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SPECIAL INSPE CTOR GENE RAL FOR IRAQ RECONSTRUCTION
January 23, 2006
MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ
COMMANDING GENERAL, MULTI-NATIONAL FORCE-IRAQ
MISSION DIRECTOR-IRAQ, U.S. AGENCY FOR
INTERNATIONAL DEVELOPMENT
SUBJECT: Management of the Commander’s Emergency Response Program
for Fiscal Year 2005 (SIGIR-05-025)
We are providing this report for your information and use. We performed the audit pursuant to
a request in 2004 from the Deputy Secretary of Defense, through the Department of Defense
Inspector General, that SIGIR review the Commander’s Emergency Response Program
(CERP) to determine whether CERP funds were properly administered by Department of
Defense officials and agencies. Our first report on the CERP was published in October 2005
(SIGIR-05-014) and concluded that overall controls of CERP processes required improvement.
This report expands on those findings by assessing the management of the CERP in Iraq in
Fiscal Year 2005. We may conduct further audits of the CERP in our continuing effort to meet
the intent of the Deputy Secretary’s request, or pursuant to other authority or guidance.
We considered comments from the Multi-National Corps-Iraq and the U.S. Agency for
International Development on the draft of this report when preparing the final report.
We appreciate the courtesies extended to the staff. For additional information on this report,
please contact Mr. Cliff Spruill at clifton.spruill@iraq.centcom.mil or at (703) 343-8816 or
Mr. Jason Venner at jason.venner@iraq.centcom.mil or at (703) 343-9256. For the report
distribution, see Appendix E.
Stuart W. Bowen, Jr.
Inspector General
400 Army Navy Drive • Arlington, Virginia 22202

Special Inspector General for Iraq Reconstruction
SIGIR-05-025 January 23, 2006
Management of the Commander’s Emergency Response Program
for Fiscal Year 2005
Executive Summary
Introduction. During the course of Fiscal Year (FY) 2005, the Congress authorized the
use of $854 million for the Commander’s Emergency Response Program (CERP), of
which $718 million was allocated to the Multi-National Force-Iraq (MNF-I) to support
Operation Iraqi Freedom. The CERP enables United States (U.S.) military commanders
in Iraq to respond to the urgent humanitarian relief and reconstruction requirements of the
local population by providing funds for repairs and condolence payments after combat
operations, the provision of equipment such as electrical generators to support critical
infrastructure, and large scale civic cleanup and construction activities to employ as many
Iraqis as possible. For FY 2005, MNF-I reported that it obligated its $718 million
allocation for 7,678 CERP projects, of which 4,805 of these projects were completed by
September 30, 2005. We previously reported in October 2005 that U.S. forces did not
fully comply with regulations and guidance for maintaining controls over appropriated
funds or for maintaining the documentation required to account for projects in FY 2004.
Our concerns over these conditions generated this audit, which addresses MNF-I’s
management of the FY 2005 CERP.
Objectives. The objectives of this audit were to determine whether MNF-I:
• implemented controls to effectively manage FY 2005 CERP projects, funds, and
records
• effectively coordinated CERP projects, where appropriate, with the Department of
State (DoS) and the U.S. Agency for International Development (USAID) to
optimize available resources for the sustainment of projects and the reconstruction
of Iraq
Results. Considerable progress has been made to improve the management of the CERP
by MNF-I. This included the improved alignment of projects with MNF-I strategic
objectives, centralized tracking of project status and management of project records, and
coordination of the CERP with other U.S. reconstruction programs. We found, however,
that the project data MNF-I used to track the progress of projects and report the status of
projects to higher headquarter units contained several errors, and MNF-I units still did not
fully comply with requirements for project records. In addition, we found that MNF-I
lacked a consistent process to coordinate CERP projects with the DoS and the USAID
when the CERP was used in conjunction with other reconstruction programs in Iraq, and
did not coordinate with DoS for the sustainment of large CERP construction projects.
Management Actions. During the course of this audit, we notified MNF-I of our
concerns about errors in its project tracking tool. As a result, MNF-I initiated its own
review of its FY 2005 project data. Also, in November 2005, MNF-I began transitioning
to the Iraq Reconstruction Management System as its project tracking tool, which shouldi

reduce the errors in their current project tracking system that we identified. In addition,
MNF-I and the U.S. Embassy-Iraq published a Joint Mission Statement on December 6,
2005, which stated that all political, military, and economic tools available to U.S.
agencies in Iraq will be integrated in FY 2006 to maximize the effectiveness of U.S.
efforts to rebuild Iraq.
Recommendations. We recommend that the Commanding General, Multi-National
Force-Iraq, direct his program managers and subordinate commands to take these actions:
1. Conduct a thorough examination of all FY 2005 CERP funds and projects to
account for project status reporting errors. In addition, if it is determined that
funds were inappropriately obligated against the FY 2005 appropriation, MNF-I
should initiate a de-obligation from FY 2005 funds and re-obligate projects with
the appropriate funds.
2. Conduct a quarterly review of the CERP to ensure the data contained within its
project tracking tool is valid and is as consistent as possible with the data for
project obligations in Army financial systems.
3. Clarify and enforce existing guidance on the collection of required project
records. MNF-I should conduct quarterly reviews of project records to improve
the management of project files. MNF-I should also consider developing a plan
to provide training for all current and future MNF-I units on project
documentation requirements and how to maintain and store these records.
Methods for storing records in electronic formats should also be considered.
4. Formalize the process of coordinating CERP projects with the DoS and the
USAID where the CERP is used in conjunction with other reconstruction
programs, particularly those projects that are of strategic importance.
5. Coordinate plans and funding for the sustainment of large CERP construction
projects; and projects that have strategic value with the DoS.
Management Comments and Audit Response. On behalf of MNF-I, the Multi-
National Corps-Iraq (MNC-I) concurred or partially concurred with four of five
recommendations of the report. We generally agreed with the comments provided by
MNC-I and, in some cases, changed our report accordingly. However, we also note that
MNC-I has apparently misunderstood parts of two of our recommendations and therefore
we reaffirmed SIGIR’s position that coordination on sustainment of reconstruction
projects is a key component of the overall success of the U.S. Government in Iraq. The
U.S. Agency for International Development also provided technical comments for this
report. We agreed with their comments and changed our report accordingly. The
comments received are fully responsive.
We plan to perform a follow-up audit later this year to determine whether the quality of
the data for the CERP, contained within financial systems and in reports to the Congress;
is accurate, timely, and consistent.
ii

Table of Contents
Executive Summary i
Introduction
Background 1
Objectives 4
Findings
Management Controls 5
Coordination of Projects 11
Conclusion and Recommendations 14
Appendices
A. Scope and Methodology 16
B. Review of CERP Project Files C. CERP Fund Uses & Restrictions 19
20
D. Acronyms 22
E. Report Distribution 23
F. Audit Team Members 25
Management Comments
Multi-National Corps-Iraq 26

