Afghanistan
U.S. Efforts to Vet Non-U.S. Vendors Need Improvement Gao ID: GAO-11-355 June 8, 2011The Departments of Defense (DOD) and State (State) and the United States Agency for International Development (USAID) have collectively obligated billions of dollars for contracts and assistance to support U.S. efforts in Afghanistan. There are concerns that U.S. funds are being diverted to fund insurgent and criminal activity in Afghanistan. In light of these concerns, under the authority of the Comptroller General of the United States, we initiated a review to identify DOD, State, and USAID efforts to vet non-U.S. contractors and assistance recipients in Afghanistan. GAO examined (1) the extent to which DOD has established a process to vet non-U.S. vendors to ensure that resources are not used to support insurgents; (2) the extent to which State and USAID have established processes to vet vendors and assistance recipients; and (3) the extent to which vetting information is shared among DOD, State, and USAID. GAO reviewed documents and met with a variety of agency officials to address the report's objectives.
While DOD's U.S. Central Command (CENTCOM) has established a vetting cell to vet non-U.S. vendors in Afghanistan to minimize the risk of insurgents or criminal groups using contracts to fund their operations, its current approach for selecting vendors to vet has gaps. For example, vendors with contracts below $100,000 are not routinely vetted. In fiscal year 2010 around three-quarters of the command's new contracts with non-U.S. vendors were below $100,000. Subcontractors are also not routinely vetted. Command officials stated that CENTCOM uses other risk factors to prioritize vendors to vet, such as contracts performed in Taliban strongholds, but these factors have not been documented. While officials stated that the vetting cell was created to vet vendors prior to award, CENTCOM is largely vetting vendors with existing contracts, which means it is likely that there are a large number of new vendors that have not been vetted prior to award and may have to be vetted in the future. Also, the vetting effort now includes some U.S. Army Corps of Engineers vendors. However, the vetting cell was not staffed to accommodate this workload, so it is uncertain how its existing resources will be able to vet vendors in a timely manner. Without accurately defining the universe of contracts that may need to be vetted, adopting a formal risk-based approach that incorporates other risk factors to identify non-U.S. vendors that pose the highest risk, and identifying the resources needed to accomplish this, it is uncertain how the vetting cell will be able to meet the additional workload and achieve its goals. In January 2011, USAID created a process intended to vet non-U.S. implementing partners in Afghanistan; however, this process may face similar limitations as CENTCOM's. According to USAID officials, this decision was based on the urgent need to mitigate the risks of USAID funds being diverted to insurgent groups. While USAID's process is in the early stages, it proposes to vet non-U.S. implementing partners and at least first-tier subcontractors with contracts valued at $150,000 or more. USAID officials said that they are considering changing the dollar threshold or vetting other potential assistance recipients based on risk; however, the available documentation does not include other risk factors. As of March 2011, State had not developed a process to vet contractor firms in Afghanistan. Since 2008, State has required that a terrorist financing risk assessment be completed for any new program or activity prior to a request for or obligation of funding. However, it does not use the same information as the CENTCOM or USAID vetting cells. Additionally, its use of Afghan vendors may increase under the Afghan First policy. 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. DOD and USAID share vetting information informally, but without a formal mechanism to share vetting results the two agencies cannot ensure that their current practices will endure. Further, as State expands its use of local contractors, it will become imperative that it is part of the data sharing with DOD and USAID. GAO is making recommendations related to improving DOD's and USAID's vetting processes and information sharing. GAO is also recommending that State assess the need for and possible options to vet non-U.S. vendors. DOD and USAID concurred with GAO's recommendations. State generally concurred.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: William M. Solis Team: Government Accountability Office: Defense Capabilities and Management Phone: (202) 512-8365GAO-11-355, Afghanistan: U.S. Efforts to Vet Non-U.S. Vendors Need Improvement
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United States Government Accountability Office:
GAO:
Report to Congressional Addressees:
June 2011:
Afghanistan:
U.S. Efforts to Vet Non-U.S. Vendors Need Improvement:
GAO-11-355:
GAO Highlights:
Highlights of GAO-11-355, a report to congressional addressees.
Why GAO Did This Study:
The Departments of Defense (DOD) and State (State) and the United
States Agency for International Development (USAID) have collectively
obligated billions of dollars for contracts and assistance to support
U.S. efforts in Afghanistan. There are concerns that U.S. funds are
being diverted to fund insurgent and criminal activity in Afghanistan.
In light of these concerns, under the authority of the Comptroller
General of the United States, we initiated a review to identify DOD,
State, and USAID efforts to vet non-U.S. contractors and assistance
recipients in Afghanistan. GAO examined (1) the extent to which DOD
has established a process to vet non-U.S. vendors to ensure that
resources are not used to support insurgents; (2) the extent to which
State and USAID have established processes to vet vendors and
assistance recipients; and (3) the extent to which vetting information
is shared among DOD, State, and USAID. GAO reviewed documents and met
with a variety of agency officials to address the report‘s objectives.
What GAO Found:
While DOD‘s U.S. Central Command (CENTCOM) has established a vetting
cell to vet non-U.S. vendors in Afghanistan to minimize the risk of
insurgents or criminal groups using contracts to fund their
operations, its current approach for selecting vendors to vet has
gaps. For example, vendors with contracts below $100,000 are not
routinely vetted. In fiscal year 2010 around three-quarters of the
command‘s new contracts with non-U.S. vendors were below $100,000.
Subcontractors are also not routinely vetted. Command officials stated
that CENTCOM uses other risk factors to prioritize vendors to vet,
such as contracts performed in Taliban strongholds, but these factors
have not been documented. While officials stated that the vetting cell
was created to vet vendors prior to award, CENTCOM is largely vetting
vendors with existing contracts, which means it is likely that there
are a large number of new vendors that have not been vetted prior to
award and may have to be vetted in the future. Also, the vetting
effort now includes some U.S. Army Corps of Engineers vendors.
However, the vetting cell was not staffed to accommodate this
workload, so it is uncertain how its existing resources will be able
to vet vendors in a timely manner. Without accurately defining the
universe of contracts that may need to be vetted, adopting a formal
risk-based approach that incorporates other risk factors to identify
non-U.S. vendors that pose the highest risk, and identifying the
resources needed to accomplish this, it is uncertain how the vetting
cell will be able to meet the additional workload and achieve its
goals.
In January 2011, USAID created a process intended to vet non-U.S.
implementing partners in Afghanistan; however, this process may face
similar limitations as CENTCOM‘s. According to USAID officials, this
decision was based on the urgent need to mitigate the risks of USAID
funds being diverted to insurgent groups. While USAID‘s process is in
the early stages, it proposes to vet non-U.S. implementing partners
and at least first-tier subcontractors with contracts valued at
$150,000 or more. USAID officials said that they are considering
changing the dollar threshold or vetting other potential assistance
recipients based on risk; however, the available documentation does
not include other risk factors. As of March 2011, State had not
developed a process to vet contractor firms in Afghanistan. Since
2008, State has required that a terrorist financing risk assessment be
completed for any new program or activity prior to a request for or
obligation of funding. However, it does not use the same information
as the CENTCOM or USAID vetting cells. Additionally, its use of Afghan
vendors may increase under the Afghan First policy. 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.
DOD and USAID share vetting information informally, but without a
formal mechanism to share vetting results the two agencies cannot
ensure that their current practices will endure. Further, as State
expands its use of local contractors, it will become imperative that
it is part of the data sharing with DOD and USAID.
What GAO Recommends:
GAO is making recommendations related to improving DOD‘s and USAID‘s
vetting processes and information sharing. GAO is also recommending
that State assess the need for and possible options to vet non-U.S.
vendors. DOD and USAID concurred with GAO‘s recommendations. State
generally concurred.
View [hyperlink, http://www.gao.gov/products/GAO-11-355] or key
components. For more information, contact William Solis at (202) 512-
8365 or solisw@gao.gov.
[End of section]
Contents:
Letter:
Background:
DOD Has Recently Begun to Vet Non-U.S. Vendors in Afghanistan, but Its
Efforts Could Be Strengthened by a Risk-Based Approach:
USAID Has Begun to Develop a Vendor Vetting Process, but State Has Not:
DOD, USAID, and State Have Not Developed a Formal Method of Sharing
Vendor Vetting Information in Afghanistan:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Defense:
Appendix III: Comments from the United States Agency for International
Development:
Appendix IV: Comments from the Department of State:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: CENTCOM Fiscal Year 2010 Contracts and Blanket Purchase
Agreements Awarded and Options Exercised Where Place of Performance
Was Afghanistan, by Dollar Category:
Table 2: USAID Fiscal Year 2010 New Awards in Afghanistan:
Table 3: State's Fiscal Year 2010 New Awards in Afghanistan:
Abbreviations:
CENTCOM: U.S. Central Command:
COIN: counterinsurgency:
COMISAF: Commander, International Security Assistance Force:
DOD: Department of Defense:
FPDS-NG: Federal Procurement Database System-Next Generation:
ISAF: International Security Assistance Force:
NATO: North Atlantic Treaty Organization:
USAID: United States Agency for International Development:
USACE: U.S. Army Corps of Engineers:
USFOR-A: United States Forces - Afghanistan:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
June 8, 2011:
Congressional Addressees:
In fiscal year 2009 and the first half of fiscal year 2010, the
Departments of Defense (DOD) and State (State) and the United States
Agency for International Development (USAID) collectively reported
obligations of at least $17.2 billion on contracts and various
assistance instruments to support U.S. efforts in Afghanistan.
[Footnote 1] The use of non-U.S. vendors--and, in particular, Afghan
vendors--is expected to increase, as the Afghan First policy adopted
by the International Security Assistance Force (ISAF), United States
Forces - Afghanistan (USFOR-A), and the U.S. Embassy in Kabul,
Afghanistan, encourages an increased use of local personnel and
vendors for goods and services as part of the U.S. counterinsurgency
(COIN) strategy.[Footnote 2] Additionally, in September 2010, the
USFOR-A/ISAF Commander released guidance encouraging the increased use
of contracting with Afghan vendors and hiring of Afghan personnel to
achieve U.S. COIN goals.[Footnote 3] Although DOD, State, and USAID
have long used contractors and implementing partners to conduct their
work, the agencies' current reliance on contractors to support U.S.
efforts to stabilize and rebuild Afghanistan is unprecedented. We have
previously reported on the contracting challenges agencies face in
contingency environments.[Footnote 4] For example, the contracting
environment in Afghanistan poses unique challenges, including the
complexity of transporting supplies and equipment, the limited
availability of staff for the needed level of oversight, the often
limited capacity of local vendors, a lack of robust accounting and
record keeping in the country, and a high volume of complex contracts
and large-scale construction projects. Further, according to DOD
officials and officials from other U.S. government agencies, and as
suggested in congressional reports, U.S. contracting efforts take
place in an environment characterized by actual and perceived
widespread corruption in Afghan government and business and face the
risk that some U.S. funds may be used to finance terrorist or
insurgent groups.
