SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN RECONSTRUCTION

Increases in Security Costs

Are Likely under the Afghan Public Protection Force;

USAID Needs to Monitor Costs and Ensure 

Unlicensed Security Providers Are Not Used

June 29, 2012
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors

SIGAR

Special Inspector General for Afghanistan Reconstruction

SIGAR Audit-12-10 June 2012

Increases in Security Costs Are Likely under the Afghan Public 

Protection Force; USAID Needs to Monitor Costs and Ensure that 

Unlicensed Security Providers Are Not Used

What SIGAR Reviewed

During fiscal years 2009 through 2011, the U.S. Agency for International Development (USAID) provided more than $4.2 billion to 

its implementing partners to carry out reconstruction and development assistance programs in Afghanistan. Implementing partners 

are responsible for their own security needs and most contracted with private security contractors (PSC) for security services for their 

offices, housing, and project sites and for the movement of their personnel. In March 2011, the Afghan government issued The 

Bridging Strategy for Implementation of Presidential Decree 62, which provided for the eventual dissolution of most PSCs. Under 

this strategy, the Afghan government required that security services for development programs and projects transfer to a state-run 

Afghan Public Protection Force (APPF) by March 20, 2012. In January 2012, President Karzai approved a model allowing 

implementing partners to use risk management companies (RMC) to advise on the security of sites, personnel, logistics, 

transportation of goods and equipment, and contract management. SIGAR’s objectives were to assess (1) the costs and the number of 

personnel and vehicles associated with PSCs for selected USAID projects during fiscal years 2009 through 2011 and (2) the potential 

costs related to the transition of security services from PSCs to the APPF and the plans of implementing partners after the transition. 

SIGAR also determined whether USAID’s implementing partners for selected projects were using PSCs licensed by the Afghan 

government. To accomplish these objectives, SIGAR analyzed invoices and other data from 13 implementing partners responsible 

for 29 of USAID’s largest projects during fiscal years 2009-2011 and discussed cost and transition issues with USAID, the 

Departments of Defense and State, and six implementing partners. SIGAR conducted work in Washington, D.C., and in Kabul, 

Afghanistan, from September 2011 to June 2012 in accordance with generally accepted government auditing standards.

What SIGAR Found

For the 29 USAID projects SIGAR examined, at least $300 million of the $2.9 billion (or 10.4 percent) expended during fiscal years 

2009 through 2011 was for security services. At least $140 million of this $300 million was for PSC personnel, and about $27

million was for vehicles. SIGAR found that some implementing partners that had purchased armored vehicles also leased vehicles to 

meet their needs, at a cost of $4.1 million, because they could not get the purchased vehicles through Afghan registration and customs 

in a timely manner.

Assuming security requirements for armed Afghan guards do not change, the transition to the APPF could increase Afghan labor 

costs by up to 46 percent or $3.1 million for the 13 of the 29 projects SIGAR examined that transitioned to the APPF. In addition, 

SIGAR notes that some implementing partners indicated they may hire more expatriates through RMCs to facilitate the transition; by 

one estimate, expatriate labor costs could increase as much as 200 percent or $52.1 million during the first year for the 13 projects 

that transitioned to the APPF. Implementing partners identified other factors, such as increased security infrastructure, that may 

further increase costs. In April 2012, USAID provided SIGAR its analysis of data provided by implementing partners for the first 

month after the transition to the APPF. It showed security costs had decreased. However, SIGAR found that the data submitted to 

USAID was inconsistent and incomplete, which calls into question USAID’s overall conclusions. Finally, as of June 2012, most of 

USAID’s implementing partners had less than 3 months experience with the APPF. Some expressed concern about the initial 

transition, including APPF personnel showing up with improper uniforms, weapons not being provided, and demands for services that 

were not anticipated. While the transition to the APPF is underway, the eventual costs of security for USAID’s ongoing and future 

programs and projects remain to be determined. 

Finally, a May 2010 report by the USAID Office of Inspector General found that USAID had not ensured that all PSCs used by 

implementing partners were licensed by the MOI, as required. Despite the Inspector General’s report, SIGAR found that 

implementing partners used unlicensed PSCs for six projects as of December 2011, which is illegal, putting USAID projects and 

reconstruction funding at risk. 

What SIGAR Recommends

SIGAR is making three recommendations to the USAID Mission Director in Kabul. Given the likely increase in security costs under 

the APPF, USAID should systematically assess security costs for (1) ongoing projects and (2) new and follow-on contracts, 

cooperative agreements, and grants. In commenting on a draft of this report, USAID said it had done the analysis recommended for 

ongoing projects and its existing policies and procedures already require that security costs for future programs and projects be 

addressed. SIGAR disagrees that this is sufficient. Because the APPF is new and unique and its capabilities have not been proven, its

costs should be closely monitored as USAID’s implementing partners gain more experience with it. In addition, to help ensure that 

implementing partners only use RMCs licensed by MOI, SIGAR recommends that the Mission Director institute a formal review 

process to ensure implementing partners are using licensed RMCs. In its comments, USAID concurred with this recommendation.

For more information contact: SIGAR Public Affairs at (703) 545-5974 or sigar.pentagon.ccr.mbx.public-affairs@mail.mil
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page i

OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN RECONSTRUCTION

June 29, 2012

The Honorable Hillary Rodham Clinton

Secretary of State

The Honorable Leon E. Panetta

Secretary of Defense

The Honorable Ryan C. Crocker 

U.S. Ambassador to Afghanistan

Dr. Rajiv Shah

Administrator, U.S. Agency for International Development

Dr. S. Ken Yamashita 

USAID Mission Director for Afghanistan 

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

Reconstruction’s (SIGAR) audit of the costs associated with private security contractors (PSCs) used by 

the U.S. Agency for International Development’s (USAID) implementing partners in Afghanistan during 

fiscal years 2009 through 2011, and the costs of security and plans of those implementing partners after 

the transition of security services to the Afghan Public Protection Force (APPF). We also determined 

whether USAID’s implementing partners for selected projects were using PSCs licensed by the Afghan 

government. This report makes three recommendations to the USAID Mission Director, Kabul, to 

systematically assess security costs for (1) ongoing projects and (2) new and follow-on contracts, 

cooperative agreements, and grants. We also recommended that the Mission Director help ensure that 

USAID’s implementing partners only use risk management companies licensed by the Afghan 

government. 

When preparing the final report, we considered comments from USAID. USAID did not agree that it 

should do any additional cost assessments than it has already done or what would be done under its 

normal policies and procedures. We disagree that this is sufficient. Because the APPF is new and unique 

and its capabilities have not been proven, its costs should be closely monitored as USAID’s implementing 

partners gain more experience with it. USAID concurred with our third recommendation. USAID’s 

comments are reproduced in appendix III. We 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-12-10 Contract Performance and Oversight/Private Security Contractors Page ii

TABLE OF CONTENTS

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

At Least $300 Million Was Expended for Security Services for 29 USAID 

Projects During Fiscal Years 2009-2011................................................................................................4

Security Costs Will Likely Increase During the First Year of Transition to APPF 

for 13 USAID Projects, but USAID and Implementing Partners Have 

Limited Experience with the APPF........................................................................................................8

Implementing Partners Used Unlicensed PSCs for Six Projects ................................................................12

Conclusion ..................................................................................................................................................13

Recommendations.......................................................................................................................................14

Comments...................................................................................................................................................14

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

Appendix II: PSC Expenditures for 29 of USAID’s Largest Projects for Fiscal 

Years 2009 through 2011 .....................................................................................................................18

Appendix III: Comments from the U.S. Agency for International Development......................................21

TABLES

Table 1: Total Project and PSC Expenditures for 29 USAID Projects, Fiscal 

Years 2009–2011 (dollars in millions)...................................................................................................5

Table 2: PSC Expenditures by Personnel Type, Fiscal Years 2009-2011 (dollars 

in millions) .............................................................................................................................................5

Table 3: PSC Vehicle Expenditures Reimbursed by Implementing Partners 

During Fiscal Years 2009-2011 (dollars in millions).............................................................................7

Table 4: Armored Vehicles Leased, Purchased, or Transferred and in Use as of 

December 2011.......................................................................................................................................7

