This is the accessible text file for GAO report number GAO-08-932T 
entitled 'Combating Terrorism: U.S. Oversight of Pakistan Reimbursement 
Claims for Coalition Support Funds' which was released on June 24, 2008.

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Subcommittee on National Security and Foreign Affairs, 
Committee on Oversight and Government Reform, House of Representatives: 

For Release on Delivery: 
Expected at 2:00 p.m. EDT:
Tuesday, June 24, 2008: 

Combating Terrorism: 

U.S. Oversight of Pakistan Reimbursement Claims for Coalition Support 
Funds: 

Statement of Charles Michael Johnson Jr. Director, International 
Affairs and Trade: 

GAO-08-932T: 

GAO Highlights: 

Highlights of GAO-08-932T, a testimony before the Subcommittee on 
National Security and Foreign Affairs, Committee on Oversight and 
Government Reform, House of Representatives. 

Why GAO Did This Study: 

The United States has reimbursed Pakistan, a key ally in the global war 
on terror, about $5.56 billion in Coalition Support Funds (CSF) for its 
efforts to combat terrorism along its border with Afghanistan. The 
Department of Defense (Defense) provides CSF for costs incurred in 
direct support of U.S. military operations. Pakistan is the largest 
recipient of CSF, receiving 81 percent of CSF reimbursements. 

This testimony focuses on (1) the extent to which Defense has 
consistently applied its guidance to validate the reimbursements 
claimed by Pakistan and (2) how the Office of the Defense 
Representative to Pakistanís (ODRP) role has changed over time. This 
statement is based on a concurrently issued GAO report titled Combating 
Terrorism: Increased Oversight and Accountability Needed over Pakistan 
Reimbursement Claims for Coalition Support Funds, GAO-08-806 
(Washington, D.C.: June 24, 2008). 

What GAO Found: 

Defense Comptroller issued new guidance in 2003 to enhance CSF 
oversight. The guidance calls for, among other things, CSF 
reimbursement claims to contain quantifiable information that indicates 
the incremental nature of support (i.e., above and beyond normal 
operations), validation that the support or service was provided, and 
copies of invoices or documentation supporting how the costs were 
calculated. While Defense generally conducted macro-level analytical 
reviews called for in its guidance, such as determining whether the 
cost is less than that which would be incurred by the United States for 
the same service, for a large number of reimbursement claims Defense 
did not obtain detailed documentation to verify that claimed costs were 
valid, actually incurred, or correctly calculated. GAO found that 
Defense did not consistently apply its existing CSF oversight guidance. 
For example, as of May 2008, Defense paid over $2 billion in Pakistani 
reimbursement claims for military activities covering January 2004 
through June 2007 without obtaining sufficient information that would 
enable a third party to recalculate these costs. Furthermore, Defense 
may have reimbursed costs that (1) were not incremental, (2) were not 
based on actual activity, or (3) were potentially duplicative. GAO also 
found that additional oversight controls were needed. For example, 
there is no guidance for Defense to verify currency conversion rates 
used by Pakistan, which if performed would enhance Defenseís ability to 
monitor for potential overbillings. 

Defenseís guidance does not specifically task ODRP with attempting to 
verify Pakistani military support and expenses, despite recognition by 
Defense officials that such verification is best performed by U.S. 
officials in Pakistan, who have access to Pakistani officials and 
information. As such, ODRP did not try to verify Pakistan CSF claims 
from January 2004 through August 2006. Beginning in September 2006, 
without any formal guidance or directive to do so from U.S. Central 
Command or the Defense Comptroller, ODRP began an effort to validate 
Pakistani military support and expenses. This increased verification 
effort on the part of ODRP contributed to an increase in the amount of 
Pakistani government CSF claims disallowed and deferred. Prior to 
ODRPís increased verification efforts, the average percentage of 
Pakistani claims disallowed or deferred for January 2004 through August 
2006 was a little over 2 percent. In comparison, the average percentage 
of Pakistani claims disallowed or deferred for September 2006 through 
February 2007 was 6 percent and for the most recent claims (March 2007 
through June 2007) processed in February 2008, was approximately 22 
percent. However, ODRPís continued oversight activity is not assured, 
as Defense had not developed formal guidance delineating how and to 
what degree ODRP should attempt to verify Pakistani claims for 
reimbursement. 

GAO recognizes that Defense may not be able to fully verify every 
Pakistani claim without the ability to access Pakistani records or do 
onsite monitoring. However, such ability would enhance CSF oversight. 

What GAO Recommends: 

GAO recommends that Defense consistently implement existing oversight 
criteria, formalize ODRPís oversight responsibilities, and implement 
additional controls. Defense generally concurred with the 
recommendations but stated that the report lacked sufficient context, 
such as Pakistanís military contributions enabled by CSF and broad 
legal authority to dispense funds. Our report does recognize Pakistanís 
military contributions and Defenseís broad legal authority to dispense 
funds. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-932T]. For more 
information, contact Charles Michael Johnson Jr. at (202) 512-7331 or 
johnsoncm@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here to discuss the U.S. Department of Defense's 
(Defense) oversight over Coalition Support Funds (CSF) reimbursed to 
Pakistan for its support of U.S. efforts to combat terrorism. My 
testimony is based on our concurrently issued report, which focuses on 
Defense's efforts to validate Pakistan's reimbursement claims and the 
role of the Office of Defense Representative to Pakistan (ODRP). 
[Footnote 1] Following the attacks of September 11, 2001, the United 
States began reimbursing coalition partners for their logistical and 
combat support of U.S. military operations in the global war on terror. 
CSF has reimbursed 27 coalition allies for their incremental costs 
(i.e., costs above and beyond the partner country's normal operating 
costs) incurred in direct support of U.S. military operations. Pakistan 
is the largest recipient of CSF payments, having received $5.56 billion 
(81 percent) of the $6.88 billion total CSF reimbursements made as of 
May 2008. 

