DTIC ADA520205: Special Inspector General for Iraq Reconstruction Quarterly Report and Semiannual Report to the United States Congress

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Quarterly Report
and
Semiannual Report
to the
United States Congress

[ ]
January 30, 2010
(Public Law 108-106, as amended, and Public Law 95-452)
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30 JAN 2010 2. REPORT TYPE 00-00-2010 to 00-00-2010
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Special Inspector General for Iraq Reconstruction Quarterly Report and
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Semiannual Report to the United States Congress
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This 24th Quarterly Report from the Special Inspector General for Iraq Reconstruction analyzes the latest
events in Iraq as the U.S. relief and reconstruction effort continues to transform itself into a more regularized
foreign assistance mission. Within the context of this transformation, two events of historic importance will
occur over the next seven months, which will fundamentally affect the U.S. program:
• In March, Iraq will conduct its first parliamentary elections since 2005, pitting Prime Minister al-Maliki’s coalition
against a broad array of contenders and marking the first time Iraq’s fledgling democracy has had an incumbent
government face the voters’ judgment at the ballot box.
• By the end of August, 60,000 U.S. combat forces will withdraw from Iraq, reducing the U.S. troop levels to about
50,000 soldiers. Before these remaining troops leave at the end of 2011, they will continue training and advising
the Iraqi Security Forces.
The most notable event from the past quarter—and perhaps the most notable economic event in modern Iraqi
history—was the December 11–12, 2009, round of bidding for new oil service contracts. The Ministry of Oil
accepted bids on seven oil fields in Iraq, including one from a Russo-Norwegian consortium for the largest
field and one from Royal Dutch Shell and Malaysia’s national oil company for the second-largest field. The bid-
ding process appeared to be transparent and fair, and its results hold great promise for Iraq’s economic future.
But, to succeed, the winning bidders must overcome Iraq’s aging infrastructure, rampant corruption, and
fragile security.
In November 2009, I visited Iraq for the 25th time and met with several high-ranking GOI officials, including
the Chief Justice of Iraq’s Higher Judicial Council, the Minister of Justice, the Minister of Finance, the President
of the Board of Supreme Audit, and the Commissioner of Integrity. Some common themes emerged from
these diverse meetings: the endemic presence of public corruption, the challenge of conducting free and fair
elections followed by a rapid and peaceful transition, and the need to diversify Iraq’s economy. I also met with
U.S. military and civilian leaders, including General Raymond Odierno and Ambassador Christopher Hill.
The themes on the U.S. side are transition, transformation, and withdrawal. In mid-February, I will travel again
to Iraq to consult with U.S. and GOI leadership and to support SIGIR’s continuing oversight efforts.
This quarter, SIGIR published five audits and five inspections, including what was certainly one of SIGIR’s
most significant audits to date: the follow-up review of the Department of State’s oversight of DynCorp
International’s contract for police training. This audit identified more than $2.5 billion in taxpayer funds
that are vulnerable to waste and fraud because of weak contract oversight. SIGIR’s finding is particularly sa-
lient given that management of the police training program will be transitioned to the Department of State
in 2011. I am also pleased to report that the SIGIR Audits Directorate passed its mandated peer review this
quarter with the highest grade possible.
SIGIR’s auditors continue to cooperate closely with SIGIR’s investigators in our ongoing forensic audit initia-
tive. This congressionally mandated program is reviewing every available transaction in the expenditure of all
U.S. reconstruction funds. To date, SIGIR has analyzed more than 73,000 transactions and flagged, for further
review, questionable transactions worth more than $340 million. Work performed by SIGIR’s forensic auditors
has led to the opening of 27 criminal investigations.
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Finally, on February 5, 2010, SIGIR will publish its fifth Lessons Learned report: Applying Iraq’s Hard Lessons
to the Reform of Stabilization and Reconstruction Operations. The report will suggest an innovative solution
to the U.S. government’s management of stability and reconstruction operations (SROs), recommending
the creation of a single agency responsible for planning and conducting them—the United States Office for
Contingency Operations.
I remain grateful to the Departments of State and Defense for their continuing support of SIGIR’s significant
in-country presence in Iraq. And I commend our contingent of 35 SIGIR auditors, inspectors, and investiga-
tors working in Iraq for their commitment and bravery in carrying out what has been the toughest oversight
mission in U.S. history.
Respectfully submitted this 30th Day of January 2010,
Stuart W. Bowen, Jr.
Special Inspector General for Iraq Reconstruction
SIGIR SUMMARTYA OBFL EP EORFF COORNMTAENNTCSE
SIGIR Summary of Performance
As of January 30, 2010
Audits
Reports Issued 160
Recommendations Issued 399
Dollars Saved and Recovered ($ millions) $81.79
Dollars Put to Better Use ($ millions) $229.72
Challenged Payments ($ millions) $14.74
Inspections
Project Assessments Issued 164
Limited On-site Assessments Issued 96
Aerial Assessments 846
Investigations
Investigations Initiated 474
Investigations Closed or Referred 361
Open Investigations 113
Arrests 26
Indictments 33
Convictions 25
Court-ordered Restitution/Forfeiture $53,759,470
Hotline Contacts, as of December 31, 2009
Fax 18
Telephone 78
Walk-in 112
E-mail 372
Referrals 26
Mail 28
SIGIR Website 146
Total Hotline Contacts 780
Non-Audit Products
Congressional Testimony 27
Lessons Learned Reports Issued 4

