01/31/2011 12:03 pm ET | Updated May 25, 2011

CWC on PMC in Afghanistan

This past Monday the always useful Commission on Wartime Contracting in Iraq and Afghanistan held a hearing. The topic was "Recurring problems in Afghan construction."

As should be well known by now, the bulk of private military contracting issues does not involve people carrying and using weapons. It does involve a myriad of logistical functions, which may be dull to the average person but are critically important to the ultimate success of any military mission. As the old saying goes, amateurs talk about strategy, professionals talk about logistics. As the CWC co-chairman Michael Thibault said:

For most Americans, this is a matter that is quite literally out of sight and out of mind. But it's a huge issue involving almost 20 billion taxpayer dollars in just the past three years. Just as critically, construction contracts also involve support for U.S. and allied troops, the future of the battered country of Afghanistan, and America's image in the rest of the world.

Untimely, unsafe, or poor construction has impacts on users. Too often, adverse impacts are felt by American soldiers, Marines, and airmen who find themselves jammed into cramped and inadequately protected quarters. The Afghan people we are trying to help have also been ill-served by some of the U.S.-funded construction projects in their country. These issues go beyond delays and cost overruns, and are just unacceptable
Now, there are lots of talented and dedicated people working on construction projects in Afghanistan, and they do much good work. That needs to be said. But there are also many problems--problems that occur over and over, year after year, involving both government and contractor personnel. And when you have recurring problems of the same type, that's Nature's way of telling you that your structures, systems, or staff need reengineering.

Why should we care?

The main reason for paying attention to construction projects is their large potential for waste. Waste can result from projects that are poorly planned, overseen, and built. Waste can spring from abuse and corruption. And waste can occur when projects are culturally insensitive, unneeded, and unsustainable. The government of the United States has been guilty of causing or tolerating all of these forms of waste.

One of the challenges in diagnosing waste and proposing reforms is that it's not always clear where the money goes. An audit released in October by the Special Inspector General for Afghanistan Reconstruction found that DoD, State, and USAID were "unable to readily report on how much money they spend on contracting for reconstruction activities in Afghanistan."

Now, of course, one can argue that trying to construction work in a war zone is uniquely challenging and can't be held to the same standards one would use in a peaceful society. There is truth to that but it is not the whole truth.

Of course, trying to build clinics, schools, and other projects in a war zone complicates an already daunting management challenge. In addition, timing is critical. The military describes a contingency mission in simple terms: secure, hold, build. If the "build" phase is launched before the "secure" phase is complete, you invite failure. You give the Taliban or other enemies a chance to sabotage projects and intimidate or kill the construction workers. That increases costs and delays, and is simply unfair to contractor employees. Meanwhile, border politics that can block or delay shipments to landlocked Afghanistan makes matters worse.

The wartime setting presents real challenges. But we have observed problems and waste even in secure, behind-the-wire projects.

An example from my own experience fits in here. I was talking to the contracting officer's representative who was overseeing construction of a barracks on a base in Afghanistan. This fellow was an engineer. But he freely told me that his expertise was blowing things up, not building them. He was a loyal American trying to do his assigned duty, but he was no more qualified to oversee construction of electrical, climate-control, water, or sanitation systems than I am. This was weakness in oversight, one that invites waste--and can cause deaths, as when American soldiers were electrocuted by faulty wiring in a base shower room. Other weaknesses occur in planning, solicitation, and management. They are recurring, avoidable, and unacceptable.

According to Major General (Ret) Arnold Fields, who is retiring as head of the Special Inspector General for Afghanistan Reconstruction (SIGAR), "SIGAR has very serious concerns about both contract delays and the sustainability of many of the construction projects we have examined. In addition to conducting audits of construction projects, SIGAR is investigating 90 cases of alleged bribery; contract fraud, which includes faulty construction; and the use of substandard materials in a range of infrastructure projects in Afghanistan. These cases include allegations that contractors have used inferior-grade asphalt on road projects and substandard materials in other infrastructure projects, such as bridges, canals, and facilities."

He also said that SIGAR found that the US Army Corps of Engineers had not adhered to its own quality assurance procedures. For example, the contractor and local quality assurance representatives failed to provide an adequate level of daily reporting on progress at the job sites, raising the risk that construction problems could surface later in the life of the project, increase operations and maintenance costs, and compromise occupant safety.

But that was hardly the only program with problems. Consider this:

We are issuing a report this week on our assessment and audit of 69 CERP projects in Laghman province. Those projects represent $58 million of American taxpayer money, obligated between 2008 and 2010. The 69 projects that we audited represent 91 percent of the $58 million. They include matters relating to roads, dams, canals and bridges. We found that 27 of these 69 projects valued at $49 million are at risk of failing.

For those without calculators in terms of numbers of projects that is a 39 percent failure rate and in terms of money wasted that is 84 percent.

Of course, the truly revelatory part of any hearing is in the Q&A. In that regard let's consider the question of whether the U.S. has learned its contracting lessons in Afghanistan

MR. ERVIN: I just wanted you to talk generally about the sweep of development since you took this job, now that you're leaving. Do you think the things that we're focused on today in this hearing, the importance of cost controls and sustainability and host-nation buy-in and support for projects and taking past performance into consideration as a key foundation of accountability; are these things, generally speaking -- and feel free to give some examples -- are these things getting better in Afghanistan, or are we basically where we were at the inception of SIGAR in this regard?