My testimony today focuses on (1) the extent to which Defense has 
consistently applied its guidance to validate the reimbursements 
claimed by Pakistan and (2) how ODRP's role has changed over time. 
[Footnote 2] Over the course of our work, we reviewed and analyzed 
information on the CSF oversight process, including Pakistani 
government reimbursement claims. In addition, we interviewed officials 
at the Undersecretary of Defense for Comptroller (Comptroller), the 
Office of the Undersecretary of Defense for Policy, U.S. Central 
Command (CENTCOM) in Tampa, Florida, ODRP, and the State Department's 
Bureau of Political-Military Affairs. ODRP memos, CENTCOM validation 
memos, Comptroller evaluations, and other CSF documentation from 
February 2002 through February 2008 (February 2008 was when the latest 
claim, for March through June 2007, was reimbursed). To assess the 
application of current CSF guidance, we examined the CSF oversight 
documentation referenced above from January 2004 through February 2008. 
We chose this timeframe because a previous Defense Inspector General 
report had already examined the pre-January 2004 CSF oversight controls 
and made recommendations to improve oversight.[Footnote 3] We evaluated 
these controls against all available Comptroller criteria and guidance, 
as well as internal control standards and general cost accounting 
criteria for adequacy, eligibility, and reasonableness. As part of our 
data reliability process, we confirmed that the data provided by the 
Comptroller were accurately recorded in the software we used to analyze 
the data. To assess the oversight role played by ODRP, we met with the 
relevant ODRP, CENTCOM and Comptroller officials, as well as with other 
officials from the U.S. Embassy, and Pakistan's Ministries of Defense 
and Interior. We visited Peshawar, near the Federally Administered 
Tribal Areas (FATA), to discuss operations being reimbursed with CSF 
funds with the U.S. consulate, Pakistan's 11th Army Corps, and Frontier 
Corps. 

We conducted this performance audit from September 2007 through June 
2008 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Summary: 

In summary, we found the following: 

Defense did not consistently apply its existing CSF oversight guidance 
and certain deficiencies existed in Defense's oversight procedures. 
Defense's 2003 guidance calls for, among other things, CSF 
reimbursement claims to contain quantifiable information that indicates 
the incremental nature of support (i.e., above and beyond normal 
operations), validation that the support or service was provided, and 
copies of invoices or documentation supporting how the costs were 
calculated. While Defense generally conducted the broad analytical 
reviews called for in its guidance, such as determining whether the 
cost is less than that which would be incurred by the United States for 
the same services, for a large number of claims Defense did not obtain 
sufficient documentation from Pakistan to verify that claimed costs 
were incremental,[Footnote 4] actually incurred, or correctly 
calculated as called for by the Comptroller's CSF guidance. For 
example, as of May 2008, Defense paid over $2 billion in Pakistani 
reimbursement claims for military activities covering January 2004 
through June 2007 without obtaining detailed information that would 
enable a third party to recalculate these costs.[Footnote 5] In 
addition, Defense often did not adequately document the basis for their 
decisions to allow or disallow claims, and we found inconsistencies in 
Defense payments that were not explained. As a result, Defense may have 
reimbursed costs that (1) were not incremental, (i.e., above and beyond 
normal operations); (2) were not based on actual activity; or (3) were 
potentially duplicative. For example, Defense paid: 

* more than $200 million for Pakistan's air defense radar before ODRP 
questioned whether this was an incremental cost, as stipulated in CSF 
guidance;[Footnote 6] 

* approximately $30 million for army road construction and $15 million 
for bunker construction without evidence that the roads and bunkers had 
been built; and: 

* an average of more than $19,000 per vehicle per month for Pakistani 
navy reimbursement claims that appeared to contain duplicative charges 
for a fleet of fewer than 20 passenger vehicles. 

We also found that additional oversight controls were needed. 
Comptroller guidance calls for a historical comparison of claimed 
costs; however, the Comptroller's instructions do not indicate how this 
comparison should be performed. In addition, we found there is no 
guidance for Defense to verify currency conversion rates used by 
Pakistan, which if performed would enhance Defense's ability to monitor 
for potential overbillings. 

Defense's 2003 guidance does not specifically task ODRP with attempting 
to verify Pakistani military support and expenses, despite recognition 
by Defense officials in Washington and CENTCOM that such verification 
is best performed by U.S. officials in Pakistan, who have access to 
Pakistani officials and information. As such, ODRP did not try to 
verify Pakistan CSF claims from January 2004 through August 2006. 
Beginning in September 2006, without any formal guidance or directive 
to do so from CENTCOM or the Comptroller, ODRP began an effort to 
validate Pakistani military support and expenses. This increased 
verification effort on the part of ODRP contributed to an increase in 
the amount of Pakistani government CSF claims disallowed and deferred. 
Prior to ODRP's increased verification efforts, the average percentage 
of Pakistani claims disallowed or deferred for January 2004 through 
August 2006 was almost 3 percent. In comparison, the average percentage 
of Pakistani claims disallowed or deferred for September 2006 through 
February 2007 was 6 percent, and for the most recent claims (March 2007 
through June 2007), processed in February 2008, was approximately 22 
percent. For example, ODRP observed poor readiness rates of Pakistani 
helicopters and recommended deferring payment for helicopter 
maintenance that had been routinely reimbursed. However, ODRP's 
continued oversight activity is not assured. As of May 2008, Defense 
had not developed formal guidance delineating how and to what degree 
ODRP should attempt to verify Pakistani military support and expenses. 

To improve CSF oversight, in our report issued concurrently with this 
testimony we included recommendations that Defense consistently 
implement existing oversight criteria, formalize the roles and 
responsibilities of ODRP, work with the government of Pakistan to gain 
greater access, clarify guidance for cost fluctuation analysis, and 
develop criteria to evaluate the effect of currency exchange rates on 
reimbursement claims. Defense generally concurred with our 
recommendations, and indicated they had updated their CSF guidance to 
incorporate our recommendations. We plan to review this guidance when 
it is made available to us. 

Background: 

As the United States focused on toppling the Taliban regime and 
fighting al Qaeda in Afghanistan, Pakistan became an important ally. In 
December 2001, Congress passed the Defense Appropriations Act for 
fiscal year 2002, stipulating that the "Defense Emergency Response 
Fund" could be used by the Secretary of Defense to reimburse coalition 
partners like Pakistan for their logistical and military support of 
U.S. military operations.[Footnote 7] This funding became known as 
Coalition Support Funds. 

To provide Defense with maximum flexibility, Congress passed the 
Defense Appropriations Act for Fiscal Year 2002 granting the Secretary 
of Defense the authority to make CSF payments notwithstanding any other 
provision of law in such amounts as the Secretary may determine in his 
discretion, based on documentation determined by the Secretary to 
adequately account for the logistical and military support provided by 
partner nations.[Footnote 8] Any such determination by the Secretary 
shall be final and conclusive. 

