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entitled 'Stabilizing and Rebuilding Iraq: U.S. Ministry Capacity 
Development Efforts Need an Overall Integrated Strategy to Guide 
Efforts and Manage Risk' which was released on October 9, 2007. 

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Report to Congressional Committees: 

United States Government Accountability Office: 

GAO: 

October 2007: 

Stabilizing and Rebuilding Iraq: 

U.S. Ministry Capacity Development Efforts Need an Overall Integrated 
Strategy to Guide Efforts and Manage Risk: 

Stabilizing and Rebuilding Iraq: 

GAO-08-117: 

GAO Highlights: 

Highlights of GAO-08-117, a report to congressional committees. 

Why GAO Did This Study: 

Iraq’s ministries were decimated following years of neglect and 
centralized control under the former regime. Developing competent and 
loyal Iraqi ministries is critical to stabilizing and rebuilding Iraq. 
The President received $140 million in fiscal year 2007 funds and 
requested an additional $255 million in fiscal year 2008 to develop the 
capacity of the Iraq’s ministries. 

This report assesses (1) the nature and extent of U.S. efforts to 
develop the capacity of the Iraqi ministries, (2) the key challenges to 
these efforts, and (3) the extent to which the U.S. government has an 
overall integrated strategy for these efforts. For this effort, GAO 
reviewed U.S. project contracts and reports and interviewed officials 
from the Departments of State (State), Defense (DOD), and the United 
States Agency for International Development (USAID) in Baghdad and 
Washington, D.C. 

What GAO Found: 

Over the past 4 years, U.S. efforts to help build the capacity of the 
Iraqi national government have been characterized by (1) multiple U.S. 
agencies leading individual efforts, without overarching direction from 
a lead entity that integrates their efforts; and (2) shifting 
timeframes and priorities in response to deteriorating security and the 
reorganization of the U.S. mission in Iraq. First, no single agency is 
in charge of leading the U.S. ministry capacity development efforts, 
although State took steps to improve coordination in early 2007. State, 
DOD and USAID have led separate efforts at Iraqi ministries. About $169 
million in funds were allocated in 2005 and 2006 for these efforts. As 
of mid-2007, State and USAID were providing 169 capacity development 
advisors to 10 key civilian ministries and DOD was providing 215 to the 
Ministries of Defense and Interior. Second, the focus of U.S. capacity 
development efforts has shifted from long-term institution-building 
projects, such as helping the Iraqi government develop its own capacity 
development strategy, to an immediate effort to help Iraqi ministries 
overcome their inability to spend their capital budgets and deliver 
essential services to the Iraqi people. 

U.S. ministry capacity efforts face four key challenges that pose a 
risk to their success and long-term sustainability. First, Iraqi 
ministries lack personnel with key skills, such as budgeting and 
procurement. Second, sectarian influence over ministry leadership and 
staff complicates efforts to build a professional and non-aligned civil 
service. Third, pervasive corruption in the Iraqi ministries impedes 
the effectiveness of U.S. efforts. Fourth, poor security limits U.S. 
advisors’ access to their Iraqi counterparts, preventing ministry staff 
from attending planned training sessions and contributing to the exodus 
of skilled professionals to other countries. 

The U.S. government is beginning to develop an integrated strategy for 
U.S. capacity development efforts in Iraq, although agencies have been 
implementing separate programs since 2003. GAO’s previous analyses of 
U.S. multiagency national strategies demonstrate that such a strategy 
should integrate the efforts of the involved agencies with the 
priorities of the Iraqi government, and include a clear purpose and 
scope; a delineation of U.S. roles, responsibilities, and coordination 
with other donors, including the United Nations; desired goals and 
objectives; performance measures; and a description of benefits and 
costs. Moreover, it should attempt to address and mitigate the risks 
associated with the four challenges identified above. U.S. ministry 
capacity efforts to date have included some but not all of these 
components. For example, agencies are working to clarify roles and 
responsibilities. However, U.S. efforts lack clear ties to Iraqi-
identified priorities at all ministries, clear performance measures to 
determine results at civilian ministries, and information on how 
resources will be targeted to achieve the desired end-state. 

What GAO Recommends: 

GAO recommends that State, in consultation with the Iraqi government, 
complete an overall strategy for U.S. efforts to develop the capacity 
of the Iraqi government. Congress should consider conditioning future 
appropriations on the completion of the strategy. State recognized the 
value of such a strategy but expressed concern about conditioning 
further capacity development investment on completion of such a 
strategy. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-117].
For more information, contact Joseph A. Christoff at (202) 512-8979 or 
christoffj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

U.S. Efforts to Build Capacity of the Iraqi Government Lack Unified 
Direction: 

Low Capacity of Iraq Ministries and Other Challenges Pose Risks to the 
U.S. Ministry Capacity Development Program: 

United States Is Beginning to Develop a Strategy for Capacity 
Development Efforts: 

Conclusions: 

Recommendations for Executive Action: 

Matters for Congressional Consideration: 

Agency Comments and Our Evaluation: 

Appendix I: Comments from the Department of State and USAID: 

GAO Comments: 

Appendix II: Scope and Methodology: 

Appendix III: State-Led Capacity Development Programs as of May 2007: 

Appendix IV: Other Donor Partner Capacity Development Efforts: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Estimated Staff Numbers and 2007 Annual Budget for Key Iraqi 
Ministries: 

Table 2: Key U.S. Capacity Development Efforts as of Mid-2007: 

Table 3: Status of U.S. Capacity Development Strategy: 

Figures: 

Figure 1: Government of Iraq Executive Branch and Ministries: 

Figure 2: Key U.S. Efforts to Improve Ministerial Capacity, 2003 to Mid-
2006: 

Figure 3: Government of Iraq Budget and Actual Expenditures for January 
to December 2006: 

Abbreviations: 

BBA: Bilingual, Bicultural Advisor: 

BSA: Board of Supreme Audit: 

CENTCOM: United States Central Command: 

CETI: Coordinator for Economic Transition in Iraq: 

CPA: Coalition Provisional Authority: 

CPI: Commission for Public Integrity: 

DFID: Department for International Development, United Kingdom: 

DOD: Department of Defense: 

EU: European Union: 

FMIS: Financial Management Information System: 

FMS: Foreign Military Sales: 

GRD: Gulf Region Division, U.S. Army Corps of Engineers: 

IRFFI: International Reconstruction Fund Facility for Iraq: 

IRMO: Iraq Reconstruction Management Office: 

IRRF: Iraq Relief and Reconstruction Funds: 

ISFF: Iraq Security Forces Fund: 

ITAO: Iraq Transition Assistance Office: 

ITF: United Nations Development Group Iraq Trust Fund: 

JACC: Joint Anti-Corruption Council: 

JTFCD: Joint Task Force on Capacity Development: 

MNF-I: Multinational Force-Iraq: 

MNSTC-I: Multinational Security Transition Command-Iraq: 

MOD: Ministry of Defense: 

MOI: Ministry of Interior: 

MPRI: Military Professional Resources, Incorporated: 

MSI: Management Systems International, Incorporated: 

NCCMD: National Center for Consultancy and Management Development, Iraq 
Ministry of Planning: 

OAT: Office of Accountability and Transparency: 

SME: Subject Matter Expert: 

UN: United Nations: 

UNDP: United Nations Development Program: 

USAID: United States Agency for International Development: 

United States Government Accountability Office: 

Washington, DC 20548: 

October 2007: 

Congressional Committees: 

The development of competent and loyal government ministries is 
critical to stabilizing and rebuilding Iraq. Iraq's 34 ministries are 
responsible for ensuring security through the armed forces and police 
services and for providing basic government services including 
electricity, water, health care, education, and justice. The ministries 
are also Iraq's largest employer, with an estimated 2.2 million 
employees.[Footnote 1] In 2005 and 2006, the United States provided 
funding of about $169 million for programs to help build the capability 
of key civilian ministries and the Ministries of Defense and Interior. 
In January 2007, the President identified government capacity 
development as a core principle of the new strategy for Iraq--the New 
Way Forward--and sought an additional $395 million funding for these 
efforts in fiscal years 2007 and 2008. The President received $140 
million in supplemental funding for fiscal year 2007 to continue these 
efforts and has requested an additional $255 million in fiscal year 
2008.[Footnote 2] According to the New Way Forward, strengthening the 
Iraqi government is critical to transforming Iraq into a modern 
democratic state. 

Ministry capacity development refers to efforts and programs to advise 
and help Iraqi government employees develop the skills to plan 
programs, execute their budgets, and effectively deliver government 
services such as electricity, water, and security. U.S. and 
international officials agree that developing Iraq's ministerial 
capacity requires long-term, sustained effort. In this report, we 
assess (1) the nature and extent of U.S. efforts to develop the 
capacity of the Iraqi ministries, (2) key challenges to capacity 
development efforts, and (3) the extent to which the U.S. government 
has an overall strategy for these efforts. 

To accomplish our objectives, we reviewed and analyzed U.S., Iraqi, 
donor government, United Nations (UN), and World Bank reports and data. 
Although U.S. ministry capacity development activities have been 
ongoing since 2003, we focused on capacity development efforts 
initiated between late 2005 and mid-2007 as part of the U.S. embassy's 
attempt to launch a more focused and coordinated national capacity 
development program. During our fieldwork in Washington, D.C; New York 
City; Baghdad, Iraq; and Amman, Jordan, we reviewed relevant U.S. and 
Iraqi government documents and met with officials and contractors 
working for the Departments of State (State), Defense (DOD), Treasury, 
Justice, and the U.S. Agency for International Development (USAID). 
During our trips to Iraq and Jordan, we met with officials from State; 
its Iraq Reconstruction Management Office (IRMO); the DOD-run 
Multinational Force-Iraq (MNF-I); its subcommand, the Multinational 
Security Transition Command-Iraq (MNSTC-I); and donor country 
representatives from the United Kingdom, Canada, and the European 
Union. We analyzed reports documenting these entities' capacity 
development efforts and results. We also analyzed data on Iraq's 2006 
and 2007 budgets and 2006 budget expenditures. We conducted our review 
from August 2006 through August 2007 in accordance with generally 
accepted government auditing standards. A detailed description of our 
scope and methodology is included in appendix 1 of this report. Because 
of broad congressional interest in this issue, we performed our work 
under the authority of the Comptroller General of the United States to 
conduct reviews on his own initiative. The work performed for this 
review has also contributed to several related GAO products on 
Iraq.[Footnote 3] 

Results in Brief: 

The implementation of U.S. efforts to help build the capacity of the 
Iraqi national government over the past 4 years has been characterized 
by (1) multiple U.S. agencies leading individual efforts, without 
overarching direction from a lead entity or strategic approach that 
integrates their efforts; and (2) shifting timeframes and priorities in 
response to deteriorating security and reorganization of the U.S. 
mission in Iraq. First, no single agency is in charge of leading the 
overall U.S. capacity development effort as originally called for by 
State's late 2005 assessment. To address concerns raised by the 
assessment, the U.S. mission initiated the National Capacity 
Development Program at the end of 2005 but left responsibilities for 
capacity development divided among State, DOD, and USAID. These three 
agencies individually have led separate efforts at key Iraqi 
ministries. While no lead entity provided overarching direction to 
integrate their efforts, the U.S. embassy in Baghdad has taken steps to 
improve coordination since early 2007. Together, these three agencies 
have conducted the most significant programs with funding allocations 
totaling about $169 million as of the end of 2006.[Footnote 4] As of 
mid-2007, these agencies were providing 384 capacity development 
advisors to 12 key ministries; State and USAID were providing 169 
advisors to 10 key civilian ministries and DOD was providing 215 to the 
Ministries of Defense and Interior. Second, the focus of U.S. capacity 
development efforts shifted from long-term institution building to an 
immediate effort to help Iraqi ministries overcome their inability to 
spend their capital budgets and better deliver essential services to 
the Iraqi people by September 2007. 

U.S. efforts to develop Iraqi ministerial capacity face four challenges 
that pose a risk to success and long-term sustainability. First, Iraqi 
ministries have significant shortages of competent personnel with the 
skills necessary to formulate budgets, procure goods and services, and 
perform other vital ministry tasks. A September 2006 U.S. assessment 
concluded that the majority of staff at all but one of the ministries 
surveyed were inadequately trained for their positions. Second, Iraqi 
efforts to build a professional and nonpartisan civil service are 
complicated by partisan influence over the leadership and staffing of 
the ministries. A November 2006, DOD report notes that ministry 
personnel are frequently selected on the basis of political affiliation 
and that some ministries are infiltrated by sectarian militias. Third, 
corruption impedes the effectiveness of U.S. efforts to develop 
ministry capacity. Iraqi law and intimidation limit anti-corruption 
agencies' efforts to pursue prosecution of employees accused of 
wrongdoing. Fourth, poor security conditions challenge the ministries. 
The lack of security limits U.S. advisors' access to Iraqi ministries, 
threatens Iraqi government workers, and prevents Iraqis from attending 
planned training sessions or getting to work. The lack of security also 
contributes to the loss of ministry personnel as some join the 4.2 
million Iraqis who have fled the country or have been internally 
displaced since 2003. 

The U.S. government is just beginning to develop an overall strategy 
for ministerial capacity development, although agencies have been 
implementing separate programs since 2003. GAO's previous analyses of 
U.S. multiagency national strategies demonstrate that an overall 
strategy for capacity development should include (1) a clear purpose, 
scope, and methodology; (2) a delineation of U.S. roles, 
responsibilities, and coordination with other donors, including the UN; 
(3) desired goals, objectives, and activities, clearly linked to Iraqi 
government priorities; (4) performance measures; and (5) a description 
of the costs and resources needed. Moreover, it should attempt to 
address and mitigate the risks associated with the four challenges 
identified above. U.S. ministry capacity efforts to date have included 
some but not all of these components. For example, agencies are working 
to better define roles and responsibilities for capacity development 
and to ensure that the overall goals of these efforts are clearly 
defined. However, U.S. ministry capacity development goals do not 
include priorities identified by the Iraqis for all ministries. In 
addition, U.S. agencies have developed tools to assess the capacity of 
the Iraqi ministries but have not developed performance measures to 
determine whether U.S. ministry capacity efforts are achieving results 
at civilian ministries. Further, agencies have not identified the 
future costs and resources needed or provided information on how 
current or requested resources will be targeted to achieve the desired 
end-state. Moreover, they should attempt to address and mitigate the 
risks associated with the four challenges identified above. The three 
agencies leading capacity development efforts, particularly the U.S.- 
run MNSTC-I, have developed some of these elements for their individual 
programs at the ministries but not as part of a unified strategy for 
overall U.S. efforts. 

