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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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