Stabilizing and Rebuilding Iraq: U.S. Ministry Capacity Development Efforts Need an Overall Integrated Strategy to Guide Efforts and Manage Risk
Published: 2007-10-01T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Iraq's ministries were decimated following years of neglect and centralized control under the former regime. Developing competent and loyal Iraqi ministries is critical to stabilizing and rebuilding Iraq. The President received $140 million in fiscal year 2007 funds and requested an additional $255 million in fiscal year 2008 to develop the capacity of the Iraq's ministries. This report assesses (1) the nature and extent of U.S. efforts to develop the capacity of the Iraqi ministries, (2) the key challenges to these efforts, and (3) the extent to which the U.S. government has an overall integrated strategy for these efforts. For this effort, GAO reviewed U.S. project contracts and reports and interviewed officials from the Departments of State (State), Defense (DOD), and the United States Agency for International Development (USAID) in Baghdad and Washington, D.C.
section_title: What GAO Found
paragraphs: Over the past 4 years, U.S. efforts to help build the capacity of the Iraqi national government have been characterized by (1) multiple U.S. agencies leading individual efforts, without overarching direction from a lead entity that integrates their efforts; and (2) shifting timeframes and priorities in response to deteriorating security and the reorganization of the U.S. mission in Iraq. First, no single agency is in charge of leading the U.S. ministry capacity development efforts, although State took steps to improve coordination in early 2007. State, DOD and USAID have led separate efforts at Iraqi ministries. About $169 million in funds were allocated 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 and DOD was providing 215 to the Ministries of Defense and Interior. Second, the focus of U.S. capacity development efforts has 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. U.S. ministry capacity efforts face four key challenges that pose a risk to their success and long-term sustainability. First, Iraqi ministries lack personnel with key skills, such as budgeting and procurement. Second, sectarian influence over ministry leadership and staff complicates efforts to build a professional and non-aligned civil service. Third, pervasive corruption in the Iraqi ministries impedes the effectiveness of U.S. efforts. Fourth, poor security limits U.S. advisors' access to their Iraqi counterparts, preventing ministry staff from attending planned training sessions and contributing to the exodus of skilled professionals to other countries. The U.S. government is beginning to develop an 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. Moreover, it should attempt to address and mitigate the risks associated with the four challenges identified above. U.S. ministry capacity efforts to date 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, clear performance measures to determine results at civilian ministries, and information on how resources will be targeted to achieve the desired end-state.

section_title: Letter
paragraphs: The development of competent and loyal government ministries is critical  to stabilizing and rebuilding Iraq.  Iraq’s 34 ministries are responsible for  ensuring security through the armed forces and police services and for  providing basic government services including electricity, water, health  care, education, and justice. The ministries are also Iraq’s largest  employer, with an estimated 2.2 million employees. In 2005 and 2006, the  United States provided funding of about $169 million for programs to help  build the capability of key civilian ministries and the Ministries of Defense  and Interior. In January 2007, the President identified government capacity  development as a core principle of the new strategy for Iraq—the New  Way Forward—and sought an additional $395 million funding for these  efforts in fiscal years 2007 and 2008.  The President received $140 million  in supplemental funding for fiscal year 2007 to continue these efforts and  has requested an additional $255 million in fiscal year 2008. According to  the New Way Forward, strengthening the Iraqi government is critical to  transforming Iraq into a modern democratic state.
Ministry capacity development refers to efforts and programs to advise  and help Iraqi government employees develop the skills to plan programs,  execute their budgets, and effectively deliver government services such as  electricity, water, and security. U.S. and international officials agree that  developing Iraq’s ministerial capacity requires long-term, sustained effort.  In this report, we assess (1) the nature and extent of U.S. efforts to  develop the capacity of the Iraqi ministries, (2) key challenges to capacity  development efforts, and (3) the extent to which the U.S. government has  an overall strategy for these efforts.
To accomplish our objectives, we reviewed and analyzed U.S., Iraqi, donor  government, United Nations (UN), and World Bank reports and data.  Although U.S. ministry capacity development activities have been ongoing  since 2003, we focused on capacity development efforts initiated between  late 2005 and mid-2007 as part of the U.S. embassy’s attempt to launch a  more focused and coordinated national capacity development program.  During our fieldwork in Washington, D.C.; New York City; Baghdad, Iraq;  and Amman, Jordan, we reviewed relevant U.S. and Iraqi government  documents and met with officials and contractors working for the  Departments of State (State), Defense (DOD), Treasury, Justice, and the  U.S. Agency for International Development (USAID). During our trips to  Iraq and Jordan, we met with officials from State; its Iraq Reconstruction  Management Office (IRMO); the DOD-run Multinational Force-Iraq (MNF- I); its subcommand, the Multinational Security Transition Command-Iraq  (MNSTC-I); and donor country representatives from the United Kingdom,  Canada, and the European Union. We analyzed reports documenting these  entities’ capacity development efforts and results. We also analyzed data  on Iraq’s 2006 and 2007 budgets and 2006 budget expenditures. We  conducted our review from August 2006 through August 2007 in  accordance with generally accepted government auditing standards. A  detailed description of our scope and methodology is included in appendix  1 of this report. Because of broad congressional interest in this issue, we  performed our work under the authority of the Comptroller General of the  United States to conduct reviews on his own initiative. The work  performed for this review has also contributed to several related GAO  products on Iraq.
subsections: section_title: Background
paragraphs: The permanent national government of Iraq was established by a  constitutional referendum in October 2005, followed by election of the  first Council of Representatives (Parliament) in December 2005 and the  selection of the first Prime Minister, Nuri Kamal al-Maliki, in May 2006. By  mid-2006, the cabinet had been approved, and the government now has 34  ministries responsible for providing security and essential services  including electricity, water, and education for the Iraqi people (see fig. 1).
The size of the ministries varies considerably in terms of staff numbers  and budget. As of May 2007, the U.S. government ministry capacity  development programs target 12 key ministries—10 civilian ministries are  the focus of State and USAID programs, while the Ministries of Defense  and Interior are targeted by DOD programs. These ministries contain 65  percent of the workforce and are responsible for 74 percent of the current  budget (see table 1).
According to U.S., international, and Coalition Provisional Authority  (CPA) assessments and officials, years of neglect, a highly centralized  decision-making system under the former regime, and looting in 2003  decimated Iraq’s government ministries. To address this problem, multiple  U.S. agencies have conducted capacity development efforts at individual  Iraqi ministries since 2003.
section_title: U.S. Efforts to Build Capacity of the Iraqi Government Lack Unified Direction
paragraphs: The implementation of U.S. efforts to help build the capacity of the Iraqi  national government over the past 4 years has been characterized by (1)  multiple U.S. agencies leading individual efforts without overarching  direction from a lead entity or strategic approach that integrates their  efforts with Iraqi government priorities and (2) shifting timeframes and  priorities in response to deteriorating security and U.S. embassy  reorganization. State, through the U.S. Embassy Baghdad’s Iraq  Reconstruction Management Office (IRMO) began implementing a  number of 1-year projects intended to jump start capacity development in  2006 at the 10 civilian ministries designated as key to enabling the Iraqi  government to sustain its reconstruction and deliver essential services to  the Iraqi people. It also targeted other national level organizations,  including the Prime Minister’s office and anticorruption entities. USAID  focused primarily on implementing a medium-term effort to improve the  public administration capabilities of the Iraqi government. DOD conducted  relatively intensive capacity development efforts at the ministries of  Defense and Interior. However, the lack of a lead entity to provide  direction and an overall plan contributed to the three agencies developing  separate metrics to assess and track the capacity levels of ministry  functions common to all ministries and blurred the distinction between  the efforts of USAID and IRMO. Since January 2007, moreover, capacity  development efforts have been subject to changes in focus, agency roles,  and organization, with the U.S. embassy and MNF-I seeking immediate  improvements in ministry performance and results in areas such as budget  execution.
subsections: section_title: State, USAID, and DOD Lead Individual Efforts without Overall Direction
paragraphs: No single agency is in charge of leading and providing overall direction for  U.S. ministry capacity development efforts. As of May 2007, six U.S.  agencies were implementing about 53 projects at individual ministries and  other national Iraqi agencies. State, USAID, and DOD are leading the  largest number of programs with funding allocations totaling about $169  million at individual ministries and other national Iraqi government  agencies. As of May 1, 2007, about 384 U.S. military, government, and  contractor staff from these 3 agencies were working with the ministries  and were implementing or completing capacity development projects.
