SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN RECONSTRUCTION

Afghan First Initiative Has Placed Work with Afghan 

Companies, but Is Affected by Inconsistent Contract 

Solicitation and Vetting, and Employment Data 

Is Limited

January 31, 2012
SIGAR

Special Inspector General for Afghanistan Reconstruction

SIGAR Audit-12-6 January 2012

Afghan First Initiative Has Placed Work with Afghan Companies, 

but Is Affected by Inconsistent Contract Solicitation and 

Vetting, and Employment Data Is Limited 

What SIGAR Reviewed

The Afghan First Initiative (AFI) supports U.S. counterinsurgency objectives by supporting Afghan companies in order to increase 

Afghan employment. The Fiscal Year 2008 National Defense Authorization Act authorized the Department of Defense (DOD) to limit

competition to Afghan products, services, and sources. In 2010, further guidance was issued to agencies which encourage local 

procurement contracting for the purpose of improving the Afghan economy by building Afghan leadership, participation, capacity, 

and sustainability. This report assesses (1) how agencies identified and documented that Afghan companies were eligible for AFI, 

(2) progress made on selected contracts with Afghan companies, and (3) how agencies were measuring progress towards AFI’s 

overall goal of increasing employment. To accomplish these objectives, SIGAR met with contracting officials from DOD, the 

Department of State, the U.S. Agency for International Development (USAID), and Afghan contractors and manufacturers. SIGAR 

limited its review to the Afghanistan Security Forces Fund, the Economic Support Fund, and other reconstruction funds. SIGAR 

reviewed 29 AFI construction contracts and conducted 10 site inspections to determine compliance with contract terms. SIGAR

conducted work from March 2011 to December 2011 in seven provinces in Afghanistan, in accordance with generally 

accepted government auditing standards. 

What SIGAR Found

U.S. contracting authorities used at least six different methods to announce contract solicitations to the Afghan business community 

and at least seven separate databases to vet contractor ownership and capacity. The announcement methods provided numerous

opportunities for Afghan businesses to identify U.S. contract opportunities; however, most U.S. agencies did not use a website that 

consolidated this information in a single location. Similarly, a wide variety of databases were available to vet Afghan companies for 

ownership, resource capacity, and prior performance. However, many U.S. agencies did not use the full range of information 

available to vet companies prior to award. For example, although U.S. agencies obtained business licenses at the time of award to 

confirm Afghan ownership, they did not independently verify these licenses with Afghan authorities or monitor the validity of the 

licenses throughout the contract’s period of performance. SIGAR found four instances in which non-Afghan companies were 

awarded an AFI contract. As a result of the inconsistent approaches in selecting and vetting Afghan companies, access to contract 

opportunities may have been limited, and some companies may not have been eligible for AFI contracts. 

Over 90 percent of the AFI reconstruction-funded awards that SIGAR reviewed were for construction projects, of which 20 Afghan 

companies received nearly 80 percent of the $654.4 million awarded. SIGAR reviewed 29 AFI construction contracts valued at 

$133 million and found that the companies generally met contract requirements. SIGAR found that 19 construction projects that

had cost and schedule variances, were generally justifiable, supported by approved modifications. Of the 10 construction projects 

SIGAR inspected, only a police station in Farah Province had significant construction deficiencies, although corrective action was 

recently taken by the contracting authority.

The absence of both a standard definition of employment and a systematic requirement to track and verify employment figures 

resulted in an inability to fully assess the effect of $654.4 million in AFI reconstruction contract awards over the last 3 years. 

U.S. agencies collect employment data on Afghan employment related to their procurement awards for a variety of purposes and 

through a variety of means; however, these efforts are not designed to gauge agency progress toward promoting Afghan 

employment through the AFI award process. Aggregate data on Afghan employment resulting from coalition partners’ contracting 

activities is only available in a coalition partners created “scorecard,” which includes broad indicators of the effect of contracts 

awarded by coalition countries. For a variety of reasons, however, this data does not provide a suitable basis for measuring the 

effect U.S. procurement efforts have had on generating short- and long-term employment gains in Afghanistan in support of 

U.S. goals.

What SIGAR Recommends

To broaden the base of participating Afghan companies, and ensure that only qualified companies receive AFI awards, SIGAR is 

making four recommendations to the Commander of U.S. Forces-Afghanistan and the U.S. Ambassador to Afghanistan, in 

coordination with the U.S. Central Command Combined Joint Theater Support Contracting Command (C-JTSCC), U.S. Army Corps of 

Engineers, and the USAID Mission Director to Afghanistan to develop more systematic approaches for soliciting and vetting 

contracts, and collecting employment data. The U.S. Embassy and C-JTSCC concurred with the recommendations. The U.S. Army 

Corps of Engineers concurred with three recommendations and did not concur with one due to challenges in measuring local 

employment in Afghanistan. 

For more information contact: SIGAR Public Affairs at (703) 545-5974 or sigar.pentagon.ccr.mbx.public-affairs@mail.mil
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page i

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN RECONSTRUCTION

January 31, 2012 

The Honorable Ryan C. Crocker 

U.S. Ambassador to Afghanistan 

General John R. Allen 

Commander, U.S. Forces-Afghanistan, and

Commander, International Security Assistance Force

Rear Admiral Nicholas Kalathas

Commander, U.S. Central Command Joint Theater Support 

Contracting Command

Lieutenant General Daniel P. Bolger

Commanding General, NATO Training Mission-Afghanistan/ 

Combined Security Transition Command-Afghanistan

Major General Merdith W. B. Temple

Acting U.S. Army Chief of Engineers and 

Acting Commanding General, U.S. Army Corps of Engineers

Dr. S. Ken Yamashita

USAID Mission Director to Afghanistan 

This report discusses the results of the Office of the Special Inspector General for Afghanistan 

Reconstruction’s (SIGAR) audit of the Afghan First Initiative (AFI) implemented by U.S. contracting 

authorities. This report includes four recommendations to the Commander of U.S. Forces-Afghanistan

and the U.S. Ambassador to Afghanistan, in coordination with U.S. Central Command Combined Joint 

Theater Support Contracting Command, U.S. Army Corps of Engineers, and the U.S. Agency for 

International Development Mission Director to Afghanistan, to assure that AFI solicitation and vetting 

procedures are improved, Afghan business ownership is verified, and the effect on employment is 

adequately measured.

When preparing the final report, we considered comments from the U.S. Embassy Kabul, U.S. Central 

Command Joint Theater Support Contracting Command (C-JTSCC), U.S. Army Corps of Engineers, and the 

Combined Security Transition Command-Afghanistan (CSTC-A). These comments are reproduced in 

appendices II-V, respectively. The U.S. Embassy, C-JTSCC, and CSTC-A concurred with the 

recommendations. The U.S. Army Corps of Engineers did not concur with one recommendation due to 

challenges in measuring local employment in Afghanistan. SIGAR conducted this performance audit under 

the authority of Public Law No. 110-181, as amended; the Inspector General Act of 1978; and the 

Inspector General Reform Act of 2008.