We recommend that State, in consultation with the Iraqi government, 
complete an overall integrated strategy for U.S. capacity development 
efforts in Iraq that, among other things, addresses the risks 
associated with these challenges and clarifies the roles and leadership 
responsibilities of those involved in the overall program. Moreover, 
given the absence of an integrated capacity development strategy, it is 
unclear how further appropriations of funding for ministry capacity 
development programs will contribute to the success of overall U.S. 
efforts in Iraq. Congress should consider conditioning future 
appropriations on the completion of a strategy incorporating these key 
components. 

In commenting on a draft of this report, State noted (1) its concern 
over our recommendation to condition future appropriations for capacity 
development on the completion of a strategy; (2) the recent appointment 
of an ambassador to supervise all short-and medium-term capacity 
development programs; and (3) the need to tailor capacity development 
needs to each Iraqi organization. We do not recommend stopping U.S. 
investment in capacity development; the $140 million in supplemental 
funding appropriated in fiscal year 2007 remains available for the 
agencies to continue their efforts. Rather, we recommend that Congress 
condition future funding on the development of an overall integrated 
strategy. We acknowledge that State named an ambassador to coordinate 
the Embassy's economic and assistance operations, including supervising 
civilian capacity development programs. However, this action occurred 
in July 2007, underscoring our point that U.S. capacity development 
efforts have lacked overall leadership and highlighting the need for an 
overall integrated strategy. Finally, our recommendation does not 
preclude U.S. agencies from tailoring capacity development efforts to 
meet each ministry's unique needs. A strategy ensures that a U.S.- 
funded program has consistent overall goals, clear leadership and 
roles, and assessed risks and vulnerabilities. 

Background: 

The permanent national government of Iraq was established by a 
constitutional referendum in October 2005, followed by election of the 
first Council of Representatives (Parliament) in December 2005 and the 
selection of the first Prime Minister, Nuri Kamal al-Maliki, in May 
2006. By mid-2006, the cabinet had been approved, and the government 
now has 34 ministries responsible for providing security and essential 
services including electricity, water, and education for the Iraqi 
people (see fig. 1). 

Figure 1: Government of Iraq Executive Branch and Ministries: 

[See PDF for image] 

Source: State Department and Map Resources (map). 

Note: Ministry of Planning's full name is the Ministry of Planning and 
Development Cooperation. 

[End of figure] 

The size of the ministries varies considerably in terms of staff 
numbers and budget. As of May 2007, the U.S. government ministry 
capacity development programs target 12 key ministries--10 civilian 
ministries are the focus of State and USAID programs, while the 
Ministries of Defense and Interior are targeted by DOD programs. These 
ministries contain 65 percent of the workforce and are responsible for 
74 percent of the current budget (see table 1). 

Table 1: Estimated Staff Numbers and 2007 Annual Budget for Key Iraqi 
Ministries: 

Key Ministries: Finance; 
Staff[A]: 9,802; 
Staff as percentage: <1; 
2007 budget (dollars in millions): $14,436[B]; 
Budget as percentage: 35. 

Key Ministries: Interior; 
Staff[A]: 408,001; 
Staff as percentage: 20; 
2007 budget (dollars in millions): 3,183; 
Budget as percentage: 8. 

Key Ministries: Defense; 
Staff[A]: 200,001; 
Staff as percentage: 10; 
2007 budget (dollars in millions): 4,141; 
Budget as percentage: 10. 

Key Ministries: Health; 
Staff[A]: 151,143; 
Staff as percentage: 7; 
2007 budget (dollars in millions): 1,818; 
Budget as percentage: 4. 

Key Ministries: Education; 
Staff[A]: 514,644[C]; 
Staff as percentage: 25; 
2007 budget (dollars in millions): 1,821; 
Budget as percentage: 4. 

Key Ministries: Agriculture; 
Staff[A]: 10,139; 
Staff as percentage: <1; 
2007 budget (dollars in millions): 108; 
Budget as percentage: <1. 

Key Ministries: Water Resources; 
Staff[A]: 17,149; 
Staff as percentage: <1; 
2007 budget (dollars in millions): 353; 
Budget as percentage: 1. 

Key Ministries: Planning; 
Staff[A]: 1,825; 
Staff as percentage: <1; 
2007 budget (dollars in millions): 210; 
Budget as percentage: 1. 

Key Ministries: Oil; 
Staff[A]: 75,000[D]; 
Staff as percentage: 3; 
2007 budget (dollars in millions): 2,451; 
Budget as percentage: 6. 

Key Ministries: Electricity; 
Staff[A]: 84,000[E]; 
Staff as percentage: 4; 
2007 budget (dollars in millions): 1,474; 
Budget as percentage: 4. 

Key Ministries: Justice; 
Staff[A]: 16,319; 
Staff as percentage: <1; 
2007 budget (dollars in millions): 125; 
Budget as percentage: <1. 

Key Ministries: Municipalities and Public Works; 
Staff[A]: 2,763; 
Staff as percentage: <1; 
2007 budget (dollars in millions): 370; 
Budget as percentage: 1. 

Subtotal--Key ministries; 
Staff[A]: 1,491,000; 
Staff as percentage: 67; 
2007 budget (dollars in millions): 30,490; 
Budget as percentage: 74. 

Subtotal--Key ministries: Other ministries and entities; 
Staff[A]: 727,000[F]; 
Staff as percentage: 33; 
2007 budget (dollars in millions): 10,564; 
Budget as percentage: 26. 

Total: 
Staff[A]: 2,218,000; 
Staff as percentage: 100; 
2007 budget (dollars in millions): $41,054; 
Budget as percentage: 100. 

Sources: Iraq National Budget 2007 and State Department Data. 

Notes: 

Numbers of employees are rounded to the nearest thousand. 

[A] Staff numbers include ministry estimates of funded staff positions. 
A census of ministry employees, required by the IMF Standby Agreement, 
has yet to be completed. 

[B] Ministry operations account for about 1 percent of this figure. The 
remainder is for general activities of the state, including food basket 
distribution, welfare, and pensions. 

[C] This figure includes schoolteachers employed by the national 
government. 

[D] State estimate as of September 2007. This figure includes the 
employees of 15 publicly funded but independently operated oil 
companies. 

[E] State estimate as of September 2007. 

[F] This figure includes staff at all other ministries and employees at 
the National Assembly, the Ministry Council, the President's Office, 
the Supreme Justice Council, and the national ministry staff located at 
the provincial level. 

[End of table] 

According to U.S., international, and Coalition Provisional Authority 
(CPA) assessments and officials, years of neglect, a highly centralized 
decision-making system under the former regime, and looting in 2003 
decimated Iraq's government ministries. To address this problem, 
multiple U.S. agencies have conducted capacity development efforts at 
individual Iraqi ministries since 2003.[Footnote 5] 

U.S. Efforts to Build Capacity of the Iraqi Government Lack Unified 
Direction: 

The implementation of U.S. efforts to help build the capacity of the 
Iraqi national government over the past 4 years has been characterized 
by (1) multiple U.S. agencies leading individual efforts without 
overarching direction from a lead entity or strategic approach that 
integrates their efforts with Iraqi government priorities and (2) 
shifting timeframes and priorities in response to deteriorating 
security and U.S. embassy reorganization. State, through the U.S. 
Embassy Baghdad's Iraq Reconstruction Management Office (IRMO)[Footnote 
6] began implementing a number of 1-year projects intended to jump 
start capacity development in 2006 at the 10 civilian ministries 
designated as key to enabling the Iraqi government to sustain its 
reconstruction and deliver essential services to the Iraqi people. It 
also targeted other national level organizations, including the Prime 
Minister's office and anticorruption entities. USAID focused primarily 
on implementing a medium-term effort to improve the public 
administration capabilities of the Iraqi government. DOD conducted 
relatively intensive capacity development efforts at the ministries of 
Defense and Interior. However, the lack of a lead entity to provide 
direction and an overall plan contributed to the three agencies 
developing separate metrics to assess and track the capacity levels of 
ministry functions common to all ministries and blurred the distinction 
between the efforts of USAID and IRMO. Since January 2007, moreover, 
capacity development efforts have been subject to changes in focus, 
agency roles, and organization, with the U.S. embassy and MNF-I seeking 
immediate improvements in ministry performance and results in areas 
such as budget execution. 

State, USAID, and DOD Lead Individual Efforts without Overall 
Direction: 

No single agency is in charge of leading and providing overall 
direction for U.S. ministry capacity development efforts. As of May 
2007, six U.S. agencies were implementing about 53 projects at 
individual ministries and other national Iraqi agencies.[Footnote 7] 
State, USAID, and DOD are leading the largest number of programs with 
funding allocations totaling about $169 million at individual 
ministries and other national Iraqi government agencies.[Footnote 8] As 
of May 1, 2007, about 384 U.S. military, government, and contractor 
staff from these 3 agencies were working with the ministries and were 
implementing or completing capacity development projects. 

State advisory teams led by the embassy's senior consultants were 
assisting capacity development efforts at the 10 key civilian 
ministries--the Ministries of Oil, Electricity, Planning, Water, 
Health, Finance, Justice, Municipalities and Public Works, Agriculture, 
and Education. These teams, ranging in size from 20 positions for the 
Ministry of Oil and 18 each for the Ministries of Finance and 
Electricity to 3 for the Ministry of Agriculture, typically interact 
with the minister, deputy minister, or department director levels, 
according to State officials.[Footnote 9] State also leads efforts to 
strengthen the capacity of three national Iraqi anticorruption 
entities--the Commission for Public Integrity (CPI), the Board of 
Supreme Audit (BSA), and the government's 29 ministerial Inspectors 
General. 

As of early May 2007, State, through IRMO and its successor 
organizations in the Baghdad embassy, had 23 capacity development 
projects worth over $50 million completed, contracted, or under 
way.[Footnote 10] These projects ranged from supplying and installing 
news media equipment in the prime minister's press center to providing 
subject matter experts to mentor, train, and assist Iraqi staff in 
their areas of expertise in the Ministries of Water and 
Electricity.[Footnote 11] See Appendix II for the list of State-led 
capacity development projects. 

USAID conducts a number of ministry capacity development efforts, 
primarily through its 3-year contract with Management Systems 
International, Inc. (MSI). For example, MSI's Arabic-speaking staff 
provide public administration training and other support to the 
Ministry of Planning's National Center for Consultancy and Management 
Development (NCCMD) and other regional civil service training centers, 
using a "train the trainer" approach. MSI has additional advisors 
working with the Council of Minister's Secretariat and six ministries, 
to create, among other things, capacity development plans that will 
guide the development of public administration skills within the 
ministries.[Footnote 12] In addition to these medium-term projects, MSI 
trainers have supported USAID and embassy efforts to achieve more 
immediate improvements in ministry budgeting and procurement 
performance. 

As of June 2007, MSI had 34 international staff providing training to 
Iraqi government staff, according to a USAID official. USAID reported 
that MSI was also working with the Ministry of Planning to develop a 
pilot self-assessment process for possible future use by other 
ministries to identify their own capacity development needs and 
priorities. By July 2007, USAID reported that 855 Iraqi national 
government employees, including staff from all 10 key civilian 
ministries and the Ministry of Interior (MOI), had attended MSI- 
sponsored courses at Iraqi government training centers. They had been 
instructed in, among other things, budgeting, procurement, leadership 
and communications, information management, and anticorruption 
policies. Officials from three other ministries, the Prime Minister's 
Office and the Council of Ministers' Secretariat were also attending 
MSI courses. 

USAID also has had a governance program contract with BearingPoint 
since 2003, which includes a project worth about $8 million to 
implement the system and train government staff on the use of an 
electronic ledger to record government payment and revenue transactions 
called the Financial Management Information System (FMIS). FMIS is 
intended to serve as the primary financial transaction system for the 
entire Iraqi government. According to USAID and BearingPoint officials, 
BearingPoint's Iraq staff had trained approximately 500 Iraqi 
government employees, as of February 2007, on how to use FMIS.[Footnote 
13] 

The coalition's Multinational Security Transition Command-Iraq (MNSTC- 
I) is leading a substantial effort to develop the capacity of the two 
security ministries. As of March 2007, the U.S.-led coalition had 
assigned 215 military, civilian, and contracting personnel to the 
Ministry of Defense (MOD) and MOI to advise Iraqi staff about 
establishing plans and policies, budgeting, and managing personnel and 
logistics, among other things. According to MNSTC-I advisors, they work 
with their Iraqi counterparts on a daily basis to develop policies, 
plans, and procedures. For example, a senior advisor to the joint staff 
worked with MOD staff to develop the counterinsurgency strategy. He 
provided them with a planning template, reviewed their work, and 
suggested they add details such as the source of the threat, the risk 
level, and the forces required to counter threats. The advisors are 
embedded with MOD staff from a number of offices, including Plans and 
Policies and the Iraqi Joint Staff. According to the senior U.S. budget 
advisor at MOD, he and his team work directly with the budget director 
and his staff to prepare budget spreadsheets and ensure that the 
departments justify their funding requests. 

MNSTC-I advisors were also working with Iraqi officials at MOI at all 
levels in the ministry, although they are not embedded in the ministry 
to the same degree as MNSTC-I's MOD advisors. Among other efforts, 
these advisors are helping MOI develop processes for vetting Iraqi 
security forces, including collecting and storing biometric data; 
establishing an identification card system; and establishing a 
personnel management database that will house inventory, payroll, human 
resource, financial, and budget data. Table 2 provides additional 
details on State, USAID, and DOD efforts. 

Table 2: Key U.S. Capacity Development Efforts as of Mid-2007: 

Dollars in millions. 

Agency: State/ IRMO; 
U.S. advisory staff: 135[B]; 
Funding[A]: $61.5; 
Description of key efforts: Implement and coordinate ongoing 1-year 
capacity development projects at key civilian ministries, the Prime 
Minister's Office, and anticorruption institutions; 
Coordinate with other U.S. agencies, international organizations, and 
Iraqi government; 
Provide senior consultants and advisory teams to give technical and 
policy advice and to assist key civilian ministries and other national 
organizations in the development of: 
* budget planning and contracting skills; 
* policies, procedures, and regulations; and: 
* information technology; 
Examples of programs: 
* Build a press office for the Prime Minister's Office; 
* Develop financial information systems; 
* Provide international consultants and subject matter experts to 
mentor, train and assist Iraqi staff in their areas of expertise, and 
advise ministries on a range of public administration functions, 
including legal and regulatory reforms, developing planning documents, 
and business practices; 
* Design and conduct training for ministries, including: 
* international water law and treaties, 
* Iraqi budget law and procedures, and: 
* English language. 