The amount of CSF reimbursements to Pakistan from October 2001 through 
June 2007 are shown in figure 1. 

Figure 1: U.S. CSF Reimbursements to Pakistan, October 2001 through 
June 2007: 

[See PDF for image] 

This figure is a vertical bar graph depicting the following data: 

Dates: October-December 2001: 
U.S. CSF Reimbursements to Pakistan: $300 million. 

Dates: January-December 2002; 
U.S. CSF Reimbursements to Pakistan: $847 million. 

Dates: January-December 2003; 
U.S. CSF Reimbursements to Pakistan: $753 million. 

Dates: January-December 2004; 
U.S. CSF Reimbursements to Pakistan: $1,221 million. 

Dates: January-December 2005; 
U.S. CSF Reimbursements to Pakistan: $915 million. 

Dates: January-December 2006; 
U.S. CSF Reimbursements to Pakistan: $1,070 million. 

Dates: January-June 2007; 
U.S. CSF Reimbursements to Pakistan: $453 million. 

Source: GAO analysis of Defense oversight documentation. 

Note: The most recent claims processed during our review were completed 
in February 2008 and covered Pakistani government reimbursement claims 
for months March 2007 through June 2007. 

[End of figure] 

Evolution of the CSF Oversight Process: 

In 2003, at the request of the Comptroller, the Defense Inspector 
General performed an audit of the CSF oversight process. The report 
found deficiencies in both the CSF guidance and documentation provided 
by CSF recipients to support their claims. It recommended improvements 
in Defense's analysis of CSF reimbursement requests and greater 
documentation requirements for countries seeking reimbursement. 

In response, the Comptroller published guidance in December 2003 to 
clarify the roles and responsibilities of the Comptroller, CENTCOM (and 
other regional combatant commanders), and ODRP in the CSF process. The 
2003 guidance notes that Congress provided the Secretary of Defense 
with the authority to determine how much to reimburse partner 
countries, and how much documentation was needed to adequately account 
for the support provided. However, the guidance also stated that 
CENTCOM and the Comptroller are to obtain sufficient documentation to 
validate that Pakistani military support had been provided and that 
costs were incurred, reasonable, and appropriate under the CSF program. 

Under the December 2003 guidance and oversight process, Pakistan would 
first submit its claim to ODRP at the U.S. Embassy in Islamabad, which 
would assist the Pakistani military in formulating the claim before 
sending it to CENTCOM in Tampa, Florida. CENTCOM would then conduct its 
own review in an attempt to link claimed expenses to U.S. military 
operations before forwarding the claim package to the Comptroller. 
Under this process, ODRP and CENTCOM staff can make recommendations to 
defer or disallow costs based on their analysis of the Pakistan 
submission; however, the Comptroller makes the final recommendation to 
the Secretary of Defense on which costs should be paid, deferred, or 
disallowed. The Department of State, the Office of Management and 
Budget, and Congress also have a role in the CSF oversight process 
after the Comptroller has finished its review.[Footnote 9] The CSF 
process and guidance is detailed in Figure 2. 

Figure 2: CSF Reimbursement Process: 

[See PDF for image] 

This figure is an illustration of the CSF Reimbursement Process, as 
follows: 

(1) Pakistan: 
Submits claim for reimbursement to ODRP at U.S. Embassy. 
 
(2) ODRPL: 
Assists host country military personnel in formulating their claims for 
reimbursement. 

(3) CENTCOM: 
Submits documentation that sufficiently supports the countryís 
reimbursement request, including (1) identification of who requested 
the service and for what period of time; (2) validation that 
support/service was provided, and confirmation that the costs incurred 
were incremental; (3) a narrative description of the types of costs 
incurred and a description of how the costs for each were computed; and 
(4) invoices or other documentation supporting how the costs were 
derived for each category of cost, and their basis of measurement. 

(4) OUSD/Comptroller: 
Evaluates claim through (1) a macro-level review comparing costs to 
similar U.S. operations, (2) an assessment of whether the cost 
categories reported are reasonable, (3) an assessment of whether 
selected subcategories are reasonable compared to U.S. costs, and (4) 
whether costs are consistent with previous claims. 

(5a) OMB: 
Reviews Comptroller package; 
(5b) Defense General Counsel: 
Reviews Comptroller package; 
(5c): State Department and Under Secretary of Defense for Policy: 
Verify that the reimbursement is consistent with U.S. governmentís 
national security policy and does not adversely impact the balance of 
power in the region. 

(6) Secretary of Defense: 
Provides Congress with 15-day notification of impending reimbursement. 

(7) Congress: 
If no congressional action, transfer of funds to Pakistan is carried 
out by DSCA. 

Legend: 

CENTCOM = United States Central Command: 
Defense = Department of Defense: 
DSCA = Defense Security Cooperation Agency: 
ODRP = Office of the Defense Representative to Pakistan: 
OMB = Office of Management and Budget: 
OUSD/Comptroller = Office of the Under Secretary of Defense for 
Comptroller: 

Source: GAO analysis of Defense documentation and discussions with 
OUSD/Comptroller. 

[End of figure] 

In July 2006, the Comptroller provided the Pakistani government with a 
cost template and information intended to clarify the types of costs 
that were reimbursable under CSF and the information the Comptroller 
needed to support Pakistan's reimbursement claims. 

Defense Did Not Consistently Apply Its Existing Guidance, and 
Additional Procedures Are Needed to Ensure Accountability over CSF to 
Pakistan: 

We found that Defense did not consistently apply existing CSF guidance 
and that certain deficiencies existed in their oversight procedures. 
[Footnote 10] Comptroller generally performed four broad analytical 
reviews as called for in its guidance. For example, the Comptroller 
generally performed a comparison of total claimed costs to the 
estimated U.S. cost to provide the same support. Defense guidance 
developed by the Comptroller also calls for obtaining sufficient 
information to validate Pakistani claims to determine that costs were 
incurred, reasonable, and appropriate. However, Defense did not fully 
implement this criteria. For example, Defense reimbursed Pakistan over 
$2 billion for claims from January 2004 through June 2007 without 
obtaining detailed documentation that would allow a third party to 
recalculate the costs. In addition, Defense often did not adequately 
document the basis for their decisions to allow or disallow claims, and 
we found inconsistencies in Defense payments that were not explained. 
As a result, Defense may have paid costs that were (1) not incremental, 
(2) not based on actual activity, or (3) potentially duplicative. We 
also found that additional oversight controls were needed. 
Specifically, while Comptroller guidance calls for a historical 
comparison of claimed costs, the guidance does not indicate why or how 
the comparison should be performed. Additionally, Defense did not 
verify the currency conversion rates used by Pakistan from January 2004 
through June 2007 and, as a result, may have overpaid Pakistani claims 
due to the devaluation of the Pakistan rupee. 

