Various factors challenge U.S. efforts to ensure proper management and oversight of U.S. development efforts in Afghanistan. Among the most noteworthy has been the “high-threat” working environment U.S. personnel and others face in Afghanistan, the difficulties in preserving institutional knowledge due in part to a high rate of staff turnover, and the Afghan government’s lack of capacity and corruption challenges. As we have previously reported, Afghanistan has experienced annual increases in the level of enemy-initiated attacks. Although the pattern of enemy-initiated attacks remains seasonal, generally peaking from June through September each year and then declining during the winter months, the annual “peak” (high point) and “trough” (low point) for each year have surpassed the peak and trough, respectively, for the preceding year since September 2005. This includes a rise in attacks against coalition forces and civilians, as well as Afghan National Security Forces. The high- threat security environment has challenged USAID’s and others’ ability to implement assistance programs in Afghanistan, increasing implementation times and costs for projects in nonsecure areas. For example, we found during our review of the U.S. road reconstruction efforts that a key road to the Kajaki dam was terminated after USAID had spent about $5 million after attacks prevented contractors from working on the project. In addition, U.S. officials cited poor security as having caused delays, disruptions, and even abandonment of certain reconstruction projects. For example, a project to provide Afghan women jobs in a tailoring business in southwest Afghanistan failed, in part, because of the threat against the female employees. The high-threat security environment has also limited the movement and ability of U.S. personnel to directly monitor projects. USAID has specifically cited the security environment in Afghanistan as a severe impediment to its ability to directly monitor projects, noting that USAID officials are generally required to travel with armored vehicles and armed escorts to visit projects in much of the country. USAID officials stated that their ability to arrange project visits can become restricted if military forces cannot provide the necessary vehicles or escorts because of other priorities. In 2009, USAID documented site visits for two of the eight programs included in our review (see fig. 1). We have experienced similar restrictions to travel beyond the embassy compound during our visits to Afghanistan. In the Mission’s 2008 and 2009 Federal Managers Financial Integrity Act of 1982 Annual Certifications, the Mission reported its efforts to monitor project implementation in Afghanistan as a significant deficiency. These reports raised concerns that designated USAID staff are “prevented from monitoring project implementation in an adequate manner with the frequency required” and noted that there is a high degree of potential for fraud, waste, and mismanagement of Mission resources. USAID further noted that the deficiency in USAID’s efforts to monitor projects will remain unresolved until the security situation in Afghanistan improves and stabilizes. The reports identified several actions to address the limitations to monitor project implementation, including, among others: placement of more staff in the field; use of Afghan staff—who have greater mobility than expatriate staff—to monitor projects; hiring of a contractor to monitor the implementation of construction projects and conduct regular site visits; and collecting of implementing partner video or photographs—including aerial photographs. Preserving institutional knowledge is vital to ensuring that new Mission personnel are able to effectively manage and build on USAID assistance efforts. We found, however, during our review of USAID’s road reconstruction efforts in 2008 and, most recently, our review of USAID’s agricultural development program that USAID had not taken steps to mitigate challenges to maintaining institutional knowledge. USAID did not consistently document decisions made. For example, staff working in Afghanistan had no documented assessments for modifications to the largest USAID-funded United Nations Office for Project Services (UNOPS) project in Afghanistan—Rehabilitation of Secondary Roads—even though these modifications increased the scope and budget of the program by more than ten times its original amount. Furthermore, USAID and other U.S. agencies in Afghanistan lack a sufficient number of acquisition and oversight personnel with experience working in contingency operations. This problem is exacerbated by the lack of mechanisms for retaining and sharing institutional knowledge during transitions of USAID personnel and the rate at which USAID staff turn over, which USAID acknowledged as hampering program design and implementation. In addition, the State Department Office of Inspector General noted in its February 2010 inspection of the U.S. Embassy to Afghanistan and its staff that 1-year assignments, coupled with multiple rest-and-recuperation breaks, limited the development of expertise, contributed to a lack of continuity, and required a higher number of personnel to achieve strategic goals. The USAID monitoring officials for the eight agricultural programs we focused on during our review of USAID’s agricultural development efforts