Smith has testified that the replacement of DCAA by a private 

contractor for purposes of determining the proper payment amount for questioned 

charges was ‘‘unprecedented in his 31-year career.’’ Are you aware of any precedent 

for such an action? 

Answer. DCAA was not replaced by a private contractor for purposes of determining the proper payment amount. Rather, a private contractor (RCI) provided 

supplemental services to a Special Cost Analysis Team, headed by Government Contracting officials, in which DCAA also participated. DCAA then and now provides 

their audit services for the LOGCAP contracts. 

Question. Please state how much RCI was compensated for its work relating to 

KBR’s questioned costs under the LOGCAP III contract. To the extent that DCAA 

has performed similar work in the past, estimate how much DCAA’s costs for such 

a service would have been. 

Answer. The estimated cost and fixed fee negotiated in the Task Order for the 

RCI services is: 

Amount 

Estimated cost ..................................................................................................................................................... $1,425,063 

Fixed Fee .............................................................................................................................................................. 72,150 

Total ........................................................................................................................................................ 1,497,213 

The Defense Contract Audit Agency has not completed the final audit of these 

costs. 

The services provided by RCI and DCAA are not the same and therefore there 

is no cost comparison between the two services. 

Question. Identify the specific services that RCI/Serco is now providing for the 

LOGCAP IV contract, and the contractual terms for those services, including the 

amount of any compensation. Identify any of these services that has been, or is currently being, performed by DCAA in connection with this or any other U.S. government contract. 

Answer. The Acquisition Strategy that provides for a separate support contractor 

for LOGCAP IV was approved in August 2006. 

The SERCO scope of work to support LOGCAP is provided below: 

Scope.—The purpose of this contract is to maximize resources and expertise of the 

Support Contractor to provide LOGCAP program management analysis and support 

on a global basis. The contractor may deploy within the Continental United States 

(CONUS) in support of CONUS activities or world-wide in support of planning, 

training, exercises, or events. Requirements shall focus on LOGCAP capabilities 

and/or resources to support Army, Department of Defense components, U.S. Federal 

Government Inter-Agency requirements, and non-governmental and coalition forces 

LOGCAP support when approved by Department of the Army. This scope does not 

intend to limit LOGCAP responses to only military operations. SECRET clearance 

is required for Support contractor personnel. The LOGCAP Support contractor will 

perform the following functions: (1) provide operations support to the LOGCAP Operations Directorate; (2) provide program support to the LOGCAP Director staff; (3) 

provide liaison support between the LOGCAP Director and COCOM/ASCC staffs 

and assist with development of LOGCAP PWS and IGCE; (4) provide support to deployed LOGCAP Deputy Program Directors; (5) participate in LOGCAP related 

COCOM/ASCC exercises; (6) maintain the Worldwide management and Staffing 

Plan; and (7) maintain existing and document new COCOM/ASCC deliberate plans. 

Services To Be Provided.—The Support Contractor shall have detailed knowledge 

of the LOGCAP program and provide acquisition and life cycle management support 

for the program. This includes but is not limited to assisting Government staff with 

planning, development of policy guidance, budgetary, contract and systems/program 

management, training, liaison between the LOGCAP Director and COCOM/ASCC 

staffs, and administrative functions. The Support Contractor shall provide In-Proc-
264 

ess Reviews (IPR) at the discretion of the Government. Program support shall be 

provided to the LOGCAP Director, LOGCAP Operations Directorate, and deployed 

Deputy LOGCAP Directors. Program support may include liaison between supported 

units and the LOGCAP Director and staff, financial, technical, and pricing analysis 

of contractor cost estimates and task execution plans, training presentations and 

program of instruction (POI) development, exercise preparation and participation, 

and documentation and update of the LOGCAP World-wide Management and Staffing Plan (WMSP) and LOGCAP support plans. The Support Contractor shall collaborate with executing contractors, establish non-disclosure agreements as required, and document proprietary executing contractor input to the WMSP and 

COCOM/ASCC plans. It is not the intent of this contract to have the contractor perform inherently Governmental functions, or to have the contractor make discretionary decisions for the Government relating to the program or contracted support. 

The contractor will primarily provide advice, analysis, and draft document submissions for Government approval. 

Amount 

Total negotiated amount: 

For period-of-performance 1—February 16, 2007 to February 15, 2008 ........................................... $14,290,606.36 

For period-of-performance 2—February 16, 2008 to February 15, 2009 ........................................... 25,328,931.14 

Serco is not under contract to provide services that would otherwise be performed 

by DCAA. 

QUESTION SUBMITTED BY SENATOR FRANK R. LAUTENBERG

Question. Last January, the DOD awarded a contract worth almost $300 million 

to a company called AEY to supply munitions to Afghan forces. This company operated from an unmarked office in Miami and was led by two men in their early 

twenties. We now know that most of the ammunition was Chinese-made and outdated. How can a company like this get such a huge contract with our Department 

of Defense? 

Answer. Based on the evaluation of price and all non-price factors, AEY was determined the best value offeror. The Procuring Contracting Officer (PCO) had received positive past performance surveys regarding AEY’s performance on contracts 

for same and similar requirements. Prior to contract award, the PCO requested and 

obtained a pre-award survey from the Defense Contract Management Agency, which 

recommended complete award based on satisfactory findings. The PCO checked the 

Excluded Parties List (EPLS), which listed neither AEY nor Efraim Diveroli. She 

also checked the Past Performance Information Management Systems (PPIMS), 

which included no records of poor performance or terminated contracts for AEY. 

During a later investigation of AEY, it was discovered that there were contracts 

that were valued at less than $5 million under which AEY had performed poorly 

and/or were terminated for cause or default. The reporting of that negative performance in the past performance information retrieval system was not required because 

it did not meet the $5 million threshold for reporting, so this information was not 

available to the PCO. If this information had been available to the PCO, her decision would most likely have been different. This reporting flaw in the system has 

been corrected by a Department of Defense directive which mandates contracting officers to report terminations for cause or default, regardless of contract value. This 

information will now be available for source selection officials in the past performance information retrieval system. 

In June 2008, the Department of Justice also indicted the President of AEY and 

three business associates. AMC assisted the law enforcement agencies on the AEY 

investigation more than 12 months prior to these indictments. 

To preclude some of these problems in the future, the Program Executive Officer 

for Ammunition (PEO Ammo) formed a Non-Standard Ammo Task Force (NSA–TF), 

with members from all key organizations, to implement policy and command guidance. To date we have accomplished the following: 

—Developed general specifications for non-standard ammunition that provide 

among other things criteria for technical data package identification, quality assurance requirements, reliability thresholds, test requirements, and packaging/ 

transportation requirements. PEO Ammo also has created a database of technical data (commercial & WARSAW specs), performance parameters, sources of 

manufacture, etc. for NSA. 
265 

—DCMA is conducting Source inspection at both CONUS and OCONUS sites. 

