SPECIAL INSPE CTOR GENE RAL FOR IRAQ RECONSTRUCTION
January 27, 2006
MEMORANDUM FOR U.S. AMBASSADOR TO IRAQ
DIRECTOR, IRAQ RECONSTRUCTION MANAGEMENT
OFFICE
COMMANDING GENERAL, GULF REGION DIVISION,
U.S. ARMY CORPS OF ENGINEERS
SUBJECT: Fact Sheet on the Use of the $50 Million Appropriation to Support the
Management and Reporting of the Iraq Relief and Reconstruction Fund
(SIGIR-05-026)
We are providing this memorandum for your information and use. We performed this
review in accordance with our statutory duties in Public Law 108-106, as amended,
which mandates the independent and objective conduct of audits relating to the programs
and operations funded with amounts appropriated or otherwise made available in support
of Iraq relief and reconstruction.
This memorandum addresses the disposition of the Fiscal Year 2004 $50 million
Department of Defense appropriation to the Coalition Provisional Authority earmarked
for the preparation, maintenance, monitoring, or reporting of the Iraq Relief and
Reconstruction Fund information required by the Public Law 108-106. We present the
facts on how the funds were used and our concerns as to the lack of information available
to support the detail expenditure of this appropriation.
The objective of this review was to determine whether the $50 million appropriated by
Congress was used appropriately and in an efficient and effective manner. We
interviewed and received documentation from responsible staff in the Office of
Management and Budget, the Department of State, and the Department of the Army.
In November 2003, Congress passed Public Law 108-106, the Emergency Supplemental
Appropriations Act for Defense and for the Reconstruction of Iraq and Afghanistan,
which appropriated $18.4 billion for the rebuilding of Iraq. This money is known as the
Iraq Relief and Reconstruction Fund (IRRF). The Act imposed significant reporting
requirements on the implementing agencies, including quarterly reports to Congress on
how the IRRF was being spent; estimates of the costs required to complete each project;
information on IRRF obligations and expenditures; IRRF reconstruction activities; IRRF
contracts; and IRRF fund transfers. To meet these reporting and monitoring requirements
and to prepare and maintain public records required by the Act, Congress authorized $50
million, which was to remain available until September 30, 2005.
One of the efforts to collect and report on IRRF information was to develop and
implement an automated system in Iraq. Although efforts to develop this system have
been underway since June 2004, at present the system has only been partially
implemented. Moreover, only $26.2 million of the authorized money had been spent on a
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system development effort. The remaining $23.8 million was returned to the Office of
Management Budget and reapportioned to the Department of State.
Our review determined that the $50 million was initially apportioned by the Office of
Management and Budget to the Department of Defense as “Operating Expenses of the
Coalition Provisional Authority” (apportionment symbol 31 2004/2005 2090). The
Department of the Army obligated $26.2 million in FY 2004 under the sub-account
“Reporting” and made disbursements of $9.2 million in FY 2004 and $9.7 million in FY
2005, with the remaining $7.3 million remaining obligated for additional disbursements
under the “Reporting” sub-account requirement.
When the Coalition Provisional Authority was terminated, the Department of the Army
transferred the remaining $23.8 million in “Reporting” funds back to the Office of
Management and Budget; which in turn reapportioned the $23.8 million to the
Department of State. The Department of State allocated the funds to the Near East Asia
Bureau where $22.1 million went for Iraq Reconstruction Management Office 31611
salary expenses; and the remaining $1.7 million was transferred to the Department of
State Office of the Inspector General for the reimbursement for the Iraq-related activities
to engage in monitoring functions through the Economy Act. The Department of State
did not provide further documentation on how these expenses supported the preparation,
maintenance, monitoring, or reporting of the IRRF information.
The Special Inspector General for Iraq Reconstruction does not question the Department
of State’s authority for obligating and disbursing the $23.8 million. We do question,
however, disbursing the remaining of the earmarked funds for salary expenses without
being able to provide either the rationale or support for how these expenditures complied
with the congressional intent for the appropriation.
We appreciate the courtesies extended to the staff. For additional information on this
memorandum, please contact Joseph T. (Mickey) McDermott, at 914-822-4618
(Baghdad), or by email at joseph.mcdermott@iraq.centcom.mil, or Dan Haigler by email
at wilson.haigler@iraq.centcom.mil.
Stuart W. Bowen, Jr.
Inspector General
cc: See Distribution
1 Employees that are appointed as 3161 employees are Excepted Service employees governed by 5 U.S.C.
3161 and provisions of Title 5 of the United State Code.
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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
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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
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