Table 5: Fees for an APPF Guard and Estimated Total Monthly Costs ....................................................10

Table I: Total Expenditures and PSC Expenditures for 29 of USAID’s Largest 

Projects, Fiscal Years 2009-2011 .........................................................................................................18

FIGURES AND PHOTOS

Figure 1: Number of Armed PSC Positions by Nationality for 29 of USAID’s 

Largest Projects for Fiscal Years 2009-2011 ........................................................................................6
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page iii

ABBREVIATIONS AND ACRONYMS

APPF Afghan Public Protection Force

FAR Federal Acquisition Regulation 

GIRoA Government of the Islamic Republic of Afghanistan

ISAF International Security Assistance Force

MOI Ministry of Interior

OAA Office of Acquisition and Assistance

OFM Office of Financial Management

PLSO Partner Liaison Security Office

PSC Private Security Contractor

RMC Risk Management Company

SIGAR Special Inspector General for Afghanistan Reconstruction

USAID U.S. Agency for International Development
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 1

Increases in Security Costs Are Likely under the Afghan Public Protection 

Force; USAID Needs to Monitor Costs and Ensure Unlicensed Security 

Providers Are Not Used

The U.S. Agency for International Development (USAID) relies heavily on implementing partners1 to 

carry out its reconstruction and development assistance programs in Afghanistan. During fiscal years 

2009 through 2011, USAID provided its implementing partners over $4.2 billion for these programs. 

Implementing partners are responsible for their own security needs and, for the most part, contract with 

private security contractors (PSCs) for security services for their offices, housing, and project sites and for 

the movement of their personnel. 

In August 2010, Afghanistan’s President Karzai issued Presidential Decree 62, calling for the 

disbandment of PSCs. In March 2011, the Government of the Islamic Republic of Afghanistan (GIRoA)

issued The Bridging Strategy for Implementation of Presidential Decree 62, which provided for the 

eventual dissolution of most PSCs.2

 Under this strategy, GIRoA required that responsibility for security 

services for development programs and projects transfer to a state-run Afghan Public Protection Force 

(APPF) by March 20, 2012. On the day of the transition, GIRoA released an APPF transition 

implementation plan granting interim licenses to some PSCs allowing USAID’s implementing partners 

more time to finalize security contracts with the APPF. 

We initiated this audit to assess (1) the costs and the number of personnel and vehicles associated with 

PSCs for selected USAID projects during fiscal years 2009 through 2011 and (2) the potential costs 

related to the transition of security services from PSCs to the APPF and the plans of implementing 

partners after the transition. We also determined whether USAID’s implementing partners for selected 

projects were using PSCs licensed by GIRoA to operate in Afghanistan. 

Overall, to address our objectives, we selected 35 of USAID’s largest projects based on total expenditures 

during fiscal years 2009 through 2011. The 35 projects represented 17 implementing partners and had 

expenditures totaling more than $3.2 billion, or more than 75 percent of USAID’s total expenditures 

during the period.3

 For the 35 projects, we requested information from the implementing partners on any 

PSCs they used, including personnel employed and vehicles used during the period. We also requested 

that the implementers provide invoices for PSC costs incurred during fiscal years 2009 through 2011. In 

coordination with USAID, we sent our information request to the 17 implementing partners and received 

responses from 13—representing 29 projects with expenditures of approximately $2.9 billion.4

 To assess 

the costs and personnel associated with USAID’s PSCs, we analyzed the data provided by each of the 

13 implementing partners that responded to our information request. To assess the costs of armed guards 

after the transition, we analyzed invoices and data for the 13 of the 29 projects that were going to be 

active as of the March 20, 2012, deadline and applied APPF rates; for expatriates, we met with several 

 1

Implementing partners, as used by USAID and in this report, represents both contractors and recipients of 

cooperative agreements and grants. 

2

PSCs providing services for International Security Assistance Force (ISAF) and Afghan National Security Forces’

construction sites and for ISAF bases will be allowed to operate for up to 1 additional year. Entities accredited with 

diplomatic status will be exempt and able to continue the use of PSCs for their security needs.

3

Projects may have had expenditures before and after the period examined, and not all projects were active all 3

years.

4

Twenty-one of the projects were contracts, representing almost $1.7 billion, or 58 percent, expended during the 

period, and 8 were cooperative agreements representing $1.2 billion, or 42 percent expended during the period. No 

grants were in the top 35 USAID projects. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 2

implementing partners and two professional organizations that represent PSCs to discuss their views on 

what will happen after the transition. To examine PSCs’ licensing status, we analyzed information 

provided by the 17 implementing partners for each of the 29 projects. We discussed the use of PSCs and 

the transition to the APPF with officials from USAID, the Departments of Defense and State, six USAID 

implementing partners, and the APPF Advisory Group located under the NATO Training MissionAfghanistan/Combined Security Transition Command-Afghanistan. We conducted our work in 

Washington, D.C., and Kabul, Afghanistan, from September 2011 through June 2012, in accordance with 

generally accepted government auditing standards. See appendix I for more detail on our scope and 

methodology. 

BACKGROUND

USAID’s implementing partners are responsible for their own security in Afghanistan, which can be 

challenging. Although reported incidents have declined in recent years,

5 the average daily incidents as of 

March 2012 still numbered from 1 to more than 3 in 15 Afghan provinces.

6

 Implementing partners have 

a variety of ways to provide for security of their personnel and sites—contracting with PSCs, hiring

unarmed watch keepers known as “chowkidars,” or providing their own armed security personnel. Many 

use a combination of these services, but most have contracts with at least one PSC to provide a variety of 

security functions. PSCs provide four basic services:

• Static (site) security—protecting fixed or static sites, such as housing areas, reconstruction work 

sites, or government buildings; 

• Convoy security—protecting convoys traveling through unsecured areas; 

• Security escorts—protecting individuals traveling through unsecured areas; and 

• Personal security details—providing full-time protective security to high-ranking individuals.

PSCs may also provide other security services, such as operational coordination, intelligence analysis, and 

security training. 

The vast majority of PSC personnel in Afghanistan are Afghan nationals. Expatriates and third-country 

nationals are also hired by PSCs, most often to provide management services or as security escorts for 

implementing partner personnel. While no official definition of an expatriate exists, USAID and its 

implementing partners generally consider expatriates to be U.S., Australian, Canadian, South African, or 

British citizens. Citizens of other countries—often from the Middle East or Central Asia—are considered 

third-country nationals. 

Implementing partners are required to ensure that PSCs are approved for providing security services by 

GIRoA and USAID. Under Afghan law, implementing partners may only hire PSC firms that are 

registered with the Afghan Ministry of Interior (MOI). As of the end of fiscal year 2011, 45 PSCs were 

approved and registered with MOI. Implementers must also seek and receive consent or approval from 

USAID’s Office of Acquisition and Assistance (OAA) at USAID’s Kabul Mission before entering into 

any subcontract, including those with PSCs.7

 OAA is responsible for managing most of USAID’s 

contracts, cooperative agreements, and grants in Afghanistan.8

 Further, USAID established the Partner 

 5

Reported incidents were 6,386 in the first 3 months of 2012, compared to 7,413 in the first 3 months of 2011.

6

Defense Intelligence Agency, Afghanistan Security Incidents Database, April 13, 2012. 

7

According to USAID, implementing partners are generally required to seek subcontract consent for contracts, and 

the Federal Acquisition Regulation (FAR) 44.2 provides the requirements concerning subcontract consent. Code of 

Federal Regulations Title 22 Part 226.25 requires recipients of USAID funds under a cooperative agreement seek 

approval of subcontracts. According to OAA, consent or approval only constitutes approval for the implementing 

partner to enter into a subcontract agreement with the PSC and not actual approval of the subcontract. Grants do not 

require OAA’s consent.

8

A limited number of financial instruments are managed at USAID headquarters in Washington, D.C.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 3

Liaison Security Office (PLSO) at its Kabul Mission to provide a link between implementing partners and 

USAID for the safety and security of implementing partner personnel. PLSO personnel are available to 

assist OAA contracting and assistance officers by reviewing implementing partner security plans and 

vetting proposed security contract modifications. After OAA approves or consents to an agreement, 

implementers may enter into a subcontract for security services with PSCs. Subcontracts for PSC 

services may be found at multiple tiers of a contract or cooperative agreement; that is, an implementing 

partner may further subcontract a portion of a project to another entity, which may then subcontract for its 

security requirements.