TABLE OF CONTENTS
Section 1 Section 4
SIGIR Observations 1 SIGIR Oversight 83
Iraq 2010: A Year of Decision and Departure 2 Collaborative Forensic Audits/Investigations Initiative 84
Reforming Overseas Stabilization SIGIR Audits 86
2
and Reconstruction Operations
SIGIR Inspections 97
U.S. Reconstruction Funding and Footprint 3
SIGIR Investigations 109
Security 3
SIGIR Hotline 120
Governance 7
SIGIR Website 121
Energy Developments 8
Legislative Update 122
Economy 10
Anticorruption 11 Section 5
International Developments 11
Other Agency Oversight 125
SIGIR Oversight 12
Introduction 126
Human Toll 15
Other Agency Audits 127
Section 2 Other Agency Investigations 132
Iraq Reconstruction Funding Sources and
17 Endnotes 134
Program Management
Acronyms and Definitions 144
Reconstruction Funding Sources 18
Reconstruction Management in Transition 30
Section 3
Reconstruction Funding Uses and Outcomes 37
Overview of Funding Uses 38
Security 40
Infrastructure 50
Governance 64
Economy 75
*The complete version of this SIGIR Quarterly Report is available
on the SIGIR website: www.SIGIR.mil. It is the official version of
the Report, containing all appendices and corrections.
TABLE OF CONTENTS
Appendices
The appendices for this Quarterly Report are not included in the print version of the publication.
They are published on the SIGIR website at www.sigir.mil.
Appendix A cross-references the pages of this Report to SIGIR’s statutory reporting requirements
under Section 3001 of P.L. 108-106, as amended.
Appendix B cross-references budget terms associated with the Iraq Relief and Reconstruction Fund
(IRRF), Iraq Security Forces Fund (ISFF), Economic Support Fund (ESF), Commander’s Emergency
Response Program (CERP), and international support for Iraq reconstruction.
Appendix C cross-references projects and programs of various U.S. government agencies within
SIGIR-defined sectors.
Appendix D reports on international contributions to the Iraq reconstruction effort.
Appendix E contains a list of SIGIR’s completed inspections of Iraq reconstruction activities.
Appendix F contains a comprehensive list of suspensions and debarments related to Iraq
reconstruction contracts or Army support contracts in Iraq and Kuwait.
Appendix G provides summaries of completed and ongoing audits and reviews of Iraq reconstruction
programs and activities, released by other U.S. government agencies.
Appendix H contains a list of completed audits, reports, and testimonies on Iraq reconstruction
activities released by SIGIR and other U.S. government audit agencies.
SIGIR

OBSERVATIONS
Iraq 2010: A Year of Decision and Departure 2
Reforming Overseas Stabilization and 2
Reconstruction Operations
U.S. Reconstruction Funding and Footprint 3
Security 3
Governance 7
Energy Developments 8
1
Economy 10
section
Anticorruption 11
International Developments 11
SIGIR Oversight 12
Human Toll 15