SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION-

Congress created SIGIR to provide independent oversight of U.S. funds used

for the reconstruction of Iraq by:
• promoting economy, efficiency, and effectiveness in the administration
Ultimately, the sustained recovery of Iraq can be accomplished only by of programs and operations
• preventing and detecting waste, fraud, and abuse in such programs and
Iraqis—soldiers, police, ministry leadership, regional officials, and the people operations
themselves—with the continuing help of the international community. • keeping the Secretary of State, Secretary of Defense, Congress, and American
taxpayers informed about problems, deficiencies, and recommendations for
corrective action relating to the administration of programs and operations

Stuart W. Bowen, Jr., was appointed Inspector General in January 2004. This past November,
HOW the Iraq Relief and Reconstruction Fund WAS SPENT IN EACH SECTOR the IG returned from his fourteenth trip to Iraq to review progress on the reconstruction effort.

Security and Justice: The allocation for this sector Transportation and Communication: Approximately
was increased to $6.31 billion from $4.56 billion. The
shift resulted in more funding for Iraqi police and
$800 million was allocated to transportation and communi-
cation. Transportation was the first sector to move to direct
THE YEAR OF
Army training. contracting, engaging more Iraqi contractors. TRANSITION IN REVIEW
Electricity: The original allocation in the electricity Health Care: Approximately $820 million was allocated Last January, SIGIR identified
sector was $5.56 billion but was reduced to $4.24 billion. to this sector to build or refurbish hospitals and primary
2006 as the year of transition,
This was the largest original allocation to any sector. The healthcare centers (PHCs). Construction of the PHCs was
sector’s goal was to improve Iraq’s capacity to generate hindered by inadequate management and weak oversight. highlighting many challenges to
power; however, generating capacity is still below pre-war effective turnover of projects and
levels. THE WAY AHEAD programs to Iraqi control. SIGIR
Water: The original allocation in this sector was $4.33 In moving forward, SIGIR has identified these areas upon
billion; however, funding shifts reduced the money available which future economic support should focus:
observed limited progress on
to this sector by approximately 50%, to $2.13 billion. • building the capacity of the Government of Iraq, these issues during 2006:
Oil and Gas: The final allocation in this sector was $1.72 especially in budget execution • supporting anticorruption efforts
billion and was invested in oil infrastructure repairs and the • supporting the rule of law by strengthening programs in • enhancing infrastructure security
purchase of petroleum products. the security and justice sector • building ministerial capacity
Economic and Societal Development: After the • stimulating the development of Iraq’s private sector • ensuring the sustainability of
transition to the Iraqi Interim Government in 2004, this • supporting the continuing improvement of coordination reconstruction programs and projects
sector received additional funding for democracy programs of and cooperation among all of the agencies involved in • increasing support for reconstruction by
and private-sector development. Total funding reached Iraq reconstruction the international community
$2.21 billion. • improving coordination of all U.S.
agencies involved in reconstruction
NOTABLE SIGIR ACTIVITIES THIS QUARTER
In 2007, transition to Iraqi control will
AUDITS: This quarter, SIGIR completed 8 audits that addressed a wide range of issues, including a review of a Department accelerate. Success, however, hinges on the Access to modern sewer facilities remains a problem for many Iraqi families.
of State task order for Iraqi police training, an update on the PHC project, and a review of government property manage- effective resolution of each of these issues.
ment controls by the U.S. Agency for International Development and its contractor, Bechtel National, Inc. All audit prod- The first $2.47 billion comprised IRRF 1 and was aimed at
ucts are summarized in section 3 of this Report. The End of THE IRRF meeting the needs of an expected humanitarian crisis. Iraqi
By the end of October 2006, all of oil revenues were expected to fund
INSPECTIONS: SIGIR inspectors completed 15 project assessments this quarter, bringing the total number of project the Iraq Relief and Reconstruction Sector Shares of IRRF 2 Funds much of the infrastructure reconstruc-
assessments completed to 80. To date, SIGIR has completed 96 limited on-site inspections and 266 aerial assessments. Most Fund (IRRF) had been obligated. As of
% of $18.44 Billion
tion. Later in 2003, with the advent of
Source: IRMO Weekly Status Report (1/2/2007)
IRRF projects that SIGIR visited this quarter met contractual specifications. However, SIGIR found some projects with December 31, 2006, approximately 80% 4% Transportation & the Coalition Provisional Authority
deficiencies in construction, design, and sustainability. For summaries of the 15 project assessments completed this quarter, had been expended. Over the course of
Communications
$.80 (CPA), an additional $18.44 billion was
see section 3 of this Report. the U.S.-led reconstruction program, 4% Health Care 1% Reconstruction
appropriated to bolster Iraq’s infra-
$.82 Management
$.21
INVESTIGATIONS: Currently, SIGIR has 78 open investigations, including 23 cases awaiting action at DoJ. SIGIR continues the allocation of IRRF dollars evolved Oil & Gas
structure. From late-2003 to mid-2004,
to vigorously pursue fraud and abuse, contributing 9 cases to the International Contract Corruption Task Force this quar- substantially. $1.72
9%
Security CPA began to execute a large-scale
& Justice
ter. SIGIR also participates on several subcommittees of the U.S. Department of Justice (DoJ) National Procurement Fraud Water 12%
34% $6.31 infrastructure reconstruction program.
Task Force. SIGIR works closely with a range of agencies to suspend and debar contractors for fraud or corruption. To date, THE CHANGING FOCUS OF IRRF $2.13 However, between mid-June 2004 and
14 individuals and companies have been suspended, and 8 have been debarred. In 2003, Congress appropriated more 12% 23% the present, funds were shifted into
Economic &
than $21 billion to the IRRF to sup- Societal security and democracy programs.
Development Electricity
port relief and reconstruction in Iraq. $2.21 $4.24
TO OBTAIN A FULL REPORT
Note: Percentages do not add up to 100% due to rounding.
visit the SIGIR Website www.sigir.mil • email PublicAffairs@sigir.mil call (703) 428-1100
 www.sigir.mil
SP ECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION email: PublicAffairs@sigir.mil
SIG IR (703) 428-1100

