Program Review Board (PRB) Minutes – June 2, 2004

Attendees:
* George Wolfe Chairman/Director Office of Management and Budget
* Hazim Al Said Iraq Ministry of Finance
* Absent Iraq Ministry of Planning and Development Cooperation
* Absent Deputy Senior Advisor for the Office of Security Affairs
* Chris Milligan USAID
* Victoria Wayne Director, Office of Operations & Infrastructure
* Dean Pittman Governance
* Absent Coalition Joint Task Force – 7, Comptroller
* Yusaf Samiullah Representative of the United Kingdom Government
* Neil Mules Representative of the Australian Government
* William Block Economic and Development Policy
* Neil Hawkins Council for International Cooperation
Patrick Maloy Economic Engineering
COL Eric Engelbrektsson Program Coordinator
BG Steve Seay CPA – HCA
Robert Speer CPA PMO Office
Mohamad Al-Awad CPA PMLC
Stuart Schwartzstein CPA MoST
Roliff Purrington CPA Ministry of Housing and Construction
John Lyons CPA Ministry of Communication
John Weaver CPA Ministry of Communication
William Keller, Jr. CPA Ministry of Communication
Donnie Rogers CPA Ministry of Justice
CPT. Thomas J. Fauvell 2BCT/ICD
LTC Efflandt 2BCT/ICD
LTC May MNFI/10
MAJ Tadd Sholtis CPA Stratcomm
Amad Ali Salshihi CPA Ministry of Housing and Construction
Travis Beeson CPA Ministry of Housing and Construction
Gib Owen USAID Project Office
Bob Martinson USAID Project Office
Sarah Horrigan CPA Ministry of Finance
Jack Curlee CPA Ministry of Finance
Patrick Aylward CPA Ministry of Finance
Craig Lund CPA Ministry of Finance
Jackie Strasser CPA Ministry of Finance
Taif Sami Iraqi Ministry of Finance
Kelley Watts PMO Log
Roger Bohnert CPA Ministry of Transport
Doug Hageman CPA Ministry of Housing and Construction
Mustafa A Rahman Iraq Ministry of Housing and Construction
Saad A-al-Zubaidi Iraq Ministry of Housing and Construction
Ali Sami Iraq Ministry of Housing and Construction
Sundus Ali CPA Ministry of Housing and Construction

Robert McClellan MNFI
Norm Szydlowski CPA Ministry of Oil
Aud-Frances McKernan CPA Governance
*Voting Members

PROCEEDINGS FROM 2 JUNE 04 PRB

The PRB approved the minutes from the 12 May 04 and 15 May 04 meetings.

The Chairman stated three limited funding sources currently exist: seized assets, year-to-date excess oil revenues (over budgeted projections) and reallocations within existing budgets. The Chairman stressed the need to leave excess oil revenues untouched in order to ensure sufficient revenue for the 2004 budget and, possibly a beginning balance for a tough 2005 budget year. The Representative from the Iraq Ministry of Finance (MoF) commented that they could not depend on high oil prices and that current oil prices should not be considered a basis for future budgets. The Representative of the United Kingdom (UK) put forth a motion for that the PRB, due to inadequacy of funds, not consider further proposals unless they were urgent and a matter of national security. The Representative of Australia seconded the motion and discussion commenced. Governance stated that such a motion was unnecessary and the Chairman suggested such a motion may not be in keeping with the charter of the PRB. The motion was rescinded but the voting members of the PRB came to a consensus that given the late date and challenging financial situation, only immediate and urgent matters should be supported.

REPROGRAMMING

#697— Oil Infrastructure Rebuilding --$20,000,000. Ministry of Oil/Norm Szydlowski. This revision represents no new spending, but reflects a shift in already authorized spending regarding a request from the Ministry of Oil to shift $20 million from the Upstream set of projects to the Downstream. This allows a high-priority rehabilitation project to be completed at the Beiji Refinery. This is part of the $460 million allocation #697 Oil Infrastructure Rebuilding. It was a result of prioritizing by the various Ministry of Oil departments and it surfaced too late to be reflected in the original PRB presentation.

The Representative of the Iraq MoF stated the MoF had been consulted and fully support the reprogramming. A motion to approve was put forth by Governance and seconded by the Representative from USAID. The motion passed unanimously.
APPROVED

#370— Security equipment for operating new prisons--$80,000. Ministry of Justice/Donnie Rogers. The purpose of this request is for no new spending, but to reallocate $80,000 of already authorized funds for housing for the National Director of the Iraqi Corrections Service. This proposal seeks the approval in order to move forward with a search for secure accommodations. Until this proposal is approved there will not be any specific information on location or the contract services required.