Transition of Security Services to the Afghan Government 

Because of Afghan concerns with the use of PSCs, on March 15, 2011, the head of the Afghan MOI and 

the Senior Advisor to the President issued a strategy for the dissolution of PSCs providing security 

services for reconstruction efforts. Under this strategy, all PSC contracts for development projects were 

to terminate by March 20, 2012, and responsibility for security transferred to a state-run APPF.9

 Also in 

March 2011, the Commander of ISAF and the U.S. Ambassador to Afghanistan issued a memorandum 

responding to President Karzai's announcement concerning dissolution of PSCs and transfer to the 

APPF.10 The memorandum expressed support for the transfer of security services, but noted that a 

successful transition would depend on certain actions by the Afghan government, including the 

development of a fully functioning APPF by the end of the bridging period. The strategy called for 

periodic assessments conducted jointly by the U.S. and Afghan governments to assess the capabilities of 

the APPF at 6-, 9-, and 12-month intervals, and every 3 months thereafter. The first assessment, released 

in September 2011, found that the APPF did not show adequate competency in any of the six essential 

tasks and only met standards for 46 of the 166 transition-readiness areas. A second assessment was 

completed in December 2011, and a third assessment was due in March 2012. According to the U.S. 

Central Command, results are pending on the third assessment. To date, however, neither the December 

2011 nor the March 2012 assessments have been released. In addition, according to the strategy, another 

assessment is due at the end of June 2012.

To assist with the buildup of the APPF and help ensure a smooth transition of security services, ISAF 

established the APPF Advisory Group to work with MOI to build and assess the capacity of the APPF. 

The working group includes representatives from the U.S. Embassy Kabul and USAID. Further, the 

Overseas Security Advisory Council has acted as a source of information and a forum for concerns for 

implementing partners on the transition. The Overseas Security Advisory Council is comprised of U.S. 

private sector and four public sector member organizations that represent specific industries or agencies 

operating abroad and provides direction and guidance to develop programs that most benefit the U.S. 

private sector overseas. 

On January 10, 2012, President Karzai approved a model that allows implementing partners to use a risk 

management company (RMC) to advise on the security of sites, buildings, and personnel; logistics;

transportation of goods and equipment; and contract management. RMCs can also provide training, 

contracting, and security advisory services to clients. Under this model, implementing partners requiring 

security services must contract with the APPF for security services, but they have the option of hiring an 

RMC to provide security consulting services. In addition, RMCs are allowed to provide lightly armed 

personnel for the purposes of personal protection. Current PSCs may become an RMC; however, a PSC 

may not hold both a PSC and an RMC license.11 On March 20, 2012, GIRoA released an APPF transition 

 9

MOI, The Bridging Strategy for Implementation of Presidential Decree 62, (Dissolution of Private Security 

Companies); Bridging Period March 22, 2011 to March 20, 2012, dated March 15, 2011. Security for ISAF 

convoys also transferred to the APPF in March 2012, but security services for ISAF facilities and construction sites 

will transfer to APPF in March 2013. The strategy exempts PSCs providing security services for diplomatic 

organizations. 10Letter to Minister of Interior, Afghanistan Bismullah Khan Mohammadi, March 15, 2010.

11If current PSCs want to keep a PSC license to serve diplomatic clients, they must form a separate entity as an 

RMC. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 4

implementation plan granting interim licenses to some PSCs allowing implementing partners more time 

to finalize security contracts with the APPF. 

SIGAR’s Alert Letter to the USAID Mission Director to Afghanistan

On March 9, 2012, we issued an alert letter to the USAID Mission Director, Kabul, identifying three 

concerns that we determined warranted immediate consideration ahead of the March 20, 2012, deadline

for transitioning security services to the APPF. First, we noted the transition to the APPF could increase 

Afghan guard and expatriate personnel costs by as much as $55.2 million for 13 of USAID’s largest 

projects in the first year after transition to the APPF. Second, if the APPF was not fully functioning by 

the March 20, 2012, deadline and no extension was granted, at least 10 ongoing USAID projects with a 

total award value of $899 million were at significant risk of termination based on USAID’s own 

reporting. Third, we found two PSCs that were not licensed by MOI had contracts with USAID 

implementing partners as of December 2011. We suggested that the USAID Mission Director, Kabul,

take certain actions addressing the concerns we raised, but he rejected our letter in its entirety. Because 

the Mission Director did not agree with our suggested actions, we address these concerns again in this 

report. In addition, our concerns were the subject of a Congressional hearing on March 29, 2012.

12

AT LEAST $300 MILLION WAS EXPENDED FOR SECURITY SERVICES FOR 

29 USAID PROJECTS DURING FISCAL YEARS 2009-2011

At least $300 million of the $2.9 billion (or 10.4 percent) expended on 29 of USAID’s largest projects 

during fiscal years 2009 through 2011 was for security services.13 Of this, at least $140 million was for 

PSC personnel and $27 million for vehicles. Other costs included communications equipment, fuel, life 

support, and additional labor. 

All but one of the 29 projects we examined had PSCs for security during this period.14 Table 1 shows 

USAID’s expenditures for the 29 reconstruction projects we examined and the portion that was spent on 

PSCs by fiscal year. Appendix II provides additional information on each of the 29 USAID projects we 

examined, including the PSC costs reported by the implementing partner. 

 12U.S. House of Representatives, Committee on Oversight and Government Reform, Subcommittee on National 

Security; Are Changes in Security Policy Jeopardizing USAID Reconstruction Projects and Personnel in 

Afghanistan?, March 29, 2012. 13Projects may have multiple tiers of subcontractors. While we attempted to identify PSC costs at all tiers, we could 

not verify whether we captured all PSC costs beyond a first-tier subcontractor reported by the implementing partner 

for any project. In addition, some implementing partners provided their own security services during this period, 

which we did not attempt to quantify for this report. 14For one project, the implementing partner hired its own armed security, which is also required to transition to the 

APPF. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 5

Table 1: Total Project and PSC Expenditures for 29 USAID 

Projects, Fiscal Years 2009–2011 (dollars in millions)

Fiscal

year

Total 

expendituresa Expenditures for PSCsb PSC expenditures as percent of total

2009 $817.8 $91.7 11.2

2010 992.1 105.8 10.7

2011 1,066.8 102.4 9.6

Total $2,876.7 $299.9 10.4

Source: SIGAR analysis of USAID financial data and implementing partners’ 

PSC invoices.

Notes:

a

Amounts paid by USAID to implementing partners. b

Amounts paid by implementing partners to PSCs based on our review of 

invoices.

Personnel Costs Comprised $140 Million in Expenditures

Personnel costs made up almost half of the $300 million spent on security costs. Specifically, for 23 of 

the 29 projects we examined, at least $140 million was for PSC personnel.15 The majority of PSC 

personnel were Afghans—more than 89 percent of all PSC positions were Afghan nationals16—yet over 

half of the personnel expenditures were for expatriate staff. Specifically, 59 percent was expended on 

expatriate labor, while 33 percent was for Afghan labor.17 Table 2 shows amounts spent on PSC 

personnel by fiscal year for these 23 projects.

Table 2: PSC Expenditures by Personnel Type, Fiscal Years 

2009-2011 (dollars in millions)

Labor type 2009 2010 2011 Total Percent 

of total

Expatriate $14.8 $32.6 $35.1 $82.5 58.8

Third-country 

national 2.2 5.3 3.8 11.3 8.1

Afghan national 6.3 19.3 20.7 46.3 33.0

Total $23.3 $57.2 $59.6 $140.2 100.0

Source: SIGAR analysis of data obtained from PSC invoices collected from 

12 implementing partners 

Note: Totals affected by rounding.

