SIGIR has identified major challenges for the U.S. and Iraqi governments to tackle in the coming year as the reconstruction effort is handed off to Baghdad; no more American money will be forthcoming for major new projects.

However, the White House has requested from Congress another $3.2 billion in the 2006 emergency supplemental to give Iraqi-run Provincial Reconstruction Development Councils cash for smaller local projects carried out by Iraqis to help close the gap in critical areas.

"There's a long way to go and that way is going to be funded by (Iraqi) oil and gas revenues," said Stuart W. Bowen, the special inspector general, in an interview with United Press International last week.

Iraq has consistently failed to beat its pre-war oil production since the invasion.

Exactly how much it will cost to finish the scores of projects started with $21 billion in U.S. money since 2003 is murky at best. Because of faulty and incomplete U.S. and Iraqi data, SIGIR could not determine whether the $2 billion remaining was sufficient to cover outstanding bills or projects on the books that have yet to start.

Many civilian projects meant to better the lives of average Iraqis with basics like clean drinking water and electricity have been affected by the ongoing violence in Iraq. At least $353 million in the $21 billion U.S.-taxpayer financed Iraq Relief and Reconstruction Fund meant for electricity and health care projects was shifted into the security sector, in at least one case without any appreciable results.

Bowen singles out a $147 million U.S. effort to help Iraq protect its oil pipelines and electrical infrastructure as a major failure, and the paucity of records on how the money was spent "raised significant concerns about possible fraud, waste and abuse" of the funds.

Begun in 2003, Task Force Shield was supposed to train and operate an Iraqi force of about 20,000 to cover 340 installations, 7,000 kilometers of oil pipeline and 14,000 kilometers of electrical lines.

"The (electricity guards) never really got organized. The (oil guards) did get formed but they didn't do a good job, as witnessed by the regularity of attacks," Bowen said.

The Defense Department recently dispatched a team to assess how oil and electrical facilities can be protected, according to Bowen, and they are drafting a new strategy.

In the meantime, Bowen has referred the Task Force Shield program to the Defense Department inspector general for a fraud investigation.

While physical attacks on the oil pipeline significantly impact the ability of Iraq to generate income, there is massive organized theft and smuggling of Iraqi oil that further degrades the economy. No one knows exactly how much oil is smuggled out of the country because the pipelines are not metered.

Security is not the only area with contracting problems: Bowen's report details how Parsons-Delaware Inc. has only completed six of a promised 150 primary health care clinics with 75 percent of its $243 million cost-plus contract award already spent. It will finish building just 14 more for a total of 20 clinics. Parsons started construction on 135 health clinics, but terminated efforts on 121 "for convenience." Completing those 121 clinics will cost about $36 million more, but there is not sufficient funding left in the Iraq Relief and Reconstruction Fund to cover the bill.

According to the report, both Parsons and the Army Corps of Engineers, which oversaw the contract, share the blame for the project's failure. Some delays and cost growth can be attributed to the overall security situation in Iraq, Bowen said.

"It's hard to parse as a general matter," he said.

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