Defense Made Payments without Obtaining Detailed Documentation to 
Support Pakistani Claims: 

The Comptroller's CSF guidance states that Pakistani claims should 
include associated invoices. In the absence of such support, CENTCOM 
officials are to obtain from Pakistan a detailed description of how 
these costs were computed. For example, claims for fuel should include 
information such as total fuel consumed, the number and types of 
vehicles supported, and best available assessments of the number of 
miles driven or hours employed. 

We found that few of the Pakistani claims we reviewed met the criteria 
contained in the Comptroller's guidance. Defense reimbursed Pakistan 
more than $2.2 billion, or 76 percent, of Pakistani army claims from 
January 2004 through June 2007, without obtaining sufficient 
information to support how the costs were calculated. In addition, the 
lack of documentation led to inconsistencies in Defense's reimbursement 
of certain costs. For example, as illustrated in figure 3, Defense paid 
Pakistani navy claimed costs for boats for about half of the months and 
disallowed them the other half, despite no discernible differences in 
the level of documentation the Pakistani government provided for the 
claims. 

Figure 3: Comptroller Approvals and Disapprovals of Pakistani Navy CSF 
Reimbursement Claims for Boats, by Month, December 2005 through June 
2007: 

[See PDF for image] 

This figure is a check box chart of comptroller approvals and 
disapprovals of Pakistani Navy CSF reimbursement claims for boats, by 
month, December 2005 through June 2007, as follows: 

Month: December 2005; 
Disallowed/Paid: Paid. 

Month: January 2006; 
Disallowed/Paid: Paid. 

Month: February 2006; 
Disallowed/Paid: Paid. 

Month: March 2006; 
Disallowed/Paid: Disallowed. 

Month: April 2006; 
Disallowed/Paid: Disallowed. 

Month: May 2006; 
Disallowed/Paid: Disallowed. 

Month: June 2006; 
Disallowed/Paid: Disallowed. 

Month: July 2006; 
Disallowed/Paid: Disallowed. 

Month: August 2006; 
Disallowed/Paid: Disallowed. 

Month: September 2006; 
Disallowed/Paid: Paid. 

Month: October 2006; 
Disallowed/Paid: Paid. 

Month: November 2006; 
Disallowed/Paid: Disallowed. 

Month: December 2006; 
Disallowed/Paid: Disallowed. 

Month: January 2007; 
Disallowed/Paid: Disallowed. 

Month: February 1007; 
Disallowed/Paid: Disallowed. 

Month: March 2007; 
Disallowed/Paid: Paid. 

Month: April 2007: 
Disallowed/Paid: Paid. 

Month: May 2007; 
Disallowed/Paid: Paid. 

Month: June 2007; 
Disallowed/Paid: Paid. 

Source: Defense. 

Note: Figure includes all monthly reimbursement claims that itemized 
costs for navy rigid hull inflatable boats. 

[End of figure] 

We also identified additional inconsistently reimbursed costs, such as 
bulletproof jackets and telephone cables. 

Defense Paid Costs That May Not Have Been Incremental: 

Comptroller guidance states that reimbursement claims must clearly 
indicate the incremental nature of the logistical and military support 
provided--i.e., that claimed costs are above and beyond the partner 
country's normal operating costs. Because the Pakistani claims lacked 
this information, Defense officials differed as to whether the claims 
should be disallowed or deferred until Pakistan could provide 
additional support. 

The case of the Pakistani radar claims illustrates this point. From 
January 2004 through February 2007, Defense paid Pakistan more than 
$200 million in radar expenses. However, the next month ODRP 
recommended the Comptroller disallow the costs. ODRP reasoned that 
Pakistan's use of the radar was not related to U.S. efforts to combat 
terrorism in the region, as terrorists in the FATA did not have air 
attack capability. The Comptroller took the position that Pakistan 
likely incurred some increased costs related to U.S. efforts to combat 
terror in the region--for example, by providing air traffic control for 
U.S. military support flights into Afghanistan. The Comptroller 
nonetheless agreed that the claims lacked sufficient detail and has 
since deferred payment until Pakistan provides additional support for 
the March through June 2007 claims. 

Defense May Have Paid Costs That Were Not Based on Actual Activity or 
Expenses: 

According to the Comptroller's criteria, both the Comptroller and 
CENTCOM are responsible for validating that claimed costs are 
associated with actual activities and are based on documentation that 
adequately accounts for the support provided. However, the 
documentation we were provided did not provide sufficient support that 
all claimed costs were based on actual activity or expenses. These 
include costs associated with construction, food, and vehicle 
maintenance. For example, Defense paid Pakistan more than $30 million 
for army road construction[Footnote 11] and over $15 million for army 
bunker construction[Footnote 12] before concerns about the validity of 
these charges led ODRP to ask the Pakistani military for the 
coordinates of the roads and bunkers to verify their existence. 

We also found large unexplained differences between the average costs 
of food per person for each force, as shown in figure 4. 

Figure 4: Average Monthly Food Costs Per Person by Force Reimbursed to 
Pakistan Government, September 2004 through June 2007): 

[See PDF for image] 

This figure is a multiple line graph depicting the following data: 

Month/year: September-04; 
Cost per airman (Pakistan air force): $766.23; 	
Cost per soldier (Pakistan army): $170.65; 
Cost per sailor (Pakistan navy): $1085.42. 

Month/year: October-04; 
Cost per airman (Pakistan air force): $385.98; 	
Cost per soldier (Pakistan army): $170.74; 
Cost per sailor (Pakistan navy): $480. 

Month/year: November-04; 
Cost per airman (Pakistan air force): $390; 	
Cost per soldier (Pakistan army): $170.69; 
Cost per sailor (Pakistan navy): $495.79. 