State advisory teams led by the embassy’s senior consultants were  assisting capacity development efforts at the 10 key civilian ministries— the Ministries of Oil, Electricity, Planning, Water, Health, Finance, Justice,  Municipalities and Public Works, Agriculture, and Education. These teams,  ranging in size from 20 positions for the Ministry of Oil and 18 each for the  Ministries of Finance and Electricity to 3 for the Ministry of Agriculture,  typically interact with the minister, deputy minister, or department  director levels, according to State officials. State also leads efforts to  strengthen the capacity of three national Iraqi anticorruption entities—the  Commission for Public Integrity (CPI), the Board of Supreme Audit (BSA),  and the government’s 29 ministerial Inspectors General.
As of early May 2007, State, through IRMO and its successor organizations  in the Baghdad embassy, had 23 capacity development projects worth over  $50 million completed, contracted, or under way. These projects ranged  from supplying and installing news media equipment in the prime  minister’s press center to providing subject matter experts to mentor,  train,  and assist Iraqi staff in their areas of expertise in the Ministries of  Water and Electricity. See Appendix II for the list of State-led capacity  development projects.
USAID conducts a number of ministry capacity development efforts,  primarily through its 3-year contract with Management Systems  International, Inc. (MSI). For example, MSI’s Arabic-speaking staff provide  public administration training and other support to the Ministry of  Planning’s National Center for Consultancy and Management Development  (NCCMD) and other regional civil service training centers, using a “train  the trainer” approach. MSI has additional advisors working with the  Council of Minister’s Secretariat and six ministries, to create, among other  things, capacity development plans that will guide the development of  public administration skills within the ministries. In addition to these  medium-term projects, MSI trainers have supported USAID and embassy  efforts to achieve more immediate improvements in ministry budgeting  and procurement performance.
As of June 2007, MSI had 34 international staff providing training to Iraqi  government staff, according to a USAID official. USAID reported that MSI  was also working with the Ministry of Planning to develop a pilot self- assessment process for possible future use by other ministries to identify  their own capacity development needs and priorities. By July 2007, USAID  reported that 855 Iraqi national government employees, including staff  from all 10 key civilian ministries and the Ministry of Interior (MOI), had  attended MSI-sponsored courses at Iraqi government training centers.  They had been instructed in, among other things, budgeting, procurement,  leadership and communications, information management, and  anticorruption policies. Officials from three other ministries, the Prime  Minister’s Office and the Council of Ministers’ Secretariat were also  attending MSI courses.
USAID also has had a governance program contract with BearingPoint  since 2003, which includes a project worth about $8 million to implement  the system and train government staff on the use of an electronic ledger to  record government payment and revenue transactions called the Financial  Management Information System (FMIS). FMIS is intended to serve as the  primary financial transaction system for the entire Iraqi government.  According to USAID and BearingPoint officials, BearingPoint’s Iraq staff  had trained approximately 500 Iraqi government employees, as of  February 2007, on how to use FMIS.
The coalition’s Multinational Security Transition Command-Iraq (MNSTC- I) is leading a substantial effort to develop the capacity of the two security  ministries. As of March 2007, the U.S.-led coalition had assigned 215  military, civilian, and contracting personnel to the Ministry of Defense  (MOD) and MOI to advise Iraqi staff about establishing plans and policies,  budgeting, and managing personnel and logistics, among other things.  According to MNSTC-I advisors, they work with their Iraqi counterparts on  a daily basis to develop policies, plans, and procedures. For example, a  senior advisor to the joint staff worked with MOD staff to develop the  counterinsurgency strategy. He provided them with a planning template,  reviewed their work, and suggested they add details such as the source of  the threat, the risk level, and the forces required to counter threats. The  advisors are embedded with MOD staff from a number of offices, including  Plans and Policies and the Iraqi Joint Staff. According to the senior U.S.  budget advisor at MOD, he and his team work directly with the budget  director and his staff to prepare budget spreadsheets and ensure that the  departments justify their funding requests.
MNSTC-I advisors were also working with Iraqi officials at MOI at all  levels in the ministry, although they are not embedded in the ministry to  the same degree as MNSTC-I’s MOD advisors. Among other efforts, these  advisors are helping MOI develop processes for vetting Iraqi security  forces, including collecting and storing biometric data; establishing an  identification card system; and establishing a personnel management  database that will house inventory, payroll, human resource, financial, and  budget data. Table 2 provides additional details on State, USAID, and DOD  efforts.
Two factors help explain the lack of overall direction and a lead agency for  U.S. capacity-development efforts. First, from their inception in 2003, U.S.  efforts evolved without a plan for capacity development or the designation  of a lead entity. Instead, U.S. agencies individually provided assistance to  four successive governments in response to immediate needs, according to  former CPA officials and senior advisors. In 2003, for example, the first  programs at the ministries were initiated by the CPA’s senior advisors,  who ran the ministries using U.S. funds and made personnel and budgetary  decisions. According to State and former CPA officials, each senior  advisor operated their ministries without an overall plan or overarching  guidance; efforts to create an overall plan in late 2003 were dropped after  the United States decided to transfer control of the ministries to a  sovereign Iraq by mid-2004.
In May 2004, the President issued National Security Presidential Directive  36, which delineated State and DOD responsibilities for the U.S. effort in  Iraq. The directive made State, through Embassy Baghdad, responsible for  all U.S civilian activities in Iraq, but gave DOD’s Central Command  (CENTCOM) responsibility for security and military operations. However,  the directive indicated that, at an appropriate time, overall leadership for  all U.S. efforts to support the organizing, training, and equipping of Iraqi  security forces would be transferred to a security assistance organization  under State’s authority.
A second factor has been the delay in acting on recommendations from a  2005 State assessment of U.S. efforts in Iraq. That assessment reported  that an integrated approach was essential for the success of U.S. efforts in  Iraq. The assessment noted that programs had been implemented in an  uncoordinated and sometimes overlapping fashion and that their efforts  had been fragmented, duplicative, and disorganized. In addition, this  implementation had taken place without a clear understanding of the  programs’ objectives or their contribution to the larger goal of transferring  responsibility for reconstruction to the Iraqi government, according to  USAID officials. Embassy documents and officials also stressed that the  success of the program required the Iraqi government to take ownership of  the capacity development effort. The assessment recommended a unified  effort among State, DOD, and USAID, with the latter ultimately providing  overall coordination and leadership.
In late 2005, the U.S. mission initiated the National Capacity Development  Program to address these concerns. However, instead of placing one  agency in charge, the program divided responsibilities for capacity  development among State, DOD, and USAID, with IRMO providing  coordination. In particular, responsibility for building the capacity of MOI  and MOD was given to the Multinational Security Transition Command- Iraq (MNSTC-I), which had previously taken action to advise and  strengthen the MOI and help rebuild the MOD from scratch after the  coalition disbanded it in 2003. Figure 2 illustrates the evolution of U.S.  efforts to develop the Iraqi government over four successive governments.
Since early 2007, the U.S. mission has made efforts to improve  coordination among State, USAID, and DOD, such as the creation of the  Joint Task Force on Capacity Development, the increased emphasis on  efforts to help stabilize Iraq in the New Way Forward Strategy, and the  creation of a joint State-DOD-USAID procurement action program to help  the Iraqi government better execute its budgets. Nonetheless, the lack of a  lead entity to provide direction and an overall plan contributes to the  following issues:    The agencies have developed separate sets of metrics. State, USAID, and  DOD participated in an effort in late 2005 to develop a common set of  metrics to measure the capacity of 10 key civilian and the 2 security  ministries. The agencies completed an initial draft assessment and,  according to USAID officials, planned to conduct a comprehensive survey  to regularly track progress. However, this effort was abandoned,  according to State and USAID officials, and State and DOD developed  their own metrics. In mid-2006, MNF-I began monthly assessments of the  capacity of the security ministries to perform nine key functions, such as  planning, logistics, and budgeting. IRMO completed a baseline assessment  of the key civilian ministries in August 2006, using a new, more detailed  ministry capacity assessment that gauges a similar list of nine core  functions, including the ministries’ ability to plan, budget, and stem  corruption. IRMO officials stated that they intended to update this  assessment quarterly to gauge Iraqi progress in developing this capacity.  However, State officials noted that questions about the usefulness of this  assessment delayed efforts to update it prior to the IRMO’s termination in  May 2007, and the embassy subsequently dropped plans to continue this  effort in July 2007.