The U.S. government has taken a number of steps to prevent resources
from being used to support terrorist activities or organizations--for
example, Executive Order 13,224 was aimed at blocking the financing of
terrorism.[Footnote 5] As the use of contractors and spending has
grown in Afghanistan, U.S. government agencies and congressional
committees have paid increasing attention to the risks of U.S.
contracting and reconstruction funds being diverted to criminal or
insurgent groups. For example, congressional legislation to address
this issue has recently been proposed, and there have been
congressional hearings and recent reports detailing examples of
corruption and financing of insurgents in Afghanistan.[Footnote 6] In
September 2010 COIN contracting guidance, the Commander of USFOR-
A/ISAF directed contracting officials to establish systems and
standard databases to ensure that contracts are not awarded to malign
actors and funds are not diverted. Additionally, in 2010 DOD and other
agencies spearheaded the creation of interagency efforts in
Afghanistan intended to encourage transparency, prevent corruption,
and identify malign actors. For example, in June 2010 DOD created Task
Force 2010, which works to develop greater visibility over contracting
networks, money flows, and the linkages to malign actors to better
employ contracting to support COIN goals.[Footnote 7] Earlier, in
2009, the Drug Enforcement Agency, DOD, the Department of the
Treasury, and other U.S. agencies established the Afghan Threat
Finance Cell, which aims to identify and disrupt the funding of
criminal and insurgent organizations.
In light of these concerns, under the authority of the Comptroller
General of the United States, we initiated a review to identify DOD,
State, and USAID efforts to vet vendors and assistance recipients in
Afghanistan[Footnote 8]. We examined (1) the extent to which DOD has
established a process to vet non-U.S. vendors in Afghanistan, both to
ensure that resources are not used to support insurgent or criminal
groups and to safeguard U.S. personnel and assets against security
risks; (2) the extent to which State and USAID have established
processes to vet non-U.S. vendors and assistance recipients in
Afghanistan; and (3) the extent to which vetting information is shared
among DOD, State, and USAID.
To conduct this work, we reviewed recent DOD, including U.S. Central
Command (CENTCOM); State; and USAID policies and procedures.[Footnote
9] These include the most recent (November 2010) CENTCOM Contracting
Command Acquisition Instruction as well as past versions, USAID's
Mission Order for Afghanistan 201.03, and an April 2010 memorandum of
understanding among DOD, State, and USAID relating to contracting in
Iraq and Afghanistan. Additionally, we reviewed the DOD contract that
establishes a vendor vetting cell in support of U.S. forces in
Afghanistan and Iraq at CENTCOM headquarters in Tampa, Florida, and
the contract's associated classified policies and procedures, as well
as draft standard operating procedures for USAID's vetting support
unit in Afghanistan. We interviewed cognizant DOD, State, and USAID
officials in both Afghanistan and the United States, including DOD
policy, logistics, and acquisition officials from the offices of the
relevant Under Secretaries of Defense in Washington, D.C.; CENTCOM
officials in the planning, logistics, and intelligence directorates,
as well as representatives of the vendor vetting cell in Tampa,
Florida; and USAID and State officials in Washington, D.C.,
responsible for contracting, procurement, and security. We do not
discuss the mechanics of the vetting processes used by DOD and USAID
in detail because we did not evaluate the effectiveness of the methods
used by the agencies to conduct the vetting. In Afghanistan, we
interviewed a variety of DOD, USFOR-A, and CENTCOM Contracting Command
officials in Kabul, including the CENTCOM Senior Contracting Official-
Afghanistan and the commanders of Task Force 2010 and other groups.
[Footnote 10] Additionally, we put out data calls to USAID and State
for their procurement data for fiscal year 2010 in Afghanistan. We
present procurement data for fiscal year 2010 in Afghanistan, based on
data calls to USAID and State, to give a broad context for the scale
of awards to U.S. vendors compared to those to non-U.S. vendors and
the amounts obligated and determined the method used to gather these
data to be sufficiently reliable for this purpose. We also interviewed
cognizant U.S. Embassy security and contracting officials and USAID
security and contracting officials, all in Kabul. Additionally, we
interviewed officials from regional contracting centers in Kabul,
Bagram, Camp Leatherneck, and Kandahar; U.S. Army Corps of Engineers
(USACE) officials in Kandahar and other locations; and ISAF
contracting and security officials in Kabul and Kandahar.
We conducted this performance audit from May 2010 through June 2011 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. Details on our
objectives, scope, and methodology are contained in appendix I.
Background:
In Afghanistan, the use of local vendors by U.S. and international
forces as part of an effort to create economic development is
considered to be one of the key supporting elements of the U.S. COIN
strategy. For example, guidance issued in August 2010 and amplified in
September 2010 by the ISAF/USFOR-A Commander emphasizes the role of
contracting in the implementation of the COIN strategy. In
Afghanistan, local personnel make up a significant portion of DOD's
contractor workforce. According to CENTCOM's quarterly census data, in
the first quarter of fiscal year 2011, there were more than 87,000 DOD
contractor personnel in Afghanistan. Of those personnel, Afghan
nationals made up approximately 53 percent of the contracted
workforce.[Footnote 11] According to DOD, recent initiatives that have
a direct influence on the hiring of local nationals in Afghanistan
include developing a more skilled workforce; increasing business
opportunities; increasing community cash flow; improving public
infrastructure, such as roads and utilities; and enhancing community
organizational capacity. In addition to its importance to DOD, local
contracting is integral to the efforts of other U.S. government
agencies, such as USAID, to rebuild and expand infrastructure and
economic capacity in Afghanistan.
Assisting in this effort by providing contracting support are numerous
agencies, commands, and offices. For U.S. forces, the two primary DOD
contracting entities in Afghanistan based on fiscal year 2010
obligations are CENTCOM Contracting Command and USACE. CENTCOM
Contracting Command--whose structure includes the Senior Contracting
Officer-Afghanistan and the regional contracting centers--obligated
over $2.7 billion in contracts in fiscal year 2010.[Footnote 12] Also
in fiscal year 2010, USACE obligated more than $1.8 billion, and it is
expected to undertake approximately $3.7 billion in projects in
Afghanistan in fiscal year 2011.[Footnote 13] Many of these
reconstruction and infrastructure projects are expected to be built by
vendors, including the extensive use of subcontractors. Further, in
fiscal year 2010, USAID obligated over $2.7 billion in program funds
for projects in Afghanistan.[Footnote 14] According to USAID
officials, the agency is actively involved in using local vendors to
provide goods and services. Additionally, contracts that support
forces in Afghanistan may be awarded in the United States by
contracting offices and commands, such as the Army Materiel Command's
Rock Island Contracting Center and U.S. Transportation Command.
According to State officials, most of the agency's contracts in
Afghanistan are awarded by contracting officials in the United States.
Further, given the NATO environment in Afghanistan, contracts that
directly or indirectly support U.S. forces may also be awarded by the
contracting offices of coalition partners, such as the United Kingdom
and Germany, and by NATO contracting entities, such as the NATO
Maintenance and Supply Agency.
While the use of local vendors in Afghanistan is a key element of the
COIN strategy, it also brings about challenges. For example, the ISAF/
USFOR-A Commander's September 2010 guidance cautions that if large
quantities of international contracting funds are spent 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 efforts in
Afghanistan. Further, the guidance suggests that extensive use of
subcontractors in Afghanistan, as well as the lack of visibility of
subcontractors by contracting personnel, could increase the risk of
corruption. The September 2010 guidance directs commanders and
contracting officials to gain and maintain visibility of the
subcontractor network, and it warns that excessive subcontracting
tiers provide opportunities for criminal networks and insurgents to
divert contract money from its intended purpose. Additionally, USAID's
Mission Order for Afghanistan 201.03 seeks to prevent USAID programs
and funds from benefiting terrorists. To prevent resources from being
used to support terrorist activities or organizations, steps have been
taken, such as the issuance of Executive Order 13,224 in September
2001, which blocks the property of individuals and entities designated
as terrorists and prohibits the support of these listed individuals or
entities through dealing in blocked property.[Footnote 15]
Additionally, various implementing regulations, found in the Federal
Acquisition Regulation, prevent government agencies from contracting
with designated individuals and entities, or require contracting
officers to check potential contract awardees against lists such as
the Excluded Parties List System.[Footnote 16]
As part of the acquisition process, the Federal Acquisition Regulation
indicates that contracts are to be awarded only to responsible
prospective vendors.[Footnote 17] A contracting officer must make an
affirmative determination of responsibility prior to awarding a
contract. Guidance found in the CENTCOM Contracting Command
Acquisition Instruction, which is intended to implement and
supplement, among other regulations, the Federal Acquisition
Regulation and the Defense Federal Acquisition Regulation Supplement
and to establish general contracting procedures, states that its
contracting officers "shall take all practicable steps to ensure the
award of all contracts to responsible contractors." Both the Federal
Acquisition Regulation and the Defense Federal Acquisition Regulation
Supplement provide a number of elements to be considered in the
determination of responsibility.[Footnote 18] Several of these are
elaborated upon in the CENTCOM Contracting Command Acquisition
Instruction, including adequate financial resources to perform the
contract, the ability to comply with delivery or performance
schedules, a satisfactory past performance record (when part of the
evaluation), and integrity and business ethics. The integrity and
business ethics element requires the contracting officer to verify
that a prospective awardee is not included in the Excluded Parties
List System.
In response to continued congressional attention and concerns from
DOD, USAID, and other agencies about actual and perceived corruption
in Afghanistan and its impact on U.S. and ISAF activities, several DOD
and interagency (including State and USAID) efforts have been
established in Afghanistan to identify malign actors, encourage
transparency, and prevent corruption. These efforts include the
establishment of several interagency task forces, such as Task Force
2010, an interagency anticorruption task force that aims to provide
commanders and civilian acquisition officials with an understanding of
the flow of contract funds in Afghanistan in order to limit illicit
and fraudulent access to those funds by criminal and insurgent groups,
and the Afghan Threat Finance Cell, an interagency organization that
aims to identify and disrupt funding of criminal and insurgent
organizations. Additionally, ISAF and U.S. agencies have established
several other joint task forces, including the Combined Joint
Interagency Task Force Shafafiyat.[Footnote 19] Task Force Shafafiyat
works to integrate ISAF and U.S. anticorruption efforts, such as Task
Force 2010 and Task Force Spotlight, which focuses on private security
contracting, with those of key Afghan government and civil society
partners to foster a common understanding of the corruption problem in
Afghanistan.[Footnote 20]
DOD Has Recently Begun to Vet Non-U.S. Vendors in Afghanistan, but Its
Efforts Could Be Strengthened by a Risk-Based Approach:
CENTCOM Contracting Command Has Recently Begun to Vet Vendors in
Afghanistan:
In 2010, DOD began to vet non-U.S. vendors in Afghanistan by
establishing at CENTCOM headquarters in Tampa, Florida, a vetting cell
called the Vendor Vetting Reachback Cell (vetting cell).[Footnote 21]
The purpose of this vetting process--which includes the examination of
available background and intelligence information--is to reduce the
possibility that insurgents or criminal groups could use U.S.
contracting funds to finance their operations. The vetting cell is
staffed by 18 contractor employees operating from CENTCOM headquarters
and is supervised by DOD officials. The contract used to establish the
vetting cell for Afghanistan was awarded in June 2010, and in August
2010 the cell began vetting non-U.S. vendors.[Footnote 22]
According to the CENTCOM Contracting Command Acquisition Instruction,
all contract awards or options equal to or above $100,000 to all non-
U.S. vendors in Iraq and Afghanistan are subject to vetting by the
vetting cell. Additionally, all information technology contracts in
Afghanistan, regardless of dollar value, are subject to vetting.
