Rebuilding Iraq: Improved Management Controls and Iraqi Commitment Needed for Key State and USAID Capacity-Building Programs

To build the capacity of Iraq's central and provincial governments to sustain this effort, the United States is implementing programs including the Department of State's Provincial Reconstruction Development Committee (PRDC) and the U.S. Agency for International Development's (USAID) National Capacity Development (NCD). The PRDC program funds and implements Iraqi proposals for small-scale projects such as schools, road repair, and water facilities in Iraq's provinces. By having Iraqi officials develop and agree on proposals, the Department of State intends to build provincial and local government capacity to identify, plan, and deliver essential services. The NCD program trains Iraqi government employees in administrative skills such as planning and budgeting and supports Iraq's national and regional training centers and individual ministry training programs. The NCD program also advises Iraq's national ministries, including the electricity, oil, water, and planning ministries. The PRDC and NCD programs are funded through the Economic Support Fund (ESF) for Iraq. The PRDC program received $700 million in ESF funds between November 2006 and February 2008, while the NCD program received $209 million in ESF funds in July 2006 and another $59.8 million in September 2008. A key factor in U.S. agencies' ability to achieve their missions and improve accountability is the implementation of appropriate management controls. Management controls help provide reasonable assurance that programs are focused on and can achieve their objectives. Key controls include a clear organizational structure with adequate managerial and staff capacity, a performance monitoring system that measures progress toward program objectives, and guidelines and policies that are communicated and consulted with program implementers. The Department of State's management controls for the PRDC program were found to be weak. The program involved multiple organizations and a complex process, but had no clearly identified program manager until May 2009. The Department of State lacked a performance monitoring system that measures progress toward building provincial capacity to deliver essential services. The program's guidelines and policies had changed frequently, but the Department of State did not adequately communicate or consult with the U.S. Army Corps of Engineers, the program implementer, about these changes. In contrast, USAID's management controls for the NCD program generally supported the program's objective of building ministry capacity. USAID's organizational structure was clear, including who is responsible for overall program management. The program's objective was narrowed to improving ministries' administrative capabilities and clearly linked to measures of outcome. However, USAID officials did not confirm receipt of goods and services for invoices totaling about $17 million of $79 million prior to payment. Iraq has committed to sustaining U.S.-funded programs and sharing in their costs, but actual budget expenditures for such activities are unclear. For the PRDC program, 16 of the 40 projects in a sample had evidence that the Iraqi government agreed to sustain the project, but the records did not specify actual financial or budget commitments. For the NCD program, the Iraqi government is supporting the program by providing trainers and allocating funds in their 2009 budgets for training center equipment and other NCD efforts.