Point of inspection can be either a depot/staging area or the place of manufacture. DCMA will have ‘‘eyes on’’ the NSA prior to it being delivered into the 

theatre. 

—We are conducting theater visits to work the new specifications/standards/procedures with all the parties in the theater involved. 

—We held an industry day with over 20 companies to get industry feedback on 

the generic specification concept and requirements. 

—We created a database of all current NSA contracts specifying item, delivery 

dates, location and place of manufacture ensuring efficiency of inspection prior 

to shipment to theatre. 

—We arranged for a team of subject matter experts (SMEs) to tour Arsenal Inc., 

in Bulgaria who is a major supplier of NSA. The TF will visit other major NSA 

suppliers as well. 

—We are working to stand-up a Product Director’s office within PEO Ammo to 

manage NSA issues and concerns. We expect this office to implement the appropriate program discipline and execution that we have with our U.S. programs. 

QUESTIONS SUBMITTED TO GORDON S. HEDDELL

QUESTIONS SUBMITTED BY SENATOR ROBERT C. BYRD

Question. Mr. Heddell, because of the snail’s pace at which investigations are initiated or are moving, the statute of limitation on many of the contracting offenses 

that have occurred in Iraq and Afghanistan will soon expire. Do you support current 

Congressional efforts to extend the statutes of limitation in cases involving these 

war zones? 

Answer. During the hearing Senator Leahy asked a similar question regarding 

the War Enforcement of Fraud Act, S. 2892, which would extend the statute of limitations. I responded to Senator Leahy ‘‘that proposal would be very beneficial to my 

office and probably other inspectors general.’’ My position on the extension of the 

statute of limitations during wartime remains the same. 

Question. Mr. Heddell, in a recent article in the Journal of Public Integrity, it was 

reported that the Army CIDs Major Procurement Fraud Unit concluded by late 2005 

that for a number of reasons, conditions in Iraq were highly conducive for fraud. 

Similarly, a recently published Defense Criminal Investigative Service assessment 

found that there had been only limited review of the completeness, accuracy, and 

propriety of contingency payment vouchers and that there existed the potential for 

fraud, waste, and abuse. While these reports were just recently published, both examined periods of time prior to June 2006. Over two years have passed. Can you 

explain what specifically has been done in your organizations to change these conditions and what is being done to identify and prosecute individual cases of fraud that 

occurred during this period? 

Answer. The DOD IG has primary jurisdiction over matters involving most contract and procurement actions awarded by Defense Agencies, Office of the Secretary 

of Defense components, and field activities. Additionally, we have jurisdiction over, 

‘‘any allegations [involving DOD] that the IG DOD considers appropriate for investigation.’’ This broad authority affords DCIS the ability to easily partner with other 

agencies in an effort to protect the integrity of the entire DOD procurement and acquisition process. We actively partner with the Service-specific Military Criminal Investigative Organizations—the Army Criminal Investigation Command, the Naval 

Criminal Investigative Service, and the Air Force Office of Special Investigations. 

In addition, we partner with the Federal Bureau of Investigation; U.S. Department 

of State, Office of the Inspector General; the Special Inspector General for Iraq Reconstruction; and the U.S. Agency for International Development, Office of the Inspector General. 

In September 2006, the DOD IG established a permanent investigative presence 

in Iraq by deploying four Defense Criminal Investigative Service (DCIS) special 

agents to the theater. Two special agents have also been deployed to Iraq to support 

a special cell investigating issues relating to weapons accountability. In April 2008, 

one special agent was deployed to Afghanistan. 

In September 2008, we will increase the DOD IG investigative presence in Southwest Asia to five DCIS special agents in Iraq, two special agents in Kuwait, and 

two agents in Afghanistan. Our European Resident Agency in Germany and multiple CONUS offices continue to conduct a wide variety of investigations related to 

Iraq and Afghanistan. In total, approximately 75 DCIS special agents are investigating procurement fraud, corruption, and other cases related to Southwest Asia. 
266 

The continued presence of the DOD IG in Iraq, Afghanistan, and Kuwait creates 

awareness within the Southwest Asia community that we are aggressively pursuing 

allegations of fraud and corruption. To date, several significant ongoing and closed 

criminal investigations, to include that of Major John Cockerham, Jr., his family, 

and associates have resulted in arrests, forfeitures, indictments, and prison sentences. Numerous additional adjudicative actions are impending. When further tangible results, such as arrests and convictions, are made public, they will further 

serve to deter future crimes and send a clear message that the DOD IG and its law 

enforcement partners will not tolerate fraud, waste, and abuse against the Department. A recent example is the arrest and charging of a former contractor in an ongoing investigation regarding the theft of nearly $40 million in jet and diesel fuel from 

Camp Liberty in Baghdad, Iraq. 

To ensure investigations involving the war efforts in Iraq and Afghanistan are 

pursued efficiently and effectively, the DOD IG and its partner Federal law enforcement agencies refer the cases to the designated Department of Justice Southwest 

Asia Intake Officer during the early stages of the investigation. The Intake Officer, 

a DoJ attorney, serves as a primary point of contact to the special agents for investigative and prosecutive guidance. The Intake Officer also assists the agents in identifying the best venue to successfully prosecute the case. This collaborative effort between the law enforcement agencies and DoJ has been central to combating fraud 

and corruption in Southwest Asia. We launched a project which will analyze over $14 billion in payment vouchers 

related to U.S. Army contingency purchases in Iraq. These vouchers are currently 

stored at the Defense Finance & Accounting Service (DFAS), Rome, NY. We are coordinating with DFAS, the Defense Contract Audit Agency, and the U.S. Army 

Audit Agency to collaboratively identify fraudulent payments through data mining 

techniques. As a result of our initial investigative concerns, we performed an audit 

of out of country payments (Report No. D–2008–098). As a result of the audit, DOD 

has initiated several critical measures that we believe will improve the accountability of out of country payments but we have not verified the efficacy of the new 

financial initiatives within DOD. Specifically, DOD modified the DOD Financial 

Management Regulation to address contingency operations, improved training, developed check lists, and transferred disbursing operations for contract payments 

back to the United States. To address the issues raised in our audit, the Director, 

DFAS deployed DFAS personnel to support the improvement of accountability within financial functions in Southwest Asia. This included assessing what financial 

functions could be removed from the theater and performed in areas where more 

resources could be committed. DOD is monitoring the progress of these actions and 

has established a matrix to measure progress. 

Further, on August 27, 2007, we announced the audit of Internal Controls and 

Data Reliability in the Deployable Disbursing System. The DOD IG is evaluating 

whether the internal controls over transactions processed through the Deployable 

Disbursing System are adequate to ensure the reliability of the data processed. This 

audit includes financial information processed by disbursing stations supporting the 

Global War on Terror. 

Question. Mr. Heddell, since Congress learns many of the cases involving waste, 

fraud and abuse from media reports and complaints received directly by the Members, I am curious: how does your office prioritize pending investigations, and how 

do you respond to whistleblower reports of abuses or unsafe conditions? 

