SIGAR Special Inspector General for 

Afghanistan Reconstruction 

 

DECEMBER

2012 

SIGAR Audit 13-2

AFGHANISTAN'S NATIONAL POWER UTILITY: 

$12.8 MILLION IN DOD-PURCHASED 

EQUIPMENT SITS UNUSED, AND USAID PAID A 

CONTRACTOR FOR WORK NOT DONE

SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report
For more information contact SIGAR Public Affairs at (703) 545-5974 or sigar.pentagon.ccr.mbx.public-affairs@mail.mil. 

WHAT SIGAR REVIEWED 

Afghanistan’s national power utility, Da 

Afghanistan Breshna Sherkat (DABS), operates 

and manages electric power generation, import, 

transmission, and distribution throughout 

Afghanistan. Since 2009, the U.S. government 

has supported the Afghanistan government by 

obligating almost $88 million to assist in 

commercializing DABS. U.S. government 

projects-funded by U.S. Forces-Afghanistan 

(USFOR-A) and the U.S. Agency for International 

Development (USAID) focus on assisting DABS 

in increasing cost recovery, reducing losses, 

and building its capacity to manage, operate, 

and maintain a national power system. This 

report provides information on equipment 

purchased to support DABS efforts in Kandahar 

and on fees paid to a USAID contractor. We will 

address additional findings related to U.S. 

government projects to assist in DABS 

commercialization in a forthcoming audit report. 

WHAT SIGAR RECOMMENDS 

To ensure equipment purchased will be used to 

rebuild, repair, and expand electrical 

distribution grids, we recommend that the 

Commanding General, USFOR-A Regional 

Command-South, determine whether $12.8 

million of equipment procured for Kandahar 

province can and should be installed in 

Kandahar and either develop a plan for 

installation or conduct a needs assessment to 

determine other uses for the equipment. We 

also recommend that the USAID Mission 

Director for Afghanistan instruct the mission’s 

contracting office to complete a comprehensive 

assessment of task order deliverables and 

contractor performance and seek 

reimbursement for any fixed fee paid in excess 

of the appropriate amount. USFOR-A and 

USAID concurred with our recommendations. 

Comments from both agencies are reproduced 

in appendices IV and V. 

WHAT SIGAR FOUND 

As part of our ongoing audit of U.S. funded projects to help 

commercialize DABS, we identified two issues that we believe 

warrant immediate attention. 

 First, almost $12.8 million in equipment purchased to meet 

urgent needs in support of the counterinsurgency strategy is 

sitting unused in storage controlled by the U.S. Army Corps of 

Engineers-Afghanistan Engineer District South (USACE-TAS) 

without a clear plan for installation. USFOR-A approved the 

projects under the Commander’s Emergency Response 

Program (CERP)—intended to enable U.S. commanders to 

respond to urgent requirements by carrying out programs that 

will immediately assist local populations—and originally 

intended to turn the equipment directly over to DABSKandahar for installation. However, due to the lack of an 

installation plan, nearly all of the equipment is currently stored 

at Shorandam Industrial Park outside Kandahar City. 

USFOR-A funded the procurement of the equipment without 

considering DABS-Kandahar’s lack of capacity to install and 

manage the equipment and without requiring an initial, 

achievable plan for installation. Although the first contract 

was awarded in August 2010, none of the agencies involved—

USFOR-A, USACE-TAS, USAID or DABS—completed an 

installation plan, either prior to or following procurement of the 

equipment. USACE-TAS officials now cite the poor technical 

capacity of DABS-Kandahar as a barrier preventing it from 

 

U.S government-purchased equipment stored at Shorandam Industrial 

Park, Kandahar province. SIGAR site visit, September 18, 2012. 

SIGAR

Special Inspector General for 

Afghanistan Reconstruction 

December 2012 

AFGHANISTAN'S NATIONAL POWER UTILITY: $12.8 MILLION IN DOD-PURCHASED 

EQUIPMENT SITS UNUSED, AND USAID PAID A CONTRACTOR FOR WORK NOT DONE

SIGAR AUDIT 13-2 
For more information contact SIGAR Public Affairs at (703) 545-5974 or sigar.pentagon.ccr.mbx.public-affairs@mail.mil. 

properly installing and managing the equipment 

independently, but this factor was not considered 

earlier in the funding or procurement processes. 

Further contributing to the ongoing storage of the 

equipment is confusion regarding which agency is 

responsible for the installation of some equipment. 

In response to SIGAR’s initial request for baseline 

information on commercialization projects, USACETAS officials stated that approximately 50,000 

customer electric meters would be installed by 

USAID or its contractor as part of USAID’s task 

order. However, a modification to the task order 

states that the contractor only would be responsible 

for providing an installation plan and not for actual 

installation. USAID reported that the contractor has 

not completed the installation plan for the meters 

as required by the task order modification but has 

offered no further information about why this has 

not been done. Although the agencies reported 

different accounts of who was responsible for the 

installation of the meters, SIGAR could find no 

written agreement between the agencies 

supporting either agency’s assertions. 

The meters procured as part of the starter and 

completion kits have a warranty of 2 years from the 

date of dispatch from the manufacturer (March 3, 

2012). Given the amount of time that has already 

lapsed since purchase, if the meters are found to 

be faulty following installation, the warranty may 

already have expired. This would leave the U.S. 

government with no recourse for the manufacturer 

to replace defective equipment under warranty. 

A second issue is that USAID paid a contractor the 

full allowable fee on a task order, despite the 

contractor’s failure to complete 26 of the 34 

deliverables required. In 2009, USAID awarded the 

$3.4 million cost-plus-fixed-fee Task Order 22 for 

the Afghanistan Infrastructure and Rehabilitation 

Program to Louis Berger Group Inc/Black & Veatch 

Special Projects Corp Joint Venture. The task order, 

with an original period of performance of May 10, 

2009 to May 9, 2011, was initially awarded to 

provide expert technical assistance, training, and 

contract advisory support to DABS Corporate in 

Kabul. However, several modifications followed, 

resulting in an entirely revised scope of work 

focusing on commercialization activities in 

Kandahar; an extended period of performance 

through December 31, 2011; modified deliverables; 

and a near doubling of the original contract value to 

almost $6.8 million. 

Although USAID had disbursed approximately $5.76 

million to the contractor as of July 31, 2012, the 

contractor did not complete76 percent of the 

deliverables required by the task order. Specifically, 

according to the task order and modifications, the 

contractor was responsible for providing a total of 

34 deliverables to USAID. USAID was able to 

provide evidence that the contractor completed 

seven deliverables on time and one additional 

deliverable late. Neither USAID nor the contractor 

provided evidence that the contractor completed 

any of the remaining 26 deliverables. Furthermore, 

SIGAR found no evidence that USAID assessed the 

deliverables provided by the contractor or held the 

contractor responsible for providing required 

outputs. Among the deliverables not completed are 

a draft and final meter installation plan, 

procurement and installation of 231 boundary 

meters, and a transition manual and handover plan 

for Kandahar commercialization activities. 

