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) 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. 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 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. 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. 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. 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. 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. 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. In contrast, in the few instances in which the government negotiated the terms before starting work, the portion of questioned costs removed from the proposal 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. 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. 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. 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. 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. In July 2007, we reported that DOD could not fully account for Iraqi security forces’ receipt of U.S.-provided equipment. Three factors contributed to this lapse in accountability. First, DOD had not specified which DOD equipment accountability procedures, if any, applied to the train-and-equip program for Iraq.