Agency: USAID/MSI; 
U.S. advisory staff: 34[C]; 
Funding[A]: $65; 
Description of key efforts: 
Reestablish and update government civil service training institutes; 
Help ministries identify capacity needs and create plan to meet them; 
Conduct budgeting and procurement courses for ministry managers; 
Examples of programs: 
* Develop and implement training on core public administration 
functions for ministry staff, including procurement and budgeting; 
* Public management advisors and teams of experts assist ministry staff 
with identified capacity development needs; 
* Train Iraqi instructors to teach ministry staff how to conduct 
capacity development assessments; 
* Scholarship program to study public administration. 

Agency: DOD/MNSTC-I; 
U.S. advisory staff: 215; 
Funding[A]: $43[D]; 
Description of key efforts: Embedded U.S. and coalition military and 
civilian advisors work with Iraqi staff to build skills in planning, 
budgeting, personnel, and contracting; 
Examples of programs: Assist the Ministries of Defense and Interior; 
* implement personnel management databases; 
* develop vetting processes for security forces; 
* develop a counter-insurgency strategy. 

Source: GAO Analysis Of State, USAID, And DOD Data. 

[A] Funding as of the end of calendar year 2006. Funding for State/IRMO 
and USAID includes fiscal year 2004 Iraq Relief and Reconstruction 
Funds (IRRF2) provided in the Emergency Supplemental Appropriations Act 
for Defense and for the Reconstruction of Iraq and Afghanistan and 
fiscal year 2006 emergency supplemental funds provided in the Emergency 
Supplemental Appropriations Act for Defense, the Global War on Terror 
and Hurricane Recovery, 2006 (P.L. 109-234). 

[B] The total number includes senior and deputy IRMO consultants, other 
U.S. government staff, and U.S. and other expatriate contract personnel 
working with or for the advisors, and translators. The total includes 
advisory team staff positions vacant as of May 1, 2007. 

[C] International professional staff under contract with Management 
Systems International, Inc. (MSI) as of mid-June 2007, according to a 
USAID official. Forty Iraqis are also under contract with MSI. 

[D]Funded from IRRF2 and from the Iraq Security Forces Fund (ISFF), 
fiscal year 2005 emergency supplemental (P.L. 109-13, H.R. 1268/ 
H.Rept.109-72) through two contracts with Military Professional 
Resources, Inc. (MPRI). 

[End of table] 

Two factors help explain the lack of overall direction and a lead 
agency for U.S. capacity-development efforts. First, from their 
inception in 2003, U.S. efforts evolved without a plan for capacity 
development or the designation of a lead entity. Instead, U.S. agencies 
individually provided assistance to four successive governments in 
response to immediate needs, according to former CPA officials and 
senior advisors.[Footnote 14] In 2003, for example, the first programs 
at the ministries were initiated by the CPA's senior advisors, who ran 
the ministries using U.S. funds and made personnel and budgetary 
decisions.[Footnote 15] According to State and former CPA officials, 
each senior advisor operated their ministries without an overall plan 
or overarching guidance; efforts to create an overall plan in late 2003 
were dropped after the United States decided to transfer control of the 
ministries to a sovereign Iraq by mid-2004. 

In May 2004, the President issued National Security Presidential 
Directive 36, which delineated State and DOD responsibilities for the 
U.S. effort in Iraq. The directive made State, through Embassy Baghdad, 
responsible for all U.S civilian activities in Iraq, but gave DOD's 
Central Command (CENTCOM) responsibility for security and military 
operations. However, the directive indicated that, at an appropriate 
time, overall leadership for all U.S. efforts to support the 
organizing, training, and equipping of Iraqi security forces would be 
transferred to a security assistance organization under State's 
authority. 

A second factor has been the delay in acting on recommendations from a 
2005 State assessment of U.S. efforts in Iraq. That assessment reported 
that an integrated approach was essential for the success of U.S. 
efforts in Iraq. The assessment noted that programs had been 
implemented in an uncoordinated and sometimes overlapping fashion and 
that their efforts had been fragmented, duplicative, and disorganized. 
In addition, this implementation had taken place without a clear 
understanding of the programs' objectives or their contribution to the 
larger goal of transferring responsibility for reconstruction to the 
Iraqi government, according to USAID officials. Embassy documents and 
officials also stressed that the success of the program required the 
Iraqi government to take ownership of the capacity development effort. 
The assessment recommended a unified effort among State, DOD, and 
USAID, with the latter ultimately providing overall coordination and 
leadership. 

In late 2005, the U.S. mission initiated the National Capacity 
Development Program to address these concerns. However, instead of 
placing one agency in charge, the program divided responsibilities for 
capacity development among State, DOD, and USAID, with IRMO providing 
coordination. In particular, responsibility for building the capacity 
of MOI and MOD was given to the Multinational Security Transition 
Command-Iraq (MNSTC-I), which had previously taken action to advise and 
strengthen the MOI and help rebuild the MOD from scratch after the 
coalition disbanded it in 2003. Figure 2 illustrates the evolution of 
U.S. efforts to develop the Iraqi government over four successive 
governments. 

Figure 2: Key U.S. Efforts to Improve Ministerial Capacity, 2003 to Mid-
2006: 

[See PDF for image] 

Source: GAO analysis of relevant documents and interviews with U.S. 
government officials. 

[End of figure] 

Since early 2007, the U.S. mission has made efforts to improve 
coordination among State, USAID, and DOD, such as the creation of the 
Joint Task Force on Capacity Development, the increased emphasis on 
efforts to help stabilize Iraq in the New Way Forward Strategy, and the 
creation of a joint State-DOD-USAID procurement action program to help 
the Iraqi government better execute its budgets. Nonetheless, the lack 
of a lead entity to provide direction and an overall plan contributes 
to the following issues: 

* The agencies have developed separate sets of metrics. State, USAID, 
and DOD participated in an effort in late 2005 to develop a common set 
of metrics to measure the capacity of 10 key civilian and the 2 
security ministries. The agencies completed an initial draft assessment 
and, according to USAID officials, planned to conduct a comprehensive 
survey to regularly track progress. However, this effort was abandoned, 
according to State and USAID officials, and State and DOD developed 
their own metrics. In mid-2006, MNF-I began monthly assessments of the 
capacity of the security ministries to perform nine key functions, such 
as planning, logistics, and budgeting. IRMO completed a baseline 
assessment of the key civilian ministries in August 2006, using a new, 
more detailed ministry capacity assessment that gauges a similar list 
of nine core functions, including the ministries' ability to plan, 
budget, and stem corruption. IRMO officials stated that they intended 
to update this assessment quarterly to gauge Iraqi progress in 
developing this capacity. However, State officials noted that questions 
about the usefulness of this assessment delayed efforts to update it 
prior to the IRMO's termination in May 2007, and the embassy 
subsequently dropped plans to continue this effort in July 2007. 

* The distinction between the efforts of USAID and IRMO became blurred. 
IRMO began implementing short-term efforts to jump start capacity 
development in 2006 using reallocated money from the fiscal year 2004 
Iraq Relief and Reconstruction Fund (IRRF2) and the fiscal year 2006 
emergency supplemental fund. In the meantime, USAID identified longer- 
term capacity development needs and beginning in 2007 helped the Iraqi 
ministries devise a strategic plan to meet their capacity development 
needs, according to a USAID official. Most of State's short-term 
efforts did not begin until the end of October 2006, after USAID began 
its capacity development programs under its medium-term contract, 
because of delays in the formation of the Iraqi government and in 
receiving fiscal year 2006 funding. Moreover, USAID officials stated 
that they began implementing a number of short-term efforts earlier 
than originally planned to address more immediate shortfalls in the 
Iraqi government's capacity to plan and execute ministry budgets. 

U.S. Capacity Development Program Refocused and Reorganized in 2007: 

Since January 2007, the emphasis of U.S. capacity development efforts 
has shifted in response to continued security problems and the 
reorganization of the embassy's reconstruction and assistance offices. 
The President's January 2007 strategic review called upon the United 
States and the coalition to "refocus efforts to help the Iraqis build 
capacity in areas vital to the success of the government" during the 
2007 surge of additional U.S. forces into Baghdad and Iraq. Moreover, 
according to embassy officials, the new commander of MNF-I placed 
greater emphasis on ways to help the Iraqi government immediately 
demonstrate that it can perform key functions to help stabilize Iraq 
and deliver essential services. Finally, the expiration of IRMO has 
diffused responsibility for conducting and overseeing the capacity 
development program. 

In early 2007, the U.S. mission refocused their capacity development 
efforts as part of the surge strategy associated with the President's 
New Way Forward proposal. Rather than focusing on 12 civilian and 
security ministries, IRMO and MNSTC-I began targeting vital functions 
requiring more immediate improvement--such as budget execution, 
procurement and contracting--at 6 ministries (MOI, MOD, Planning, 
Finance, Oil, and Electricity), plus the Prime Minister's office and 
the Council of Ministers' Secretariat. Furthermore, USAID's contracted 
trainers at the Iraqi government's NCCMD also attempted to address more 
immediate government needs by directly training middle-and upper-level 
ministry staff. In May 2007, the U.S. embassy established a procurement 
assistance program at the Ministry of Planning to address pressing 
procurement problems, assisted by a DOD-provided team of U.S. civilian 
procurement and contracting officials and Iraqi contractors.[Footnote 
16] By June 2007, the U.S. embassy had identified efforts that could 
improve ministry performance by September 2007. 

The U.S. government's efforts also have been affected by recent changes 
in the leadership and organization of the U.S. mission in Iraq. In 
February, the embassy created a new office of the Coordinator for 
Economic Transition in Iraq (CETI) to work with the deputy prime 
minister and other senior officials to improve budget execution and to 
coordinate U.S. capacity development efforts to improve ministry 
performance immediately. In addition, on May 8, 2007, the Iraq 
Transition Assistance Office (ITAO) succeeded IRMO. According to an 
embassy official, many of IRMO's senior consultants now report directly 
to other embassy offices or working groups, while ITAO coordinates 
senior consultants at four ministries delivering essential services 
(Oil, Water, Electricity, and Communications). This official also noted 
that ITAO is not expected to manage any additional capacity development 
projects.[Footnote 17] In July, the U.S. government appointed an 
ambassador to oversee the embassy's economic and assistance operations. 
This includes responsibility for supervising and coordinating all U.S. 
short and medium-term capacity development programs except for the 
training and security functions of MNSTC-I at the Ministries of Defense 
and Interior, and the Rule of Law Coordinator's Office (which provides 
capacity development training for justice and law enforcement 
functions). State noted that he now oversees USAID, ITAO, and attachés 
from the Departments of Treasury, Energy, Agriculture, Health, Commerce 
and the embassy's economic section. 

Low Capacity of Iraq Ministries and Other Challenges Pose Risks to the 
U.S. Ministry Capacity Development Program: 

U.S. efforts to develop Iraqi ministerial capacity face four key 
challenges that pose a risk to their success and long-term 
sustainability. First, Iraqi ministries have significant shortages of 
personnel who can formulate budgets, procure goods and services, and 
perform other vital ministry tasks. Second, Iraqi efforts to build a 
professional and nonpartisan civil service are complicated by partisan 
influence over the leadership and staffing of the ministries and 
infiltration by sectarian militias or political parties hostile to the 
U.S. government. Third, although the Iraqi government has taken 
measures to improve the capacity of its anti-corruption entities with 
U.S. assistance, pervasive corruption impedes the effectiveness of U.S. 
efforts to develop ministry capacity. Fourth, numerous U.S. and 
coalition officials stated that the security situation remains a major 
obstacle to their efforts to help the Iraqis develop capacity in areas 
vital to the government's success. 

Iraq Ministries' Lack of Trained Personnel Hinders Capacity 
Development: 

Iraqi government institutions suffer from significant shortages of 
competent personnel with the skills to perform the vital tasks 
necessary to provide security and deliver essential services to the 
Iraqi people. According to State, CPA, and other U.S. government 
reports and officials, Iraq's governing capacity has suffered from 
years of centralized control that led to the decay of core functions, 
such as strategic and policy planning, financial management, 
information technology, and human resources management. In neglecting 
the civil service for almost 30 years, the central government fostered 
poor management practices through incompetent staffing and leadership. 
Moreover, in 2003, the CPA removed Ba'athist party leaders from 
government and provided for the investigation and removal of even 
junior party members from upper-level management in government, 
universities, and hospitals. As a result, most of Iraq's technocratic 
class was pushed out of government, according to the Iraq Study Group 
report.[Footnote 18] In 2005, a U.S. embassy document noted that the 
ministries lacked skilled mid-level managers who could make decisions. 

The dearth of skilled personnel complicated U.S. and international 
efforts to engage Iraqis in capacity development efforts, according to 
a number of State, DOD, USAID and international officials. On the other 
hand, the coalition's involvement in their budgeting and procurement 
processes may have hindered the ministries' capacity to improve their 
own procurement and contracting systems and perform other vital 
services, according to MNSTC-I and embassy officials. A September 2006 
U.S. embassy assessment[Footnote 19] noted that the government had 
significant human resource shortfalls in most key civilian ministries. 
The majority of staff at all but one of the ministries surveyed were 
inadequately trained for their positions and a quarter of them relied 
heavily on foreign support to compensate for their human and capital 
resource shortfalls.[Footnote 20] According to a senior IRMO advisor, 
the Minister of Planning had only one of the three deputies he needed 
and did not delegate authority or tasks because the ministry lacked 
skilled staff. This lack of trained staff made it difficult for 
coalition personnel to find ministry staff to work on capacity 
development. For example, officials from USAID and its implementing 
partner for capacity development stated that one of the key challenges 
to their program's success was the small pool of Iraqi government 
employees from which to draw willing or qualified participants. 
Moreover, UN officials stated that one key ministry had few staff 
available with whom to meet when they visited. Furthermore, U.S. 
advisors in the defense ministry stated that most Iraqi staff lacked 
basic computer and information technology skills and often avoided 
making decisions by referring problems to higher levels. 

The lack of trained staff has particularly hindered the ability of the 
key government ministries to develop and execute budgets. U.S. and 
international officials noted that the lack of competent staff 
contributed to poor budget execution rates among some of the key 
civilian ministries. While a U.S. Treasury assessment reported that 8 
of 12 key ministries had spent more than half of their 2006 budgets by 
the end of December 2006, the entire national government had executed 
just 17 percent of its projected 2006 capital goods expenditures by the 
end of the year (see fig. 3).[Footnote 21] 

Figure 3: Government of Iraq Budget and Actual Expenditures for January 
to December 2006: 

[See PDF for image] 

Source: GAO analysis of government of Iraq budget data as reported by 
the U.S. territory. 

Notes: The percentage represents actual expenditures as a percentage of 
the budget for the indicated category. 

Transfers include $2 billion provided to the provinces. 

The Ministry of Finance transferred $2 billion in funds to the 
provinces in 2006 but these monies were not recorded as being expended. 

