The scale of contractor support DOD relies on today in  locations such Iraq and elsewhere amounts to billions of dollars worth of  goods and services each year, underscoring the need to effectively manage  and oversee contractor efforts. Further, we found that  unclear DOD guidance resulted in poor accountability over 190,000  weapons provided to the Iraqi security forces. At the contract level, the lack of well-defined requirements resulted in  schedule delays and the United States potentially paying more than  necessary. These circumstances  influenced DOD’s decision to pay nearly all of the $221 million in  questioned costs. Three factors  contributed to this lapse in accountability. In our July 2007 report, we recommended that the Secretary of Defense (1)  determine which DOD accountability procedures apply or should apply to  the program, and (2) after defining the required accountability procedures,  ensure that sufficient staff, functioning distribution networks, standard  operating procedures, and proper technology are available to meet the  new requirements. DOD concurred with our recommendations but, as of  March 3, 2008, had not determined which accountability procedures apply  to the program. Long-standing Problems Hinder DOD’s Management and Oversight of Contractors Supporting Deployed Forces

Several long-standing and systemic problems continue to hinder DOD’s  management and oversight of contractors at deployed locations, including  the failure to follow planning guidance, an inadequate number of military  and civilian contract oversight personnel, failure to systematically collect  and distribute lessons learned, and the lack of comprehensive training for  military commanders and contract oversight personnel. In prior reports, we made a number of recommendations  aimed at strengthening DOD’s management and oversight of contractor  support at deployed locations, and the department has agreed to  implement many of those recommendations. However, our prior work has  found that DOD has made limited progress implementing some key  recommendations. Our work on contracts to support deployed forces in  Iraq has identified instances where poor oversight and management of  contractors led to negative financial and operational impacts. Lack of Adequate Strategic Planning Impedes U.S. Efforts to Develop Capacity in Iraqi Ministries and Improve Outcomes in Iraq’s Energy Sector

U.S. efforts to increase the Iraqi government’s capacity to invest in its own  rebuilding are undermined by strategic planning shortfalls in two critical  areas—developing the capacity of the Iraqi ministries to effectively  execute their responsibilities and integrating oil and electricity  development into a unified plan. In the energy sector, developing a  comprehensive and integrated strategic plan is essential to meeting energy  production and export goals, which in turn will help Iraq meet its future  financial needs. Over the past 4 years, U.S. efforts to help build the capacity of the Iraqi  national government have been characterized by multiple U.S. agencies  leading individual efforts, without overarching direction from a lead entity  that integrates their efforts, and shifting time frames and priorities in  response to deteriorating security and the reorganization of the U.S.  mission in Iraq. State commented, however, that the  Iraqi government, not the U.S. government, is responsible for taking action  on GAO’s recommendations. We believe that the recommendations are  still valid given the billions of dollars made available for Iraq’s energy  sector, the limited capacity of the Iraqi ministries, and the U.S.  government’s influence in overseeing Iraq’s rebuilding efforts. However,  nation building is costly, particularly in the absence of a permissive  security environment. Since 2001, Congress has appropriated about $700  billion for military and diplomatic activities in support of the global war on  terrorism; the majority of this amount has supported U.S. actions in Iraq. In prior reports, GAO recommended that, to improve accountability and  minimize opportunities for fraud, waste, and abuse of U.S. funds, (1) DOD  adopt sound business processes in its acquisition strategies, such as  definitizing contracts in a timely fashion and strengthening accountability  procedures; (2) DOD leadership ensure implementation of and compliance  with existing guidance to improve its management and oversight of  contractors supporting deployed forces; and (3) U.S. agencies work with  Iraq to develop strategic plans for key sectors.
Why GAO Did This Study

Since 2001, Congress has appropriated nearly $700 billion for the global war on terrorism. The majority of these funds have supported U.S. efforts in Iraq. Congressional oversight is crucial to improve performance, ensure accountability, and protect U.S. programs from fraud, waste, and abuse. Since 2003, GAO has issued nearly 130 Iraq-related reports and testimonies. This testimony addresses (1) factors contributing to poor contracting outcomes and accountability, (2) long-standing issues in the Department of Defense's (DOD) management and oversight of contractors supporting deployed forces, and (3) efforts to improve the capacity of the Iraqi government. GAO reviewed U.S. agency documents and interviewed officials from State, DOD, and other agencies; the United Nations (UN); and the Iraqi government. We also made multiple trips to Iraq.

What GAO Found

U.S. efforts in Iraq have relied extensively on contractors to undertake reconstruction projects and provide support to U.S. forces. However, a lack of well-defined requirements, poor business arrangements, and inadequate oversight and accountability have negatively affected reconstruction and support efforts. For example, in a July 2007 report, GAO found that DOD completed negotiation for task orders on an oil contract more than 6 months after the work commenced and most costs were incurred. DOD paid nearly all of the $221 million in costs questioned by auditors. Also in July 2007, GAO found that unclear DOD guidance, inadequate staff, and insufficient technology resulted in poor accountability over more than 190,000 weapons provided to Iraqi forces. DOD concurred with GAO's recommendation to determine what DOD accountability procedures apply or should apply to the program. However, as of March 2008, DOD had not made a determination. The need to effectively manage and oversee contractors supporting deployed forces is equally important. DOD pays billions of dollars each year for contracted goods and services in locations such as Iraq and elsewhere. However, several long-standing and systemic problems continue to hinder DOD's management and oversight of contractors at deployed locations, including the failure to follow planning guidance, provide an adequate number of contract oversight personnel, systematically collect and distribute lessons learned, and provide predeployment training for military commanders and contract oversight personnel on the use and role of contractors. GAO's work has identified instances where poor oversight and management of contractors led to negative financial and operational impacts.

What GAO Recommends

GAO has made a number of recommendations aimed at strengthening DOD's management and oversight of contractor support at deployed locations, and the department has agreed to implement many of those recommendations. However, GAO has found that DOD has made limited progress in implementing some key recommendations. The United States has made available nearly $6 billion to rebuild Iraq's energy sector and $300 million to develop its government ministries but lacks integrated strategic plans for both efforts. Building the capacity of the ministries is critical to ensure that Iraq can effectively govern, rebuild, and stabilize the country. Rebuilding Iraq's energy sector is necessary to ensure that Iraq can pay for these tasks and provide essential services to the Iraqi people. However, in the absence of a comprehensive and integrated strategic plan, U.S. efforts to build the capacity of the Iraqi government have been hindered by multiple U.S. agencies pursuing individual efforts without overarching direction. The creation of a plan for the energy sector is also essential for Iraq to meet energy production and export goals. GAO recommended that State work with Iraqi ministries to develop an integrated energy plan. State commented that the Iraqi government, not the U.S. government, should act on GAO's recommendations. Given the billions of dollars provided to rebuild Iraq's energy sector and the limited capacity of Iraqi ministries, GAO believes that its recommendations are still valid.