Iraq Reconstruction Timeline

2002 2 00 3 2 00 4 2005 2006 2007 JANUARY 2007
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan QUARTERLY REPORT

PRE-WAR
PLANNING ORHA C PA U.S. MISSION/IRMO

Funding
4/16 5/22 10/23-24 11/6 3/2004 9/2004 12/2004 3/2005 11/1 10/4

DFI IRRF 2 Large-scale Major 80% of IRRF 2 Obligated 12/31

Created under Established under Design-build Reprogramming 50% of IRRF 2 Expended 79% of IRRF 2 Expended
UN Res. 1483 P.L. 108-106 $18.44B Contracts Awarded Major of IRRF 2
GRD-PCO Announces Final Remaining
IRRF 1 Madrid Reprogramming Projects Apportioned to DoD Have Started
Established under Donor of IRRF 2
Major
P.L. 108-11 $2.4B Conference Reprogramming 9/30 100% of IRRF 2 Obligated
of IRRF 2 74% of IRRF 2 Expended
Organizational
1/20 3/16 4/16 6/15 8/2003 1/25 5/11 6/28 1/29 12/4

PMO Created by CPA USACE Transfer of Sovereignty; JCC-I PCO Merged 12/20
CPA Program Gulf Region CPA Dissolves Established under GRD Iraq Reconstruction Accountability Act
Review Board Div. Activated (PCO replaces PMO) of 2006 Extends SIGIR Mission through
CPA Founded FY 2008
Created by MNSTC-I (Multi-National Security
Transition Command–Iraq) Established 10/14 PCO (Iraq) Terminated
CENTCOM 10/16 Diyala Provincial Reconstruction
ORHA Mobilizes Team Inaugurated
IRMO & PCO
to Kuwait
Established under
ORHA NSPD-36
Established 9/6 Fuel Import Liberalization Law Passed
under NSPD-24
10/11 Federal Regions Law Passed
12/6 Iraq Study Group Report Released

Transition 12/13 International Compact Final Text

Released by PM Nouri al-Maliki
3/21 4/9 1/5 3/8 6/1 1/30 4/28 10/15 12/15

Liberation Day Iraqi Interim Government Iraqi Transitional

Announced Government Formed 12/20
Coalition Land Forces Transitional Najaf Officially Transferred to Iraqi Control
Enter Iraq Administrative First Democratic
Law (TAL) Signed Elections in Iraq 6/14 Operation Together Forward (Baghdad Security Plan)
Constitutionally 6/25 National Reconciliation Plan and Dialogue Project
DoS Section 2207 Report Based Elections
5/20 Unity Government Formed
Constitutional
Referendum
4/22 Nouri al-Maliki Selected as Iraq's
First Permanent Prime Minister