[Footnote 23] The Acquisition Instruction suggests that although not
required, all vendors should be submitted for vetting--which would
include those with contracts below $100,000. According to the
Acquisition Instruction, to vet a vendor, a contracting officer,
generally located in Afghanistan, submits a request using a Web-based
database system known as the Joint Contingency Contracting System.
[Footnote 24] These requests are ultimately directed to the vetting
cell located at CENTCOM headquarters in Florida for vetting. The cell
vets the vendor and provides a recommendation either to approve or
disapprove it, which first goes to a DOD official in Tampa for review
and then is forwarded to a DOD entity in Afghanistan, which makes the
final determination. If the final determination calls for not
contracting with the vendor, the customer (e.g., the battlespace
owner) can request an exception to the policy proscribing DOD entities
from awarding contracts to rejected vendors. According to the
Acquisition Instruction, contracting officers should plan for the
standard vetting process to take at least 14 calendar days. However,
urgent vetting requests can be accomplished in 5 days. A request is
considered urgent when the customer informs the contracting officer in
writing that a delay will cause an operational crisis outweighing the
risk of awarding to a potential rejected contractor. After the final
determination is made, the approval or disapproval status of the
vendor is entered and maintained within the Joint Contingency
Contracting System database. According to CENTCOM officials, the cell
is currently conducting periodic re-vettings of previously vetted
vendors that are under contract, which the cell will continue to do as
part of its duties. Additionally, while the vetting cell is structured
to be able to vet any non-U.S. vendors, the current vetting emphasis
is on Afghan vendors and those from neighboring countries.
The CENTCOM Vetting Cell Has Recently Begun Vetting Vendors Used by
USACE:
USACE obligated over $1.8 billion in Afghanistan in fiscal year 2010,
but until recently it did not have a process in place to routinely vet
non-U.S. vendors. According to USACE officials, in fiscal year 2010,
well over half of USACE contract awards and more than half of the
dollars obligated went to non-U.S. vendors. USACE officials told us
that recognizing the potential for overlap among vendors with which
USACE and CENTCOM Contracting Command are contracting in Afghanistan,
CENTCOM Contracting Command requested that USACE send a list of its
most frequently used prime vendors to be vetted, beginning in January
2011. USACE officials told us that while CENTCOM Contracting Command
has asked for a list of the most frequently used prime vendors as well
as major subcontractors, it specifically asked USACE to stagger the
submission of vendor names so as not to overwhelm the vetting cell.
While USACE officials told us that some prime contractor names have
been submitted, it is unclear when any subcontractor vendor names will
be submitted for vetting. According to USACE officials, CENTCOM
Contracting Command made this request, in part, because at the time
USACE did not use the Joint Contingency Contracting System database,
and as such CENTCOM Contracting Command personnel bear the burden of
entering all USACE vendor data into the database. USACE officials told
us that although USACE has not previously used the Joint Contingency
Contracting System to track contracts and vendors, it has begun to
train personnel, both in Afghanistan and in the United States, to use
the database. Once this training is complete, USACE expects to have
approximately 50 personnel available who could enter vendor
information into the database, which USACE officials expect will
relieve the burden of data entry on CENTCOM Contracting Command
personnel.
Vendor Vetting Process Faces Limitations:
Vetting Cell Does Not Routinely Vet Vendors below $100,000 Threshold:
The CENTCOM Acquisition Instruction requires that non-U.S. vendors
competing for awards equal to or above $100,000 be vetted by the
vetting cell. The Acquisition Instruction also encourages the vetting
of prospective vendors competing for contracts below $100,000, but
these contracts are not routinely vetted, and CENTCOM could not
provide us with the specific number of vendors below the threshold
that have been vetted to date. In Afghanistan, a significant portion
of CENTCOM's new contracts and options exercised for fiscal year 2010
awarded by CENTCOM Contracting Command are below the $100,000
threshold. According to CENTCOM Contracting Command officials, with
the increased focus on local contracting, the number of contracts
below the threshold is expected to grow. See table 1 for a breakdown
of the number and total obligated value of new contracts and blanket
purchase agreements awarded and options exercised in fiscal year 2010,
where the vendor was non-U.S. vendor, at or above and below the
$100,000 threshold. This table shows that although more money is
obligated to contracts and options at or above $100,000, there may be
many more contracts awarded and options exercised below the $100,000
threshold.
Table 1: CENTCOM Fiscal Year 2010 Contracts and Blanket Purchase
Agreements Awarded and Options Exercised Where Place of Performance
Was Afghanistan, by Dollar Category:
FY10 contracts awarded and options exercised: $100,000 or more;
Non-U.S. contractor: Number of contracts awarded and options
exercised: 1,978;
Non-U.S. contractor: FY10 award amount: $1,352,509,525;
U.S. contractor: Number of contracts awarded and options exercised:
175;
U.S. contractor: FY10 award amount: $227,464,630;
Total: Number of contracts awarded and options exercised: 2,153;
Total: FY10 award amount: $1,579,974,155.
FY10 contracts awarded and options exercised: Less than $100,000;
Non-U.S. contractor: Number of contracts awarded and options
exercised: 6,509;
Non-U.S. contractor: FY10 award amount: $144,046,747;
U.S. contractor: Number of contracts awarded and options exercised:
1,633;
U.S. contractor: FY10 award amount: $19,739,633;
Total: Number of contracts awarded and options exercised: 8,142;
Total: FY10 award amount: $163,786,379.
FY10 contracts awarded and options exercised: Total;
Non-U.S. contractor: Number of contracts awarded and options
exercised: 8,487;
Non-U.S. contractor: FY10 award amount: $1,496,556,272;
U.S. contractor: Number of contracts awarded and options exercised:
1,808;
U.S. contractor: FY10 award amount: $247,204,263;
Total: Number of contracts awarded and options exercised: 10,295;
Total: FY10 award amount: $1,743,760,535.
Source: GAO analysis of Federal Procurement Database System-Next
Generation (FPDS-NG) data, April 2011.[Footnote 25]
Notes: Non-U.S. contractors were identified in the system as
contractors where vendor country was not the United States or where
contractor name was "miscellaneous foreign contractor." Award amount
is the amount of the initial obligation for contracts and purchase
orders; the obligation for options exercised in fiscal year 2010; and
because of the lack of estimate value for blanket purchase agreements
and indefinite delivery contracts, the fiscal year 2010 obligated
amount for calls and orders performed in Afghanistan. FPDS-NG includes
unclassified contracts that are estimated to be $3,000 or more and any
modifications to these contracts regardless of dollar value. Further,
the number of contracts and task orders does not necessarily equal the
number of vendors as some vendors may have more than one contract or
task order. Totals may not add due to rounding.
[End of table]
Additionally, USFOR-A and CENTCOM officials told us it is possible
that the same contractor may have multiple contracts with them that
taken individually fall below the $100,000 mark but when viewed
collectively could meet or exceed the $100,000 threshold.
According to DOD contracting officials and supervisors of the vetting
cell, the contract terms do not specifically exclude vendors below the
dollar threshold from what the cell can vet. Further, CENTCOM
Contracting Command officials stated that if a contracting officer or
his or her representative knows of a specific prospective vendor
holding or competing for numerous contracts below the threshold,
officials are free to recommend that the vendor be vetted. Officials
also stated that they are currently considering the vetting of non-
information technology vendors that fall below the dollar threshold.
However, there is no policy or guidance for this; any such vetting
would be conducted on an ad hoc basis. And while CENTCOM Contracting
Command officials have stated that vetting additional prospective
vendors would more fully address potential risks, they have expressed
concern that available vetting cell capacity may not be able to
accommodate a large increase should vendors below the threshold be
included.
Vetting Cell Does Not Routinely Vet Subcontractors:
Currently, CENTCOM Contracting Command does not routinely vet
subcontractor vendors--even when the value of a subcontractor's work
exceeds the $100,000 threshold. Officials from multiple DOD
contracting entities with whom we spoke said that subcontractors
conduct much of the work in Afghanistan, with some contracts having
multiple tiers of subcontractors. For example, USACE contracting
officials stated that prime vendors that are awarded large
construction contracts often use multiple subcontractor tiers in
Afghanistan, and officials recognize that given the high dollar value
of their contracts, a significant risk is introduced at the
subcontractor level. In addition, officials from USFOR-A stated that
the Host Nation Trucking contract--the contract by which most of the
goods needed to support U.S. warfighters are transported throughout
Afghanistan--utilizes multiple tiers of trucking and security
subcontractors. In September 2010, ISAF/USFOR-A released additional
COIN contracting guidance that directs officials to gain more
visibility over the networks of subcontractors in Afghanistan. The
guidance further states that officials are to contract with vendors
that have fewer subcontractors since excessive subcontracting can
provide opportunities for criminal networks and insurgents to divert
contract money from its intended purpose[Footnote 26].:
USACE contracting officials stated that they plan to submit major
subcontractors through CENTCOM Contracting Command's vendor vetting
process, though officials did not know when this would occur or what
number of subcontractors the vetting cell would be able to support. As
with the dollar threshold, CENTCOM officials stated that while the
vendor vetting cell contract does not specifically preclude officials
from submitting subcontractors to be vetted, the cell was not
designed, in terms of its number of staff, to vet subcontractors.