Data reported by implementing partners show that the number of armed expatriate PSC personnel steadily 

increased from fiscal year 2009 through fiscal year 2011, while armed Afghan PSC personnel first 

increased then decreased. Specifically, armed expatriate PSC personnel increased from 71 to 207, or 

almost 192 percent, from fiscal year 2009 to 2011, and armed Afghan PSC positions dropped in fiscal 

 15We did not include labor costs for six projects implemented by the Louis Berger Group Inc./Black & Veatch Joint 

Venture because it did not provide the necessary detail. In addition, we could not determine labor categories from 

some of the PSC invoices for the remaining 23 projects, which results in understating the labor costs for these 

projects. 

16Although most PSC personnel were armed, PSCs also hired a number of unarmed personnel. For the 29 projects 

we examined, implementing partners had contracted for 501, 677, and 581 unarmed personnel as of the end of fiscal 

years 2009, 2010, and 2011, respectively. 17Includes expenditures for both armed and unarmed personnel because the invoices did not separate the two.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 6

year 2011 to almost 23 percent below the fiscal year 2009 level, after having increased in fiscal year 

2010. The number of armed third country nationals was relatively constant. See figure 1.

Figure 1: Number of Armed PSC Positions by Nationality for 29 of USAID’s 

Largest Projects for Fiscal Years 2009-2011

Source: SIGAR analysis of USAID implementing partner data.

In addition, implementing partners for 8 of the 29 projects in our selection hired their own armed security 

personnel. These projects averaged more than 75 additional armed personnel per year.18

Vehicles Accounted for over $27 Million in PSC Expenditures

Vehicle expenditures constituted almost 10 percent of the $300 million spent on security services.19 

Specifically, our review of invoices for 23 projects shows that implementing partners spent over 

$27 million to purchase or lease vehicles during fiscal years 2009 through 2011—$21.5 million for 

armored vehicles and $5.6 million for other vehicles.

20 See table 3.

 18A total of 83, 80, and 76 armed personnel were employed directly by implementing partners at the end of fiscal 

years 2009, 2010, and 2011, respectively. 

19These expenditures included purchasing, leasing, and maintenance of vehicles. Some invoices billed costs for 

vehicles with a driver. 20This represents vehicles purchased or leased by PSCs that were reimbursed by implementing partners. It does not 

include vehicles that an implementing partner may have leased or purchased directly. It also does not include 

vehicle costs for six projects implemented by the Louis Berger Group Inc./Black & Veatch Joint Venture. 

71

161 207

3313

4174

2696

240 216 233

0

1000

2000

3000

4000

5000

FY09 FY10 FY11

Armed expatriate PSC 

personnel

Armed Afghan PSC 

personnel

Armed third country 

national PSC personnel
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 7

Table 3: PSC Vehicle Expenditures Reimbursed by 

Implementing Partners During Fiscal Years 2009-2011 

(dollars in millions)

Vehicle type 2009 2010 2011 Total

Armored $5.2 $7.6 $8.7 $21.5

Other 1.3 2.0 2.4 $5.6

Total $6.4 $9.6 $11.1 $27.1

Source: SIGAR analysis of data obtained from implementing partners’ 

invoices for PSC security services for 23 projects. 

Note: Totals affected by rounding.

As of December 5, 2011, almost half of all armored vehicles in use for the 15 active projects that we 

examined were leased.21 Table 4 shows the number of armored vehicles used and whether the vehicles 

were purchased, leased, or transferred from another USAID program or project.

Table 4: Armored Vehicles Leased, 

Purchased, or Transferred and in Use as of 

December 2011

Procurement method Total Percent

of total

Leased 68 47.6

Purchased 32 22.4

Transferred 43 30.0

Total 143 100.0

Source: SIGAR analysis of data for 15 projects active and 

using armored vehicles as of December 5, 2011, obtained 

from implementing partners.

Afghan Government Delays Led Implementing Partners to Lease Additional Vehicles 

We found that some implementing partners leased vehicles, at a total cost of $4.1 million,22 because 

vehicles that they had already purchased were delayed in obtaining customs and registration approvals 

from GIRoA.

Implementing partners and PSCs are allowed to import armored vehicles to provide for the secure 

transportation of their personnel, but they must be properly licensed by GIRoA.23 A company wishing to 

import an armored vehicle must receive prior authorization from MOI. Licensing is required by MOI, 

which charges an annual fee per vehicle. The Ministry of Finance manages customs processing and 

charges a customs tax on the vehicles once they arrive in country. According to the APPF Advisory 

Group, any vehicles that are currently registered with PSCs will have to be transferred if the PSCs obtain 

RMC licenses.

 21Sixteen of the projects we examined were still active at the time of our information request—December 5, 2011. 

Fifteen of these projects used armored vehicles. 

22Funds spent for armored vehicles currently in use as of December 5, 2011. 

23Ministry of Interior Affairs, Deputy Office General Department, Procedure of Import and Use of Secure Armored 

Vehicles, Items, Equipments and Temporary Technology Which Have Military and Security Usage, April 24, 2011. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 8

Six implementing partners reported administrative and bureaucratic delays ranging from 5 months to 

2 years to get vehicles processed through customs and registered by GIRoA. For example:

• One implementer cited a time of 6 months on one project before vehicles were cleared for 

importation into Afghanistan and 24 months for another. 

• The same implementing partner reported that registration only took 2 weeks after vehicles were 

held in customs for 6 months, while another implementing partner reported registration took up to 

8 months for its project.

• One implementing partner cited a time of 2 years for customs clearance and vehicle registration 

on two projects.

• One implementing partner estimated that it took a total of 3 months to get new licenses once 

vehicles were transferred from other projects. 24

Implementing partners cited instances of collusion and corruption as a cause for the delays in getting 

vehicles through customs and registered. For example, according to one implementing partner, an 

Afghan ministry official attempted to charge an additional $10,000 to register the company’s vehicles; 

however, the implementing partner refused and leased vehicles instead. Some implementing partners also 

alleged collusion between ministry officials and owners of local vehicle leasing companies. 

In December 2011, personnel in the Kabul Mission’s PLSO informed us they were interviewing 

candidates to hire a local national familiar with the customs and registration processes to assist 

implementing partners in clearing these administrative barriers. As of June 2012, PLSO is awaiting final 

security clearance and expects the individual to begin work in July. PLSO added that it had sent letters 

urging MOI to complete outstanding registrations, but MOI’s response was a request that these letters be 

sent from the U.S. Embassy. 

SECURITY COSTS WILL LIKELY INCREASE DURING THE FIRST YEAR OF 

TRANSITION TO APPF FOR 13 USAID PROJECTS, BUT USAID AND 

IMPLEMENTING PARTNERS HAVE LIMITED EXPERIENCE WITH THE APPF

In our alert letter, we reported that security costs for 13 USAID projects that transitioned to the APPF

could increase by as much as $55 million during the first year after the transition. USAID did not agree 

and has since provided us information that it says shows that security costs had decreased since the 

transition to the APPF. However, we found this additional information incomplete and inconsistent. 

Overall, USAID’s implementing partners experience with the APPF is limited, and costs remain 

uncertain.

Security Costs Could Increase by as Much as $55 Million for 13 Projects

Assuming security requirements for armed Afghan guards do not change, the transition to the APPF will 

likely increase Afghan labor costs by up to 46 percent or $3.1 million during the first year of transition for 

the 13 projects that transitioned to the APPF. In addition, some implementing partners indicated they 

may hire more expatriates through RMCs to facilitate the transition; by one estimate, expatriate labor 

costs could increase as much as 200 percent or $52.1 million during the first year of transition for the 13 

projects. Implementing partners identified other factors, such as increased security infrastructure, that 

may further increase costs. However, overall, USAID disagreed with our assessment and, based on its 

analysis, suggests that security costs under the APPF had decreased. We found USAID’s data to be 

incomplete and inconsistent. 

