	Transferring Additional Security Responsibilities to the Iraqi Government Has Not Improved the Security Situation

Despite U.S. and Iraqi efforts to shift a greater share of the country’s  defense to the Iraqi security forces, the security situation continues to  deteriorate, impeding management of the more than $29 billion obligated  for reconstruction and stabilization efforts. The State Department has reported that the number of  army and police forces that have been trained and equipped increased  from about 174,000 in July 2005 to about 323,000 in December 2006. In October  2006, the State Department reported that the recent increase in violence  has hindered efforts to engage with Iraqi partners and illustrates the  difficulty in making political and economic progress in the absence of  adequate security conditions. According to portions of the January 2007  National Intelligence Estimate on Iraq that were declassified, sectarian  divisions have eroded the dependability of many Iraqi units, and a number  of Iraqi units have refused to serve outside the areas where they were  recruited. Moreover, in November 2006, the State Department reported  that corruption and infiltration by militias and others loyal to parties other  than the Iraqi government have resulted in the Iraqi security forces being  part of the problem in many areas instead of the solution. DOD Faces Weaknesses in the Program to Develop Iraqi Security Forces

Our work has identified weaknesses in the $15.4 billion program to  develop Iraqi security forces. Although unit-level transition readiness  assessments provide detailed information on Iraqi security force  capabilities, the aggregate reports that DOD and State provide to Congress  do not provide the information needed to determine the complete  capabilities of the forces. Consequently, Congress will need additional  information to assess the department’s supplemental request for $3.8  billion to train and equip Iraqi security forces. The State Department reports that the number of trained and equipped  Iraqi security forces has increased from about 174,000 in July 2005 to  about 323,000 in December 2006. However, these numbers do not provide  a complete picture of the Iraqi security forces’ capabilities in part because  they may overstate the number of forces on duty. DOD Faces Challenges in Managing Contracts and Contractors in Iraq that Could Lead to Fraud, Waste, and Abuse

While DOD relies heavily on contractors for reconstruction projects and  support to its forces in Iraq, it faces several management and oversight  challenges. Second,  DOD lacks clear and comprehensive guidance and leadership for  managing and overseeing contractors. Third, key contracting issues— including unclear requirements and not reaching agreement on key terms  and conditions in a timely manner—have prevented DOD from achieving  successful acquisition outcomes. Finally, military commanders and contract oversight  personnel do not receive sufficient training to effectively manage  contracts and contractors in Iraq. Most recently, in our December 2006 review of DOD’s use of contractors  in Iraq, we found that DOD’s limited visibility unnecessarily increased  contracting costs to the government and introduced unnecessary risk. DOD Needs Clear and Comprehensive Guidance and Leadership to Manage and Oversee Contractors

Since the mid-1990s, our reports have highlighted the need for clear and  comprehensive guidance for managing and overseeing the use of  contractors who support deployed forces. However, as our December 2006  report made clear, DOD’s guidance does not address a number of  problems we have repeatedly raised—such as the need to provide  adequate contract oversight personnel, to collect and share lessons  learned on the use of contractors supporting deployed forces, or to  provide DOD commanders and contract oversight personnel with training  on the use of contractors overseas before deployment. According to U.S.  officials, the inability of the Iraqi government to spend its 2006 capital  budget also increases the uncertainty that it can sustain the rebuilding  effort. Iraq Has Difficulty Sustaining the Billions of Dollars Invested in Infrastructure and Security

The United States has obligated about $14 billion to restore essential  services such as oil, electricity, and water, and more than $15 billion to  train, equip, and sustain Iraqi security forces. The Iraqi Government Faces Critical Challenges Staffing Effective Civil Service, Fighting Corruption, and Managing Resources

Iraqi government institutions are undeveloped and confront significant  challenges in staffing a competent, non-partisan civil service; effectively  fighting corruption; using modern technology; and managing resources  effectively. This includes more accurate,  reliable, and comprehensive information on the cost of the war, the  capabilities of Iraqi security forces, and the results of U.S. efforts to build  the managerial capacity of the Iraqi ministries.
Why GAO Did This Study

