RestoreIraqiOilApprovalandRelease ofFunding

OFFICE OF THE UNDER SECRETARY OF DEFENSE l 100 DEFENSE PENTAGON WASHINGTON, DC 20301-1100 COMPTROLLER (Program/Budget) TO: THRU: COVER BRIEF UNDER SECRETARY OF DEFENSE (COMPTROLLER) PRINCIPAL DEPUTY AND DEPUTY UNDER SECRETARY OF DEFENSE FOR MANAGEMENT REFORM DEPUTY COMPTROLLER (PROGRAM/BUDGET) DEPUTY UNDER SECRETARY OF DEFENSE (FINANCIAL MANAGEMENT) .:J~ 111 ,uti) FROM: ~r DIRECTOR FOR OPERATIONS & PERSONNEL C:Jr'-fl:s 1( £5~ Jtc..T'"-'<1 SUBJECT: Project from the Office of Coalition Provisional Authority (OCPA) PURPOSE: To obtain your approval and release of funding for the Restore Iraqi Oil (RIO) · Infrastructure Plan DISCUSSION: Analysis of Request • Attached is the $961 million OCPA request to fund RIO infrastructure (Tab A). • The request is based on the total RIO need of $1,398 million from a Rough Order of Magnitude (ROM) estimate minus $437 million (Tab B) broken down as follows: • $225 million for expenses related to the emergency import and distribution of benzene and liquid petroleum gasoline (LPG) through 09/30/03 to be funded by a separate project. One month's supply was funded from seized assets at a cost of $90 million on 06/13/03, and • $212 million paid from the Natural Resources Risk Remediation Fund (NRRRF) for obligation, contract, and unexploded ordinance costs through 06/06/03. The ROM was prepared by the Iraqi Ministry of Oil, Kellogg Brown & Root (a subsidiary of Halliburton), and the U.S. Army Task Force (TF) RIO, and is summarized below (dollars in millions): ROM COST INPUTS I. System Restoration 2. System Maintenance and Operating Equipment 3. Vehicles and Heavy Equipment 4. Security Safety and Environment 5. Communications 6. Otber (including benzene and LPG) TOTAL RIO COSTS ROM ADJUSTMENTS Subtract benzene and LPG Subtract obligations to date Subtract RIO contract costs to date Subtract unexplored ordinance costs to date TOTAL ESTIMATED AMOUNT REQUIRED (Details at Attachment 1) Spend Plan. 07/03-09/03 Spend Plan, FY 2004 ($ in Millions) $817 17 54 58 36 416 $1,398 ($225) (192) (10) UID $961 $504 $457 • TF RIO has provided a detailed explanatory spend plan for $504 million of the $961 million total request to fund major projects and purchases from 07/01103 to 09/30/03 (Attachment 1). • Ambassador Bremer has indicated a preference for funding RIO infrastructure with appropriated funds. The Program ReviewBoard approved the request on 07/07/03 (Tab C). Funding Sources NRRRF. DFl, and IRRF $489 million was identified in the Act for transfer to the NRRRF from the Iraq1 Freedom Fund (IFF). 