Introduction
Background
During the course of Fiscal Year (FY) 2005, the Congress authorized the use of $854
million for the Commander’s Emergency Response Program (CERP) of which, the
United States Central Command allocated $718 million to the Multi-National Force-Iraq
(MNF-I) to support Operation Iraqi Freedom.1 The purpose of the CERP is to provide
United States military commanders in Iraq and Afghanistan the ability to respond to the
urgent humanitarian relief and reconstruction requirements of the local population within
their areas of responsibility with a variety of non-construction and construction activities.
The tool MNF-I used to track projects in FY 2005 indicated funds were obligated for
7,678 projects, of which 4,805 projects were completed by the end of the fiscal year
(September 30, 2005) in support of Operation Iraqi Freedom. For a complete list of the
numbers of projects and obligations by project type as reported MNF-I for FY 2005, see
Appendix C.
MNF-I reported to us that it had obligated approximately $284.2 million, or
approximately 40 percent of its total allocation, for 4,101 non-construction projects in FY
2005. Some examples of non-construction projects include condolence payments, the
provision of foodstuffs, and purchases of equipment such as computers, electrical
generators, or vehicles.
In FY 2005, MNF-I also reported to us that it obligated approximately $450.8 million, or
roughly 60 percent of its total allocation for 3,577 construction projects. Construction
projects include the repair of homes and buildings damaged by combat operations, the
building or reconstruction of community infrastructure such as hospitals and schools,
fences and barriers to protect oil pipelines, and “last tactical mile” projects to bridge the
gap between large Iraq Relief and Reconstruction Fund projects with the local population
(i.e., building substations or sewerage systems that link Iraqi neighborhoods with power
or water lines). Some of these construction projects require additional funds for
continued sustainment costs (i.e. operation and maintenance costs) from either the U.S. or
the Government of Iraq to maintain the structures over time.
Guidance for the FY 2005 CERP for Operation Iraqi Freedom. MNF-I units must
execute the CERP in order to support the strategic objectives of MNF-I’s Campaign Plan
for FY 2005. The Campaign Plan is a classified operational order that is updated
periodically and details MNF-I’s military, political, and economic objectives for Iraq.
The Commanding General, MNF-I, intended the CERP to support these objectives by
focusing CERP projects on labor intensive and urgent humanitarian relief and
reconstruction efforts in FY 2005. MNF-I’s Command Policy and Standard Operating
Procedure document, published on February 2, 2005, and in effect throughout the rest of
FY 2005, clarified and expanded the Commanding General’s intent by focusing the
1 The Congress authorized funding for the CERP three times over the course of FY 2005 from funds
already appropriated to the Department of Defense for operations and maintenance programs: on October
28, 2004, for $300 million under the “Ronald W. Reagan National Defense Authorization Act for Fiscal
Year 2005” (P.L. 108-375); on December 8, 2005, for $500 million under the Consolidated Appropriations
Act, 2005” (P.L. 108-447); and again on May 11 2005, for a final authorization of $854 million for FY
2005 under the “Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and
Tsunami Relief, 2005'' (P. L. 109-13).
1

CERP on “highly visible, quick starting, labor intensive & urgent humanitarian relief and
reconstruction projects” to be used for:
• reconstruction after combat operations to rapidly improve local conditions in
areas affected by combat
• emergency repairs of critical facilities
• critical infrastructure shortfalls that can be rapidly resolved
• reducing the risk of injury to the local populace
• procurement of critical equipment to replace items or establish critical
community services
• employing as many Iraqis as possible
MNF-I also issued fragmentary orders that clarified or changed the program management
responsibilities and procedural requirements of subordinate units over the course of the
fiscal year. As MNF-I’s primary implementing agency for the CERP, the Multi-National
Corps-Iraq (MNC-I) published its own Campaign Plan to further the use of the CERP in
accordance with MNF-I’s Campaign Plan; issued fragmentary orders to update
subordinate units on changes in the CERP; and published its own Standard Operating
Procedure document on June 29, 2005, codifying all current CERP procedures and
requirements for subordinate units. In addition, MNC-I officials we interviewed defined
projects that take 180 days or less as meeting the intent of the guidance for the CERP to
respond to the urgent humanitarian relief and reconstruction requirements of the local
Iraqi population.
Department of Defense (DoD) Program Responsibilities. The Under Secretary of
Defense-Comptroller, located in the Pentagon, Arlington, Virginia, is responsible for the
establishment and supervision of the execution of principles, policies, and procedures for
the CERP.
The United States Army is the executive agent for the CERP, and the Army Budget
Office, under the Assistant Secretary of the Army for Financial Management and
Comptroller, is responsible for reporting to the Congress each quarter on the source,
allocation, and use of CERP funds for both Iraq and Afghanistan. The Army Budget
Office is also located in the Pentagon, Arlington, Virginia.
The United States Central Command, headquartered in Tampa, Florida, oversees military
operations, programs, and funds in both Iraq and Afghanistan. U.S. Central Command is
responsible for allocating CERP funds between Iraq and Afghanistan, and through its
Army component command, Army Forces Central Command (ARCENT) reconciles
CERP funds every three months and reports these results to the Army Budget Office for
the quarterly reports to the Congress.
The Multi-National Force-Iraq (MNF-I), headquartered in Baghdad, Iraq, oversees
military operations, programs, and reconstruction funds for Iraq. MNF-I is the program
manager in Iraq for the CERP. The following subordinate units manage and execute the
CERP for MNF-I:
• The Multi-National Corps-Iraq (MNC-I), headquartered at Camp Victory,
Baghdad, Iraq, is MNF-I’s primary operational warfighting and reconstruction
command in Iraq. MNC-I manages CERP projects, funds, and records for
2

MNF-I. For FY 2005, MNC-I and subordinate units were authorized to obligate
$692 million, which resulted in 7,491 CERP projects, and represented 75 percent
of MNC-I’s $918 million reconstruction budget for FY 2005.2 During FY 2005,
MNC-I was staffed by two different Army Corps Commands – the III Corps
based at Fort Hood, Texas; and the 18th Airborne Corps based at Fort Bragg,
North Carolina. The processes to improve the management of the CERP
discussed in this audit were implemented by the 18th Airborne Corps. In January
2006, the V Corps, based in Heidelberg, Germany, will take command of MNC-I.
However, lead elements of the V Corps have already taken over the management
of MNC-I from the 18th Airborne Corps and were tasked by MNF-I with
responding to the findings of this audit.
• MNC-I’s seven Major Subordinate Commands (MSCs) are headquartered
throughout Iraq and are comprised of U.S. Army and Marine Corps, and coalition
forces. MSCs propose, initiate, and execute non-construction projects and some
construction projects in their areas of responsibility. In FY 2005, the MSCs
primarily consisted of the following coalition forces.
o Multi-National Division-Baghdad: U.S. Army forces
o Multi-National Division-Center-South: Coalition forces from the
Republic of Poland
o Multi-National Division-North-Center: U.S. Army forces
o Multi-National Division-Northeast: Coalition forces from the Republic of
Korea
o Multi-National Division-Southeast: Coalition forces from the United
Kingdom
o Multi-National Force-Northwest: U.S. Army forces
o Multi-National Force-West: U.S. Marine Corps forces
• The U.S. Army Corps of Engineers, Gulf Region Division (GRD), executes larger
construction projects for MNC-I and/or the MSCs. GRD is headquartered in
Baghdad, Iraq and provides planning, engineering, contracting, and project
management expertise and services to MNF-I and other U.S. agencies. In FY
2005 GRD managed 393 CERP construction projects with $227 million in
obligations for MNC-I and the MSCs.
• The Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) supports non-
construction CERP projects for MNC-I and/or the MSCs in Iraq. JCC-I/A is
headquartered in Baghdad, Iraq, and provides operational contracting support to
MNF-I to efficiently acquire vital supplies, services, and construction for the
relief and reconstruction of Iraq. JCC-I/A contracting offices executed contracts
for CERP projects totaling approximately $22 million according to JCC-I/A
officials.
2 The balance of MNC-I’s reconstruction budget (approximately $226 million) was funded with Iraqi
Transitional Government funds and funds from the DoS’ Commander’s Humanitarian Relief and
Reconstruction Program.
3

• The Multi-National Security Transition Command-Iraq (MNSTC-I),
headquartered in Baghdad, Iraq, is a subordinate command of MNF-I, whose
mission is to organize, equip, and mentor Iraqi security forces. MNSTC-I
obligated approximately $26 million for 187 CERP projects in FY 2005.
MNSTC-I was required to report the status of its CERP projects and funds to
MNC-I.
Department of State (DoS) Program Responsibilities. The U.S. Ambassador to Iraq is
the Department of State’s Chief of the U.S. Mission in Iraq and is responsible for the
continuous supervision and general direction of all assistance for Iraq according to
National Security Presidential Directive 36 United States Government Operations in Iraq.
This includes the direction, coordination, and supervision of all United States government
employees, policies, and activities in country, except those under the command of an area
military commander. The DoS’s activities to rebuild Iraq are primarily funded through
the Iraq Relief and Reconstruction Fund as codified in Public Law 108-11 and Public
Law 108-106.
U.S. Agency for International Development (USAID) Program Responsibilities.
The United States Agency for International Development (USAID), under the direction
of the State Department, undertakes projects to restore Iraq’s vital infrastructure in the
areas of electricity, water/sewerage, health care, education, communications, and
transportation. USAID uses a combination of the Iraq Relief and Reconstruction Fund
and direct appropriations to fund their projects.
Objectives
The objectives of this audit were to determine whether MNF-I:
• implemented controls to effectively manage FY 2005 CERP projects, funds, and
records
• effectively coordinated CERP projects, where appropriate, with the DoS and the
USAID to optimize available resources for the sustainment of projects and the
reconstruction of Iraq
For a discussion of the audit scope and methodology, see Appendix A. For our review of
records and documents for completed CERP project files, see Appendix B. For a list of
the uses of and restrictions of CERP funds, see Appendix C. For definitions of the
acronyms used in this report, see Appendix D. For a list of the report’s distribution, see
Appendix E. For a list of the audit team members, see Appendix F.
4

