Updated Aug 10, 2009 - We added a Jul 28th article from the military newspaper, Stars & Stripes.
The USAID Inspector General seems to be issuing stronger and stronger audit reports. This (below) is one of the first I have seen where due to such a report, USAID "suspended" payments to the contractor, International Relief & Development (IRD) on July 4th for a $600-million program. It seems the cost of NOT providing adequate documentation for spending and not adequately justifying expected "deliverables" is becoming higher.
Usually we see negative reports from SIGIR (SIGIR.mil) for Iraq contracting, or from the new Wartime Contracting Commission, but here the evidence is actually from the USAID IG themselves, AND USAID actually halted payments. There is progress, folks! USAID seems to be now monitoring and implmenting corrective actions if contractors don't provide measurable results the way an auditor would look for them.
One of the lessons learned for contractors is that you can't rely on weak direction from your USAID contacts and the contract, but now you need to provide programs and documentation that can stand up to what a business or skilled auditor would expect for the funds received. That is a big difference, and contractors maybe should research audit reports mentioned in this blog, as well as from the GAO, SIGIR, and other IG's to identify the strength of the management systems, reporting and documentation they need, which may NOT be specified by donor agencies like USAID, but are implied in all the audits.
I can remember auditing concessions like cafeterias, restaurante and golf clubs in the 1970's for the County of Los Angeles. The contracts were so weakly worded that we defined performance expectations and put a number of firms out of business. Finally, we rewrote the contract to specify the documentation standards, expense categorization rules, etc so the concessionaire's accountant could actually understand in professional terms what reports and accounting was needed to calculate correct rental prices, and the problems went away. Maybe that is what USAID needs to do - ask their IG, SIGIR, etc. to propose contract specifications or review them BEFORE works starts to ensure the contractor has sound professional guidance on the documentation, reports, and performance measures expected by the auditors. That one step just might reduce all the negative audits being reported.
The article also mentions they got a quote from USA Today. USA Today seems to be continually using Freedom of Information Act document requests to get copies of USAID IG reports that have not been made public. I will see if I can find the two mentioned "reviews" below.
vj
Iraq jobs program suspended after probes
Published by UPI: July 27, 2009 at 10:21 AM
Among concerns raised in a report was evidence of phantom jobs and money being steered to insurgents instead of jobs projects, USA Today reported Monday.
The Community Stabilization Program, meant to thwart insurgent activity by paying Iraqis cash for public works projects, was run by the International Relief and Development, a non-profit corporation in Virginia that runs similar programs for the U.S. government.
Funded through the U.S. Agency for International Development, the stabilization program "is generally thought of as one of the most effective counterinsurgency efforts in Iraq," Deputy Secretary of State Jacob Lew told USA Today.
In the first audit in March 2008, USAID's inspector general reported evidence that the program was defrauded through overbilling and payments to nonexistent Iraqi employees. While not alleging corruption, the inspector general said it found IRD's records were riddled with "irregularities that call into question not only" the reported jobs "but also the validity of payments made to project contractors."
That report led USAID and IRD to implement new financial monitoring mechanisms.
An outside company reviewed the program's youth component in February and in June reported "inconsistencies" in Mosul, Iraq, USAID said in a statement to USA Today.
USAID suspended its payments to the program July 4, the agency said.
Lew and others declined to say how much money was diverted in Mosul.
© 2009 United Press International, Inc. All Rights Reserved.
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Report: USAID halts Iraq job funding
The U.S. Agency for International Development has suspended a $644 million Iraqi jobs program amid concerns about misspending and an allegation that millions of dollars may have ended up in the hands of insurgents, according to a USA Today report.
The Community Stabilization Program began in 2006 and "is generally thought of as one of the most effective counterinsurgency efforts in Iraq," Deputy Secretary of State Jacob Lew told USA Today.
The program is designed to pay Iraqis for performing jobs such as trash removal and ditch digging. However, a March 2008 audit by USAID’s inspector general found overbilling and payments to ghost employees, the paper noted.
Included in the audit was a letter from an official with a provincial reconstruction team. The official wrote that "millions of dollars from these projects were fraudulently going to insurgents, as well as to corrupt community leaders and [program] representatives."
Financial safeguards were put in place, but this year the inspector general said that "inconsistencies" regarding payouts continued, and USAID halted payments to the program on July 4, USA Today wrote.
Four former employees of International Relief and Development, which ran the program, told the paper that $10 million was spent questionably in the city of Mosul alone.
One employee said millions were allocated for projects that didn’t exist, and documents for them were faked.
I AM SURE 100 % THAT IRD MOSUL STAFF WERE STALL. WHAT MADE ME SAD THAT AFTER TAKING THE MONEY, THEY GOT SPECIAL VISA TO USA?????????? SHALL WE SAY THAT US HELPING THESE TYPES OF PEOPLE? OR US INTELEGENCIES HAVE SHORTAGE???
US DISAPOINT ME?? BECAUSE IF THEY DID REALL INVESTIGATION THE COULD FIND THE ROBBERIES.
ENG. IBRAHIM
IRAQ
Posted by: Ibrahim | December 19, 2009 at 03:48 PM