The distinction between the efforts of USAID and IRMO became blurred.
IRMO began implementing short-term efforts to jump start capacity  development in 2006 using reallocated money from the fiscal year 2004  Iraq Relief and Reconstruction Fund (IRRF2) and the fiscal year 2006  emergency supplemental fund. In the meantime, USAID identified longer- term capacity development needs and beginning in 2007 helped the Iraqi  ministries devise a strategic plan to meet their capacity development  needs, according to a USAID official. Most of State’s short-term efforts did  not begin until the end of October 2006, after USAID began its capacity  development programs under its medium-term contract, because of delays  in the formation of the Iraqi government and in receiving fiscal year 2006  funding. Moreover, USAID officials stated that they began implementing a  number of short-term efforts earlier than originally planned to address  more immediate shortfalls in the Iraqi government’s capacity to plan and  execute ministry budgets.
section_title: U.S. Capacity Development Program Refocused and Reorganized in 2007
paragraphs: Since January 2007, the emphasis of U.S. capacity development efforts has  shifted in response to continued security problems and the reorganization  of the embassy’s reconstruction and assistance offices. The President’s  January 2007 strategic review called upon the United States and the  coalition to “refocus efforts to help the Iraqis build capacity in areas vital  to the success of the government” during the 2007 surge of additional U.S.  forces into Baghdad and Iraq. Moreover, according to embassy officials,  the new commander of MNF-I placed greater emphasis on ways to help the  Iraqi government immediately demonstrate that it can perform key  functions to help stabilize Iraq and deliver essential services. Finally, the  expiration of IRMO has diffused responsibility for conducting and  overseeing the capacity development program.
In early 2007, the U.S. mission refocused their capacity development  efforts as part of the surge strategy associated with the President’s New  Way Forward proposal. Rather than focusing on 12 civilian and security  ministries, IRMO and MNSTC-I began targeting vital functions requiring  more immediate improvement—such as budget execution, procurement  and contracting—at 6 ministries (MOI, MOD, Planning, Finance, Oil, and  Electricity), plus the Prime Minister’s office and the Council of Ministers’  Secretariat. Furthermore, USAID’s contracted trainers at the Iraqi  government’s NCCMD also attempted to address more immediate  government needs by directly training middle- and upper-level ministry  staff. In May 2007, the U.S. embassy established a procurement assistance  program at the Ministry of Planning to address pressing procurement  problems, assisted by a DOD-provided team of U.S. civilian procurement  and contracting officials and Iraqi contractors. By June 2007, the U.S.  embassy had identified efforts that could improve ministry performance  by September 2007.
The U.S. government’s efforts also have been affected by recent changes in  the leadership and organization of the U.S. mission in Iraq. In February,  the embassy created a new office of the Coordinator for Economic  Transition in Iraq (CETI) to work with the deputy prime minister and  other senior officials to improve budget execution and to coordinate U.S.  capacity development efforts to improve ministry performance  immediately. In addition, on May 8, 2007, the Iraq Transition Assistance  Office (ITAO) succeeded IRMO. According to an embassy official, many of  IRMO’s senior consultants now report directly to other embassy offices or  working groups, while ITAO coordinates senior consultants at four  ministries delivering essential services (Oil, Water, Electricity, and  Communications). This official also noted that ITAO is not expected to  manage any additional capacity development projects. In July, the U.S.  government appointed an ambassador to oversee the embassy’s economic  and assistance operations. This includes responsibility for supervising and  coordinating all U.S. short and medium-term capacity development  programs except for the training and security functions of MNSTC-I at the  Ministries of Defense and Interior, and the Rule of Law Coordinator’s  Office (which provides capacity development training for justice and law  enforcement functions). State noted that he now oversees USAID, ITAO,  and attachés from the Departments of Treasury, Energy, Agriculture,  Health, Commerce and the embassy’s economic section.
section_title: Low Capacity of Iraq Ministries and Other Challenges Pose Risks to the U.S. Ministry Capacity Development Program
paragraphs: U.S. efforts to develop Iraqi ministerial capacity face four key challenges  that pose a risk to their success and long-term sustainability. First, Iraqi  ministries have significant shortages of personnel who can formulate  budgets, procure goods and services, and perform other vital ministry  tasks. Second, Iraqi efforts to build a professional and nonpartisan civil  service are complicated by partisan influence over the leadership and  staffing of the ministries and infiltration by sectarian militias or political  parties hostile to the U.S. government. Third, although the Iraqi  government has taken measures to improve the capacity of its anti- corruption entities with U.S. assistance, pervasive corruption impedes the  effectiveness of U.S. efforts to develop ministry capacity. Fourth,  numerous U.S. and coalition officials stated that the security situation  remains a major obstacle to their efforts to help the Iraqis develop  capacity in areas vital to the government’s success.
subsections: section_title: Iraq Ministries’ Lack of Trained Personnel Hinders Capacity Development
paragraphs: Iraqi government institutions suffer from significant shortages of  competent personnel with the skills to perform the vital tasks necessary to  provide security and deliver essential services to the Iraqi people.  According to State, CPA, and other U.S. government reports and officials,  Iraq’s governing capacity has suffered from years of centralized control  that led to the decay of core functions, such as strategic and policy  planning, financial management, information technology, and human  resources management. In neglecting the civil service for almost 30 years,  the central government fostered poor management practices through  incompetent staffing and leadership. Moreover, in 2003, the CPA removed  Ba’athist party leaders from government and provided for the investigation  and removal of even junior party members from upper-level management  in government, universities, and hospitals.  As a result, most of Iraq’s  technocratic class was pushed out of government, according to the Iraq  Study Group report.  In 2005, a U.S. embassy document noted that the  ministries lacked skilled mid-level managers who could make decisions.
The dearth of skilled personnel complicated U.S. and international efforts  to engage Iraqis in capacity development efforts, according to a number of  State, DOD, USAID and international officials. On the other hand, the  coalition’s involvement in their budgeting and procurement processes may  have hindered the ministries’ capacity to improve their own procurement  and contracting systems and perform other vital services, according to  MNSTC-I and embassy officials. A September 2006 U.S. embassy  assessment noted that the government had significant human resource  shortfalls in most key civilian ministries. The majority of staff at all but  one of the ministries surveyed were inadequately trained for their  positions and a quarter of them relied heavily on foreign support to  compensate for their human and capital resource shortfalls. According to  a senior IRMO advisor, the Minister of Planning had only one of the three  deputies he needed and did not delegate authority or tasks because the  ministry lacked skilled staff. This lack of trained staff made it difficult for  coalition personnel to find ministry staff to work on capacity development.  For example, officials from USAID and its implementing partner for  capacity development stated that one of the key challenges to their  program’s success was the small pool of Iraqi government employees from  which to draw willing or qualified participants. Moreover, UN officials  stated that one key ministry had few staff available with whom to meet  when they visited. Furthermore, U.S. advisors in the defense ministry  stated that most Iraqi staff lacked basic computer and information  technology skills and often avoided making decisions by referring  problems to higher levels.
The lack of trained staff has particularly hindered the ability of the key  government ministries to develop and execute budgets. U.S. and  international officials noted that the lack of competent staff contributed to  poor budget execution rates among some of the key civilian ministries.  While a U.S. Treasury assessment reported that 8 of 12 key ministries had  spent more than half of their 2006 budgets by the end of December 2006,  the entire national government had executed just 17 percent of its  projected 2006 capital goods expenditures by the end of the year (see fig.  3).
