Afghanistan:

U.S. Efforts to Vet Non-U.S. Vendors Need Improvement

GAO-11-355: Published: Jun 8, 2011. Publicly Released: Jun 8, 2011.

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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.

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.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To promote interagency collaboration so as to better ensure that vendors potentially posing a risk to U.S. forces are vetted, 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, should 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 Affected: Department of State: U.S. Embassy, Kabul, Afghanistan: Office of the U.S. Ambassador to Afghanistan

    Status: Closed - Implemented

    Comments: In 2012, the U.S. Embassy in Kabul established an Inter-Agency Working Group chaired by Coordinating Director for Development and Economic Affairs to advise chief of mission regarding the potential impact of negative vetting determinations of Embassy sections and agencies under chief of mission authority. The working group formalizes the previous informal interagency collaboration activities.

    Recommendation: To help ensure that resources are not used to support terrorist or criminal groups, the Director of the Office of Security and the USAID Mission Director, Kabul, Afghanistan, should 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.

    Agency Affected: United States Agency for International Development: Office of Afghanistan and Pakistan Affairs: USAID Afghanistan

    Status: Closed - Implemented

    Comments: The U.S. Agency for International Development (USAID) has developed a vendor vetting system to vet non-U.S. companies and key personnel potentially working on USAID projects. As of June 2012 USAID has completed over 400 vetting requests and through vetting, kept $17.6 million from being awarded to parties associated with malign actors. This includes contracts under $150,000.

    Recommendation: To promote interagency collaboration so as to better ensure that vendors potentially posing a risk to U.S. forces are vetted, 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, should 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 Affected: Department of State

    Status: Closed - Implemented

    Comments: In 2012, the U.S. Embassy in Kabul established an Inter-Agency Working Group chaired by Coordinating Director for Development and Economic Affairs to advise chief of mission regarding the potential impact of negative vetting determinations of Embassy sections and agencies under chief of mission authority. The working group formalizes the previous informal interagency collaboration activities.

    Recommendation: To promote interagency collaboration so as to better ensure that vendors potentially posing a risk to U.S. forces are vetted, 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, should 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 Affected: Department of Defense: U.S. Central Command

    Status: Closed - Implemented

    Comments: 11/2012 The U.S. Embassy in Kabul established an Inter-Agency Working Group chaired by Coordinating Director for Development and Economic Affairs to advise chief of mission regarding the potential impact of negative vetting determinations of Embassy sections and agencies under chief of mission authority. The working group formalizes the interagency arrangement to promote collaboration.

    Recommendation: To help ensure that State resources are not diverted to insurgent or criminal groups, the Secretary of State should 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.

    Agency Affected: Department of State

    Status: Closed - Implemented

    Comments: On October 1, 2012, The new Office of Risk Analysis and Management (A/LM/RAM) began vetting State contractors and grantees at six pilot posts. They have processed several hundred vetting requests, the majority for Afghanistan. Vetting is required to ensure contracts are not awarded to individuals or companies that engage in activities harmful to U.S. national security interests. Since most State contracts are awarded in Washington, posts will normally not be involved in the vetting process.

    Recommendation: To help ensure that resources are not used to support terrorist or criminal groups, the Director of the Office of Security and the USAID Mission Director, Kabul, Afghanistan, should 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.

    Agency Affected: United States Agency for International Development: Office of Security

    Status: Closed - Implemented

    Comments: The U.S. Agency for International Development (USAID) has developed a vendor vetting system to vet non-U.S. companies and key personnel potentially working on USAID projects. As of June 2012 USAID has completed over 400 vetting requests and through vetting, kept $17.6 million from being awarded to parties associated with malign actors. This includes contracts under $150,000.

    Recommendation: To safeguard U.S. personnel against security risks and help ensure that resources are not used to support insurgent or criminal groups, the Commander of U.S. Central Command should direct CENTCOM Contracting Command to (1) 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 (2) 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.

    Agency Affected: Department of Defense: U.S. Central Command

    Status: Closed - Implemented

    Comments: In response to our recommendations, U.S. Central Command (USCENTCOM) established a formalized risk based vetting program under Task Force 2010 (a task force located in Afghanistan tasked with anti-corruption efforts.) The process is designed to ensure DOD funds are not used for illicit purposes and to provide the Battle Space Owner with a risk management tool to identify vendors that have ties to the insurgency or that are involved in nefarious activities. Also, a validation advisory panel reviews the data from the vendor vetting cell to look for derogatory information or criminal activity. In addition, CENTCOM increased the size of the Vendor Vetting Cell and moved the contracting officer's representative from Kabul to Tampa to maintain proper oversight of the contract and contact with employees for increased efficiency

    Recommendation: To promote interagency collaboration so as to better ensure that vendors potentially posing a risk to U.S. forces are vetted, 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, should 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 Affected: United States Agency for International Development: Office of Afghanistan and Pakistan Affairs: USAID Afghanistan

    Status: Closed - Implemented

    Comments: In 2012, the U.S. Embassy in Kabul established an Inter-Agency Working Group chaired by Coordinating Director for Development and Economic Affairs to advise chief of mission regarding the potential impact of negative vetting determinations of Embassy sections and agencies under chief of mission authority. The working group formalizes the previous informal interagency collaboration activities.

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