Nearly half of the 93,118 private contractors working for the U.S. military in Afghanistan are Afghan citizens, and ensuring the contracts are not feeding “endemic corruption” or funneling money to insurgents “remains a challenge,” Pentagon contracting officials said Thursday.

“I cannot stress enough the complexity of managing countless requirements, overseeing tens of thousands of contractors and awarding billions of dollars in procurements in an environment that is hostile and corrupt on many levels,” Kim Denver, assistant deputy defense secretary, said in testimony prepared for a House oversight subcommittee investigating contract fraud in the war effort.

Boosting the Afghan economy through local hiring has been a key part of the U.S. counterinsurgency strategy. Non-Afghan contract personnel are about evenly divided between third-country nationals and American citizens.

Denver and other defense officials were testifying Thursday before a the House subcommittee on national security, homeland defense and foreign operations, whose investigation last year, “Warlord Inc.,” charged the military was running a virtual “protection racket” that indirectly paid the Taliban and Afghan warlords for safe passage of truck convoys supplying U.S. military installations around the country.

Following its own investigation, the military concluded that as much as $360 million had been diverted to “malign actors” from a $2.16 billion trucking contract.

Thursday’s House hearing was called to assess military progress in addressing the problem.

“It is utterly unacceptable for any U.S. taxpayer dollars to ever make their way into the hands of those who would use them as a means to harm our brave men and women in uniform,” said Rep. John F. Tierney, (D-Mass.), the subcommittee’s senior minority member.