Steven J Trent

Acting Special Inspector General

for Afghanistan Reconstruction
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page ii

TABLE OF CONTENTS

Background ...................................................................................................................................................2

Contracting Authorities Used Inconsistent Methods To Solicit and Vet Afghan 

Companies..............................................................................................................................................4

Selected AFI Construction Projects Generally Met Contract Terms and Our 

Inspections Generally Found Minor Construction Flaws .....................................................................10

Data on Employment Gains Is Limited........................................................................................................13

Conclusion...................................................................................................................................................14

Recommendations......................................................................................................................................15

Comments...................................................................................................................................................15

Appendix I: Scope and Methodology..........................................................................................................16

Appendix II: Comments From the U.S. Embassy Kabul...............................................................................18

Appendix III: Comments From Centcom Joint Theater Support Contracting 

Command .............................................................................................................................................26

Appendix IV: Comments From NATO Training Mission-Afghanistan / Combined 

Security Transition Command-Afghanistan..........................................................................................28

Appendix V: Comments From U.S. Army Corps of Engineers.....................................................................29

TABLES

Table 1: AFI Funding and Award Categories, by Contracting Authority, January 

2008 through May 2011.........................................................................................................................3

Table 2: Contract Solicitation Methods by Agency.......................................................................................5

Table 3: Databases or Information Sources Available for Vetting of Afghan 

Companies..............................................................................................................................................6

Table 4: Databases and Information Sources Utilized by Contracting Authorities 

to Vet Afghan Companies for Award......................................................................................................7

Table 5: Status of AFI Construction Projects in July-August 2011 ..............................................................12

FIGURES 

Figure 1: Distribution of AFI Awards by Procurement Category ($ in millions)..........................................11
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page iii

ACRONYMS

ABAP Afghan Business Advisor Program

AFI Afghan First Initiative

AFWG

AISA

Afghan First Working Group

Afghanistan Investment Support Agency

CERP Commander’s Emergency Response Program

C-JTSCC U.S. Central Command Joint Theater Support Contracting Command

COIN Counterinsurgency

CSTC-A Combined Security Transition Command-Afghanistan

DOD Department of Defense

INL Bureau of International Narcotics and Law Enforcement Affairs

ISAF International Security Assistance Force

NDAA National Defense Authorization Act

PAS Public Affairs Section

PDT Peace Dividend Trust

PPIRS Past Performance Information Retrieval System

SIGAR Special Inspector General for Afghanistan Reconstruction

State Department of State

TFBSO Task Force for Business and Stability Operations

USACE U.S. Army Corps of Engineers

USACE-TAN USACE, Afghan Engineer District - North

USACE-TAS USACE, Afghan Engineer District - South

USAID U.S. Agency for International Development

USFOR-A U.S. Forces-Afghanistan
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 1

Afghan First Initiative Has Placed Work with Afghan Companies, but Is Affected

by Inconsistent Contract Solicitation and Vetting, and Employment Data 

Is Limited

Since March 2006, U.S. military and civilian agencies operating in Afghanistan have taken steps to 

ensure that a greater number of contracts are awarded to Afghan companies. Over time, these efforts 

have become known collectively as the Afghan First Initiative (AFI).

1

 The key aim of AFI isto support 

U.S. counterinsurgency (COIN) objectives by helping create job opportunities to improve the economy. 

In January 2008, AFI was codified in Section 886 of the Fiscal Year 2008 National Defense Authorization 

Act (NDAA)2

In fiscal year 2011, the International Security Assistance Force (ISAF) estimated that U.S. agencies 

contracted over $4 billion, out of $17.3 billion, with Afghan companies. This report examines only the 

part of AFI funded by funds such as the Afghanistan Security Forces Fund, the Economic Support Fund, 

and other reconstruction funds.

authorizing the Department of Defense (DOD) to limit competition to Afghan products, 

services, and sources. In the fall of 2010, the U.S. Forces-Afghanistan (USFOR-A) Commander and the 

U.S. Ambassador to Afghanistan issued guidance that U.S. contracting agencies should hire Afghans first, 

buy Afghan products, and build Afghan capacity.

3

 We reviewed reconstruction funds provided to Afghan prime 

contractors.

4 Based on agency-reported data for reconstruction activities5

To accomplish these objectives, we met with contracting officials from the Combined Security Transition 

Command-Afghanistan (CSTC-A); the U.S. Central Command Joint Theater Support Contracting 

Command (C-JTSCC), responsible for 12 Regional Contracting Centers in Afghanistan; the U.S. Army 

—U.S.-funded reconstruction 

awards to Afghan prime contractors from January 2008 to May 2011 totaled $654.4 million, of which 

over 90 percent went to construction projects throughout Afghanistan. Specifically, we assessed

(1) how agencies identified and documented that Afghan companies were eligible for AFI, (2) progress 

made on selected contracts with Afghan companies, and (3) how agencies were measuring progress 

towards AFI’s overall goal of increasing employment.

 1

We refer to the “Afghan First Initiative” throughout this report, but it has also been referred to as the Afghan First 

Program and Afghan First Policy by U.S. officials at different times. 

2

P.L. 110-181, Section 886.

3

According to ISAF, more than 90 percent of the $4 billion was spent on four primary categories: products 

purchased from Afghan vendors (49 percent), construction (28 percent), support services (11 percent), and 

transportation (6 percent). 

4

Reconstruction funds are used to build or rebuild the physical infrastructure of Afghanistan, establish training or 

technical assistance programs for the Afghan government, deliver relief assistance to the people of Afghanistan,

and provide security or other support functions to facilitate reconstruction efforts. To identify U.S.-funded AFI 

awards, we requested agencies to identify contracts that they had awarded to prime Afghan vendors funded by 

Afghanistan Security Forces Fund, the Economic Support Fund, and other reconstruction funds.

5

Both the U.S. Agency for International Development (USAID) and the Air Force Center for Engineering and the 

Environment manage significant portfolios of U.S.-funded reconstruction project in Afghanistan, which were 

excluded from this audit. We did not include the Air Force Center for Engineering and the Environment because it 

reported it did not have any prime contracts with Afghan companies. USAID officials noted that the agency relies 

almost exclusively on non-Afghan entities to serve as prime contractors or grantees. However, the agency 

encourages its prime contractors and grantees to employ Afghan companies as sub-contractors.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 2

Corps of Engineers’ (USACE) Afghanistan Engineer District-North (USACE-TAN) and Afghanistan Engineer 

District-South (USACE-TAS); DOD’s Task Force for Business and Stability Operations (TFBSO); the 

U.S. Agency for International Development (USAID); the Department of State (State); interagency 

working groups; and Afghan companies. We excluded awards made under the Commander’s 

Emergency Response Program (CERP). We selected 29 construction contracts valued at $133 million for 

detailed review, and made inspections of 10 project sites valued at $46 million. We also held a panel 

discussion with 10 Afghan companies that had received AFI awards. We conducted our audit work in 

seven Afghan provinces from March 2011 to December 2011 in accordance with generally accepted 

government auditing standards. Appendix I provides a more detailed discussion of our scope and 

methodology.

BACKGROUND 

From 2002 through December 31, 2011, $85.5 billion has been appropriated for Afghanistan

reconstruction. This effort has resulted in reported progress in terms of infrastructure development and 

the restoration of certain critical services. However, security conditions remain tenuous in certain parts 

of the country and both unemployment and underemployment remain high, which raises concerns 

about Afghanistan’s future as expected draw-downs of international operations and assistance begin.6

• In March 2006 then Commanding General of Combined Forces Coalition-Afghanistan,

announced the creation of the “Afghan First” program to leverage Combined Forces 

Coalition-Afghanistan’s activities and resources to promote the Afghan economy.