U.S. and coalition officials noted that the inability of the Iraqi government  to execute its budget jeopardized the U.S. transition strategy and capacity  development objectives and prompted U.S. officials to bypass ineffective  Iraqi government procurement systems in order to procure equipment and  supplies more quickly. In December 2006, U.S. advisors began assisting the   Ministries of Defense and Interior in procuring needed equipment for their  security forces from the United States through the foreign military sales  (FMS) program.  While available data from the government of Iraq and  analysis from U.S. and coalition officials show that spending has increased  compared with spending in 2006, a September 2007 GAO report noted that  a large portion of Iraq’s $10 billion capital projects and reconstruction  budget in fiscal year 2007 will likely go unspent.
section_title: Iraqi Ministries Are Affected by Partisan Influence and Militia Infiltration
paragraphs: Iraq’s government confronts significant challenges in staffing a  professional and nonpartisan civil service and addressing militia  infiltration of key ministries.  Moreover, U.S. officials noted that affected  ministries are less responsive to U.S. government capacity development  efforts. A DOD report notes that many Iraqi ministry staff were selected  because of their partisan affiliation. We further reported in January 2007  that the Iraqi civil service remains hampered by staff whose political and  sectarian loyalties jeopardize the civilian ministries’ ability to provide  basic services and build credibility among Iraqi citizens, according to U.S.  government reports and international assessments. The DOD report  further stated that government ministries and budgets are sources of  power for political parties, staff ministry positions rewarded to party  cronies for political loyalty. According to U.S. officials, this use of  patronage can hinder capacity development because it leads to instability  in the civil service as many staff are replaced whenever the government  changes or a new minister is named. As of early August 2007, for example,  15 of the 37 Iraqi cabinet members had withdrawn from Prime Minister  Maliki’s government. Six Sadrist ministers announced their resignation as  a protest against the continued presence of coalition forces in April 2007,  and five of their seats remain vacant as of August 2007. In early August, six  Sunni ministers resigned and three additional ministers announced they  would boycott cabinet meetings.
Some Iraqi ministries under the authority of political parties hostile to U.S.  goals use their positions to pursue partisan agendas that conflict with the  goal of building a government that represents all ethnic groups. Moreover,  U.S. military advisors to one of the security ministries note that Iraqi  intelligence organizations are particularly hindered by infiltration because  their officials believe they cannot execute intelligence operations for fear  of betrayal by their colleagues. For instance, DOD reports that militia  influence affects every component of the Ministry of Interior. In particular  the Ministry has been infiltrated by members of the Supreme Islamic  Council of Iraq or its Badr Organization and Muqtada al-Sadr’s Mahdi  Army. The Mahdi Army often operates under the authority or approval of  Iraqi police to detain, torture, and kill Sunni civilians. Until late April 2007,  the Ministries of Agriculture, Health, Civil Society, Transportation,  Governorate Affairs, and Tourism were led by ministers loyal to al-Sadr,  who provided limited access to U.S. officials. U.S. embassy officials noted  that the effectiveness of U.S. programs is hampered by the presence of  unresponsive or anti-U.S. officials.
Several U.S. embassy officials noted that one of the key ministries targeted  by U.S. capacity development and budget execution efforts was  particularly unresponsive to U.S. efforts to reform and improve its  processes. For example, a USAID official stated that no staff from this  ministry had attended USAID-sponsored budgeting, procurement, and  other public management training at the National Training Center as of  February 2007. Furthermore, while a senior U.S. advisor noted his frequent  contacts with this minister, he is affiliated with the Supreme Council for  Islamic Revolution in Iraq and his level of cooperation with U.S. capacity  development efforts remains limited.
section_title: U.S. and Iraqi Efforts to Address Impact of Pervasive Government Corruption on Capacity Development Programs Yielding Mixed Results
paragraphs: According to a State document, widespread corruption undermines efforts  to develop the government’s capacity by robbing it of needed resources,  some of which are used to fund the insurgency; by eroding popular faith in  democratic institutions seen to be run by corrupt political elites; and by  spurring capital flight and reducing economic growth. In addition, an  IRMO document noted that corruption is affecting the ability of critical  ministries to deliver essential services. According to an IRMO assessment,  one-third of the civilian ministries surveyed had a problem with “ghost  employees” (i.e., nonexistent staff listed on the payroll).
In addition, the procedures to counter corruption adopted at all but one of  the civilian ministries surveyed were either assessed as only partly  effective or ineffective. Similar problems existed in the security ministries,  according to two 2007 DOD reports.
Efforts to help the Iraqi government develop the capacity of its  anticorruption entities have had mixed results. On the one hand, the  government has made progress in developing its three main anticorruption  bodies—the Commission for Public Integrity (CPI), the Board of Supreme  Audit (BSA), and the inspector generals assigned to each ministry.  According to U.S. officials, the government also has made progress  developing the courts necessary to investigate and prosecute government  corruption with the assistance of the U.S. government and its coalition and  international partners. Moreover, the Ministry of Finance approved  funding to increase the number of inspector general staff at the Ministry of  the Interior by 1,000 during 2007. The U.S. embassy also created the Office  of Accountability and Transparency (OAT) to help the Iraqis develop a  national anticorruption strategy, identify capacity development needs, and  combat money laundering. It also helped the government initiate its Joint  Anti-Corruption Council (JACC) in February 2007, which brings together  the primary anticorruption entities under the leadership of the Prime  Minister.
On the other hand, Iraq’s anticorruption entities face challenges. For  example, in October 2007, the head of Iraq’s Commission for Public  Integrity, testified that violence, intimidation, and personal attacks were a  main obstacle to the Commission’s work. He stated that 31 of his staff had  been assassinated since the establishment of the Commission and some of  the staff and their family members had been kidnapped or detained.   Another challenge is the existing legal structure. According to the Special  Inspector General for Iraq Reconstruction, Article 136(b) of Iraq’s Criminal  Code is a structured obstacle impeding Iraq’s anti-corruption efforts. This  provision allows any Iraqi minister to grant by fiat complete immunity  from prosecution to any ministry employee accused of wrongdoing.  The  Inspector General also stated that an order issued by the Prime Minister  this past spring requires Iraq law-enforcement authorities to obtain  permission from the Prime Minister’s Office before investigating current or  former ministers.
section_title: Violence and Sectarian Strife Impede and Undermine Capacity Development Efforts
paragraphs: Numerous U.S. and coalition officials stated that the security situation  remains a major obstacle to their efforts to help Iraqis develop capacity in  areas vital to the government’s success. The high level of violence hinders  U.S. advisor access to their counterparts in the ministries, directly affects  the ability of ministry employees to perform their work, and hinders the  effectiveness of U.S. capacity development programs, according to these  officials. State and USAID efforts are affected by the U.S. Embassy  security restrictions imposed on their movement. Embassy security rules  limit, and in some cases bar, U.S. civilian advisors from visiting the  ministries outside the Green Zone. For example, the senior IRMO finance  advisor noted that that his team has regular access to the Finance  Minister, who is located in the Green Zone. However, his team cannot visit  the Ministry of Finance outside the Green Zone and has limited contact  with ministry officials. Moreover, efforts to complete the installation of the  FMIS system stopped after a British BearingPoint contractor and his  security team were kidnapped from the Ministry of Finance in May 2007.  Nevertheless, according to a State cable, an embassy organizational and  staffing review concluded in late May 2007 that the embassy’s security  rules were overly restrictive for embassy staff to perform their work,  leading the ambassador to recommend the embassy adopt less restrictive  military security standards.
The security situation also complicates the capacity development efforts  of the MNSTC-I advisors to the security ministries. A U.S. MNSTC-I advisor  noted that the MOI headquarters is 20 minutes from the Green Zone and is  particularly unsafe because sectarian militias control different floors of  the building and differ in the degree to which they are hostile to the  coalition forces. As a result, U.S. advisors have to be accompanied by two  armed U.S. guards while visiting their Iraqi counterparts and must leave  certain offices and departments no later than 10 p.m. The MOD, which is in  the Green Zone, is a comparatively safe work environment for the  embedded DOD advisors.