Meter stored at Shorandam Industrial Park, Kandahar 

province. SIGAR site visit, September 18, 2012. 
December 18, 2012 

General John R. Allen 

 Commander, U.S. Forces-Afghanistan, and 

 Commander, International Security Assistance Force 

Major General Robert B. Abrams 

 Commander, U.S. Forces-Afghanistan Regional Command-South, 

Dr. S. Ken Yamashita 

 USAID Mission Director for Afghanistan 

The Special Inspector General for Afghanistan Reconstruction (SIGAR) is conducting an audit of 

U.S. government efforts to assist in the commercialization of Afghanistan’s national power 

utility, Da Afghanistan Breshna Sherkat (DABS) (code 063A). In this report, we address two 

issues we found in the course of our audit that we believe warrant immediate attention prior to 

issuing a final report in early 2013. First, almost $12.8 million in equipment purchased to 

meet urgent needs is sitting unused in U.S. Army Corps of Engineers-Afghanistan Engineer 

District South (USACE-TAS) controlled storage without a clear plan for installation. Second, the 

U.S. Agency for International Development (USAID) paid a contractor the full allowable fee on a 

contract despite the contractor’s failure to complete 76 percent of required deliverables. We 

are providing the enclosed report for your review and comment. The report includes one 

recommendation to the Commanding General of U.S. Forces-Afghanistan (USFOR-A) Regional 

Command-South to work with stakeholders to develop and execute a plan to install equipment 

valued at approximately $12.8 million and one recommendation to the USAID-Afghanistan 

Mission’s contracting office to complete a comprehensive assessment of deliverables and 

contractor performance and seek appropriate reimbursement for performance deemed 

unsatisfactory. 

We received comments from USFOR-A and USAID, which are reproduced in appendices IV and 

V. USFOR-A concurred with our first recommendation and USAID concurred with our second 

recommendation. SIGAR conducted this work under the authority of Public Law 110‐181, as 

amended; the Inspector General Act of 1978; and the Inspector General Reform Act of 2008 

and in accordance with generally accepted government auditing standards. 

John F. Sopko 

Special Inspector General 

 for Afghanistan Reconstruction 

CC: The Honorable Hillary Rodham Clinton, Secretary of State; The Honorable Leon Panetta, 

Secretary of Defense; The Honorable James B. Cunningham, U.S. Ambassador to Afghanistan; 

General James N. Mattis, Commander, U.S. Central Command; Lieutenant General Thomas 

Bostick, Commanding General and Chief of Engineers, U.S. Army Corps of Engineers
TABLE OF CONTENTS 

SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page i 

Background .................................................................................................................................................................. 1

Almost $12.8 Million in Electricity Distribution Equipment Purchased to Meet Urgent Needs is Sitting Unused in 

Storage ................................................................................................................................................................ 4

USAID Paid Contractor the Maximum Allowable Fee despite Poor Performance .................................................... 7

Conclusions .................................................................................................................................................................. 9

Recommendations ...................................................................................................................................................... 9

Agency Comments ..................................................................................................................................................... 10

Appendix I - Scope and Methodology ....................................................................................................................... 11

Appendix II - Losses in Energy Distribution .............................................................................................................. 12

Appendix III - Status of Deliverables for USAID Task Order 22 ............................................................................... 13

Appendix IV - Comments from U.S. Forces-Afghanistan, Regional Command-South ............................................ 17

Appendix V - Comments from the U.S. Agency for International Development ...................................................... 18

TABLES 

Table 1 - Ongoing and Completed DABS Commercialization Projects ...................................................................... 3

Table I - Status of Deliverables for USAID Task Order 22 ....................................................................................... 13

FIGURES 

Figure 1 - Pallets of Transformers .............................................................................................................................. 4

Figure 2 - Wire Storage ................................................................................................................................................ 5

Figure 3 - Pole Storage ................................................................................................................................................ 5

Figure 4 - Pallets of Customer Meters ........................................................................................................................ 6

Figure I - Energy Flow from Generation to Distribution ............................................................................................ 12

Figure II - Losses in the Distribution System ............................................................................................................ 12
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page ii 

ABBREVIATIONS & ACRONYMS 

CERP Commander’s Emergency Response Program 

DABS Da Afghanistan Breshna Sherkat 

LBG/B&V Louis Berger Group, Inc./Black & Veatch Special Projects Corp. Joint Venture 

RC-S Regional Command-South 

RC-SW Regional Command-Southwest 

SIGAR Special Inspector General for Afghanistan Reconstruction 

TO 22 Task Order 22 

USACE U.S. Army Corps of Engineers 

USACE-TAS U.S. Army Corps of Engineers-Afghanistan Engineer District South 

USAID U.S. Agency for International Development 

USFOR-A U.S. Forces-Afghanistan
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 1 

Since 2009, the U.S. government has supported the Afghan government by obligating almost $88 million to 

assist in commercializing the national power utility, Da Afghanistan Breshna Sherkat (DABS). In addition to 

those funds already obligated, the U.S. Agency for International Development (USAID) plans to provide an 

additional $157 million between 2013 and 2016 to assist with building capacity and commercializing DABS as 

part of USAID’s $814 million Power Transmission Expansion and Connectivity program. DABS operates and 

manages electric power generation, import, transmission, and distribution throughout Afghanistan. U.S. 

government projects—funded by USAID and U.S. Forces-Afghanistan (USFOR-A)—focus on assisting DABS in 

increasing cost recovery, reducing losses,1 and building DABS’s capacity to manage, operate, and maintain a 

national power system (see appendix II for more details on where/how losses occur throughout the 

transmission and distribution process). 

As part of our ongoing audit of U.S.-funded projects to assist in commercializing DABS—initiatives responding to 

the Afghanistan government’s goal of developing a modern and efficiently run energy supplier—we identified 

two issues related to U.S. commercialization projects in Afghanistan’s Kandahar province that we believe 

warrant immediate attention and prompted us to issue this interim report.

BACKGROUND 

Afghanistan’s National Priority Programs include increasing energy sector commercialization and national 

generation capacity as a key component of the government’s national energy policy.2 The overall mission of 

DABS within this framework is to acquire, operate, and maintain the equipment and systems needed to 

finance, generate, supply, and expand electricity to all areas of Afghanistan. 

DABS headquarters is located in the city of Kabul; DABS also maintains seven regional departments 

throughout the country in Kabul, Parwan, Kunduz, Balkh, Herat, Nangarhar, and Kandahar provinces.3 Since 

2009, the U.S. government has focused its commercialization efforts primarily in Kabul and—to a lesser 

extent—Kandahar and Helmand. Due in part to these efforts, DABS-Kabul has been relatively successful in 

improving revenue collection and reducing losses in Kabul. 

