McClatchy Newspapers, January 12, 2011

U.S. keeps funneling money to troubled Afghan projects

McClatchy found that U.S. government funding for at least 15 large-scale programs and projects grew from just over billion to nearly billion despite the government's questions about their effectiveness or cost

By Marisa Taylor and Dion Nissenbaum

KABUL, Afghanistan — For years, U.S. officials held up Kabul's largest power plant project as a shining example of how American taxpayers' dollars would pull Afghanistan out of grinding poverty and decades of demoralizing conflict.

Billions of dollars have been wasted in projects in Afghanistan due to corruption
Tthe U.S. government has charged ahead with development programs such as building dozens of schools and clinics that are so poorly built that they might not withstand a serious earthquake. (Photo: MCT)

But behind the scenes, the same officials were voicing outrage over the slow pace of the project and its skyrocketing costs. The problems were so numerous that one company official told the U.S. government that he'd understand if the contract were canceled.

"We are discouraged and exhausted with the continued flow of bad information," one U.S. official complained in an internal memo that McClatchy obtained. "This is a huge example of poor performance on an extremely important development project."

Despite expressing serious misgivings in internal memos and meetings, the U.S. agency that was overseeing the project more than doubled the plant's budget.

Welcome to Afghan aid, American-style.

In the rush to rebuild Afghanistan, the U.S. government has charged ahead with ever-expanding development programs despite questions about their impact, cost and value to America's multi-billion-dollar campaign to shore up the pro-Western Afghan president and prevent Taliban insurgents from seizing control.

The well-intentioned campaign comes at a high cost — and not only to American taxpayers.

An approach that experts denounce as ad hoc and politicized has led to programs with mixed, if not poor, results and has soured many Afghans on the U.S. military's presence in their country, even as the Obama administration is banking on their support.

McClatchy found that U.S. government funding for at least 15 large-scale programs and projects grew from just over $1 billion to nearly $3 billion despite the government's questions about their effectiveness or cost.

They include:

* A modest wheat program that's ballooned into one of America's biggest counterinsurgency projects in southern Afghanistan despite misgivings about its impact.

* A wayward multi-billion-dollar construction project that's now scrambling to find money to rebuild dozens of schools, clinics and other public buildings that were so poorly constructed that they might not withstand a serious earthquake.

The projects, overseen by the U.S. Agency for International Development, are designed to address different goals in Afghanistan but all offer evidence that the U.S. has downplayed their waste and inefficiency in its zeal to demonstrate short-term success.

"The strategy at the moment is to try and spend our way out of this war," said Bob Kitchen, the country director in Afghanistan for the nonprofit International Rescue Committee, which is involved in USAID programs. "We should be spending less and demanding more."


At the beginning of the Obama administration, U.S. officials scrutinized ongoing programs in Afghanistan with major reforms in mind. Their conclusion: The George W. Bush administration had failed in Afghanistan because it was distracted by the war in Iraq.

There was too much reliance on private contractors, the officials decided. Much more money should go directly to the Afghan government and its people. They also wanted programs to be scrutinized more thoroughly to see whether they were working.

"We've taken some dramatic steps to demand accountability and to create stronger policies moving forward," said Alex Thier, the director of the USAID's office of Afghanistan and Pakistan affairs.

Among the reforms he cited were imposing stricter standards for vetting subcontractors and trying to divide up contracts so the agency doesn't have to rely on one contractor.

But those ambitions have bumped squarely into the realities of a rural, uneducated and dangerous Afghanistan.

Meanwhile, Afghanistan is littered with scores of unfinished or hazardous buildings constructed with American money. Programs continue to receive tens of millions of dollars in U.S. aid even as contractors or government officials concede that the goals are unrealistic or inappropriate for Afghanistan. For instance, the U.S. is seeking to dramatically increase the number of women employed by local governments, even though previous projects with similar aims have failed because of threats to female workers.

While many of the programs were launched under the Bush administration, several have continued and have been given more money on President Barack Obama's watch.

The current administration, for instance, has moved ahead with a program that supplies Afghan farmers with wheat seeds and other assistance despite concerns about its effectiveness.

Last spring, government auditors challenged the impact of the program and questioned the contractor's estimates of success.

After being forced to revamp its dubious estimates, International Relief and Development, the Virginia-based nonprofit organization that's overseeing the program, was able to show only that about half the farmers who received American-funded wheat seed were marginally better off than those who didn't.

Auditors concluded that many of the farmers probably had grown more wheat not as a result of the Afghanistan Vouchers for Increased Productive Agriculture program but because it had rained more than expected.

Adding to the problems, the list of recipients seemed to include thousands of phantom farmers: Fingerprints collected as proof that the farmers had received vouchers for buying seeds appeared to be falsified in more than half the 4,500 records the auditors reviewed.

Even so, the Obama administration revamped the program's safeguards, dramatically increased its budget and transformed it into a broader counterinsurgency initiative that hands out jobs, fertilizer and support to farmers who are willing to cooperate with the U.S-backed government.

The program's original price tag: $33 million. Since the questions were raised: $431 million.

American officials involved in the program said they'd learned from the early missteps and had set up better oversight to prevent the problems from undermining the project.

"It's not perfect," said one U.S. official, who agreed to discuss it only on the condition of anonymity in order to be more candid. "There's no perfect program here, but I think the systems have been pretty good."

Some U.S. officials and contractors acknowledge privately that they're spending more on high-profile, flawed projects because of the pressure to show results quickly that could help bolster the government of President Hamid Karzai.

The officials and contractors would speak to McClatchy only if their names weren't used because they feared losing their jobs or government business.