Month/year: December-04; 
Cost per airman (Pakistan air force): $390; 	
Cost per soldier (Pakistan army): $170.69; 
Cost per sailor (Pakistan navy): $479.59. 

Month/year: January-05; 
Cost per airman (Pakistan air force): $386.86; 	
Cost per soldier (Pakistan army): $164.96; 
Cost per sailor (Pakistan navy): $492.23 

Month/year: February-05; 
Cost per airman (Pakistan air force): $386.86; 	
Cost per soldier (Pakistan army): $164.96; 
Cost per sailor (Pakistan navy): $496.4. 

Month/year: March-05; 
Cost per airman (Pakistan air force): $386.86; 	
Cost per soldier (Pakistan army): $164.96; 
Cost per sailor (Pakistan navy): $447.66. 

Month/year: April-05; 
Cost per airman (Pakistan air force): $386.86; 	
Cost per soldier (Pakistan army): $164.96; 
Cost per sailor (Pakistan navy): $496.3. 

Month/year: May-05; 
Cost per airman (Pakistan air force): $386.86; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $480. 

Month/year: June-05; 
Cost per airman (Pakistan air force): $386.86; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $444.34. 

Month/year: July-05; 
Cost per airman (Pakistan air force): $386.86; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $549.02. 

Month/year: August-05; 
Cost per airman (Pakistan air force): $386.86; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $528.7. 

Month/year: September-05; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $636.7. 

Month/year: October-05; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $651.3. 

Month/year: November-05; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $630. 

Month/year: December-05; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $806. 

Month/year: January-06; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $806. 

Month/year: February-06; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $165; 
Cost per sailor (Pakistan navy): $806. 

Month/year: March-06; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $
Cost per sailor (Pakistan navy): $806. 

Month/year: April-06; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $181.5
Cost per sailor (Pakistan navy): $775.81. 

Month/year: May-06; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $181.5; 
Cost per sailor (Pakistan navy): $775.81. 

Month/year: June-06; 
Cost per airman (Pakistan air force): $368.57; 	
Cost per soldier (Pakistan army): $181.5; 
Cost per sailor (Pakistan navy): $780. 

Month/year: July-06; 
Cost per airman (Pakistan air force): $409.07; 	
Cost per soldier (Pakistan army): $181.5; 
Cost per sailor (Pakistan navy): $806. 

Month/year: August-06; 
Cost per airman (Pakistan air force): $409.07; 	
Cost per soldier (Pakistan army): $181.5; 
Cost per sailor (Pakistan navy): $806. 

Month/year: September-06; 
Cost per airman (Pakistan air force): $409.07; 	
Cost per soldier (Pakistan army): $181.5; 
Cost per sailor (Pakistan navy): $181.5. 

Month/year: October-06; 
Cost per airman (Pakistan air force): $409.07; 	
Cost per soldier (Pakistan army): $181.5; 
Cost per sailor (Pakistan navy): $181. 

Month/year: November-06; 
Cost per airman (Pakistan air force): $408.9; 	
Cost per soldier (Pakistan army): $181.49; 
Cost per sailor (Pakistan navy): $431. 

Month/year: December-06; 
Cost per airman (Pakistan air force): $408.9; 	
Cost per soldier (Pakistan army): $181.5; 
Cost per sailor (Pakistan navy): $459. 

Month/year: January-07; 
Cost per airman (Pakistan air force): $408.95;	
Cost per soldier (Pakistan army): $181.5; 
Cost per sailor (Pakistan navy): $462.2. 

Month/year: February-07; 
Cost per airman (Pakistan air force): $408.89;	
Cost per soldier (Pakistan army): $208.74; 
Cost per sailor (Pakistan navy): $378.2. 

Month/year: March-07; 
Cost per airman (Pakistan air force): $408.54; 	
Cost per soldier (Pakistan army): $208.72; 
Cost per sailor (Pakistan navy): $0. 

Month/year: April-07; 
Cost per airman (Pakistan air force): $408.83; 	
Cost per soldier (Pakistan army): $208.72; 
Cost per sailor (Pakistan navy): $0. 

Month/year: May-07; 
Cost per airman (Pakistan air force): $408.54; 	
Cost per soldier (Pakistan army): $208.73; 
Cost per sailor (Pakistan navy): $0. 

Month/year: June-07; 
Cost per airman (Pakistan air force): $408.83; 	
Cost per soldier (Pakistan army): $208.72; 
Cost per sailor (Pakistan navy): $0. 

Source: GAO analysis of food cost data from Defense and troop levels 
from Pakistan claims. 

Note: Pakistani reimbursement claims January 2004 through August 2004 
did not provide sufficient information to allow us to calculate average 
food costs per person. 

[End of figure] 

As the figure above shows, navy monthly food costs per person were 
generally higher than monthly air force and army food costs per person. 
From June 2005, navy claims for food rapidly increased from 
approximately $445 per sailor to $800 per sailor in December 2005, 
while air force and army food costs per person remained stable. Despite 
these anomalies, Defense continued to pay the navy $800 per sailor for 
food until September 2006, when the Comptroller began to question these 
costs. 

We also found Defense paid the Pakistani navy more than $1.5 million in 
possibly inflated costs for damage to navy vehicles. On average, 
Defense paid the Pakistani navy more than $5,700 per vehicle per month 
in damages compared with the army's average claim of less than $100 per 
vehicle per month.[Footnote 13] According to the most recent navy 
claims, these vehicles generally consisted of passenger cars and SUVs 
that were not involved in combat. By contrast, the army vehicles were 
used to conduct military operations in the FATA and border region. 

Defense Paid Costs That Were Potentially Duplicative: 

Comptroller guidance requires CENTCOM to ensure that costs are not 
counted twice; however, none of the CENTCOM memos we reviewed provide 
any indication that a review for duplicate costs had been performed. As 
a result, Defense paid more than $8.9 million in potentially 
duplicative costs. 

For example, the most recent Pakistani navy claim (June 2007) includes 
cost categories titled "vehicle damage" and "cost of vehicles 
repaired," but no details were provided to explain the differences 
between these two categories, and there was insufficient detail to 
determine whether some or all of the claimed costs were unique or 
duplicative. Despite this lack of detail, we found that Defense paid 
the Pakistani navy an average of over $19,000 per vehicle per month 
(more than $3.7 million per year)[Footnote 14] to operate, maintain, 
and repair a fleet of fewer than 20 passenger vehicles without 
sufficient information to determine that these costs were not 
duplicative. 