Answer. The DOD IG prioritizes investigations in line with the national defense 

priorities and available resources. Our investigative priorities for 2008 include: 

—Continued vigorous investigative support to the Global War on Terrorism, as it 

affects the Department of Defense at home and abroad. 

—Maintaining a high priority on procurement fraud investigations with emphasis 

on defective, substituted, and substandard products that impact the safety and 

mission-readiness of our warfighters. 

—Continued focus on combating corruption by ferreting out and uncompromisingly investigating major DOD procurement fraud including bribery, corruption, 

kickbacks, and major thefts. 

—Continued concentration on investigations, training, and awareness aimed at 

the illegal transfer of technology, systems, and equipment critical to the Department of Defense and dangerous if in the hands of proscribed persons and nations. 

—Continued defense against cyber crimes and computer intrusions that impact 

DOD, with emphasis on computer network defense to protect the global information grid. 

In addition, we carefully review and take appropriate action on all whistleblower 

reports from whatever source they emanate, whether through our Hotline, directly 
267 

to our military and civilian reprisal offices, or directly to our special agents in the 

field. Clearly, those allegations that concern the health and safety of the men and 

women deployed in the Southwest Asia theater are given the highest priority. 

Items received through the hotline are considered to be high priority if they are: 

—Life Threatening.—The source of the information believes that an existing condition constitutes a real and immediate threat to life. For example, a faulty aircraft ejection seat, substandard parachute riser cord, or a Service member 

threatens self harm or to harm others. 

—Time Sensitive,—A matter that is ongoing or scheduled to take place in the immediate future and requires rapid response to halt or correct the problem. 

Question. Mr. Heddell, what are your organization’s audit and investigative priorities, who sets those priorities, and are you aware of any outside interference with 

the priorities of your organization? 

Answer. The DOD IG Strategic Plan is the basis for our priorities. The strategic 

plan is developed by taking into consideration the risks and challenges the Department is facing and includes consideration of the President’s Management Agenda, 

DOD Top Priorities, and GAO high-risk areas. Each component uses the IG strategic plan as the basis for setting their priorities. The priorities established for each 

component are directly linked to the goals established in the DOD IG Strategic 

Plan. There has been no outside interference with the establishment of the DOD IG 

Strategic Plans or our investigative and audit priorities. Below are our investigative 

and audit priorities. 

Investigative Priorities 

The Deputy Inspector General for Investigations and the Director, Defense Criminal Investigative Service, prioritize investigations in line with the national defense 

priorities and available resources. The priorities for 2008 are: 

—Continued vigorous investigative support to the Global War on Terrorism, as it 

affects the Department of Defense at home and abroad. 

—Maintaining a high priority on procurement fraud investigations with emphasis 

on defective, substituted, and substandard products that impact the safety and 

mission-readiness of our warfighters. 

—Continued focus on combating corruption by ferreting out and uncompromisingly investigating major DOD procurement fraud including bribery, corruption, 

kickbacks, and major thefts. 

—Continued concentration on investigations, training, and awareness aimed at 

the illegal transfer of technology, systems, and equipment critical to the Department of Defense and dangerous if in the hands of proscribed persons and nations. 

—Continued defense against cyber crimes and computer intrusions that impact 

DOD, with emphasis on computer network defense to protect the global information grid. 

Audit Priorities 

The Deputy Inspector General for Audit, focuses audit priorities on the following 

high risk/high impact areas within DOD: Life or safety issues/health care; GWOT 

operations; contracting and acquisition programs; information technology management; and financial management. 

Further, audit efforts are focused so we achieve results in the following areas: Improve the effectiveness and/or safety of service members; improve national security; 

identify potential monetary benefits; improve business operations; and comply with 

statutes and regulations. 

Our priorities are reflected in our audit plan(s) which we publish yearly. These 

plans include projects we intend to perform during the fiscal year to address our 

view of the risks and challenges the Department is facing and to include consideration of the President’s Management Agenda, DOD Top Priorities, and GAO highrisk areas. 

Question. Mr. Heddell, please inform the Committee what percent of IG investigations are referred to the Department of Justice, the percentage of those that result 

in prosecution, and the primary reasons why the remaining cases are not referred 

or prosecuted? 

Answer. Our investigators routinely discuss their investigations with prosecutors 

as soon as sufficient information is developed to indicate that a possible violation 

of U.S. law has occurred. As we and our partner Federal law enforcement agencies 

refer the cases to the designated DoJ Southwest Asia Intake Officer during the early 

stages of the investigation. The Intake Officer serves as a primary point of contact 

to the special agents for investigative and prosecutive guidance. The Intake Officer 
268 

also assists the agents in identifying the best venue to successfully prosecute the 

case. We believe this approach is very effective. 

Overall, the DOD IG has 1,685 open criminal investigations and projects being 

handled by the Defense Criminal Investigative Service. Of the 1,685, we have 134 

active investigations involving Iraq and Afghanistan which are at various stages of 

investigation. Of these 134 investigations, 110 are fraud related investigations. To 

date, 32 of the 134 investigations have been presented to either DoJ or command 

authorities for judicial or administrative action. The remaining investigations have 

not been presented for or taken for adjudication because information has not been 

sufficiently developed to warrant such action. As these investigations progress, DoJ 

is kept apprised of the status of the cases. 

Question. Mr. Heddell, please inform the Committee as to the number of investigations performed by the Inspector General’s office involving contracts in or in 

support of operations in Iraq and Afghanistan that have involved fraud; the percent 

of those cases that have resulted in arrests being made, and the percentage of those 

cases that have resulted in prosecution? 

Answer. DOD IG investigations in Iraq and Afghanistan have focused on matters 

such as bribery, theft, procurement fraud, illegal receipt of gratuities, bid-rigging, 

defective and substituted products, and conflicts of interest. 

Of the current 134 ongoing GWOT investigations, 110 are fraud related investigations. Thirty-two cases have been adjudicated with some type of administrative or 

judicial action, including 16 criminal indictments and 16 criminal informations 

which resulted in 17 felony convictions; 22 years confinement; 15 years probation; 

2 companies and 6 individuals debarred from contracting; 24 companies and individuals suspended from contracting; 2 settlement agreements; 1 contract termination, 

1 job suspension, $359,200 assessed in fines and penalties; forfeiture of $1,029,819; 

seizures of $2,043,079; and $9,889,420 in restitution to the U.S. Government. 

Question. Mr. Heddell, do the arrests and prosecutions in these cases track well 

with the amount of the losses and the nature of the offense? 

Answer. For the 32 adjudicated GWOT investigations, the Defense Criminal Investigative Service Investigative Data System (electronic case management system) 

indicates estimated losses due to fraud at $58.4 million. Thirty-two cases have been 

adjudicated with some type of administrative or judicial action, including 16 criminal indictments and 16 criminal informations which resulted in 17 felony convictions; 22 years confinement; 15 years probation; 2 companies and 6 individuals 

debarred from contracting; 24 companies and individuals suspended from contracting; 2 settlement agreements; 1 contract termination, 1 job suspension, 

$359,200 assessed in fines and penalties; forfeiture of $1,029,819; seizures of 

$2,043,079; and $9,889,420 restitution to the U.S. Government. 