However, contracting officials who administer the vetting cell
contract, as well as vetting cell officials who conduct the work,
stated that the contract was created with the flexibility to enable a
reallocation of staff between the Iraq and Afghanistan cells if
CENTCOM Contracting Command wanted to vet vendors below the $100,000
threshold and to vet subcontractors. Contracting officials have also
indicated that the lack of visibility over subcontractors impairs
their ability to provide subcontractor names to the vendor vetting
cell. In August 2010, in order to gain more visibility over
subcontractors, CENTCOM Contracting Command issued Policy Memorandum
No. 10-09, which directs that effective August 31, 2010, contracting
officers must make a subcontractor responsibility determination in
writing, when the prime contractor identifies that it intends to
subcontract a portion of the contract, regardless of a contract's
dollar value.[Footnote 27]
Vetting Cell's Requirements and Resources Not Clearly Defined:
When CENTCOM Contracting Command established the vendor vetting cell
for Afghanistan, it did so without clearly defining the command's
requirements. According to CENTCOM Contracting Command officials, the
requirements in the contract that established, staffed, and resourced
the Afghanistan vetting cell were defined with the intention of
determining a non-U.S. vendor's eligibility to be awarded a contract
in Afghanistan prior to award. However, according to command
officials, the vetting cell has been focused on vetting vendors that
have already been awarded contracts. According to CENTCOM Contracting
Command officials, they began vetting vendors who had already received
contracts in order to address immediate corruption and illicit funding
concerns.[Footnote 28] As of March 12, 2011, CENTCOM Contracting
Command officials stated that a total of 248 vendors, most of which
are on existing contracts, had been vetted, 19 of which had been
rejected. Additionally, officials added that the most recent output
average is 15 vendors vetted per week and that contracts valued at
$100,000 were awarded to 1,042 Afghan vendors in fiscal year 2010. At
the current average of 15 vets per week it would take another 53
weeks, or until late March 2012, just to complete the vetting of host-
nation vendors with contracts of $100,000 or more awarded in fiscal
year 2010. Furthermore, the number of vendors awarded contracts prior
to vetting continues to grow as contracts continue to be awarded in
Afghanistan by CENTCOM Contracting Command during fiscal year 2011.
As of April 2011 CENTCOM Contracting Command has not determined how
many of the remaining non-U.S. vendors that have already been awarded
contracts valued above $100,000 will be vetted in the future, a
timeline for when it will begin vetting vendors prior to award, or an
estimate number of anticipated prospective vendors that will be vetted
for the remainder of the fiscal year. As we have previously reported,
without a sufficient understanding of projected needs, it is difficult
to define accurate requirements, which can result in diminished
operational capability.[Footnote 29] Further, leading federal
management practices for improving performance state that when
planning activities, defined goals, such as desired output, must be
linked with resources in order to effectively and efficiently achieve
results.[Footnote 30] Since the backlog of vendors not vetted
continues to grow, it is uncertain how the current vetting process and
existing resources will bear the addition of other existing non-U.S.
vendors, prospective CENTCOM Contracting Command vendors, and vendors
from other contracting commands, such as the January 2011 addition of
some USACE contracts.
CENTCOM Contracting Command Considers Other Factors in Prioritizing
Vetting Needs but Has Not Formalized or Documented a Risk-Based
Approach:
CENTCOM Contracting Command and other contracting officials stated
that it would be beneficial to include certain contracts below
$100,000 and large subcontractors in its vetting process. We have
previously reported that a risk-based approach can help DOD and other
executive agencies strategically allocate resources to achieve desired
outcomes, including those for contract oversight, and DOD has also
recognized the usefulness of such an approach to effectively use
existing resources in its acquisitions.[Footnote 31] For example, we
reported that dollar value alone may not be a good proxy for risk for
every type of contract and that other factors could also be used to
identify potential risk, such as the characteristics of the activity
being performed, the location, or the type of contract.[Footnote 32]
CENTCOM Contracting Command officials stated in February 2011 that
because of their concerns regarding the vetting cell's capacity, as
well as their desire to use the vetting cell resources efficiently and
immediately, they prioritized the first tranche of vendors vetted
based on a variety of factors in addition to the dollar threshold and
vendor type given in the Acquisition Instruction. Specifically,
officials stated that the first set of vendors vetted were drawn from
contracts performed in Kandahar province, which is generally accepted
as a Taliban stronghold; high-value and high-risk contracts, such as
private security contracts; complex contracts, such as the Host Nation
Trucking contract; and some high-value construction projects in
certain high-threat regions.
DOD's use and consideration of additional risk factors to the criteria
articulated in the Acquisition Instruction have not been formalized
and documented, however. According to CENTCOM officials, they used an
ad hoc approach for including other risk factors to help prioritize
which vendors to vet once the cell was initially under way; however,
officials could not explain to what extent this risk-based approach
would continue to be used in the future, or to include vendors that
fall outside of the Acquisition Instruction vetting criteria. CENTCOM
Contracting Command officials indicated in February 2011 that they are
working to formalize this approach, for example, in a set of standard
operating procedures or white paper; however, these documents have not
yet been completed, and officials could not provide any further
information. Utilizing a risk-based approach to identify high-risk
vendors below the $100,000 threshold, as well as subcontractors, could
enable CENTCOM Contracting Command to expand its ability to prevent
contracts from going to criminal or insurgent groups within existing
resource constraints, particularly as CENTCOM Contracting Command
balances vetting existing contracts, those prior to award, and vendors
from other commands. For instance, while officials have stated that
the USACE's subcontractors pose a large risk because the high value of
their construction contracts, they stated that some of the larger
subcontractors are prime vendors for other projects, and many of the
USACE subcontractors are also used by CENTCOM Contracting Command,
either as prime contractors or subcontractors. USACE officials also
stated that as of February 2011, their hope is that their large
subcontractors that are not vetted through their roles as prime
contractors will be submitted to the CENTCOM vetting cell soon, and
that USACE aims to decrease the data entry burden on CENTCOM
Contracting Command by beginning to use its own personnel to enter
information into the Joint Contingency Contracting System. However, as
of February 2011, CENTCOM Contracting Command and USACE officials
could not specify when USACE will begin submitting subcontractors for
vetting because of CENTCOM Contracting Command's questions regarding
the vetting cell's capacity, and to date CENTCOM has no plans to begin
routinely vetting its subcontractors.
USAID Has Begun to Develop a Vendor Vetting Process, but State Has Not:
USAID Has Recently Established a Unit to Vet Non-U.S. Implementing
Partners in Afghanistan, Though Details of the Process Have Not Been
Finalized:
In January 2011, in order to counter potential risks of U.S. funds
being diverted to support criminal or insurgent activity, USAID
created a process for vetting prospective non-U.S. contract and
assistance recipients (i.e., implementing partners) in Afghanistan,
which is similar to a vetting process it has used in the West Bank and
Gaza since 2006.[Footnote 33] Previously, as of October 2010, USAID
officials indicated that they expected to use the CENTCOM Contracting
Command vetting cell to vet potential non-U.S. implementing partners--
whether through a formal interagency agreement, shared system or
platform, or some other information-sharing arrangement. At the time,
officials expressed that they wanted to have one consistent U.S.
government approach for vetting non-U.S. vendors in Afghanistan to
ensure that no USAID implementing partners engage in or support
criminal or insurgent groups with contract or other assistance funds.
As illustrated in table 2, in fiscal year 2010 USAID reported 114 new
contracts and other awards to U.S. partners valued at over $285
million, and 126 to non-U.S. partners valued at almost $46 million.
While the number of dollars USAID reported as obligated to non-U.S.
partners is substantially lower than that to U.S. partners, the
numbers of awards given is higher. In addition, as with DOD, USAID
officials said the use of subcontractors/subawardees is extensive, and
the use of host-nation partners is expected to increase.
Table 2: USAID Fiscal Year 2010 New Awards in Afghanistan:
U.S. vendors;
Number of awards: 114;
Percentage of awards: 47.5%;
Dollars obligated: $285,509,259;
Percentage of dollars obligated: 86%.
Non-U.S. vendors;
Number of awards: 126;
Percentage of awards: 52.5%;
Dollars obligated: $45,984,061;
Percentage of dollars obligated: 14%.
Total;
Number of awards: 240;
Percentage of awards: 100.0%;
Dollars obligated: $331,493,320;
Percentage of dollars obligated: 100%.
Source: GAO analysis of USAID data.
Note: Number of awards given to a type of partner does not indicate
the number of individual partners used.
[End of table]
According to USAID officials, the agency had long been interested in
vetting its non-U.S. implementing partners in Afghanistan and, with
the establishment of the CENTCOM vetting cell, USAID had been working
with CENTCOM's Senior Contracting Official in Afghanistan to do so.
However, in late 2010 several factors emerged that led USAID to
immediately begin exploring whether the CENTCOM Contracting Command
vetting cell best met its needs or, alternatively, the agency needed
to establish its own vetting process. For example, USAID officials
said that in October 2010 they received a report by the Afghan Threat
Finance Cell that found that a certain percentage of USAID dollars
were being diverted in certain Afghan provinces and in some cases
funneled to insurgent groups. Additionally, in determining if
CENTCOM's vetting cell could meet its needs, officials stated that
they sent a test vetting through the cell and that it took nearly 3
months for the vetting cell to provide results. Once USAID began
looking into the possibility of setting up a vetting unit, officials
said they assessed that the agency had existing capabilities from its
vetting process used in the West Bank and Gaza with which to implement
a process similar to CENTCOM's without having to establish a
duplicative system. According to USAID officials, given the urgent
need to mitigate the issues reported by the Afghan Threat Finance
Cell, the timelines experienced with the CENTCOM vetting cell, and the
availability of existing vetting resources within USAID, the agency,
in consultation with the Coordinating Director for Development and
Economic Affairs for the U.S. Embassy in Kabul, decided that a Kabul-
based USAID vetting support unit separate from CENTCOM's process would
most immediately and effectively meet the agency's needs.
USAID officials stated that in preparation for standing up the vetting
support unit, the agency sent representatives from its Office of
Security to observe the CENTCOM vendor vetting cell's process.
According to USAID officials, after observing the CENTCOM process they
concluded that USAID had the existing resources and ability to
similarly vet its implementing partners within timelines that met the
agency's needs. In January 2011, USAID issued a cable outlining the
initial structure of its newly created vetting support unit in
Afghanistan, and as of March 2011 USAID officials were in the process
of drafting standard operating procedures. According to USAID
officials and the January 2011 cable, the purpose of the vetting
support unit is to help ensure that U.S. government funds do not
support malign actors, such as insurgents, corrupt power brokers, and
criminal patronage networks. The unit is to comprise an intelligence
analyst and two or more permanent support staff stationed in Kabul,
who would reach back to existing vetting analysts in USAID's Office of
Security in Washington, D.C., who would conduct the vetting. As with
the CENTCOM process, the actual vetting would take place in the United
States, while information identifying the prospective non-U.S.
partners would be forwarded from the support unit in Afghanistan to
USAID's vetting database.[Footnote 34] If USAID analysts find
derogatory information, the final decision about whether to use the
partner would reside with USAID officials in Afghanistan. Although the
vetting unit is currently situated within the Office of Acquisition
and Assistance in Kabul, USAID officials stated that the
responsibilities of the unit are more closely aligned with security-
related functions rather than the formal acquisition process, and that
many details of the unit are still being determined. As of February
2011, USAID officials stated that the vetting support unit is
currently staffed with temporary personnel, and they expect the
process of hiring permanent staff to be complete in 3 to 6 months.