The Ministries of Defense and Interior established foreign military 
sales accounts of $1.55 billion and $0.169 billion, respectively, to 
purchase goods, services, and capital goods. If the budget expenditure 
figures were restated to include foreign military sales (FMS) figures, 
then total spending would increase to $26.5 billion or 78 percent of 
the budget. Similarly, the unexpended budget surplus would be reduced 
from $11.2 billion to $7.5 billion. 

[End of figure] 

U.S. and coalition officials noted that the inability of the Iraqi 
government to execute its budget jeopardized the U.S. transition 
strategy and capacity development objectives and prompted U.S. 
officials to bypass ineffective Iraqi government procurement systems in 
order to procure equipment and supplies more quickly. In December 2006, 
U.S. advisors began assisting the Ministries of Defense and Interior in 
procuring needed equipment for their security forces from the United 
States through the foreign military sales (FMS) program.[Footnote 22] 
While available data from the government of Iraq and analysis from U.S. 
and coalition officials show that spending has increased compared with 
spending in 2006, a September 2007 GAO report noted that a large 
portion of Iraq's $10 billion capital projects and reconstruction 
budget in fiscal year 2007 will likely go unspent.[Footnote 23] 

Iraqi Ministries Are Affected by Partisan Influence and Militia 
Infiltration: 

Iraq's government confronts significant challenges in staffing a 
professional and nonpartisan civil service and addressing militia 
infiltration of key ministries. Moreover, U.S. officials noted that 
affected ministries are less responsive to U.S. government capacity 
development efforts. A DOD report notes that many Iraqi ministry staff 
were selected because of their partisan affiliation.[Footnote 24] We 
further reported in January 2007 that the Iraqi civil service remains 
hampered by staff whose political and sectarian loyalties jeopardize 
the civilian ministries' ability to provide basic services and build 
credibility among Iraqi citizens, according to U.S. government reports 
and international assessments.[Footnote 25] The DOD report further 
stated that government ministries and budgets are sources of power for 
political parties, staff ministry positions rewarded to party cronies 
for political loyalty. According to U.S. officials, this use of 
patronage can hinder capacity development because it leads to 
instability in the civil service as many staff are replaced whenever 
the government changes or a new minister is named. As of early August 
2007, for example, 15 of the 37 Iraqi cabinet members had withdrawn 
from Prime Minister Maliki's government. Six Sadrist ministers 
announced their resignation as a protest against the continued presence 
of coalition forces in April 2007, and five of their seats remain 
vacant as of August 2007. In early August, six Sunni ministers resigned 
and three additional ministers announced they would boycott cabinet 
meetings. 

Some Iraqi ministries under the authority of political parties hostile 
to U.S. goals use their positions to pursue partisan agendas that 
conflict with the goal of building a government that represents all 
ethnic groups. Moreover, U.S. military advisors to one of the security 
ministries note that Iraqi intelligence organizations are particularly 
hindered by infiltration because their officials believe they cannot 
execute intelligence operations for fear of betrayal by their 
colleagues. For instance, DOD reports that militia influence affects 
every component of the Ministry of Interior. In particular the Ministry 
has been infiltrated by members of the Supreme Islamic Council of 
Iraq[Footnote 26] or its Badr Organization and Muqtada al-Sadr's Mahdi 
Army. The Mahdi Army often operates under the authority or approval of 
Iraqi police to detain, torture, and kill Sunni civilians. Until late 
April 2007, the Ministries of Agriculture, Health, Civil Society, 
Transportation, Governorate Affairs, and Tourism were led by ministers 
loyal to al-Sadr, who provided limited access to U.S. officials. U.S. 
embassy officials noted that the effectiveness of U.S. programs is 
hampered by the presence of unresponsive or anti-U.S. officials. 

Several U.S. embassy officials noted that one of the key ministries 
targeted by U.S. capacity development and budget execution efforts was 
particularly unresponsive to U.S. efforts to reform and improve its 
processes. For example, a USAID official stated that no staff from this 
ministry had attended USAID-sponsored budgeting, procurement, and other 
public management training at the National Training Center as of 
February 2007. Furthermore, while a senior U.S. advisor noted his 
frequent contacts with this minister, he is affiliated with the Supreme 
Council for Islamic Revolution in Iraq and his level of cooperation 
with U.S. capacity development efforts remains limited. 

U.S. and Iraqi Efforts to Address Impact of Pervasive Government 
Corruption on Capacity Development Programs Yielding Mixed Results: 

According to a State document, widespread corruption undermines efforts 
to develop the government's capacity by robbing it of needed resources, 
some of which are used to fund the insurgency; by eroding popular faith 
in democratic institutions seen to be run by corrupt political elites; 
and by spurring capital flight and reducing economic growth. In 
addition, an IRMO document noted that corruption is affecting the 
ability of critical ministries to deliver essential services. According 
to an IRMO assessment, one-third of the civilian ministries surveyed 
had a problem with "ghost employees" (i.e., nonexistent staff listed on 
the payroll). 

In addition, the procedures to counter corruption adopted at all but 
one of the civilian ministries surveyed were either assessed as only 
partly effective or ineffective. Similar problems existed in the 
security ministries, according to two 2007 DOD reports.[Footnote 27] 

Efforts to help the Iraqi government develop the capacity of its 
anticorruption entities have had mixed results. On the one hand, the 
government has made progress in developing its three main 
anticorruption bodies--the Commission for Public Integrity (CPI), the 
Board of Supreme Audit (BSA), and the inspector generals assigned to 
each ministry. According to U.S. officials, the government also has 
made progress developing the courts necessary to investigate and 
prosecute government corruption with the assistance of the U.S. 
government and its coalition and international partners.[Footnote 28] 
Moreover, the Ministry of Finance approved funding to increase the 
number of inspector general staff at the Ministry of the Interior by 
1,000 during 2007. The U.S. embassy also created the Office of 
Accountability and Transparency (OAT) to help the Iraqis develop a 
national anticorruption strategy, identify capacity development needs, 
and combat money laundering. It also helped the government initiate its 
Joint Anti- Corruption Council (JACC) in February 2007, which brings 
together the primary anticorruption entities under the leadership of 
the Prime Minister.[Footnote 29] 

On the other hand, Iraq's anticorruption entities face challenges. For 
example, in October 2007, the head of Iraq's Commission for Public 
Integrity, testified that violence, intimidation, and personal attacks 
were a main obstacle to the Commission's work. He stated that 31 of his 
staff had been assassinated since the establishment of the Commission 
and some of the staff and their family members had been kidnapped or 
detained. Another challenge is the existing legal structure. According 
to the Special Inspector General for Iraq Reconstruction, Article 
136(b) of Iraq's Criminal Code is a structured obstacle impeding Iraq's 
anti-corruption efforts. This provision allows any Iraqi minister to 
grant by fiat complete immunity from prosecution to any ministry 
employee accused of wrongdoing. The Inspector General also stated that 
an order issued by the Prime Minister this past spring requires Iraq 
law-enforcement authorities to obtain permission from the Prime 
Minister's Office before investigating current or former ministers. 

Violence and Sectarian Strife Impede and Undermine Capacity Development 
Efforts: 

Numerous U.S. and coalition officials stated that the security 
situation remains a major obstacle to their efforts to help Iraqis 
develop capacity in areas vital to the government's success. The high 
level of violence hinders U.S. advisor access to their counterparts in 
the ministries, directly affects the ability of ministry employees to 
perform their work, and hinders the effectiveness of U.S. capacity 
development programs, according to these officials. State and USAID 
efforts are affected by the U.S. Embassy security restrictions imposed 
on their movement.[Footnote 30] Embassy security rules limit, and in 
some cases bar, U.S. civilian advisors from visiting the ministries 
outside the Green Zone. For example, the senior IRMO finance advisor 
noted that that his team has regular access to the Finance Minister, 
who is located in the Green Zone. However, his team cannot visit the 
Ministry of Finance outside the Green Zone and has limited contact with 
ministry officials. Moreover, efforts to complete the installation of 
the FMIS system stopped after a British BearingPoint contractor and his 
security team were kidnapped from the Ministry of Finance in May 2007. 
Nevertheless, according to a State cable, an embassy organizational and 
staffing review concluded in late May 2007 that the embassy's security 
rules were overly restrictive for embassy staff to perform their work, 
leading the ambassador to recommend the embassy adopt less restrictive 
military security standards. 

The security situation also complicates the capacity development 
efforts of the MNSTC-I advisors to the security ministries. A U.S. 
MNSTC-I advisor noted that the MOI headquarters is 20 minutes from the 
Green Zone and is particularly unsafe because sectarian militias 
control different floors of the building and differ in the degree to 
which they are hostile to the coalition forces. As a result, U.S. 
advisors have to be accompanied by two armed U.S. guards while visiting 
their Iraqi counterparts and must leave certain offices and departments 
no later than 10 p.m. The MOD, which is in the Green Zone, is a 
comparatively safe work environment for the embedded DOD advisors. 

International officials noted that about half of Iraqi government 
employees are absent from work daily; at some ministries, those who do 
show up only work between 2 to 3 hours a day for security reasons. U.S. 
and UN officials stated that, while the Ministry of Planning has a 
relatively skilled workforce, the security situation seriously hinders 
its ability to operate. These officials noted that 20 director generals 
(department heads or other senior officials) in the ministry have been 
kidnapped, murdered, or forced to leave the ministry in the 6 months 
prior to February 2007. One international official stated that violence 
is also affecting their effort to build capacity in the university 
system from which the government draws some of its expertise. She noted 
that about 360 university professors have been killed since 2003. 

The violence is also contributing to a brain drain within the Iraqi 
ministries as staff join growing numbers of refugees and internally 
displaced persons. According to a UN report, between March 2003 and 
June 2007, about 2.2 million Iraqis left the country and 2 million were 
internally displaced. According to U.S. and international officials, 
the flow of refugees exacerbates Iraqi ministry capacity shortfalls 
because those fleeing tend to be disproportionately from the educated 
and professional classes, thereby reducing the pool of qualified 
personnel from which the ministries can recruit. For example, according 
to international officials, the Iraqi medical association estimated 
that half of Iraq's 34,000 registered doctors had left the country by 
November 2006 and over 2,000 of the remainder had been killed. 
Moreover, a November 2006 UN report stated that it was estimated that 
at least 40 percent of Iraq's professional class had left since 2003. 
The exodus of employees from the ministries limits U.S. efforts to 
develop ministry capacity. One Iraqi official complained that the 
skilled personnel selected for international capacity development 
training were more prone to leave government employment. 

United States Is Beginning to Develop a Strategy for Capacity 
Development Efforts: 

The U.S. government is just beginning to develop an overall strategy 
for its capacity development efforts. GAO's previous analyses of U.S. 
multiagency national strategies have found that an integrated strategy 
should include a clear purpose, scope, and methodology; delineation of 
U.S. roles, responsibilities, coordination, and integration; desired 
goals, objectives, and activities; performance measures; and a 
description of costs, resources needed, and risk.[Footnote 31] The 
three agencies leading capacity development efforts in Iraq, 
particularly MNSTC-I, have developed some of these elements for their 
individual programs at the ministries, but not as part of a unified 
strategy for all U.S. efforts. 

United States Has Yet to Create a Strategy for Capacity Development 
Efforts: 

U.S. officials reported in January 2007 that the conditions and 
challenges facing U.S. capacity development efforts in Iraq have 
impeded a structured, traditional approach to capacity development. 
This makes it difficult to develop an overall strategy. Nonetheless, 
the need for an overarching capacity development strategy is clear 
given that the President has identified ministry capacity development 
as a key to the success in Iraq, has called for greater integration of 
U.S. civilian and military efforts to develop Iraqi government 
capacity, and has requested at least $255 million in additional funding 
in fiscal year 2008 for these efforts.[Footnote 32] Moreover, a January 
2007 report by the Iraqi National Security Council took steps to 
identify the critical efforts and coordination needed at key civilian 
ministries to support the Ministries of Defense and Interior.[Footnote 
33] The report also indicated that Iraqi ministries depend on each 
other and need to function as a unified government. 

In February 2007, State Department officials provided GAO with a three- 
page, high-level outline proposing a U.S. strategy for strengthening 
Iraqi ministerial capacity. This document was a summary with few 
details, and State officials have not provided GAO with a timeline for 
completing this overall strategy. A senior USAID official indicated 
that it is uncertain whether the high-level summary will be developed 
into a strategy, although the President has received $140 million in 
additional funding for these efforts for fiscal year 2007. 

The summary noted that the capacity development strategy would be 
guided by the April 2006 Joint Campaign Plan issued by Embassy Baghdad 
and the MNF-I. In addition, it stated that the U.S. government would 
assist the Iraqi government in strengthening the ministries' capacity 
to perform core functions, such as developing sufficient long-term 
plans and policies, proper legal and regulatory frameworks, transparent 
financial systems, and effective technology. The summary also called 
for U.S. agencies to coordinate efforts and approaches. Finally, it 
called for U.S. agencies to plan these efforts in consultation with the 
Iraqi ministries and work with the ministries to determine their needs 
and priorities. 

U.S. Ministry Capacity Efforts Include Some Key Elements of an Overall 
Strategy: 

GAO has previously identified the desirable elements of a strategy: a 
clear purpose, scope, and methodology; a delineation of U.S. roles, 
responsibilities, and coordination with other donor nations and 
international organizations, including the UN; desired goals, 
objectives, and activities; performance measures; and a description of 
costs, resources needed, and risk. U.S. agencies have developed some of 
these elements in their programs for individual ministries but not as 
part of an overall U.S. strategy. Table 3 summarizes and describes the 
key elements of a strategy and provides examples of the status of the 
U.S. approach thus far and cites practices by some agencies at 
individual ministries that could be incorporated into an overall U.S. 
strategy. 

Table 3: Status of U.S. Capacity Development Strategy: 

Key component: Clear purpose, scope, and methodology; 
Description: Addresses why the strategy was produced, the scope of its 
coverage, and the process by which it was developed; 
Status of efforts: 
* Limited discussion of purpose and methodology for overall strategy; 
* Scope of capacity development efforts has shifted. 

Key component: Delineation of U.S. roles, responsibilities, and 
coordination; 
Description: Addresses who will be implementing the strategy, what 
their roles will be compared with others, and the mechanisms for 
coordinating their efforts; 
Status of efforts: 
* Roles not clearly delineated between USAID, MNSTC-I, and embassy; 
* Limited documentation on how efforts are to be integrated, such as a 
security cooperation office and a lead agency; 
* Interagency task force helping to clarify roles, responsibilities, 
and coordination. 

