Commanders urged to think local in Afghan contracting
Memo indicates that contracts could be going to unscrupulous firms and says officials must do a better job of following the money.
NATO commanders must do a better job of contracting with scrupulous and locally based Afghan companies to ensure that international funds are not flowing to insurgents, according to a memorandum from the United States' top military commander in Afghanistan.
In the Sept. 8 document, Gen. David Petraeus said contracting officials must get a tighter grip on their business partners, and on where funds ultimately are ending up.
"With proper oversight, contracting can spur economic development and support the Afghan government and NATO's campaign objectives," Petraeus wrote. "If, however, we spend large quantities of international contracting funds quickly and with insufficient oversight, it is likely that some of those funds will unintentionally fuel corruption, finance insurgent organizations, strengthen criminal patronage networks and undermine our efforts in Afghanistan."
Petraeus told NATO commanders to take a more direct role in overseeing contract awards and performance. He urged officials to establish a database for vetting both Afghan and international vendors, incorporate additional planning and transparency into the procurement process, share best practices, and align policies and procedures.
The memo also directs acquisition officers to "look beyond cost, schedule and performance" when awarding work and to consider how the contract will affect the Afghan people and American foreign policy. For U.S. forces to win the hearts and minds of Afghans, Petraeus noted that contracts must be awarded on a more regular basis to trustworthy, locally based firms that will invest in the country's workforce.
"Wherever appropriate, use in-country sourcing rather than imports," he wrote. "Look for opportunities to incorporate maintenance and repair training in existing contracts to build Afghan skills and to create long-term employment. Focus efforts on promoting industries with immediate and long-term growth potential such as agriculture, food processing, beverages and construction. Adopt a fair wage and price approach that minimizes market shock and inflation. Guard against 'front businesses' that fraudulently claim to be Afghan owned."
The directive also encouraged procurement officials to use small and midsize firms, allow Afghans more access to military bases when appropriate and avoid entrenched power brokers that exclude subcontractors outside of their patronage networks.
As a model, Petraeus pointed to NATO contracts with three women-owned Afghan firms to provide troops with boots and T-shirts. Defense officials have indicated that the acquisitions -- part of the Afghan First program -- were significantly cheaper than similar contracts with U.S-based companies.
NATO and U.S. forces spent $14 billion in fiscal 2009 on contracts in Afghanistan to improve roads, power sources, commercial infrastructure, water, medical clinic availability and security. But, Afghan President Hamid Karzai claims international contracting dollars are being directed to corrupt firms that could be fueling the efforts of the Taliban.
"Contracts with a broader range of Afghan companies will help break monopolies and weaken patronage networks that breed resentment" among the people of Afghanistan, Petraeus wrote. "In situations where there is no alternative to powerbrokers with links to criminal networks, it may be preferable to forgo the project."
The general directed officials to contract with vendors that use fewer subcontracts. Excessive subcontract tiering, he said, creates opportunities for funds to be diverted to insurgents and criminal syndicates. Prime contractors also should be held responsible for the behavior and performance of their subcontractors, the memo said.
The post-contract award process, which has been criticized for weak staffing and insufficient oversight, also must be beefed-up with additional personnel, specifically top-level contracting officer representatives, the memo said. When links between companies and criminal networks are discovered, contracts should be terminated and firms suspended or debarred.
NATO established a task force in June to investigate evidence of corruption among Afghan contractors. The international team of 22 military and civilian officials includes experts in forensic auditing, criminal investigation, intelligence and contracting.
"It is time to look at how we're spending the money and is it making the changes we want," said Adm. Kathleen Dussault, the former head of the Joint Contracting Command in Iraq and Afghanistan, who is leading the task force.