The USAID vetting process, as it is described by officials and in
preliminary documentation, may have limitations that are similar to
those of CENTCOM. For example, USAID's January 2011 cable indicates
that there is a $150,000 award threshold for selecting potential
implementing partners to vet, and USAID is still finalizing the extent
to which it will vet subcontractors/subawardees. In addition,
according to USAID officials, as a first step while the unit hires
permanent staff, it will focus first on host-nation partners when it
plans to begin vetting in April 2011. However, USAID officials
indicated that the agency's vendor vetting process was still in the
early stages, and it is expected to be an iterative implementation
process--aspects of which could change, such as the vetting threshold
and expanding vetting to other non-U.S. partners. Officials stated
that ultimately, the formalized vetting criteria will likely
incorporate the assessment of other risk factors, such as which
province the activity is located in and local knowledge of USAID
officials; however, these criteria have not yet been included in
preliminary documents. In addition, in March 2011 officials noted that
the vetting support unit will vet at least first-tier potential
subcontractors/subawardees that have been identified as apparent
recipients of awards with a value of $150,000 or more, and will likely
go beyond first-tier subcontractors/subawardees for certain awards,
though this has also not been finalized. Further, officials pointed to
their experience developing and implementing USAID's vetting efforts
in the West Bank and Gaza--which has included trying different
monetary thresholds, as well as vetting contract recipients whose
cumulative awards reach the threshold in order to capture frequently
used partners--and indicated that they expect to include such
considerations as they continue to develop the vetting process. As
previously discussed, we have frequently reported the value of using a
risk-based approach to effectively achieve desired results.[Footnote
35] Incorporating such an approach into determining what implementing
partners to vet--as USAID officials have indicated will occur but has
not yet been documented--would increase USAID's ability to address the
greatest risk with existing resources.
State Has Not Created a Vendor Vetting Process for Afghanistan:
As of March 2011, State was not vetting vendors in
Afghanistan.[Footnote 36] State officials told us that currently many
of their contracts are awarded to U.S. prime contractors, and they
award relatively few contracts to non-U.S. vendors. However, table 3
shows that based on our analysis, State does work with many non-U.S.
vendors in Afghanistan, but embassy officials in Kabul told us that
they do not do any vetting or background checks on the vendors other
than for the security risks posed by individual personnel with
physical access to the embassy property or personnel. See table 3 for
a comparison between quantities of awards to U.S. vendors and those to
non-U.S. vendors.
Table 3: State's Fiscal Year 2010 New Awards in Afghanistan:
U.S. vendors;
Number of awards: 124;
Percentage of awards: 15.6%;
Dollars obligated: $721,726,425;
Percentage of dollars obligated: 93.1%.
Non-U.S. vendors;
Number of awards: 673;
Percentage of awards: 84.4%;
Dollars obligated: $53,226,821;
Percentage of dollars obligated: 6.9%.
Total;
Number of awards: 797;
Percentage of awards: 100.0%;
Dollars obligated: $774,953,246;
Percentage of dollars obligated: 100.0%.
Source: GAO analysis of Federal Procurement Database System-Next
Generation data, April 2011.
Notes: This table includes data on non-U.S. contractors that were
identified in the system as contractors where vendor country was not
the United States or where contractor name was "miscellaneous foreign
contractor." The number of awards does not necessarily equal the
number of vendors as a vendor could have more than one award.
[End of table]
Further, State has endorsed the Afghan First policy, which will likely
result in increased contracting with Afghan vendors in the future,
which will in turn increase the potential for funds to be diverted to
terrorist or insurgent groups.[Footnote 37] Given this potential
increase in local contracting, and without a way to consider--after
specific vendors are known to be candidates--the risk posed by funding
non-U.S. vendors to perform particular activities in Afghanistan, the
department may increasingly expose itself to contracting with malign
actors.
While State does not have a vendor vetting program, in 2008 State
issued a cable that applies to both State and USAID, requiring
personnel to complete a terrorist financing risk assessment for any
new program or activity prior to requesting or obligating program
funds. Periodic updates to the risk assessment are also completed for
ongoing programs and activities, though these do not examine vendors
against the same information as the CENTCOM or USAID vetting cells.
The risk assessment is intended to ensure that projects and activities
are not providing benefits, even inadvertently, to terrorists or their
supporters, including people or organizations that are not
specifically designated by the U.S. government as such but that may,
nevertheless, be linked to terrorist activities. This risk assessment
weighs the likelihood that a program or activity will inadvertently be
funding or benefiting terrorists against the consequences of that
occurring--a risk that varies greatly depending on the type and
location of the program or activity. USAID and DOD's vendor vetting
processes are intended to be conducted once a potential vendor for a
specific contract or activity is known in order to determine whether
awarding to a particular entity will increase the likelihood of U.S.
funds being diverted to insurgent or other criminal actors, and
additionally use law enforcement and intelligence information.
[Footnote 38]
DOD, USAID, and State Have Not Developed a Formal Method of Sharing
Vendor Vetting Information in Afghanistan:
Although DOD, USAID, and State likely utilize many of the same vendors
in Afghanistan, the agencies have not developed a formalized process
to share vendor vetting information. Currently, DOD and USAID
officials in Afghanistan have established informal communication such
as biweekly meetings, ongoing correspondence, and mutual participation
in working groups. Further, DOD and USAID officials said that their
vetting efforts are integrally related and are complementary to the
work of the various interagency task forces, such as Task Force 2010
and the Afghan Threat Finance Cell, and that their mutual
participation in these task forces contributes to interagency
information sharing in general and vetting results in particular.
However, a formal arrangement for sharing information such as would be
included in a standard operating procedure or memorandum of agreement
between DOD and USAID has not been developed. In addition, though the
U.S. Embassy also participates in various interagency task forces,
such as Task Force 2010, there is no ongoing information sharing of
vendor vetting results, either ad hoc or formal. According to CENTCOM
Contracting Command officials, the command is in the process of
developing a standard operating procedure for sharing the vendor
vetting results specifically with USAID, but this document has not yet
been completed.
Standards for internal control for the federal government highlight
the importance of establishing and documenting communication and
information-sharing capabilities to enable agencies to achieve their
goals.[Footnote 39] In addition, prior GAO work has highlighted the
importance of interagency information sharing and collaboration to
achieve common outcomes.[Footnote 40] USAID and CENTCOM Contracting
Command officials stated that interagency information sharing is
active and effective; that ISAF, USFOR-A, and USAID are in constant
communication in order to establish a common picture of ongoing
vetting efforts and results; and that officials have emphasized their
strong working relationships. Further, according to USAID officials,
sharing vendor vetting results would greatly assist the agency's
efforts to ensure that it is not conducting business with known malign
actors in Afghanistan. However, in a workforce environment
characterized by frequent personnel rotations, maintaining continuity
of processes and procedures can be a challenge. Without documented,
formalized procedures, DOD and USAID cannot ensure that their current
information-sharing practices will endure. Further, sharing
information on vetting results 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.
Conclusions:
In Afghanistan, the use of local vendors by U.S. government agencies
such as DOD, USAID, and State is a key component of the COIN strategy.
But awards to local vendors in Afghanistan pose particular challenges
because of the potential for fraud, corruption, or the siphoning of
funds to organizations hostile to U.S. forces. These concerns
highlight the importance of establishing processes for mitigating the
risk that malign actors could profit from U.S. government contracts.
Both CENTCOM Contracting Command and USAID have established processes
to vet non-U.S. vendors in Afghanistan, but these processes are time-
and resource-intensive. Given these restraints, it is not feasible to
vet every non-U.S. vendor that contracts with the U.S. government in
Afghanistan, and it is important that vendors are selected for vetting
based on a variety of factors, including the risk level for the
service being provided and the risk estimate based on the geographic
area in which the service is to be performed. Understanding the
capacity and resources available to CENTCOM Contracting Command is
also essential to devising an appropriate risk-based approach to
effectively use the vendor vetting cell to achieve its goals with
existing resources in the short term and evaluating what resources
will be needed to accommodate any further increase in the workload in
the future. Further, as USAID begins to finalize its vetting process,
the consideration of a risk-based approach may help the agency to
address limitations similar to those of the CENTCOM process. While
State has not yet developed a specific vendor vetting process, given
the number of non-U.S. vendors it currently uses, and as it goes
forward with implementing Afghan First, the need to vet these vendors
may become more acute in order to mitigate the risk of contracting
with these vendors. Given the multiagency operational environment in
Afghanistan, it is imperative that U.S. efforts be coordinated and
that information about malign actors be shared among all contracting
parties. This information sharing may be particularly important for
State because it does not currently vet its non-U.S. vendors.
Otherwise, agencies may unknowingly contract with vendors that have
been deemed a risk by other agencies.
Recommendations for Executive Action:
To safeguard U.S. personnel against security risks and help ensure
that resources are not used to support insurgent or criminal groups,
we recommend that the Commander of U.S. Central Command direct CENTCOM
Contracting Command to:
* consider formalizing a risk-based approach to enable the department
to identify and vet the highest-risk vendors--including those vendors
with contracts below the $100,000 threshold--as well as subcontractors
and:
* work with the vendor vetting cell to clearly identify the resources
and personnel needed to meet the demand for vendor vetting in
Afghanistan using a risk-based approach.
To help ensure that resources are not used to support terrorist or
criminal groups, we recommend that the Director of the Office of
Security and the USAID Mission Director, Kabul, Afghanistan, consider
formalizing a risk-based approach that would enable USAID to identify
and vet the highest-risk vendors and partners, including those with
contracts below the $150,000 threshold.
To help ensure that State resources are not diverted to insurgent or
criminal groups, we recommend that the Secretary of State direct the
appropriate bureau(s) to assess the need and develop possible options
to vet non-U.S. vendors, which could include leveraging existing
vendor vetting processes, such as USAID's, or developing a unique
process.
To promote interagency collaboration so as to better ensure that
vendors potentially posing a risk to U.S. forces are vetted, we also
recommend that the Commander of U.S. Central Command; USAID Mission
Director, Kabul, Afghanistan; and the Coordinating Director for
Development and Economic Affairs, U.S. Embassy, Kabul, Afghanistan,
consider developing formalized procedures, such as an interagency
agreement or memorandum of agreement, to ensure the continuity of
communication of vetting results and to support intelligence
information, so that other contracting activities may be informed by
those results.
Agency Comments and Our Evaluation:
We provided a draft of this report to DOD, USAID, and State. We
received written comments from all three, which we have reprinted in
appendixes II, III, and IV, respectively. DOD concurred with our
recommendations. In response to our second recommendation to CENTCOM
to work with the vendor vetting cell to identify the resources and
personnel needed to meet the demand for vendor vetting in Afghanistan,
DOD provided additional clarification about the limitations that
currently exist on its resources, including limitations on expanding
its joint manning document and the current mandate to reduce staff at
CENTCOM. USAID concurred with our recommendations, and in its response
also noted that the GAO team's field work and draft report contributes
positively to USAID/Afghanistan's efforts to implement a system to
help ensure that resources are not used to support terrorist or
criminal groups.