Question. Mr. Heddell, are the amounts recovered in cases that involve fines, penalties and restitution equivalent to the amounts of money lost by the taxpayer? 

Answer. As of August 1, 2008, the total amount of fines, penalties, and restitution 

in GWOT investigations, including non-fraud investigations, amounted to $18.5 million. Fraud cases resulted in $13.322 million in recoveries, while the estimated 

losses in taxpayer dollars equaled $58.4 million. 

Question. Mr. Heddell, a recent IG study entitled ‘‘Internal Controls over Payments Made in Iraq, Kuwait and Egypt’’ covers the period April 2001 through June 

2006. The report, however, was not published until May 22, 2008. What was the 

cause of the delay in the publication of the report? 

Answer. Audit fieldwork for D–2008–098, ‘‘Internal Controls Over Payments Made 

in Iraq, Kuwait and Egypt,’’ was initiated in May 2006 and concluded in December 

2007. We issued the draft report on February 11, 2008. We received management 

comments by April 25, 2008 and additional comments on May 15, 2008. The final 

report was issued on May 22, 2008. 

As stated in the report, ‘‘audit trails for voucher payments did not exist.’’ Generally accepted government auditing 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. It was a time consuming 

and labor intensive process for our auditors to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions given that the 

data was not readily available in a war zone. 

Question. Mr. Heddell, what do you consider to be a metric or quantifiable measure of success in pursuing the priorities of your organization? 

Answer. The mission of Inspector General’s Office is to promote integrity, accountability, and improvement of Department of Defense personnel, programs and operations to support the Department’s mission and serve the public interest. To facilitate the mission, OIG must maintain a dynamic organization that effectively proc-
269 

esses client requests, statutory requirements, and self-initiated assessments that 

yield the greatest return on investment to the Department of Defense. 

As such, the single and most important metric is the timely and accurate response 

to all requirements. In the short term, the metric centers on processes that are 

standardized, continuously refined and focused on product delivery and quality. This 

is accomplished through comprehensive strategic planning thereby allowing for the 

most effective use of our resources to conduct and supervise future audits and investigations relating to the programs and operations of within the Department of Defense. 

Measures of success include both monetary and non-monetary benefits, the percentage of reports that address the key areas such as the Secretary of Defense focus 

areas, the President’s Management Agenda, the Government Accountability Office’s 

high-risk areas, and our own assessment of DOD’s management challenges; and action taken by DOD management regarding our recommendations. 

The DOD IG monitors the success of pursuing the priorities of the organization 

via a quarterly performance report that assesses each functional component in six 

categories: timeliness of projects, coverage of key areas, return on investment, external engagement, budget, and personnel. 

Question. Mr. Heddell, A recent DOD–IG report, ‘‘Internal Controls Over Payments Made in Iraq, Kuwait and Egypt,’’ dated May 22, 2008, provided some aggregate information regarding 183,486 commercial and miscellaneous payments totalling $10.7 billion, made by Army contingency disbursing stations between April 

2001 and June 2006. Some $1.4 billion in commercial payments lacked even the 

most rudimentary supporting documentation and $6.3 billion in payments contained 

basic information but did not comply with all statutory and regulatory requirements. That means that $7.7 billion out of $10.7 billion paid out by the Army was 

not, in the DOD–IG’s words, ‘‘properly supported’’ and does not ‘‘provide the necessary assurance that funds were used as intended.’’ It does not mean that 70 percent of all funds paid out during that period were necessarily wasted or lost—only 

that contracting officers and auditors cannot confirm that the monies were paid for 

actual goods delivered, services provided, or that the products and work paid for actually met the contract requirements. Page 5 of the report notes that one payment 

of $11.1 million was paid to an American company without the benefit of either a 

receiving report or an invoice, leading the auditors to write that ‘‘. . . it is unclear 

how the disbursing office determined that the vendor was entitled to payment or 

the amount that was due.’’ That is not a record to be proud of. Can you tell the 

committee how that compares to the July 2006 to July 2008 period? 

Answer. We plan to conduct a followup audit to determine whether the actions 

taken by DOD as a result of this audit have improved controls and support for payments. In response to our report, ‘‘Internal Controls Over Payments Made in Iraq, 

Kuwait and Egypt,’’ DOD stated that the fielding of the Deployable Disbursing System to all in-theater payment activities is a significant control. On August 27, 2007, 

we announced the audit of Internal Controls and Data Reliability in the Deployable 

Disbursing System. The DOD IG is evaluating whether the internal controls over 

transactions processed through the Deployable Disbursing System are adequate to 

ensure the reliability of the data processed. This audit includes financial information processed by disbursing stations supporting the Global War on Terror. 

In addition, the Defense Finance and Accounting Service Internal Review performed a review of vouchers from disbursing stations in Iraq from October 2005 to 

April 2007. They reported that additional document management changes were necessary. Finally, the Assistant Secretary of the Army for Financial Management and 

Comptroller stated on March 24, 2008, that it will work with the Army Audit Agency to perform a more robust audit of payments made in theater and pre-deployment 

training in order to more accurately identify internal control issues and corrective 

actions. 

As a correction, because of rounding, we estimated that $7.8 billion, not $7.7 billion, of payments did not meet all statutory or regulatory requirements. This was 

out of an estimated $8.2 billion, not $10.7 billion, of commercial payments. The difference between the $10.7 billion and the $8.2 billion were non-commercial payments of seized and vested assets or Command Emergency Response Program payments. 

Question. Mr. Heddell, are inspector general reports staffed to the Office of the 

Secretary prior to their release, and if so, why? 

Answer. We provide draft reports to the responsible officials within the Department of Defense prior to issuance of our final reports. The DOD IG follows, as required by the IG Act, generally accepted government auditing standards, ‘‘Government Auditing Standards,’’ July 2007. These standards are established by the Gov-
270 

ernment Accountability Office. Under these standards it is appropriate for auditors 

to staff reports with responsible officials. 

Specifically, Government Auditing Standards, Chapter 8.32 states: 

‘‘Providing a draft report with findings for review and comment by responsible officials of the audited entity and others helps the auditors develop a report that is 

fair, complete, and objective. Including the views of responsible officials results in 

a report that presents not only the auditors’ findings, conclusions, and recommendations, but also the perspectives of the responsible officials of the audited entity and 

the corrective actions they plan to take. Obtaining the comments in writing is preferred, but oral comments are acceptable.’’ 

Further, Chapter 8.36 also states: 

‘‘When the audited entity’s comments are inconsistent or in conflict with the findings, conclusions, or recommendations in the draft report, or when planned corrective actions do not adequately address the auditors’ recommendations, the auditors 

should evaluate the validity of the audited entity’s comments. If the auditors disagree with the comments, they should explain in the report their reasons for disagreement. Conversely, the auditors should modify their report as necessary if they 

find the comments valid and supported with sufficient, appropriate evidence.’’ 