1415-IR deposited $252 million from the IFF to the NRRRF, and subsequently to the Operation and Maintenance, Army account. The remainder in the NRRRF at the time of approval (estimated at $237 million) should be used for this requirement. We also believe the RIO infrastructure request satisfies the standards for use of Development Fund for kaq (DFI) funds. United Nations Security Council Resolution 1438, Paragraph 14 allows the release of DFI funds "for the economic reconstruction and repair of Iraq's infrastructure." We think the RIO infrastructure request falls under foreign assistance rehabilitation and reconstruction activities and should qualify for Iraq Relief and Reconstruction Funds (lRRF). Recommended Allocation of Funds Fund the RIO infrastructure request at $961 million. Option # l. $961 million in NRRRF and DFI Funding. • Apply the remruning balance in the NRRRF (estimated at $237 million) to finance the RIO infrastructure request. • Seek funding for the residual RIO infrastructure balance to equal $961 million (estimated at $724 million) from the DF1. If Option 1 is unavrulable or cannot be implemented within a reasonable time frame, pursue option 2. OCPA Preferred Option #2. $961 million in NRRRF and IRRF Funding. • Apply the remruning balance in the NRRRF to finance the RIO infrastructure request. Seek funding for the residual RIO infrastructure balance to equal $961 million from the IRRF. RECOMMENDATION: That you approve the above allocation of funding sources. COORDINATION: USD(P) ODGC(F) TJS ARMY CENTCOM __ _ ------ OPTION #l OPTION #2 Approve ___ _ Approve ___ _ Disapprove ___ _ Disapprove ___ _ Other ____ _ Other ____ _ Restore Iraqi Oillnfrast:ructure.doc I Conljlany i I SUMMARY Phase I Oct2003 fundtng By 15 AlllJ 03 Phase 2 Dec 2003 Phase 3 Mar 2004 lsi Comoanv , Phase I Oct2003 Phasa2Dd03 Pllale J Mar2004 fundtngBy15Aug OJ Pre·War I Current Ell , Etec Product Product Cosllmi~ USD: Prl)d 1 KBR MOOEPC & Procure !mtl) Local Procure Total (mil) USQ !m,li USO USQ Protect SubtotaiPI~asel !05.00(1 TOT ALFND!NG Phase 1 Oct1003 Phase 3 Mar2004 Funding By 1 Jan 04 KBR MOOEPC & Procure(mlll ootPm;:urt Total(mil) imlll uso USD Phase 1 Oct20113 Pl\nf 2 Dec 2003 Phasa 3 Mar 2004 Phase 1 Oct101JJ Phm 2.Dee 2003 ~ l'tlase 3 Mar 2004 Fundrng By 15 Aug OJ FundlngSVJNovOJ~,' Fun<llng By 1 Jan 04 i I : . Elt. KBk MOO EPC & I I Pre·War CiJirent Est i I we :Cost{niif' em-·, , ·Extc Procure{rrnl) LocatProcure Total(mll) 1;~. </:"v~:: Company I I ProJeCt Product Product Coil(mit)USD: Prod ! Resp ·· uso>- •Ritp USD Prod Relp uso lmiliUSO USD C:~l J.lliC I c FumJ!IJfe ~n~ F 1~!ure Mr:flJU~!l!en! I 0050 i I MRC ·.