War of words on US aid to Afghanistan

Several allegations of mismanagement and waste of U.S. aid in Afghanistan have made headlines lately. What has received less attention is how these reports have further strained an already fickle relationship between U.S. auditors, aid officials and implementing partners. A recent shift in the types of audits conducted by the leading U.S. oversight agency in Afghanistan, its aggressive media tactics and questions about who should have the power to suspend government contractors are among the issues that have created friction in recent months. Devex spoke with government officials, oversight experts and aid implementers about these tensions and how to ensure aid money is spent wisely in Afghanistan. Some of these sources declined to go on the record to avoid jeopardizing sensitive business relationships. All of them were quick to point out their shared goal of seeing foreign aid is delivered efficiently and effectively to improve the lives of people around the world. This is particularly true in the case of Afghanistan, a country struggling to overcome decades of civil unrest and an invasion of U.S. and allied forces that began after the Sept. 11, 2001 terrorist attacks. Enter SIGAR After more than a decade of war on terror, U.S. President Barack Obama’s pledge to withdraw combat troops from Afghanistan by 2014 has accelerated the transition to a more limited engagement and heightened U.S. taxpayers’ interest in what exactly has been accomplished so far. Auditors have grabbed headlines by pointing to unfinished projects and alleged overspending, while donors and their implementing partners suggest — usually, on condition of anonymity — that these watchdogs have been looking for easy scapegoats and are missing the difficult realities of delivering aid to a war-torn country with plenty of infrastructure, governance and security challenges. Much of the recent tension stems from a 2008 decision by Congress to stand up a new independent agency — the Special Inspector General for Afghanistan Reconstruction — to look into allegations of fraud, waste and abuse related to U.S. spending in Afghanistan. SIGAR conducts and commissions audits of U.S. government programs from all agencies involved in Afghanistan’s reconstruction. Its oversight work began in 2009 and its mandate is to continue until the pool of money for reconstruction dips below $250 million per year. That pool currently stands at around $20 billion. The agency is led by John Sopko, who assumed the post of inspector general in July 2012 after members of Congress publicly criticized previous SIGAR leaders as ineffectual. Under Sopko’s leadership, SIGAR has become a more vocal player, to the chagrin of some aid implementers who call the agency’s audit reports misleading and the inspector general’s unusually blunt media statements one-sided and detrimental to the U.S. aid mission. “If you’re prone to believe that contractors are evil anyway or generally don’t do a good job, then the SIGAR reports add fuel to the fire that contractors are not well performing their responsibilities and we ought to fire them, debar them, and execute them at high noon,” Alan Chvotkin, executive vice president and counsel of the Professional Services Council, an advocacy organization for federal contractors, told Devex. Overarching powers With development spending coming under increasing scrutiny in Congress, where the Senate and House are unlikely to approve a budget before the end of the fiscal year on Sept. 30, findings presented in audit reports — especially those that allege waste — can quickly turn into political fuel for those who would see foreign aid budgets slashed. During a House appropriations committee markup in July, for instance, lawmakers approved an amendment — largely symbolic — to the budget that would cut Secretary of State John Kerry’s salary unless he provided Congress with a plan for enacting SIGAR’s recommendations. While the U.S. Agency for International Development’s own inspector general can only look at USAID-funded projects, SIGAR may review projects that cut across government departments — including State and Defense — and make recommendations to all of the agencies involved. Tim Cox, USAID’s deputy inspector general, told Devex that all of the oversight offices, including SIGAR, work well together to avoid redundancy and ensure the highest-priority programs are identified and scheduled for audits by one of the oversight bodies. Gene Aloise, SIGAR’s deputy inspector general, offered a similarly favorable assessment of the coordination process. Representatives from the oversight offices meet quarterly to identify projects to be audited and create an auditing plan. And in Afghanistan, a similar group called the “Afghanistan Shura” convenes an in-country planning process. Audits are prioritized according to several key criteria, including the size of a project’s budget, whether implementation is happening in an area where little oversight has taken place, the performance record of the contractor or grantee, and whether the project involves certain high-risk factors such as a lack of administrative accountability procedures. SIGAR’s media blitzkrieg Some members of the