International officials noted that about half of Iraqi government employees  are absent from work daily; at some ministries, those who do show up  only work between 2 to 3 hours a day for security reasons. U.S. and UN  officials stated that, while the Ministry of Planning has a relatively skilled  workforce, the security situation seriously hinders its ability to operate.  These officials noted that 20 director generals (department heads or other  senior officials) in the ministry have been kidnapped, murdered, or forced  to leave the ministry in the 6 months prior to February 2007. One  international official stated that violence is also affecting their effort to  build capacity in the university system from which the government draws  some of its expertise. She noted that about 360 university professors have  been killed since 2003.
The violence is also contributing to a brain drain within the Iraqi ministries  as staff join growing numbers of refugees and internally displaced persons.  According to a UN report, between March 2003 and June 2007, about 2.2  million Iraqis left the country and 2 million were internally displaced.  According to U.S. and international officials, the flow of refugees  exacerbates Iraqi ministry capacity shortfalls because those fleeing tend to  be disproportionately from the educated and professional classes, thereby  reducing the pool of qualified personnel from which the ministries can  recruit. For example, according to international officials, the Iraqi medical  association estimated that half of Iraq’s 34,000 registered doctors had left  the country by November 2006 and over 2,000 of the remainder had been  killed. Moreover, a November 2006 UN report stated that it was estimated  that at least 40 percent of Iraq’s professional class had left since 2003. The  exodus of employees from the ministries limits U.S. efforts to develop  ministry capacity. One Iraqi official complained that the skilled personnel  selected for international capacity development training were more prone  to leave government employment.
section_title: United States Is Beginning to Develop a Strategy for Capacity Development Efforts
paragraphs: The U.S. government is just beginning to develop an overall strategy for its  capacity development efforts. GAO’s previous analyses of U.S.  multiagency national strategies have found that an integrated strategy  should include a clear purpose, scope, and methodology; delineation of  U.S. roles, responsibilities, coordination, and integration; desired goals,  objectives, and activities; performance measures; and a description of  costs, resources needed, and risk. The three agencies leading capacity  development efforts in Iraq, particularly MNSTC-I, have developed some of  these elements for their individual programs at the ministries, but not as  part of a unified strategy for all U.S. efforts.
subsections: section_title: United States Has Yet to Create a Strategy for Capacity Development Efforts
paragraphs: U.S. officials reported in January 2007 that the conditions and challenges  facing U.S. capacity development efforts in Iraq have impeded a  structured, traditional approach to capacity development. This makes it  difficult to develop an overall strategy. Nonetheless, the need for an  overarching capacity development strategy is clear given that the  President has identified ministry capacity development as a key to the  success in Iraq, has called for greater integration of U.S. civilian and  military efforts to develop Iraqi government capacity, and has requested at  least $255 million in additional funding in fiscal year 2008 for these  efforts. Moreover, a January 2007 report by the Iraqi National Security  Council took steps to identify the critical efforts and coordination needed  at key civilian ministries to support the Ministries of Defense and  Interior. The report also indicated that Iraqi ministries depend on each  other and need to function as a unified government.
In February 2007, State Department officials provided GAO with a three- page, high-level outline proposing a U.S. strategy for strengthening Iraqi  ministerial capacity. This document was a summary with few details, and  State officials have not provided GAO with a timeline for completing this  overall strategy. A senior USAID official indicated that it is uncertain  whether the high-level summary will be developed into a strategy,  although the President has received $140 million in additional funding for  these efforts for fiscal year 2007.
The summary noted that the capacity development strategy would be  guided by the April 2006 Joint Campaign Plan issued by Embassy Baghdad  and the MNF-I. In addition, it stated that the U.S. government would assist  the Iraqi government in strengthening the ministries’ capacity to perform  core functions, such as developing sufficient long-term plans and policies,  proper legal and regulatory frameworks, transparent financial systems,  and effective technology. The summary also called for U.S. agencies to  coordinate efforts and approaches. Finally, it called for U.S. agencies to  plan these efforts in consultation with the Iraqi ministries and work with  the ministries to determine their needs and priorities.
section_title: U.S. Ministry Capacity Efforts Include Some Key Elements of an Overall Strategy
paragraphs: GAO has previously identified the desirable elements of a strategy: a clear  purpose, scope, and methodology; a delineation of U.S. roles,  responsibilities, and coordination with other donor nations and  international organizations, including the UN; desired goals, objectives,  and activities; performance measures; and a description of costs,  resources needed, and risk. U.S. agencies have developed some of these  elements in their programs for individual ministries but not as part of an  overall U.S. strategy. Table 3 summarizes and describes the key elements  of a strategy and provides examples of the status of the U.S. approach thus  far and cites practices by some agencies at individual ministries that could  be incorporated into an overall U.S. strategy.
Clear purpose, scope, and methodology. We found little evidence that the  U.S. government has clearly defined the purpose, scope, and methodology  for developing an overall strategy. Agencies have provided some limited  information on why an overall strategy is needed, what it will cover, and  how it will be developed. Although the high-level outline for the overall  capacity development strategy provided bullets about the purpose of U.S.  capacity development efforts, it did not define capacity development or  other key terms. Furthermore, it did not provide the context for such a  program, such as whether it drew upon lessons learned from previous  USAID, World Bank or other capacity development efforts. In terms of  scope, the high-level summary indicated that the strategy would guide U.S.  efforts to build capacity at the Prime Minister’s Office and the Iraqi  Ministries, but did not identify specific ministries or determine which  ministries were priorities or how those priorities had shifted in 2007. In  addition, in terms of methodology, U.S. officials indicated only that an  interagency task force would develop the strategy but not how they would  do so.
U.S. roles, responsibilities, and coordination. The multi-agency Joint  Task Force on Capacity Development (JTFCD), established in October  2006, has helped U.S. agencies better delineate roles and responsibilities  for ministry capacity development and to better coordinate efforts.  However, the high-level outline and other potential strategy documents we  reviewed do not address how overall efforts are to be integrated and  unified. The JTFCD began cataloguing all U.S. capacity development  efforts in late 2006. According to USAID officials, this effort helped inform  U.S. agencies of each other’s work and helped identify responsibilities.  The JTFCD has also helped coordinate efforts. For example, to avoid  potential overlap, during a February 2007 JTFCD meeting, USAID worked  out a way to allow officials from the security ministries to participate in  budget training courses that were previously limited to the civilian  ministries. However, the high-level outline and other planning documents  we identified do not specify how the Embassy, USAID, and MNSTC-I  capacity development efforts will be unified and integrated, such as how  MNSTC-I’s security cooperation office will be transitioned into an office  within the embassy. Nor do they discuss a potential lead agency to  continue overall capacity development efforts, as was proposed in 2005.    Moreover, other efforts to improve cooperation with the UN and other  international donor nations and organizations have encountered  difficulties. For example, the outline states that U.S. efforts are to be  coordinated with the Iraqi government and the international donor  community through the Capacity Development Working Group.  Chaired  by the Minister of Planning, this group was intended to secure Iraqi  government input and commitment to U.S., coalition, and other donor  partner capacity development objectives at the civilian ministries, but the  group did not meet for about a year after forming in late 2005 and has not  met since February 2007. Appendix III provides more information on the  UN, other donor partners, and international organizations that have  conducted efforts to build the capacity of the Iraqi government since 2003.
Desired goals, objectives and activities. U.S. agencies have clearly  identified the overall goals of capacity development at the Iraqi ministries,  but most U.S. efforts lack clear ties to Iraqi priorities for all ministries.  According to a February 2007 U.S. embassy briefing, the desired end-state  for capacity development efforts is clearly defined: to assist Iraq’s  transition to self-sufficiency by enabling the government to provide  security and rule of law, deliver essential services, and develop a market- driven economy through democratic processes. The U.S. embassy and  MNSTC-I have also identified overall goals for Iraqi ministry capacity  development, such as improving service delivery, improving  accountability, and reforming leadership and management skills.  Moreover, MNSTC-I has taken clear steps to incorporate Iraqi priorities for  its efforts at MOD. MOD’s national defense priorities are stated in the  Policy of the Ministry of Defense 2006-2011. This document, which was  approved and signed by the Minister of Defense, specifies MOD’s mission,  values, and priorities in areas such as finance, personnel, training, and  logistics. According to U.S. advisors and documents, the Ministries of  Health, Electricity and Municipalities and Public Works have also  demonstrated their commitment to U.S. objectives by developing capacity  development organizations within each ministry to identify their specific  needs and priorities.