This testimony discusses some of the systemic conditions in Iraq that contribute to the fraud, waste, or abuse of U.S.-provided funds. Since 2003, DOD has reported total costs of about $257.5 billion for military operations in Iraq; these have increased from about $38.8 billion in fiscal year 2003 to about $83.4 billion in fiscal year 2006. The largest increase has been in operation and maintenance expenses, including items such as support for housing, food, and services; the repair of equipment; and transportation of people, supplies and equipment. Many of the operation and maintenance expenses are for services. Other U.S. government agencies had reported obligations of $29 billion for Iraqi reconstruction and stabilization, as of October 2006. These funds have been used for, among other things, infrastructure repair of the electricity, oil, water, and health sectors; training and equipping of the Iraqi security forces; and administrative expenses. Specifically, the testimony focuses on (1) security, (2) management and reporting of the program to train and equip Iraqi security forces, (3) contracting and contract management activities, and (4) Iraqi capacity and commitment to manage and fund reconstruction and security efforts.

What GAO Found

Despite U.S. and Iraqi efforts to shift a greater share of the country's defense on Iraqi forces, the security situation continues to deteriorate. Poor security conditions have hindered the management of the more than $29 billion that has been obligated for reconstruction and stabilization efforts since 2003. Although the State Department has reported that the number of Iraqi army and police forces that has been trained and equipped has increased from about 174,000 in July 2005 to about 323,000 in December 2006, overall security conditions in Iraq have deteriorated and grown more complex. These conditions have hindered efforts to engage with Iraqi partners and demonstrate the difficulty in making political and economic progress in the absence of adequate security conditions. GAO's ongoing work has identified weaknesses in the $15.4 billion program to support the development and sustainment of Iraqi security forces. Sectarian divisions have eroded the dependability of many Iraqi units, and a number of Iraqi units have refused to serve outside the areas where they were recruited. Corruption and infiltration by militias and others loyal to parties other than the Iraqi government have resulted in the Iraqi security forces being part of the problem in many areas instead of the solution. While unit-level transition readiness assessments (TRA) provide important information on Iraqi security force capabilities, the aggregate reports DOD provides to Congress based on these assessments do not provide adequate information to judge the capabilities of Iraqi forces. The DOD reports do not detail the adequacy of Iraqi security forces' manpower, equipment, logistical support, or training and may overstate the number of forces on duty. Congress will need additional information found in the TRAs to assess DOD's supplemental request for funds to train and equip Iraqi security forces. DOD's heavy reliance on contractors in Iraq, its long-standing contract and contract management problems, and poor security conditions provide opportunities for fraud, waste, and abuse. First, military commanders and senior DOD leaders do not have visibility over the total number of contractors who are supporting deployed forces in Iraq. As we have noted in the past, this limited visibility can unnecessarily increase costs to the government. Second, DOD lacks clear and comprehensive guidance and leadership for managing and overseeing contractors. In October 2005, DOD issued, for the first time, department-wide guidance on the use of contractors that support deployed forces. Although this guidance is a good first step, it does not address a number of problems we have repeatedly raised. Third, key contracting issues have prevented DOD from achieving successful acquisition outcomes. There has been an absence of well-defined requirements, and DOD has often entered into contract arrangements on reconstruction efforts and into contracts to support deployed forces that have posed additional risk to the government. Further, a lack of training hinders the ability of military commanders to adequately plan for the use of contractor support and inhibits the ability of contract oversight personnel to manage and oversee contracts and contractors in Iraq. Iraqi capacity and commitment to manage and fund reconstruction and security efforts remains limited. Key ministries face challenges in staffing a competent and non-partisan civil service, fighting corruption, and using modern technology. The inability of the Iraqi government to spend its 2006 capital budget also increases the uncertainty that it can sustain the rebuilding effort.