 

To further COIN objectives, the United States initiated AFI to increase Afghan job opportunities to help 

improve the Afghan economy. As illustrated below, U.S. laws and related guidance established AFI.

• In January 2008, Section 886 of the 2008 NDAA stipulated DOD to limit competition to Afghan 

companies if used by Afghanistan security forces or if the limitation is in the “national security 

interest of the United States” when the limitation provides “a stable source of jobs” in 

Afghanistan and will not harm military operations nor the U.S. industrial base.

7

• In 2009, Section 1102 of the Supplemental Appropriations Act stipulated that State’s Economic 

Support Funds may be awarded on a limited-competition basis in Afghanistan in a manner that 

utilizes Afghan entities and improves the economic, social well-being, and political status of 

Afghan women and girls.

 

8

• In early 2010, the U.S. Ambassador and Commander USFOR-A and Commander ISAF, issued an

“Afghan First Policy,” which states that the U.S. Mission will work with the United Nations 

Assistance Mission in Afghanistan, USFOR-A, the ISAF, and international organizations to 

increase procurement from Afghan companies. 

 

• In September 2010, the Commander USFOR-A and Commander ISAF, issued COIN contracting 

guidance to ISAF urging the award of more contracts directly to Afghan companies.9

• In November 2010, the U.S. Ambassador issued additional COIN contracting guidance directing

all U.S. Embassy and USAID Mission personnel in Afghanistan to adhere to overall COIN goals in 

contracting on behalf of the U.S government. 

 

 6

The Central Intelligence Agency World Factbook notes that despite the “infusion of international assistance,” 

Afghanistan is “highly dependent on foreign aid.” The Factbook notes Afghanistan, in 2008, had a 35 percent 

unemployment rate – making it the 180th worst figure out of 199 countries the Central Intelligence Agency ranked.

7

P.L. 110-181, Section 886.

8

P.L. 111-32, Section 1102.

9

COIN contracting objectives include hiring Afghans first, buying Afghan products, and building Afghan capacity.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 3

• In September 2011, the Commander USFOR-A and Commander ISAF, re-issued the ISAF COIN 

contracting guidance, which stated that, in addition to the COIN objectives in the September 

2010 guidance, local leaders must be consulted and vendors must be vetted to ensure that 

contracting does not allow the diversion of funds. 

U.S. Awards to Afghan Companies since January 2008

DOD, State, and USAID are the primary U.S. contracting authorities in Afghanistan. Between January 

2008 and May 2011, these contracting authorities reported awarding $654.4 million in reconstruction 

funds directly to 214 Afghan companies for 356 contracts or other agreements for construction, 

services, and commodities. USACE accounted for over $531 million, or 81 percent, of the AFI awards. 

The majority of the C-JTSCC,10

Table 1: AFI Funding and Award Categories, by Contracting Authority, January 2008 

through May 2011

USACE, USAID, and State’s Bureau of International Narcotics and Law 

Enforcement Affairs (INL) AFI reconstruction awards were for construction, followed by commodities. 

Awards by the U.S. Embassy’s Public Affairs Section (PAS) were for services only. USAID makes some 

awards directly to Afghan companies, but generally relies on its non-Afghan contractors and grantees to 

use Afghan companies as sub-contractors. See table 1.

Contracting 

Authority

Total Number 

of AFI Prime 

Awards 

Total Dollar 

Value of All 

Awards

(in millions)

Construction Services Commodities /

Other

USACE 125 $531.5 100% 0% 0%

C-JTSCC 192 $66.4 58% 19% 24%

INL 27 $37.4 52% 7% 41%

PAS 8 $10.2 0% 100% 0%

USAID 4 $8.9 75% 25% 0%

Total 356 $654.4

Source: SIGAR analysis of USACE, C-JTSCC, State, and USAID data. 

Note: Percentages are based on number of awards and may not add to 100 percent due to rounding.

Though awards come directly from these contracting entities, several entities, which do not directly 

contract with Afghan companies, play a role in AFI. 

• The U.S. Embassy established the Afghan First Working Group (AFWG) in June 2010 to 

coordinate both U.S. and international efforts in AFI. Both civilian and military agencies 

participate in the AFWG. The AFWG acts as a forum to exchange information and provide a 

strategic, high-level view of AFI efforts, but it cannot authorize, compel, or instruct agencies to 

make awards to Afghan companies.

• In 2006, DOD created TFBSO to increase the number of contracts awarded to Iraqi companies, 

but in 2009 it shifted its focus to Afghanistan at the request of ISAF, the U.S. Central Command, 

and the U.S. Embassy Kabul. Among other activities, TFBSO created the AfghanFirst.org website, 

which is intended to be a repository for AFI solicitations for all agencies.

 10We are conducting a separate review to assess the reliability of C-JTSCC’s data (see app. I).
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 4

• The Peace Dividend Trust (PDT) is a non-governmental organization partially funded by 

development agencies from Canada and the United Kingdom. In 2006, it established the Peace 

Dividend Marketplace-Afghanistan, which is intended to support the AFI local procurement 

practices. PDT maintains a database of registered Afghan companies that is used by some

contracting authorities in Afghanistan.

• The Afghanistan Investment Support Agency (AISA) is the primary Afghan government entity 

responsible for issuing required business operating licenses and tax identification numbers to 

businesses. Other Afghan ministries may issue a license, based on their specific area, but AISA 

licenses are required for all businesses that are not small retail firms or import/export firms. 

CONTRACTING AUTHORITIES USED INCONSISTENT METHODS TO SOLICIT AND VET AFGHAN 

COMPANIES

U.S. contracting authorities used at least six different methods to announce solicitations to the Afghan 

business community and at least seven separate databases to vet for contractor ownership and capacity. 

The announcement methods used by U.S. contracting authorities provided numerous opportunities for 

the Afghan business community to identify U.S. contract opportunities; however, the U.S. contracting 

authorities did not use an established information portal intended to consolidate information on 

U.S. contract opportunities. Similarly, a wide variety of databases are available to vet Afghan companies 

for ownership, resource capacity, and prior performance. However, none of the contracting authorities

used the full range of information available in these databases to vet companies prior to award. For 

example, we found that U.S. agencies did not routinely check business licenses to ensure that Afghan 

companies are qualified to do business in Afghanistan. We reviewed 19 licenses of companies with 

U.S. contracts under AFI and found that four companies were foreign owned. As a result, access to 

procurement opportunities by Afghan companies may be limited, and some companies may not have 

been eligible.

Solicitations for Procurement Opportunities Were Not Provided In a Single Location

U.S. contracting authorities reported at least six different methods to announce their contract

opportunities, increasing the likelihood that Afghan companies may not be able to identify the full range 

of solicitations available. Table 2 illustrates how U.S. contracting authorities advertised their AFI

contract solicitations. Contracting authorities generally relied on a mix of websites, meetings, and 

conferences and, in some cases, solicited companies from internal agency databases.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 5

Table 2: Contract Solicitation Methods by Agency 

Contracting 

Agency

AfghanFirst

.Org

Federal 

Business 

Opportunities 

Website

Agency 

Website

Peace 

Dividend 

Trust

Website or 

Fairs

Industry Fairs, 

Conferences 

or Other 

Meetings

Internal Agency 

Database, 

Afghan Advisors 

C-JTSCC  

USACE-TAN    

USACE-TAS      

INL   

PAS 

USAID    

Source: SIGAR analysis of information from C-JTSCC, USACE, State, USAID, and Federal Business Opportunities and 

AfghanFirst.org websites.