GEN. FIELDS: Sir, I'm not confident that there is evidence that we're getting better of it -- at the implementation level, at the -- at the bottom line, I would say at the tactical level, which is really where the work is being accomplished.

However, given the president's or this administration's focus on the new strategy in addressing Afghanistan, which emphasizes certain elements to include reconstruction elements such as shoring up agriculture in Afghanistan but also focusing more on involving the Afghans in the reconstruction of their own country, which also has a focus on contract elements to it, I think these are all good matters, sir, that will ultimately help to improve reconstruction in Afghanistan.

My most significant recommendation, however, would be that while we were inclined to do something very quickly following the 9/11 matters -- and I have used this phrase before and I don't mean it condescendingly to folks who are a lot smarter than I am in addressing these issues -- but I believe back in 2002, when we commenced our effort in Afghanistan, we began to kind of throw stuff up on the wall, hoping that much of it would stick in order to perhaps build upon and arrive at largely where we currently are in reference to reconstruction in Afghanistan. I would say we should do a better job on the front end, take that extra moment to plan better, consider the environment, consider resources, consider limitations.

And then there was this:

MR. HENKE: The last paragraph of your testimony says -- and you mentioned this in your opening -- you have three major concerns about building Afghan forces. Number one, there's no comprehensive plan. Number two, your words, "the projects are seriously behind schedule, making it doubtful that the construction efforts would keep pace with recruitment and training," so we may be building forces faster than we can put them in barracks, simply. And number three, the sustainment issue: We're building something so large, the Afghan government won't be able to pay for it. Their entire revenue this year is on the order of a billion dollars, and we're spending billions to build something that will cost billions to sustain.

The bottom line of your statement, I think, is really remarkable. And I want to make sure it does not go unnoticed. These issues -- your testimony, these issues place the entire U.S. investment, the entire U.S. investment of $11.4 billion in ANSF facilities construction, at risk. So every bit of it is at risk. Is that correct, sir?

GEN. FIELDS: That is correct, sir.

Speaking of risk, if you are going to use private contractors it should be axiomatic that one has effective means of oversight. Is that the case today in Afghanistan?

MR. ERVIN: In your judgment, has the United States government -- and by that, of course, I mean specifically DOD and State and AID -- that's our charter here -- have we become overly reliant on contractors? I think everybody would acknowledge that there's a role for them to play in contingencies, but have we defaulted to them all too often? What's your judgment about that? Is there organic capacity that ought to be grown in government, such that our -- we wouldn't be as dependent on contractors as we presently are and as we will be in future contingencies if action isn't taken now?

GEN. FIELDS: Well, first, I must agree that we are very dependent upon contracting.

MR. ERVIN: Sir, could you just, again, speak a little bit more --

GEN. FIELDS: Thank you.

MR. ERVIN: -- for the --

GEN. FIELDS: Let me say again that I believe that we are -- we have become very dependent upon contractors. And I'm not suggesting that that is all bad. We have to examine, you know, the risk, if you will, or the capacity, what capacity exists within the federal structure and what capacity must we tap into in order to bring about a certain capability or end that we are looking for.

So I'm -- I -- we're going to be involved with contractors, I think, for the duration.

So I won't argue that there -- that we have too many contractors or too little. I believe that the jury is still out in that regard. What I will argue, though, is that we don't have enough trained folks within the federal establishment to provide the oversight of the very contractors that we are bringing aboard. And something that has come to my mind here recently is: It should be axiomatic that a part of the training regimen of our leaders, both on the civil side and in the military ranks, should be contract training. And that's something that I never had, really, as an officer, and I have had contractors under my charge. But of course I've had trained contractor expertise to assist me in that regard. But I think we need more depth and breadth of contract training as a basic element of the curriculum that's provided to our officers and our staff NCOs.

Finally, I was able to reach CWC member Charles Tiefer, who is also a professor at the University of Baltimore law school, by phone. He offered the following comments in regard to the hearing

U.S. agencies have much more trouble contracting with locals in Afghanistan than they did in Iraq. There is a much lower level of training and business organization in Afghanistan and the rampant corruption poses an almost crushing "tax" on business.

There are no easy fixes. US agencies need to have more of their own inspection people (CORs) and that would make it easier to use Afghan subcontractors.

Many examples of failure in quality control came out of both Chairman Thibault's inspection trip and the hearing witnesses. He went there and went out to where the schools had been built and saw that the work was shoddy.

The hearing revealed a start contrast between the Army Corps of Engineers, which does vigorously compete its contracts and the US Agency for International Development (USAID) which is still sole sourcing.

USAID has hollowed itself out to the point that it couldn't do separate competition for the different energy projects in the Kandahar province. Instead it lumped together diesel fuel generators and hydro-electric generators that were a hundred miles apart because AID doesn't have the staff to treat different things separately.

USAID has to get away from relying on its few contractors it has an almost cozy relationship with, like the Louis Berger Group and Black & Veatch. It has to open itself up to competition which would drive the costs down and the quality up.

In the meantime we paid whatever price was asked, which often meant an excessive price to give at least the appearance of mission support and progress towards goals. The approach in Afghanistan was an example of using contractors in the most expensive way.

The only people who think that the costs of private security contractors are manageable are those that ignore the furious reaction from the Karzai administration against those contractors. The Karzai administration has blown its top on the issue. They apparently see private security contractors, at best, diverting resources that the Afghan security forces could use. At worse they see private security contractors propping up local militias that are a threat to the national government.