U.S. military awards contracts in Afghanistan to get money away from insurgents

The U.S. military has moved to stem the flow of contract money to Afghan insurgents, awarding at least 20 companies new contracts worth about $1 billion for military supply transport and suspending seven current contractors it found lacking in “integrity and business ethics.”

The new contracts, which were finalized Monday and will take effect next month, aim to eliminate layers of brokers and middlemen who allegedly skimmed money, and to allow more transparency in a complex web of Afghan subcontractors paid to provide security for the supply truck convoys.

“I think we’ve finally got our arms around this thing,” said a senior military officer who was authorized to discuss the matter only on the condition of anonymity. The new contracts, the official said, were the result of a year’s worth of “intelligence work and asking the right questions. We’re now starting to take action.”

Congressional investigators determined last year that much of the transport and security money went to the Taliban and Afghan warlords as part of a protection racket to ensure the safe arrival of the convoys, conclusions that were confirmed this spring by military and intelligence inquiries.

House and Senate committees have said that the military has long been aware of the problem but has been reluctant to disrupt the system and risk interrupting a supply chain that provides virtually all fuel, food and weapons for U.S. troops across Afghanistan. Some lawmakers have criticized the length of time it has taken the military to act and wonder whether the new system will change much.

“I appreciate that the Department of Defense has taken steps to reform its Afghan trucking contracts, but I am concerned that they still lack sufficient visibility and accountability to ensure that U.S. taxpayer dollars are not getting into the hands of the enemy,” said Rep. John F. Tierney (D-Mass.), whose House Oversight and Government Reform subcommittee investigated the contract last year.

The panel has scheduled a hearing for Sept. 15.

While the Obama administration has touted significant progress against insurgents this year, U.S., NATO and Afghan military forces still control only scattered pockets of territory and thousands of trucks travel each week over vast unsecured areas.

U.S. commanders have argued that outsourcing the transport and security frees up the U.S. warfighters to handle more important missions. The only alternative, said a senior congressional staff member speaking on the condition of anonymity to discuss information not yet released, is “to reduce the [U.S.] footprint in Afghanistan.”

Policymakers and the public need to understand, he said, that “the cost of doing business is that we have to pay, effectively, our enemy for the right to be there.”

Details of the new system are to be released next week, but military officials said that principle changes include direct contracts with truckers, improvements in convoy monitoring and increased vetting of Afghan private security subcontractors. The initial contract is for one year, with an option for a second.

Despite the 2010 congressional investigations and subsequent military findings that at least half of the eight firms participating in the Host Nation Trucking contract were involved in “a criminal enterprise or support to the enemy,” that contract was extended for six months in March.

Six of the companies are Afghan-owned or joint Afghan-international ventures. Two are described as U.S.-owned, including the Washington-based Sandi Group and NCL Holdings, whose founder and president, Hamed Wardak, is the son of Afghanistan’s defense minister. All served as brokers who subcontracted with Afghan trucking companies, and all used private Afghan security firms to guard the convoys.

The senior military official said that he could not discuss whether the companies would be barred from future U.S. contracts — a process that often involves lengthy legal proceedings — or whether any would be prosecuted by the Justice Department.

One of the eight firms was told in June that it had been barred from the new contract for reasons that could not be determined. Several of the others were actively bidding on the new contract before being informed last week that they were not eligible.

Letters sent to the firms said that their new bids were technically acceptable and competitively priced. But the letters went on to say that they had been “excluded” from the competition under federal regulations requiring “a satisfactory record of integrity and business ethics.”

Executives at several of the suspended companies expressed anger and disbelief about their suspension and said the new systems would do little to eliminate the problems of security or payoffs. The new contractors were largely the same truckers that the original firms had subcontracted, said John Christopher Turner, a principal in MG-EMA, a U.S.-Afghan venture that is one of the eight. “They have no clue,” Turner said of the military. “They’re not in the field at all.”

Said the head of another company who agreed to discuss the issue on the condition of anonymity: “Our prices were competitive, we were completely comfortable we were going to win this.”

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