 24Re-registration of the vehicles was required because the vehicles were transferred from one project to another. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 9

Afghan Armed Guards Could Increase Costs by $3.1 Million 

The APPF will charge a monthly fee for an APPF armed guard, which includes the guard’s salary and 

other fees. According to rates on the APPF Advisory Group’s website, MOI has set a base salary of a 

guard at $100 a month. The APPF will add charges for firearms; ammunition; training; and 

administrative and overhead fees, among other charges, to the monthly fee. Furthermore, the APPF will 

apply a profit of 20 percent to all charges associated with a guard, except for uniform and pension 

charges.25

According to the Overseas Security Advisory Council, the current average salary for an Afghan guard 

ranges from $250 to $350 per month, and our analysis found the average burdened rate26 for an Afghan 

guard was $566 per month in fiscal year 2011. Assuming that implementing partners pay their guards the 

same salary as before the transition, the burdened rate for a guard after the transition will be between 

$710 and $830 per month, an increase of between 25 and 46 percent.27 Table 5 illustrates the charges that 

will be assessed per guard per month by the APPF, using the salary for an armed PSC guard in fiscal year 

2011 of $250 and $350.

 25Several fees have increased or changed since we began our work in November 2011. For example, the yearly cost 

for a uniform increased almost $100 to $600 per year, and the pension charge increased from 11 percent to 16 

percent and was then revised to a flat $200 per year. 26A burdened rate includes the salary of a guard, administrative and overhead costs, profit, and any related other 

direct costs. An unburdened rate includes only the salary of a guard. 

27Implementing partners may pay their guards the same pay that they received before the transition if it was more 

than the APPF base pay. This pay is considered hazard pay. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 10

Table 5: Fees for an APPF Guard and Estimated Total Monthly Costsa

APPF fee Fee per guard

Total for 

guard with

salary 

of $250

Total for 

guard with

salary 

of $350

Base salary $100.00 $100.00 $100.00

Hazard pay TBD by 

customer 150.00 250.00

Bank charges 2.00 2.00 2.00

Medicine 8.00 8.00 8.00

Martyr contribution 18.00 18.00 18.00

Burial contribution 12.50 12.50 12.50

Training 10.00 10.00 10.00

Food stipend 120.00 120.00 120.00

AK-47 rifle 25.00 25.00 25.00

9mm side arm 17.00 17.00 17.00

Ammunition 9.00 9.00 9.00

Administrative and overhead 65.00 65.00 65.00

Profit 20% of

above total 107.00 127.00

Pensionb 16.67 16.67 16.67

Uniform and equipmentc 50.00 50.00 50.00

Total per guard $710.00 $830.00

Source: SIGAR analysis of information provided by the APPF Advisory Group and MOI.

Notes: 

a

These rates are from the APPF Advisory Group website as of mid April 2012. 

b

We spread the $200 annual charge over 12 months.

c

We spread the $600 annual charge over 12 months.

For the 13 USAID projects we examined that were active after the March 20, 2012, transition to the 

APPF, we found that these projects had 964 positions for armed Afghan guards as of September 30, 2011. 

If the security needs for these projects do not change, these guards will cost implementing partners an 

additional $1.7 to $3.1 million (or up to 46 percent) for the first year of the transition to the APPF. 

Expatiates Could Increase Costs by as Much as $52.1 Million

Implementing partners cited the possible need for additional expatriate security personnel as a result of 

uncertainty of the quality of security services to be provided by the APPF. Implementing partners are 

particularly concerned about the innermost level of security for their personnel. According to the 

Chairman of the Overseas Security Advisory Council, implementing partners estimate that the number of 

expatriate personnel could increase up to 200 percent. The 13 projects that transitioned to the APPF had 

79 positions for armed expatriate labor. Assuming an increase of expatriate labor of 200 percent, these 13 

projects could cost as much as $52.1 million in additional labor costs for the first year.28 

In its comments on a draft of this report, the USAID Mission Kabul questioned our assumption that 

expatriate labor costs could increase as much as 200 percent. As the Mission notes, the early experience 

with the APPF has not borne this out. Nevertheless, the final number of expatriates and APPF personnel

remains to be determined. The APPF is a nascent, unproven entity and, according to one privately 

 28This figure was calculated using the monthly average burdened rate for an expatriate in fiscal year 2011 of 

$27,454.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 11

employed security officer in Afghanistan, its leadership and administration have been questionable. Until 

the APPF demonstrates a sustainable capability in its administration of security, more expatriates will be 

needed. 

Other Costs Could Increase

In addition, multiple implementing partners cited the need for additional security infrastructure, such as 

blast walls and reinforced doors, as a result of the transition. Further, USAID announced to implementing 

partners it will consider sole source requests to allow implementing partners to contract with RMCs that 

previously provided security for their projects as PSCs. Limiting competition could lead to higher costs. 

USAID Reports Security Costs Had Decreased, but Its Data Was Inconsistent and Incomplete

In April 2012, the USAID Mission Kabul provided us a cost analysis that it had done based on data it 

obtained from implementing partners. USAID asked implementing partners to report the cost of security 

services provided by PSCs during the last full month before the transition to the APPF, and the costs of 

APPF services for the first month after the transition. In response, 15 implementing partners provided 

USAID information on 32 projects. 

USAID concluded, from the data it received, that security costs had decreased over three percent as a 

result of the transition. We note that of the 13 largest USAID projects that continued after the March 20, 

2012, transition, only 6 of these were included in USAID’s analysis. We also found the data provided by 

the implementers was inconsistent and incomplete, which calls into question USAID’s overall conclusion 

that security costs had decreased. For example, we noted the following:

• One implementing partner reported that it was performing some functions previously done by its

PSC for two of its task orders, such as recruiting guards, distributing equipment, and paying 

guards until the APPF could do so. These costs were not included in USAID’s totals. 

• The implementing partners for two projects noted in their responses that the pre- and post-APPF 

costs were not accurate comparisons, due to a significant decrease in project personnel or changes 

in scope of work. 

• For one project, the implementing partner had yet to sign a contract with the APPF for all of its 

security needs and, therefore, costs for the APPF were not included in its response. 

• The security costs reported for four projects reportedly decreased significantly after the 

implementing partner signed with the APPF—31, 32, 32, and 51 percent, respectively. We asked 

the USAID Mission Kabul why these numbers declined so much, especially the 51 percent 

decrease, but the Mission did not know, telling us that we would have to contact the 

implementing partners for this information. 

Finally, several of USAID’s implementing partners that had previously used PSC services indicated that 

they would only be using an RMC and not the APPF. These reports raise questions about how RMCs 

will be used. To date, GIRoA has not indicated whether using an RMC without the APPF will be 

allowed. 

Experience with APPF Is Limited, and Costs Are Uncertain

Although, the APPF has entered into contracts to provide security services for a number of USAID’s 

implementing partners, signed contracts are only the first step in the APPF providing security services. 

USAID’s implementing partners have limited experience with the APPF, and costs are still uncertain.

While the transition to the APPF is underway, the eventual costs of security for USAID’s ongoing and 

future programs and projects remain to be determined. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 12

In January 2012, USAID’s assessment of contingency plans submitted by its implementing partners found 

that, if the APPF is not prepared to provide adequate security services and an extension is not granted by 

GIRoA, 10 projects with a total award value of $899 million were at significant risk of termination. The 

assessment also found that an additional 19 projects valued at $451 million may require either a partial 

termination or modification of operations if the APPF is unable to provide security services. The interim

licenses granted for some projects allow implementing partners additional time to transition. 

Nevertheless, although no implementing partners have terminated their projects because of concerns with 

APPF, the projects USAID identified at risk of termination or modification are still at risk until the 

implementing partners determine that the APPF can provide adequate security services. 

Also, before the transition to the APPF occurred, implementing partners expressed concern that the

Federal Acquisition Regulation and USAID directives require that certain clauses be inserted into 

contracts or cooperative agreements, some specifically addressing security matters, and these clauses are 

further required to be inserted into subcontracts. However, the APPF contract template does not contain 

all of these required clauses. In its comments on a draft of this report, the USAID Mission Kabul reported 

that its implementing partners have been able to add the required clauses to the APPF contract template

on a case-by-case basis, though USAID did not provide us with any examples of these contracts, as we 

requested.

Also of some concern, according to the APPF Advisory Group website as of June 19, 2012, we note that 

19 RMCs had been licensed by the MOI. This is significantly less than the 45 PSCs previously licensed 

to provide security services. 

Further, as of June 2012, most of USAID’s implementing partners had less than 3 months experience with 

the APPF. In following up with some of USAID’s implementing partners about their experiences with 

the APPF, they expressed concern about the initial transition and operations. For example, 

• Implementing partners expressed concern about lines of command and control over the APPF 

guards. For example, even though its contract with the APPF allows it to reject unsuitable 

personnel and propose replacements, one USAID implementing partner reported that it has been 

unsuccessful in doing so.