State partially concurred with our recommendation that the Secretary
direct the appropriate bureaus to assess the need and develop possible
options to vet non-U.S. vendors. State noted in its written comments
that it recognizes the risk of U.S. funds under State's management
being diverted for the benefit of terrorists or their supporters, and
has devoted a good deal of time to defining the issue and seeking
appropriate processes to mitigate the risk of this occurring. However,
State noted that significant legal concerns relating to contracting
law, competition requirements, and the conflict between open
competition and the use of classified databases to vet contractors and
grantees have required analysis and discussion. We recognize these
concerns and encourage State to continue to address the various issues
if they develop and implement a vetting process. Additionally, State
said that the Department of State, Foreign Operations, and Related
Programs Appropriations Act for Fiscal Year 2010 (which is Division F
of the Consolidated Appropriations Act, 2010, Pub. L. No. 111-117)
prohibited the use of State funds to implement a partner vetting
program but authorized creation of a pilot program for contractor
vetting to apply to both State and USAID programs and activities.
State noted that the department has assigned responsibility for
developing such a pilot vetting program and has begun work on the
pilot's design. We appreciate State's efforts to begin the pilot
program and the need for State and USAID to act consistently with the
funding restriction described above in all their vetting efforts.
However, as we previously noted, State and USAID officials both
indicated that the pilot program would not apply to Afghanistan.
Additionally, based on its written comments, State is beginning to
address our recommendation as it noted that Afghanistan is under
active review for inclusion in a vetting effort that would apply
specifically to that country.
State did not comment on our recommendation that DOD, USAID, and State
consider developing formalized procedures to ensure the continuity of
communication of vetting results and to support intelligence
information, so that other contracting activities may be informed by
those results.
We are sending copies of this report to the appropriate congressional
committees and the Secretaries of Defense and State and the
Administrator of the United States Agency for International
Development. This report also is available at no charge on the GAO Web
site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-8365 or solisw@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions
to this report are listed in appendix V.
Signed by:
William M. Solis, Director:
Defense Capabilities and Management:
List of Addressees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Claire McCaskill:
Chairman:
Ad Hoc Subcommittee on Contracting Oversight:
Committee on Homeland Security and Government Affairs:
United States Senate:
The Honorable Howard P. "Buck" McKeon:
Chairman:
The Honorable Adam Smith:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable John Tierney:
Ranking Member:
Subcommittee on National Security, Homeland Defense and Foreign
Operations:
Committee on Oversight and Government Reform:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
Under the authority of the Comptroller General of the United States,
we initiated a review to identify what efforts, if any, are under way
to ensure that U.S. contracting funds or resources are not diverted to
support corruption or insurgent organizations. Specifically, we
examined (1) the extent to which the Department of Defense (DOD) has
established a process to vet non-U.S. vendors in Afghanistan, both to
ensure that resources are not used to support insurgent or criminal
groups and to safeguard U.S. personnel and assets against security
risks; (2) the extent to which the Department of State (State) and the
United States Agency for International Development (USAID) have
established processes to vet non-U.S. vendors and other assistance
recipients in Afghanistan; and (3) the extent to which vetting
information is shared among DOD, State, and USAID.[Footnote 41]
As the use of host nation and regional contractors is expected to
increase through the use of various agreements, such as Afghan First,
in which the United States and NATO have demonstrated a commitment to
obtain products and services locally, we focused our review on non-
U.S. contractors and nongovernmental organizations, as well as based
on congressional interest. Further, legal protections, policy
considerations, and business practices in the United States could
constrain the U.S. Government from investigating U.S. citizens, so
vetting of U.S. contractors would be more constrained.
To identify and examine the efforts DOD has taken to vet non-U.S
vendors in Afghanistan and the extent to which State and USAID have
established processes to vet non-U.S. vendors in Afghanistan and to
share this vetting information, we reviewed recent DOD, State, and
USAID policies and procedures, including fragmentary orders; the
recently updated November 2010 U.S. Central Command (CENTCOM)
Contracting Command's Acquisition Instruction as well as a previous
version USAID's Mission Order for Afghanistan 201.03; and an April
2010 memorandum of understanding between DOD, State, and USAID
relating to contracting in Iraq and Afghanistan. Additionally, we
reviewed the DOD contract that establishes a vendor vetting cell in
support of U.S. forces in Afghanistan and Iraq at CENTCOM headquarters
in Tampa, Florida, and the contract's associated classified policies
and procedures, as well as draft standard operating procedures for
USAID's vetting support unit in Afghanistan. We do not discuss the
mechanics of the vetting processes used by DOD and USAID in detail
because we did not evaluate the effectiveness of the methods used by
the agencies to conduct the vetting. We also reviewed a 2008 State
cable that applies to both USAID and State regarding risk assessments
to mitigate the threat of financing terrorism. In addition, we
reviewed prior GAO and other audit agency work that was related to
contract management and oversight in Afghanistan, as well as vetting.
We interviewed cognizant DOD, State, and USAID officials in both
Afghanistan and the United States, including DOD policy, logistics,
and acquisition officials from the offices of the relevant Under
Secretaries of Defense in Washington, D.C.; CENTCOM officials in the
planning, logistics, and intelligence directorates, as well as
representatives of the vendor vetting cell in Tampa, Florida; and
USAID and State officials in Washington, D.C., responsible for
contracting, procurement, and security. We do not discuss the
mechanics of the vetting processes used by DOD and USAID in detail
because we did not evaluate the effectiveness of the methods used by
the agencies to conduct the vetting. In Afghanistan, we interviewed a
variety of DOD, United States Forces - Afghanistan (USFOR-A), and
CENTCOM Contracting Command officials in Kabul, including the CENTCOM
Senior Contracting Official there, and the commanders of Task Force
2010, Task Force Spotlight, and other groups.[Footnote 42]
Additionally, we put out data calls to USAID and the Department of
State for their procurement for fiscal year 2010 in Afghanistan. We
present procurement data for fiscal year 2010 in Afghanistan, based on
data calls to USAID and the Department of State, and our own data
pulls to give a broad context for the scale of awards to U.S. compared
to non-U.S. and the amount obligated and determined the method used to
gather this data to be sufficiently reliable for this purpose. We also
interviewed cognizant U.S. Embassy security and contracting officials
and USAID security and contracting officials, all in Kabul.
Additionally, we interviewed officials from USFOR-A regional
contracting centers in Kabul, Camp Leatherneck, and Kandahar; U.S.
Army Corps of Engineers (USACE) officials in Kandahar, as well as
USACE officials in other locations via teleconference; and
International Security Assistance Force contracting and security
officials in Kabul and Kandahar. We also held teleconferences with
contracting officials at Bagram Air Force Base and in Qatar.
We retrieved contract data from the Federal Procurement Data System-
Next Generation to present information about the amount of obligations
for USACE and both the obligations and the number of awards above and
below $100,000 for CENTCOM Contracting Command in fiscal year 2010 in
Afghanistan. Additionally, we put out data calls to USAID and State
for their procurement data for fiscal year 2010 in Afghanistan. We
presented these data in our report to give a broad context for the
scale of awards to U.S. vendors compared to those to non-U.S. vendors
and the amounts obligated, and we determined the method used to gather
these data to be sufficiently reliable to present the information in
this context.
We conducted this performance audit from May 2010 through June 2011 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.
We visited or contacted the following organizations during our review:
The Department of Defense:
* Office of the Under Secretary of Defense for Acquisition, Technology
and Logistics, Washington, D.C.
* Office of the Under Secretary for Defense for Intelligence,
Arlington, Virginia:
* Office of the Under Secretary of Defense for Personnel and
Readiness, Arlington, Virginia:
* Business Transformation Agency, Arlington, Virginia:
* Pakistan-Afghanistan Coordination Cell, Arlington, Virginia:
* U.S. Central Command, Tampa, Florida:
* U.S. Transportation Command, Scott Air Force Base, Illinois:
* United States Forces - Afghanistan, Kabul, Afghanistan:
* Defense Contract Management Agency, Kabul, Afghanistan:
* U.S. Central Command Contracting Command, Qatar:
* Senior Contracting Official, Afghanistan, Kabul, Afghanistan:
* Regional contracting commands in Kabul, Leatherneck, Kandahar, and
Bagram, Afghanistan:
Interagency, international, and joint organizations:
* NATO Maintenance and Supply Agency, Kandahar, Afghanistan:
* Combined Joint Interagency Task Force Shafafiyat, Kabul, Afghanistan:
* International Security Assistance Force CJ4, Kabul, Afghanistan:
* Task Force 2010, Task Force Spotlight, and Task Force for Business
and Stability Operations, Kabul, Afghanistan:
Department of the Army:
* U.S. Army Corps of Engineers, Washington, D.C., and Afghanistan:
* Army Materiel Command, Fort Belvoir, Virginia:
* Rock Island Contracting Center, Rock Island, Illinois:
Department of State:
* Bureau of Diplomatic Security, Arlington, Virginia:
* Office of Acquisitions Management, Arlington, Virginia:
* U.S. Embassy Kabul, Kabul, Afghanistan:
United States Agency for International Development:
* Office of Security, Washington, D.C.
* Office of Afghanistan and Pakistan Affairs, Washington, D.C.
* USAID/Afghanistan, Kabul, Afghanistan:
* Office of Safety and Security, Kabul, Afghanistan:
* Office of Acquisition and Assistance, Kabul, Afghanistan:
Nongovernmental organization:
* Peace Dividend Trust:
[End of section]
Appendix II: Comments from the Department of Defense:
Office Of The Assistant Secretary Of Defense:
Logistics And Materiel Readiness:
3500 Defense Pentagon:
Washington, DC 20301-3500:
May 20, 2011:
Mr. William M. Solis:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street N.W.
Washington, DC 20548:
Dear Mr. Solis:
This is the Department of Defense response to the GAO Draft Report,
GA0-11-355, "Afghanistan: U.S. Efforts to Vet Non-U.S. Vendors Need
Improvement," dated April 25, 2011 (GAO code 351489). Detailed
comments on the report recommendations are enclosed.
The Department appreciates the opportunity to respond to your draft
report and look forward to working with you as we continue to ensure a
strong and viable vetting process in Afghanistan. Should you have any
questions, please contact Mr. Kevin Doxey, Kevin.doxev@osd.mil, 703-
697-1368.
Sincerely,
Signed by:
[Illegible], for:
Alan F. Estevez:
Principal Deputy:
[End of letter]
GAO Draft Report Dated April 25, 2011: GAO-11-355 (GAO Code 351489):
"Afghanistan: U.S. Efforts To Vet Non-U.S. Vendors Need Improvement"
Department Of Defense Comments To The GAO Recommendations:
Recommendation 1: The GAO recommends that the Commander of the U.S.
Central Command direct the U.S. Central Command (CENTCOM) Contracting
Command to consider formalizing a risk-based approach to enable the
department to identify and vet the highest risk vendors--including
those vendors with contracts below the $100,000 threshold”-as well as
subcontractors. (See page 28/GAO Draft Report.)