The U.S. government’s efforts to assist DABS in Kandahar and Helmand have been less successful, however. 

USAID cites security concerns, resistance from regional DABS officials, and a lack of available qualified staff as 

difficulties in moving forward with commercialization activities. USAID estimates power losses of 60 to 80 

percent for DABS-Kandahar. Our analysis of USAID data on DABS-Kandahar revenues from November 2010 to 

 

1Commercialization efforts include reducing technical and commercial losses in the distribution process. Technical losses 

refer to differences in the amount of energy purchased by a utility and the amount of energy consumed or stored by the 

utility; these losses often occur as a result of poorly maintained or aging equipment/infrastructure and overloading. Nontechnical (or commercial) losses refers to differences in the amount of (1) energy consumed and the amount billed 

(unbilled energy), and (2) energy billed and energy paid (unpaid energy). Throughout this report, we use “losses” to refer to 

both technical and nontechnical losses in the electrical distribution process. 

2Government of Afghanistan, National Priority Programs, Economic and Infrastructure Development Cluster, July 2010, 

pg 49. The 22 National Priority Programs are grouped in six clusters: Security, Human Resource Development, 

Infrastructure Development, Private Sector Development, Agriculture and Rural Development, and Governance. The 

National Energy Program, designed to address the gap between supply and demand for electricity, is included under the 

Infrastructure Development cluster. 

3Additionally DABS has 10 sub-regional offices, including an office in Helmand. 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 2 

 October 20114 indicates that such losses resulted in at least $4.3 million5 in lost revenue during that period.6 

Nevertheless, USAID maintains that the successful commercialization of DABS-Kandahar will serve longer term 

development needs and contribute to the U.S. military’s counterinsurgency strategy. In addition, continuing 

commercialization activities are linked to the sustainability of projects intended to improve the distribution and 

transmission of power to southern Afghanistan. 

For our audit, we defined “commercialization” as U.S. government efforts to assist DABS to increase revenues, 

decrease losses, and become a self-sustaining entity.7 Since 2009, USAID has obligated almost $61 million 

on two contract task orders and one grant to assist in commercialization efforts in Kabul and Kandahar; 

however, all but the grant are completed. USFOR-A has obligated more than $27 million in Commander’s 

Emergency Response Program (CERP) funds—intended to enable U.S. commanders to respond to urgent 

requirements by carrying out programs that will immediately assist local populations—to USACE-TAS to 

purchase equipment to assist in rebuilding, repairing, and expanding current electrical distribution grids for 

Regional Command-South (RC-S) and Regional Command-Southwest (RC-SW).8 USAID is not currently funding 

any new commercialization projects in Afghanistan, but it is planning to provide an additional $157 million to 

DABS in direct assistance between 2013 and 2016 to assist in commercialization and capacity building. Table 

1 shows ongoing and completed U.S. government projects designed to assist in the commercialization of 

DABS. 

 

 

4USAID received DABS-Kandahar revenue data from its contractor in Kandahar. The contractor departed Kandahar in 

December 2011, so more recent data is not available for analysis. 

5Actual total amount collected by DABS-Kandahar during this period was 145,352,438 Afghanis. Analysis and currency 

conversion based on 60 percent losses and September 30, 2012 U.S. Department of Treasury exchange rate of 50.5 

Afghanis to 1 U.S. dollar. 

6Some losses are common in electricity transmission and distribution. For example, losses in the United States average 7 

percent. 

7While USFOR-A, USACE, and USAID were unable to provide an official definition of commercialization, all agencies agreed 

with our working definition. A document provided by USAID during our audit work defines commercialization activities as 

those “supporting the development of effective commercial capacity of DABS, including the systems, corporate 

commitment, and human resource capacity to operate on a commercial basis, with full cost recovery.” We coordinated the 

development of our definition with USAID early in our work and believe the definitions are materially the same. 

8The area of responsibility for RC-S is Kandahar, Uruzgan, Zabul, and Daykundi provinces. The area of responsibility for RCSW is Helmand and Nimroz provinces. 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 3 

Table 1 - Ongoing and Completed DABS Commercialization Projects 

Funding 

Agency Project Location Description Status Period of Performance 

Obligated 

Amount 

USAID 

Kabul Electricity 

Services Improvement 

Project 

Kabul 

Commercialization 

activities 

Complete 5/5/2009-

3/31/12 $53,025,290

USAID 

Kandahar 

Commercialization 

(Task Order 22)b

Kandahar Complete 5/10/09- 

12/31/11 $6,875,436 

USAID Etisalat Afghanistan Kandaharc

Support Etisalat in 

mobile electricity bill 

payment 

Ongoing 12/1/11-

12/31/12 $676,110 

RC(S) 

Kandahar City Starter 

Kit 1 

Kandahar 

The near term 

increase and 

improved reliability of 

electrical power in the 

Kandahar area. 

Complete 8/13/10-

3/25/12 

$7,446,712d

Kandahar City Starter 

Kit 2 Ongoinge 7/20/11-1/16/12 

RC(S) Pashmul Completion 

Kits 

Kandahar 

Purchase materials 

for new digital, 

individual metered 

connections to 

homes and 

businesses. 

Ongoing 09/29/11-

11/30/12 

$2,843,564d

RC(S) Maiwand Completion 

Kits 

Kandahar $2,704,128d

RC(S) Spin Boldak 

Completion Kits 

Kandahar $3,232,527d

RC(SW) Sangin Completion 

Kits 

Helmand 

Ongoing 9/28/11-

12/30/12 

$2,843,564d

RC(SW) Musa Qa’leh 

Completion Kits Helmand $2,704,128d

RC(SW) Hyderabad Completion 

Kits Helmand $2,704,128d

RC(SW) Tangi Completion Kits Helmand $2,843,564d

Total $87,899,151

Source: SIGAR analysis of USFOR-A, USACE-TAS, and USAID data. 

Notes: aRows highlighted in blue denote projects discussed in this report. 

bThe initial task order scope of work cites providing technical assistance, training, and contract advisory support to DABS 

Corporate. Modification 1 to the Task Order changed the scope of work to providing technical assistance to DABSKandahar. 

cThe initial grant cites supporting Etisalat in mobile electricity bill payment in Kandahar. Modification 1 to the grant 

changed the implementation area from Kandahar to Kabul. 

dRepresents amount of CERP funds transferred from RC-S and RC-SW to USACE-TAS through a Military Interdepartmental 

Purchase Request. 

eUSACE-TAS has not modified the period of performance and is still receiving equipment purchased as part of the 

Kandahar City Starter Kit 2. 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 4 

ALMOST $12.8 MILLION IN ELECTRICITY DISTRIBUTION EQUIPMENT 

PURCHASED TO MEET URGENT NEEDS IS SITTING UNUSED IN STORAGE 

According to USAID,9 improvement in 

residential collections is by far the largest 

opportunity for DABS-Kandahar to increase 

revenues. However, existing customer 

meters are antiquated, and USAID reports 

that surveys suggest around 70 percent of 

meters are typically broken or underrecorded.10 Existing meters also can be 

easily tampered with, causing inaccurate 

billing of energy consumption. 

