Full impact of Department of Defense program to restart state-owned enterprises difficult to estimate
(Web-Based Document)

Title from title screen (viewed on March 7, 2011).

"January 30, 2009."

Available online.

Approved for public release.

Since the inception of the war in 2003, Iraq has reportedly had an approximate 60 % underemployment/ unemployment rate. The Department of Defense (DoD) believed that this high rate was a factor in fueling insurgency in the country in 2006; in June 2006, DoD established a Task Force to Improve Stability and Business Operations in Iraq to stimulate economic development and employment in Iraq. One of the Task Force s major efforts has been to revitalize Iraqi state-owned enterprises (SOE), which are factories that played an important role in Iraq s pre-war economy. SOEs employed about 200,000 Iraqi s, according to DoD officials. Since its inception in June 2006, the Task Force has received about $50 million in FY 2007 and $53 million in FY 2008 to revitalize state-owned factories. Projects associated with the FY 2007 funding are being implemented, although most of projects associated with the FY 2008 funding have not yet been given final approval for implementation. Once a project is selected for funding, the Task Force enters into a cooperative agreement with the state-owned enterprise to implement the project. These agreements describe the assistance to be provided, the project time frames, and the procedures for the disbursement of funds. SIGIR s reporting objectives for this report were to assess the following: the baseline data and performance metrics the Task Force used to estimate the impact of its projects the adequacy of management controls the Task Force has in place to mitigate risk and ensure funds are used for the intended purposes the Task Force s future plans to assist state-owned enterprises In July 2008, SIGIR reported on the financial resources devoted to the Task Force, and the major areas of economic development assistance, along with examples of projects.

In June 2006, the Department of Defense (DoD) established a Task Force in the Office of the Secretary of Defense to focus on efforts to stimulate economic development and employment in Iraq. One of the Task Force's major efforts has been to revitalize Iraqi stateowned enterprises (SOE). These enterprises include factories that were important in Iraq's pre-war economy, employing about 200,000 Iraqi's, according to DoD officials. The Task Force has received about $103 million to revitalize state-owned factories. SIGIR undertook an audit to determine the baseline data and performance metrics the Task Force used to assess the impact of its program to restart state-owned enterprises, the adequacy of internal control procedures used to mitigate risk and ensure that the funds are used for intended purposes, and future Task Force plans. SIGIR performed work at Task Force locations in Arlington, Virginia and Baghdad, Iraq. We also visited five state owned enterprises assisted by the Task Force. Security requirements limited the number of SOE's that SIGIR could visit, and the time available at each site. SIGIR recommends that the Task Force (1) establish milestones to ensure that baseline data required to assess the impact of the Fiscal Year (FY) 2008 projects is obtained in a timely manner, (2) obtain copies of invoices to verify the cost of items purchased directly by SOE's, and (3) verify receipt of items before payment is made under contracts awarded by the Joint Contracting Command-Iraq.