• In one instance, APPF personnel reported for duty in Afghan National Police uniforms; the 

implementing partner turned the personnel away and asked them to report in APPF uniforms.

• At one site served by APPF, the implementing partner reported that the provision of weapons and 

uniforms had been held up for almost 2 months awaiting approval of the APPF’s “tashkil” or its 

personnel and equipment authorization. As noted by the implementing partner, the delay could 

have been disastrous if any serious security incident had occurred.

• An implementing partner reported that some APPF officers were assigned to sites that were not 

near their homes. These officers “demanded” services that were not anticipated, such as trips 

back to Kabul to visit their family, a car and fuel, and other forms of life support that were not 

originally agreed to in the contract.

• One implementing partner also reported that the APPF was submitting invoices for guard services 

for projected hours worked, rather than actual hours. The partner noted that it had not seen that 

the APPF had a system to adjust the projected costs to actual.

Not all experiences with the APPF have been negative. One implementing partner reported that all its 

APPF guards transitioned from its PSCs, and its RMC has “continuously” advised the APPF regarding 

the security operation.

IMPLEMENTING PARTNERS USED UNLICENSED PSCS FOR SIX PROJECTS

GIRoA requires PSCs to hold a current operating license from MOI to provide security services. To 

obtain an operating license, a PSC must comply with certain MOI procedural and legal requirements and 

pay a yearly fee. Implementing partners must seek consent or approval from USAID before entering into 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 13

any subcontracts.

29 A May 2010 report by the USAID Office of Inspector General found that USAID had 

not ensured that all PSCs used by implementing partners were licensed by the MOI and recommended 

USAID notify the implementing partners not using licensed PSCs of this requirement.30 USAID

concurred with this recommendation. 

Nevertheless, we determined that implementing partners used unlicensed PSCs for six projects. Three of 

these projects were among the 29 projects we reviewed.

31 As of December 5, 2011, unlicensed PSCs 

were still providing security services for two of these projects. After we issued our March 8, 2012, alert 

letter citing the use of unlicensed PSCs, USAID provided additional documentation regarding the 

transition to the APPF. Based on this documentation, we found three additional projects where 

implementing partners used unlicensed PSCs for security services. 

Implementing partners’ failure to contract with licensed PSCs is illegal in Afghanistan and puts both 

USAID projects and reconstruction funding at risk. Despite the USAID Inspector General’s prior report, 

USAID did not have a process requiring implementing partners to submit MOI licenses for their PSCs or 

an established process for reviewing these licenses before providing consent or approval for subcontracts.

CONCLUSION

During fiscal years 2009 through 2011, USAID provided its implementing partners over $4.2 billion for 

reconstruction and development assistance programs in Afghanistan. Without adequate security for 

USAID’s implementing partners, many of these programs and projects could be scaled back or 

terminated, putting USAID reconstruction funding at risk.

The March 2012 transition to the APPF has increased the uncertainty over security, though USAID 

reports that its implementing partners are working with the APPF, as required, and no programs or 

projects have been terminated. Nevertheless, the transition is in its early stages and USAID and its 

partners have limited experience with the costs and adequacy of APPF’s security services. USAID’s 

analysis of transition costs was limited, and we found its data was incomplete and inconsistent among the 

implementing partners that provided data. Based on our analysis, security costs are likely to increase and 

could be substantial, and some initial reports are that the transition to the APPF has encountered some 

issues that need to be addressed. These costs should be monitored for ongoing projects, as well as 

specifically addressed on future USAID programs and projects, especially as the implementing partners 

gain experience with the APPF. 

In addition, USAID did not have a system in place to ensure that all PSCs used by its implementing 

partners were licensed to operate in Afghanistan. While PSCs are being phased out, USAID must ensure 

that any RMCs implementing partners contract with are properly licensed by GIRoA. 

 29Consent is required for contracts and approval is required for cooperative agreements. 30USAID Office of Inspector General Audit Report No. 5-306-10-009-P, Audit of USAID/Afghanistan’s Oversight 

of Private Security Contractors in Afghanistan, May 21, 2010. 31One project used two unlicensed PSCs. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 14

RECOMMENDATIONS

Given the likely increase in security costs under the APPF, we recommend that the USAID Mission 

Director, Kabul:

1. Perform a comprehensive analysis of security costs for all ongoing projects that are using or plan 

to use APPF security services and determine a) if funding will be available to cover any

additional security costs and b) the effect the additional costs will have on overall project 

implementation. 

2. Before deciding whether to award new or follow-on contracts, cooperative agreements, or grants 

for reconstruction and development projects, conduct a cost-benefit analysis for each award that 

methodically assesses whether U.S. funds should be spent on other projects if the costs of security

exceed any benefits that USAID expects to derive from these projects. 

To ensure implementing partners only use RMCs licensed by MOI, we recommend the USAID Mission 

Director, Kabul:

3. Institute a formal process that requires implementing partners to submit MOI licenses to OAA 

and requires OAA to ensure they are still valid and to document these reviews prior to approving 

or consenting to the subcontract award. 

COMMENTS

We provided a draft of this report to USAID and the U.S. Central Command for comment. The USAID 

Mission Kabul provided detailed comments, which are reproduced in appendix III. We also met with 

USAID Mission Kabul officials on April 17 and 30, 2012, to discuss the status of the transition to the 

APPF and the alert letter. The U.S. Central Command did not provide formal comments. Both USAID 

and the U.S. Central Command noted some technical changes and clarifications, which we have 

incorporated into this final report, as appropriate.

Overall, the USAID Mission said the report provided some useful insights, but disputed much of our 

analysis supporting likely increases in security costs during the first year of transition for the 13 projects 

we examined. USAID’s principal disagreement with our cost analysis was that security needs will not 

change; in particular, USAID contends that the increase in expatriate labor that some experts reported 

could increase as much as 200 percent is not likely. We clearly noted in the report that this was an upper 

limit, but should be considered as a possibility. Nevertheless, early indications from some of USAID’s

implementing partners are that more expatriates are being hired, but not at double or triple the rates from 

before the transition. While we would welcome the lower (or no) increase in expatriate labor costs that 

USAID is expecting, the eventual number of and use of expatriates remains to be determined. 

USAID Mission Kabul also did not concur with the first two recommendations, saying (1) its analysis 

shows security costs declining for ongoing projects as of April 2012 and further analysis was not 

necessary and (2) for future projects, its standard policies and procedures for entering into contracts, 

cooperative agreements, or grants already require the consideration of all costs associated with the 

project, including security services. 

• Concerning recommendation number one, the data USAID used in its analysis was collected just 

weeks after the transition. Although USAID’s data showed security costs were decreasing, we 

found the data incomplete and inconsistent among the implementing partners that responded to 

USAID’s data request, which calls into question USAID’s conclusions. While decreased security 

costs would be a good outcome, the transition to the APPF is in its early stages and USAID and 

its implementing partners do not have much experience with it. We continue to believe that a 

systematic monitoring of security costs for ongoing projects would be useful to document 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 15

implementing partners’ experiences with the APPF, and to provide a longer-term analysis of the 

costs involved.

• Concerning recommendation number two, the APPF is a new Afghan entity that is untested. A 

September 2011 assessment found the APPF was not ready to provide security. The results of 

planned assessments from December 2011 and March 2012 have not been released. This lack of 

transparency raises doubts about the capability and capacity of the APPF to provide the security 

necessary for USAID’s implementing partners. If it cannot, USAID’s investment in 

Afghanistan’s development could be at risk if implementers withdraw or projects are cut short. 

We continue to urge USAID to specifically consider the security needs and costs with its 

implementing partners as new programs and projects are initiated. The costs of security should 

be weighed against the benefits of the project before contracts, cooperative agreements, or grants

are entered into. 

Overall, we continue to urge the USAID Mission to systematically track the security costs of the APPF as 

implementing partners gain more experience with it. Specifically, USAID should monitor security costs 

over time, ensure implementing partners report data using common definitions and time periods, and 

explain variances as they occur.