Management Controls
CERP Management and Tracking
MNF-I utilized several processes to improve the management of the CERP in FY 2005.
Specifically, MNF-I:
• implemented three processes within its chain of command to effectively align
CERP projects with the strategic objectives of its Campaign Plan
• required all subordinate units to report the status of projects and funds twice a
month to MNC-I, and for MNC-I to consolidate these reports and provide them to
MNF-I
• centralized the collection and management of project records at MNC-I, and
required the MSCs to turn in their records for completed projects at the end of
each month
As a result of these improvements, we found that coalition forces generally used CERP
funds in accordance with the intent of published guidance from higher headquarter units
and were better positioned to manage the large supplemental appropriation for the CERP
that MNF-I received late in FY 2005 under P.L. 109-13. However, as previously
reported by the Special Inspector General for Iraq Reconstruction (SIGIR)3 coalition
forces did not fully comply with DoD guidance for maintaining controls over
appropriated funds and for maintaining the documentation required to ensure
accountability and oversight of CERP projects.
We tested the effectiveness of these controls in several ways. First, we reviewed the
records of 207 projects completed by September 5, 2005. This included a stratified
random sample of 187 projects and a judgmental sample of the top 20 most expensive
completed projects at that time.4 These project files were used to assess whether projects
met the intent of DoD and MNF-I guidance for the CERP, and whether required project
records and documents were present at the designated control point (i.e. MNC-I). Then,
we analyzed the tool used by MNF-I to track the status of projects to assess the validity
of MNF-I’s data for the CERP for FY 2005. For a more detailed explanation of our
methodology for this objective, see Appendix A.
Aligning Projects with MNF-I’s Campaign Plan. MNF-I, through MNC-I,
implemented processes to effectively prioritize and align CERP projects with its strategic
objectives. As the focus of MNF-I’s Campaign Plan changed to emphasize using
reconstruction programs, including the CERP, as an enabler of MNF-I’s military,
political, and economic goals for FY 2005, guidance from the Commanding General,
MNF-I, challenged the commanders of subordinate units to prioritize the projects that
they thought best advanced these goals. As a result, MNC-I developed and implemented
three processes which took effect in April 2005, to centralize the management of the
CERP within MNC-I and to link projects to the strategic objectives of MNF-I’s
Campaign Plan. These processes are: the annual Joint Civil-Military Engineering Board;
3 Management of the Commander’s Emergency Response Program for Fiscal Year 2004 (Report Number
SIGIR 05-014, October 13, 2005).
4 To comply with generally accepted government auditing standards for statistical sampling methods, we
consulted with the Department of Defense Office of the Inspector General Quantitative Methods Division.
For more information on our sampling plan, see Appendix A.
5

the monthly Targeting and Effects Process; and the weekly CERP Program Review
Board.
Joint Civil-Military Engineering Board (JCMEB)
The JCMEB codified the policies, procedures, and priorities for an annual MNC-I
approval process for CERP projects proposed by the MSCs. The JCMEB was convened
once in FY 2005 to approve projects that needed advance planning, including both
construction projects and non-construction projects (such as the purchase of vehicles or
equipment). Projects for condolence payments or battle damage repairs were still at the
discretion of the MSC commander, and could be substituted for MNC-I approved
projects if the estimated cost of the project was less than $500,000.5
The measures MNC-I used in the JCMEB to prioritize projects was based on MNF-I
operational priorities, available CERP funds, and overall guidance on the CERP from
DoD. The JCMEB also takes “saturation criteria” into account, which is based on area
security, capacity of local contractors, and other mitigating factors. Prior to the JCMEB,
CERP projects and allocations of funds to MSCs were based primarily on the population
density of Iraqi cities and provinces within the MSCs area of responsibility. MNC-I
officials we interviewed said the JCMEB significantly improved MNC-I’s ability to
ensure CERP projects met guidance from DoD for the appropriate use of CERP funds,
and MNF-I guidance to align projects with strategic objectives. Accordingly, of the 207
projects reviewed to assess whether FY 2005 CERP funds were used for the purposes
intended by the DoD, we found only one project that violated the intended use of CERP
funds.6
Targeting and Effect Process
The Targeting and Effect Process integrates the projects approved through the JCMEB
with MNC-I combat and reconstruction operations across Iraq through a monthly review
process. This enabled MNC-I to measure the effectiveness of CERP projects in
conjunction with overall operations and to synchronize the intended effects of new
projects with MNF-I’s strategy. According to MNC-I officials and MNF-I documents,
MNC-I was able to focus approximately $400 million for projects to provide essential
services and economic improvements to key cities and provinces across Iraq pursuant to
MNF-I’s Campaign Plan for FY 2005. However, MNC-I officials said they do not expect
to see the full effects of these CERP projects until the second or third quarter of FY 2006
after most of the projects are completed.
CERP Program Review Board
The weekly MNC-I CERP Program Review Board enabled MNC-I to synchronize on-
going CERP projects with changing operational priorities. The Program Review Board
included representation from operations and support officers, and officials from all MNF-
I units and offices involved with the CERP, including MNF-I, MNC-I, all of the MSC’s,
and supporting commands such as GRD and JCC-I/A. As we observed, the Program
Review Board was instrumental at the end of the year in providing a forum in which
CERP funds could be reallocated between the MSCs and GRD in order to obligate funds
by the end of the fiscal year, and support MNF-I strategic objectives. For example,
5 Projects with an estimated cost of $500,000 or more require written approval from the Commanding
General, MNC-I.
6 Prior to the 18th Airborne Corps assuming command of MNC-I, Multi-National Force-Northwest paid
$40,000 to security forces of the Iraqi Ministry of the Interior for operating expenses while deployed from
Baghdad to Mosul on November 26, 2004. MNF-I Fragmentary Order 87 (June 29, 2004) states CERP
funds will not be used for the direct or indirect benefit of U.S., coalition, or other supporting forces.
6