Question. Mr. Heddell, if a Department of Defense civilian or official is involved 

in an Inspector General’s investigation, is the Office of the Secretary of Defense advised prior to Justice Department referral and if so, why? 

Answer. DOD IG criminal investigations and actions related thereto are not routinely briefed to the Office of the Secretary of Defense. We can imagine that in a 

very rare instance, the Secretary’s office might be advised of an ongoing investigation prior to the Department of Justice (e.g., an Assistant United States Attorney) 

being engaged. However, the current IG Investigations leadership cannot recall one 

instance of this occurring. 

Question. Mr. Heddell, have your office’s requests for additional budget or resources to support oversight of contracts in Iraq ever been refused within the Department of Defense or at the Office of Management and Budget, and if so, why? 

Answer. All requests for additional resources to support oversight of contracts in 

Iraq have been met. However, Senate Report 110–77, to accompany the National 

Defense Authorization Act (NDAA) for Fiscal Year 2008, addressed concerns of inadequate funding necessary to meet the Department of Defense (DOD), Office of Inspector General audit and investigative mission requirements. The Senate Armed 

Services Committee (SASC) directed the Inspector General to provide defense committees an analysis of current requirements. They further directed that the report 

include a comprehensive and detailed master plan, with annual objectives and funding requirements that will provide the fastest possible increase in audit and investigative capabilities. 

The report submitted to the defense committees on March 31, 2008 identified a 

shortfall of $677.4 million between fiscal year 2010 and fiscal year 2015 as compared to the Inspector General’s Fiscal Year 2010–2015 Fiscal Guidance. 

Program Enhancements 

This increase will allow us to increase audit and investigative functions. Since 

2001 the defense budget has grown from $200 billion to well over $500 billion annually. Despite this growth the IG personnel strength has remained relatively constant. The potential for fraud and waste is significantly higher today due to the our 

diminishing ability to maintain adequate oversight of the Department’s growing resources and programs. 

Summary of Proposed Enhancements 

TOA 

[Current dollars in millions] 

Fiscal year— 

2009 2010 2011 2012 2013 2014 2015 2010–15 

Base 

Office of the Inspector General 

(OIG) ..................................... 247.8 198.5 205.1 209.5 215.6 219.7 223.9 1,272.3 
271 

TOA—Continued 

[Current dollars in millions] 

Fiscal year— 

2009 2010 2011 2012 2013 2014 2015 2010–15 

Enhancements 

OIG Growth Plan ....................... .............. 89.6 99.3 113 119 125.4 131.1 677.4 

Effect of Enhancements 

Auditors and investigators add value by helping to manage and control risk, and 

detect and deter fraud, waste, and abuse. During the period of October 1, 2004 

through September 30, 2007, our auditors identified $3.476 billion in monetary benefits, an average of $5.2 million per auditor. In fiscal year 2006 and fiscal year 2007, 

our investigations resulted in 770 criminal indictments, 644 convictions, and over 

$3.14 billion in criminal, civil, and administrative recoveries. Excluding headquarters and field managers, this is an average of $6.24 million per agent, per year. 

Predictions of future achievements should not be based on prior accomplishments. 

However, it is reasonable to expect that there are greater chances of achieving monetary benefits if more resources are dedicated to conducting audits and investigations. 

Question. Mr. Heddell, it seems that Congress learns about high profile cases of 

waste, fraud and abuse from the media and whistleblowers. This seems to suggest 

one of two possibilities: that you are not informing Congress when these types of 

cases arise, or, you are not investigating contract irregularities very aggressively. 

What is preventing whistleblowers from being able to bring cases to the IG rather 

than to Congress or the media in order to get results? 

Answer. There is nothing impeding whistleblowers from contacting our office with 

cases of waste, fraud, and abuse. They have unfettered access to the DOD Hotline 

via the Internet, e-mail, fax, mail, and telephone. Professional investigators are 

available to receive telephone calls from 7 a.m. to 5 p.m. Eastern Time, Monday 

through Friday. Further, this last year, in an effort to encourage personnel stationed in Southwest Asia to report suspected fraud, waste, abuse, and mismanagement, we established a special, toll-free DOD Hotline number exclusively for their 

use. In the first three quarters of fiscal year 2008 the DOD Hotline received 10,196 

contacts (13,560 in fiscal year 2007) from all sources. 

Due to the sensitive nature of criminal and administrative investigations, we do 

not discuss ongoing investigations. Among other benefits, this allows investigators 

to look into allegations without alerting subjects, witnesses, and others that are key 

to an investigation about our activities and to protect the privacy interests of all 

parties. In fact, the DOD IG does not either confirm or deny the existence of an investigation to anyone without an authorized need to know. 

Regarding audits my office does not discuss potential findings. We use our audit 

and inspection reports as our primary means to keep Congress informed of identified deficiencies within the Department. 

QUESTIONS SUBMITTED BY SENATOR BYRON L. DORGAN

Question. On July 12, 2005, a group of 28 senators wrote Secretary Rumsfeld to 

request an immediate and full investigation of allegations by former KBR food production manager Rory Mayberry, including allegations that U.S. troops in Iraq were 

being fed expired food or food that had been damaged by bullets and shrapnel. My 

office received letters from the IG on August 11, 2005, and again on January 27, 

2006, stating that the DOD Inspector General was investigating this matter—but 

no further word on this issue. 

Please describe the status of this investigation. 

Answer. In August 2005, the KBR Task Force in Rock Island, Illinois, was contacted by the Army Sustainment Command (ASC) regarding allegations by Mr. 

Mayberry to Congress. Mr. Mayberry alleged KBR billed DOD for food it had not 

delivered. The referral from ASC requested the FBI investigate the over-billing of 

food by KBR. The referral did not mention food spoilage or shrapnel/bullets in meals 

provided to U.S. troops. The FBI determined Mr. Mayberry’s allegations were not 

credible. In part, this assessment was based upon Mr. Mayberry’s inability to provide concrete information that could be used to further corroborate the allegations 

or direct the agents to other investigative leads. In January 2006, Mr. Mayberry 

filed a qui tam suit regarding the over-billing and added allegations of spoilage and 
272 

munitions items found in food. In March 2008, DoJ declined to intervene in the qui 

tam suit citing lack of evidence. In August 2006, the same allegations were forwarded to our investigators, which following discussions with the FBI and DoJ, declined to pursue the allegations. 

Question. Explain the reason for the delay in the resolution of this investigation, 

given that the allegations involved unsafe food being fed to the troops. 

Answer. In August 2005, the KBR Task Force in Rock Island, Illinois, was contacted by the Army Sustainment Command (ASC) regarding allegations by Mr. 

