US May Have Wasted $8 Billion in Effort to Rebuild Iraq

Almost 10 years after the U.S. invasion of Iraq, an accounting of the $60 billion the U.S. spent to help rebuild the country has determined that at least $8 billion of it may have been wasted, a figure equal to 15 percent of the funds the U.S. dedicated to the effort.

The special inspector general for Iraqi reconstruction (SIGIR) said it has been unable to find record-keeping to justify where the $8 billion may have been spent.

Established by Congress nine years ago to keep tabs on how the $60 billion in Iraq reconstruction money was being spent, SIGIR is wrapping up its work after having conducted 390 audits and 600 inspections.

Investigators reviewed small- and large-scale reconstruction projects in Iraq that, despite being well-intentioned, were sometimes found to be lacking in workmanship and built with a lack of coordination with Iraqi officials as to how they would be maintained after the U.S. left Iraq.

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Throughout those investigations, SIGIR officials often complained about shoddy record-keeping that made it difficult for them to track the funding and oversight of the reconstruction projects in Iraq.

In one of the last audits, SIGIR investigators said that pattern continued as they determined the $8 billion figure after reviewing past audits and a new review of the comprehensive database on spending in Iraq.

According to the audit, "We found that incomplete and unstandarized databases left us unable to identify the specific use of billions of dollars spent on projects, because the U.S. government agencies involved were not required to manage project data in a uniform and comprehensive manner. While these agencies present broad information on their programs, they did not develop or retain accessible data regarding detailed projects."

Therefore, SIGIR said, " A full accounting, if ever possible, would require combing through mountains of disordered electronic and paper records accumulated since 2003 that are currently stored in multiple locations across many agencies. "

The $60 billion came from five funds: $20.86 billion from the Iraq Relief and Reconstruction Fund, $20.19 billion from the Iraq Security Forces Fund that was used to train and equip Iraq's security forces, $5.13 billion from the Economic Support Fund, $4.12 billion from the Commander's Emergency Response Program and $1.31 billion from the International Narcotics Control and Law Enforcement account.

SIGIR estimated that an average of $15 million a day was spent during the nine-year Iraqi rebuilding program. The number decreased over time. It was $25 million a day in 2005 and had decreased to $7 million a day in 2012. All U.S. military forces left Iraq in December 2011.

A State Department response included in the audit labeled SIGIR's estimate of billions wasted in Iraq as being "premature" because "the lack of consistent record-keeping systems has made it impossible to quantify the precise extent of waste that occurred during the implementation of reconstruction programs in Iraq."

SIGIR also released a 186-page final report entitled "Learning from Iraq" that contained interviews with senior American and Iraqi leaders who lamented the missed opportunities the aid money presented. Their comments reaffirmed what SIGIR officials had determined over the years, that the U.S. undertook large projects in Iraq without much input from Iraqis or long-range planning for how they would be maintained after the U.S. military left Iraq.

One example listed in the final report was a 2004 contract for $80 million to build the 3,600-bed Khan bani Sa'ad prison in Diyala province. By June 2006, the project was terminated for "failure to make sufficient progress on the project" and "massive cost overruns" that put the project two years behind schedule.

But efforts toward construction continued for another year before the project was totally scrapped. By then, $40 million had been spent, no building on the facility had been completed and the Iraqi Ministry of Justice said it did not have plans to use it.

According to the report, "SIGIR visited the site in June 2008, finding it neither secured nor occupied by the GOI. SIGIR's assessment documented poor-quality workmanship by [the contractor] Parsons, including many potentially dangerous conditions. Several sections were recommended for demolition. The site still sits dormant in Diyala and apparently will never be used."

But SIGIR also found instances where U.S. funds had been spent on projects that provided long-lasting benefits to Iraq and were delivered on time.

For example, $6 million was spent to renovate the Baghdad Railway Station.

"The project worked," said SIGIR after a 2006 review found that "the Iraq Republic Railway now had workspaces that offered a much safer and healthier environment for its employees and visitors, and the station's structures and utility systems had been modernized to sufficiently support the railway's services and operations."

In the report, Special Inspector General Stuart Bowen listed these "seven final lessons" from Iraq:

1. Create an integrated civilian-military office to plan, execute, and be accountable for contingency rebuilding activities during stabilization and reconstruction operations.

2. Begin rebuilding only after establishing sufficient security, and focus first on small programs and projects.

3. Ensure full host-country engagement in program and project selection, securing commitments to share costs (possibly through loans) and agreements to sustain completed projects after their transfer.

4. Establish uniform contracting, personnel, and information management systems that all SRO participants use.

5. Require robust oversight of SRO activities from the operation's inception.

6. Preserve and refine programs developed in Iraq, like the Commander's Emergency Response Program and the Provincial Reconstruction Team program, that produced successes when used judiciously.

7. Plan in advance, plan comprehensively and in an integrated fashion, and have backup plans ready to go.