MNC-I was able to redirect $1.9 million from other MSCs for MNC-Northwest to
obligate against $3.9 million worth of unfunded humanitarian relief projects resulting
from combat operations in Tal Afar. Reallocations were also made from other MSCs to
assist GRD with administrative issues in order to obligate approximately $172 million for
91 construction projects between September 26 and September 30, 2005. In addition, we
observed that the Program Review Board was a useful way for MNF-I officials to
communicate administrative or procedural issues, or share lessons learned with other
MNF-I CERP officials.
According to MNF-I officials we interviewed, these processes were instrumental in
enabling MNF-I to obligate the $354 million supplemental funding authorization for the
CERP that MNF-I received in May 2005 pursuant to P.L. 109-13. For example, due to
the advance planning done in April through the JCMEB process in expectation of
receiving the supplemental funds, MNF-I’s data indicates that it obligated roughly $392
million for 2,541 projects in the fourth quarter of 2005, which was approximately $258
million more in obligations than in any other quarter in FY 2005. In order to do so,
however, MNC-I approved obligations of roughly $208 million for 121 large projects
over $500,000, of which 25 of these projects were planned to last longer than 180 days.
There was no consensus on the effect of having to obligate such a large allotment of
money in such a short period of time. Some MNF-I officials we spoke with debated
whether so many large projects taking more than 180 days to execute actually met the
intent of urgent humanitarian relief, while other officials discussed whether the
administrative effort required to obligate this amount of money in such a short period of
time was justifiable given MNF-I’s other combat and reconstruction priorities in Iraq.
However, virtually all of the officials indicated that the funds were executed for projects
that supported the objectives of MNF-I’s Campaign Plan, and within the intent of the
Congress that the funds authorized for the CERP in FY 2005 were to be obligated by the
end of the fiscal year.
Reporting the Status of Projects and Funds. MNF-I, through MNC-I, implemented a
process to manage the program and track the status of CERP projects. To track the status
of projects, MNF-I required all subordinate units to report project status to MNC-I twice
a month using a common Excel spreadsheet format, and MNC-I consolidated this data
into a single Excel spreadsheet and provided it to MNF-I. These reports included each
project’s identifying data and purpose, progress towards completion; and data on
committed, obligated, and expended funds for each project. The project tracking tool is
the mechanism by which the MSCs communicate project status information to MNC-I
and MNF-I for management of the overall program.
This project tracking tool is provided to the Army Forces Central Command-Army
(ARCENT) each month, but without project completion information. ARCENT used this
tool to compare MNF-I data with the financial report for CERP funds from the Army’s
financial systems, which is the official management system of record for the CERP. If
the total obligations from the two reports do not match, ARCENT officials said they
queried MNF-I to reconcile the data. ARCENT then sends its report of the status of
funds and project information for the CERP to the Army Budget Office, which provides a
report to the Congress on the source, allocation, and use of CERP funds for each quarter
of the fiscal year pursuant to P.L. 108-375.
We analyzed MNF-I’s project tracking tool and found several problems in the data which
caused us to question the tool’s reliability. MNF-I’s total obligation authority for the
CERP for FY 2005 was $718 million. MNF-I reported it had obligated 100 percent of
this by the end of the fiscal year (September 30, 2005) and ARCENT confirmed this on
7

October 16, 2005. During the course of our audit, however, MNF-I provided us with
their year end project tracking tool—dated October 24, 2005—for FY 2005. Our analysis
of the project tracking tool indicates that MNF-I was tracking 7,678 projects with total
obligations of approximately $735 million.7 These totals included:
• 114 projects representing $4.6 million in obligations that were listed as starting in
FY 2004
• 22 projects representing $700,000 in obligations with “planned” start dates in FY
2004
• 96 projects representing approximately $21 million in obligations with a
“scheduled” start in FY 2006
MNF-I officials provided us with documentation from the Army’s financial systems
certifying that MNF-I did not exceed its total obligation authority for the CERP for FY
2005. These officials also said the Army’s financial systems have built-in safeguards to
help program managers’ avoid exceeding their total obligation authority in any fiscal
year.8 While we acknowledge some of the projects in error noted above may be attributed
to clerical errors, the definition of terms, or addressed by financial safeguards; we could
not determine, with any reasonable assurance, whether all these errors were reconciled.
For example, the projects noted above were still in MNF-I’s project tracking tool after it
submitted its year end report to ARCENT. MNF-I officials we interviewed indicated this
occurred because MNF-I does not formally reconcile the obligations listed in the project
tracking tool with total obligations recorded in the financial system. Part of the reasons
for this are time and resource constraints, but primarily the Army’s financial systems do
not provide enough detailed information to compare total obligations to individual CERP
projects. As a result, MNF-I could not provide us with assurance that these projects were
properly accounted for in their management process during the course of our audit.
Additionally, if the projects noted above were actually contracted for or obligated in FY
2004 or FY 2006, they must be de-obligated from FY 2005 and re-obligated against
appropriate funds from the appropriate fiscal year.
Based on the errors discussed above, we believe the potential for additional errors in the
information reported to ARCENT remains high. MNF-I officials we interviewed also
agreed that the quality of the data in the project tracking tool should be improved, and
should be as consistent as possible with the records in the Army’s financial systems. At
the conclusion of our audit, however, MNF-I did not yet have a plan in place to improve
the accuracy of its project management data for FY 2005.
Maintaining Project Records. MNF-I centralized the management and maintenance of
records for CERP projects at MNC-I. Throughout FY 2005, MNF-I required the MSCs
to submit completed files of source documentation for completed projects to MNC-I for
review and storage at the end of each month. In addition, as the requirements for specific
CERP records changed over the course of the fiscal year, MNC-I issued fragmentary
orders codifying these requirements; provided training to some MSCs on which records
were required for completed project’s file folders and to complete the records; and
7 For more information on our analysis, see Appendix A. For a complete list of obligations by project type
as reported by MNF-I, see Appendix B.
8 We did not audit the Army’s financial systems during the course of this audit, but we plan to do so in a
future audit.
8

published its Standard Operating Procedure document on June 29, 2005, which discussed
all of the requirements for the management of records for CERP projects. Although the
official record for the funding and status of CERP projects is kept within the Army’s
financial systems, DoD officials we spoke with in Baghdad and at the Pentagon said the
project records maintained by MNC-I play an important part in preventing potential
fraud, waste, and abuse of CERP funds by enabling DoD officials to verify that
procedures to commit, obligate, and disburse funds are followed.
The MSCs, however, did not comply with MNF-I’s guidance. MNF-I required the MSCs
to submit 16 different types of records or other documentation to MNC-I for the project
files for completed projects. To assess whether the MSCs complied with MNF-I’s
guidance for project records, we analyzed a random sample of 187 projects—stratified by
MSC—out of 4,160 projects completed by September 5, 2005. To allow for the
maximum number of statistical projections, however, we grouped: (a) records certifying
the commitment of funds; (b) records certifying the obligation of funds; (c) records
certifying the disbursement of funds; (d) records that certified the officials that were
responsible for handling project funds; and (e) records that certified the completion of a
project into five categories for statistical analysis. This allowed us to project the point
estimate, or mean error rate, for these five categories with a 90 percent confidence level
as reflected in Table 1.9
Table 1: Point Estimate Projections for Errors of Selected Documents
Record Category with Required Forms Measure Errors
Certification of the Commitment of Funds:
• Department of the Army (DA) Form 3953; or
• Department of Defense (DD) Form 1149
Number
Rate
907
21.8%
Certification of Obligation of Funds:
• Standard Form (SF) 44; or
• SF 1449
Number
Rate
385
9.3%
Certification of Disbursement of Funds:
• DD Form 1081 marked on advance; and/or
• DD Form 1081 marked on return
Number
Rate
2,178
52.4%
Certification of Officials Responsible for Project Funds:
• Purchasing Officer (PO) Appointment Letter; and
• Pay Agent (PA) Appointment Letter; and
• PO DD Form 577 purchasing card; and
• PA DD Form 577 purchasing card
Number
Rate
2,901
69.7%
Certification of Completion of Project:
• Commander’s Clearance Letter; and/or
• DD Form 250
Number
Rate
2,347
56.4%
Source: SIGIR
The type of errors in each category varied, with differences for both the individual
records and for each MSC. For example, in reviewing documents for the Certification of
Officials Responsible for Project category, we found that 66 percent of the required DD
9 Point estimates represent the mean of the confidence interval between the lower and upper bounds of
projected errors for each category. See Appendix A for more on our sampling methodology. For a
summary of our results for the records for all 187 projects, see Appendix B.
9