Mayberry to Congress. Mr. Mayberry alleged KBR billed DOD for food it had not 

delivered. The referral from ASC requested the FBI investigate the over-billing of 

food by KBR. The referral did not mention food spoilage or shrapnel/bullets in meals 

provided to U.S. troops. The FBI determined Mr. Mayberry’s allegations were not 

credible. In part, this assessment was based upon Mr. Mayberry’s inability to provide concrete information that could be used to further corroborate the allegations 

or direct the agents to other investigative leads. In January 2006, Mr. Mayberry 

filed a qui tam suit regarding the over-billing and added allegations of spoilage and 

munitions items found in food. In March 2008, DoJ declined to intervene in the qui 

tam suit citing lack of evidence. In August 2006, the same allegations were forwarded to our investigators, which following discussions with the FBI and DoJ, declined to pursue the allegations. 

QUESTIONS SUBMITTED BY SENATOR FRANK R. LAUTENBERG

Question. Earlier this year, I asked your predecessor to investigate a suspicious 

e-mail exchange indicating that the Army Audit Agency was told not to answer 

questions about whether the cost of closing Fort Monmouth was higher than the 

Army originally indicated. Mr. Kicklighter responded ‘‘Yes, we will.’’ It’s been four 

months. When will your office complete its investigation? 

Answer. Our investigators are continuing their fieldwork regarding the issues of 

whether the Army Deputy Assistant Chief of Staff for Installation Management 

failed to take appropriate action when advised by Fort Monmouth personnel of an 

error in their original submission to a base closure data call and whether he improperly suppressed an audit into the matter. We anticipate completing that portion of 

the investigation in late October and will provide a copy of the report when it is 

completed. 

We are also examining a related issue presented in a letter from the New Jersey 

Delegation as to whether the Director of Defense Research and Engineering improperly withheld information from the BRAC Commission. We anticipate completing 

this portion of the investigation by late October or early November and will provide 

a copy of the report when it is completed. 

Question. In your opinion, should Congress end the LOGCAP ‘‘cost-plus’’ contracting process? Has it become just too rife for abuse? 

Answer. My role as Inspector General is to report on whether DOD operations are 

taking place within the guidelines of the applicable laws and regulations. For me 

to speculate on whether programs should be ended could give the appearance of a 

loss of objectivity when reporting on whether DOD is performing operations in accordance with those laws. 

However, I offer the following observation: ‘‘Cost-plus’’ contracts are legal and are 

supposed to be monitored pursuant to Federal Acquisition Regulations. The Federal 

Acquisition Regulations state that more resources are required to oversee contractor 

performance on ‘‘cost-plus’’ contracts than on firm fixed price contracts. Cost type 

contracts place the risk on the Government which must be balanced by an adequate 

surveillance system to ensure that DOD receives what it pays for. 

In Iraq, a number of problems have occurred because there is an inadequate level 

of Government surveillance personnel in place or because responsibilities for providing surveillance have been delegated to contractor personnel with little incentive 

to protect Government resources. Over time, historical data can be developed and 

used to allow DOD better insight into expenditures such that portions of the logistics support should be able to be converted to fixed price work, thereby shifting some 

of the risk to the contractor and reducing the commensurate level of government 

surveillance. It is our opinion that continued use of a cost-plus contracting process 

will increase the likelihood of additional cases of waste and abuse unless additional 

measures including more resources for surveillance and converting cost-plus work 

to fixed price tasks when possible are established. 

Therefore, DOD needs to better plan how to provide contractor oversight resources 

for contingency contracting actions involving ‘‘cost-plus’’ contracts. The wartime environment in Iraq increases challenges to conducting the surveillance required to 
273 

support cost-plus type contracts. As we state in our report D–2008–086, ‘‘Challenges 

Impacting Operations Iraqi Freedom and Enduring Freedom as Report by Major 

Oversight Organizations for Fiscal Year 2003 Through Fiscal Year 2007,’’ the Army 

has taken several measures to oversee LOGCAP that we believe should improve the 

controls over LOGCAP. Some measures taken include in April 2007, the Army created an Executive Director for LOGCAP which brings program management oversight to LOGCAP. Further, DOD efforts include developing future planning doctrine 

on contractor logistical support in contingency operations. 

QUESTIONS SUBMITTED BY SENATOR WAYNE ALLARD

Question. You mentioned in your testimony that over the course of conducting Operations Enduring and Iraqi Freedom, DOD experienced, at times, significant and 

recurring challenges in contract management, logistics, and financial management. 

You went on to say that these three areas have been reported as challenges within 

DOD since the early 1990s, and therefore not surprising that DOD is experiencing 

these challenges in Iraq and Afghanistan. 

Why is this the case? In your estimation, what needs to be done that has been 

overlooked or unsuccessfully executed time and again that has caused these repeated challenges. 

Answer. DOD is a large and very complex organization, which presents a tremendous management challenge in developing and implementing Department-wide improvements within areas such as contract management, logistics, and financial management. For specific wartime related challenges, we believe the Department needs 

to work in concert with the Commission on Wartime Contracting to institute policies 

and procedures for contingency operations. The Department has already begun 

many initiatives to address implementing contingency business operations and principles. Just as DOD prepares its military, the Department must prepare its business 

operations and personnel to support contingency operations. 

Since 1990 and 1992, respectively, GAO has designated DOD Weapon Systems Acquisition and Contract Management as high-risk areas. Acquisition initiatives that 

began in the 1990s led to reductions in acquisition oversight assets and when the 

spending trend dramatically reversed after September 11th, the Department was 

not able to quickly react to the need for more contract and oversight support. The 

emphasis on urgency to support the war effort especially for contracting in an expeditionary environment has only served to increase the challenges. In fiscal year 

2008, the Defense budget with war funding will approach $650 billion. This total 

is more than double the last DOD budget preceding September 11, 2001. Keeping 

pace with this spending would be a difficult proposition if acquisition and oversight 

assets were increasing at a proportional rate. But, from 1990 until the end of fiscal 

year 1999, total personnel included in the DOD acquisition workforce decreased 

about 50 percent, from 460,516 to 230,556 personnel. For example, since the mid 

1990 the Defense Contract Management Agency has taken significant cuts in personnel (approximately 50 percent). Additional, emphasis/funding/billets for the Defense Contract Management Agency, Defense Contract Audit Agency, and the Defense Finance and Accounting Service would be beneficial in increasing the oversight of the performance and payment of contractors both at in the United States 

and abroad. 

As of May 2008, there were approximately 25,000 contracting officers to handle 

over $315 billion in procurements of goods and services. Other organizations such 

as the Defense Contract Management Agency which is responsible for much of the 

administration and surveillance of DOD contracts decreased its staff levels by similar amounts during the same time frame. Even within the Inspector General’s office, 

we reported in our March 31, 2008 growth plan that our auditors are unable to keep 

pace with the ballooning Defense budget and this growth ‘‘leaves the Department 

increasingly more vulnerable to fraud, waste and abuse.’’ 

Question. As you know, there are 825 Contracting Officer’s Representatives performing contractual efforts within Iraq, and it is imperative that these Representatives have the proper training and expertise. 

