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SIGIR Reports to Congress: January 30, 2005 Report

This is the first report of the new Office of the Special Inspector General for Iraq Reconstruction (SIGIR), which succeeded the Coalition Provisional Authority Inspector General (CPA-IG). The SIGIR is carrying on the work of the former CPA-IG with modified authorities. The CPA-IG provided oversight of the operations and programs of the Coalition Provisional Authority (CPA), and now the mandate of the SIGIR focuses on the programs and operations funded by the Iraq Relief and Reconstruction Fund (IRRF)1. The SIGIR provides timely information to the Congress and the Secretaries of State and Defense.

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These are summaries of the findings of two SIGIR audits during this reporting period:

• The CPA provided less than adequate controls for approximately $8.8 billion of Development Fund for Iraq (DFI) funds provided to Iraqi ministries through the national budget process. The CPA did not establish or implement sufficient managerial, financial, and contractual controls to ensure that DFI funds were used in a transparent manner. Consequently, there was no assurance that the funds were used for the purposes mandated by United Nations Security Council Resolution 1483 (UNSCR 1483). UNSCR 1483 required that the DFI funds be used in a transparent manner to meet the humanitarian needs of the Iraqi people, for the economic reconstruction and repair of Iraq's infrastructure, for the continued disarmament of Iraq, for the costs of Iraqi civilian administration, and for other purposes benefiting the people of Iraq.
• Kellogg Brown & Root, Inc., (KBR) did not provide the CPA with sufficiently detailed cost data to evaluate overall project costs or to determine whether specific costs for services performed were reasonable. Neither the Logistics Civilian Augmentation Program (LOGCAP) III contract nor the associated Task Order 0044 required detailed cost data, and the LOGCAP contract was awarded to KBR even though the contractor did not have certified billing or cost-and-schedule reporting systems. As a result, the CPA did not receive sufficient or reliable cost information to effectively manage Task Order 0044. The SIGIR believes that Federal Acquisition Regulation Clause 52.216-26, Payments of Allowable Costs Before Definitization, should be enforced by the U.S. Army Field Support Command.