DoD Response:
Concur. The Department agrees that a formalized risk-based approach is
necessary to focus on contractors, by region, work type, and frequency
of awards across all monetary thresholds. The Department's approach
will parallel the Defense Intelligence Agency's (DIA) previously
established Supply Chain Risk Management (SCRM) Threat Analysis Center
(TAC) designed to identify maligned actor threats and employ
analytical methodologies to evaluate information. Adoption of this
risk-based approach would require CENTCOM to revise their procedures
for submission of a vendor-vetting cell and review SCRM TAC guidance.
At present, the International Security Assistance Force (ISAF) is
developing a FRAGO that will include provisions for vetting
international and coalition partners in Afghanistan.
Recommendation 2: The GAO recommends that the Commander of the U.S.
Central Command direct the Joint Theater Support Contracting Command
(JTSCC) to work with the vendor vetting cell to clearly identify the
resources and personnel needed to meet the demand for vendor vetting
in Afghanistan using a risk-based approach. (See page 28/GAO Draft
Report.)
DoD Response: Concur. The Department agrees that CENTCOM J2X, JTSCC,
and IJC require more efficiency with identifying the necessary
resources and personnel to perform vetting responsibilities. The
Department however is constricted by limited appropriations for
additional personnel and the manning constraints of the Joint Manning
document. While the Department will encourage CENTCOM to develop
better resourcing requirements, more must be done to reduce the
limitations that could result in resource gridlock.
Recommendation 3: To promote interagency collaboration so as to better
ensure that vendors potentially posing a risk to U.S. forces are
vetted, the GAO also recommends the Commander of U.S. Central Command,
USAID Mission Director, Kabul, Afghanistan, and the Coordinating
Director for Development and Economic Affairs, U.S. Embassy, Kabul,
Afghanistan, consider developing formalized procedures, such as an
interagency agreement or memorandum of agreement, to ensure the
continuity of communication of vetting results and supporting
intelligence information, so that other contracting activities may be
informed by those results. (See page 28 through 29/GAO Draft Report)
DoD Response: Concur. The Department acknowledges that USAID and
CENTCOM have an informal process of sharing information about vendors
in Afghanistan. However, due to high personnel turnover, the process
has become ineffective. The Department recognizes the need for a
formalized Memorandum of Agreement that clearly defines the goals of
the collaboration, and the roles and limitations of each interagency
regardless of personnel turnover. The Department also recognizes that
such an agreement would allow for the exchange of critical information
and prevent duplication of effort. At present, USAID and the Joint
Contingency Contracting System (JCCS) are working on an MOU, based on
USFOR-A's FRAGO for vetting, that will formalize the sharing of
results between the USAID and C3.
[End of section]
Appendix III: Comments from the United States Agency for International
Development:
USAID:
From The American People:
Mr. William Solis, Director:
Defense Capabilities and Management:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Solis:
I am pleased to provide the U.S. Agency for International
Development's formal response to the GAO draft report entitled
"Afghanistan: U.S. Efforts to Vet Non-U.S. Vendors Need Improvement"
(GAO-11-355). Our comments are limited to those sections of the report
concerning USAID's assistance and operations.
The GAO team's field work and draft report contributes positively to
USAID/Afghanistan's efforts to implement a system to help ensure that
resources are not used to support terrorist or criminal groups.
Thank you for the opportunity to respond to the GAO draft report and
for the courtesies extended by your staff in the conduct of this audit
review.
Sincerely,
Sean Carroll /s/:
Chief Operating Officer:
U.S. Agency for International Development:
Enclosure: a/s.
[End of letter]
USAID Comments On GAO Draft Report No. GAO-11-355:
General comments: USAID agrees with the GAO findings and
recommendations in the draft audit report. The report captures many of
the key points about the current status of implementation and areas
for improvement in USAID/Afghanistan's vetting process. USAID has
already initiated corrective measures to ensure conformity with the
GAO recommendations and adherence to various statutes, regulations and
executive orders pertaining to terrorism.
Recommendation 1: To help ensure that resources are not used to support
terrorist or criminal groups, we recommend that the Director of the
Office of Security and the USAID Mission Director, Kabul, Afghanistan,
consider formalizing a risk-based approach that would enable them to
identify and vet the highest risk vendors and partners, including
those with contracts below the $150,000 threshold.
Management Comments: The Mission agrees with this recommendation and
has incorporated risk assessment factors into its vetting policies and
procedures embodied in a Mission Order, developed in coordination with
USAID/Washington, and signed on May 9, 2011. Aside from establishing a
vetting threshold of $150,000 (thus covering projects that constitute
significant financial risks and the bulk of USAID assistance to
Afghanistan), other factors such as project location and type of
project or services will be considered in vetting non-U.S. recipients
and contractors prior to award.
For example, the Mission Order states that all awards to non-U.S.
private security companies (PSC) will be vetted regardless of the
award amount. Furthermore, it also establishes an Afghanistan Counter-
Terrorism Team made up of necessary offices that, among other things,
will review and adjust, as needed, the risk factors.
Recommendation 2: To promote interagency collaboration so as to better
ensure that vendors potentially posing a risk to U.S. forces are
vetted, we also recommend that the Commander of U.S. Central Command,
USAID Mission Director, Kabul, Afghanistan, and the Coordinating
Director for Development and Economic Affairs (CDDEA), U.S. Embassy,
Kabul, Afghanistan, consider developing formalized procedures, such as
an interagency agreement or memorandum of agreement, to ensure the
continuity of communication of vetting results and supporting
intelligence information, so that other contracting activities may be
informed by those results.
Management Comments: Subject to discussion with U.S. Central Command
(CENTCOM) and CDDEA, the Mission agrees with this recommendation.
However, the development of formal agreements requires concurrence by
all three parties. It also requires careful thought in order to assure
sustainability and successful implementation. As mentioned in the
report, the Mission already has an informal information sharing
agreement with U.S. CENTCOM with which it has been collaborating. The
Mission will work with U.S. CENTCOM and U.S. Embassy, Kabul to
formalize this agreement, as recommended. Interagency discussions have
been initiated and a final action target date will be established as
soon as discussions among all concerned USG agencies are completed.
[End of section]
Appendix IV: Comments from the Department of State:
United States Department of State:
Chief Financial Officer:
Washington, D.C. 20520:
May 20, 2011:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report,
"Afghanistan: U.S. Efforts to Vet Non-U.S. Vendors Need
Improvement," GAO Job Code 351489.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Janice DeGarmo, Special Assistant, Bureau of Administration at
(202) 647-4461.
Sincerely,
Signed by:
Barbara Retzlaff:
cc: GAO ” William M. Solis:
A ” Will Moser:
State/OIG ” Evelyn Klemstine:
[End of letter]
Department of State Comments on GAO Draft Report:
Afghanistan: US Efforts to Vet Non-US Vendors Need Improvement
(GAO-11-355, Job Code 351489):
The Department of State appreciates the opportunity to comment on
GAO's draft report entitled "Afghanistan: U.S. Efforts to Vet Non-U.S.
Vendors Need Improvement."
Recommendation: To help ensure that State resources are not diverted to
insurgent or criminal groups, we recommend that the Secretary direct
the appropriate bureau(s) to assess the need and develop possible
options to vet non-U.S. vendors, which could include leveraging
existing vendor vetting processes, such as USAID's or developing a
unique process.
Response: The Department partially agrees with this recommendation. The
Department recognizes the risk of U.S. funds under our management
being diverted for the benefit of terrorists, or their supporters, and
has devoted a good deal of time to defining the issue and seeking
appropriate processes to mitigate the risk of this occurring.
Significant legal concerns relating to contracting law, competition
requirements, and the conflict between open competition and the use of
classified databases to vet contractors and grantees have required
analysis and discussion. The FY 2010 Department of State, Foreign
Operations, and Related Programs Appropriations Act, carried forward
for FY 2011 under the Continuing Resolution, prohibited the use of
State Department funds to implement a Partner Vetting program but
authorized creation of a pilot program for contractor vetting together
with USAID. In January 2011, the Department assigned responsibility
for developing such a pilot vetting program to the Bureau of
Administration's Office of Logistics Management (A/LM).
The Office has since recruited a small team and begun work on both the
design of the pilot as well as the various legal and regulatory
filings required under the Privacy and Paperwork Reduction Acts in
order to proceed. While Afghanistan would not necessarily be one of
the countries included in the anticipated pilot program-–adding it
would skew the results of a program designed to measure world-wide
need-”it is under active review for inclusion in a vetting effort that
would apply specifically to that country.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
William M. Solis, (202) 512-8365 or solisw@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, major contributors to this
report were Carole Coffey, Assistant Director; Johana Ayers; Vincent
Balloon; Laura Czohara; Timothy DiNapoli; Melissa Hermes; Jason
Jackson; Natasha Wilder; and Sally Williamson. In addition, Michael
Shaughnessy provided legal support, Julia Kennon provided technical
support, and Cheryl Weissman and Kimberly Young provided assistance in
report preparation.
[End of section]
Footnotes:
[1] For fiscal year 2009 and the first half of fiscal year 2010, DOD
and State also reported approximately $690 million in obligations for
contracts and various assistance instruments with performance in Iraq,
Afghanistan, or both, without specifying in which country the
contracted activity took place. DOD, State, and USAID have all relied
heavily on contractors (vendors) in Afghanistan, and DOD accounts for
the vast majority of all U.S. contract obligations in Afghanistan,
which are used both for direct support to the U.S. government and for
reconstruction efforts. Additionally, State and USAID have relied on
assistance, such as grants and cooperative agreements, to implement
their programs; USAID refers to entities that enter into such
agreements as implementing partners. See GAO, Iraq and Afghanistan:
DOD, State, and USAID Face Continued Challenges in Tracking Contracts,
Assistance Instruments, and Associated Personnel, [hyperlink,
http://www.gao.gov/products/GAO-11-1] (Washington, D.C.: Oct. 1, 2010).
[2] DOD, State, and USAID joint guidance has described the U.S. COIN
approach as a blend of comprehensive civilian and military efforts
intended to not only fight insurgency but also address its root
causes. U.S. COIN efforts focus not only on security objectives, but
consider building Afghan economic and governance capacity as key
elements.
[3] Commander, International Security Assistance Force (COMISAF)/
United States Forces - Afghanistan, COMISAF's Counterinsurgency (COIN)
Contracting Guidance (Sept. 8, 2010).
[4] See [hyperlink, http://www.gao.gov/products/GAO-11-1], and GAO,
Warfighter Support: Cultural Change Needed to Improve How DOD Plans
for and Manages Operational Contract Support, [hyperlink,
http://www.gao.gov/products/GAO-10-829T] (Washington, D.C.: June 29,
2010); Contingency Contracting: Improvements Needed in Management of
Contractors Supporting Contract and Grant Administration in Iraq and
Afghanistan, [hyperlink, http://www.gao.gov/products/GAO-10-357]
(Washington, D.C.: Apr. 12, 2010); and Warfighter Support: Continued
Actions Needed by DOD to Improve and Institutionalize Contractor
Support in Contingency Operations, [hyperlink,
http://www.gao.gov/products/GAO-10-551T] (Washington, D.C.: Mar. 17,
2010).
