Collaboration in Civic Spheres

GAO: Aid contracts to Afghani vendors require stricter review

by June 27th, 2011

SUMMARY: According to a June 2011 United States Government Accountability Office report, nearly 75 percent of all U.S. government aid contracts to non-U.S. organizations in Afghanistan were not evaluated to determine possible criminal affiliations prior to contract approval. Such contracts totaled nearly $11 billion in 2010. The GAO found that the Department of Defense (DOD), the United States Agency for International Development (USAID), and the State Department – the agencies that award aid contracts – have no formal process for vetting potential non-U.S. vendors. As a result of this study, the GAO recommended that all three agencies develop a shared “vetting” process that would examine “available background and intelligence information” to verify a vendor’s likelihood of criminal or terrorist affiliations.

BACKGROUND: In order to support U.S. rebuilding efforts in Afghanistan, various U.S. agencies have committed vast sums of aid money though contracts to non-U.S. organizations. Many consider the effort to develop Afghanistan’s economy to be one of the primary pillars of the current U.S. involvement in Afghanistan. The Federal Acquisition Regulation states that U.S. government funds be contracted only to “responsible prospective vendors,” including non-U.S. organizations.

KEY LINK: U.S. Efforts to Vet Non-U.S. Vendors Need Improvement,” Report to Congressional Addressees, William M. Solis, Director of Defense Capabilities and Management, U.S. Government Accountability Office, June 2011


  • According to the GAO report, “there are concerns that U.S. funds are being diverted to fund insurgent and criminal activity in Afghanistan,” rather than provide aid and assistance. However, the GAO report cited no examples indicating fraudulent contracts with non-U.S. organizations.
  • The GAO found that in 2010 nearly three-quarters of all U.S. government contracts in Afghanistan did not determine aid recipients or establish a clear use of funds prior to contract approval. Of the contracts that were examined, most contracts were only investigated after they were established.
  • The GAO found the lack of uniform criteria for evaluating contracts to be concerning. According to the report, DOD and USAID communicate evaluations unofficially, but there is no official process by which this information sharing occurs.
  • As a result, GAO suggests improving DOD’s and USAID’s vetting processes and information sharing by developing a “risk-based” approach. Such an approach would evaluate vendors based on proposed risk, regardless of contract size.
  • The GAO determined that the State Department does not currently have any process for examining contracts prior to approval. “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,” the report stated. As a result, GAO suggests that State develop standards and a process that will allow it to assess non-U.S. vendors.
  • All three agencies responded to the GAO’s recommendations before the study’s publication. DOD and USAID concurred with GAO’s recommendations and both stated that improvements to their formal contract examination processes are already underway. The State Department agreed with the GAO’s findings, but also emphasized that tensions between market competition and legal requirements regarding classified databases may prevent easy development of a State contract vetting system.

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