They described how U.S. officials in Afghanistan for years have imposed so-called "burn rates," in which the Afghan government or contractors are expected to spend a certain amount of money each year.

The burn rates have created a mentality among officials that success can be assessed by how much money is spent, many experts agreed. Fueling the urgency, the Obama administration has set 2014 as its goal to withdraw U.S. troops from Afghanistan.

"As long as you spend money and you can provide a paper trail, that's a job well done," said Martine van Bijlert, a co-director of the nonprofit Afghanistan Analysts Network. "It's a perverse system, and there seems to be no intention to change it."

The USAID's Thier denied that burn rates drove his agency.

"USAID has always focused on in-country results," he said.


But sometimes Afghanistan's own politics motivates the agency's agenda, according to internal USAID documents that detail meetings and phone conversations between the agency and contractors. People who obtained the documents under the Freedom of Information Act gave them to McClatchy. Some of the officials quoted in this article are unidentified because the government withheld their names.

In a meeting days before Obama was sworn in as president, officials pointed out the political necessity of moving ahead with the Kabul power plant, noting that the U.S. wanted to be able to show results to the Afghan people, the documents reveal.

"The sole purpose of the project will not be achieved," one memo says, alluding to the expectation that a completed power plant would provide Karzai with political cachet during his re-election later that year.

Just two months previously, however, officials had questioned the escalating costs and direction of the project, the documents indicate. Then-Ambassador William Wood told the contractors: "I'm paying for quality service and not getting it."

Over the next two years, U.S. officials described delays in the power plant as "unacceptable" and expressed "extreme displeasure" in meetings with the two companies overseeing the project, according to minutes of the meetings.

In the midst of the heated discussions, one of the contractors, Louis Berger, a Morristown, N.J.-based company, was negotiating separately with federal prosecutors to settle allegations that it had overbilled the U.S. government. The company has since agreed to pay a nearly $70 million fine, but it's allowed to continue to bid for government contracts.

By the time the Obama administration took over, the plant was only one of several projects under a $1.4 billion contract jointly overseen by Louis Berger and Black & Veatch Corp. that troubled the USAID. The agency also admonished the joint venture for how it handled the refurbishing of the Kajaki Dam, a major pillar of an effort to revive the economy in southern Afghanistan's Taliban strongholds.

One U.S. official chided Louis Berger, saying he'd asked for feedback from USAID staff involved in the power plant contract and received "six pages of negative comments and no positive points."

"It's hard to rebuild trust," the official told a company executive in a phone conversation.

Nonetheless, the power plant's budget climbed from $125 million to $300 million.

Even as they proceeded, officials knew that the diesel plant wouldn't be a reliable power supply because its fuel cost more than the Afghan government could afford to run it regularly.

"We had to finish it," one U.S. official told McClatchy. "There was a lot of outside pressure."

USAID officials vowed to rebid the Kajaki Dam project competitively again, saying it "remains a high priority for the U.S. government," according to internal e-mails.

Yet the agency awarded Black & Veatch a new $266 million sole-source contract in November that includes the dam. The agency exempted the company from competing for the work, claiming that such a process would "have an adverse effect on programs."

Black & Veatch refuted the characterization of the power plant project as troubled. The company also denied that it had any responsibility for the problems with the Kajaki Dam, asserting that Louis Berger had handled that part of the joint contract.

Louis Berger downplayed the acrimony between its executives and the U.S. government as "communications issues" that were isolated to 2008 and resulted from "working in a high-stress and fast-paced environment," not from problems with its work.

The company, however, is one of several contractors responsible for building schools, health clinics and other structures in Afghanistan that the USAID has concluded were built so poorly that they need to be torn down and reconstructed.

Though U.S. officials identified the construction problems years ago, the USAID continued to fund the buildings aggressively without making sure they met international safety codes.

Now American officials are evaluating nearly 1,000 U.S.-funded buildings in Afghanistan to determine whether they were constructed without taking earthquake dangers into account.

Of the first 206 buildings in high-risk areas that were inspected, USAID officials concluded that 129 — most of them schools or clinics — are at serious risk of collapsing in an earthquake.

Making matters worse, American officials said they didn't have any money set aside to address the problems.

"Can you imagine what would happen if there was an earthquake and one of these schools collapsed?" one U.S. official asked.

American officials in Kabul said the buildings represented a small fraction of the thousands that had been constructed with U.S. money. One American official suggested that other programs might get a higher priority than reconstructing some of the seismically unsafe buildings.

"Certainly we appreciate the fact that we don't want people running into problems in a building that USAID built, but in general in Afghanistan we don't want people running into problems in an earthquake," another U.S. official said.

To manage spending in Afghanistan, the USAID increased its staff, but it still struggles to keep tabs on programs. One U.S. official said the agency got "tied down doing paperwork and can't get out into the field to see if the projects are moving ahead." At the same time, it's quadrupled its overall spending to $300 million a month, with more than a quarter of it going directly to the Afghan government.

When it comes to large-scale, ambitious aid programs, many outside experts are at a loss as how to handle programs in Afghanistan better, and they say the problems raise fundamental questions about whether the U.S.'s efforts to rebuild the country can work.

"The job we gave USAID was ridiculous: Build the nation," said T.X. Hammes, a retired Marine Corps officer and senior research fellow at the Center for Strategic Research, National Defense University. "The U.S. has made a huge assumption that counterinsurgency and nation building are applicable for Afghanistan. More and more evidence shows that it's not true."

(Taylor reported from Washington. Jonathan S. Landay in Washington contributed to this article.)

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