Form 577s for Purchasing Officers were included in the project files, whereas only 33
percent of Appointment Letters for Purchasing Officers were present in the project files.
These records identify and certify the MNF-I officials authorized to spend appropriated
funds on CERP projects and provide a reasonable assurance to DoD officials that
procedures to disburse funds are followed. We found that the Multi-National Division-
Baghdad submitted 97 percent of their required DD Form 1081’s “marked on return”,
while the Multi-National Force-West only submitted 17 percent of these records.
Conversely, the MSCs submitted more documentation for all project folders identified as
being among the Top 20 most expensive projects as of September 5, 2005. For a
complete list of the occurrences of project records and documents in CERP project files
for all 207 completed projects we reviewed, see Appendix B.
MNC-I officials acknowledged they were aware the MSC’s were generally not following
all of the requirements for submitting records for completed projects. For example,
MNC-I conducted their own audit of the Multi-National Division-Baghdad in April 2005,
and found 95 percent of the 100 files they reviewed (which included 30 FY 2005 CERP
projects) did not fully comply with guidance from MNF-I and MNC-I. MNC-I officials
we interviewed cited several factors for this, but primarily faulted the austere, war-time
environment in Iraq which prevented the MSCs from establishing fully functional finance
and accounting offices to maintain project records. For example, the personnel turnover
at the MSCs is high: U.S. Air Force and U.S. Navy project officers, finance personnel,
and contracting personnel can be in their positions for as little as four months before
rotating out of Iraq.
Moreover, some MSC finance and accounting offices did not have the technological
capability to electronically transfer records to MNC-I. In addition, MNC-I officials said
foreign coalition forces could not necessarily be expected to use DoD forms to record
project information given language barriers and differences in accounting systems.
While we acknowledge these difficulties—and that the MSCs generally attempted to
control funds and document project milestones using their own documents and
management control processes—MNF-I required all MSCs to fully comply with
published guidance for maintaining and submitting records to MNC-I, and did not permit
waivers for meeting the requirements for these records for any reason.
Management Actions
During the course of this audit, we recommended to MNF-I that it take action to improve
the quality of its data in its project tracking tool. MNF-I agreed and initiated its own
review of its data for FY 2005 projects; however, this review was not completed at the
conclusion of our audit. Also, in November, 2005, MNF-I began transitioning to the Iraq
Reconstruction Management System as its project tracking tool for FY 2006.10 This
newly developed centralized database will be used to identify and track all U.S.
reconstruction projects in Iraq, including the CERP. One of its commercial components
called Maximo provides a formatted structure for capturing, updating, and reviewing
project data. This will enable MNC-I and the MSCs to generate a Unique Requirements
Identifier to track projects and avoid duplication of project data. MNF-I believes the
errors in their current project tracking tool that we identified above will be reduced in FY
2006 by transitioning to this automated system.
10 The DoD requested an appropriation of $500 million for the CERP for FY 2006, of which MNF-I
expects to receive $375 million for use in Iraq.
10

Coordination of Projects
Interagency Processes
MNF-I’s actions to effectively coordinate CERP projects with DoS and USAID varied in
FY 2005. The primary methods of coordinating the CERP with DoS and USAID took
place in the weekly Coordinated Embassy Reconstruction Team meeting in the U.S.
Embassy in Baghdad. In addition, CERP projects were coordinated through interagency
working groups, lower-level meetings, and personal contacts. According to MNF-I, DoS
and USAID officials, all of these forums enabled U.S. officials to meet, discuss, and
coordinate reconstruction projects to avoid duplication of efforts between MNF-I, DoS
and USAID. These officials characterized this as ad hoc—but effective—coordination of
CERP projects with other reconstruction programs, which improved over the course of
FY 2005. However, the DoS’ October 5, 2005, Management Review of the U.S. Mission
– Iraq report to the U.S. Ambassador to Iraq stated that the lack of focused leadership of
the U.S. reconstruction effort in Iraq resulted in disjointed and less than optimal results in
FY 2005. These concerns were reflected in the coordination of the CERP in FY 2005 by
MNF-I, DoS, and USAID as discussed below.
Coordination with the DoS. MNF-I effectively coordinated the CERP with the DoS in
support of the Provincial Reconstruction and Development Committee (PRDC) program.
The PRDC program is a DoS-led effort to promote the rule of law and governance
capabilities of Iraqi provincial governments by providing $150 million from the Iraq
Relief and Reconstruction Fund for capacity-building activities for 15 of 18 Iraqi
provinces (i.e. $10 million for each province). However, DoS staff and funds were not
available in May 2005 to start the program, so MNF-I agreed to staff and fund the
program with $80 million from the CERP to support capacity building activities in nine
strategic cities located in eight of the provinces in support of MNF-I’s Campaign Plan.
The eight PRDCs were authorized to nominate up to $10 million worth of CERP projects
per city with MSC approval, and were expected to learn how to manage these projects
with the assistance of their local MSC and other U.S. government officials. MNF-I
officials said the use of the CERP “kick started” the PRDC program, resulting in the
PRDCs nominating 484 CERP projects in FY 2005. However, during the course of this
audit, we did not verify whether the PRDC’s capability to manage CERP projects
improved.
Conversely, MNF-I did not fully coordinate the sustainment of large CERP construction
projects with the DoS. As previously reported by SIGIR, DoS is responsible for the
continuous supervision and general direction of all assistance for Iraq, including the
sustainment of all U.S. reconstruction programs such as the CERP.11 MNF-I reported that
it had obligated more than $500,000 for each of 126 large CERP construction projects,
for a total obligation of approximately $190.9 million, or roughly 27 percent of the total
CERP funds appropriated for Iraq in FY 2005. Of these, MNF-I also reported it had
obligated $1 million or more for each of 53 construction projects; $4 million or more for
each of 8 construction projects; and $8 million or more for 3 capital construction projects,
the largest of which was an $11 million project initiated in August 2005 to protect the
Beiji to Kirkuk oil pipeline. Some of these projects are integrated into Iraq’s national
infrastructure and therefore are strategically important to U.S. efforts to rebuild Iraq.
11 When SIGIR issued SIGIR-05-022 Managing Sustainment for Iraq Relief and Reconstruction Fund
Programs on October 24, 2005, the DoS did not yet have a plan to sustain reconstruction projects.
11

According to MNC-I officials, the scope of work for CERP construction projects may
include some funding for sustainment or training of Iraqi personnel, but these funds
typically last for only six months, and therefore do not cover the continuing sustainment
requirements for these projects. Therefore, MNF-I units commonly used additional
CERP funds to sustain these projects, which according to MNC-I officials we
interviewed, deviates from the intent of the guidance for the CERP and delays the long-
term U.S. goals of transferring reconstruction projects to the Government of Iraq to
operate and maintain.
Coordination with the USAID. MNF-I did not formally coordinate the CERP with
USAID’s reconstruction programs. MNF-I units, however, effectively coordinated with
USAID’s Office of Transition Initiatives (OTI) to use CERP projects in conjunction with
OTI Employment Grants on a case-by-case basis. In FY 2005, USAID OTI provided
$175 million for 2,611 Employment Grants to provide short-term employment
opportunities for unemployed Iraqis. In Baghdad, for example, OTI Employment Grants
were used to provide essential services to the local population. This included the removal
of trash and sewage; and the rehabilitation and renovation of community infrastructure
such as clinics, markets, schools, and sports fields in conjunction with CERP projects
executed by the Multi-National Division-Baghdad. According to USAID officials, the
coordination of CERP and OTI projects resulted from an on-going agreement between
the USAID Mission Director and the U.S. Commander of the Multi-National Division-
Baghdad in March 2004, for USAID officials to attend the Multi-National Division-
Baghdad’s reconstruction meetings, and for a liaison officer from the Multi-National
Division-Baghdad to be placed on USAID’s staff, to ensure each organization stayed
informed of the other’s reconstruction activities in Baghdad.
OTI Employment Grants were also used in FY 2005 in conjunction with the CERP to
repair and rebuild Najaf, Fallujah, Ramadi, and Tal Afar after combat operations
concluded in those strategic cities. According to USAID officials, MNF-I units and
USAID were able to coordinate post-combat reconstruction activities in Fallujah and Tal
Afar early in the planning for these operations through the Combined Embassy
Reconstruction Team meetings. Consequently, USAID OTI was able to broker
agreements to be on the ground in these cities approximately two weeks after combat
operations ended to assist MNF-I units with post-combat humanitarian assistance
operations. As a result of this successful collaboration, MNF-I and Multi-National Force-
West placed liaison officers with the USAID office in Baghdad, and USAID placed
liaison officers in Fallujah and Ramadi to better coordinate MNF-I and USAID programs.
This ad-hoc coordination, however, contributed to the uneven use of CERP projects in
conjunction with OTI Employment Grants across Iraq. In Baghdad, USAID disbursed
$68.1 million, or roughly 39 percent of total FY 2005 OTI Employment Grant
expenditures, to support CERP projects and other DoD reconstruction priorities. In
contrast, USAID disbursed approximately $25 million worth of OTI Employment Grant
expenditures, or roughly 14 percent of the total for FY 2005, were used in Najaf,
Fallujah, Ramadi, Salah Ad Din, and Diyala. This Baghdad-centric approach to
reconstruction, according to the October 2005 DoS management review report, is not
adaptive enough to respond to the rapidly changing war-time conditions that exist in Iraq
today. Accordingly, MNC-I officials stated that a formal process to coordinate with
USAID would have resulted in a more even distribution of the use of USAID OTI
Employment Grants with CERP projects to better support MNF-I and U.S. mission
objectives across Iraq.
12