The TFBSO established AfghanFirst.Org, in cooperation with partner nations, to provide a simple 

mechanism to communicate with the Afghan business community. The website’s goal is to simplify 

interaction between Afghan business and the international community's contracting professionals who 

purchase materials in support of their respective missions. AFWG also promotes the use of this website 

as a source of U.S. contract solicitations for AFI. We found that only USACE used the website. INL

explained that it uses the website of the U.S. Consulate General in Frankfurt to announce solicitations

because its Regional Procurement Support Office is located there. However, it is unlikely that this 

website is well known in the Afghan business community as a source of AFI awards. INL officials also 

reported that they often relied on informal knowledge of local companies, which could limit the ability 

to attract new companies. In response to our request, PAS reported AFI grants that were sole source 

and therefore did not use solicitation mechanisms. However, in commenting on a draft of this report, 

the U.S. Embassy stated that since June 2010, PAS policy is to limit sole source and make awards under 

specific requests for proposals or the Annual Program Statement for open competition that are solicited 

on grants.gov and the U.S. Embassy website. Some Afghan companies that participated in our panel 

discussion noted that a single website would be useful in identifying all U.S. contract solicitations

available and, at a minimum, could provide links to available solicitations on other contracting authority 

websites. 

Vetting of Afghan Ownership and Sufficiency of Resources Was Inconsistent

Contracting officials have multiple databases available to vet Afghan companies prior to award to 

document (1) Afghan ownership, (2) sufficiency of resources (cash flow, equipment, and staff), and 

(3) past performance.11

 11We did not include vetting Afghan vendors for insurgent links. A recent U.S. Government Accountability Office 

report addressed this topic. See GAO-11-355, U.S. Efforts to Vet Non-U.S. Vendors Need Improvement 

(June 8, 2011).

 Specifically, we found that contracting authorities used at least seven different

databases or information sources to vet companies. However, they did not use the same sources and 

only one agency used the full range of reported databases or information sources available to vet 

Afghan companies prior to award. Although U.S. contracting authorities obtained the business licenses 

at the time of award to confirm Afghan ownership, they neither independently verified business licenses 
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 6

with Afghan authorities nor monitored the validity of business licenses throughout the period of 

performance of a contract. In addition, only one information source was available to check for 

sufficiency of company resources, but it does not verify a potential company’s current cash flow. We 

found that only C-JTSCC used this database to vet sufficiency of resources. As of September 2011, 

C-JTSCC acquisition guidance was updated to require that C-JTSCC use business advisors located at 

Afghan regional contracting centers for C-JTSCC to validate (1) vendor information in the Joint 

Contingency Contracting System,12

Table 3: Databases or Information Sources Available for Vetting of Afghan Companies

(2) legitimacy of vendor registration documentation, and (3) business 

portfolio of Afghan companies. As shown in table 3, contracting authorities varied widely in selecting

databases or information sources to vet Afghan companies for ownership, sufficiency of resources, and 

prior performance. 

Acronym Database or Information Source Afghan

Ownership

Sufficiency of 

Resources

Past 

Performance

AISA Afghanistan Investment Support 

Agency



CPARS Contractor Performance Assessment 

Reporting System



EPLS Excluded Parties List System 

FAPIIS Federal Awardee Performance and 

Integrity Information System



JCCS Joint Contingency Contracting System 

PDT Peace Dividend Trust’s Registration and 

Validation Process

  

PPIRS Past Performance Information Retrieval 

System



Source: SIGAR analysis of DOD, State, and USAID documents and interviews, PDT interviews and documents, AISA 

documents and interviews, and data from CPARS, EPLS, FAPIIS, JCCS.

Note: Sufficiency of resources includes cashflow, equipment, and staffing resources. In March 2011, C-JTSCC implemented 

an Afghan Business Advisor program utilizing Afghan business advisors to validate Afghan company’s business portfolios.

Table 4 identifies which databases or information sources were used by the U.S. contracting authorities 

to vet Afghan companies. The lack of a standard approach for vetting Afghan companies raises 

questions regarding the adequacy and thoroughness of agency vetting efforts and the potential risk for 

incomplete identification of qualified Afghan companies for AFI awards. 

 12The Joint Contingency Contracting System is a DOD database that provides information on the past performance 

of vendors. 
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 7

Table 4: Databases and Information Sources Utilized by Contracting Authorities to Vet Afghan 

Companies for Award

Contracting 

Authority ABAPa AISA CPARS EPLS FAPIIS JCCSb PDT PPIRS Internal Databases

INL  N/A

PAS   N/A 

C-JTSCC      

USACE       c

USAID    N/A

Source: SIGAR analysis of C-JTSCC, USACE, State, and USAID documents and interviews; PDT interviews and documents;

documents from AISA, CPARS, EPLS, FAPIIS, JCCS; and agency websites.

Notes: a

In March 2011, C-JTSCC initiated an Afghan Business Advisor Program (ABAP) requiring the use of Afghan business advisors to 

plan vendor outreach events, assist with resolution of vendor registration, payment and claims issues and help match host nation 

vendors’ capabilities to coalition forces needs. 

b According to U.S. Embassy comments, JCCS is not applicable for vetting State and USAID contracts. c

USACE-TAN maintains a “Section 886” database, which lists all companies that have registered with USACE.

Afghan Ownership

Section 886 of the 2008 NDAA allowed DOD to limit competition, provide preference, or use 

non-competitive procurement methods in procuring a product or service in Afghanistan.

13 A product 

from Afghanistan is defined to be mined, produced, or manufactured in Afghanistan. A service from 

Afghanistan is defined to be performed in Afghanistan by citizens or permanent resident aliens of 

Afghanistan. An Afghan company is defined as a business that (1) is owned by an Afghan citizen; (2) has 

51 percent or more interest in the business held by an Afghan citizen, as indicated in licensing 

documentation, (3) holds a current operating license issued by a Government of the Islamic Republic of 

Afghanistan licensing authority; and (4) holds a identification number.

14

• PDT provides information on ownership via its business portal website, 

afganistan.buildingmarkets.org. According to PDT, the database provides information on over 

7,000 Afghan-owned businesses across the country. Companies are entered into the business 

portal after a 7-step registration and validation process, which includes a site visit to the 

company by a PDT official and confirmation that the company has a current domestic business 

license—issued by the Afghan government—specifically the AISA.

U.S. contracting officials 

reported using two sources of information to vet the ownership of Afghan companies: (1) the PDT

database and (2) the AISA online website or licensing department officials.

• AISA maintains a business directory on its website, which can be used to check whether a 

company has a valid AISA license and is Afghan owned or foreign owned. AISA’s database, in 

contrast to PDT’s, allows direct access to verify a company’s status with AISA. However, we 

found instances in which the database provided incorrect ownership information. For example, 

AISA officials told us they had issued 20 to 30 licences designated as domestic ownership when,

in fact, they were internationally owned. 

 13P.L. 110-181, Section 886. 

14According to TFBSO, these three criteria are the common U.S. government/North Atlantic Treaty Organization 

approved definition of an Afghan company. 
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 8

Only two contracting authorities—C-JTSCC and USAID—reported using these databases to verify 

ownership and licensing documents of Afghan companies. USACE-TAS, INL, and PAS officials reported 

they were either unaware of AISA’s online database or tended to accept AISA licenses at face value 

without validation due, in part, to the lack of requirements to further verify licenses. 