However, not all U.S. capacity development efforts are as clearly linked to  Iraqi-identified needs and priorities, which may affect the sustainability of  key U.S. capacity development efforts once they are turned over to the  Iraqis. USAID’s capacity development plans were to help the Iraqis  develop and administer ministry self-assessments to identify Iraqi needs  and priorities. However, USAID officials stated in May 2007 that it was  unclear when implementation of this critical effort would begin. Moreover,  other efforts to secure greater Iraqi input beyond an ad hoc basis, such as  the Capacity Development Working Group, have not succeeded. A January  2007 SIGIR report found that ministry capacity efforts were being  conducted “based upon individual understandings reached between the  Iraqi ministers and U.S. agency officials,” raising questions about whether  the U.S. had obtained adequate input and commitment from the Iraqi  government.
Performance measures. U.S. agencies implementing capacity development  projects have not developed performance measures for all of their efforts,  particularly outcome-related performance measures that would allow  them to determine whether U.S. efforts at the civilian ministries have  achieved both U.S. and Iraqi desired goals and objectives. The U.S.  embassy did conduct a baseline assessment in August 2006 of the civilian  ministries to gauge their capacity to plan, prepare an operating budget,  and conduct key tasks rather than the progress or impact of ministry  capacity efforts. The assessment was completed by U.S. senior advisors  and included indicators such as whether a ministry had a strategic plan  and the percentage of budgeted funds disbursed in the previous year. U.S.  officials stated that an updated State assessment of the civilian ministries  was scheduled for completion at the end of June 2007, but the embassy  decided in July not to continue this effort, according to embassy officials.
In comparison, MNSTC-I is developing metrics to measure the progress  and impact of efforts at the security ministries. MNSTC-I began conducting  monthly assessments of MOD and MOI in mid-2006. However, in April  2007, MNSTC-I officials stated that the Commanding General decided to  retool the assessment in consultation with the Iraqi government to better  gauge the results of U.S. efforts. Officials stated that monthly assessments  are being conducted at the field level to determine whether the MOD and  MOI are ensuring Iraqi security forces units are sufficiently manned, have  required weapons, and are being paid. MNSTC-I officials stated that they  also recently began conducting quarterly assessments to determine what  tasks or processes at the ministries may need to be adjusted to achieve  results in the field. For example, the new assessment might determine  whether capacity development efforts help MOD recruit and retain enough  troops to maintain manning requirements. Officials were not able to share  the new assessments with us because they are still being developed.
Future costs, resource needs, and risk. The overall strategy should also  address costs, priorities, and resources needed to achieve the end-state  and how the strategy balances benefits, costs, and risks. Guidance on  costs and resources needed using a risk management approach would  assist Congress and implementing organizations to make resource  decisions. Although U.S. agencies have provided data on U.S. funding for  current capacity development efforts at the Iraqi civilian and security  ministries, agencies have not identified the costs and resources needed  beyond the budget requests for fiscal years 2007 and 2008. Moreover, they  have not determined how much funding overall is necessary to achieve the  stated long-term goal of a self-sufficient Iraqi government. Without these  cost data, neither U.S. agencies nor Congress can reliably determine the  cost of capacity development, which U.S. and international officials have  noted is a long-term process. In addition, agencies have not provided  information on how future resources will be targeted to achieve the  desired end-state or, given the challenging situation in Iraq, how  allocations balance benefits, costs, and efforts to address risks, such as  addressing the risks associated with the four challenges identified above.
section_title: Conclusions
paragraphs: U.S. programs to improve the capacity of Iraq’s ministries must address  significant challenges if they are to achieve their desired outcomes. U.S.  efforts lack an overall strategy: No lead agency provides overall direction,  and U.S. priorities have been subject to numerous changes. In addition,  U.S. efforts confront shortages of competent personnel at Iraqi ministries  and sectarian Iraqi ministries contending with pervasive corruption. The  risks are further compounded by the ongoing violence in Iraq as U.S.  civilian advisors have difficulties meeting with their Iraqi counterparts and  skilled Iraqi professionals leave the country. U.S. agencies have provided  $169 million to improve the capacity of Iraq’s ministries as of the end of  2006.  Congress appropriated $140 million more in May 2007 and the  Administration wants up to $255 million for fiscal year 2008.  We believe  that future U.S. investments must be conditioned on the development of a  unified U.S. strategy that clearly articulates agency roles and  responsibilities, delineates the total costs needed, addresses risks, and  establishes clear goals and measurements.
section_title: Recommendations for Executive Action
paragraphs: Given the risks U.S. agencies face in implementing capacity development  in Iraq and the funds being requested, GAO recommends that State, in  consultation with the Iraqi government, complete an overall integrated  strategy for U.S. capacity development efforts. Key components of an  overall capacity development strategy should include a clear purpose,  scope, and methodology; a clear delineation of U.S. roles, responsibilities,  and coordination, including the designation of a lead agency for capacity  development; desired goals, objectives, and activities, based on Iraqi- identified priorities; performance measures based on outcome metrics;  and a description of  how resources will be targeted to achieve the desired  end-state balancing benefits, costs, and both internal risks (such as  potential changes in cost, schedule, or objectives) and external risks (such  as an increase in violence or militia influence).
section_title: Matters for Congressional Consideration
paragraphs: Given the absence of an integrated capacity development strategy, it is  unclear how further appropriations of funding for ministry capacity  development programs will contribute to the success of overall U.S. efforts  in Iraq. Congress should consider conditioning future appropriations on  the completion of an overall integrated strategy incorporating the key  components identified above.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Departments of Defense and  State, and USAID. DOD did not provide comments. State provided written  comments, which are reprinted in appendix IV. State also provided  technical comments, which we incorporated where appropriate. USAID  noted that its comments were incorporated into State’s written response.
In commenting on a draft of this report, State commented that it  recognized the value of a unified strategy. However, it noted its concern  over our recommendation to condition future appropriations for capacity  development on the completion of a strategy. State also noted the recent  appointment of an ambassador to supervise all short- and medium-term  capacity development programs. Moreover, it stated that a strategy is only  one element in a complex process that needs to be tailored to the needs  and priorities of each Iraqi ministry or government organization.
We do not recommend stopping U.S. investment in capacity development;  the $140 million in supplemental funding appropriated in fiscal year 2007  remains available for the agencies to continue their efforts. Rather, we  recommend that Congress condition future funding on the development of  an overall integrated strategy. We acknowledge that State named an  ambassador to coordinate the embassy’s economic and assistance  operations, including supervising civilian capacity development programs.  However, this action occurred in August 2007, underscoring our point that  U.S. capacity development efforts have lacked overall leadership and  highlighting the need for an overall integrated strategy. Finally, our  recommendation does not preclude U.S. agencies from 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 assessed risks and vulnerabilities.