Management Actions
MNF-I has taken actions that may address our concerns regarding the need for a more
formal process to coordinate the CERP with other reconstruction programs. MNF-I and
the U.S. Embassy – Iraq published a Joint Mission Statement on December 6, 2005,
which stated that all political, military, and economic tools available to U.S. agencies in
Iraq would be integrated in FY 2006 to maximize the effectiveness of U.S. efforts to
rebuild Iraq. In addition, MNF-I implemented the Strategic Resource Council to better
focus MNF-I, DoS, and USAID officials on specific reconstruction issues and to
coordinate reconstruction costs in FY 2006.12
12 MNF-I Fragmentary Order 05-316 (October 15, 2005) establishes the Strategic Resource Council in
order to maximize the effect of limited funds to rebuild Iraq by providing a forum for MNF-I, DoS, and
USAID to coordinate the funding priorities of reconstruction activities.
13

Conclusion and Recommendations
Conclusion
MNF-I made important progress in FY 2005 to improve the management of the CERP.
We commend MNF-I and subordinate units for their efforts and look forward to seeing
the results of their additional improvements scheduled to take place in FY 2006. We
believe, however, that MNF-I cannot currently provide a reasonable assurance to DoD
leadership and the Congress that FY 2005 project information was sufficiently controlled
to provide an accurate year-end report on the use of funds for projects; or that project
records were sufficiently accounted for to protect against potential fraud, waste, and
abuse of the program. We also believe that the lack of formal coordination with DoS and
USAID of the CERP with other U.S. reconstruction programs and funds potentially
limited the effectiveness of some CERP projects, particularly large construction projects.
While we realize that the CERP is only one of the programs MNF-I is managing while
conducting combat operations in Iraq, SIGIR believes the effective management of the
CERP—of which the DoD has requested $500 million for FY 2006, with $375 million of
this total planned to go to Iraq—is essential to the success of the long-term U.S. goals for
Iraq.
Recommendations
We recommend that the Commanding General, Multi-National Force-Iraq, direct his
program managers and subordinate units to take these actions:
1. Conduct a thorough examination of all FY 2005 CERP funds and projects to
account for project status reporting errors. In addition, if it is determined that
funds were inappropriately obligated against the FY 2005 appropriation, MNF-I
should initiate a de-obligation from FY 2005 funds and re-obligate projects with
the appropriate funds.
2. Conduct a quarterly review of the CERP to ensure the data contained within its
project tracking tool is valid and is as consistent as possible with the data for
project obligations in Army financial systems.
3. Clarify and enforce existing guidance on the collection of required project
records. MNF-I should conduct quarterly reviews of project records to improve
the management of project files. MNF-I should also consider developing a plan
to provide training for all current and future MNF-I units on project
documentation requirements and how to maintain and store these records.
Methods for storing records in electronic formats should also be considered.
4. Formalize the process of coordinating CERP projects with the DoS and the
USAID where the CERP is used in conjunction with other reconstruction
programs, particularly those projects that are of strategic importance.
5. Coordinate plans and funding for the sustainment of large CERP construction
projects; and projects that have strategic value with the DoS.
Management Comments and Audit Response. On behalf of MNF-I, the Multi-
National Corps-Iraq (MNC-I) concurred or partially concurred with four of five
14

recommendations of the report. We generally agreed with the comments provided by
MNC-I and, in some cases, changed our report accordingly. However, we also note that
MNC-I has apparently misunderstood parts of two of our recommendations and therefore
we reaffirm our position that coordination on sustainment of reconstruction projects is a
key component of the overall success of the Iraqi government. The following responds to
MNC-I’s comments.
• In response to Recommendation 4, MNC-I concurs that CERP projects should be
synchronized but non-concurs with “... the idea that this coordination can or
should happen at the MNC-I or MNF-I level in all cases.” Nowhere in our report
did we prescribe a level at which all coordination should take place. MNC-I
further states that the most effective coordination of projects occurs when MNC-I,
DoS, and USAID officials discuss projects with Iraqi officials, and that any
coordination should not limit the MSC commanders flexibility to respond to
emergencies. We agree. However, based upon examples we have cited in our
report, we believe that formalized coordination processes could optimize the use
of scarce funds and resources and better enable MNF-I, DoS, and USAID to
contribute to rebuilding Iraq.
• In response to Recommendation 5, MNC-I broadly non-concurs that it should
coordinate sustainment plans and funding of large CERP projects with DoS.
Rather, MNC-I states that the appropriate coordination takes place only between
the commander executing the project and representatives of the Iraqi government.
MNC-I also responds that this type of coordination takes place regularly through
the PRDCs, Provincial Support Teams, and Provincial Reconstruction Teams.
We note however, that these organizations are sponsored, supported, funded and,
in some cases, chaired by DoS officials. MNC-I asserts that sustainment of CERP
projects is solely the responsibility of the Government of Iraq. While it is true
that the sustainment of existing infrastructure is the responsibility of the
Government of Iraq, the failure of any project attributed to the lack of
sustainment, regardless of which government is at fault, may weaken the
Government of Iraq and ultimately be blamed on the U.S. Therefore, while we
commend the efforts of MNC-I and DoS to coordinate with the Government of
Iraq on the provincial level, it is the position of SIGIR that the DoS is the U.S.
agency responsible for coordinating the overall sustainment of reconstruction
projects in Iraq. Some CERP projects, particularly capital construction projects,
and those of strategic value, rise to that threshold, thus requiring more concerted
efforts between all government entities charged with responsibilities for
reconstruction activities in Iraq.
MNC-I also provided technical comments and documents certifying that it did not exceed
its total obligations authority for the CERP for FY 2005 for the January 5, 2005 draft of
the report. We agreed with these comments and changed our draft report accordingly.
However, we plan to perform a follow-up audit later this year to determine whether the
quality of the data for the CERP, contained within financial systems and in reports to the
Congress; is accurate, timely, and consistent.
The U.S. Agency for International Development also provided technical comments for
this report. We agreed with their comments and changed our report accordingly.
15

Appendix A. Scope and Methodology
In August 2005, we initiated this audit (Project No. SIGIR-2005-15) to determine
whether CERP projects and funds were effectively managed by MNF-I in FY 2005. This
is the second in a series of audits of the CERP pursuant to a request in 2004 from the
Deputy Secretary of Defense, through the Department of Defense Inspector General, that
SIGIR review the CERP to determine whether CERP funds were properly administered
by Department of Defense officials and agencies. This report discusses management
controls over CERP projects, funds, and records, and the coordination of CERP projects
with the reconstruction programs of the DoS and the USAID.
To determine if MNF-I implemented controls to effectively manage FY 2005 CERP
projects, funds, and records we interviewed officials from MNF-I, MNC-I, and the Multi-
National Division-Baghdad to understand how the program was managed over the course
of FY 2005. This included attending several CERP Program Review Board meetings to
observe how MNC-I managed the CERP from week-to-week. We also collected and
analyzed guidance and fragmentary orders governing the program from the Office of the
Secretary of Defense, MNF-I, and MNC-I. In addition, we tested the controls MNF-I
implemented in FY 2005 to improve the management of the CERP in several ways.
First, to determine whether MNF-I used CERP funds for the purposes intended in DoD
guidance, and adequately controlled the records for CERP projects at the control point
(i.e. MNC-I), we reviewed the project records for 207 of 4,160 projects completed by
September 5, 2005. This included a stratified random sample of 187 projects by MSC,
which the Department of Defense Office of the Inspector General Quantitative Methods
Division validated, and a judgmental sample of the top 20 most expensive completed
projects at that time. The 16 records we selected for our review were based on MNF-I
and MNC-I guidance on CERP procedures and administrative requirements included in
fragmentary orders and Standard Operating Procedure documents issued over the course
of FY 2005. We then grouped records into five categories to allow for the maximum
number of statistical projections for our sample. As noted above, these categories are for
the records that certify the commitment, obligation, and disbursement of funds; that
certify the officials that were responsible for handling project funds; and certify the
completion of a project. This allowed us to project the point estimate, or mean error rate,
for all of these five categories of errors simultaneously with a 90 percent level of
confidence, so that all intervals include their respective population error rate and number
of errors across all 4,160 projects to state the error for the population total. For each
individual category separately, there is a 98 percent level of confidence the projected
error rate and number of errors is between the lower and upper bounds as illustrated in
Table 2 below.
16