To determine an Afghan company’s ownership, U.S. contracting authorities collected AISA licenses from 

Afghan companies at the time of award and maintained those documents as verification of Afghan

ownership. Our review of contract files for AFI awards found that AFI awards went to companies that 

were not Afghan-owned, although contracting authorities had copies of AISA licenses to confirm 

ownership from Afghan companies. Specifically, we reviewed 19 AISA licenses to determine whether 

they had a “D” for domestic or an “I” for international license and independently confirmed ownership 

status of these Afghan companies with AISA licensing officials.15 As described below, 4 of 19 companies 

that we reviewed were registered as majority foreign-owned—or “international”—companies at the 

time of award. AISA confirmed in October 2011, that one of these companies had recently become 

Afghan-owned and would now have a “D” license. These companies had received a total value of over 

$23 million in AFI awards.16

• AISA confirmed that company A was registered as a foreign-owned company at the time of 

award, but AISA’s files demonstrated that company A, as of October 2011, was a majority 

Afghan-owned company. According to AISA officials, the company was a majority foreignowned when it first registered with AISA, but the foreign owner—an American—no longer holds 

the majority of shares. Company A recently re-registered as a domestic company. Company A 

has three sole-source contracts with USAID and one contract with USACE-TAN worth over 

$10.7 million collectively; it is one of the top 20 recipients of AFI awards identified in our 

analysis.

• AISA confirmed that company B, which has an ongoing contract with USACE-TAS, was mistakenly 

issued a domestic license when in fact, it was fully foreign-owned (a Turkish national owns 

50 percent and an American owns 50 percent). Company B’s contract with USACE-TAS is valued 

at about $2.1 million.

• Although AISA issued company C an AISA license as a domestic company, checks by AISA officials 

found that company C is owned by foreign investors, including the president and vice president. 

Company C currently has two AFI contracts, one with C-JTSCC and the other with USACE-TAN. 

These contracts are valued at over $8.8 million.

• AISA confirmed that company D is a foreign-owned company, although it has ongoing contracts 

with C-JTSCC. In project files sent to SIGAR, CSTC-A provided an AISA “D” license of a company 

that turned out to be company D’s subcontractor. Company D’s contract with C-JTSCC lists a 

California address. C-JTSCC told SIGAR it believed an exception for Company D had been made, 

but did not provide requested documentation or written confirmation. Company D currently has 

two contracts with C-JTSCC worth over $1.6 million.

Although contracting authorities collect AISA licenses at the time of award, we found that they did not 

monitor license expiration dates of AFI companies during their contract period. Specifically as of 

October 2011, 8 of the 19 companies with current, ongoing contracts had expired licenses. For example, 

one company with an ongoing contract with USACE-TAN and ongoing contracts with USAID had a license 

that expired in December 2010.

 15Our assessment reflects the status of licenses as of October 2011 and not as of the date the contracts were 

awarded.

16We are not using company names to protect their identities.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 9

Sufficiency of Resources

U.S. contracting authorities do not have a sufficient basis to determine whether Afghan companies have 

the needed resources to execute awarded contracts and grants raising the risk Afghan companies might 

default on their obligations due to resource constraints. Of the databases used by contracting 

authorities, only the PDT database provides information on a prospective awardee’s sufficiency of 

resources. PDT’s staff visit companies to validate their existence, including the presence of staff and 

equipment. PDT, however, does not verify cash-flow or current financial resources. Of the contracting 

authorities examined, only C-JTSCC consulted the PDT database to assess an Afghan firm’s sufficiency of

resources.

In March 2011, ABAP was initiated by the ISAF COIN Contracting Economic Enterprise, an umbrella 

program that coordinates COIN contracting efforts in Afghanistan. The aim is to use ABAP as the 

primary entity for vetting vendors for Afghan ownership, sufficiency of resources, and past performance. 

Intended to be used for the vetting of all contracts awarded by C-JTSCC, ABAP currently has 14 business 

advisors located at C-JTSCC Regional Contracting Centers across Afghanistan. C-JTSCC intends to 

increase the number of advisors up to 75, and according to the September 2011 C-JTSCC acquisition 

instructions, the business advisor will be used to validate all “non-vetted vendors” for company 

information including ownership and its portfolio. The relative newness of the ABAP meant that we 

could not assess its accuracy, although it appears to be the most rigorous effort by a U.S. contracting 

authority to verify a company’s capacity to perform.

Past Performance

U.S. contracting authorities generally use databases that provide information on company performance 

to vet Afghan company’s prior performance. As identified in table 3, databases include the Contractor 

Performance Assessment Reporting System, Excluded Party List System, Federal Awardee Performance

and Integrity Information System, Joint Contingency Contracting System, PDT’s business directory, and 

Past Performance Information Retrieval System. Vetting of prior performance generally does not 

include physical visits to the site of a potential contractor’s business. For example, USACE-TAS officials 

stated that they rely on records from past, completed work to assess a company’s prior performance, to 

include the vetting of all potential bidders through the Joint Contingency Contracting System.

• The Contractor Performance Assessment Reporting System is a web-enabled application that 

collects and manages a library of automated performance reports that document performance 

information required by federal regulations. USACE, C-JTSCC, and State/INL reported that they 

use this system to evaluate the past performance of Afghan companies.

• The Excluded Party List System is a database that identifies companies that have been debarred, 

suspended, proposed for debarment, excluded or disqualified under the non-procurement 

common rule, or otherwise declared ineligible from receiving federal contracts. Contracting 

officials from PAS, C-JTSCC, and USACE reported that they use the Excluded Party List System for 

vetting purposes.

• The Federal Awardee Performance and Integrity Information System is a distinct application that 

is accessed through the Past Performance Information Retrieval System and is available to 

federal acquisition professionals for their use in award and responsibility determinations. The 

Federal Awardee Performance and Integrity Information System provides users access to 

integrity and performance information from its reporting module in the Contractor Performance 

Assessment Reporting System. PAS and USACE officials reported that they use this system to 

evaluate past performance of Afghan companies.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 10

• The Joint Contingency Contracting System is a DOD database that provides information on the 

past performance of DOD vendors that have reconstruction contracts in Iraq and Afghanistan. 

According to the U.S. Embassy, this database does not track all U.S. government vendors and is 

not applicable for use by State and USAID. This system allows oversight of in-theater contracts 

to monitor cost, schedule, and vendor activities and provides a centralized web-based reporting 

and tracking tool for data on contract awards and expenditures in Iraq and Afghanistan.

According to U.S. Central Command regulations, contracting officers are required to use this 

system to vet all non-U.S. vendors. USACE and C-JTSCC officials reported that they used the 

Joint Contingency Contracting System as their primary method for verifying past performance of 

Afghan companies.

• PDT offers a business validation and registration service, which provides information on Afghan 

companies including contact information and operational capacity. PDT maintains a vendor 

database, which requires vendors to provide three past performance references including the 

name of the client, contact information for the client, type of work performed, period of 

contract, total value of the contract, and the description of work performed. C-JTSCC officials 

reported that they use PDT for vetting purposes.