·· ;<'~~< .. ,:,.; I s 0()50 $ r]DSii SubtollllfRC 0 il I 18.733 I '::.f:i: •,; $ . I s 15.983 $ 2.15\ll 18.7JJ ll1&c II Em1~qencv P\M't~ at Cr;:1w1 Ollt~alliii Co Silc~ Subtotal M1sc $ &JOOO ~·~ '·I .. ·.;;;;~''' ':'·1 I ! 51JifJ() I Sii.OOO () o I 50000 I i IS .• .. r·l.· ·+· ·Is I 50.000 I I 50.000 TOTAL PHASE 1 FUNDING 2,]11,5?9 279081 I 716133 i ' $ ~'r;;;,. 'I' $ I 589.655 I 129.578 s 716.131 PHASE 2 FUNDING soc I ~: lui;: LIL~ farm I ,, . _, .. ! . 4.001 ·" ISCOP I I! i~CI) S I 000 1$ 4(1iX I ' ;• s 14.00) r::; soc I I I l4L~ t 5oo:J •s !4~Ju I ~:~~~;;~~~~~PS 10 0 ! ·-·· 6.000 I c soc .... ... I .)~ i $ ,s. l;(JJ\) . .... ,_ lui"' lilsCi o,;,as ~a~011 1 I .. SrJC (i I •. R.111d!117\4:1.'~Aiw.;nrt< i $ 7000 1: ~~ f=is 4200 $ 2.1100 s 700l,i soc •···· DS·5 ·:.::::c.:· . -- -~~~-- __ Sl'S " r;la~el'idl~· 0 I -~-- I 7.000 ilt $ 10) f~: ~ I Sf: 2.000 I! 12ou $ ; 2.000 II 1200 }-~: • $ 20~C ..... }~i~ ~~~- s,:, 40 ! $ 12.(00 rF SOC&;,. 1 ll 7100 ~~~-ittli .. s,Jc I . .-:...~ t:lll~G 0 s ' 4.000 "Ali SCOP_,,,. II 24[~ ,. s liJ'J!l " ~~T~ DS B ... 140~] 1-~---- (! -------~; ' '•,,, ll-1"800 i'""521Jj s~ao. .... : 41 $ c1l000 soc { : soc 43 1 1\m!,ll,hr,,,,;,,m,l ----· $ ;.(!! 2.000 ........ soc I I 2.000 I Subtotal SOC D $ $ 73.000 :· s I $ 4461111 I 28400 $ 73000 ·-~~ cfs~ SRC 4 IP!<IIOC<'iMINIGPONAill~ I .... ,,··! s . ~0.75() ' SRC i s 0•iJ0\S. 01~. }-,6ii .. SRC 1 : 1 SRC :. I I $ U'1 Ji $ 0045 ~1 SRC i '' .-.. -- .. ·· .. -. ... e~:;,}{§~~~:;BUsle> SRC . '• s ::£10 s j :~o Subtolaf SRC I 0 $ : 2.J.' $ I I I 1.105 $ 0.195 $ 2400 liif: 15_ [CJ~ Slllf\'~J Snura & ~an~ra I $ 2.000 '-'1V NQC,;, II 14011 s 0.000 !__2fJX. [Ch{'l1ilfJi'l [···· IL... . I NOC I,,, 1.000 , .. I" li ;~~ ..... s I (;y; !8 ~~WI _ :=--:-=F=-s ''12000 1:~ NCC. '1 II 1400 s .. c tJ](! S...Jji(Xi .... 1'" ~~:cl I I~· 11- · :· NOg s,;e.ooo ,.,~~ • ~r. $ NCC I I _0~1() ! ivoc 1-· $,.s.D.500 ;;;,:if' KBR ·'~I L.~. • I _j_SQO 1) ~ .. ..... $ :i3,00J I'':' ·~ SCOP I" I! 2100 I O'f~ S JO:JIJ NOC 17 \~3PS7 Rl't\rldl~tSirag filM' ... ...... t~-"'1 $ 45.000 I~'· .. , SCOP · I s :11YJ; s .. :3100 Is 450C~ Subtotal NOC 0 I I 61.500 Iii~· .;;((,' $ .,, I s 41900 I 15600 I 61500 -·~--- ,, I JCi:t~HGl1 1 IS NGC I ' 0.500 "''"'!:' :~,~~ i : \SW011 ILaiW<I!Ii.ill [r]'II!'Dt1.1 I ··'"- .. . tlGC 5.000 :,.~,, II 0500 I; 05~0 I NOC 1 ,,, .. •tooo , cr~, 1: ... ~, f - ~L~ Subtotal NOC u I .. · $ 6,500 .i .. I ! 6.500 I I 6.500 ., . l I<Rr: i ~ $ ·:'0.200 I .. NRC s ! -,,R,: ---- t~ .......... ; I! 0080 ! 021J! s s 4.300 1~£~' ' NRCi ,., I l i 1.135 $ 4h' ~~:~::~: ~:::;:~e~jeCKJi f't:rr,t>~ . .• ~m Subtotal NRC J I s 4,550 ·.