implementer community have been critical of SIGAR’s field auditors and by the agency’s vocal, unfiltered media style, which they argue presents findings in a one-sided light that does not equally represent implementers’ responses. SIGAR officials however argue that implementers have a 21-day window to comment on findings, and that these comments must be included — with SIGAR’s response — in the final audit report. “That comment period is their chance to say we got this totally wrong,” said Aloise. “If we’re wrong, we will change it. We haven’t changed a report yet.” Implementers point out that most people are unlikely to read an audit cover to cover, including the industry response that is tucked away at the end of each report. And they fear that SIGAR’s attention-grabbing Twitter messages and email blasts hinting at aid waste and mismanagement — without any characterization of implementers’ responses to the findings — reinforce a superficial or unbalanced understanding of the watchdog’s findings. Last week, for instance, SIGAR released an audit of a $236 million USAID-funded public health program; within a few days, auditors had issued 20 tweets mentioning the report, each reporting a negative finding and none offering any characterization of USAID’s rebuttal. In an interview with Devex, a USAID official defended the audited public health program and said SIGAR’s report failed to give the “full picture” of the agency’s risk mitigation efforts. Financial vs performance audits Contractors have also reacted with some distress to SIGAR’s relatively recent foray into financial audits, a departure in scope from the “performance” audits the oversight office has typically conducted. These two differ in terms of both the type of findings they produce and the institutions they target. Performance audits look at a development program’s objectives and determine whether or not it has been successful in meeting them. A performance audit is “really looking at USAID,” said Cox. Financial audits, in contrast, review costs incurred by government contractors with the authority to call their expenditures into question. With its shifting audit strategy, SIGAR has set its sights on both USAID programs and individual implementing partners to a degree that has not happened in the past, implementing officials suggest. And while USAID ultimately is responsible for determining whether to implement the recommendations that compose both performance and financial audits, when SIGAR suggests — or tweets — that a particular contractor is mismanaging taxpayer funds, it can damage that company’s credibility regardless of any reasonable explanation. According to a report released July 30, the previous quarter was SIGAR’s most “productive” since Congress created the agency. The agency issued 30 reports, 11 of which were financial audit reports. Chvotkin is concerned that metric for productivity — the number of reports published and the number of findings issued — might force auditors to rush through the fact-finding and analysis process. “When you focus on that orientation, sometimes you can trade off speed for detail, speed for thoroughness, speed for tracing more leads and information,” he noted. Aggressive strategy SIGAR’s publicity push can detract from the oversight body’s ability to uncover meaningful systemic problems in the Afghanistan aid delivery system, he suggested. “John [Sopko] doesn’t get to that. He simply states what he finds,” Chvotkin argued. “Without asking those questions, it’s easy to be misled, particularly if you’re predisposed to jump to the wrong conclusions anyway.” Aloise, who brought 38 years of experience at the Government Accountability Office with him to SIGAR, told Devex this is a “typical response you get from audit work, especially aggressive audit work.” SIGAR’s “aggressive” approach has some implementers worried about a movement in Congress to grant the watchdog authority to suspend federal contractors for misusing funds. Currently, contractors can only be suspended by the federal agency with whom they hold the most contracts. But Congress’s frustration that the Defense Department has been unresponsive to SIGAR’s investigative referrals has led to calls that Sopko’s office be granted authority to freeze implementers from receiving federal contracts. Sopko has stated he supports granting suspension authority to an independent agency with a presence in Afghanistan, whether that agency is SIGAR or not. “I think that’s a mistake,” said Chvotkin. “In my view … we ought not to have the investigators being the judge and jury as well — unless your goal is more suspension and debarment.” That, of course, isn’t SIGAR’s goal, and according to Aloise, implementers should view rigorous oversight as an opportunity to prove to Congress and U.S. taxpayers that aid to Afghanistan is spent wisely, and delivers results: “If you want to pursue your foreign policy objectives, isn’t it right to pursue them correctly?” For U.S. implementers in Afghanistan, making that case has perhaps never been tougher. Read more international development business news. See more related articles: - How to stop 3 new aid crime trends in Afghanistan - Women’s rights in Afghanistan: Uneven and fragile gains