US doesn’t vet Afghan contractors well enough to ensure money doesn’t fall into terrorist hands

Introduction

There are growing concerns that U.S. funds might end up in the hands of insurgents or criminals in Afghanistan. The Pentagon, State Department and U.S. Agency for International Development spent $17.2 billion for contracts and assistance projects in Afghanistan between 2009 and the first half of 2010.

U.S. Central Command, CENTCOM, established a group to examine intelligence information on non-U.S. vendors, which includes Afghan and foreign vendors, seeking aid contracts to determine if there are any risks the funds could reach insurgent or criminal groups. But according to the Government Accountability Office, the current process for selecting vendors has gaps and does not employ a risk-based approach.

CENTCOM uses risk factors to prioritize which vendors need to be screened the most, like contracts in Taliban strongholds and high-value or high-risk contracts. But these factors have not been documented. The screening group meant to vet vendors before they received an award, but CENTCOM has been screening existing contracts, leaving new vendors without any oversight. CENTCOM has rejected 19 of the 248 contracts reviewed so far, most of which were existing contracts.

Half of the Pentagon’s contracts in Afghanistan go to Afghan nationals.

Contracts worth less than $100,000 are not routinely screened, even though three-quarters of contracts with non-U.S. vendors fall below this threshold. CENTCOM could not provide a number of vendors with contracts below $100,000 who have already been vetted so far, the number of remaining non-U.S. vendors with contracts above $100,000 to be screened, an estimated number of prospective vendors to be vetted this year or a timeline for beginning to screen vendors before awarding contracts.

Due to the backlog at CENTCOM, USAID created its own screening process in January, but it may have similar limitations to CENTCOM, such as not screening contracts worth less than $150,000.

In 2010, the Afghan Threat Finance Cell, a multi-agency group, found that a certain percentage of USAID dollars were being diverted to specific provinces and occasionally, funneled to insurgent groups. In 2010, USAID spent almost $46 million on 126 awards to non-U.S. partners.

While State requires a terrorist-financing risk assessment for any new program or activity receiving funding, it lacks a screening process like CENTCOM or USAID to vet vendors. State officials said they award few contracts to non-U.S. vendors, but GAO’s analysis found that State does work with many non-U.S. vendors in Afghanistan. Embassy officials said they do not do any vetting or background checks on vendors, except for security risks posed by individual with physical access to embassy property or personnel.

“Absent a way to consider the risk posed by non-U.S. vendors, State may not be well prepared to assess the potential for its funds to be diverted to criminal or insurgent groups,” the GAO said.

DOD, USAID and State share information about non-U.S. vendors informally, but due to high personnel turnover in Afghanistan, they cannot ensure this process will continue. Formalized information sharing could be especially beneficial for State, since it currently has no plans to perform vetting of the type done by DOD and USAID for any of its non-U.S. vendors in Afghanistan.

Since it is not feasible to screen every non-U.S. contractor in Afghanistan, GAO suggests vetting non-U.S. contractors through a risk-based approach, like the risk level for the service performed and risk estimate for the geographic area the work will take place.

FAST FACT: During the first quarter of 2011, there were more than 87,000 DOD contractor personnel in Afghanistan and 53 percent of the contracted workforce was made up of Afghan nationals.