It is already July, 2008, when will the DOD Inspector General’s office be able to 

determine whether personnel assigned to the Joint Contracting Command—Iraq/Afghanistan as Contracting Officer’s Representatives have the training and expertise 

to perform their duties? 

Answer. We announced an audit of the ‘‘Assignment and Training of Contracting 

Officers’ Representatives at Joint Contracting Command—Iraq/Afghanistan,’’ 

(Project No. D2008–D000JC–0203.000), on May 12, 2008, to review the qualifications of Contracting Officers’ Representatives performing contractual efforts in Iraq. 
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The overall objective is to determine whether personnel assigned as Contracting Officers’ Representatives to the Joint Contracting Command Iraq/Afghanistan have 

the necessary training and expertise required to perform their duties. We plan to 

issue a draft report in January 2009 and the final report in March 2009. 

Question. With so many authorities responsible for detecting waste, fraud, and 

abuse in Iraq—including DOD and non-DOD law enforcement. 

Are we most effectively combating corruption and fraud in Iraq? Are DOD and 

non-DOD law enforcement partners working together effectively? Is there an absolute need for each and every investigative and audit organization that is present 

right now in Iraq? 

Answer. Pursuant to the Inspector General Act of 1978, we have broad criminal 

investigative jurisdiction regarding DOD programs and operations. The DOD IG has 

primary jurisdiction over matters involving most contract and procurement actions 

awarded by Defense Agencies, OSD components, and field activities. However, effectively countering fraud in Southwest Asia, just as in the United States, requires the 

cooperative efforts of other DOD investigative agencies and Federal law enforcement 

partners, as well as the audit community. As a team, special agents are more effectively combating corruption and fraud in Iraq and Afghanistan and avoiding duplication of effort by coordinating investigative activities and deconflicting cases. This 

cooperation has a synergetic effect that maximizes the time, tools, and efforts of the 

agencies involved. Our joint efforts thus far are having a positive impact in theater 

and are making a significant difference. 

The DOD IG is the lead oversight agency for accountability in DOD, and as such, 

is committed to maintaining an effective working relationship with other oversight 

organizations to minimize duplication of efforts and to provide more comprehensive 

coverage. Effective interagency coordination, collaboration, and partnerships within 

the oversight community are essential to providing comprehensive reviews of wartime expenditures to identify whether critical gaps exist, and then to recommend 

actions to fix those gaps. Below is a brief description of investigative and audit partnerships we participate in to ensure coordination with other oversight organizations. 

Joint Investigative Partnerships 

The Defense Criminal Investigative Service (DCIS), the criminal investigative arm 

of the DOD IG works jointly with other federal law enforcement agencies, participates in various working groups and has agents assigned to FBI Joint Terrorism 

Task Forces throughout the nation. Examples of partnerships between the DCIS 

and other agencies include: 

—Joint cases with the Federal Bureau of Investigation; Immigrations and Customs Enforcement; United States Secret Service; United States Marshals Service; Alcohol Tobacco and Firearms; United States Postal Inspection Service; and 

various IGs including National Aeronautics and Space Administration; General 

Services Administration; Health and Human Services; Veterans Affairs; Department of Transportation; Department of State; Housing and Urban Development; 

and the Military Criminal Investigative Organizations including the United 

States Army Criminal Investigation Command; Naval Criminal Investigative 

Service; and Air Force Office of Special Investigations. 

—Member of the National Procurement Fraud Task Force, created in October 

2006 to promote the prevention, early detection and prosecution of procurement 

fraud. 

—Member of the International Contract Corruption Task Force with full time 

agent assigned to the Joint Operations Center. 

—Member of the Defense Enterprise Working Group. 

—Excellent working relationships with agencies in the SWA theater of operations. 

Southwest Asia Joint Planning Group 

The DOD IG has jointly established and chairs an interagency SWA Joint Planning Group that meets quarterly and provides oversight of fraud, waste, abuse, and 

criminal activities in the SWA region. The JPG provides a chance for collaboration 

and teamwork with the organizations engaged in this effort, including the military 

inspectors general and service auditors general, combatant commands inspectors 

general, the Defense Contract Audit Agency, the Defense Finance and Accounting 

Service, the Defense Contract Management Agency, the Inspectors General of State 

and the USAID, and the SIGIR. The mission of the JPG is to better coordinate and 

integrate oversight activities in the region. The SWA JPG leads the coordination 

and oversight required to identify and recommend improved mission support to military units conducting operations. 

In conjunction with the SWA Joint Planning Group, the DOD IG also participates 

in the Afghanistan Working Group and the Iraq Inspectors General Council. 
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—The Afghanistan Working Group was established by the DOD IG, along with 

the Government Accountability Office, the Department of State Inspector General, and the USAID, established a working group on oversight activities in Afghanistan to minimize the impact on forward command operations, eradicate 

overlapping and duplicate oversight requests, and facilitate the exchange of 

oversight information. The DOD IG, as the Department of Defense representative of the group, also incorporates the ongoing and planned Afghanistan-related oversight efforts of the Service Auditors General into the working group. 

—The Iraq Inspectors General Council chaired by the SIGIR, was established to 

minimize the impact on forward command operations, deconflict overlapping 

and duplicate oversight requests, and facilitate the exchange of oversight information unique to Iraq. 

Question. I understand from your testimony that the service-specific Military 

Criminal Investigative Organizations—the Army Criminal Investigation Command, 

the Naval Criminal Investigative Service, and the Air Force Office of Special Investigations—typically focus upon allegations involving the award of contract and procurement actions of their respective military department. 

How effective have these service-specific organizations been at detecting and 

eliminating waste, fraud, and abuse? 

Answer. The DOD IG has primary jurisdiction over matters involving most procurement actions awarded by the Defense Agencies, OSD components, and field activities, but it can also undertake or join any DOD fraud, waste, and abuse investigation. The Defense Criminal Investigative Service’s (DCIS) primary partner in 

countering DOD-related fraud in Southwest Asia is the U.S. Army Criminal Investigation Command’s (CID) Major Procurement Fraud Unit (MPFU). The MPFU conducts investigations into allegations of fraud associated with the Army’s major acquisition programs. DCIS and MPFU agents conduct fraud briefings to create 

awareness and to encourage DOD personnel and contractors to report fraud, waste 

and abuse. DCIS and MPFU agents also actively recruit sources for intelligence and 

information regarding past and current fraud, waste, and abuse against the Department. In addition, CID has a significant number of military special agents deployed 

throughout Southwest Asia who typically investigate general crimes and handle 

force protection matters. These military special agents represent yet another resource for invaluable information. 

The immense and critical roles of the Naval Criminal Investigative Service and 

the Air Force Office of Special Investigations in force protection, counter-intelligence, and general crimes investigations has prevented significant engagement by 

these components in fraud investigations as they did prior to operations in Iraq and 

Afghanistan. 