• The Past Performance Information Retrieval System is a web-enabled, enterprise application 

that aims to provide timely and pertinent contractor past performance information to the DOD

and the federal acquisition community for use in making source selection decisions. Contractor 

Performance Asessment Reporting System has connectivity with the Federal Past Performance 

Information Retrieval System. PAS, C-JTSCC, and USACE reported that they use the Past 

Performance Information Retrival System for vetting purposes.

SELECTED AFI CONSTRUCTION PROJECTS GENERALLY MET CONTRACT TERMS AND OUR 

INSPECTIONS GENERALLY FOUND MINOR CONSTRUCTION FLAWS

Of the $654.4 million in reported U.S.-funded AFI awards to Afghan prime companies from January 2008 

to May 2011, construction projects represented 90 percent of the awards, of which 20 Afghan 

companies received nearly 80 percent of the $654.4 million.17

 17Figures are based on agency responses to our May 2011 request for information on prime contracts with Afghan 

companies.

 Figure 1 illustrates the distribution of 

funds for AFI awards by procurement category. 
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 11

Figure 1: Distribution of AFI Awards by Procurement Category 

($ in millions)

Source: SIGAR analysis of USACE, C-JTSCC, INL/PAS, and USAID data

We found that for the contracts we reviewed, the Afghan companies generally met contract cost, 

schedule, and outcome requirements.18

Selected Construction Projects Generally Met Outcomes and Our Inspections Generally Found 

Minor Construction Flaws

 Specifically, we reviewed 29 AFI construction contracts valued 

at $133 million and selected 10 projects to inspect the progress and quality of work. Only one project 

had major construction flaws, but the contracting authority had already issued letters of concern to the 

contractor regarding its performance. 

We reviewed 29 AFI construction contracts valued at $133 million and found variances in costs and 

construction schedules for 19 projects. Cost variances ranged from $7,400 to $15.2 million over the 

original award amount. Schedule variances ranged from 38 days to 463 days over original targets.

19

We selected 10 contracts, which represented $46 million, to inspect the progress and quality of work 

and conducted inspections in July and August 2011. Of the 10, 5 projects were for the construction of 

facilities for the Afghan National Police and the Afghan National Army, such as headquarters facilities, an 

Afghan National Army medical clinic; other projects included a staff barracks at a prison. All projects 

were ongoing at the time of our inspection. We found only minor construction flaws at 9 of the 10 sites 

With the exception of a police headquarters building in Farah, the other cost and schedule variances had

reasons generally not attributed to the contractor and supported by approved modifications. For 

example, delays occurred because security issues had made it difficult to gain access to sites and 

changes were requested by contracting authorities. In one instance, a land ownership issue put a $1.8 

million project on hold.

 18Our reporting on other U.S. construction awards to an Afghan firm illustrates that these positive results are not 

necessarily typical and that a continued emphasis on vetting Afghan companies for their capacity to perform is an 

important agency responsibility. For example, see SIGAR Audit-11-3, ANP District Headquarters Facilities in 

Helmand and Kandahar Provinces Contain Significant Construction Deficiencies Due to Lack of Oversight and Poor 

Contractor Performance (October 27, 2010).

19We did not have sufficient documentation to assess schedule variances for the C-JTSCC and INL projects we 

reviewed.

$603.0

$33.3

$16.7

$1.4

Construction

Service

Commodity

Unknown
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 12

and the contactors were largely meeting the outcome requirements in their contracts. 20

Table 5: Status of AFI Construction Projects in July-August 2011

 Table 5 lists 

the 10 construction projects, their location, description, and award amounts.

Date of Visit Contracting 

Authority Province Project Description Original Award Amount

7/6/11 USAID Kabul Renovation of Men's Dormitory at 

Kabul University

$6,890,771

7/16/11 INL Kabul Staff Barracks at Pol-i-Charkhi 

Prison Compound

$1,904,855

7/16/11 INL Kabul Elevated Water Tank at Pol-iCharkhi Prison Compound$1,492,135

7/20/11 USACE-TAS Ghazni Afghan National Police Station $1,546,292

7/27/11 USACE-TAS Farah Afghan National Police Station $2,099,600

8/9/11 USACE-TAN Kabul Kabul Military Training Center 

Drainage Rehabilitation

$1,738,238

8/13/11 USACE-TAN Balkh Afghan National Army Regional 

Military Training Center

$26,943,886

8/21/11 C-JTSCC Helmand Regional Military Training Center

Power Plant and Distribution

$866,748

8/21/11 C-JTSCC Helmand Regional Military Training Center

Billeting

$950,496

8/27/11 USACE-TAS Herat Afghan National Army Troop 

Medical Clinic

$1,668,806

Source: SIGAR analysis of data provided by USACE, C-JTSCC, USAID, INL, and PAS.

At one project—a police station in Farah province—we found some major construction flaws. We

observed that the main building had columns in place and a complete slab on grade, the perimeter wall 

was structurally complete, and concrete block work had commenced. However, the quality of concrete

block work was poor, the slab on grade was uneven in many locations and the concrete columns 

evidenced honeycombing and cosmetic concrete patching.

21

 20Examples of minor construction flaws include honeycombing on some columns, cold joints, consumer quality 

fixtures, and improperly buried electrical cables.

 During the course of this audit, we 

identified that this Afghan firm had an expired license and was identified by AISA to be majority foreignowned. 

21A rough, pitted surface resulting from incomplete filling of the concrete against formwork, often caused by using 

concrete that is too stiff or by not vibrating it sufficiently after it has been poured.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 13

In July 2011, the project was about a year behind schedule. USACE-TAS officials in Farah stated that 

they had issued cure notices22

DATA ON EMPLOYMENT GAINS IS LIMITED

and letters of concern to the Afghan company. For example, USACE-TAS 

issued a letter to the Afghan contractor in July 2011 citing concerns with the poor quality of concrete on 

the site. Until June 2011, when USACE-TAS established a Resident Engineer Office in Farah, USACE-TAS 

did not have a significant presence in the region and had used a Local National Quality Assurance 

representative to visit the site on a regular basis. In October 2011, USACE-TAS officials stated that 

construction quality of this project had improved and that actions had been taken to correct the poor 

concrete quality issues.

U.S. agencies collected employment data from their AFI awards for different purposes and in various 

ways, but not with the intention of measuring increases in Afghan employment. However, AFI guidance 

neither requires U.S. agencies to systematically collect employment data from AFI awards nor provides a 

standard definition of employment to track AFI’s progress in increasing Afghan employment and 

improving Afghanistan’s economy. Aggregate data on Afghan employment resulting from coalition 

partners’ contracting activities is only available in an ISAF “scorecard,” which includes broad indicators 

of the impact of procurements awarded by coalition countries.

In response to the September 2010 COIN contracting guidance, ISAF developed a “scorecard” to assess 

ISAF’s progress in furthering the COIN contracting guidance. The scorecard reports data in several 

relevant areas, one of which is Afghan employment figures. Nevertheless, the scorecard only reports 

DOD agency data; ISAF officials told us that they are in discussions with State and USAID to obtain their

data. On a quarterly basis, each DOD contracting agency reports figures to ISAF. According to ISAF 

officials, these figures are validated by comparing the submissions to the Federal Procurement Data 

System and Army Contracting Business Intelligence System data.

