Petraeus: NATO contracts must not undermine counterinsurgency strategy in Afghanistan

KABUL, Afghanistan (AP) — The NATO command has issued new guidelines for awarding billions of dollars worth of international contracts in Afghanistan, saying that without proper oversight the money could end up in the hands of insurgents and criminals, deepen corruption and undermine efforts to win the loyalty of the Afghan people at a critical juncture in the war.

The guidance, issued last week by Gen. David Petraeus and obtained Sunday by The Associated Press, was issued in response to concern that the military's own contracting procedures could be, in some cases, running counter to efforts on the battlefield.

The changes are aimed, in large part, at addressing complaints that ordinary Afghans have seen little change in their daily lives despite billions poured into their country since 2001.

"With proper oversight, contracting can spur economic development and support the Afghan government and NATO's campaign objectives," Petraeus wrote in a two-page memorandum. "If, however, we spend large quantities of international contracting funds 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 our efforts in Afghanistan."

Private contractors, both Afghans and foreigners, provide a range of services to U.S. and NATO forces, including transportation, security, running dining facilities and sanitation at military bases, training and construction.

Precise figures on the amount of money paid to contractors were unavailable, though most estimates put the figure at about $14 billion a year. Admiral Kathleen Dussault, head of the Joint Contracting Command, was quoted as recently as July saying that the amount of money being spent in Afghanistan had tripled since 2008.

But President Hamid Karzai has long criticized the international contracting process, saying that war-weary Afghans have not reaped the full benefits because so much of the money goes to high-priced contractors, subcontractors and powerbrokers.

Afghans also complain that too many contracts are awarded to the same contractors.

"Contracts with a broader range of Afghan companies will help break monopolies and weaken patronage networks that breed resentment" among the Afghan people, Petraeus wrote. "In situations where there is no alternative to powerbrokers with links to criminal networks, it may be preferable to forgo the project."

The new guidance said that contracts should go to Afghans first and if the military cannot contract with an Afghan company, the company that is awarded the contract should be encouraged to hire Afghan workers and subcontractors. Petraeus referenced a Kabul company that is making boots for Afghan police and soldiers as a success story of NATO's "Afghan First" program.

"Focus efforts on promoting industries with immediate and long-term growth potential, such as agriculture, food processing, beverages and construction," Petraeus wrote. "Guard against 'front businesses' that fraudulently claim to be Afghan-owned."

Commanders must use intelligence resources to learn a lot about the companies they are dealing with and determine the effect of each contract on "security, local power dynamics and the enemy."

The effort to award contracts to Afghan firms, however, is not always the fastest way to build military bases or Afghan police stations, according to the Army Corps of Engineers. The Corps has complained that the effort has led to delays at the very time that NATO has been rushing to accommodate tens of thousands more international troops dispatched to the war.

While supportive of the project, Col. Kevin Wilson, the head of the U.S. Army Corps of Engineers in the south and west, said the trade-off is that construction can either be done on time, or contracted to the Afghans.

Petraeus' guidance also noted the pitfalls of too many subcontractors.

"Excessive subcontracting tiers provide opportunities for criminal networks and insurgents to divert contract money from its intended purpose," he said, adding that prime contractors should be held responsible for the behavior and performance of their subcontractors.

The Pentagon's new "contractor's transparency clause" requires lead contractors to list subcontractors on a project to improve oversight. Anyone who bids on U.S. military contracts has to provide a list of all their subcontractors, provide licensing, personnel and banking information, according to Brig. Gen. Camille Nichols, head of the contracting authority for both Afghanistan and Iraq, who recently briefed reporters on the new clause.

Still, the transparency campaign might prove difficult in an impoverished country where corruption has become widespread, leaving Afghans disgruntled with their government and the international community. With little oversight, it's unclear where most of the contract corruption occurs.