To help DABS-Kandahar address these 

issues, USFOR-A approved four CERP 

projects intended to help DABS decrease 

losses and increase revenues. These 

projects were designed to procure urgently 

needed electricity distribution equipment11

—including new electric meters—for 

Kandahar. USFOR-A requested that 

USACE-TAS execute the contracts to 

purchase the equipment for use by DABS-Kandahar to help rebuild, repair, and expand the current electrical 

distribution grids, including meter replacement. USACE-TAS executed the CERP projects through two contracts 

for this equipment in Kandahar City (Starter Kit 1 and Starter Kit 2, signed August 13, 2010 and July 20, 2011, 

respectively) and one contract for completion kits in Pashmul, Maiwand, and Spin Boldak (signed 

September 29, 2011).12 USACE-TAS procured the equipment from a contractor, Jubaili Brothers, at a total of 

more than $12.8 million in CERP funds. As of September 20, 2012, USACE-TAS had received approximately 

90 percent of the equipment.13

 

9Reported by USAID contractor Louis Berger Group Inc./Black & Veatch Special Projects Corporation Joint Venture 

(LBG/B&V). 

10Task Order 22 Close-out Report dated March 2012. 

11The CERP funds were transferred from USFOR-A to USACE through a Military Interdepartmental Purchase Request. 

12Starter kits and completion kits are made up of equipment to improve the electricity distribution infrastructure. According 

to USACE officials, and based on our review of the required equipment, the two kits are virtually identical in content and 

include items such as meters, transformers, poles, and trucks. 

13The percentage excludes equipment received for Kandahar City Starter Kit 1, as USACE has not been able to provide 

SIGAR with receiving information for this contract; however, USACE officials stated that 100 percent of the equipment for 

this contract has been received. 

Figure 1 - Pallets of Transformers 

Source: SIGAR site visit photo, September 18, 2012. 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 5 

USFOR-A approved the CERP projects based on USFOR-A requirements that CERP funds be used to meet an 

urgent need. USFOR-A originally intended that the equipment be turned directly over to DABS-Kandahar for 

installation.14 The project justifications contained in the approved CERP files for the four projects state that 

the projects support the U.S. government’s counterinsurgency strategy in Afghanistan, respond to an urgent 

humanitarian need, and increase the Afghan government’s capacity to generate and deliver electricity to the 

Afghan people. The CERP files also state that DABS-Kandahar would administer and execute the installation of 

the equipment, under the supervision and management of USACE-TAS. However, USACE-TAS only received 

funding to procure the equipment and was not funded to provide supervision and management of the 

installation. 

After procuring the equipment, however, USACE-TAS officials determined that DABS-Kandahar lacked the 

technical and operational capacity to properly install and manage it.15 Instead of being turned over to DABS for 

installation, therefore, nearly all equipment currently sits unused in a USACE-TAS-controlled storage facility at 

Shorandam Industrial Park outside Kandahar City without a plan in place for its ultimate installation.16 Figures 

1-4 show the equipment in its current storage location. 

 

14USFOR-A PUB1-06, Commander’s Emergency Response Program (CERP) SOP, March 2012. 

15 USACE-TAS has not made a formal assessment of the capacity of DABS-Kandahar. 

16 Shorandam Industrial Park is a U.S. facility housing a power plant supplying electricity, and is located just outside of 

Kandahar City. According to USACE, the facility will be turned over to the Government of Afghanistan in December 2014. 

SIGAR auditors and an engineer inspected the equipment in storage in September 2012 and the equipment appeared to 

be well-maintained within the storage facility and USACE had a process and internal controls for approving requests and 

issuing equipment to DABS-Kandahar. According to USACE-TAS, the equipment is presently distributed to DABS-Kandahar 

on an as-needed basis. To date, however, only a limited number of items have been turned over. 

Figure 2 - Wire Storage Figure 3 - Pole Storage 

 

Source: SIGAR site visit photo, September 18, 

2012. 

 Source: SIGAR site visit photo, September 18, 2012. 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 6 

Figure 4 - Pallets of Customer Meters 

Source: SIGAR site visit photo, September 18, 2012. 

USFOR-A funded the procurement of the equipment without considering DABS-Kandahar’s lack of capacity to 

install and manage the equipment or requiring an initial, achievable plan for installation. Although the first 

contract was awarded in August 2010, none of the agencies involved—USFOR-A, USACE-TAS, USAID or DABS—

completed an installation plan, either prior to or following procurement of the equipment.17 In addition, 

despite CERP requirements that projects be sustained by a local population, agency, or government office, no 

agency determined the capacity of the Afghan stakeholder, DABS, to install and maintain the equipment until 

after it had already been procured. USACE-TAS officials now cite the poor technical capacity of DABS-Kandahar 

as a barrier preventing it from properly installing and managing the equipment independently, but this factor 

was not considered earlier in the funding or procurement processes; USAID and Asian Development Bank 

officials18 independently verified this assessment. 

Further contributing to the ongoing storage of the equipment is confusion regarding which agency is 

responsible for the installation of some equipment. In response to our initial data request for baseline 

information on commercialization projects, USACE-TAS officials stated that approximately 50,000 customer 

electric meters, procured as part of the Kandahar City Starter Kit 2, and constituting approximately 60% of the 

value, would be installed by USAID or its contractor as part of USAID’s Task Order 22 (TO 22). However, 

modification 2 of TO 22 explicitly contradicts this, stating that the contractor only would be responsible for 

providing an installation plan and not for actual installation. Specifically, the modification states: 

“The U.S. Army Corps of Engineers (USACE) will be providing 55,000 customer meters to DABS to 

replace existing meters that are dysfunctional. The [USAID] contractor shall prepare a plan and 

implementation schedule for the installation of the new meters provided by USACE. The plan will 

 

17Recent discussions between USFOR-A RC-S, USACE-TAS, and DABS-Kandahar as a direct result of our audit indicate 

potential efforts to develop an installation plan as well as improve communication on future CERP projects. 

18Asian Development Bank is the lead donor organization in Afghanistan’s energy sector, and, in conjunction with the 

Afghan government, is developing the master plan for Afghanistan’s energy sector. 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 7 

include the replacement of existing meter boxes to protect the new meters and prevent tampering. 