[5] See Exec. Order No. 13,224, 66 Fed. Reg. 49079 (Sept. 23, 2001).
[6] See National Defense Authorization Act for Fiscal Year 2012, H.R.
1540, 112th Cong. § 821 (2011) (as reported by H. Comm. on Armed
Services, May 17, 2011); No Contracting with the Enemy Act of 2011, S.
341, 112th Cong. (2011) (as introduced in the Senate, Feb. 14, 2011).
[7] Task Force 2010 is an interagency group that includes
representatives from DOD, State, USAID, the Department of Justice, and
ISAF, among others.
[8] While the term vetting can be used to describe any sort of
background verification or fact checking, for purposes of this review,
vetting is used to describe the examination of available background
and intelligence information to determine whether prospective vendors
or assistance recipients are affiliated with insurgent or criminal
groups, or appear to pose a significant risk of diverting funds or
security information to terrorist, criminal, or other corrupt
organizations.
[9] CENTCOM is one of DOD's six geographic combatant commands. Among
other duties, it is responsible for executing U.S. military operations
that take place in Iraq and Afghanistan, as directed.
[10] CENTCOM Contracting Command is the commonly used name for what is
formally known as the Joint Theater Support Contracting Command,
formerly the Joint Contracting Command-Iraq/Afghanistan. CENTCOM
Contracting Command has authority over all contracting activities
assigned or attached to CENTCOM, with the exception of those of the
U.S. Army Corps of Engineers.
[11] We have previously noted that while DOD officials consider
CENTCOM's quarterly census the most reliable source of data on
contractor personnel in Iraq or Afghanistan, officials acknowledged
that the census numbers represent a rough approximation of the actual
number of contractor personnel who worked in either country.
Furthermore, as military operations increase in Afghanistan, efforts
to obtain an accurate count of the contractor workforce may be more
complicated than in Iraq, because DOD's contractor workforce in
Afghanistan consists of more local nationals than that in Iraq, and
data on local nationals are more difficult to obtain than data on U.S.
citizens and third-country nationals. See [hyperlink,
http://www.gao.gov/products/GAO-11-1].
[12] The source for these data is the Federal Procurement Data System-
Next Generation, February 2011.
[13] The source for fiscal year 2010 obligations is the Federal
Procurement Data System-Next Generation, February 2011. The source for
projected obligations for fiscal year 2011 is USACE.
[14] This information is based on USAID data.
[15] See Exec. Order No. 13,224, 66 Fed. Reg. 49079, 49079-49080, § 1,
2(a) (Sept. 23, 2001).
[16] See, e.g., 48 C.F.R. § 25.701 (prohibiting agencies from
acquiring supplies or services where a proclamation, executive order,
statute, or implementing regulations related to listed individuals
would prohibit such a transaction by private individuals); §§ 9.404-
9.405 (discussing the Excluded Parties List System). A Mission Order
from the USAID Mission for Afghanistan specifies a similar safeguard
for grants or cooperative agreements, directing officials to check the
names of recipients against publicly available lists of sanctioned
individuals and organizations.
[17] See 48 C.F.R. § 9.103.
[18] See, e.g., 48 C.F.R. §§ 9.104-1, 209.104-1.
[19] Shafafiyat means "transparency" in Dari and Pashto, the two
official languages of Afghanistan.
[20] In addition to these Afghanistan-specific efforts, in 2005 the
Federal Bureau of Investigation led the establishment of a task force
of offices of inspectors general and other investigative entities to
create the International Contract Corruption Task Force, which is
charged with detecting, investigating, and dismantling contract fraud
and corruption in areas of contingency operations such as Iraq and
Afghanistan.
[21] The establishment of a vetting cell to vet prospective vendors in
Afghanistan expanded an existing process used by the formerly named
Joint Contracting Command-Iraq/Afghanistan to vet prospective vendors
in Iraq. It has been referred to over time and in various documents as
the Vendor Vetting Reachback Cell, Vendor Assessment Cell, and Vendor
Vetting Cell. For ease of reference, it is referred to here as the
vetting cell.
[22] The vetting cell contract awarded in June 2010 is an indefinite-
delivery/indefinite-quantity contract that currently has two task
orders that separately establish vetting cells for Afghanistan and
Iraq that are collocated at CENTCOM headquarters in Tampa, Florida.
The task order for Iraq was awarded slightly later, in August 2010, to
allow the period of performance for the prior Iraq vetting cell
contract to conclude.
[23] According to the Acquisition Instruction, this process is to be
implemented for information technology contracts as soon as feasible
and practicable but not later than April 2, 2011.
[24] Among other things, the Joint Contingency Contracting System
captures critical in-theater acquisition and vendor data, with
emphasis on host-nation spending; provides centralized vendor
registration and solicitation; and functions as a proposal-posting Web
site for potential contractors, with English and Arabic capabilities.
It is available to all DOD contracting commands that award contracts
in Iraq and Afghanistan. According to the Acquisition Instruction,
contracting officers can request vetting of all vendors or offerors,
those in the competitive range, or apparently successful vendors or
offerors. See CENTCOM Contracting Command Acquisition Instruction, §
25.7704-1203(c)(4) (Nov. 5, 2010).
[25] FPDS-NG is the federal government's primary data system for
tracking information on contracting actions. While FPDS-NG is known to
have some limitations, we have tried to mitigate any potential issues
by relying on more recent data and by using more than one data element
in our analysis. For further information on FPDS-NG, please see GAO,
Defense Contracting: Enhanced Training Could Strengthen DOD's Best
Value Tradeoff Decisions, [hyperlink,
http://www.gao.gov/products/GAO-11-8] (Washington, D.C.: Oct. 28,
2010), and Federal Contracting: Observations on the Government's
Contracting Data Systems, [hyperlink,
http://www.gao.gov/products/GAO-09-1032T] (Washington, D.C.: Sept. 29,
2009).
[26] COMISAF/United States Forces - Afghanistan, COMISAF's
Counterinsurgency (COIN) Contracting Guidance.
[27] CENTCOM Contracting Command, Policy Memorandum No. 10-09,
Responsibility Determination for Subcontractors (Aug. 31, 2010).
[28] Although the Acquisition Instruction primarily focuses on vetting
prospective contract actions (i.e., award), one subsection addresses
the potential for termination of existing contracts where a
contracting officer becomes aware of a contractor with a "rejected"
eligibility status. See CENTCOM Contracting Command Acquisition
Instruction, § 25.7704-1203(k) (Nov. 5, 2010).
[29] GAO, Defense Acquisitions: Sound Practices Critical to Ensuring
Value for the Defense Logistics Agency's Acquisitions, [hyperlink,
http://www.gao.gov/products/GAO-09-1040T] (Washington, D.C.: Sept. 24,
2009).
[30] GAO, Executive Guide: Effectively Implementing the Government
Performance and Results Act, [hyperlink,
http://www.gao.gov/products/GAO/GGD-96-118] (Washington, D.C.: June
1996).
[31] For example, see GAO, Federal Lands: Adopting a Formal, Risk-
Based Approach Could Help Land Management Agencies Better Manage Their
Law Enforcement Resources, [hyperlink,
http://www.gao.gov/products/GAO-11-144] (Washington, D.C.: Dec. 17,
2010); Commercial Vehicle Security: Risk-Based Approach Needed to
Secure the Commercial Vehicle Sector, [hyperlink,
http://www.gao.gov/products/GAO-09-85] (Washington, D.C.: Feb. 27,
2009); Defense Acquisitions: Tailored Approach Needed to Improve
Service Acquisition Outcomes, [hyperlink,
http://www.gao.gov/products/GAO-07-20] (Washington, D.C.: Nov. 9,
2006); and Defense Management: Additional Actions Needed to Enhance
DOD's Risk-Based Approach for Making Resource Decisions, GAO-06-13
(Washington, D.C.: Nov. 15, 2005).
[32] [hyperlink, http://www.gao.gov/products/GAO-07-20].
[33] For more information on this process, see GAO, Foreign
Assistance: Measures to Prevent Inadvertent Payments to Terrorists
under Palestinian Aid Programs Have Been Strengthened, but Some
Weaknesses Remain, [hyperlink, http://www.gao.gov/products/GAO-09-622]
(Washington, D.C.: May 19, 2009).
[34] USAID collects certain identifying information on its partners as
part of USAID's acquisition and assistance award process. The vetting
support unit facilitates the inclusion of this and other requested
information, if any, into the vetting database. According to officials
and the January 2011 cable, the vetting support unit is to also ensure
that host-nation applicants for USAID funding are registered into the
Joint Contingency Contracting System to facilitate vetting. For
further information on the general process of USAID's process to vet
vendors and award recipients in the West Bank and Gaza, see
[hyperlink, http://www.gao.gov/products/GAO-09-622].
[35] For example, see [hyperlink,
http://www.gao.gov/products/GAO-09-85] and [hyperlink,
http://www.gao.gov/products/GAO-06-13].
[36] State is currently working with USAID to set up a pilot program
for a comprehensive partner vetting system as authorized by the
Consolidated Appropriations Act, 2010, Pub. L. No. 111-117, § 7034(o)
(2009). The act restricts the use of funds by State or USAID to
implement a Partner Vetting System, except that funds appropriated by
the act may be used to implement a Partner Vetting System pilot
program, to be applied equally to the programs and activities of State
and USAID. However, officials from State and USAID told us that
Afghanistan has been excluded as a potential candidate for the pilot
program because of the kinetic nature of its operating environment.
Additionally, according to USAID and State officials, this joint pilot
program that is referenced in the legislation is distinct from the
current effort that USAID has under way in Afghanistan.
[37] See Afghanistan and Pakistan Regional Stabilization Strategy,
updated February 2010.
[38] State contracting officers are supposed to consult publicly
available lists of sanctioned individuals and organizations--such as
the Specially Designated Nationals List--prior to contract award. See,
e.g., 48 C.F.R. § 609.404-70.
[39] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[40] GAO, Results-Oriented Government: Practices That Can Help Enhance
and Sustain Collaboration among Federal Agencies, [hyperlink,
http://www.gao.gov/products/GAO-06-15] (Washington, D.C.: Oct. 21,
2005).
[41] While the term vetting can be used to describe any sort of
background screening or fact checking of companies, individuals, or
information, for purposes of this review, vetting is used to describe
the examination of available background and intelligence information
to determine whether prospective vendors or assistance recipients are
affiliated with insurgent or criminal groups, or appear to pose a
significant risk of diverting funds or security information to
terrorist, criminal, or other corrupt organizations.
[42] CENTCOM Contracting Command is the commonly used name for what is
formally known as the Joint Theater Support Contracting Command,
formerly the Joint Contracting Command-Iraq/Afghanistan. CENTCOM
Contracting Command has authority over all contracting activities
assigned or attached to CENTCOM, with the exception of those of the
U.S. Army Corps of Engineers.
[End of section]
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