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
2002 2 00 3 2 00 4 2005 2006

2006: Year of Transition in Review

SIGIR Activities in 2006
SIGIR Inspections SIGIR Investigations
SIGIR Audits Approximately 70% of the projects that SIGIR inspected in SIGIR is currently working on 78 cases. Investigations
Insight, Foresight, Oversight 2006 were in compliance with contract specifications. have resulted in 5 arrests and 4 convictions. Another 23
await prosecution.
9 1
Issued 42 audit products to improve the transparency, 1
2
2
4 2 2
efficiency, and effectiveness of the management of Iraq 30 1 2 2 1 SIGIR is a member of the International Contract Corruption
On-site 3 2
relief and reconstruction. 5 8 1
Aerial Imagery 19 2 2 Project 8 1 Task Force (ICCTF).
Assessments 18 8 8 4 Assessments 2 1 1
1 2
Promoted accountability, rule of law, and public trust 4
12 2 The ICCTF has identified 36 cases. SIGIR has contributed
1
in Iraq. 3 2 9 cases to the effort.
2 1
2 4
14 1
Focused on the end-state: the cost to complete U.S. 1 66
2 1 3 2
projects, the sustainment and transition of U.S.-funded 3 7
1 1
1 1 1 Members of the ICCTF
5
projects to the Government of Iraq (GOI), and building 1 3 1 2 4
1 4
SIGIR
the capacity of Iraqi ministries and Iraqi Security Forces. 1
2 1 1 1 5 U.S. ARMY CID, Major Procurement Fraud Unit
3
1 3 2 1 4 35
3 8 3 DoS OIG, Criminal Investigations Directorate
Number of Assessments 3 9 2
2 USAID OIG
This Quarter 10 1 7
5
Other Quarters DCIS (DoD IG Defense Criminal Investigative Service)
Federal Bureau of Investigation
Iraq Reconstruction at a Glance: 2006
In 2006, oil production continued to lag below targets.
Continuing Concerns
Iraq Crude Oil Production
Source: IRMO, Monthly Import, Production, and Export Report • Does the GOI have the capacity to operate and maintain
(December 2006) IRRF projects?
Thousands of Barrels Per Day
The security situation continues to deteriorate, and the
3,000
• Has the GOI budgeted for operations and maintenance (O&M) effectiveness of the Iraqi Security Forces remains a
2,500 of IRRF projects? significant concern.
2,000
• Does the GOI have a plan to address infrastructure security? Security Forces Trained and Equipped
1,500 Source: IRMO, Weekly Status Reports, 2006; 9010 Report (February 2006)
1,000
Number Trained
500 Challenges to Infrastructure Transition 300,000
Operations and Maintenance 250,000
J F M A M J J A S O N D
2006 The U.S. strategy to train and assist the GOI on O&M remains
unclear, and the GOI lacks sufficient capacity to operate and 200,000
Actual Production Target Production
maintain facilities. 150,000
100,000
In 2006, demand for electricity exceeded capacity.
GOI Budget 50,000
Electrical Demand vs. Capacity The capacity of Iraq’s ministries to execute their budgets remains
Source: IRMO, Weekly Status Report (12/14/2005 - 12/26/2006) weak. In August 2006, the GOI had executed only 43% of its total J F M A M J J A S O N D
Megawatts (MW) budget. 2006
Ministry of Defense (MoD) MoD Goals for 2006
12,000
Ministry of Interior (MoI) MoI Goals for 2006
10,000 Infrastructure Protection
8,000 Despite significant investment, Iraq has been unable to protect its
infrastructure: electricity towers and oil pipelines are continually
6,000 interdicted.
4,000
2,000

J F M A M J J A S O N D
2006 For Information on all SIGIR work, including the full text of all final audit and inspection products,
Actual Peak Capacity (MW) Electrical Demand (MW)
see the SIGIR website: http://www.sigir.mil.