The Representative of the UK put forth a motion to approve if it is determined by the Chairman that such reallocation has precedent and is within the norm of reprogramming. The motion was seconded and passed.
TENTATIVELY APPROVED

NEW PROPOSALS

#687— Iraqi National Foundation for Remembrance --$10,000,000. Governance/Michael Ratney. The Iraqi National Foundation for Remembrance will take steps to ensure that the atrocities of the previous regime are memorialized. The Foundation will consider proposals from across the nation on how best to memorialize the victims of these brutal atrocities and the sacrifices made by Iraqi individuals and the communities of Iraq. The Foundation will seek proposals to memorialize and commemorate, among others, those who suffered or lost their lives during many atrocities committed by the previous regime against members of the political opposition in all ethnic and religious groups. The Foundation will seek to raise private funds for establishing a national memorial museum in Baghdad. This museum will document, study and present publicly the history of atrocities suffered under the previous regime.

The Chairman asked if the Iraq MoF had been consulted and the Representative responded affirmatively. The Representative stated the new Minister of Finance had been consulted and USAID had already committed to funding the site. The Representative of the Iraq MoF stated he had not been consulted and was unaware of the project. The Representative of the Iraq MoF also noted that if the project was a priority he would have been informed. The Representative of the UK stated the project did not qualify as an emergency. Governance said the proposal came out of wide consultation with Ambassador Bremer and Iraqis country-wide. Governance stated Ambassador Bremer is committed to the project and this funding would help give the project a needed head start. The Representative of Australia stated that despite the merits of the project, it would be best served having Iraqis make all the decisions. The Representative of the UK stated the proposal was premature and susceptible to private donations.
WITHDRAWN

#701— Digital Switches --$15,000,000. Ministry of Communication/John Lyons. The telephone network and exchanges belonging to the Iraqi Telecommunication and Post Company (ITPC) have suffered a considerable amount of damage due war, looting and years of neglect. This condition negatively impacts on the ability of ITPC to deliver reliable service to existing customers in Baghdad and in the provinces or to add new customers The goal of the Iraq telephone and Postal Company (ITPC) is to expand its network throughout Iraq to enhance its teledensity from 4% to 6% by the end of the year.

The Chairman asked if they had spoken to the Iraqi Ministries of Finance and Planning and the Representative responded affirmatively. The Representative of the Iraq MoF stated they had not been consulted. John Weaver of CPA Ministry of Communication stated they had already reduced existing projects and needed the proposed funding to complete a greater, connected project. The Representative of the UK asked whether, if they had reduced the geographic area for communications, they could have completed that area. John Weaver of CPA Ministry of Communication stated they did go through and reduce to essentials but needed this funding to complete a smaller footprint. The Representative of USAID asked if supplemental funding existed and the Representative said no. The Representative of the Council for International Coordination (CIC) asked if the Iraqi Ministry of Planning had been consulted and the Representative responded negatively.

Governance put forth a motion to table the proposal and the Representative of USAID seconded. The Representative of the UK stated that if the proposal came back to the PRB more detailed information would be necessary. The motion passed.
TABLED

#702— Hazardous Waste Disposal --$41,000,000. Ministry of Environment/Roliff Purrington. The purpose of this proposal is to develop a hazardous waste disposal facility to employ all three chief types of disposal technology: incineration, land filling and biodegradation. Hazardous waste disposal has a direct link to three critical goals for rebuilding Iraq: economic development, clean water and public health. Iraq’s Environmental Cooperation Council, chaired by the Minister of Environment, passed a resolution on April 22, including the following: “Since hazardous wastes lead to major environmental risks if mismanaged and due to the broad nature of this problem in Iraq…the Council decided…on bringing up the issue to the Governing Council and request …the necessary funding to treat remains of companies and factories of the former Foundation for Military Industries.”

The Representative of Australia asked how much of the waste was generated by the coalition and the Representative responded he did not know. The Representative of Australia asked if Iraqi money should be used to clean up coalition waste. COL Eric Engelbrektsson stated Centcom is responsible for hauling coalition waste out of country. The Chairman stated the proposal did not appear urgent. The Representative stated the project is urgent and had simply been overlooked. The Representative of the UK stated the Iraq Ministry of Planning was needed and that recurring costs would be a major issue. The Representative of the UK also stated the project was premature and usually should be followed by a feasibility study. The Representative of the Iraq MoF suggested the project be proposed for the 2005 budget.