An official at ODRP with a role in reviewing CSF reimbursement claims 
stated that, based on the scarce details provided in the CSF claims, it 
was it was nearly impossible to know the actual cost of claimed items. 
When we discussed this issue with officials at the Comptroller's 
office, they indicated that the Pakistani claims do not provide enough 
detail to explain the context of the costs. According to the 
Comptroller, this makes it difficult to determine whether the costs 
should be reimbursed as called for under the Comptroller's guidance. 

Opportunities Exist to Enhance CSF Oversight Controls: 

We found deficiencies in the Comptroller's guidance concerning 
historical comparison of claimed costs and verification of currency 
conversions. The Comptroller guidance calls for a historical comparison 
of claimed costs, and such an analysis could identify costs that do not 
reflect actual activity levels. We found that some of Pakistan's 
claimed costs experienced potentially significant unexplained 
fluctuations from month to month. For example, Defense paid the army's 
largest[Footnote 15] cost claimed in April 2006, which experienced a 12 
percent ($2.8 million) increase from March, without investigating this 
fluctuation. As a result, Defense may be paying for costs based on 
activities that did not occur. 

In addition, we found that CSF guidance does not require Defense to 
evaluate the exchange rates used to convert claimed costs from 
Pakistani rupees into U.S. dollars, and as a result, potential 
overbillings may have gone undetected. Since January 2004, the 
Pakistani rupee has declined over 6 percent against the U.S. dollar. 
Consequently, fewer dollars should have, over time, purchased more 
rupees, resulting in a lower cost to the CSF program. For one cost 
category we reviewed, Defense may have overpaid more than $1.25 million 
over 12 months because it did not consider the currency conversion used 
to calculate the cost.[Footnote 16] Figure 5 illustrates the results of 
our analysis and shows that CSF would have been billed fewer dollars 
had International Monetary Fund (IMF) exchange rates been used. 

Figure 5: Effect of Exchange Rate Fluctuations on One Fixed Pakistani 
Claimed Cost, September 2004 through August 2005: 

[See PDF for image] 

This figure is a multiple line graph depicting the following data: 

Date: September-04; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5629.87. 

Date: October-04; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5607.5. 

Date: November-04; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5590.04. 

Date: December-04; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5579.81. 

Date: January-05; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5615.74. 

Date: February-05; 	
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5615.74. 

Date: March-05; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5615.74. 

Date: April-05; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5615.74. 

Date: May-05; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5580.71. 

Date: June-05; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5562.74. 

Date: July-05; 	
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5566.74. 

Date: August-05; 
Amounts claimed (in millions): $5700; 
Amounts converted using IMF exchange rates (in millions): $5564.4. 

Source: GAO analysis of Pakistani claims and IMF data. 

Note: IMF data includes market rate, period average, by month, exchange 
rates for U.S. dollars per Pakistan rupee. 

[End of figure] 

If the rupee continues to decline against the dollar, future Pakistani 
claims calculated using a fixed exchange rate will become more and more 
inflated over time. 

ODRP Began Playing a Larger Role in the CSF Oversight Process in Late 
2006; However, ODRP's Continued Oversight Is Not Assured: 

Defense's 2003 guidance did not specifically task ODRP with attempting 
to verify Pakistani military support and expenses, despite recognition 
by Defense officials that such verification is best performed by U.S. 
officials in Pakistan, who have direct access to Pakistani officials 
and information. Because of this, ODRP did not try to verify Pakistani 
CSF claims until September 2006, when, without any formal guidance or 
directive to do so, ODRP began an effort to verify that Pakistani 
military support was provided and costs were actually incurred as 
claimed in the military's requests for reimbursement. According to ODRP 
officials, this new effort stemmed from a concern that some of 
Pakistan's reported costs may not have been valid or properly 
supported. They also stated that the Comptroller's July 2006 
presentation to Pakistani officials helped ODRP conduct more detailed 
verification because Pakistan began to provide greater detail in its 
reimbursement claims. 

For the March through June 2007 claims, ODRP recommended deferring 
payment to Pakistan for $22.3 million in helicopter maintenance costs. 
ODRP found that, despite $55 million in Defense reimbursements to 
Pakistan for helicopter maintenance, only a few of these helicopters 
were fully operational.[Footnote 17] According to ODRP officials, the 
Pakistani army was not maintaining the helicopters, causing essential 
systems to malfunction. Given the poor readiness rates, ODRP 
recommended that the Comptroller defer payment on Pakistan's helicopter 
maintenance claims until a process could be implemented to ensure that 
Pakistan could maintain its helicopter fleet. ODRP also recommended 
disallowing Pakistani claims for bulletproof vests, radios, road 
construction, air defense radars, tents, and funding for Pakistan's 
joint staff headquarters operations, all due to insufficient 
information to verify the costs. 

Figure 6 shows the increased CSF disallowals and deferrals during 
ODRP's increased oversight activity in the September through October 
2006 claims, and particularly in the latest claim period (March through 
June 2007), when Defense disallowed or deferred a total of $81.2 
million over these four months. 

Figure 6: Pakistani CSF Reimbursement Claims Disallowed or Deferred, 
January 2004 through June 2007: 

[See PDF for image] 

This figure is a line graph depicting the following data: 

Month/year: January-04; 
Reimbursement claims: $2.28 million. 

Month/year: February-04; 
Reimbursement claims: $2.3531 million. 

Month/year: March-04; 
Reimbursement claims: $2.6556 million. 

Month/year: April-04; 
Reimbursement claims: $2.7959 million. 

Month/year: May-04; 
Reimbursement claims: $2.574 million. 

Month/year: June-04; 
Reimbursement claims: $3.097 million. 

Month/year: July-04; 
Reimbursement claims: $6.5113 million. 

Month/year: August-04; 
Reimbursement claims: $5.7903 million. 

Month/year: September-04; 
Reimbursement claims: $0.462 million. 

Month/year: October-04; 
Reimbursement claims: $0.442 million. 

Month/year: Nov.-04; 
Reimbursement claims: $0.072 million. 

Month/year: December-04; 
Reimbursement claims: $0.3639 million. 

Month/year: January-05; 
Reimbursement claims: $1.5939 million. 