Key component: Desired goals, objectives and activities; 
Description: Addresses what the strategy is trying to achieve, 
priorities, and steps to achieve those results, consistent with Iraqi 
priorities; 
Status of efforts: 
* U.S. Embassy-Baghdad defined overall end-state: assist Iraq's 
transition to self-sufficiency; 
* MNSTC-I priorities and objectives for the MOD, consistent with Iraqi 
priorities; 
* Overall, Iraqi government priorities not clearly identified. 

Key component: Performance measures; 
Description: Performance measures to gauge results; 
Status of efforts: 
* Status of efforts to develop performance measures is unclear; 
* U.S. embassy is using process or output measures at civilian 
ministries; uncertain about future assessments; 
* MNSTC-I is in process of developing outcome and results measures at 
the security ministries. 

Key component: Description of costs, resources needed, and risk; 
Description: Addresses what the strategy will cost; 
what sources and types of resources are needed; 
and where resources and investments should be targeted, balancing 
benefits, costs, and risks; 
Status of efforts: 
* No assessments of risk provided with agency funding requests for 
fiscal years 2007-2008; 
* No estimates of long-term costs and resources needed to achieve 
program results. 

Source: GAO. 

[End of table] 

Clear purpose, scope, and methodology. We found little evidence that 
the U.S. government has clearly defined the purpose, scope, and 
methodology for developing an overall strategy. Agencies have provided 
some limited information on why an overall strategy is needed, what it 
will cover, and how it will be developed. Although the high-level 
outline for the overall capacity development strategy provided bullets 
about the purpose of U.S. capacity development efforts, it did not 
define capacity development or other key terms. Furthermore, it did not 
provide the context for such a program, such as whether it drew upon 
lessons learned from previous USAID, World Bank or other capacity 
development efforts. In terms of scope, the high-level summary 
indicated that the strategy would guide U.S. efforts to build capacity 
at the Prime Minister's Office and the Iraqi Ministries, but did not 
identify specific ministries or determine which ministries were 
priorities or how those priorities had shifted in 2007. In addition, in 
terms of methodology, U.S. officials indicated only that an interagency 
task force would develop the strategy but not how they would do so. 

U.S. roles, responsibilities, and coordination. The multi-agency Joint 
Task Force on Capacity Development (JTFCD), established in October 
2006, has helped U.S. agencies better delineate roles and 
responsibilities for ministry capacity development and to better 
coordinate efforts. However, the high-level outline and other potential 
strategy documents we reviewed do not address how overall efforts are 
to be integrated and unified. The JTFCD began cataloguing all U.S. 
capacity development efforts in late 2006. According to USAID 
officials, this effort helped inform U.S. agencies of each other's work 
and helped identify responsibilities. The JTFCD has also helped 
coordinate efforts. For example, to avoid potential overlap, during a 
February 2007 JTFCD meeting, USAID worked out a way to allow officials 
from the security ministries to participate in budget training courses 
that were previously limited to the civilian ministries. However, the 
high-level outline and other planning documents we identified do not 
specify how the Embassy, USAID, and MNSTC-I capacity development 
efforts will be unified and integrated, such as how MNSTC-I's security 
cooperation office will be transitioned into an office within the 
embassy. Nor do they discuss a potential lead agency to continue 
overall capacity development efforts, as was proposed in 2005. 
Moreover, other efforts to improve cooperation with the UN and other 
international donor nations and organizations have encountered 
difficulties. For example, the outline states that U.S. efforts are to 
be coordinated with the Iraqi government and the international donor 
community through the Capacity Development Working Group. Chaired by 
the Minister of Planning, this group was intended to secure Iraqi 
government input and commitment to U.S., coalition, and other donor 
partner capacity development objectives at the civilian ministries, but 
the group did not meet for about a year after forming in late 2005 and 
has not met since February 2007. Appendix III provides more information 
on the UN, other donor partners, and international organizations that 
have conducted efforts to build the capacity of the Iraqi government 
since 2003. 

Desired goals, objectives and activities. U.S. agencies have clearly 
identified the overall goals of capacity development at the Iraqi 
ministries, but most U.S. efforts lack clear ties to Iraqi priorities 
for all ministries. According to a February 2007 U.S. embassy briefing, 
the desired end-state for capacity development efforts is clearly 
defined: to assist Iraq's transition to self-sufficiency by enabling 
the government to provide security and rule of law, deliver essential 
services, and develop a market-driven economy through democratic 
processes. The U.S. embassy and MNSTC-I have also identified overall 
goals for Iraqi ministry capacity development, such as improving 
service delivery, improving accountability, and reforming leadership 
and management skills. Moreover, MNSTC-I has taken clear steps to 
incorporate Iraqi priorities for its efforts at MOD. MOD's national 
defense priorities are stated in the Policy of the Ministry of Defense 
2006-2011. This document, which was approved and signed by the Minister 
of Defense, specifies MOD's mission, values, and priorities in areas 
such as finance, personnel, training, and logistics. According to U.S. 
advisors and documents, the Ministries of Health, Electricity and 
Municipalities and Public Works have also demonstrated their commitment 
to U.S. objectives by developing capacity development organizations 
within each ministry to identify their specific needs and priorities. 

However, not all U.S. capacity development efforts are as clearly 
linked to Iraqi-identified needs and priorities, which may affect the 
sustainability of key U.S. capacity development efforts once they are 
turned over to the Iraqis.[Footnote 34] USAID's capacity development 
plans were to help the Iraqis develop and administer ministry self-
assessments to identify Iraqi needs and priorities. However, USAID 
officials stated in May 2007 that it was unclear when implementation of 
this critical effort would begin. Moreover, other efforts to secure 
greater Iraqi input beyond an ad hoc basis, such as the Capacity 
Development Working Group, have not succeeded. A January 2007 SIGIR 
report found that ministry capacity efforts were being conducted "based 
upon individual understandings reached between the Iraqi ministers and 
U.S. agency officials," raising questions about whether the U.S. had 
obtained adequate input and commitment from the Iraqi 
government.[Footnote 35] 

Performance measures. U.S. agencies implementing capacity development 
projects have not developed performance measures for all of their 
efforts, particularly outcome-related performance measures that would 
allow them to determine whether U.S. efforts at the civilian ministries 
have achieved both U.S. and Iraqi desired goals and 
objectives.[Footnote 36] The U.S. embassy did conduct a baseline 
assessment in August 2006 of the civilian ministries to gauge their 
capacity to plan, prepare an operating budget, and conduct key tasks 
rather than the progress or impact of ministry capacity efforts. The 
assessment was completed by U.S. senior advisors and included 
indicators such as whether a ministry had a strategic plan and the 
percentage of budgeted funds disbursed in the previous year. U.S. 
officials stated that an updated State assessment of the civilian 
ministries was scheduled for completion at the end of June 2007, but 
the embassy decided in July not to continue this effort, according to 
embassy officials. 

In comparison, MNSTC-I is developing metrics to measure the progress 
and impact of efforts at the security ministries. MNSTC-I began 
conducting monthly assessments of MOD and MOI in mid-2006.[Footnote 37] 
However, in April 2007, MNSTC-I officials stated that the Commanding 
General decided to retool the assessment in consultation with the Iraqi 
government to better gauge the results of U.S. efforts. Officials 
stated that monthly assessments are being conducted at the field level 
to determine whether the MOD and MOI are ensuring Iraqi security forces 
units are sufficiently manned, have required weapons, and are being 
paid. MNSTC-I officials stated that they also recently began conducting 
quarterly assessments to determine what tasks or processes at the 
ministries may need to be adjusted to achieve results in the field. For 
example, the new assessment might determine whether capacity 
development efforts help MOD recruit and retain enough troops to 
maintain manning requirements. Officials were not able to share the new 
assessments with us because they are still being developed. 

Future costs, resource needs, and risk. The overall strategy should 
also address costs, priorities, and resources needed to achieve the end-
state and how the strategy balances benefits, costs, and risks. 
Guidance on costs and resources needed using a risk management approach 
would assist Congress and implementing organizations to make resource 
decisions.[Footnote 38] Although U.S. agencies have provided data on 
U.S. funding for current capacity development efforts at the Iraqi 
civilian and security ministries, agencies have not identified the 
costs and resources needed beyond the budget requests for fiscal years 
2007 and 2008. Moreover, they have not determined how much funding 
overall is necessary to achieve the stated long-term goal of a self-
sufficient Iraqi government. Without these cost data, neither U.S. 
agencies nor Congress can reliably determine the cost of capacity 
development, which U.S. and international officials have noted is a 
long-term process. In addition, agencies have not provided information 
on how future resources will be targeted to achieve the desired end-
state or, given the challenging situation in Iraq, how allocations 
balance benefits, costs, and efforts to address risks, such as 
addressing the risks associated with the four challenges identified 
above. 

Conclusions: 

U.S. programs to improve the capacity of Iraq's ministries must address 
significant challenges if they are to achieve their desired outcomes. 
U.S. efforts lack an overall strategy: No lead agency provides overall 
direction, and U.S. priorities have been subject to numerous changes. 
In addition, U.S. efforts confront shortages of competent personnel at 
Iraqi ministries and sectarian Iraqi ministries contending with 
pervasive corruption. The risks are further compounded by the ongoing 
violence in Iraq as U.S. civilian advisors have difficulties meeting 
with their Iraqi counterparts and skilled Iraqi professionals leave the 
country. U.S. agencies have provided $169 million to improve the 
capacity of Iraq's ministries as of the end of 2006. Congress 
appropriated $140 million more in May 2007 and the Administration wants 
up to $255 million for fiscal year 2008. We believe that future U.S. 
investments must be conditioned on the development of a unified U.S. 
strategy that clearly articulates agency roles and responsibilities, 
delineates the total costs needed, addresses risks, and establishes 
clear goals and measurements. 

Recommendations for Executive Action: 

Given the risks U.S. agencies face in implementing capacity development 
in Iraq and the funds being requested, GAO recommends that State, in 
consultation with the Iraqi government, complete an overall integrated 
strategy for U.S. capacity development efforts. Key components of an 
overall capacity development strategy should include a clear purpose, 
scope, and methodology; a clear delineation of U.S. roles, 
responsibilities, and coordination, including the designation of a lead 
agency for capacity development; desired goals, objectives, and 
activities, based on Iraqi-identified priorities; performance measures 
based on outcome metrics; and a description of how resources will be 
targeted to achieve the desired end-state balancing benefits, costs, 
and both internal risks (such as potential changes in cost, schedule, 
or objectives) and external risks (such as an increase in violence or 
militia influence). 

Matters for Congressional Consideration: 

Given the absence of an integrated capacity development strategy, it is 
unclear how further appropriations of funding for ministry capacity 
development programs will contribute to the success of overall U.S. 
efforts in Iraq. Congress should consider conditioning future 
appropriations on the completion of an overall integrated strategy 
incorporating the key components identified above. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Departments of Defense and 
State, and USAID. DOD did not provide comments. State provided written 
comments, which are reprinted in appendix IV. State also provided 
technical comments, which we incorporated where appropriate. USAID 
noted that its comments were incorporated into State's written 
response. 

In commenting on a draft of this report, State commented that it 
recognized the value of a unified strategy. However, it noted its 
concern over our recommendation to condition future appropriations for 
capacity development on the completion of a strategy. State also noted 
the recent appointment of an ambassador to supervise all short-and 
medium-term capacity development programs. Moreover, it stated that a 
strategy is only one element in a complex process that needs to be 
tailored to the needs and priorities of each Iraqi ministry or 
government organization. 

We do not recommend stopping U.S. investment in capacity development; 
the $140 million in supplemental funding appropriated in fiscal year 
2007 remains available for the agencies to continue their efforts. 
Rather, we recommend that Congress condition future funding on the 
development of an overall integrated strategy. We acknowledge that 
State named an ambassador to coordinate the embassy's economic and 
assistance operations, including supervising civilian capacity 
development programs. However, this action occurred in August 2007, 
underscoring our point that U.S. capacity development efforts have 
lacked overall leadership and highlighting the need for an overall 
integrated strategy. Finally, our recommendation does not preclude U.S. 
agencies from tailoring capacity development efforts to meet each 
ministry's unique needs. A strategy ensures that a U.S.-funded program 
has consistent overall goals, clear leadership and roles, and assessed 
risks and vulnerabilities. 

We are sending copies of this report to interested congressional 
committees. We will also make copies available to others on request. In 
addition, this report is available on GAO's Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-8979 or christoffj@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Key contributors to this report are 
listed in appendix V. 

Joseph A. Christoff: 
Director, International Affairs and Trade: 

List of Congressional Committees: 

The Honorable Robert C. Byrd: 
Chairman: 
The Honorable Thad Cochran: 
Ranking Member: 
Committee on Appropriations: 
United States Senate: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John S. McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Joseph R. Biden, Jr.: 
Chairman: 
The Honorable Richard G. Lugar: 
Ranking Member: 
Committee on Foreign Relations: 
United States Senate: 

The Honorable Joseph I. Lieberman: 
Chairman: 
The Honorable Susan M. Collins: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Daniel Inouye: 
Chairman: 
The Honorable Ted Stevens: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate: 

The Honorable Patrick J. Leahy: 
Chairman: 
The Honorable Judd Gregg: 
Ranking Member: 
Subcommittee on State, Foreign Operations, and Related Programs: 
Committee on Appropriations: 
United States Senate: 

The Honorable David Obey: 
Chairman: 
The Honorable Jerry Lewis: 
Ranking Member Committee on Appropriations: 
House of Representatives: 

The Honorable Ike Skelton: 
Chairman: 
The Honorable Duncan L. Hunter: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Tom Lantos: 
Chairman: 
The Honorable Ileana Ros-Lehtinen: 
Ranking Member: 
Committee on Foreign Affairs: 
House of Representatives: 

The Honorable Henry A. Waxman: 
Chairman: 
The Honorable Tom Davis: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

The Honorable Joseph P. Murtha: 
Chairman: 
The Honorable C.W. Bill Young: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

The Honorable Nita M. Lowey: 
Chairman: The Honorable Frank R. Wolf: 
Ranking Member: 
Subcommittee on State, Foreign Operations, and Related Programs: 
Committee on Appropriations: 
House of Representatives: 

The Honorable John F. Tierney: 
Chairman: 
The Honorable Christopher Shays: 
Ranking Member: 
Subcommittee on National Security and Foreign Affairs: 
Committee on Oversight and Government Reform: 
House of Representatives: 

[End of section] 

Appendix I: Comments from the Department of State and USAID: 

United States Department of State: 
Assistant Secretary for Resource Management: 
and Chief Financial Officer: 
Washington, D.C. 20520: 

September 10, 2007: 

Ms. Jacquelyn Williams-Bridgers: 
Managing Director: 
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, N.W.: 
Washington, D.C. 20548-0001: 


Dear Ms. Williams-Bridgers: 

We appreciate the opportunity to review your draft report, "Stabilizing 
And Rebuilding Iraq: U.S. Ministry Capacity Development Efforts Need an 
Overall Integrated Strategy to Guide Efforts and Manage Risk," GAO Job 
Code 320424. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report.    
If you have any questions concerning this response, please contact 
Maryz Habib, Iraq Desk Officer, Bureau of Near Eastern Affairs, at 
(202) 647-6389. 