We are sending copies of this report to interested congressional  committees. We will also make copies available to others on request. In  addition, this report is available on GAO’s Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me at (202) 512-8979 or christoffj@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. Key contributors to this report are listed in appendix V.
section_title: Appendix I: Comments from the Department of State and USAID
paragraphs: The following are GAO’s comments on the Department of State’s letter  dated September 10, 2007, and USAID’s letter dated September 13, 2007.
subsections: section_title: GAO Comments
paragraphs: 1.  We do not recommend stopping U.S. funds investment in capacity  development. In fact, the President received an additional $140 million  for capacity development efforts in May 2007 from the fiscal year 2007  supplemental funds.  However, we recommend that Congress consider  conditioning the administration’s request for up to $255 million in  additional funds for fiscal year 2008 on the completion of an overall  integrated strategy incorporating the key components identified in the  report. Without these key components, Congress may lack the critical  information needed to weigh risks and judge U.S. costs, progress, and  results of the current capacity development programs.    2.  We changed our draft report to acknowledge this July 2007 change in  the U.S. Embassy Baghdad’s organizational arrangements for the  conduct of capacity development programs.  However, this initiative is  relatively new; it is too soon to evaluate whether this action has helped  address coordination and leadership. This recent action underscores  our point that U.S. capacity development efforts have lacked overall  leadership and highlights the need for an overall integrated strategy.   This is particularly so since capacity development efforts for rule of  law and the security ministries are under separate leadership.    3.  Our recommendation does not preclude U.S. agencies from 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 assessed risks and  vulnerabilities.  4.  We did not discuss project-level capacity development efforts at length  as the focus of this engagement was on the ministry-level efforts  deemed critical by State; however, we did note the substantial  contributions made at the project level by the U.S. Army Corps of  Engineers’ Gulf Region Division.  5.  This report notes that various U.S. agencies pursued separate ministry- level capacity development efforts at various Iraqi ministries between  2004 and 2005 without the benefit of an overall strategy.  We also note  in this report that the U.S. embassy itself advocated in 2005 that an  integrated strategy be adopted with a lead agency in charge, using as a  justification its finding that capacity development efforts up to that  time had been implemented in an uncoordinated and sometimes  overlapping fashion and that its efforts had been fragmented,  duplicative, and disorganized.  6.  We note the comparative success MNSTC-I has achieved with its  relatively intensive efforts at the security ministries. For example, we  note that a senior MNSTC-I advisor worked with MOD staff to develop  its counterinsurgency strategy.  We also note in table 3 and elsewhere  MNSTC-I’s comparative success in developing some aspects of a  unified, integrated strategy.    7.  We have acknowledged the importance of addressing the  shortcomings in Iraqi budget execution and procurement procedures  in this and previous reports and testimonies. For example, our  September 2007 report on whether Iraq had met 18 key benchmarks  stated that the government of Iraq has had difficulty spending its  resources on capital projects and that some of the reported  improvements in budget execution stem from funding releases to the  provinces. Our September 2007 report also noted that a “commitment”  in Iraq is similar to an obligation under the U.S. budget process. These  commitments are not expenditures and may not be reliable indicators  of future spending by ministries and provinces. Moreover, the  government of Iraq’s official expenditure data, as reported by the  Ministry of Finance, does not include commitments or obligations.  Finally, the report notes that it is unclear whether government funds  committed to contracts are a reliable indicator of actual spending.  8.  We contend that budget execution rates may not be one of the best  measures of effective capacity development. Our September 2007  report noted that, given the capacity and security challenges currently  facing Iraq, many contracts that have government funds committed to  them may not be executed and thus would not result in actual  expenditures. Moreover, until more complete data on actual capital  project expenditures become available, it may be premature to  conclude that U.S. efforts to improve budget execution have had a  “highly significant impact” on ministry capacity. We are currently  conducting a review of U.S. efforts to help Iraq spend its budget and  will issue a report at a later date.    9.  This report acknowledges the contributions of the JTFCD to  coordinating and cataloging all U.S. capacity development efforts in  late 2006.  However, the draft planning documents we identified do not  specify how the JTFCD or other coordination groups will integrate  Embassy, USAID, and MNSTC-I capacity development efforts.   Further, we noted in the report that the Capacity Development  Working Group, chaired by the Minister of Planning, was intended to  secure Iraqi government input and commitment to U.S. and coalition  capacity development objectives at the civilian ministries.  However,  the group did not meet for about a year after forming in late 2005 and  has not met since February 2007.  The Ministerial Engagement Teams  are a coordinating arrangement introduced in mid-2007; it is too soon  to evaluate their activities or results.  10. This report does not view short-term activities as a negative outcome.
We do note that IRMO originally justified conducting short-term efforts  in an attempt to jump-start capacity development in 2006 using more  readily available funding.  These programs would complement and  support a follow-on USAID effort to conduct longer-term capacity  development programs.  Most of State’s short-term efforts did not  begin until after USAID began its capacity development programs  under its medium-term contract because of delays in the formation of  the Iraqi government and in receiving fiscal year 2006 funding.  Moreover, USAID officials stated that they began implementing a  number of short-term efforts earlier than originally planned to address  more immediate shortfalls in the Iraqi government’s capacity to plan  and execute ministry budgets.  11. We addressed these elements as they were among the core ministry  functions identified as common to all the key ministries.  GAO  reviewed how these common functions were defined and what metrics  were used by State and DOD to track these elements in their  assessments of the status of key ministries’ capacity development.  We  also noted the existence of the scholarship program as an example of a  USAID capacity development program in table 2 but did not otherwise  discuss it.
section_title: Appendix II: Scope and Methodology
paragraphs: In this report, we (1) assess the nature and extent of U.S. efforts to  develop the capacity of the Iraqi ministries, (2) assess the key challenges  to these efforts, and (3) assess the extent to which the U.S. government  has an overall strategy for these efforts that incorporates key elements.  For the purposes of this review, which we undertook under the  Comptroller General’s authority to conduct reviews on his own initiative,  we focused on key U.S. capacity development efforts initiated or ongoing  in fiscal years 2006-2007, primarily those efforts begun after the start of the  National Capacity Development Program in late 2005, the U.S. Mission  Baghdad’s attempt to focus and better coordinate U.S. efforts.
To describe these programs, we reviewed U.S. government documents  including the Department of State’s (State) quarterly section 2207 reports  to Congress from October 2004 to April 2007 on the use of Iraq Relief and  Reconstruction Funds; State’s quarterly section 1227 reports to Congress  from April 2006 to April 2007 on current military, diplomatic, political, and  economic measures undertaken to complete the mission in Iraq; the U.S.  Agency for International Development (USAID) contract awarded in July  2006 to Management Systems International, Inc., Building Recovery and  Reform through Democratic Governance National Capacity Development  Program; reports on USAID’s implementation of the Iraqi Financial  Management Information System under the Economic Governance Project  II; the U.S. Embassy-Baghdad Joint Task Force for Capacity  Development’s catalogue of U.S. capacity development efforts fromApril  2007; the Department of Defense’s (DOD) quarterly reports to Congress,  Measuring Security and Stability and Iraq, from July 2005 to June 2007;  and Multi-National Security Transition Command-Iraq’s 2007 Campaign  Action Plan. We reviewed the results of the Iraq Reconstruction  Management Office’s (IRMO) September 2006 Ministerial Capacity Metrics  Assessment and deemed the results sufficiently reliable to provide a broad  indication of the strengths and weaknesses of the ministries surveyed. We  found the procedures followed by IRMO in creating the assessment,  compiling the results, and assessing data reliability to be reasonable.  However, the data had significant limitations. For example, a number of  subquestions were not answered for all ministries. We also examined the  federal government’s fiscal years 2006, 2007, and 2008 regular and  supplemental budget requests for State, USAID, DOD for capacity  development efforts for the Iraqi government. Moreover, we reviewed  previous GAO reports and reviews and periodic reporting from the Office  of the Special Inspector General for Iraq Reconstruction (SIGIR),  including its January 2007 report Status of Ministerial Capacity  Development in Iraq. We also interviewed key U.S. government officials  from State, USAID, DOD, and relevant contractor officials in Washington,  D.C.; Iraq; and Jordan. We conducted interviews over the telephone and  made site visits to Iraq and Jordan in February 2007.
To assess key challenges to U.S. capacity development efforts, we  reviewed and analyzed the documents mentioned above and other relevant  plans, reports, and data from the Iraqi government. We designated the  identified challenges as key, based on evidence presented in previous GAO  reports, the frequency they were cited by U.S. officials and documents,  and the importance they accorded their impact on U.S. capacity  development objectives. We interviewed U.S. government officials from  the Departments of State, Defense, Treasury, Justice and the Agency for  International Development in Washington D.C., Iraq, and Jordan; and the  Multinational Forces-Iraq (MNF-I); and other donors, including officials  from the United Nations and its associated relief and development  agencies, the World Bank, the European Union, the United Kingdom’s  Department for International Development (DFID), and the Canadian  International Development Agency.