Month/year: February-05; 
Reimbursement claims: $0.3162 million. 

Month/year: March-05; 
Reimbursement claims: $3.1551 million. 

Month/year: April-05; 
Reimbursement claims: $0.3286 million. 

Month/year: May-05; 
Reimbursement claims: $1.4398 million. 

Month/year: June-05; 
Reimbursement claims: $1.35 million. 

Month/year: July-05; 
Reimbursement claims: $1.3901 million. 

Month/year: August-05; 
Reimbursement claims: $1.5829 million. 

Month/year: September-05; 
Reimbursement claims: $3.6818 million. 

Month/year: October-05; 
Reimbursement claims: $0.234868 million. 

Month/year: November-05; 
Reimbursement claims: $0. 

Month/year: December-05; 
Reimbursement claims: $0.00339 million. 

Month/year: January-06; 
Reimbursement claims: $1.539 million. 

Month/year: February-06; 
Reimbursement claims: $0.55607 million. 

Month/year: March-06; 
Reimbursement claims: $1.2734 million. 

Month/year: April-06; 
Reimbursement claims: $1.02555 million. 

Month/year: May-06; 
Reimbursement claims: $3.30517 million. 

Month/year: June-06; 
Reimbursement claims: $3.9917 million. 

Month/year: July-06; 
Reimbursement claims: $1.311 million. 

Month/year: August-06; 
Reimbursement claims: $1.9533 million. 

Month/year: September-06 (Begin increased ODRP oversight); 
Reimbursement claims: $6.23081 million. 

Month/year: October-06; 
Reimbursement claims: $7.17288 million. 

Month/year: November-06; 
Reimbursement claims: $5.60229 million. 

Month/year: December-06; 
Reimbursement claims: $5.22462 million. 

Month/year: January-07; 
Reimbursement claims: $5.21479 million. 

Month/year: February-07; 
Reimbursement claims: $3.85375 million. 

Month/year: March-07; 
Reimbursement claims: $23.4936 million. 

Month/year: April-07; 
Reimbursement claims: $21.7683 million. 

Month/year: May-07; 
Reimbursement claims: $20.7287 million. 

Month/year: June-07; 
Reimbursement claims: $15.2004 million. 

Source: Defense. 

Note: There is a lag between the claimed period and Defense's 
reimbursement of claims. At the time of the issue of this report, the 
March through June 2007 claims, reimbursed in February 2008, were the 
latest round of claims reimbursed by Defense. GAO has not verified the 
reliability of Comptroller's data processing. 

[End of figure] 

The amount disallowed or deferred for March through June 2007 
represents a significant increase in CSF oversight by Defense. For 
example, from January 2004 through August 2006, Defense disallowed or 
deferred an average of a little more than 2 percent of each monthly 
Pakistani reimbursement claim, for a total of $59.4 million over a 32- 
month period. In comparison, the average percentage of Pakistani claims 
disallowed or deferred for September 2006 through February 2007 was 6 
percent or $33.3 million over a 6-month period and for the most recent 
claims (March 2007 through June 2007) processed in February 2008, was 
approximately 22 percent, or $81.2 million in a four month period. This 
four month period accounts for approximately 53 percent of the total 
CSF funding disallowed or deferred by Defense since January 2004 
($173.92 million). 

No Guidance to Ensure Continued Oversight by ODRP: 

Despite ODRP's increased oversight activity, the continuity of this 
oversight is not assured. According to Standards for Internal Control 
in the Federal Government, clear delegation of authority and 
responsibility is important to establishing an effective internal 
control system.[Footnote 18] However, as of May 2008, ODRP continued to 
lack formal guidance or training that explicitly described either its 
oversight responsibilities or the procedures for conducting such 
oversight. Defense has never provided ODRP with guidance on how, and to 
what extent, it should verify that Pakistan actually provided military 
support and that expenses were actually incurred. ODRP is largely 
dependent upon the quality of information supplied by the Pakistani 
military. According to Defense officials, Defense lacks the authority 
to audit the internal finances of the Pakistani military. 

ODRP officials said they doubted that ODRP would ever be able to fully 
verify actual costs in Pakistan. First, the Pakistani military reports 
costs to ODRP that are already aggregates of many smaller costs that 
ODRP cannot directly monitor. Furthermore, according to ODRP, 
electronic record keeping is rare in the Pakistani government, and 
collation may entail a certain amount of approximation and averaging. 

Conclusions: 

Coalition Support Funds are a critical component of America's global 
war on terror, as well as the primary support for Pakistani operations 
to destroy the terrorist threat and close the terrorist safe haven in 
Pakistan's FATA. Following the attacks of September 11, 2001, Congress 
quickly authorized emergency funding to prevent another attack, and 
because of the grave and immediate threat at the time, Congress 
recognized that ensuring accountability for these funds was secondary 
to protecting the nation from another attack. However, given the large 
amounts of funding provided to Pakistan since October 2001, and the 
indications that Pakistan will continue to receive such payments in the 
future, we believe that Defense should ensure it follows its own 
guidance and considers what other guidance is needed. 

Our assessment found that while CSF played a key role in Pakistan's 
support for the war on terror, Defense has not followed its existing 
guidance and has provided little oversight of the effort at the embassy 
in Pakistan. Defense had concerns about the accuracy of Pakistan's 
claims from the very first claim submitted in 2001. Based on the lack 
of supporting evidence in the Pakistani claims from January 2004 
through June 2007 (the latest claims reimbursed by Defense), we found 
that neither Defense nor we could determine if Pakistan had actually 
incurred most of the costs in their clams. Prior to 2004, it appears 
there was even less evidence to support Pakistan's claims. As a result, 
we conclude that Defense cannot accurately determine how much of the 
$5.56 billion in costs reimbursed to Pakistan since 2001 were actually 
incurred. 

As a result of these and other findings, we believe that Defense should 
consistently implement its own CSF guidance to fully verify Pakistani 
claims and ensure the effective use of CSF in meeting key U.S. national 
security goals. While we recognize that CSF is used to support 27 
countries in fighting terrorism, the fact that Pakistan receives 81 
percent of these funds indicates that Defense should provide oversight 
procedures that reflect the role Pakistan plays as both the major 
recipient of CSF and its role in supporting U.S. national security 
objectives in Pakistan and Afghanistan. Additionally we recognize that 
Defense may not be able to fully verify all Pakistani claims without 
having the ability to access the Pakistani government's records and 
make site visits or conduct spot checks. ODRP's recent increased 
efforts, however, show that greater oversight may be achieved through 
the use of U.S. representatives in Pakistan. 