In regards to recommendation number three, the USAID Mission concurred and noted actions planned to 

ensure RMCs are properly licensed with the GIRoA before contracts can be entered into.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 16

APPENDIX I: SCOPE AND METHODOLOGY

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

Reconstruction’s audit of the costs of private security contractors (PSCs) associated with the U.S. Agency 

for International Development’s (USAID) reconstruction and development assistance programs in 

Afghanistan. We initiated this audit to assess (1) the costs and the numbers of personnel and vehicles 

associated with PSCs for selected USAID projects during fiscal years 2009 through 2011 and (2) the 

potential costs related to the transition of security services from PSCs to the Afghan Public Protection 

Force (APPF) and the plans of implementing partners after the transition. We also determined whether 

USAID’s implementing partners for selected projects were using PSCs licensed by the Government of the 

Islamic Republic of Afghanistan (GIRoA) to operate in Afghanistan. In conducting this audit, we

reviewed documents covering the period September 2007 to June 2012. 

To address our objectives, we selected 35 of USAID’s largest projects representing almost $3.27 billion, 

or more than 75 percent of the total expenditures during fiscal years 2009 through 2011.32 These projects 

represented 17 implementers. To select the projects, the USAID Office of Financial Management (OFM) 

provided a list of all 162 USAID contracts, cooperative agreements, and grants over $100,000 that had 

expenditures during fiscal years 2008, 2009, 2010, and 2011. We compared the accrued expenditures for 

all 162 awards in the OFM report to computer-processed data previously provided to us from USAID’s 

financial information system. We reconciled the total disbursements in the OFM report to USAID’s 

financial system to within 97.7 percent accuracy. We also identified some additional discrepancies in the 

computer-processed data report, such as expenditures for one financial instrument was listed under 

different line items, which USAID corrected. Therefore, we concluded that the data were sufficiently 

reliable for the purposes of our objectives. Once we were satisfied the data met our needs, we excluded 

any inter-governmental transfers, GIRoA grants, or grants to multilateral organizations. We then 

stratified the projects by total expenditures to select USAID’s 35 largest projects. Finally, we assessed 

the adequacy of internal controls over USAID’s financial data, including its assessment of implementing 

partners’ security costs after the transition to the APPF, through interviews with cognizant officials and 

reviews of relevant documents. The results of our assessment are included in the body of this report.

To determine the PSC costs and the numbers of personnel and vehicles used for the 35 largest projects, 

we requested information from the associated implementing partners on any PSC used, personnel they 

employed, and vehicles used during fiscal years 2009 through 2011. We met with six implementers to 

discuss our objectives and to vet our questions and the format of our information request prior to sending 

to all 17 implementing partners. In coordination with USAID, we sent our request for information to the 

implementing partners and received responses from 13, representing 29 projects.33 We also requested 

that the implementing partners provide PSC invoices for any PSC costs incurred during fiscal years 2009

through 2011. The format and detail of the invoices we received varied greatly from one project and 

implementing partner to the next. We recorded the total for each month and identified certain cost

elements, where possible; specifically, (1) labor costs for expatriates, third country nationals, and local 

nationals and (2) the costs for both armored and unarmored vehicles. We also documented by year the 

number of PSC personnel positions and internal armed security personnel positions and the number and 

type of vehicles used. We also analyzed the narratives provided by implementing partners specific to 

questions we asked on challenges getting armored vehicles through customs and registered by the GIRoA, 

and other significant costs associated with security services to identify trends and common responses.

However, for one implementing partner, Louis Berger Inc./Black & Veatch Joint Venture, we could not 

identify with certainty the PSC costs for the six projects in our selection because the invoices also 

 32Projects included may have had expenditures before and after the period examined. Further, not all projects were 

active all 3 fiscal years.

33Twenty-one of these projects were contracts, representing almost $1.7 billion or 58 percent of expenditures during 

the period, and 8 were cooperative agreements representing $1.2 billion or 42 percent spent during the period. No 

grants were in the largest 35 projects. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 17

included costs for projects not in our selection. Instead, we asked the Joint Venture to provide its security 

costs for the six projects for all 3 years, which means the personnel and vehicle costs we report by year do 

not include these six projects. However, the numbers of personnel and vehicles we report do include 

these projects. 

To estimate the labor costs associated with the transition to the APPF, we calculated an average burdened 

labor rate for Afghan guards and expatriate security managers before the transition by analyzing the labor 

rates charged on invoices for 10 projects in fiscal year 2011. For each project, we took the burdened 

labor rates from three invoices—one from early in the year, one from mid-year, and one from late in the 

year—for a total of 30 invoices and averaged them together. For Afghan guards, the rate was $566 per 

month; for expatriate staff, the rate was $27,454 per month. 

• To estimate the costs for an Afghan guard after the transition to the APPF, we obtained an 

unburdened labor rate for an Afghan guard from the Overseas Security Advisory Council ($250 

to $350 per guard) and added the APPF fees published on the AFFP Advisory Group’s website as 

of mid-April 2012 to determine the fully burdened rate of an APPF guard. To calculate the 

additional estimated cost for Afghan guards, we subtracted the burdened rate we calculated of 

$566 per month from these new figures.

• To estimate the costs for expatriate security managers after the transition to the APPF, we 

multiplied the calculated burdened rate ($27,454 per month) by the increase (up to 200 percent) 

projected by the Overseas Security Advisory Council based on meetings with implementing 

partners.

To estimate the additional costs of security services for the first year after the transaction to the APPF for 

the 13 projects we examined that transitioned to the APPF as of March 20, 2012, we (1) applied the 

calculated increase in the burdened labor rate for the number of Afghan guards they had been using and 

(2) added the projected increase in the number of expatriate managers they had been using. 

In addition, we reviewed numerous documents, reports, studies, memoranda, and guidance related to 

PSCs and the transition to the APPF. We reviewed guidance and regulations by the Afghan Ministry of 

Interior on PSCs and risk management companies, the GIRoA/International Security Assistance 

Force/U.S. Embassy 6-month assessment of the APPF, Partner Liaison and Security Office (PLSO) 

reviews of three implementing partners’ security plans or security proposals, and USAID’s analyses of 

the pre- and post-transition costs from April 2012. We discussed the costs of PSCs and USAID’s plans 

for transitioning to the APPF with officials from the USAID Mission’s Office for Acquisition and 

Assistance and PLSO; USAID’s Office of Financial Management; and contracting officers, contracting 

officers’ technical representatives, and program managers from various program. In addition, we 

discussed the build-up and capacity of the APPF with the APPF Advisory Group under the NATO 

Training Mission-Afghanistan/Combined Security Transition Command-Afghanistan, and we attended 

two Industry Days hosted jointly by the Afghan Ministry of Interior and the APPF Advisory Group to 

update the development community on the capacity and transition to the APPF. We also attended a 

meeting of the Overseas Security Advisory Council and met with officials from the Professional Services 

Council, Inc., and six implementing partners to obtain information on plans to transition to the APPF. 

We conducted work in Washington, D.C., and in Kabul, Afghanistan, from September 2011 to June 2012, 

in accordance with generally accepted government auditing standards. These 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. The audit was conducted 

under the authority of Public Law No. 110 181, as amended; the Inspector General act of 1987; and the 

Inspector General Reform Act of 2008.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 18

APPENDIX II: PSC EXPENDITURES FOR 29 OF USAID’S LARGEST PROJECTS 

FOR FISCAL YEARS 2009 THROUGH 2011

The following table lists 29 of the 35 U.S. Agency for International Development (USAID) projects that 

USAID reported having the largest value of expenditures during fiscal years 2009 through 2011. 

Implementing partners for six of the projects did not respond to our request for information. We analyzed 

invoices for each of these projects to determine how much was spent for private security contractors 

(PSCs). Projects may have multiple tiers of subcontractors. While we attempted to identify PSC costs at 

all tiers, we could not verify whether we captured all PSC costs beyond a first-tier subcontractor reported 

by the implementing partner for any project. In addition, some implementing partners provided their own 

security services during this period, which we did not attempt to quantify for this report. In one case, 

USAID’s implementing partner did not use a PSC. For the 29 projects we examined, PSCs expenditures 

totaled at least $299 million or about 10.4 percent of total expenditures during fiscal years 2009 through 

2011.