The Representative of USAID put forth a motion to table and Governance seconded. The motion passed.
TABLED

#703— Development of Housing --$80,000,000. Ministry of Housing and Construction/Roliff Purrington. Several estimates put the housing shortage in Iraq at between 1.2 – 1.5 million units. The shortage of housing is a critical problem. This request will create 2,016 new housing units, ease housing shortage in areas of greatest need, and employ approximately 2,000 local laborers in each location. The Ministry of Housing and Construction has been developing affordable solutions to the housing crisis in both fiscal year 2003 and now in 2004. The number of units being built cannot keep pace with the demand and the lack of solutions to this problem are a continuing source of civil discontent in the reconstruction effort.

The Representative stated that discussions had occurred with the Ministries of Finance and Planning. Saad A-al-Zubaidi of the Iraq Ministry of Housing and Construction stated these were major problem areas and the projects would bring employment and social benefits. The Representative of the Iraq MoF requested additional discussions. The Representative of CIC stated that UN Habitat was already putting together a housing project with the Japanese. The Representative of the UK asked about the unit costs and ownership. The Representative discussed a potential point system for determining use. The Representative of the UK asked why this shouldn’t be provided by the banking sector. The Representative stated that mortgage funding was not readily available.
NO ACTION TAKEN

#704— Al Hartha Bridge --$10,000,000. Ministry of Housing and Construction/Roliff Purrington. This bridge was destroyed during the war by the previous regime. Al-Hartha Bridge is an important to link a city of 100,000 people with the city of Basrah. The city of Al-Hartha was ignored and not maintained because it is mostly She’a. There was a floating bridge serving that city, and the prior regime ordered to taken it off the river just prior to the war in 2003. Since then the city has been improvising using old, small and very unsafe boats to cross the river going to their jobs, schools, hospitals and shopping as well. No real development will be possible in this city without having this bridge rebuilt.
Saad A-al-Zubaidi of the Iraq Ministry of Housing and Construction stated that, due to the limited budget, this project could not be funded. He also stated everything in the town of 100,000 people was disconnected from Basrah due to the lack of a bridge. The Representative of CIC asked why, if this was such a priority, was it not funded in the budget. The Representative of the Iraq MoF stated the project should be funded out of the existing budget.
NO ACTION TAKEN

#705— Sewer Proposal --$38,209,200. Baghdad Central/CPT Fauvell. The overall purpose of the initiative is to create a functional, reliable sewer network, capable of handling the demand placed on it by the Northwest Baghdad and Abu Ghuraib populations.
• Request $22,268,200 to execute multiple sewer projects designed at the complete rehabilitation of the Northwest Baghdad and Abu Ghuraib sewer network. Projects will include the repair of major sewer line collapses, extensive line cleaning, emplacement of new lines, refurbishment of existing vertical and submersible pumps throughout the system, and the emplacement of new pumps at every pump station in the 2BCT AOR. Projects will occur in every neighborhood of the 2BCT AOR, this area being bordered by Khadamiya in the northeast, Abu Ghuraib in the west, and Qadasiya in the southeast.

• Request $15,941,000 to execute numerous water infrastructure improvements that are integrated with the above mentioned sewer rehabilitation. Water improvement projects include replacing and repairing of main water transmission lines into neighborhoods and major branch lines from water mains. Primary goal is to prioritize and sequence projects to maximize productivity and minimize system downtime. This is achieved by executing water and sewer projects in the same local area at the same time.
The Chairman questioned why any more money should be allocated to Baghdad after $145 million of the $500 million proposal for security was approved for spending, largely in water and sewer, in Baghdad. The Representative of CIC asked who would implement the project and the Representative stated the Ammanat and the Director General. The Representative of CIC asked for clarification on competitive bidding and who the prime contractor would be. The Representative stated there is no prime contractor. The Chairman asked if the Ministry of Planning supported additional funding and the Representative responded affirmatively. The Representative of the Iraq MoF asked where the funding would come from. The Chairman stated most likely from seized funds. Governance asked if the project was in the US Supplemental and the Representative of PMO stated no. The Representative of the UK put forth a motion to table the proposal for further discussions with the Iraqi Ministries of Finance and Planning, PMO and the Ammanat. The Representative of Australia seconded and the motion passed.
TABLED

To close the meeting the Chairman stated the current requests differed from requests comprising the recent allocation of $2 billion in funding. The Chairman said the earlier requests were put together in an overall spending plan by a process that included budget hearings and consultation with numerous ministries, including Finance and Planning, and represented a balance between reserves, food, security, and reconstruction.