~ $ I 1735 s 1.815 $ 4.550 ~-f~f-=- ~ OEC I l]l!l ""'~•v•; :~1rt1e5_ i L O'C 2 f~NS f>1rty!o wn:1url 'Nt1ty sur;ey Subtota/OEC I : $ 40000 'P. ·OEC : s 0.2~ OEC ' I I 02~1 II 0250 lt-J~~~I L\~1 o I s 40.250 '- h I I $ 41125011 · is 41125ol .=F CPC i jR,1latellaiS!I)3 PST iCPG .\ f\;,:uclsl Subtotal OPC 0 I ' $ 13.670 $ I I 8130 I 5.440 II 136701 s ' '13.670 , SCOP I s WJi 54-1011 11n70 orne OPDC ; q,~d•t 1 1!t~&SIJilrePar!slrn ln1c>s. fur\l~s.&_1Jher $ 4,(00 lc? OPDC I 4GI)J s_ 4CIJO_ s 4.000 ll!i!? • OPDC · ','·' I , ·. I l5l~ I I 0.530 s 4030_ rJPOC -··· ....... 1----- ~~:~;::: Eq"l~'~6~~~1~~S1ies .. --~-1-~-l j $ O.lll l''it.:-;;:, OPDC~· i·· :·,· ·, 1 s oooo ! ... OPOC 7 \Replace rnrorvac,; & ~lkuhps wiS)Ii!te parts $c '1.000 ~~~,,~,, OflOC:"' q + ! I s ~ ooo i I ~~ -l·r~ $ub!O~IOEC ,,. 1- i I. I IOOJ /: :cr~ ;~~ Sublo!JI OPDC o I $ 9.3311 .J,;i; ,:~ I . I I 81100 I 0.530 I 9330 ; $ 71M0.267- ' ' $ !0267 1D2GI 0 I I $ n&; $; ' .,'-· ... $ 11.167 I I 11.267 \< ·~':: ;. '""'; "i. , t~r: i ; . i'l Carnps(4) j_[ L ___ :_ I s ,3.000J~ . ··IIOC~ I I ,,,0 ! J l~}J L____ l_s_ . lC{)]j ···-~·· ''·~ ;.,(~;.; ~~~~t~;H~~;~~::ri~i~~~~~~:c~tlllti.~·R~:~ir'-&~~wne!rl Phase I Oct200J Fundtng B1li Aug 03 Curren! Elt Prod ~~~~~~~~~~~-r~~~~~ KBfl MOOEPC& Procure Jill!) Lot~l Procure Tolal (mil) USO I mill uso USD 1 Phase 1 Oc12003 )~20ec2.003;: :·: ,:. Phm 3 Mar 2004 fundmg By 15 Aug 03 ·. F~ngBy1Nov,03i( . ·~ ' Funding By 1 Jan 04 I I ;;,: _£st.;:vt I Pre-War Current I I Em ·J!: ·Hit. .. &, .:'' KBR MOOEPC& I I Est ! I Ex!C Procure (llllll lou! Procure Total (mil) : Co::any I I i0~:~~~-: COlli~ PrOJ!CI Product Product C05tlmiiJUSO Prod ! R11p ~ Retp>. uso Rtlp USD lmliiUSD USO ~ ,~: !!I~ .. -. ··- ID I ~ lltrU11~1 Rqs ! $ 40000 IDC ! 40.000 s 4CDW i ''r«~ Subtor;I/DC 0 0 $ • I i $ ... :,,.-... ~: . I 92.500 $ 92.500 I l nsoc I I _MRC I 3 RijJacem~ll Tan! ____ I I ·' ·.·.···: r.~;!f;:x, .1,00) _, MRC I! Otji)(J I v401! 1 s :cor;j .. .. l ltn,~;lr~ll I .. . --1 :,~; 1.107 MRC II :_707 .... ' ,._; 0.000 MRC II -~~~ ------ MRC t IJ',I,UI ~~~: I~ i~,:;~~;'f1 I .. , __ , "l J~ IIRC i t: '· ~;fts . "I$ 0183 MRC $ 0.183 I IJ:o:l SubtoratMRC 0 o I I $ ,;,: .:~ ;., ,, IlL II 3.390 I 2990 $ 0.400 l 1390: I I) Q,lttdi:lltl' a•"l R&D t•:oter and MOO 110 Subtotal MISC I ... ;. I 10.000 I $ :flO()[; I tOOL~' it 0 I I II · -1'11:!': I ;!f:!):IS 10.000' I I 10.000 $ I 1o.oaot I TOTAL PHASE 3 FUNDING 10\.000 0 I ' lsidd"· ±I ·.·tiltk .·'~1 s 11aAOt I s 162180 $ 14.226 I 176406! I TOTAL FUNDING BY PHASE 1.416,529 I 179,001 I 716.2331 I $"1<111 ~'!: <r I 17~406 I Is 950181 I 196.284 I 1,\43.~ I ~~h·l