Table 2: Projections Using 90 percent Simultaneous Confidence Bounds
Error
Lower
Point
Upper
Record Categories
Measure
Bound
Estimate
Bound
Certification of Commitment of Funds Number Rate 579 13.9% 907 21.8% 1,234
29.7%
Certification of Obligation of Funds Number Rate 115 2.8% 385 9.3% 655
15.7%
Certification of Disbursement of Funds Number Rate 2,030 48.8% 2,178 56.4% 2,664
64.0%
Certification of Officials Responsible for
Project Funds
Number Rate 2,562 61.6% 2,901 69.7% 3,239
77.9%
Certification of Completion of Project Number Rate 1,840 44.2% 2,347 52.4% 2,516
60.5%
Source: SIGIR
Then, to determine the errors for these categories, we only recorded an occurrence of an
error when the record or document was not present in the project file at MNC-I. All other
occurrences resulted in a “Present” mark. This included records with missing signatures,
records and documents that were not applicable at the time of project completion,
substituted documents as authorized, and records and documents for projects whose files
were not present at MNC-I. The files for twenty projects were not present at MNC-I at
the time we finished our review on October 27 2005: one project file from the Multi-
National Division-Baghdad, one project file from the Multi-National Division-North
Center, one project file from the Multi-National Division-Northeast, and 16 project files
from the Multi-National Force-West. The results for the occurrences of all records for
the 207 project folders we reviewed are tabulated in Appendix B below.
Last, we analyzed the tool used by MNC-I to track the status of projects to assess the
validity MNF-I’s data for the CERP. This included examining the following data sets:
• distribution of projects by start dates
• status of projects for planned, in-progress, complete, and cancelled projects
• number of construction and non-construction projects
• distribution of projects by MSC, project type, and obligations
• total obligations for projects reported by project and program managers to MNC-I
To determine if MNF-I effectively coordinated CERP projects, where appropriate, we
interviewed officials and obtained relevant documentation from MNF-I and its
subordinate units, the DoS, and the USAID to understand how reconstruction programs,
including the CERP, were coordinated across U.S. government agencies in Iraq. We also
attended several strategic interagency coordination meetings held in the U.S. Embassy –
Iraq to further observe how reconstruction activities are coordinated. Furthermore, we
reviewed MNF-I, DoS, and USAID plans to coordinate reconstruction programs in FY
2006 and queried officials on how the CERP will be integrated into these plans.
We conducted this audit from August 2005 through January 2006, in accordance with
generally accepted government auditing standards.
17

Use of Computer-Processed Data. We did not use computer-processed data to perform
this audit.
Prior Coverage. SIGIR reported on October 13, 2005 in “Management of Commander’s
Emergency Response Program for Fiscal Year 2004” (SIGIR-2005-014) that CERP-
appropriated funds were properly used for their intended purposes, but overall controls
over the distribution of appropriated funds were not consistently followed, and the
required project documentation for CERP projects was not consistently used to ensure
accountability of projects. This report did not contain recommendations, therefore, no
management response was required; however, the findings of this report were the basis
for our current review of the FY 2005 projects and funds. Other SIGIR reports covering
the CERP include SIGIR Report No. SIGIR 05-022 “Managing Sustainment for Iraq
Relief and Reconstruction Fund Programs” (October 24, 2005).
In addition, the Army Audit Agency (AAA) is currently conducting a series of audits on
the funds allocated to MNSTC-I for CERP projects in FY 2005. We met with the audit
team from AAA and developed our audit methodology to ensure we did not duplicate
their efforts. As a result, we did not review the project records of any MNSTC-I projects,
however, the funding data for MNSTC-I projects was included in our analysis. Prior
AAA reports on the CERP include:
• Report A-2005-0173-ALE “Commanders’ Emergency Response Program and
Quick Response Fund” (May 2, 2005)
• Report A-2005-0332-ALE “Follow-Up of Commander’s Emergency Response
Fund and Quick Response Fund” (September 30, 2005)
• Project A-2006-ALE-0108.000 “Follow-Up II of Commander’s Emergency
Response Program and Quick Response Fund” (Draft Report dated 2 December
2005)
18

MSC Multi-
National
Division -
Baghdad
Multi-
National
Division -
Center South
Multi-
National
Division -
North Center
Multi-
National
Division -
North East
Multi-
National
Division -
South East
Multi-
National
Force - North
West
Multi-
National
Force - West
Total for
Random
Sample
Total for Top
20
Total for All
Projects
Appendix B. Review of CERP Project Files
Table 3 below summarizes the results of our review of the 207 completed projects of the
207 CERP projects files we selected to assess whether the MSCs complied with guidance
for submitting the 16 records and other project documents to MNC-I, as required by
MNF-I guidance. As discussed above, the first ten types of records were grouped into
five categories to project the errors for the population of 4,160 projects completed by
September 5, 2005.
Table 3: Occurrences of Project Records in CERP Project Files
Occurrence
1. DA3953 or DD1149
2. SF 44(s) and/or SF
1449(s)
3. DD Form 1081 [On
Advance]
4. DD Form 1081 [On
Return]
5. Appointment Letter for
Purchasing Officer
6. Appointment Letter for
Pay Agent
7. DD Form 577 for
Purchasing Officer
8. DD Form 577 for Paying
Agent
9. MSC Commander's
Clearance Memo
10. DD Form 250
11. Project Proposal or
Statement of Work
12. Copy of Contract
13. 3+ Vendors or Sole
Source Justification
Documented
14. Invoice from Vendor(s)
15. MSC Comptroller
Clearance Memo
16. MNC-I Approval for
Projects With an Estimated
Cost of $500,000 or More
Present 30 29 28 29 21 20 28 28 28 30 27 30 30 29 3 30
Error 0 1 2 1 9 10 2 2 2 0 3 0 0 1 27 0
Total 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30
Percent Present 100% 97% 93% 97% 70% 67% 93% 93% 93% 100% 90% 100% 100% 97% 10% 100%
Present 12 28 0 0 2 0 11 11 15 10 29 30 27 22 4 30
Error 18 2 30 30 28 30 19 19 15 20 1 0 3 8 26 0
Total 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30
Percent Present 40% 93% 0% 0% 7% 0% 37% 37% 50% 33% 97% 100% 90% 73% 13% 100%
Present 28 27 11 9 6 6 19 17 22 13 24 29 28 14 15 30
Error 2 3 19 21 24 24 11 13 8 17 6 1 2 16 15 0
Total 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30
Percent Present 93% 90% 37% 30% 20% 20% 63% 57% 73% 43% 80% 97% 93% 47% 50% 100%
Present 4 5 3 3 3 3 5 5 3 4 3 5 6 3 3 6
Error 2 1 3 3 3 3 1 1 3 2 3 1 0 3 3 0
Total 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6
Percent Present 67% 83% 50% 50% 50% 50% 83% 83% 50% 67% 50% 83% 100% 50% 50% 100%
Present 1 11 0 0 0 0 12 12 0 5 29 31 26 26 0 30
Error 30 20 31 31 31 31 19 19 31 26 2 0 5 5 31 1
Total 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31 31
Percent Present 3% 35% 0% 0% 0% 0% 39% 39% 0% 16% 94% 100% 84% 84% 0% 97%
Present 30 28 28 30 23 27 26 28 19 24 17 29 26 21 24 30
Error 0 2 2 0 7 3 4 2 11 6 13 1 4 9 6 0
Total 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30
Percent Present 100% 93% 93% 100% 77% 90% 87% 93% 63% 80% 57% 97% 87% 70% 80% 100%
Present 20 28 5 5 7 0 22 20 2 13 18 30 28 14 0 30
Error 10 2 25 25 23 30 8 10 28 17 12 0 2 16 30 0
Total 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30
Percent Present 67% 93% 17% 17% 23% 0% 73% 67% 7% 43% 60% 100% 93% 47% 0% 100%
Present 125 156 75 76 62 56 123 121 89 99 147 184 171 129 49 186
Error 62 31 112 111 125 131 64 66 98 88 40 3 16 58 138 1
Total 187 187 187 187 187 187 187 187 187 187 187 187 187 187 187 187
Percent Present 67% 83% 40% 41% 33% 30% 66% 65% 48% 53% 79% 98% 91% 69% 26% 99%
Present 18 20 16 17 13 14 19 19 17 20 20 14 20 17 4 14
Error 2 0 4 3 7 6 1 1 3 0 0 6 0 3 16 6
Total 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Percent Present 90% 100% 80% 85% 65% 70% 95% 95% 85% 100% 100% 70% 100% 85% 20% 70%
Present 143 176 91 93 75 70 142 140 106 119 167 198 191 146 53 200
Error 64 31 116 114 132 137 65 67 101 88 40 9 16 61 154 7
Total 207 207 207 207 207 207 207 207 207 207 207 207 207 207 207 207
Percent Present 69% 85% 44% 45% 36% 34% 69% 68% 51% 57% 81% 96% 92% 71% 26% 97%
19

