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Special Inspector General for Iraq Reconstruction (SIGIR)
April 30, 2006 Quarterly and Semiannual Report to Congress

"I am pleased to submit to the U.S. Congress and the Secretaries of State and Defense the ninth Quarterly Report from the Special Inspector General for Iraq Reconstruction (SIGIR).

As this year of transition in Iraq reconstruction unfolds, U.S.-funded projects are rapidly being completed and transferred to Iraqi management and control. Within that context, SIGIR identifies, in Section 1 of this Report, five critical issues the resolution of which will help advance Iraq toward economic prosperity and democratic success:

• Improve Infrastructure Security-by intensifying efforts to ensure that Iraq can secure its essential energy infrastructure.
• Close the Reconstruction Gap-by providing funds for sustaining Iraq's infrastructure and developing Iraqi capacities to manage projects and programs.
• Bolster Anticorruption Efforts-by empowering and enabling Iraq's incipient anticorruption institutions through training and funding.
• Energize the Oil and Gas Sector-by stimulating and sustaining investment in this sector, which is the key to Iraq's future prosperity.
• Increase International Donor Participation-by engaging donor nations to participate more actively in the next phase of Iraq's relief and reconstruction.

Section 2 of this Report updates SIGIR's previous reviews of Iraq's essential service sectors-oil and gas, electricity, and water-and provides initial reports on the following sectors: security; transportation and communications; health care; and democracy, education, and private sector development. Taken together, these sector reviews provide, for the first time, a comprehensive and detailed picture of the activities, outputs, and outcomes arising from the enormous U.S. investment in Iraq's infrastructure. Despite certain setbacks, chiefly caused by security problems, the overall picture conveys a sense of substantial progress in the relief, recovery, and reconstruction of Iraq.

Section 3 of this Report provides summaries of SIGIR audits, inspections, and investigations performed this quarter. Notable among the audits is a performance review of the contract to construct primary health care centers across Iraq. As the audit notes, both the contractor and the U.S. government's oversight failed to meet expectations. After $186,000,000 had been spent, only six health care centers were complete. Fourteen more will be completed by the contractor, and the remaining facilities, which are partially constructed, will have to be completed by other means. SIGIR performed five inspections of selected health care centers covered by this contract, and, at each facility, SIGIR inspectors found serious deficiencies.

SIGIR also audited "Task Force Shield" this quarter, a program designed in September 2003 to build Iraq's capacity to protect its oil and gas and electrical infrastructures. The audit documents significant shortcomings in the program and concludes that it failed to meet its goals because it was burdened by a lack of clear management structure and poor accountability. There were indications of potential fraud, which are now under review by SIGIR investigators.

(...)

SIGIR inspectors continued to meet their mission this quarter, which is to visit project sites from every sector and geographical region in Iraq and report on the quality of the work performed.

(...)

SIGIR's investigators continued work on more than 70 cases in Iraq and the U.S., combating and detering fraud.

(...)

This Report also contains a thorough review of the history and status of investments in Iraq's relief and reconstruction by non-U.S. donor nations and international institutions, as well as a summary of Iraq's current debt situation.