The contractor will not be responsible for installing the meters.” 

USAID reports that the contractor has not completed the installation plan for the meters as required by 

modification 2 of TO 22, but has offered no further information about why this has not been done. Although 

the agencies reported different accounts of who was responsible for the installation of the meters, we could 

find no written agreement between the agencies supporting either agency’s assertions. 

The meters procured as part of the starter and completion kits have a warranty of 2 years from the date of 

dispatch from the manufacturer, March 3, 2012. Given the amount of time that has already lapsed since 

purchase, if the meters are found to be faulty following installation, the warranty may already have expired. 

This would leave the U.S. government with no recourse for the manufacturer to replace defective equipment 

under warranty. According to USAID officials, some of this equipment may be installed as part of its planned 

Power Transmission Expansion and Connectivity program, but USAID does not yet have any finalized 

statements of work, and no formal, coordinated installation plan has been developed with USFOR-A, USACETAS, and DABS. 

USAID PAID CONTRACTOR THE MAXIMUM ALLOWABLE FEE DESPITE POOR 

PERFORMANCE 

On May 10, 2009, USAID awarded the $3.4 million cost-plus-fixed-fee TO 22 for the Afghanistan Infrastructure 

and Rehabilitation Program to LBG/B&V.19 The task order, with an original period of performance of May 10, 

2009 to May 9, 2011, was initially awarded to provide expert technical assistance, training, and contract 

advisory support to DABS Corporate in Kabul. However, several modifications followed, resulting in an entirely 

revised scope of work focusing on commercialization activities in Kandahar; an extended period of 

performance through December 31, 2011; modified deliverables; and a near doubling of the original contract 

value to almost $6.8 million. 

Although USAID had disbursed approximately $5.76 million to the contractor as of July 31, 2012, the 

contractor did not complete76 percent of the deliverables required by TO 22. Specifically, according to the 

task order and modifications, the contractor was responsible for providing a total of 34 deliverables to USAID. 

USAID was only able to provide evidence that the contractor completed seven deliverables on time and one 

additional deliverable late. Neither USAID nor the contractor provided evidence that the contractor completed 

any of the remaining 26 deliverables. Furthermore, we found no evidence that USAID assessed the 

deliverables provided by the contractor or held the contractor responsible for providing required outputs. 

Among the deliverables not completed are a draft and final meter installation plan, procurement and 

installation of 231 boundary meters, and a transition manual and handover plan for Kandahar 

commercialization activities. (See appendix III for a list of all deliverables and associated status.) 

In the TO 22 closeout report, the contractor stated that several challenges prevented the completion of 

deliverables, including short timeframes, delays, and issues with DABS-Kandahar management. The 

contractor also noted, however, that these challenges were evident from the start of the activities supporting 

DABS-Kandahar. For example, the contractor did not meet with DABS-Kandahar managers until September 

2010 — almost a year after the Kandahar commercialization piece was added. Similarly, although LBG/B&V 

 

19In August 2006, USAID awarded a 5-year indefinite quantity contract with a ceiling price of $1.405 billion, to the 

LBG/B&V for the Afghanistan Infrastructure and Rehabilitation Program. Under this contract, between August 25, 2006 and 

August 24, 2011, USAID issued 27 cost-plus-fixed-fee task orders. Black and Veatch was the implementing partner 

responsible for the implementation of TO 22 (contract number 306-I-22-06-00517-00). 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 8 

hired a Task Order Manager in early December 2010, he did not arrive in Kandahar until August 2011. 

According to the contractor’s closeout report for TO 22: 

“...it was clear from the start that both the timeframe and the scope of work were not sufficient to 

deliver the expected results. On top of this the external environment was one that lacked the legal 

framework to support commercialization efforts, senior [DABS] management were kept in place 

despite the fact that they were not qualified for the positions and had an agenda to continue with the 

inefficient and corrupt practices of the past...” 

Adding to the contractor’s stated challenge of too much work and too little time, USAID and DABS headquarters 

officials identified friction and a personality conflict between the LBG/B&V TO 22 Manager and the head of 

DABS-Kandahar as further issues preventing the completion of some contract activities. According to a former 

Black & Veatch official responsible for the closeout of TO 22, the Task Order Manager and Deputy Task Order 

Manager were pulled out of Kandahar in November 2011 to help alleviate the personality conflicts. 

Consequently, the contractor had a Task Order Manager on the ground in Kandahar for fewer than 4 months of 

the entire commercialization effort. Despite the contractor’s assertion that challenges in fulfilling the terms of 

the contract were “clear from the start,” the contractor nonetheless signed the task order and associated 

modifications, thereby accepting responsibility for the contract deliverables. It remains unclear whether the 

contractor made satisfactory efforts to provide contractually required deliverables. 

On January 12, 2012, after the expiration of the task order’s period of performance, a senior LBG/B&V official 

responsible for the Afghanistan Infrastructure and Rehabilitation Program contract submitted a written request 

to USAID to modify TO 22’s statement of work. The contractor-requested modification appears to be an effort 

to more closely align the statement of work with what the contractor actually completed. However, the 

modification request only addressed 5 of the 26 deliverables the contractor did not complete. According to 

USAID officials, the modification request has been under review since they received it over 9 months ago. 

USAID stated that it will review the items LBG/B&V is requesting that USAID remove from the statement of 

work and that the contracting officer’s representative is still working with LBG/B&V to reconcile the 

contractor’s budget. However, a review of communication between USAID and the contractor suggests that 

USAID plans to simply modify the statement of work, per the contractor’s request, without adjusting the fee or 

other costs in any other way.20 

The Federal Acquisition Regulation allows a fixed fee to be conditional based upon receipt of required 

deliverables. USAID, however, paid the maximum allowable fixed fee to the contractor, even though our 

analysis found that only 24 percent of required deliverables were completed. Federal Acquisition Regulation 

16.306(d)(1) states that a cost-plus-fixed-fee contract requiring a definite goal or end product—such as 

reports—requires the contractor to complete and deliver the specified end product within the estimated cost as 

a condition for payment of the entire fixed fee. Additionally, the Afghanistan Infrastructure and Rehabilitation 

Program contract21 states that, 

“If the Contracting Officer determines that this [fixed fee payment] method results in paying a 

disproportionately higher ratio of fixed fee than the percentage of work that the Contractor has 

completed, then the Contracting Officer may suspend further payment of any fixed fee until the 

Contractor has made sufficient progress to justify further payment...” 

 

20Our analysis of communication between responsible USAID officials and the contractor from February to September 2012 

found that USAID continually asked the contractor to provide budget revisions so that a modification to the contract, per the 

contractor’s request, could be completed. Since the completion of the task order, in December 2011, USAID never told the 

contractor that the contractor may face a reduction in fee due to poor performance. After receiving a copy of a draft of this 

report, on October 17, 2012, USAID informed the contractor of the possible performance-based reduction in fixed fee, more 

than 9 months after the original modification request. 