Sincerely,

Signed by: 
Sid Kaplan (Acting):
cc: GAO — Tetsuo Miyabara: 
NEA — C. David Welch: 
State/OIG — Mark Duda: 

USAID: 
US Agency for International Development: 
300 Pennsylvania Avenue, NW: 
Washington. D.C. 20523: 
[hyperlink, http://wwww.usaid.gov]: 

September 13, 2007: 

Mr. Joseph. A. Christoff: 
Director: 
International Affairs and Trade: 
U.S. Government Accountability Office: 
441 G Street, N.W.: 
Washington. D.C. 20548: 

Dear Mr. Christoff: 

I am pleased to provide U.S. Agency for International Development's 
(USAID) formal response on the draft GAO report entitled Stabilizing 
and Rebuilding Iraq: U.S. Ministry Capacity Development Efforts Need an 
Overall Integrated Strategy to Guide Efforts and Manage Risk" (GM) 07-
903). 

In an effort to address the report with one voice, the Department of 
State and USAID worked together to combine remarks and comments into 
one cohesive response    hank. you for the opportunity to respond to 
the GA draft report and fir the courtesies extended by your staff in 
the conduct of this review. 

Sincerely ,

Signed by: 
Mosina H. Jordan: 
Counselor to the Agency: 

Enclosure: State/USAID Comments: 

STATE/USAID Comments: 

Stabilizing and Rebuilding Iraq: U.S. Ministry Capacity Development 
Efforts Need an Overall Integrated Strategy to Guide Efforts and Manage 
Risk (GAO-07-903, GAO Code 320424): 

Thank you for the opportunity to review and comment on the draft GAO 
report Stabilizing and Rebuilding Iraq: U.S. Ministry Capacity 
Development Efforts Need an Overall Integrated Strategy to Guide 
Efforts and Manage Risk. In our view, these programs will play an 
important part in ensuring the long-term success of our engagement in 
this country, and the success of Iraq as a nation long after our 
presence has been reduced. Thus we welcome GAO's attention to them. 
However, we were naturally concerned by the GAO's conclusion that no 
further US investments be made in capacity development unless there is 
a "unified strategy that clearly articulates agency roles and 
responsibilities, delineates total costs needed and establishes clear 
goals and measurements." 

Regarding the issue of coordination, recently and since the time period 
covered by the GAO Report, Ambassador Crocker has asked that Ambassador 
Charles Ries assume responsibility for coordinating all economic and 
assistance operations at Embassy Baghdad. Amb. Ries thus oversees 
USAID, ITAO, Treasury, ECON, Energy, Health, Agriculture, and Commerce 
sections of the Embassy. Programmatically, he supervises all of the 
capacity development programs of a short and medium term nature, except 
for the training and security functions of Multinational Security 
Transition Command – Iraq (which handles capacity development for the 
Defense and Interior Ministries) and the Rule of Law Coordinator's 
Office (which provides capacity development training for justice and 
law enforcement functions). The Joint Task Force on Capacity 
Development, referred to in the report and chaired at the working level 
by USAID, involves both MNSTC-I and the Rule of Law Coordinator. Amb. 
Ries also coordinates our significant and growing Ministerial 
Performance activities and our cadre of senior advisors for many Iraqi 
ministries. We very much appreciate the opportunity to discuss this 
issue during a follow-on conference call on August 31 with GAO 
auditors, during which the GAO auditors indicated greater comfort with 
the Embassy's management of this program and acknowledged that the 
program has demonstrated some success. 

The draft GAO report describes the challenges of working in Iraq 
(shortages of competent personnel, lack of a career civil service, 
partisan influence, corruption and poor security). These very 
challenges make it all the more important that we undertake the 
capacity development so critical to Iraq's ability to govern itself in 
the future. These challenges also mean that we must maintain the 
flexibility to adapt our approach to the circumstances of each ministry 
and provincial government setting in which we find ourselves. Providing 
training, advice and motivation in the face of frequent death threats, 
instances of kidnapping, and emigration of qualified staff, requires 
creativity and occasionally personal courage on the part of our 
implementers, embedded senior consultants and Embassy officers. 

We recognize the value of a "unified strategy," the report's principal 
recommendation, although it can only be one element for the complex 
process of engagement tailored to the diverse Capacity Development 
needs and priorities of each GOI government organization. During the 
conference call, we reviewed the consistent goals the USG has had for 
this Capacity Development program since its inception. While specific 
elements have changed, the overall direction and scope of the program 
has remained focused on the most important Iraqi ministries and 
organizations. We believe that the additional information we provided 
during the conference call further illustrates the benefits of having 
different partners implementing specific capacity development programs 
at various levels. Further, given the history of Iraqi civil service 
and public administration, ministerial capacity efforts must be 
tailored to Iraq's specific needs, not a model applied in other 
countries. At the same time, it should be noted (and was not considered 
in the report) that Capacity Development strategies exist at the 
project level (e.g., USAID's Tatweer Project). A team or project does 
not go into a ministry without knowing what the problems are and what 
they're trying to accomplish. This process of information gathering and 
analysis also provides an opportunity, unacknowledged by the GAO 
report, for GOI input into the technical assistance to be delivered. 
The GAO report's premise is that the lack of an overarching strategy is 
the major obstacle to improving capacity in Iraq, yet it does so 
without providing examples of patterns of failure or poor performance 
in which a strategy could have altered outcomes. 

At the same time, the draft report does not include illustrations of 
Capacity Development success. The GAO's own 2006 assessment confirmed 
Embassy assessments that budget execution and procurement procedures 
were the two greatest capacity challenges across GOI ministries. 
Addressing these shortcomings has been a very high priority of State, 
USAID, DOD and other agency programs. Reflecting our joint efforts in 
Capacity Development, thus far in 2007 Iraqi ministries and provincial 
authorities have committed budget resources to capital projects at 
twice the rate of 2006, and have done so in most cases while following 
detailed procurement regulations.

This performance also highlights GOI recognition of the need for action 
despite ongoing problems, the severity of which would tax the most 
developed of civil services. Budget execution, a very broad and 
comprehensive metric, is arguably one of the best measures of 
effectiveness of capacity development. Coordinated USG capacity 
development efforts in budget execution have had a highly significant 
impact over a broad range of GOI ministries. In the context of the 
International Compact for Iraq, moreover, the government has set for 
itself an ambitious reform program and has recently conducted a fair 
self-assessment. 

On the subject of coordination within the US Mission, moreover, the 
report does not convey the extent to which coordination occurs, and 
enables each USG agency to draw on its comparative advantage. Numerous 
meetings and significant levels of coordination occur with respect to 
ministry capacity development, not only with reference to coordination 
among the security ministries on one hand, and the non-security 
ministries on the other, but overall. Groups such as the Joint Task 
Force on Capacity Development (JTFCD), the Ministerial Performance and 
Capacity Development Working Group, and the Ministerial Engagement 
Teams all perform useful roles (the latter two groups are not even 
referenced in the report).

Capacity development is a long-term process comprised of short-term 
steps. The report alludes several times to short-term activities as 
though these represent a negative outcome. We would suggest that short-
term activities should not be viewed as negative; agencies work 
assiduously to ensure that the leading edge of long-term activities 
respond to short-term priorities. Some `short-term' initiatives are 
entirely appropriate given the urgency of US objectives in Iraq, the 
fragility of Iraqi agencies, and the fluctuating conditions faced by 
both US and Iraqi officials. The efforts involved to improve budget 
execution, for instance, contribute directly to other Capacity 
Development needs identified across almost all ministries (e.g., 
communications, planning, and procurement procedures). 

The report also failed to note that prioritization on certain key 
obstacles and ministries did not preclude other efforts addressing 
human resources, IT, leadership development, and longer-term approaches 
to Capacity Development such as masters degree scholarship programs -- 
efforts not discussed in the draft report. These areas were neither 
discontinued nor neglected. One emphasis of the US Capacity Development 
approach in Iraq is on a systems perspective: as a crucial component of 
Capacity Development, this provides the link to bond together other 
interventions. Nonetheless, such systems change requires time to 
establish, reform, or revive; we must have a long-term horizon on 
Capacity Development work with the GOI. 

We hope that these brief comments are clear and useful. Please do not 
hesitate to contact us if we can be of further assistance and can 
provide more information in order to assist you in capturing a complete 
picture of USG Capacity Development efforts in Iraq. 

The following are GAO’s comments on the Department of State’s letter 
dated September 10, 2007, and USAID’s letter dated September 13, 2007. 

GAO Comments: 

1. We do not recommend stopping U.S. funds investment in capacity 
development. In fact, the President received an additional $140 million 
for capacity development efforts in May 2007 from the fiscal year 2007 
supplemental funds. However, we recommend that Congress consider 
conditioning the administration’s request for up to $255 million in 
additional funds for fiscal year 2008 on the completion of an overall 
integrated strategy incorporating the key components identified in the 
report. Without these key components, Congress may lack the critical 
information needed to weigh risks and judge U.S. costs, progress, and 
results of the current capacity development programs. 

2. We changed our draft report to acknowledge this July 2007 change in 
the U.S. Embassy Baghdad’s organizational arrangements for the conduct 
of capacity development programs. However, this initiative is 
relatively new; it is too soon to evaluate whether this action has 
helped address coordination and leadership. This recent action 
underscores our point that U.S. capacity development efforts have 
lacked overall leadership and highlights the need for an overall 
integrated strategy. This is particularly so since capacity development 
efforts for rule of law and the security ministries are under separate 
leadership. 

3. Our recommendation does not preclude U.S. agencies from tailoring 
capacity development efforts to meet each ministry’s unique needs. A 
strategy ensures that a U.S.-funded program has consistent overall 
goals, clear leadership and roles, and assessed risks and 
vulnerabilities. 

4. We did not discuss project-level capacity development efforts at 
length as the focus of this engagement was on the ministry-level 
efforts deemed critical by State; however, we did note the substantial 
contributions made at the project level by the U.S. Army Corps of 
Engineers’ Gulf Region Division. 

5. This report notes that various U.S. agencies pursued separate 
ministry-level capacity development efforts at various Iraqi ministries 
between 2004 and 2005 without the benefit of an overall strategy. We 
also note in this report that the U.S. embassy itself advocated in 2005 
that an integrated strategy be adopted with a lead agency in charge, 
using as a justification its finding that capacity development efforts 
up to that time had been implemented in an uncoordinated and sometimes 
overlapping fashion and that its efforts had been fragmented, 
duplicative, and disorganized. 

6. We note the comparative success MNSTC-I has achieved with its 
relatively intensive efforts at the security ministries. For example, 
we note that a senior MNSTC-I advisor worked with MOD staff to develop 
its counterinsurgency strategy. We also note in table 3 and elsewhere 
MNSTC-I’s comparative success in developing some aspects of a unified, 
integrated strategy. 

7. We have acknowledged the importance of addressing the shortcomings 
in Iraqi budget execution and procurement procedures in this and 
previous reports and testimonies. For example, our September 2007 
report on whether Iraq had met 18 key benchmarks stated that the 
government of Iraq has had difficulty spending its resources on capital 
projects and that some of the reported improvements in budget execution 
stem from funding releases to the provinces. Our September 2007 report 
also noted that a “commitment” in Iraq is similar to an obligation 
under the U.S. budget process. These commitments are not expenditures 
and may not be reliable indicators of future spending by ministries and 
provinces. Moreover, the government of Iraq’s official expenditure 
data, as reported by the Ministry of Finance, does not include 
commitments or obligations. Finally, the report notes that it is 
unclear whether government funds committed to contracts are a reliable 
indicator of actual spending. 

8. We contend that budget execution rates may not be one of the best 
measures of effective capacity development. Our September 2007 report 
noted that, given the capacity and security challenges currently facing 
Iraq, many contracts that have government funds committed to them may 
not be executed and thus would not result in actual expenditures. 
Moreover, until more complete data on actual capital project 
expenditures become available, it may be premature to conclude that 
U.S. efforts to improve budget execution have had a “highly significant 
impact” on ministry capacity. We are currently conducting a review of 
U.S. efforts to help Iraq spend its budget and will issue a report at a 
later date. 

9. This report acknowledges the contributions of the JTFCD to 
coordinating and cataloging all U.S. capacity development efforts in 
late 2006. However, the draft planning documents we identified do not 
specify how the JTFCD or other coordination groups will integrate 
Embassy, USAID, and MNSTC-I capacity development efforts. Further, we 
noted in the report that the Capacity Development Working Group, 
chaired by the Minister of Planning, was intended to secure Iraqi 
government input and commitment to U.S. and coalition capacity 
development objectives at the civilian ministries. However, the group 
did not meet for about a year after forming in late 2005 and has not 
met since February 2007. The Ministerial Engagement Teams are a 
coordinating arrangement introduced in mid-2007; it is too soon to 
evaluate their activities or results. 

10. This report does not view short-term activities as a negative 
outcome. We do note that IRMO originally justified conducting short-
term efforts in an attempt to jump-start capacity development in 2006 
using more readily available funding. These programs would complement 
and support a follow-on USAID effort to conduct longer-term capacity 
development programs. Most of State’s short-term efforts did not begin 
until after USAID began its capacity development programs under its 
medium-term contract because of delays in the formation of the Iraqi 
government and in receiving fiscal year 2006 funding. Moreover, USAID 
officials stated that they began implementing a number of short-term 
efforts earlier than originally planned to address more immediate 
shortfalls in the Iraqi government’s capacity to plan and execute 
ministry budgets. 

11. We addressed these elements as they were among the core ministry 
functions identified as common to all the key ministries. GAO reviewed 
how these common functions were defined and what metrics were used by 
State and DOD to track these elements in their assessments of the 
status of key ministries’ capacity development. We also noted the 
existence of the scholarship program as an example of a USAID capacity 
development program in table 2 but did not otherwise discuss it. 

[End of section] 

Appendix II: Scope and Methodology: 

In this report, we (1) assess the nature and extent of U.S. efforts to 
develop the capacity of the Iraqi ministries, (2) assess the key 
challenges to these efforts, and (3) assess the extent to which the 
U.S. government has an overall strategy for these efforts that 
incorporates key elements. For the purposes of this review, which we 
undertook under the Comptroller General’s authority to conduct reviews 
on his own initiative, we focused on key U.S. capacity development 
efforts initiated or ongoing in fiscal years 2006-2007, primarily those 
efforts begun after the start of the National Capacity Development 
Program in late 2005, the U.S. Mission Baghdad’s attempt to focus and 
better coordinate U.S. efforts. 