QUESTIONS SUBMITTED BY SENATOR LARRY CRAIG

Question. Mr. Heddell, one of the reports you provided this Committee goes into 

great detail about the lack of personnel available to actually provide adequate oversight over contractors overseas. Can you walk us through the steps that DOD IG’s 

office is doing to incentivize and increase the number of folks joining the ranks of 

auditors overseas? 

Answer. On March 31, 2008, the DOD IG provided the defense committees its 

growth plan for increasing Audit and Investigative Capabilities fiscal years 2008– 

2015 (as directed by the Committee on Armed Services, United States Senate, in 

the language of Senate Report 110–77, to accompany S. 1547, the National Defense 

Authorization Act for Fiscal Year 2008). As identified in Senate Report 110–77, ‘‘The 

committee is concerned that funding levels for this important independent audit and 

investigative function is not keeping pace with the demands for Inspectors General 

services in the global war on terror.’’ 

In November 2007, we realigned internal core mission assets within the Office of 

the Deputy Inspector General for Auditing to form the Joint and Overseas Operations Directorate to support Southwest Asia audit operations. This expeditionary 

audit directorate was formed to address corruption, fraud, waste, and abuse in 

Southwest Asia; combat illegal and improper expenditures; and improve accountability of DOD resources that support operations in Southwest Asia. Through this 

new directorate, we are expanding our audit presence in our field offices in Southwest Asia including Afghanistan and Iraq. We are also assessing the expansion of 

the DOD IG field office in Kuwait. 

All DOD IG personnel working in Southwest Asia are there as volunteers. As 

mentioned, we employ an expeditionary workforce model in support of our Southwest Asia oversight efforts. Our expeditionary workforce model is structured using 
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a core of personnel assigned and deployed to our field offices in Southwest Asia. 

This provides us a base level of personnel to perform oversight in theater, support 

audit work being performed back in CONUS, and support incoming personnel performing specific fieldwork. This model allows us to attract employees who accept 

longer term assignments as well as those who desire limited term assignments 

working in combat related areas. We believe our expeditionary model along with the 

additional resources received, provides us incentives to attract personnel to deploy 

to Southwest Asia in support of our mission while minimizing risks and costs. 

Within the Department of Defense, progress in training and equipping more contract officials to handle the increased workload will take time. However, a number 

of initiatives are underway that are addressing the challenges both within the Department and from proposed legislation that should lead to improvement and better 

meet these challenges. A commission headed by Dr. Jacques Gansler evaluated the 

Army Expeditionary Contracting and recommended urgent reform. As a result, the 

U.S. Army Materiel Command activated the Army Contracting Command which will 

oversee more than $85 billion in contracts annually and focus on maintaining and 

improving the Army’s ability to respond globally in support of warfighters’ needs. 

Since 1990 and 1992, respectively, GAO has designated DOD Weapon Systems Acquisition and Contract Management as high-risk areas. Acquisition initiatives that 

began in the 1990s led to reductions in acquisition oversight assets and when the 

spending trend dramatically reversed after September 11th, the Department was 

not able to quickly react to the need for more contract and oversight support. The 

emphasis on urgency to support the war effort especially for contracting in an expeditionary environment has only served to increase the challenges. In fiscal year 2008, the Defense budget with war funding will approach $650 billion. This total is more than double the last DOD budget preceding September 11, 

2001. Keeping pace with this spending would be a difficult proposition if acquisition 

and oversight assets were increasing at a proportional rate. But, from 1990 until 

the end of fiscal year 1999, total personnel included in the DOD acquisition workforce decreased about 50 percent, from 460,516 to 230,556 personnel. 

As of May 2008, there were approximately 25,000 contracting officers to handle over $315 billion in procurements of goods and services. Other organizations such 

as the Defense Contract Management Agency which is responsible for much of the 

administration and surveillance of DOD contracts decreased its staff levels by similar amounts during the same timeframe. 

Question. Mr. Heddell, I am extremely concerned by the ongoing trend of providing inadequate armor for our troops in the field. The report specifically cites numerous incidents where the manufacturer either did not have the capability to 

produce enough armor or simply delivered substandard armor that put our troops 

at risk. Has this trend been improving since the problems identified in fiscal year 

2007? And why have contractors with an ongoing history of poor performance continued to receive contracts for armor production? 

Answer. The DOD IG has issued several reports regarding the armor capabilities 

supporting our troops. Our series of armor related reports cover body armor, armored vehicles, and armor kits for tactical vehicles. These issued reports identify 

that DOD has experienced challenges in fielding adequate armor capabilities for our 

troops. DOD IG has four armor related projects ongoing (two ongoing projects reviewing aspects of body armor and two ongoing projects addressing the Mine Resistant Armor Protected vehicle). In addition, we have another planned audit regarding 

the life cycle management of body armor. The four ongoing projects as well as the 

planned project should show whether progress is being made. The four ongoing 

armor related projects are: 

—DOD Testing Requirements for Body Armor (D2008–D000JA–0263.000). 

—Research on DOD Body Armor Contracts (D2008–D000CD–0256.000). 

—Marine Corps Implementation of the Urgent Universal Need Statement Process 

for Mine Resistant Ambush Protected Vehicles (D2008–D000AE–0174.000). 

—Procurement And Delivery Of Joint Service Armor Protected Vehicles (D2007– 

D000CK–0230.000). 

Contracting decisions are the responsibility of the DOD contracting officials responsible for the acquisition. Past performance can be included as evaluation criteria in the acquisition process; however, as we discuss in report D–2007–107, ‘‘Procurement Policy for Armored Vehicles,’’ the size of the industrial base (competitors) 

was a factor in awarding contracts to a contractor that could not meet production 

schedules. Specifically, for the Army Buffalo Mine Protected Clearance Vehicle, we 

found no indication that other sources were available for competition for the Buffalo. 

DOD can and has assessed liquidated damages to compensate for not meeting contractual requirements, such as with the Joint Explosive Ordnance Disposal Rapid 

Response Vehicle (JERRV). The performance of the current contractors providing 
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armor capabilities should be considered when making future acquisition decisions 

for armor capabilities. We are currently reviewing the contracts awarded for Mine 

Resistant Ambush Protected (MRAP) vehicles and assessing the strategies employed 

by the officials responsible for the procurement. 

Investigative indices disclosed that since 1999, the DOD IG has investigated 29 

allegations of improper manufacture or insufficient delivery of body armor or armored vehicles. In 2006, we initiated seven such investigations, five were initiated 

in 2007, and three have been initiated so far this year. There is insufficient data 

to assert generally that there has been a decline in incidents involving defective 

body armor, but we believe that increased scrutiny from auditors, law enforcement, 

and Congress is likely to have had an effect in reducing attempted fraud. 

CONCLUSION OF HEARINGS

Chairman BYRD. This hearing is recessed, subject to the call of 

the chairman. 

[Whereupon, at 12:35 p.m., Wednesday, July 23, the hearings 

were concluded and the committee was recessed, to reconvene subject to the call of the Chair.] 

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