21Contract 306-I-00-06-00517-00, §B.5.3.a. 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 9 

The Afghanistan Infrastructure and Rehabilitation Program contract allows up to 4 percent of contract costs to 

be billed as a fixed fee, which resulted in approximately $224,000 in potential fees for TO 22.22 Although the 

contractor only completed 24 percent (8 out of 34) of the deliverables, leaving 76 percent (26 out of 34) 

incomplete, the contractor billed for—and USAID paid—the full fee allowable under the task order. 

Furthermore, according to the modification request by LBG/B&V, the contractor requested a $70,000 discount 

from a supplier due to late equipment delivery. We reviewed communication between the contractor and 

USAID regarding the discount, but have seen no evidence that any cost savings were passed on to the U.S. 

government. 

CONCLUSIONS 

Although CERP guidance requires that program funds be used to respond to urgent needs with immediate, 

locally sustainable projects, nearly all of the CERP-funded equipment purchased to help DABS-Kandahar 

reduce losses and increase revenue is currently in storage with no plan for future installation. The equipment 

could be used to replace antiquated existing meters and allow access to electricity for more customers in 

Southern Afghanistan. However, USFOR-A and USACE-TAS, in coordination with DABS and USAID, did not 

adequately plan for the installation of the equipment, and USFOR-A and USACE-TAS failed to properly assess 

the technical capacity of DABS-Kandahar prior to purchasing the equipment. If the technical capacity of DABSKandahar prevents the proper installation, management, and use of the equipment, U.S. government agencies 

should work with DABS to comprehensively assess how the equipment can provide immediate 

commercialization and counterinsurgency effects for DABS throughout Afghanistan. 

Additionally, although the USAID contractor for TO 22 only completed 24 percent of the deliverables, USAID 

paid the full fee allowable under the task order. The Federal Acquisition Regulation requires a contractor to 

complete and deliver a specified end product as a condition for payment of the entire fixed fee. In this case, 

however, USAID has paid the contractor a fee for work that was not completed and should therefore reassess 

whether the contractor is indeed due the maximum fee allowable. 

RECOMMENDATIONS 

To ensure that purchased electrical equipment will be used to repair, and expand electrical distribution grids, 

we recommend that the Commanding General for USFOR-A RC-S: 

1. Put approximately $12.8 million in equipment to better use by determining whether equipment 

procured as part of the starter and completion kits for Kandahar province can and should be installed 

in Kandahar (given CERP requirements for urgency, counterinsurgency effects, and capacity of DABS 

Kandahar to sustain the equipment), and: 

a. If so, develop and execute a clear plan for the installation of the equipment; this plan should 

include clear timelines, responsibilities, and funding streams for installation, and should be 

 

22The initial negotiated fixed fee for the task order was approximately $264,000. This is a fixed fee and should not 

fluctuate with contract costs. However, emails from responsible USAID officials to the contractor required the contractor to 

limit its fee to 4 percent of total contract costs. USAID provided disbursements as of July 31, 2012, but the contractor’s 

estimate at completion provided to USAID on September 19, 2012 showed a total of almost $5.61 million dollars spent 

under the contract, resulting in a fixed 4 percent fee of $224,544. 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 10 

executed as soon as possible to respond to the urgent needs and counterinsurgency 

objectives, as required, or; 

b. If not, conduct a needs assessment for consideration of repurposing the equipment at 

locations other than those indicated in the original procurement documentation. 

Consideration of repurposing should respond to the requirement for timely installation based 

on DABS’ needs, and capacity for installation and management in areas throughout the 

country. 

This recommendation should be performed in close coordination with USACE-TAS, USAID, DABS Corporate, and 

DABS-Kandahar. 

To ensure that USAID’s contractor is not paid a fee for work that was never performed and/or completed, we 

recommend that the USAID Mission Director for Afghanistan instruct the USAID Mission Afghanistan’s Office of 

Acquisition and Assistance to, before closing out TO 22: 

2. Complete a comprehensive assessment of TO 22 deliverables and contractor performance. Using the 

results of this assessment, USAID should negotiate the appropriate fixed fee associated with TO 22 

that should be paid and seek reimbursement for any fee paid in excess of the negotiated amount in 

order to hold the contractor accountable for incomplete deliverables. 

AGENCY COMMENTS 

USFOR-A and USAID provided written comments on a draft of this report. These comments are reproduced in 

appendices IV and V, respectively. USFOR-A, USACE-TAS, and USAID also provided technical comments, which 

we incorporated into our final report, as appropriate. 

USFOR-A concurred with our first recommendation. According to USFOR-A, RC-S has developed a plan for the 

installation of the equipment that was approved by the RC-S Commanding General and includes timelines, 

responsibilities, and funding streams for installation. Although we have not been provided a copy of the 

approved plan, these steps appear to meet the intent of our recommendation. 

USAID concurred with our second recommendation and stated that the Office of Acquisition and Assistance is 

pursuing a course of action with the contractor to negotiate an appropriate fixed fee for work completed under 

TO-22. 

   
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 11 

APPENDIX I - SCOPE AND METHODOLOGY 

In July 2012, the Special Inspector General for Afghanistan Reconstruction (SIGAR) initiated an audit of U.S. 

government efforts to assist in the commercialization of Da Afghanistan Breshna Sherkat (DABS). Specifically, 

SIGAR sought to (1) identify the goals of U.S. government projects to commercialize DABS, particularly in Kabul 

and Kandahar; assess the extent to which metrics are capturing progress of those projects; and evaluate the 

extent to which completed and ongoing projects have achieved or are achieving stated objectives; (2) assess 

the transition from completed DABS commercialization projects to recently awarded/planned projects, and the 

extent to which planned projects consider lessons learned; and (3) evaluate the level of coordination among 

U.S. agencies involved in DABS commercialization and the extent to which commercialization projects 

implemented by those agencies contribute to a self-sustaining DABS. SIGAR issued this interim report to 

highlight issues related to DABS commercialization requiring immediate consideration prior to the issuance of 

our detailed audit report scheduled for issuance in early 2013. To accomplish our objectives, we reviewed 

relevant guidance, including the Federal Acquisition Regulation and the current Money as a Weapon System 

Afghanistan, dated March 2012. We reviewed all award, contract, disbursement, and obligation data for Task 

Order 22 (TO 22), all subsequent modifications, and all 8 Commander’s Emergency Response Program (CERP) 

projects. We reviewed the closeout report for TO 22 and all CERP file documentation for the 8 CERP projects. 

We reviewed documents in the period between July 2010 and September 2012. 