To describe these programs, we reviewed U.S. government documents 
including the Department of State’s (State) quarterly section 2207 
reports to Congress from October 2004 to April 2007 on the use of Iraq 
Relief and Reconstruction Funds; State’s quarterly section 1227 reports 
to Congress[Footnote 39] from April 2006 to April 2007 on current 
military, diplomatic, political, and economic measures undertaken to 
complete the mission in Iraq; the U.S. Agency for International 
Development (USAID) contract awarded in July 2006 to Management Systems 
International, Inc., Building Recovery and Reform through Democratic 
Governance National Capacity Development Program; reports on USAID’s 
implementation of the Iraqi Financial Management Information System 
under the Economic Governance Project II; the U.S. Embassy-Baghdad 
Joint Task Force for Capacity Development’s catalogue of U.S. capacity 
development efforts from April 2007; the Department of Defense’s (DOD) 
quarterly reports to Congress, Measuring Security and Stability and 
Iraq, from July 2005 to June 2007; and Multi-National Security 
Transition Command-Iraq’s 2007 Campaign Action Plan. We reviewed the 
results of the Iraq Reconstruction Management Office’s (IRMO) September 
2006 Ministerial Capacity Metrics Assessment and deemed the results 
sufficiently reliable to provide a broad indication of the strengths 
and weaknesses of the ministries surveyed. We found the procedures 
followed by IRMO in creating the assessment, compiling the results, and 
assessing data reliability to be reasonable. However, the data had 
significant limitations. For example, a number of subquestions were not 
answered for all ministries. We also examined the federal government’s 
fiscal years 2006, 2007, and 2008 regular and supplemental budget 
requests for State, USAID, DOD for capacity development efforts for the 
Iraqi government. Moreover, we reviewed previous GAO reports and 
reviews and periodic reporting from the Office of the Special Inspector 
General for Iraq Reconstruction (SIGIR), including its January 2007 
report Status of Ministerial Capacity Development in Iraq.[Footnote 40] 
We also interviewed key U.S. government officials from State, USAID, 
DOD, and relevant contractor officials in Washington, D.C.; Iraq; and 
Jordan. We conducted interviews over the telephone and made site visits 
to Iraq and Jordan in February 2007. 

To assess key challenges to U.S. capacity development efforts, we 
reviewed and analyzed the documents mentioned above and other relevant 
plans, reports, and data from the Iraqi government. We designated the 
identified challenges as key, based on evidence presented in previous 
GAO reports, the frequency they were cited by U.S. officials and 
documents, and the importance they accorded their impact on U.S. 
capacity development objectives. We interviewed U.S. government 
officials from the Departments of State, Defense, Treasury, Justice and 
the Agency for International Development in Washington D.C., Iraq, and 
Jordan; and the Multinational Forces-Iraq (MNF-I); and other donors, 
including officials from the United Nations and its associated relief 
and development agencies, the World Bank, the European Union, the 
United Kingdom’s Department for International Development (DFID), and 
the Canadian International Development Agency. 

We also analyzed data on Iraq’s 2006 and 2007 budgets and 2006 budget 
execution through December 2006, which were provided to us by the U.S. 
Treasury from Iraq’s Ministry of Finance, and found that these data 
were sufficiently reliable for our purposes.[Footnote 41] We also 
interviewed relevant U.S. government officials or contractor officials 
working with BearingPoint; Management Systems International, 
Incorporated (MSI); and Military Professional Resources, Incorporated 
(MPRI). 

Finally, to examine the extent to which the U.S. government has an 
overall strategy for these efforts that incorporate key elements, we 
reviewed and analyzed, in addition to the abovementioned documents, the 
July 2007Joint Campaign Plan issued by Embassy Baghdad and the 
Multinational Force-Iraq (MNF-I); the Multi-National Security 
Transition Command- Iraq 2007 Campaign Action Plan; the November 2005 
National Strategy for Victory in Iraq; the President’s February 2007 
New Way Forward strategy for Iraq; Iraqi government’s National 
Development Strategies for 2005-2007 and for 2007-2010; State’s 
February 2007 strawman (a three page, high-level summary) for a U.S. 
government strategy to strengthen Iraqi ministerial capacity; and the 
September 2006 U.S. Embassy-Baghdad assessment of the capacity of key 
Iraqi civilian ministries to perform core functions. We interviewed key 
U.S. officials from State, USAID, DOD, and other relevant agencies. We 
reviewed previous GAO reports that identified the desirable 
characteristics of a national strategy, including Combating Terrorism: 
Evaluation of Selected Characteristics in National Strategies Related 
to Terrorism, Rebuilding Iraq: More Comprehensive National Strategy 
Needed to Help Achieve U.S. Goals, Rebuilding Iraq: More Comprehensive 
National Strategy Needed to Help Achieve U.S. Goals and Overcome 
Challenges, Intellectual Property: Initial Observations on the STOP 
Initiative and U.S. Border Efforts to Reduce Piracy, and GAO, 
Intellectual Property, Strategy for Targeting Organized Piracy (STOP) 
Requires Changes for Long-term Success. We analyzed the information we 
obtained on U.S. capacity development efforts to identify components of 
an overall strategy that the three agencies leading these 
efforts—State, USAID, and MNSTC-I—have developed to date. 

We conducted our work from August 2006 through August 2007 in 
accordance with generally accepted government auditing standards. 

[End of section] 

Appendix III: State-Led Capacity Development Programs as of May 
2007[A]: 

Table: 1; 
Program: Prime Minister's Media Center; 
Description of program: Supply and install news media equipment in the 
prime minister press center; 
Estimated cost: $1.6; 
Time frame: N/A[B]; 
Targeted ministry or agency: Prime Minister's Office.

2; 
Program: Visual Teleconference Facilities and Internet Telephone 
Capabilities for the Ministries; 
Description of program: Increase the ability of the Iraqi Government 
Ministries and Prime Minister's Office to conduct business between each 
other on an immediate basis; 
Dollars in millions: Estimated cost: 3.6; 
Dollars in millions: Time frame: Apr. '07 to Apr. '08; 
Targeted ministry or agency: Prime Minister's Office /various 
ministries.

3; 
Program: Legislative Coordination Committee; 
Description of program: Help PMO staff develop the capacity to initiate 
research, coordinate new legislative initiatives, and to track 
legislation; 
Dollars in millions: Estimated cost: 4.7; 
Dollars in millions: Time frame: Feb. '07 to Feb. '08; 
Targeted ministry or agency: Prime Minister's Office.

4; 
Program: Bilingual, Bicultural Advisors (BBA)/Technical assistance 
/Subject Matter Experts (SME) for Key Ministries; 
Description of program: Provide specialists to help develop and 
implement appropriate policies, strengthen core public administration 
functions, and create training systems to improve delivery of 
services; 
Estimated cost: 2.5; 
Time frame: Nov. '06 to Aug.'07; 
Targeted ministry or agency: Key ministries.

5; 
Program: Economic Reform and Transparency; 
Description of program: Support efforts to reform and improve the 
investment climate and tax policies, develop a national anticorruption 
strategy, and promote citizen participation in government.; 
Estimated cost: 2; 
Time frame: N/A; 
Targeted ministry or agency: Prime Minister's Office/Council of 
Ministers' Secretariat.

6; 
Program: National English Training Program --English and Business 
Skills; 
Description of program: To provide approximately 200 training modules 
to each of the 10 key ministries; 
Estimated cost: 0.3; 
Time frame: Oct. '06 to Aug. '07; 
Targeted ministry or agency: All 10 key civilian ministries.

7; 
Program: CPA Order 87 Initiative --Procurement Office; 
Description of program: Establish office in Ministry of Planning to 
facilitate budget procurement across all Iraqi ministries.; 
Estimated cost: 6.1; 
Time frame: N/A; 
Targeted ministry or agency: Planning.

8; 
Program: Capital Budget Formulation/Implementation and Procurement 
Reform; 
Dollars in millions: Description of program: Help Ministry of Planning 
implement capital budget and reform procurement in coordination with 
the international community and subject matter experts; 
Dollars in millions: Estimated cost: 2.7; 
Dollars in millions: Time frame: Oct. '06 to Apr. '07; 
Targeted ministry or agency: Finance, Planning.

9; 
Program: Budget Execution 
Monitoring Support Unit; 
Description of program: Help Iraqi ministries execute budgets and 
provide metrics for leadership; 
Estimated cost: 1.1; 
Dollars in millions: Time frame: Mar. '07 to Apr. '08; 
Targeted ministry or agency: Various ministries.

10; 
Program: Budget Preparation, FMIS IT, and Inter-Governmental Fiscal 
Relations; 
Dollars in millions: Description of program: Enable Ministry of Finance 
staff to perform better by strategic budget development, organizational 
modernization, regulation development, and future sector 
privatization.; 
Estimated cost: 4.5; 
Dollars in millions: Time frame: Oct. '06 to Apr. '07; 
Targeted ministry or agency: Finance.

11; 
Program: Subject Matter Experts (SMEs) for Ministry of Planning; 
Description of program: Provide 10 SMEs to help the ministry develop 
policies, especially for budget execution.; 
Estimated cost: 0.7; 
Time frame: N/A; 
Targeted ministry or agency: Planning.

12; 
Program: National Procurement Reform and FMIS Procurement 
Implementation; 
Dollars in millions: Description of program: Enable the Ministries of 
Finance, Planning, and other ministries' staffs to perform core 
ministerial functions and tasks better through strategic budget 
development, future year budgeting, modernization, and development of 
regional automation, and regional fiscal accounting commonalities.; 
Estimated cost: 3.3; 
Time frame: Oct. '06 to Apr. '07; 
Targeted ministry or agency: Finance, Planning and various ministries.

13; 
Program: Two SMEs to design Sector Master Plans for Water Resources and 
Public Works; 
Description of program: Produce Sector Master Plans for the ministries 
to better focus resources on medium-to-long-term production, sustain 
outputs, and meet the goals necessary to deliver essential services to 
the public.; 
Estimated cost: 0.8; 
Time frame: Apr. '07 to Apr. '07; 
Targeted ministry or agency: Water, Municipalities and Public Works.

14; 
Program: Ministry of Justice Legal Reform; 
Description of program: Develop the ministry's capacity to provide 
advice and technical support for draft legislation that promotes 
individual freedoms, human rights, and the rule of law within the 
context of the Iraqi constitution.; 
Estimated cost: 1.5; 
Time frame: N/A; 
Targeted ministry or agency: Justice.

15; 
Program: Commission for Public Integrity (CPI) Investigative Analysis 
Package; 
Description of program: Provide software to increase CPI capability to 
organize and cross-reference investigative data, making working 
practices more efficient and anti-corruption investigations more 
effective.; 
Estimated cost: 1.1; 
Time frame: N/A; 
Targeted ministry or agency: Commission for Public Integrity. 

16; 
Program: Core Functions Capacity Development assessment to the Board of 
Supreme Audit (BSA) and Inspector Generals; 
Description of program: Develop a tool for the BSA and each of the 29 
ministerial Inspector Generals to assess core needs.; 
Estimated cost: 0.5; 
Time frame: N/A; 
Targeted ministry or agency: Board of Supreme Audit, Inspector Generals.

17; and: 18; 
Program: Five Electricity SMEs (Critical Infrastructure Management - 
Improve Business Continuity) - Phase I and Phase II; 
Description of program: Provide Subject Matter Experts to build 
Ministry of Electricity capacity in:; 
budget execution and procurement,; legal and tariff reform,; regulatory 
reform, and; sector strategic planning.; 
Estimated cost: Phase I; 1.4; 
Phase II; 1.4; 
Time frame: Oct. '06 to Apr. '07; May '07 to May '08; 
Targeted ministry or agency: Electricity.

19; Program: Ministry of Water Ministry Classes; 
Description of program: Provide specific training on international and 
domestic water laws and policies to ministry employees responsible for 
formulating, negotiating, interpreting, or applying water laws and 
policies.; 
Estimated cost: 2; 
Time frame: May '07 to May '08; 
Targeted ministry or agency: Water.

20; Program: Essential Skills 
Development Courses; Description of program: 
Provide training in essential skills, such as strategic and contingency 
planning; contracting management; and human resource management.; 
Estimated cost: 2; 
Time frame: May '07 to May '08; 
Targeted ministry or agency: Municipalities and Public Works.

21; Program: Supply Chain Management to Reduce Corruption and Improve 
Supply; 
Description of program: Increase the organizational, accountability, 
inventory management, and technology capacities of Kimadia, (a state 
company for marketing medical appliances and equipment in Iraq).; 
Estimated cost: 2.8; Time frame: Feb. '07 to Feb. '08; 
Targeted ministry or agency: Health. 

22; 
Program: Education Management Business Process Reengineering; 
Description of program: Install a computer network within the ministry 
to help it manage educational activities, improve accountability, and 
capture and report educational data.; 
Estimated cost: 2; 
Time frame: Feb. '07 to Feb. '08; 
Targeted ministry or agency: Education. 

23; 
Program: Executive Program Management Office for the Director of 
Airports and Ports Oversight Management Office (Strategic Plan Support 
Phase II); 
Description of program: Provide nine staff with a mixture of skills to 
assist a variety of national-level programs, including:  
establishing guidelines for transport sector development; addressing 
information technology standards requirements; national identity card 
requirements; and; mentor program for management staff in order to 
build sustainable Iraqi expertise; 
Estimated cost: 1.5[C]; 
Time frame: N/A; 
Targeted ministry or agency: Transportation.

Total; 
Program: [Empty]; 
Estimated cost: $50.1; 
Time frame: Targeted ministry or agency: [Empty]. 

Source: GAO analysis of State data.

[A] Includes only programs contracted, under way, or completed as of 
April 2007. 

[B] N/A = not available. 

[C] United Nations Development Program contributed an additional $1.5 
million to this project, and the government of Iraq provided $1.5 
million in-kind assistance. 

[End of table] 

[End of section] 

Appendix IV: Other Donor Partner Capacity Development Efforts: 

The United Nations, the European Union, the United Kingdom, and the 
Canadian government also have conducted efforts to develop the capacity 
of the Iraqi government since 2003. 

The United Nations Assistance Mission for Iraq coordinates and oversees 
projects with capacity development components implemented by over a 
dozen UN agencies in Iraq. Most of these projects are funded through 
the International Reconstruction Fund Facility for Iraq (IRFFI)/United 
Nations Development Group Iraq Trust Fund (ITF).[Footnote 42] One 
effort implemented by the UN Development Program (UNDP) governance 
program provided basic management skills training for Ministry of 
Municipalities and Public Works employees at a cost of $3 million in 
February 2007. The UN International Organization for Migration in Iraq 
began implementing the Capacity Building in Migration Management 
Project in August 2004 with support of the Australian government. This 
ongoing project includes helping the Ministry of Interior establish a 
training center for immigration officers, with an information 
technology lab and a library with resource materials. 