We also analyzed data on Iraq’s 2006 and 2007 budgets and 2006 budget  execution through December 2006, which were provided to us by the U.S.  Treasury from Iraq’s Ministry of Finance, and found that these data were  sufficiently reliable for our purposes. We also interviewed relevant U.S.  government officials or contractor officials working with BearingPoint;  Management Systems International, Incorporated (MSI); and Military  Professional Resources, Incorporated (MPRI).
Finally, to examine the extent to which the U.S. government has an overall  strategy for these efforts that incorporate key elements, we reviewed and  analyzed, in addition to the abovementioned documents, the July 2007  Joint Campaign Plan issued by Embassy Baghdad and the Multinational  Force-Iraq (MNF-I); the Multi-National Security Transition Command- Iraq  2007 Campaign Action Plan; the November 2005 National Strategy for  Victory in Iraq; the President’s February 2007 New Way Forward strategy  for Iraq; Iraqi government’s National Development Strategies for 2005-2007  and for 2007-2010; State’s February 2007 strawman (a three page, high- level summary) for a U.S. government strategy to strengthen Iraqi  ministerial capacity; and the September 2006 U.S. Embassy-Baghdad  assessment of the capacity of key Iraqi civilian ministries to perform core  functions. We interviewed key U.S. officials from State, USAID, DOD, and  other relevant agencies. We reviewed previous GAO reports that identified  the desirable characteristics of a national strategy, including Combating  Terrorism: Evaluation of Selected Characteristics in National Strategies  Related to Terrorism, Rebuilding Iraq: More Comprehensive National  Strategy Needed to Help Achieve U.S. Goals, Rebuilding Iraq: More  Comprehensive National Strategy Needed to Help Achieve U.S. Goals and  Overcome Challenges, Intellectual Property: Initial Observations on the  STOP Initiative and U.S. Border Efforts to Reduce Piracy, and GAO,  Intellectual Property, Strategy for Targeting Organized Piracy (STOP)  Requires Changes for Long-term Success. We analyzed the information we  obtained on U.S. capacity development efforts to identify components of  an overall strategy that the three agencies leading these efforts—State,  USAID, and MNSTC-I—have developed to date.
We conducted our work from August 2006 through August 2007 in  accordance with generally accepted government auditing standards.
section_title: Appendix III: State-Led Capacity Development Programs as of May 2007a
subsections: section_title: Supply and install news media equipment in the prime minister press center
paragraphs: Increase the ability of the Iraqi Government  Ministries and Prime Minister’s Office to  conduct business between each other on an  immediate basis.
Help PMO staff develop the capacity to  initiate research, coordinate new legislative  initiatives, and to track legislation.
Provide specialists to help develop and  implement appropriate policies, strengthen  core public administration functions, and  create training systems to improve delivery of  services.
Support efforts to reform and improve the  investment climate and tax policies, develop  a national anticorruption strategy, and  promote citizen participation in government.
To provide approximately 200 training  modules to each of the 10 key ministries.
Establish office in Ministry of Planning to  facilitate budget procurement across all Iraqi  ministries.
Help Ministry of Planning implement capital  budget and reform procurement in  coordination with the international community  and subject matter experts.
Help Iraqi ministries execute budgets and  provide metrics for leadership.
Enable Ministry of Finance staff to perform  better by strategic budget development,  organizational modernization, regulation  development, and future sector privatization.
Provide 10 SMEs to help the ministry  develop policies, especially for budget  execution.
Enable the Ministries of Finance, Planning,  and other ministries’ staffs to perform core  ministerial functions and tasks better through  strategic budget development, future year  budgeting, modernization, and development  of regional automation, and regional fiscal  accounting commonalities.
Produce Sector Master Plans for the  ministries to better focus resources on  medium-to-long-term production, sustain  outputs, and meet the goals necessary to  deliver essential services to the public.
Develop the ministry’s capacity to provide  advice and technical support for draft  legislation that promotes individual freedoms,  human rights, and the rule of law within the  context of the Iraqi constitution.
Provide software to increase CPI capability to  organize and cross-reference investigative  data, making working practices more efficient  and anti-corruption investigations more  effective.
Develop a tool for the BSA and each of the  29 ministerial Inspector Generals to assess  core needs.
May ’07 to  May ’08  sector strategic planning.
Provide specific training on international and  domestic water laws and policies to ministry  employees responsible for formulating,  negotiating, interpreting, or applying water  laws and policies.
Provide training in essential skills, such as  strategic and contingency planning;  contracting management; and human  resource management.
Increase the organizational, accountability,  inventory management, and technology  capacities of Kimadia, (a state company for  marketing medical appliances and equipment  in Iraq).
Install a computer network within the ministry  to help it manage educational activities,  improve accountability, and capture and  report educational data.
Provide nine staff with a mixture of skills to  assist a variety of national-level programs,  including:  establishing guidelines for transport sector  development;  addressing information technology standards  requirements;   national identity card requirements; and  mentor program for management staff in  order to build sustainable Iraqi expertise.
Includes only programs contracted, under way, or completed as of April 2007.   provided $1.5 million in-kind assistance.
section_title: Appendix IV: Other Donor Partner Capacity Development Efforts
paragraphs: The United Nations, the European Union, the United Kingdom, and the  Canadian government also have conducted efforts to develop the capacity  of the Iraqi government since 2003.
The United Nations Assistance Mission for Iraq coordinates and oversees  projects with capacity development components implemented by over a  dozen UN agencies in Iraq. Most of these projects are funded through the  International Reconstruction Fund Facility for Iraq (IRFFI)/United Nations  Development Group Iraq Trust Fund (ITF). One effort implemented by the  UN Development Program (UNDP) governance program provided basic  management skills training for Ministry of Municipalities and Public Works  employees at a cost of $3 million in February 2007. The UN International  Organization for Migration in Iraq began implementing the Capacity  Building in Migration Management Project in August 2004 with support of  the Australian government. This ongoing project includes helping the  Ministry of Interior establish a training center for immigration officers,  with an information technology lab and a library with resource materials.
The European Union (EU) provided about 16 million euro through the  IRFFI/ World Bank ITF from 2003 to 2005 for two World Bank capacity- development projects. These two projects included efforts to train Iraqi  staff at 19 ministries in topics such as policy reform, World Bank  procurement policies, and basic training in MS Excel. The EU also  provided about 42 million euro through the IRFFI/UN ITF from 2003 to  2006 for governance and civil society projects, including efforts to train  Iraqi government officials in reconstruction management.
The United Kingdom’s Department for International Development (DFID)  has conducted capacity development efforts including a $23 million  project that began in 2005 to provide consultants for the Ministry of  Interior to provide training and assistance for MOI staff in such areas as  procurement and legal and regulatory frameworks. Another $25 million  effort that began in 2005 aims to provide technical and policy advice for  the Ministry of Finance in areas such as subsidy reform and budget and  expenditure management. DFID has coordinated its efforts with U.S.  efforts by participating in meetings of the U.S. Joint Task Force for  Capacity Development.
The Canadian government has funded about $14 million worth of ministry  capacity efforts for implementation from 2005-2008, including human and  minority rights training for Ministry of Human Rights employees and  assistance for a marshland restoration project with the Ministry of the  Environment, the Ministry of Water Resources, and an Iraqi university.
As of February 2007, trainers from 11 nations, including Iraq, provided  basic instruction and more advanced administrative courses to develop  the capacity of the Iraqi police at the Jordan International Police Training  Center. Between October 2003 and February 2007, 50,300 Iraqi police  graduated from the center, according to the training center director.  Nations contributing instructors included Australia, Austria, Belgium,  Canada, Croatia, Finland, Jordan, Slovenia, the United Kingdom, and the  United States.
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition, Tetsuo Miyabara, Assistant Director; Daniel Cain; Lynn  Cothern; Martin De Alteriis; Etana Finkler; Elisabeth Helmer; B. Patrick  Hickey; Bruce Kutnick; and Mary Moutsos made key contributions to this  report.