As Afghanistan contracting surges, who’s following the money?

Introduction

In the past eight years, the United States has allocated $51 billion to rebuild and stabilize Afghanistan. But tracking that money sometimes seems as challenging as finding the leaders of the Taliban.

No one keeps an exact count of the number of private contractors working in Afghanistan — even though Congress ordered that be done more than two years ago. There’s no central list of all the contracts now in force. Government auditors cannot determine with confidence if the reconstruction money is being properly spent or meets the stated objectives. And efforts to improve coordination among the key U.S. agencies managing the money — the Pentagon, the State Department and the U.S. Agency for International Development — have lagged at best.

That is the picture that emerges from dozens of interviews with auditors, contractors, congressional aides and inspectors general, who echo the findings of independent government reports over the past decade. Without rigorous record-keeping, they say, the contracting process is vulnerable to waste, duplication of effort and fraud.

The oversight task is growing more critical, because as the Obama administration boosts the number of U.S. troops in Afghanistan it also is spawning a surge in contractors hired to build schools and government offices, to help farmers grow cash crops other than poppies that fuel heroin production — and, in the most critical nation-building task, to train Afghan police and soldiers.

An estimated 56,000 more contractors — almost double the 30,000 additional troops to be deployed this year — are expected to be working in Afghanistan by the end of 2010, according to the Congressional Research Service. The number of contractors could top 160,000, exceeding the ranks of U.S. troops fighting the Taliban.

But that’s just an estimate. A key official in the inspector general’s office established to oversee Afghan reconstruction spending said that simply “defining the universe” of contractor spending has been difficult.

“It is a frustration,” said John Brummet, chief auditor in the Office of the Special Inspector General for Reconstruction in Afghanistan. “Everyone assumes the information is there but it just is not. You’d think the [U.S. command in Kabul] could say they have 200 contractors there but…it’s just not there.”

Spending on Afghan reconstruction represents about 20 percent of the total cost of the war, which reached $230 billion by the end of 2009. About half of the reconstruction spending goes toward training Afghan security forces.

Attempts to oversee the billions of dollars flowing to the contractors have been complicated by congressional inattention, severe gaps in manpower and ineffective training for the military officers and bureaucrats shipped off to Afghanistan to monitor reconstruction work, according to agency audits and interviews with auditors.

Even identifying the authority most responsible for managing the rebuilding of Afghanistan is a challenge. Asked for the name of that person, the Defense Department’s public affairs office for procurement named a lieutenant colonel in Virginia, an Army official in San Antonio, a deputy secretary in the Army in Virginia and a general in Afghanistan. No single official would be able to explain all the aspects of a given contract, the office said. A State Department spokesperson also could not provide a central point of contact for reconstruction spending.

One government official long familiar with the contracting process in Iraq and Afghanistan, speaking on condition of anonymity, said all agencies suffer from fractured lines of accountability. “There’s not one person to pin the rose on,” the official said. “And that is exactly what’s wrong with the process.”

The electronic record-keeping systems of the three biggest spenders on reconstruction — Defense, State and USAID —are incompatible, according to the inspectors general for Afghanistan and Iraq. So coordinating spending by the agencies remains beyond the capacity of the inspector general’s office and the government’s chief accountant, the Government Accountability Office.

“It sounds like it should be easy but for so many different reasons, it is challenging,” said John Hutton, the GAO’s director of acquisition and sourcing management.

On Monday, the Wartime Commission on Contracting, a bipartisan panel formed to oversee reconstruction in Iraq and Afghanistan, asked representatives from State and Defense why the agencies have yet to coordinate their work.

The commission’s chairman, Michael Thibault, sharply questioned Ambassador John Herbst, the State Department’s Coordinator for Reconstruction and Stabilization, about a three-month-old overture from Defense Secretary Robert Gates to Secretary of State Hillary Clinton, calling for changes in how the government handles spending on security for reconstruction projects. Gates’ Dec. 15 memo calls for “a new model of shared responsibility.” It was copied to the chairman of the Joint Chiefs of Staff, the national security adviser and the director of Office of Management and Budget.

As of March, members of the contracting commission said, there was no response from the State Department. “What’s going on?” Thibault asked Herbst at Monday’s hearing.

Herbst responded: “Certainly coordination is a very important issue, but I’m afraid I can just tell you this is being looked at.” Thibault didn’t hide his frustration: “That’s unacceptable.”

On Capitol Hill, the oversight of contract spending in Afghanistan—like the war itself—was long treated as secondary to the challenges in Iraq. Only in 2008 did Congress establish a special inspector general’s office to audit Afghan nation-building.

That inspector general’s office for reconstruction has been working with far fewer staff members than the equivalent office for contract spending in Iraq, run by Stuart W. Bowen. At work since the first year of the Iraq war, Bowen has produced 164 inspections, 160 audits and one book. In his last report, Bowen found that coordination still was lacking in the war zone and recommended a single federal office to oversee reconstruction contracting.

Bowen said in a recent interview that Iraq illuminates the lessons of wartime contracting. Many problems stemmed from the decision to launch a war without long-term plans for battle or rebuilding, he said. In Iraq, millions of dollars spent initially to rebuild electrical grids and power plants and schools were wasted or lost as conflict raged, his reports found.

On his first trip to Baghdad, Bowen said, he saw U.S. officials delivering duffle bags of cash to government ministries, presumably to keep basic services running. “There were simply inadequate controls,” he said.

A key problem in both Iraq and Afghanistan has been a dearth of people in government and the military who know how to read contracts and assess the contractor’s performance. These people, known as contracting officer representatives, or CORs, are in desperately short supply – and their absence is noted in every audit of agency oversight of contracting in the past few years.

Ironically, the weak link in the current wars can be traced back to the peace dividend at the end of the Cold War. After the fall of the Berlin Wall, the Defense and State departments cut back on personnel in the 1990s. Contract officer representatives were among the first to go. No one anticipated two far-flung wars would follow. Today, the government is scrambling to train 20,000 contract officers over the next five years.

Meanwhile, efforts to provide better information about contracting sometimes run into trouble on the ground.

In July 2008, State, Defense and USAID agreed to cooperate and compile a common list of contract personnel working in the war zone. But the GAO reported in October that the system still wasn’t working. Among other problems, the agencies could not verify the names of guards hired to protect contractors or U.S. personnel.

One obstacle, the GAO found, was that many Afghans balked at having their names and other data entered into a U.S. computer system. USAID officials said local workers feared for their safety if the system—known as SPOT or the Synchronized Predeployment and Operational Tracker – were ever compromised. In response, Defense officials offered to put USAID information into classified computers. But USAID officials resisted because they had little access to classified computers, GAO found.

USAID was only part of the problem. None of the agencies, when questioned, would vouch for the information already entered into the system, the GAO found.

“The agencies could not verify whether the reported data were accurate or complete,” the audit said.

Staff reporter Ben Protess contributed to this story.