Appendix C. CERP Fund Uses & Restrictions
Listed below are the uses and restrictions for the CERP for FY 2005, along with the total
year-end obligations for each category as reported to us by MNF-I. The Office of the
Under Secretary of Defense-Comptroller published a list of uses and restrictions for the
CERP on November 25, 2003, and then augmented this list on February 18, 2005, and
July 27, 2005.
Uses. Appropriated funds for the CERP were used for projects to meet urgent
humanitarian relief and reconstruction requirements to assist the Iraqi people in the
following 19 areas in FY 2005 in table 4 below.
Table 4: CERP Uses, and Reported Projects and Obligations for FY 2005
Number of
Total
Uses
Projects
Obligations
1. Water and sanitation 1369 $234,363,373
2. Food production and distribution 44 $2,245,472
3. Agriculture 74 $12,442,237
4. Electricity 522 $73,952,460
5. Healthcare 414 $32,060,661
6. Education 1188 $68,776,477
7. Telecommunications 155 $26,154,212
8. Economic, financial, and management improvements 267 $14,237,727
9. Transportation 680 $105,475,157
10. Rule of law and governance 531 $31,491,415
11. Irrigation 63 $8,690,243
12. Civic cleanup activities 343 $15,747,956
13. Civic support vehicle 65 $5,486,643
14. Repair of civic and cultural facilities 353 $13,873,578
15. Repair of damage that results from U.S., coalition, or
supporting military operations and is not
compensable under the Foreign Claims Act**
168 $6,791,468
16. Condolence payments to individual civilians for
death, injury, or property damage resulting from U.S.
coalition, or supporting military operations**
631 $14,866,544
17. Payment to individuals upon release from
detention**
0 0
18. Protective measures to enhance the durability and
survivability of critical infrastructure sites**
52 $16,452,392
19. Other urgent humanitarian or reconstruction projects 759 $51,869,018
Total 7,678 $734,977,033
Source: SIGIR and MNF-I as of October 24, 2005
20

Restrictions. Appropriated funds made available for the CERP shall not be used for the
following 10 purposes:
1. Activities with a direct or indirect benefit to U.S., Coalition, or other supporting
personnel
2. Providing goods, services, or funds to national armies, national guard forces, border
security forces, civil defense forces, infrastructure protection forces, highway patrol
units, police, special police, or intelligence or other security forces**
3. Except as authorized by law and separate implementing guidance, weapons buy-back
programs, or other purchases of firearms or ammunition
4. Entertainment
5. Rewards program
6. Removal of unexploded ordnance
7. Duplication services available through municipal governments
8. Salaries, bonuses, or pensions of Iraqi or Afghan military or civilian government
personnel*
9. Training, equipping, or operating costs of Iraqi security forces**
10. Conducting psychological operations, information operations, or other U.S., coalition,
or Iraqi/Afghan security force operations**
* Added on February 18, 2005
** Added on July 27, 2005
21

Appendix D. Acronyms
ARCENT U.S. Army Forces Central Command
CERP Commanders Emergency Response Program
DoD Department of Defense
DoS Department of State
GRD U.S. Army Corps of Engineers Gulf Region Division
MNC-I Multi-National Corps-Iraq
MNF-I Multi-National Force-Iraq
MNSTC-I Multi-National Security Transition Command-Iraq
MSC MNF-I Major Subordinate Command
OTI USAID Office of Transition Initiatives
SIGIR Special Inspector General for Iraq Reconstruction
USAID U.S. Agency for International Development
22

Appendix E. Report Distribution
Department of State
Secretary of State
Senior Advisor to the Secretary and Coordinator for Iraq
U.S. Ambassador to Iraq
Director, Iraq Reconstruction Management Office
Inspector General, Department of State
Department of Defense
Secretary of Defense
Deputy Secretary of Defense
Director, Defense Reconstruction Support Office
Under Secretary of Defense (Comptroller)/Chief Financial Officer
Deputy Chief Financial Officer
Deputy Comptroller (Program/Budget)
Inspector General, Department of Defense
Department of the Army
Assistant Secretary of the Army for Acquisition, Logistics, and Technology
Principal Deputy to the Assistant Secretary of the Army for Acquisition,
Logistics, and Technology
Deputy Assistant Secretary of the Army (Policy and Procurement)
Director, Project and Contracting Office
Commanding General, Joint Contracting Command – Iraq/Afghanistan
Assistant Secretary of the Army for Financial Management and Comptroller
Chief of Engineers and Commander, U.S. Army Corps of Engineers
Commanding General, Gulf Region Division
Auditor General of the Army
U.S. Central Command
Commanding General, Multi-National Force – Iraq
Commanding General, Multi-National Security Transition Command – Iraq
Commander, Joint Area Support Group – Central
Other Defense Organizations
Director, Defense Contract Audit Agency
23

Other Federal Government Organizations
Director, Office of Management and Budget
Comptroller General of the United States
Inspector General, Department of the Treasury
Inspector General, Department of Commerce
Inspector General, Department of Health and Human Services
Inspector General, U.S. Agency for International Development
Mission Director – Iraq, U.S. Agency for International Development
Congressional Committees and Subcommittees, Chairman and
Ranking Minority Member
U.S. Senate
Senate Committee on Appropriations
Subcommittee on Defense
Subcommittee on State, Foreign Operations and Related Programs
Senate Committee on Armed Services
Senate Committee on Foreign Relations
Subcommittee on International Operations and Terrorism
Subcommittee on Near Eastern and South Asian Affairs
Senate Committee on Homeland Security and Governmental Affairs
Subcommittee on Federal Financial Management, Government Information and
International Security
Subcommittee on Oversight of Government Management, the Federal
Workforce, and the District of Columbia
U.S. House of Representatives
House Committee on Appropriations
Subcommittee on Defense
Subcommittee on Foreign Operations, Export Financing and Related Programs
Subcommittee on Science, State, Justice and Commerce and Related Agencies
House Committee on Armed Services
House Committee on Government Reform
Subcommittee on Management, Finance and Accountability
Subcommittee on National Security, Emerging Threats and International
Relations
House Committee on International Relations
Subcommittee on Middle East and Central Asia
24

Appendix F. Audit Team Members
This audit report was prepared and the audit work was conducted under the
direction of Joseph T. McDermott, the Assistant Inspector General for Auditing,
Office of the Special Inspector General for Iraq Reconstruction. The staff members
who contributed to the report include:
Walt Keays
Ronald Rembold
Clifton Spruill
Jason Venner
In addition, the following staff from the DoD Office of the Inspector General,
Quantitative Methods Division contributed to the report:
James Hartman
Kandasamy Selvavel
25

Management Comments
Multi-National Corps-Iraq
26

27