Due to the various methods used to collect employment data and the absence of a standard definition 

of employment, the data in the scorecard may be of questionable validity and value. Although the 

scorecard’s contract data is validated in total, ISAF officials stated that the employment data provided is 

agency-reported and not independently verified—either by physical inspection at the worksites or by 

reviewing supporting documents. ISAF officials stated they lack the staff to verify figures. For example, 

each of the contracting authorities we reviewed collected some type of Afghan employment data, but 

the absence of a standard definition of employment led each agency to use varying employment records 

and data sources, varying definitions of what constituted “employment,” and varying levels of data 

verification.

We attempted to verify claimed employment gains at a project often cited by the Combined Security 

Transition Command-Afghanistan and others to be an AFI success story. In October 2011, we performed 

a physical verification of employees and confirmed that the numbers reported were accurate at the 

time. See the case study summary.

 22A cure notice is sent prior to terminating a contract for any reason other than late delivery, such as the 

contractor’s failure to perform some other provision of the contract or failure to make progress so as to endanger 

the performance of the contract.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 14

CASE STUDY: AFGHAN-OWNED COMPANY EMPLOYS APPROXIMATELY 160 AFGHANS

To verify one set of reported employment figures, we conducted a case study of a company 

frequently publicized to be an AFI success story. Over the past 3 years, this company 

received $75.2 million from the Afghanistan Security Forces Fund to produce boots for the 

Afghanistan National Security Forces. This company has three divisions which make boots, 

PVC pipes, and mattresses. The company started supplying boots through a Blanket 

Purchase Agreement awarded by C-JTSCC in 2007, and later through an Indefinite Delivery 

Indefinite Quantity contract awarded in 2009. The Defense Contract Management Agency 

provides contract oversight for the 2009 contract. According to these officials, the

company originally produced poor quality boots and could have been terminated. Instead, 

the agency officials stated they made significant investments in training and improved 

quality control to allow the company to continue production. For example, the Defense 

Contract Management Agency recommended building a prototype boot using U.S. 

specifications and then have the company enter into a low-rate, initial production to verify 

the boots could be produced at an acceptable quality level.

The company reports on a monthly basis to DOD the number of employees it directly hired 

as a result of its contract with the U.S. government. In October 2011, the company 

reported that it employed 162 individuals. To validate these figures, in October 2011, we 

physically verified the number of employees at the company by observing the payroll 

distribution. We confirmed that the numbers reported were accurate. The 162 positions—

part of the company’s 700 employees—were directly attributed to performing work for the 

2009 Indefinite Delivery Indefinite Quantity contract.

CONCLUSION

U.S. contracting authorities did not use a single location or repository to link sources of AFI 

opportunities and did not consistently consult available databases to vet an Afghan firm’s ownership, 

licensing, and prior performance. As a result, interested and qualified Afghan companies may not be 

aware of solicitation notices, and contracting authorities did not always ensure that Afghan companies

met AFI requirements for Afghan ownership and were licensed to do business in Afghanistan. 

Therefore, access to contract opportunities among Afghan companies may be limited, and some 

companies may not have been eligible for AFI. Although our inspections of 10 construction projects

found that the Afghan contractors had generally met the contract terms, as more contracts are awarded 

to Afghan companies, vetting their qualifications and prior performance will become increasingly

important. The lack of a standard definition of and methodology for assessing employment gains as a 

result of AFI led to varying interpretations of what is needed and inconsistent data. This limits the 

U.S. ability to assess progress and determine whether the overall objective of creating job opportunities 

in the economy. Without capturing the data associated with the intended goal of increasing licit Afghan 

employment, the overall effect of AFI on the Afghan economy cannot be assessed. 
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 15

RECOMMENDATIONS

To help broaden the base of participating Afghan companies, and ensure that only qualified companies

receive AFI awards, SIGAR recommends that the Commander USFOR-A and the U.S. Ambassador to 

Afghanistan, in coordination with C-JTSCC, USACE, and the USAID Mission Director:

1. Promote the use of a designated website, such as AfghanFirst.org, as an information portal for 

linking sources of U.S. procurement information in one location.

2. Develop guidelines to encourage U.S. contracting authorities to adopt a more systematic 

approach to considering all available and relevant vetting sources to assess Afghan ownership, 

sufficiency of resources, and past performance. 

3. Immediately require U.S. contracting authorities to verify whether current AFI award recipients 

are Afghan-owned and have current licenses to operate in Afghanistan. 

To help assess whether AFI awards are generating Afghan employment opportunities, SIGAR 

recommends that the Commander USFOR-A and the U.S. Ambassador to Afghanistan, in coordination

with C-JTSCC, USACE, and the USAID Mission Director:

4. Develop guidelines that define employment generation; delineate the employment data 

needed, including collection and verification standards; and develop an assessment process to 

measure Afghan employment levels resulting from AFI procurement activities. 

COMMENTS

The U.S. Embassy Kabul (including USAID and the Embassy’s Public Affairs and INL sections), C-JTSCC, 

CSTC-A, and USACE provided written comments on a draft of this report. These comments are 

reproduced in appendices II through V, respectively. In their responses, the U.S. Embassy Kabul, 

C-JTSCC, and CSTC-A concurred with the four recommendations and noted actions taken or planned to 

be taken. USACE concurred with three of the recommendations, but did not concur with the fourth 

recommendation to take measures to assess the generation of Afghan employment opportunities from 

AFI awards. USACE stated that employment data is difficult to collect and validate, and noted that the 

nature of construction contracts results in employment that is not permanent. However, construction 

skills are transferable and Afghan workers will likely have opportunities to work on other projects. The 

U.S. Embassy Kabul also provided technical comments, which we incorporated, as appropriate. 
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 16

APPENDIX I: SCOPE AND METHODOLOGY

This report provides the results of the Office of the Special Inspector General for Afghanistan 

Reconstruction’s (SIGAR) review of the Afghan First Initiative (AFI). This review did not include all AFI

awards; rather, it was limited to awards funded by the Afghanistan Security Forces Fund, Economic 

Support Fund, or other Afghanistan reconstruction funds. This report assesses (1) how agencies 

identified and documented that Afghan firms were eligible for AFI, (2) progress made on selected 

contracts with Afghan firms, and (3) how agencies were measuring progress towards AFI’s overall goals 

of increasing employment opportunities.

Overall, to accomplish these objectives, we reviewed AFI legislative guidance and related 

documentation, including Section 886 of the Fiscal Year 2008 National Defense Authorization Act,23

Section 1102 of the 2009 Supplemental Appropriations Act,24

To determine what awards—funded by the Afghanistan Security Forces Fund and the Economic Support 

Fund—were AFI-related, we met with contracting officials or collected data from the US Central 

Command Joint Theater Support Contracting Command-Afghanistan (C-JTSCC); the U.S. Army Corps of 

Engineers’ Afghanistan Engineer District-North (USACE-TAN) and Afghanistan Engineer District-South 

(USACE-TAS); the Department of Defense’s (DOD) Task Force for Business and Stability Operations 

(TFBSO); the U.S. Agency for International Development (USAID); the Department of State (State); 

interagency working groups, and Afghan companies.

counterinsurgency contracting guidance, 

and other AFI related guidance from the Commander of U.S. Forces-Afghanistan and the 

U.S. Ambassador to Afghanistan. 