Recommendations for Executive Action: 

To improve the impact and oversight of CSF payments to Pakistan, we 
make the following five recommendations to the Secretary of Defense: 

* Consistently implement existing criteria to disallow or defer 
Pakistani claims that do not supply the documentation needed to verify 
their claims. 

* Define and formalize the roles and responsibilities of ODRP. 

* Work with the government of Pakistan to develop procedures to allow 
ODRP or other U.S. representatives to conduct greater oversight of CSF 
use in Pakistan, including the potential use of on-site inspections. 

* Clarify guidance for Comptroller analysis of cost fluctuations. 

* Develop and apply criteria to evaluate currency exchange rates to 
ensure that the U.S. government is not overpaying for Pakistan 
operations. 

Agency Comments and Our Evaluation: 

In response to our concurrently issued report, Defense generally 
concurred with our recommendations, and indicated they had updated 
their CSF guidance to incorporate our recommendations. We plan to 
review this guidance when it is made available to us. In addition, 
Defense's comments noted that our report did not give sufficient weight 
to (1) Pakistan's military contributions enabled by CSF; (2) the 
Department's adherence to the law; and (3) Pakistan's accounting 
standards. Our report does recognize Pakistan's contributions and the 
role of CSF, and stated that Congress gave Defense broad authority to 
make CSF payments. Regarding Pakistan's accounting for CSF, we 
acknowledge that there are limitations in any arrangement with another 
sovereign nation, but we noted that Pakistan provided more detailed 
documentation to support their claims after a request from the 
Comptroller in 2006. 

Mr. Chairman and Members of the Subcommittee, this concludes my 
prepared statement. I would be pleased to answer any questions that you 
may have. 

GAO Contact and Staff Acknowledgments: 

For questions regarding this testimony, please contact Charles Michael 
Johnson Jr. at (202) 512-7331 or johnsoncm@gao.gov. Other contributors 
to this statement were Steve Sebastian, Director; Hynek Kalkus, 
Assistant Director; Roger Stoltz, Assistant Director; Edward J. George; 
David W. Hancock; Claude Adrien; Jeffrey S. Beelaert; Cara Bauer; 
Janice Friedeborn; Arthur James; Karen Deans; Mark Dowling; and Jena 
Sinkfield. 

[End of section] 

Footnotes: 

[1] See GAO, Combating Terrorism: Increased Oversight and 
Accountability Needed Over Pakistan Reimbursement Claims for Coalition 
Support Funds, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-
806] (Washington, D.C.: June 24, 2008). 

[2] See appendix I for a brief description of our scope and 
methodology. The work on which this testimony is based was conducted in 
accordance with generally accepted government auditing standards. 

[3] Department of Defense Inspector General, Financial Management: 
Coalition Support Funds, D-2004-045 (Washington, D.C., January 16, 
2004). This is a classified report. 

[4] Defense guidance defines incremental costs as those costs that are 
above and beyond the partner country's normal operating costs. 

[5] This example is based on our analysis of Pakistani army claims and 
does not include the other service's claims. However, we found 
generally that the navy claims' documentation was similar to the 
army's, and the other services' claims had less documentation. 

[6] The Comptroller took the position that Pakistan likely incurred 
some increased costs by using the radars to police the airspace over 
the Northwest Frontier Province and provide air traffic control for 
U.S. military support flights into Afghanistan. The Comptroller 
nonetheless agreed that the claims lacked sufficient detail to 
determine whether these charges were definitively incremental. 

[7] P.L. 107-117, sec 301, January10, 2002. 

[8] Pub. L. 107-206, Operation and Maintenance, Defense-Wide, August 2, 
2002. Defense was required to provide a 15-day notification of upcoming 
CSF reimbursements. Later legislation also required Defense to provide 
quarterly reports to the congressional House and Senate Committees on 
Appropriations and the House and Senate Armed Services Committees on 
the use of funds made available for payments to Pakistan and other CSF 
recipients. 

[9] See, for example, Pub. L. 107-206; Pub. L. 108-11, sec 1310; Pub. 
L. 110-161. Beginning in 2003, with the passage of the Emergency 
Wartime Supplemental Appropriations Act, 2003 (Pub. L. 108-11), 
Congress required that CSF payments be made with concurrence of the 
Secretary of State and in consultation with the Director of OMB. The 
Secretary of Defense's determination with respect to the documentation 
supporting payments is final and conclusive. 

[10] Because a previous Defense Inspector General report led to new CSF 
oversight guidance in December 2003, our assessment focused on 
reimbursement claims submitted by Pakistan between January 2004 and 
June 2007. 

[11] Army road construction costs were included as a specific line item 
amount beginning in September 2004. These costs were claimed and paid 
each month from September 2004 through February 2007. 

[12] Army bunker construction costs were included as a specific line 
item amount beginning in July 2006. These costs were claimed and paid 
each month from July 2006 through February 2007. 

[13] Average vehicle damage cost paid was calculated using claims in 
which vehicle damage was listed as a specific category (September 2004 
through June 2007). 

[14] These figures include the $5,700 average navy cost per vehicle per 
month for "vehicle damages" discussed previously. These figures do not 
include claims prior to September 2004, as these claims did not contain 
specific categories. 

[15] This cost category was the largest for April 2006 based on the 
percentage of total dollars claimed that was included in each category. 
This cost category accounted for 28 percent of the entire claim for 
April 2006. 

[16] We determined this by using the claimed amounts and the exchange 
rates that were stated in Pakistan's September and October 2004 claims, 
and we converted the claimed cost into rupees. We then converted the 
claimed cost back into U.S. dollars using the applicable IMF exchange 
rates and compared the resulting figure to the amount paid by Defense. 

[17] Defense reimbursed Pakistan approximately $55 million for 
maintenance of the Pakistani army's MI-17 and AH-1 Cobra helicopter 
wings in the border area from July 2006 through February 2007. 

[18] See GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office: 
441 G Street NW, Room LM: 
Washington, D.C. 20548: 

To order by Phone: 
Voice: (202) 512-6000: 
TDD: (202) 512-2537: 
Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: