Program Review Board (PRB) Minutes – April 7, 2004

Attendees:
* George Wolfe Chairman/Director Office of Management and Budget
* Hazim Saed Iraq Ministry of Finance
* Behnam Puttrus Iraq Ministry of Planning and Development Cooperation
* Frederick C. Smith Deputy Senior Advisor for the Office of Security Affairs
* Teddy Bryan USAID
* COL Frank Boynton Director, Office of Operations & Infrastructure
* Absent Governance
* Lt Col Jim Reitzel Coalition Joint Task Force – 7, Comptroller
* Christopher Segar, Representative of the United Kingdom Government
* Heidi Venamore Representative of the Australian Government
* Absent Economic and Development Policy
* Neil Hawkins Council for International Cooperation
COL Eric Engelbrektsson Program Coordinator
Jesse Pruett Program Review Board - Regional Programs Manager
COL Rafael Lara CPA – General Counsel
Col Don Davis CPA Comptroller
Absent CPA – HCA
Michael Powers CPA – Program Management Office
Absent Board of Supreme Audit
Patricia Hatcher CPA -- PMLC
Todd Baldwin CPA -- Office of Management and Budget
Dr. Faik Ali Abdul-Rasool Iraq Ministry of Planning and Development Cooperation
Steve Newhouse CPA – Ministry of Planning and Development Cooperation
Rick Clay CPA – Ministry of Housing and Construction
Mike Karem CPA – Ministry of Housing and Construction
Steven Koutsis CPA – Ministry of Foreign Affairs
Rula Dalabach USAID
Yassen T. Al-Yassry Iraqi Ministry of Interior
Belinda Berry CPA – Ministry of Interior
Michael Dittoe CPA – Ministry of Justice
Ammar Shawkut CPA – Ministry of Youth and Sports
Mark Clark CPA – Ministry of Youth and Sports
Cindy Burleson CPA – Ministry of Youth and Sports
Mounser Fatfat CPA – Ministry of Youth and Sports
Dr. Ed Theriot CPA – Ministry of Water Resources
Peter King CPA – Ministry of Agriculture
Lindy Cameron UK—DFID
Taif Sami Iraqi Ministry of Finance
*Voting Members


PROCEEDINGS FROM 7 APRIL 04 PRB

The PRB approved the minutes from the 29 March 04 meeting.

The Program Review Board approved the following reprogramming action:

#146 – Baghdad Sewer Initial Reconstruction Strategy -- $70,000,000. Baghdad Central. This is a not a request for additional funds. Initially approved in July 03 for Vested funds. Reprogramming #7 shifted $55,000,000 to Seized funds. Baghdad Central is requesting an amendment to PRB 146 a & b. They are not asking for any additional funds. The following change in scope was requested:

In 146 (a) “Sewage Equipment for the City of Baghdad”, add training in regard to the equipment, to include inventory management, operation, maintenance and ordering spare parts for employees who will be responsible for this new equipment (Equipment=vacuum and jetting trucks for sewer maintenance).; and

In 146 b, “Sewage Reconstruction – City of Baghdad” broaden the scope of the project to include: (1) development of a Master Plan for Water and Sewage in Baghdad, and (2) repair/restoration of selected (about $1.5 M) residual from this project in Adhamiyah sewage treatment plant, and (3) cleaning of the major trunk line, known as the Zeblin line, by labor intensive methods to clean as much of the Zeblin sewage line as possible.
APPROVED

NEW PROPOSALS

#668 – Outstanding FAO Purchase Orders-- $312,000. The Ministry of Agriculture (MoA). Ten forklifts were ordered via a UN Food & Agriculture Organization (FAO) contract on behalf of the State Company for Agricultural Supplies for MoA offices/warehouses in northern Iraq. These items were not included in the 2004 Iraqi budget. Four of the ten forklifts have been delivered. The supplier is currently withholding delivery of the final six forklifts pending payment for the initial delivery ($124,800). The Iraqi MoA has reiterated the need for these items and is satisfied with the initial delivery. CPA General Counsel has found that this is a valid contractual liability of the CPA. The Chair asked if MoA could reprioritize their budget to cover these costs. CPA MoA countered that there is a precedent for the PRB to approve additional funds for outstanding FAO contracts. Since there are likely to be more emerging, MoA does not want to set a new precedent of payment from the ministry’s budget. The Chair emphasized that, with the approval of the 2004 Revised Iraqi Budget, that all ministries should strive to solve budget issues within their approved budget. Failing that, they should engage the Iraqi MoF to work the issue before coming to the PRB. The Iraqi MoF and MoPDC initially opposed the action, but agreed to an amended motion that urged the MoA to come to MoF first to fund this action, and future actions, before additional DFI funds are allocated.
APPROVED AS AMENDED: DFI $312,000

#669 – ICAO Compliant Iraqi Passport Issuance System --$31,500,000. The Ministry of Interior (MoI). This project provides Iraq with a legitimate, internationally respected passport. A passport is an integral component of any sovereign nation’s capacity to maintain national security and is vital to convincing the world that Iraq has regained firm control of its borders. The 2004 budget included $4.5M for this effort. However, initial bids were above the $100M range. The RFP was rescoped and the current estimate is $36M. It is estimated that passport issuance will generate $37.5M in revenues in its first year. The Australian representative asked if this project was competitively bid. CPA MoI confirmed that they had conducted a competitive source selection with international participation. The representative of CPA NSD asked whether revenue would go back to MoI or the general fund. The Chair stated that, absent special provisions, the revenue would return to the general fund. The Iraqi MoF stated a concern that the selected solution was too expensive and urged a less expensive solution similar to neighboring countries. The representative of the CPA Ministry of Foreign Affairs stated that, due to heightened security concerns, most countries were now, or will be, rejecting passports that do not have security features found in the proposed Iraqi passport. The Iraqi MoF stated their opposition to the motion.
APPROVED: DFI $31,500,000

#670 – Youth Center Revitalization -- $18,500,000. The Ministry of Youth and Sports (MoYS). Youth centers in Iraq are a critical part of the fabric of Iraqi society, and require consideration in and support under any comprehensive strategy for assistance to Iraq. The refurbishing of existing youth centers and the addition of computer technology will allow the MoYS to further cultural, scientific and democracy building programs which lead to inclusion of Iraq as a whole within the international community. 60 centers have already been refurbished and require a mostly equipment and some minor rework. The remaining 90 centers under the MoYS will require refurbishment and equipment. This proposal also includes $3M for operating expenses through the end of 2004. The Iraqi MoPDC asked if grants had been sought for this effort. CPA MoYS stated that the urgency of the requirement did not allow time for seeking grants. The representative from CPA CiC asked three questions: The first was about the consideration of recurring costs due to the increased capabilities of the centers. CPA MoYS assured the PRB that recurring costs would be covered in the 2005 budget. Next, CiC asked about the removal of squatters and Islamist groups from the centers. MoYS stated that this has already begun. Several methods have been tried with varied levels of success, but efforts are ongoing and should be successful. Finally, CiC asked if MoYS had coordinated their programs with the Ministry of Education. MoYS stated that they had not, but would coordinate with MoED and other ministries as a condition of approval of an amended motion. Also, approval is contingent upon PRB Chair obtaining confirmation of approval from the Iraqi MoF.
APPROVED AS AMENDED: DFI $18,500,000

#671 – Judicial Salaries -- $2,500,000. The Ministry of Justice (MoJ). The MoJ recommends a salary increase for judges and prosecutors in order to preserve judicial independence and discourage the endemic bribery that formerly plagued the Iraqi judiciary. CPA MoJ is advocating a separate pay scale and note that many judges are now paid less under the Coalition than under the prior regime, when bribery flourished. The amount requested is for eight months in 2004. The recurring annual amount would be $3,770,000. . Several Board members noted that many ministries were attempting to make the case for increased salaries for senior or critical jobs. CPA has discouraged this practice and has held to the 11-tier salary scale. MoJ countered that, as an new independent branch of government, the Judiciary should not be required to use the same pay scale. MoJ noted that the Administrator had approved the new salary scale. The Chair agreed that the Administrator had approved a new judicial salary scale. However, this proposal dealt with the source of funding, not the requirement itself. The Chair asked the MoJ representative if they had considered reprioritizing their internal budget to cover the increased salaries. MoJ stated that that was not a viable option. The Iraqi MoF agreed, in principle, that judicial salaries need attention and encouraged MoJ to come to them to discuss other options.
NOT APPROVED

#673 – Microcredit for CPA South -- $10,000,000. CPA South/. This project will encourage private sector growth and employment through credit extension to small and micro enterprises in urban areas of the Southern Region. The loans will be administered by CHF, a US NGO already doing similar work under CPA Grant 0001. The average loan will be less than $2,000.
DEFERRED: WILL BE CONSIDERED AT 14 APRIL PRB

#674 – Emergency Assistance for Flooding -- $10,000,000. Ministry of Water Resources (MoWR). Climatic forecast indicate a strong possibility of flooding due to unusually high flows in the Tigris and Euphrates from Turkey and Syria. The potential for flooding will be high through July. Four seasons of drought and reduced river flows have resulted in weakened dykes and levees along the rivers and tributaries. Funding is required to meet emerging flood emergencies to repair levees and pay claims for flood damage. CPA MoWR noted that this was to be an contingency fund drawn upon only in the case of a flooding emergency. CPA General Counsel asked if it was proper for MoWR to be honoring claims. MoWR stated precedent for these claims. However, several ministries were exploring the forming of an organization, like the US Federal Emergency Management Agency (FEMA) to deal with disaster mitigation across the board. The Iraqi MoF stated that funds could be made available within the 2004 budget by delaying other capital. projects, if necessity arose. The Iraqi MoPDC opposed taking funds for approved capital projects for this proposal. The UK representative asked if there were plans to repair levees before emergencies arose. CPA MoWR stated that the budget did not contain funding for levee repairs. The Chair suggested an amended motion for a smaller amount to cover near-term contingencies. A motion was introduced to approve the proposal at a reduced level of $3,000,000.
APPROVED AS AMENDED: DFI $3,000,000

#675 – Organizational Reform and Housing Policy -- $3,000,000. Ministry of Housing and Construction (MoHC). To fund studies on reforming the Iraqi MoHC organizational structure to optimize utilization of Deputy, Directorate, and Commission staffs and to develop a Housing Reform Policy. This is necessary due to a budgeted reduction in ministry staff and an unrealistic span of control for leaders in the current structure. Additionally, MoHC seeks to shift its role from a housing provider to a facilitator for the private sector. This requires a retooling of housing policy. CPA MoHC noted that Ambassador Bremer had subsequently recommended funding for this effort from US Supplemental funds. However, the supplemental did not include funds for this purpose. The Iraqi MoPDC stated that there had already been a World Bank study on the structure of the Iraqi MoHC. CPA MoHC stated that the World Bank report did not contain specific detail on reorganizing MoHC, or changing housing policy. There was extended discussion on finding different avenues for funding this proposal. MoHC stated that grants had been pursued, unsuccessfully, numerous times from World Bank and other organizations. A motion was made to ask CiC and MoPDC to assist MoHC in obtaining a grant from the World Bank Trust Fund or the United Nations Habitat Fund.
NOT APPROVED