25 Our scope included AFI reconstruction-funded 

awards to prime contracts and grants awarded from January 2008 through May 2011. We excluded 

(1) awards to Afghan companies based on full and open competition, (2) prime contractors' and 

implementing partners' sub-contracts awarded to Afghan companies, and ( 3) Commander's Emergency 

Response Program-funded projects.26

To determine how agencies solicit Afghan companies for AFI awards, we conducted interviews with 

contracting authorities, attended Afghan First Working Group meetings held by State and the 

International Security Assistance Force, and held a panel discussion with 10 Afghan companies to gain 

their general views of solicitation. To determine how contracting agencies vetted companies for 

 The response from agencies to our May 2011 request provided us 

with information on 356 projects totaling $654.4 million. To assess the reliability of 

computer-processed data, we (1) interviewed officials to discuss the reliability of the data; (2) conducted 

electronic testing and checked for missing data, erroneous or incomplete entries, and duplicates; and 

(3) compared system generated data with the documents in the project files. On the basis of our 

reliability assessments, we determined that the data was sufficiently reliable to identify AFI awards 

within our limited scope, with the exception of C-JTSCC data. We have ongoing work to assess the 

reliability of C-JTSCC’s data and its data query retrieval process. Until the assessment is complete, the 

reliability of the construction data obtained from C-JTSCC and used in this report is undeterminable.

 23P.L. 110-181, Section 886.

24P.L. 111-32, Section 1102.

25The Air Force Center for the Environment and the Environment notified us that it does not use AFI when 

awarding contracts.

26Although by definition, the Commander’s Emergency Response Program (CERP) is an Afghan First program, its 

authorizing legislation (P.L. 108-106, Title 1, Section 1110) gives field commanders broad authority to spend CERP 

funds notwithstanding other provisions of law. As a result, projects funded by CERP funds are not bound by the 

Federal Acquisition Regulation or other procurement laws. Therefore, we excluded CERP projects from the scope 

of our audit. Additionally, we reported on CERP project implementation efforts. See SIGAR, Commander’s 

Emergency Response Program in Laghman Province Provided Some Benefits, but Oversight Weaknesses and 

Sustainment Concerns Led to Questionable Outcomes and Potential Waste, SIGAR Audit-11-7 (January 27, 2011).
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 17

(1) sufficiency of resources (cash flow, equipment, and staff) and (2) prior performance, we collected 

information on available sources for vetting and conducted interviews with contracting agencies to 

determine the methods used by each agency. To determine whether agencies vet companies for Afghan 

ownership, we provided information on 20 contractors, which were within the 29 larger construction 

contracts, to AISA to independently verify ownership status. We were able to confirm the status of

19 companies with AISA officials. We also independently reviewed the information available for these 

companies in AISA’s online directory, and validated these licenses in the contract files with agency 

officials to confirm they were Afghan-owned. 

To assess the performance of companies awarded AFI contracts, including compliance with cost, 

schedule, and outcome terms of the contracts, we analyzed the 29 larger construction projects. To 

determine the cost of projects, we analyzed obligation and disbursement data from contract documents 

obtained from the relevant contracting authorities. 

To determine project outcomes, we analyzed quality assurance reports and additional documents in the 

project files that listed the project requirement (such as the contracts and statements of work) and 

described the conditions of the projects. Of the 29 construction projects, we selected 13 contracts for 

site visits based on risk factors such as schedule slippage and reported quality or design issues. We were 

unable to visit three projects due to security constraints. In the end, we inspected 10 projects which 

represented $46 million. We conducted our inspections during July and August 2011. At the sites, we 

interviewed key project management officials, contractors’ representatives, and agency officials 

providing contract oversight. To determine project schedules, we analyzed project completion dates 

based on the contract documents that we obtained from the contracting agencies.

To assess the progress made towards achieving AFI’s broad outcome objectives, including increased 

employment, we conducted interviews with contracting authorities to obtain information on the 

tracking of employment in AFI contracts. 

We assessed internal controls over contracting authorities’ procedures for (1) selecting and awarding 

projects under AFI, (2) tracking projects after awards; and (3) monitoring and evaluating the contractors 

through interviews, site visits, and analyses performed for the 29 construction projects. The results of 

our assessment are included in the body of this report.

We conducted this audit from March 2011 to December 2011 in Kabul, Herat, Farah, Balkh, Ghazni, 

Helmand, and Kandahar provinces in Afghanistan, 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 conducted by SIGAR under the authority of 

Public Law No. 110-181, as amended; and the Inspector General Act of 1978; and the Inspector General 

Act of 2008.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 18

APPENDIX II: COMMENTS FROM THE U.S. EMBASSY KABUL
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 19
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 20
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 21

See SIGAR 

comment 1.

See SIGAR 

comment 2.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 22

See SIGAR 

comment 3.

See SIGAR 

comment 4.

See SIGAR 

comment 5.

See SIGAR 

comment 6.

See SIGAR 

comment 7.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 23
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 24
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 25

The following are SIGAR’s comments to the U.S. Embassy Kabul’s response dated January 25, 2012:

1. We disagree. We have noted in the introduction section of this report and in the scope and 

methodology that we only included prime contracts awarded to Afghan companies in this 

audit. Therefore, the figures in table 1 only represent U.S. agency prime awards funded with 

the Afghanistan Security Forces Fund, the Economic Support Fund, or other reconstruction 

funds. Our depiction of USAID’s AFI awards is based on USAID’s response to our data call in 

May 2011. This response included four contracts awarded by USAID to Afghan companies. We

subsequently confirmed this data with USAID staff in June 2011.

2. We disagree. We noted that USAID uses www.fbo.gov, but cannot confirm that USAID uses

www.AfghanFirst.org. FedBizOps (www.fbo.gov) is a distinct website, separate from 

www.AfghanFirst.org. We did not define the websites to be interchangeable as suggested. 

3. We updated table 2 to indicate that USAID also participates in industry fairs, conferences, or 

other meetings as a method of solicitation. 

4. We made the correction.

5. We added acknowledgement of PAS’s policy change.

6. We updated table 4 to reflect that USAID uses CPARS and EPLS and also added “N/A” to the 

JCCS column for INL, PAS and USAID. We did not include “N/A” under ABAP because ABAP 

officials provided information confirming that State may make requests through them for 

information. We excluded contracts awarded by implementing partners and therefore cannot 

comment on their vetting practices. Additionally, we did not examine vetting methods used by 

U.S. contracting authorities for terrorism links, as stated.

7. We made the correction.
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 26

APPENDIX III: COMMENTS FROM CENTCOM JOINT THEATER SUPPORT CONTRACTING 

COMMAND
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 27
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 28

APPENDIX IV: COMMENTS FROM NATO TRAINING MISSION-AFGHANISTAN / COMBINED 

SECURITY TRANSITION COMMAND-AFGHANISTAN
SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 29

APPENDIX V: COMMENTS FROM U.S. ARMY CORPS OF ENGINEERS
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SIGAR Audit-12-6 Economic and Social Development / Afghan First Initiative Page 33

(This performance audit was conducted under the audit project code SIGAR-043A).
SIGAR’s Mission 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.

Obtaining Copies of SIGAR 

Reports and Testimonies

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 Report Fraud, Waste, and 

Abuse in Afghanistan 

Reconstruction Programs

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: hotline@sigar.mil

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

• Phone DSN Afghanistan 318-237-2575

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

• Phone DSN International: 312-664-0378

• U.S. fax: +1-703-604-0983

Public Affairs Public Affairs Officer

• Phone: 703-545-5974

• Email:sigar.pentagon.ccr.mbx.publicaffairs@mail.mil

• Mail: SIGAR Public Affairs

2530 Crystal Drive,

Arlington, VA 22202