We performed data reliability tests to determine the accuracy and completeness of the computer-processed 

data in the report by comparing CERP project files to Military Interdepartmental Purchase Request data 

provided by U.S. Forces-Afghanistan (USFOR-A) and U.S. Army Corps of Engineers-Afghanistan Engineer District 

South (USACE-TAS). We also compared USAID disbursement and obligation data with TO 22 contract and 

modification documentation. We determined that the data were sufficiently reliable for the purposes of the 

audit objectives. 

We assessed USFOR-A’s internal controls over CERP project files to determine whether CERP project 

documentation in the Combined Information Data Network Exchange database was complete. 

We interviewed officials at USAID Offices of Financial Management, Acquisition and Assistance, Economic 

Growth and Infrastructure, and Program and Project Development; Department of Defense Offices USFOR-A J9, 

USFOR-A Regional Command-South, USFOR-A Inspector General, and USACE-TAS. We also interviewed 

representatives from the World Bank, the Asian Development Bank, DABS Corporate, and current and former 

in-country Black & Veatch staff. We also viewed the equipment purchased by USACE with USFOR-A funds 

stored at the Shorandam Industrial Park outside of Kandahar City. 

We conducted our audit work in Kabul, Afghanistan, and Washington, D.C., from July 2012 to October 2012, 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. This audit was performed by SIGAR 

under the authority of Public Law 110-181, as amended, the Inspector General Act of 1978, and the Inspector 

General Reform Act of 2008. 

 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 12 

APPENDIX II - LOSSES IN ENERGY DISTRIBUTION 

The majority of energy losses occur in the distribution phase of energy flow to customers. Figure I shows how 

energy flows from generation to transmission and distribution. 

Figure I - Energy Flow from Generation to Distribution 

Source: National Energy Education Development Project (Public Domain). 

Losses in the distribution of energy occur for technical and non-technical (or commercial) reasons, and utilities 

must address both types simultaneously (not one or the other) to increase revenues and achieve full cost 

recovery. Figure 2 demonstrates where technical and non-technical losses occur in the distribution system. 

Figure II - Losses in the Distribution System 

Source: USAID document for the South Asia Regional Initiative for Energy
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 13 

APPENDIX III - STATUS OF DELIVERABLES FOR USAID TASK ORDER 22 

The table below shows the status of deliverables for Task Order 22 (TO 22). Deliverables completed are those 

USAID provided to SIGAR found to be sufficient to meet the deliverable as required by the task order and all 

modifications. See table I. 

Table I - Status of Deliverables for USAID Task Order 22 

Deliverable Modification # Date Due Status 

1 Monthly reports Initial Task Order Within 5 days after the end of 

each month 

Completed 

2 Annual work plan Within 15 days of contract 

award; USAID will respond 

within 5 calendar days and 

anticipate a finalized work plan 

within 30 days of award 

Completed, 

but not on time 

3 Final report Not specified Incomplete 

4 Brief technical reports Not specified Completed 

5 Baseline estimates of energy 

input to KED and cash collection 

Not specified Completed 

6 Training materials for senior 

DABS, KED, and Afghanistan 

government officials 

Not specified Incomplete 

7 Technical reports/training 

materials related to DABS 

corporate development 

Not specified Incomplete 

8 Baseline study showing current 

production of energy and sales 

with comparison to DABSKandahar documented revenue 

Modification 1 No later than 90 days after 

award 

Completed 

9 Establishment of employee 

distribution loss reduction 

qualifications program for up to 

30 staff 

No later than 1 year after 

award 

Incomplete 

10 Well-trained distribution loss 

prevention team established 

within DABS-Kandahar with key 

performance indicators and 

incentive system 

No later than 240 days after 

award 

Incomplete 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 14 

Table I - Status of Deliverables for USAID Task Order 22 

Deliverable Modification # Date Due Status 

11 Detailed designs, including bills 

of quantity of hardware 

requirements, for Kandahar 

technical distribution system 

improvements 

Modification 1 No later than 120 days after 

award 

Completed 

12 System for calculating electricity 

tariffs that would allow for full 

cost recovery and a schedule for 

implementation 

No later than 1 year after 

award 

Incomplete 

13 Plan designed and implemented 

to facilitate DABS-Kandahar 

management 

structure/accounting system 

towards commercial viability 

No later than 90 days after 

award 

Incomplete 

14 Draft report on bulk and 

boundary metering with results 

of technical/non-technical loss 

calculations and plan for 

recovering losses 

Modification 2 No later than November 17, 

2011 

Incomplete 

15 Final report on bulk and 

boundary metering with results 

of technical/non-technical loss 

calculations and plan for 

recovering losses incorporating 

USAID review comments 

No later than December 20, 

2011 

Incomplete 

16 Draft customer meter 

installation plan, detailing meter 

replacement plan 

No later than December 1, 

2011 

Incomplete 

17 Final customer meter 

installation plan incorporating 

USAID review comments 

No later than December 20, 

2011 

Incomplete 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 15 

Table I - Status of Deliverables for USAID Task Order 22 

Deliverable Modification # Date Due Status 

18 List of employees trained in 

equipment maintenance 

Modification 2 Upon COTR approval Incomplete 

19 Written set of goals for 

monitoring production, sales, 

and revenue 

Modification 3 (revised 

from Modification 1) 

No later than 90 days after 

award 

Incomplete 

20 Implemented plan to procure 13 

computers 

No later than November 15, 

2011 

Incomplete 

21 Normalize Pooyesh customer 

database 

No later than November 15, 

2011 

Incomplete 

22 Implement customer cash 

receipting system 

No later than November 15, 

2011 

Incomplete 

23 Implement customer care 

module 

No later than November 15, 

2011 

Incomplete 

24 Implement revenue 

management module 

No later than November 15, 

2011 

Completed 

25 Procurement and installation of 

231 boundary meters 

Modification 3 (revised 

from Modification 2) 

Not specified; meters intended 

to provide information on 

losses for report. Draft report 

no later than November 17, 

2011; final report no later than 

December 20, 2011. 

Incomplete 

26 Installation of a data center and 

train DABS employees on how to 

collect and use data generated 

by the boundary meters 

Not specified; meters intended 

to provide information on 

losses for report. Draft report 

no later than November 17, 

2011; final report no later than 

December 20, 2011. 

Incomplete 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 16 

Table I - Status of Deliverables for USAID Task Order 22 

Deliverable Modification # Date Due Status 

27 Training plan and attendance 

sheets for all trained DABS 

employees on bulk and 

boundary meeting 

Modification 3 (revised 

from Modification 2) 

Training plan no later than 

October 15, 2011. 

All training to be completed no 

later than December 31, 2011. 

