Construction contracts a weak link in Afghan nation building

SHAHRI BUZURG, Afghanistan — For more than a year, Afghan police chief Rajab Mohammed and his men have worked out of a dark, cramped mud home in a remote corner of Afghanistan while waiting in vain for construction workers to finish building the U.S.-funded police station across the street.

With winter fast approaching, some of the men, who'd been sleeping in a dirt courtyard, recently took over the idle construction site and set up cots inside the half-built station after they learned that the U.S. government had fired the Afghan company responsible for the project.

The U.S. is spending billions of dollars to build facilities like the one in Badakhshan for Afghanistan's expanding national police and new garrisons for its army. The ambitious program is a linchpin of President Obama's strategy to strengthen Afghan security forces so 100,000 U.S. troops can come home.

However, like much of the wider Afghan reconstruction effort, it's faltering, according to current and former U.S. officials, Afghan and American contractors, and contract documents.

Dozens of structures across the country either were poorly constructed or never completed at all. Tens of thousands of Afghan soldiers who were supposed to be living in garrisons by now are still housed in tents.

The stations and barracks represent a pattern repeated across Afghanistan: Construction projects are failing with such frequency that the administration's initiative to reinforce the Afghan security forces could be hobbled.

While American policymakers struggle to find enough money to resuscitate the U.S. economy or rebuild infrastructure at home, American taxpayers are financing an unprecedented construction boom in Afghanistan for new schools and clinics, electricity and water and roads and bridges.

U.S. Army Gen. David Petraeus, the commander of international forces in Afghanistan, has ordered a dramatic expansion in contracting. Other than asking a brigadier general to investigate problems with military contracts, so far he's failed to address their flaws.

A McClatchy Newspapers investigation has found that since January 2008, nearly $200 million in U.S. Army Corps of Engineers construction projects in Afghanistan have failed, face serious delays or resulted in subpar work. Poor record-keeping made it impossible for McClatchy to determine the value of faulty projects before then. The military tries to recover part of a project's cost, but in many cases, the funds were already spent.

The investigation also found that:

• In a rush to award contracts to Afghan companies, the Corps accepts bids that don't cover the cost of a project, including the expense of security and a contractor's profit.

• Rather than scrap a project that's failing, the government sometimes rewrites the contract to require only the work that's been done and declares the effort a success. The process is called "de-scoping."

• A vast majority of the companies that McClatchy found were doing shoddy work haven't been banned from getting new U.S. contracts, according to government records. U.S. taxpayer dollars also continue to go to firms whose true ownership is hard to determine, making it difficult to hold anyone accountable.

Spending up anyway

Despite these challenges, the Corps' work in Afghanistan is set to more than double in the fiscal year that began on Oct. 1, to nearly $2 billion from $900 million in the northern half of Afghanistan alone, according to a recent presentation by Army Col. Thomas Magness, the commander of the Afghanistan Engineer District-North.

U.S. taxpayers also will pay to maintain the Afghan police and army bases, because the Afghans lack that capability. In August, the Corps awarded ITT Corp., based in White Plains, N.Y., an $800 million contract to maintain the sites and train Afghans themselves to eventually do so.

In an interview in Kabul, Magness said the number of contracts set aside for Afghan firms would expand from 25 last year to 91 this year, "so we are going all the way in."

He acknowledged past problems but promised changes. "There is a recognition that our construction is not keeping up with the requirements."

Before, he said, the approach to construction was " 'Ready, fire, aim,' and now we want to change it to 'Ready, aim, fire.' And I think as a result of that we'll have a higher record of success."

'Afghan First' program

Administration officials have concluded that its emphasis on awarding U.S. government contracts to local firms will build up the Afghan economy and strengthen the capabilities of domestic companies.

The U.S. has decided to expand this effort by promoting an experimental initiative that's supposed to give Afghan companies an edge over international firms competing for billions of dollars of work in Afghanistan.

The program, dubbed Afghan First, grew out of a meeting in 2006 in which Ambassador Karl Eikenberry, then the commander of the U.S.-led forces in Afghanistan, held up a bottle of water imported from Pakistan and asked his staff, "Why can't we do this locally?" recalled retired Army Col. Andy Smith, his logistics chief.

The reason: Most of the U.S. contracting dollars go to U.S. or multinational contracting giants. Only 22 percent of U.S. development-assistance funds reached the local Afghan economy, according to a study by Peace Dividend Trust, a nonprofit working with the U.S. government. The reverse was true for Great Britain, which didn't funnel most of its aid through international companies. As a result, more than 70 percent of British aid reached the Afghan economy.

Before Afghan First can work, however, the U.S. approach needs fundamental rethinking, critics familiar with the program say.

"Their intentions are good, but the way they are managing the program is a total mess," said the president of a large U.S. firm doing work in Afghanistan, who requested anonymity to not risk his relations with the Army. "The system needs a serious, serious re-analysis and re-evaluation."

Deep cultural chasm

The administration also appears to be ignoring a deep cultural chasm exposed by the initiative, contractors and former government officials said.

Afghan firms, often with little experience and sometimes newly formed, bid too low on projects and then are unable to complete them. As a result, more than 40 Afghan police-headquarters projects have been delayed or terminated before completion.

One major reason: The Corps often insists that unqualified Afghan companies adhere to stringent U.S. building standards and tough safety requirements. The Corps concedes that only a handful of Afghan firms can meet those standards.

"This whole system is designed for the United States," said another U.S. contractor who asked to remain anonymous because he's doing business with the Corps. "It's Western standards being imposed on Eastern areas where they don't have the materials or the managers for this volume of work."

The laborers may not have the skills, either. DynCorp found that it had to train its construction workers how to hammer nails and pour concrete, according to the Special Inspector General for Afghanistan Reconstruction.

Afghan firms are loaded down with "contract after contract" in the rush to build, even though they're not equipped to handle major projects, said John Brummet, a SIGAR assistant inspector general.

As a result, Corps officials have an expression for a project that fails to meet proper construction standards but is sufficient enough to be classified as completed, often through de-scoping. They call it "Afghan good."

Such low standards can result in unsafe buildings, however. Six police stations in southern Afghanistan's most volatile provinces, for instance, were supposed to be built for less than $1 million each but were so poorly constructed by one Afghan contractor, Basirat Construction Firm, that they can't be occupied, according to auditors.

Even though the stations in Helmand and Kandahar were never completed, the Corps paid Basirat most of the $5.5 million contract price after subcontracting oversight to local Afghans, who provided digital pictures of supposed progress.

When projects go under, the subcontractors often are left in the lurch. The Corps doesn't require prime contractors to take out bonds that guarantee that their subcontractors get paid.

The Afghan contractor "suddenly realizes he's not going to make it, takes the money and doesn't pay the subcontractor and leaves," said Mazin Sadiq, of FCEC UIProjects, a construction joint venture working in Afghanistan. "Most of the stories are like that."