Table I: Total Expenditures and PSC Expenditures for 29 of USAID’s Largest Projects, Fiscal 

Years 2009-2011

Agreement number Implementing 

partner

Agreement 

type

Project 

expenditures 

for

fiscal years

2009-2011

PSC 

expenditures 

for

fiscal years

2009-2011

PSC 

expenditures 

as percent of 

total

Active as of 

March 20, 

2012

306-DFD-A-00-08-00304-00

International 

Relief and 

Development, 

Inc.

Cooperative 

Agreement $470.7 $37.9 8.1 No

DFD-I-00-05-00250-00

Development 

Alternatives, 

Inc.

Contract 261.6 33.1 12.7 No

306-A-00-08-00509-00

International 

Relief and 

Development, 

Inc.

Cooperative 

Agreement 258.6 21.3 8.2 No

306-A-00-09-00511-00

Central Asia 

Development 

Group, Inc.

Cooperative 

Agreement 195.9 - 0.0 Yes

306-C-00-07-00508-00

Deloitte 

Consulting, 

LLP

Contract 169.6 8.7 5.1 No

306-I-09-06-00517-00

The Louis 

Berger Group 

Inc./Black & 

Veatch Joint 

Venture

Contract 138.9 9.5 6.9 No

306-I-08-06-00517-00

The Louis 

Berger Group 

Inc./Black & 

Veatch Joint 

Venture

Contract 129.5 47.7 36.9 No

306-I-01-06-00517-00

The Louis 

Berger Group 

Inc./Black & 

Veatch Joint 

Venture

Contract 88.2 13.9 15.8 No

306-DOT-I-01-08-00033-00

Chemonics 

International, 

Inc

Contract 87.8 17.6 20.1 Yes

306-C-00-07-00501-00

Chemonics 

International, 

Inc

Contract 87.6 6.8 7.7 No
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 19

Agreement number Implementing 

partner

Agreement 

type

Project 

expenditures 

for

fiscal years

2009-2011

PSC 

expenditures 

for

fiscal years

2009-2011

PSC 

expenditures 

as percent of 

total

Active as of 

March 20, 

2012

306-I-04-06-00517-00

The Louis 

Berger Group 

Inc./Black & 

Veatch Joint 

Venture

Contract 87.0 8.4 9.6 No

306-A-00-09-00508-00

Development 

Alternatives, 

Inc.

Cooperative 

Agreement 84.5 3.1 3.7 Yes

306-M-00-06-00508-00

Creative 

Associates 

International, 

Inc.

Contract 70.7 2.2 3.1 No

306-C-00-07-00503-00

Development 

Alternatives 

Inc.

Contract 67.4 8.3 12.4 Yes

306-A-00-08-00529-00 

Consortium 

for Elections 

and Political 

Process 

Strengthening

Cooperative 

Agreement 66.4 14.3 21.5 Yes

306-DFD-I-06-05-00225-00 

International 

Foundation For 

Election 

Systems

Contract 61.4 13.7 22.4 Yes

306-A-00-09-00510-00 CARE 

International

Cooperative 

Agreement 59.3 0.8 1.3 No

306-M-00-06-00505-00

International 

Relief and 

Development, 

Inc.

Contract 54.9 7.5 13.7 No

306-EEM-I-04-07-00005-00

Deloitte 

Consulting, 

LLP

Contract 53.9 6.9 12.9 Yes

306-DOT-I-02-08-00035-00

Development 

Alternatives, 

Inc.

Contract 49.8 5.8 11.7 Yes

306-I-14-06-00517-00

The Louis 

Berger Group 

Inc./Black & 

Veatch Joint 

Venture

Contract 44.9 4.0 8.9 No

306-M-00-05-00516-00

Chemonics 

International, 

Inc 

Contract 44.5 5.0 11.2 No

306-C-00-10-00527-00

Chemonics 

International, 

Inc 

Contract 41.2 2.6 6.3 Yes

306-C-00-09-00529-00

Chemonics 

International, 

Inc 

Contract 38.3 6.9 18.1 Yes

306-A-00-06-00523-00 JHPIEGO 

Corporation

Cooperative 

Agreement 37.2 1.0 2.7 Yes

306-A-00-06-00520-00 Academy for 

Educational 

Development

Cooperative 

Agreement 34.3 0.7 2.1 No
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 20

Agreement number Implementing 

partner

Agreement 

type

Project 

expenditures 

for

fiscal years

2009-2011

PSC 

expenditures 

for

fiscal years

2009-2011

PSC 

expenditures 

as percent of 

total

Active as of 

March 20, 

2012

306-I-02-06-00517-00

The Louis 

Berger Group 

Inc./Black & 

Veatch Joint 

Venture

Contract 31.5 6.9 21.9 No

306-C-00-11-00506-00

Black & Veatch 

Special 

Projects 

Corporation

Contract 30.8 2.3 7.4 Yes

306-C-00-10-00526-00

Development 

Alternatives, 

Inc.

Contract 30.6 2.9 9.6 Yes

Total $2,876.7 $299.9 10.4

Source: SIGAR analysis of USAID financial data and implementing partners’ PSC invoices.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 21

APPENDIX III: COMMENTS FROM THE U.S. AGENCY FOR INTERNATIONAL 

DEVELOPMENT

See SIGAR 

comment 1.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 22

See SIGAR 

comment 2.

See SIGAR 

comment 3.

See SIGAR 

comment 3.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 23

See SIGAR 

comment 3.

See SIGAR 

comment 4.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 24

See SIGAR 

comment 3.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 25

See SIGAR 

comment 1.

See SIGAR 

comment 5.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 26

See SIGAR 

comment 6.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 27
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 28

See SIGAR 

comment 1.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 29

See SIGAR 

comment 7.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 30
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 31

See SIGAR 

comment 8.
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 32

The following are SIGAR comments on USAID’s letter dated June 12, 2012:

1. We updated the report, accordingly.

2. We clarified the sentence to reflect that DIA’s incident data also has declined in recent months.

3. We do not agree that any change is necessary.

4. We clarified and elaborated on our methodology throughout the report. In particular, see 

appendix I, pages 16-17. We clearly noted in the report that this was an upper limit, and should 

be considered as a possibility. We also note that the transition to the APPF is still in its early 

stages and USAID’s implementing partners’ experience with it and their ultimate use of 

expatriate labor remains to be determined.

5. We added additional information regarding our analysis of USAID’s cost calculations. See page 

11.

6. USAID mischaracterizes our cost analysis. The likely increase in security costs that we report is 

for the 13 projects we examined that transitioned to the APPF. The projects were selected based 

on total expenditures during fiscal years 2009 through 2011 and was not a random sample. A 

confidence level cannot be applied to it. See appendix I, pages 16-17. 

7. The data USAID used in its analysis was collected just weeks after the transition to the APPF. 

Although USAID’s data showed security costs were decreasing, we found the data incomplete 

and inconsistent among the implementing partners that responded to USAID’s data request, 

which calls into question USAID’s conclusions. While decreased security costs would be a good 

outcome, the transition to the APPF is in its early stages and USAID and its implementing 

partners do not have much experience with it. We continue to believe that a systematic 

monitoring of security costs for ongoing projects would be useful to document implementing 

partners’ experiences with the APPF, and to provide a longer-term analysis of the costs involved.

8. The APPF is a new Afghan entity that is untested. A September 2011 assessment found the 

APPF was not ready to provide security. The results of planned assessments from December 

2011 and March 2012 have not been released. This lack of transparency raises doubts about the 

capability and capacity of the APPF to provide the security necessary for USAID’s implementing 

partners. If it cannot, USAID’s investment in Afghanistan’s development could be at risk if 

implementers withdraw or projects are cut short. We continue to urge USAID to specifically 

consider the security needs and costs with its implementing partners as new programs and 

projects are initiated. The costs of security should be weighed against the benefits of the project 

before contracts, cooperative agreements, or grants are entered into. 
SIGAR Audit-12-10 Contract Performance and Oversight/Private Security Contractors Page 33

(This report was conducted under the audit project code SIGAR-051A).
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: 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 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