Incomplete 

28 

Pilot program, including 

implementation plan, for SMS 

billing 

Initial tranche of no less than 

500 bills delivered by SMS 

before November 30, 2011. 

SMS billing implementation 

plan before December 15, 

2011. 

Incomplete 

29 Syllabus and training materials 

for each seminar/training 

session (use and maintenance 

of IT systems) 

No later than November 30, 

2011 

Incomplete 

30 Complete equipment inventory 

of all items procured and 

delivered to DABS 

Upon COTR approval Incomplete 

31 Evidence of training and 

capacity building (use and 

maintenance of IT systems, such 

as testing results) 

No later than November 30, 

2011 

Incomplete 

32 Roster of participants for 

training and capacity building 

(use and maintenance of IT 

systems) 

No later than November 30, 

2011 

Completed 

33 Transition manual/handover 

plan 

Modification 3 No later than December 15, 

2011 

Incomplete 

34 DABS office improvements No later than October 31, 

2011 

Incomplete 

Source: SIGAR analysis of TO 22, modifications, and related documentation. 

a

Although a closeout report, dated March 22, 2012, was completed, it omits a thorough discussion of specific deliverables. 

The report therefore does not appear to meet the requirement for a final report as stipulated in the contract. 

 

 

 

 

 

 

 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 17 

APPENDIX IV - COMMENTS FROM U.S. FORCES-AFGHANISTAN, REGIONAL 

COMMAND-SOUTH 

 
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 18 

APPENDIX V - COMMENTS FROM THE U.S. AGENCY FOR INTERNATIONAL 

DEVELOPMENT 
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SIGAR Responses to USAID’s December 2, 2012 Memorandum 

1. The report accurately characterizes agency responsibilities, and USAID’s comment provides no 

evidence or specific instance to demonstrate that our report conflates USAID and USACE authorities or 

processes. 

2. The report does not state that TO 22 activities had no effect in improving commercialization, and we 

agree with USAID that DABS Kandahar still has unacceptably high levels of ATC losses. Nevertheless, 

USAID does not provide evidence that TO 22 activities resulted in the asserted increases in supplied 

power or revenues, and USAID mischaracterizes the cause for the increases. In fact, we would expect 

power generation and revenues to increase in Kandahar in 2011, but those increases likely have 

nothing to do with TO 22 activities. As we reported in SIGAR 12-12, CERP-funded power plants were 

built and commissioned in Kandahar in the third quarter of fiscal year 2011, and the U.S. government 

(through the Afghanistan Infrastructure Fund) continues to provide up to 27 megawatts of “free” 

electricity to DABS Kandahar; DABS Kandahar then collects revenues based on the U.S.-funded 

energy. 

3. The report does not state that the TO 22 contractor was responsible for installation, but the report 

clearly states, as indicated by USAID, that the contractor was required to complete an installation plan. 

On multiple occasions, we requested a copy of the installation plan that was required by the TO 22 

Statement of Work. USAID representatives told us that the plan was not completed. Further, in 

response to an earlier draft of this report, USAID provided all deliverables completed by the contractor. 

USAID did not provide a copy of the plan at that time, and we still have not seen evidence of its 

completion. 

4. As indicated in the report, and according to USACE, very little of the equipment has been installed. 

5. In discussions with USFOR-A and USACE, and in their formal comments on this report, the agencies did 

not report that the International Finance Corporation was conducting an assessment of best use of the 

CERP-funded materials. Moving forward, we hope that USAID shares its plans and the forthcoming 

assessment with key stakeholders, including USFOR-A and USACE, because USAID has no authority or 

responsibility for CERP funds. 

6. We agree that the minor changes help clarify the recommendation, and we made the requested 

revisions, as appropriate, in the final draft. 

7. USAID’s assessment shows that the contractor only completed 17 deliverables, or 50 percent. As 

noted by USAID, the remaining 17 deliverables were either not completed or partially completed. 

Further, USAID’s analysis cites several deliverables as “completed,” without providing any evidence to 

SIGAR. Therefore, we maintain that USAID should hold the contractor responsible for the deliverables 

and seek appropriate reimbursement. 

8. Because USAID heeded our recommendation and took action to explore and resolve the issue, we 

deleted this line from the recommendation in the final report. 

9. CERP is a DOD program, managed by USFOR-A; thus, it remains unclear why USAID would 

independently commission an assessment for the best use of CERP-procured equipment that resides 

in USACE controlled storage. Further, in discussions with USFOR-A and USACE, and in their formal 

comments to this report, the agencies did not report that the International Finance Corporation was 

conducting an assessment of best use of the CERP-funded materials, and rather reported that no plan 

was in place for installation of the equipment. Therefore the recommendation is not redundant. 

   
SIGAR Audit 13-2/Afghanistan’s National Power Utility Interim Report Page 25 

This audit was conducted under project code 

SIGAR-063A. 
SIGAR’s Mission 

Obtaining Copies of SIGAR 

Reports and Testimonies 

To Report Fraud, Waste, and 

Abuse in Afghanistan 

Reconstruction Programs 

Public Affairs 

The mission of the Special Inspector General for Afghanistan 

Reconstruction (SIGAR) is to enhance oversight of programs for the 

reconstruction of Afghanistan by conducting independent and 

objective audits, inspections, and investigations on the use of 

taxpayer dollars and related funds. SIGAR works to provide accurate 

and balanced information, evaluations, analysis, and 

recommendations to help the U.S. Congress, U.S. agencies, and 

other decision-makers to make informed oversight, policy, and 

funding decisions to: 

 improve effectiveness of the overall reconstruction 

strategy and its component programs; 

 improve management and accountability over funds 

administered by U.S. and Afghan agencies and their 

contractors; 

 improve contracting and contract management 

processes; 

 prevent fraud, waste, and abuse; and 

 advance U.S. interests in reconstructing Afghanistan. 

To obtain copies of SIGAR documents at no cost, go to SIGAR’s Web 

site (www.sigar.mil). SIGAR posts all publically released reports, 

testimonies, and correspondence on its Web site. 

To help prevent fraud, waste, and abuse by reporting allegations of 

fraud, waste, abuse, mismanagement, and reprisal, contact SIGAR’s 

hotline: 

 Web: www.sigar.mil/fraud 

 Email: sigar.pentagon.inv.mbx.hotline@mail.mil 

 Phone Afghanistan: +93 (0) 700-10-7300 

 Phone DSN Afghanistan: 318-237-3912 ext. 7303 

 Phone International: +1-866-329-8893 

 Phone DSN International: 312-664-0378 

 U.S. fax: +1-703-601-4065 

Public Affairs Officer 

 Phone: 703-545-5974 

 Email: sigar.pentagon.ccr.mbx.public-affairs@mail.mil 

 Mail: SIGAR Public Affairs 

2530 Crystal Drive 

Arlington, VA 22202