The European Union (EU) provided about 16 million euro through the 
IRFFI/ World Bank ITF from 2003 to 2005 for two World Bank capacity-
development projects. These two projects included efforts to train 
Iraqi staff at 19 ministries in topics such as policy reform, World 
Bank procurement policies, and basic training in MS Excel. The EU also 
provided about 42 million euro through the IRFFI/UN ITF from 2003 to 
2006 for governance and civil society projects, including efforts to 
train Iraqi government officials in reconstruction management. 

The United Kingdom's Department for International Development (DFID) 
has conducted capacity development efforts including a $23 million 
project that began in 2005 to provide consultants for the Ministry of 
Interior to provide training and assistance for MOI staff in such areas 
as procurement and legal and regulatory frameworks. Another $25 million 
effort that began in 2005 aims to provide technical and policy advice 
for the Ministry of Finance in areas such as subsidy reform and budget 
and expenditure management. DFID has coordinated its efforts with U.S. 
efforts by participating in meetings of the U.S. Joint Task Force for 
Capacity Development. 

The Canadian government has funded about $14 million worth of ministry 
capacity efforts for implementation from 2005-2008, including human and 
minority rights training for Ministry of Human Rights employees and 
assistance for a marshland restoration project with the Ministry of the 
Environment, the Ministry of Water Resources, and an Iraqi university. 

As of February 2007, trainers from 11 nations, including Iraq, provided 
basic instruction and more advanced administrative courses to develop 
the capacity of the Iraqi police at the Jordan International Police 
Training Center. Between October 2003 and February 2007, 50,300 Iraqi 
police graduated from the center, according to the training center 
director. Nations contributing instructors included Australia, 
Austria, Belgium, Canada, Croatia, Finland, Jordan, Slovenia, the 
United Kingdom, and the United States. 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments:

GAO Contact:

Joseph Christoff, (202) 512-8979 or christoffj@gao.gov:

Staff Acknowledgments:

In addition, Tetsuo Miyabara, Assistant Director; Daniel Cain; Lynn 
Cothern; Martin De Alteriis; Etana Finkler; Elisabeth Helmer; B. 
Patrick Hickey; Bruce Kutnick; and Mary Moutsos made key contributions 
to this report.

[End of section] 

Footnotes: 

[1] Government employment figures include national ministry employees 
and teachers. 

[2] This includes $25 million in the fiscal year 2008 budget request 
and $230 million in the fiscal year 2008 request for the global war on 
terror. 

[3] GAO, Securing, Stabilizing, and Rebuilding Iraq: Key Issues for 
Congressional Oversight, GAO-07-308SP (Washington, D.C.: Jan. 9, 2007); 
Securing, Stabilizing, and Rebuilding Iraq: GAO Audit Approach and 
Findings, GAO-07-385T (Washington, D.C.: Jan. 18, 2007); Stabilizing 
Iraq: Factors Impeding the Development of Capable Iraqi Security 
Forces, GAO-07-612T (Washington, D.C.: Mar. 13, 2007); Stabilizing 
Iraq: Preliminary Observations on Budget and Management Challenges of 
Iraq's Security Ministries, GAO-07-637T (Washington, D.C.: Mar. 22, 
2007); and Rebuilding Iraq: Integrated Strategic Plan Needed to Help 
Restore Iraq's Oil and Electricity Sectors, GAO-07-677 (Washington, 
D.C.: May 15, 2007). 

[4] Funding for State and USAID programs conducted in 2006 includes 
reallocated fiscal year 2004 Iraq Relief and Reconstruction Funds 
(IRRF2) provided in the Emergency Supplemental Appropriations Act for 
Defense and for the Reconstruction of Iraq and Afghanistan, 2004 (P.L. 
108-106), and fiscal year 2006 emergency supplemental funds provided in 
the Emergency Supplemental Appropriations Act for Defense, the Global 
War on Terror and Hurricane Recovery, 2006 (P.L. 109-234). Funding for 
a DOD program contract awarded in 2005 came from IRRF2 and funding for 
a contract awarded in 2006 came from Iraq Security Forces Fund (ISFF), 
in the Emergency Appropriations Act for Defense, the Global War on 
Terror and Tsunami Relief, 2005 (P.L. 109-13). 

[5] In November 2003, Congress passed legislation encouraging U.S. 
organizations receiving U.S. reconstruction funds to provide 
significant financial resources, technical assistance and capacity 
building to counterpart organizations led by Iraqis. See Emergency 
Supplemental Appropriations Act for Defense and Reconstruction of Iraq 
and Afghanistan (P.L. 108-106). 

[6] IRMO was a temporary organization established by National Security 
Presidential Directive 36 in May 2004 to facilitate the transition of 
reconstruction efforts in Iraq. 

[7] One of these agencies, the Gulf Region Division (GRD) of the U.S. 
Army Corps of Engineers, provides technical assistance to help Iraqi 
ministries manage and operate Iraqi infrastructure. GRD reported in 
October 2006 that it worked with 9 ministries on infrastructure project 
training and sustainment issues and had allocated $60 million in fiscal 
year 2006 funds for project-level technical training and capacity 
development activities at 5 ministries. In April 2007, IRMO reported 
that GRD was conducting 22 projects related to project-level technical, 
management, and sustainment training. Other embassy offices, which 
include personnel from the Departments of Treasury and Justice, also 
contribute to State's ministry capacity development efforts. 

[8] About $165 million of this funding was for capacity development 
projects initiated in 2006. One DOD contract for about $4 million 
provided specialized training for Ministry of Defense officials 
beginning in 2005. 

[9] State had additional advisory teams working with the Ministries of 
Transportation, Communications, and Interior. The latter is under 
operational control of MNSTC-I. 

[10] Until early May 2007, the U.S. embassy's Iraq Reconstruction 
Management Office (IRMO) led State's capacity development efforts. On 
May 8, 2007, the Iraq Transition Assistance Office (ITAO) replaced IRMO 
as the manager of these projects. According to an embassy official, 
responsibility for some of IRMO's other capacity development functions 
were transferred to other embassy offices. 

[11] The United Kingdom's Department for International Development is 
implementing two additional projects. 

[12] As of June 2007, the six ministries are Health, Electricity, Oil, 
Agriculture, Water Resources, and Municipalities and Public Works. 

[13] In addition, two of State's capacity development projects on 
budget preparation and procurement include training staff on the use of 
FMIS in the Ministries of Planning, Finance, and other ministries. The 
system is also referred to as the Iraqi Financial Management 
Information System (IFMIS). 

[14] The four governments are the Coalition Provisional Authority 
(April 2003 to June 2004); the interim government (June 2004 to May 
2005); the transitional government (May 2005 to May 2006); and the 
permanent government (May 2006 to the present). 

[15] CPA allocated more than $10.5 billion for operations and operating 
expenses of Iraq's government ministries by the end of April 2004, 
including about $1.2 billion in U.S. funds. See GAO, Rebuilding Iraq: 
Resource, Security, Governance, Essential Services, and Oversight 
Issues, GAO-04-902R (Washington, D.C.: June 28, 2004). 

[16] MNF-I made an attempt to provide coalition budget assistance teams 
directly to civilian ministries early in 2007. According to U.S. 
embassy officials, this effort has yet to be initiated because concerns 
were raised about the political sensitivities associated with coalition 
military personnel working in civilian ministries. 

[17] IRMO documents and officials noted that IRMO's Office of 
Accountability and Transparency (OAT) had been expected to manage a 
number of new anticorruption capacity development efforts to be funded 
with fiscal year 2007 supplemental funding. However, according to State 
documents, OAT now reports to the embassy's Rule of Law Coordinator and 
USAID will manage these anticorruption efforts. 

[18] GAO, Securing, Stabilizing, and Rebuilding Iraq: Iraqi Government 
Has Not Met Most Legislative, Security, and Economic Benchmarks, GAO-
07-1195 (Washington, D.C.: Sept. 4, 2007). 

[19] IRMO, Baseline Assessment of Core Functions at Key Civilian 
Ministries, (September 2006). 

[20] Moreover, these ministries are not necessarily understaffed in 
terms of numbers. For example, the same survey indicated that two 
thirds of the ministries were overstaffed. 

[21] The survey included budget performance figures for 28 ministries, 
the National Assembly, the President's Office and Council of Ministers, 
the Board of Supreme Audit, the Council of Judges, and the Kurdish 
region. 

[22] Under FMS, the U.S. government agrees to sell or lease defense 
articles or services (including training) to countries or international 
organizations only if the President, in accordance with the Arms Export 
Control Act, as amended, determines that the country or organization is 
eligible. The articles or services usually come from DOD stocks or 
through purchase under DOD-managed contracts. The President determined 
that Iraq was eligible to participate in the FMS program on July 21, 
2004. 

[23] GAO, Securing, Stabilizing, and Rebuilding Iraq: Iraqi Government 
Has Not Met Most Legislative, Security, and Economic Benchmarks, GAO-
07-1195 (Washington, D.C.: Sept. 4, 2007). 

[24] DOD, Measuring Stability and Security in Iraq: Report to Congress 
in Accordance with The Department of Defense Appropriations Act 2007, 
Section 9010, Public Law 109-289 (Washington, D.C., November 2006). 

[25] GAO, Securing, Stabilizing, and Rebuilding Iraq: Key Issues for 
Congressional Oversight, GAO-07-308SP (Washington, D.C.: Jan. 9, 2007). 

[26] This organization changed its name from Supreme Council for 
Islamic Revolution in Iraq in May 2007. 

[27] DOD, Measuring Stability and Security in Iraq: Report to Congress 
in Accordance with The Department of Defense Appropriations Act 2007, 
Section 9010, Public Law 109-289 (Washington, D.C., March 2007); and 
Measuring Stability and Security in Iraq: Report to Congress in 
Accordance with The Department of Defense Appropriations Act 2007, 
Section 9010, Public Law 109-289 (Washington, D.C., June 2007). 

[28] CPI is an independent commission that, under Article 102 of the 
Iraqi Constitution, is subject to monitoring by the Council of 
Representatives (Parliament). While CPI staff do not have arrest 
powers, the commission investigates accusations of corruption and 
refers cases to the Central Criminal Court of Iraq established by CPA 
Order 13 in April 2004. BSA is an independent audit body under Section 
103 of the Iraqi constitution. The offices of the inspector generals 
were established by CPA Order Number 57 and are responsible for 
conducting internal investigations within their ministries and can 
refer cases either to CPI or law enforcement agencies. 

[29] Special Inspector General for Iraq, Quarterly Report to Congress 
(Washington, D.C.:, April 2007). 

[30] While USAID and MSI officials noted that MSI's Arabic speaking 
staff are based outside the Green Zone and have fewer constraints on 
their ability to conduct capacity development program activities, they 
stated that the security situation makes it difficult to implement 
projects and provide contract oversight. 

[31] GAO has identified desirable characteristics of a national 
strategy and assessed the extent these characteristics were applied to 
other U.S. national strategies in previous reports. See GAO, Combating 
Terrorism: Evaluation of Selected Characteristics in National 
Strategies Related to Terrorism, GAO-04-408T (Washington, D.C.: Feb. 3, 
2004); Rebuilding Iraq: More Comprehensive National Strategy Needed to 
Help Achieve U.S. Goals, GAO-06-788 (Washington, D.C.: July 11, 2006); 
Rebuilding Iraq: More Comprehensive National Strategy Needed to Help 
Achieve U.S. Goals and Overcome Challenges, GAO-06-953T (Washington, 
D.C.: July 11, 2006); Intellectual Property: Initial Observations on 
the STOP Initiative and U.S. Border Efforts to Reduce Piracy, 
GAO-06-1004T (Washington, D.C.: July 26, 2006); and Intellectual 
Property: Strategy for Targeting Organized Piracy (STOP) Requires 
Changes for Long-Term Success, GAO-07-74 (Washington, D.C.: Nov. 8, 
2006). 

[32] See National Security Council, Highlights of the Iraq Strategy 
Review, (Washington, D.C.:January 2007). 

[33] This report was completed by a subcommittee of MNF-I's Joint 
Committee for Accelerating the Transfer of Iraqi Security. The 
subcommittee for ministerial capacity, which developed the January 2007 
report, was led by the Iraqi National Security Council and IRMO. 

[34] In March 2007, Iraq produced a National Development Strategy that 
identified a number of broad government capacity development goals to 
achieve by 2010, including implementing a system of government internal 
controls and audit policies, and instituting a comprehensive civil 
service reform program. 

[35] SIGIR, Status of Ministerial Capacity Development in Iraq, SIGIR-
06-045 (Jan. 30, 2007). 

[36] The World Bank defines outputs as the short term achievements that 
result from activities undertaken to implement a program (e.g., the 
number of public servants trained). Outcomes are the medium term 
changes that result from achieving the outputs (e.g., the improved 
skills of employees). Impacts are the long term changes that result 
over time from achieving the program's outputs and outcomes (e.g., 
improved program delivery). 

[37] MNSTC-I has conducted monthly Transition Readiness Assessments of 
the Iraqi security ministries and Iraqi security forces (army and 
police) since mid-2006. 

[38] For example, a strategy might include a discussion of the types of 
resources required, such as budgetary, human capital, information 
technology, or contract services. It might also discuss how 
implementing organizations will use risk management, taking into 
consideration both internal risks (e.g., potential changes in cost, 
schedule, objectives, or focus) and external risks (e.g., increase in 
violence or increase in the influence in the Iraqi government of 
parties or militias less supportive of U.S. capacity development 
objectives in Iraq) to aid in prioritizing and allocating resources. 

[39] State's quarterly 1227 reports are submitted pursuant to Section 
1227 of the National Defense Authorization Act for Fiscal Year 2006 
(P.L. 109-163). 

[40] SIGIR-06-045 and quarterly reports. 

[41] We corroborated our analysis and findings with information from 
other U.S. agencies, the Iraqi government, and the International 
Monetary Fund. While we did not independently verify the precision of 
the data on Iraq's budget execution, we found that the data are 
sufficiently reliable to show the relative differences in budget 
execution across Iraq's ministries and budget categories (e.g., capital 
projects versus salaries). 

[42] The International Reconstruction Fund Facility for Iraq (IRFFI) 
was launched in early 2004 by the UN and the World Bank to help donor 
nations channel resources and coordinate their support for 
reconstruction and development in Iraq. IRFFI has two trust funds for 
donor contributions: the United Nations Development Group Iraq Trust 
Fund and the World Bank Iraq Trust Fund. 

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