in Afghanistan were in place, on average, 7.5 months (see table 1). Moreover, the length of time that a monitoring official was in place has declined. The two most recently initiated agricultural programs have had monitoring officials in place for an average of only 3 months each. USAID officials noted that the effectiveness of passing information from one monitoring official to another is dependent on how well the current official has maintained his or her files and what guidance, if any, is left for their successor. USAID officials noted that a lack of documentation and knowledge transfer may have contributed to the loss of institutional knowledge. We reported in April 2010 that USAID used contractors to help administer its contracts and grants in Afghanistan, in part to address frequent rotations of government personnel and security and logistical concerns. Functions performed by these contractors included on-site monitoring of other contractors’ activities and awarding and administering grants. While relying on contractors to perform such functions can provide benefits, we found that USAID did not always fully address related risks. For example, USAID did not always include a contract clause required by agency policy to address potential conflicts of interest, and USAID contracting officials generally did not ensure enhanced oversight in accordance with federal regulations for situations in which contractors provided services that closely supported inherently governmental functions. USAID has increasingly included and emphasized capacity building among its programs to address the government of Afghanistan’s lack of capacity to sustain and maintain many of the programs and projects put in place by donors. In 2009, USAID rated the capability of 14 of 19 Afghan ministries and institutions it works with as 1 or 2 on a scale of 5, with 1 representing the need for substantial assistance across all areas and 5 representing the ability to perform without assistance. The Ministry of Agriculture, Irrigation, and Livestock was given a rating of 2—needing technical assistance to perform all but routine functions—while the Ministry for Rural Rehabilitation and Development was given a rating of 4—needing little technical assistance. Although USAID has noted overall improvement among the ministries and institutions in recent years, none was given a rating of 5. USAID has undertaken some steps to address the Afghan ministries’ limited capacity and corruption in Afghanistan by including a capacity- building component in its more recent contracts. In 2009, the U.S. government further emphasized capacity building by pursuing a policy of Afghan-led development, or “Afghanization,” to ensure that Afghans lead efforts to secure and develop their country. At the national level, the United States plans to channel more of its assistance through the Afghan government’s core budget. At the field level, the United States plans to shift assistance to smaller, more flexible, and faster contract and grant mechanisms to increase decentralized decision making in the field. For example, the U.S. government agricultural strategy stresses the importance of increasing the Ministry of Agriculture, Irrigation, and Livestock’s capacity to deliver services through direct budget and technical assistance. USAID also recognized that, with a move toward direct budget assistance to government ministries, USAID’s vulnerability to waste and corruption is anticipated to increase. According to USAID officials, direct budget assistance to the Ministry of Agriculture, Irrigation, and Livestock is dependent on the ability of the ministry to demonstrate the capacity to handle the assistance. These officials noted that an assessment of the Ministry’s ability to manage direct budget assistance was being completed. The U.S. Embassy has plans under way to establish a unit at the embassy to receive and program funds on behalf of the Ministry while building the Ministry’s capacity to manage the direct budget assistance on its own. According to the Afghanistan’s National Development Strategy, Afghanistan’s capacity problems are exacerbated by government corruption, describing it as a significant and growing problem in the country. The causes of corruption in Afghan government ministries, according to the Afghanistan National Development Strategy, can be attributed to, among other things, a lack of institutional capacity in public administration, weak legislative and regulatory frameworks, limited enforcement of laws and regulations, poor and nonmerit-based qualifications of public officials, low salaries of public servants, and a dysfunctional justice sector. Furthermore, the sudden influx of donor money into a system already suffering from poorly regulated procurement practices increases the risk of corruption. In April 2009, USAID published an independent Assessment of Corruption in Afghanistan that found that corruption was a significant and growing problem across Afghanistan that undermined security, development, and democracy-building objectives. According to the assessment, pervasive, entrenched, and systemic corruption is at an unprecedented scope. The USAID-sponsored assessment added that Afghanistan has or is developing most of the institutions needed to combat corruption, but these institutions, like the rest of the government, are limited by a lack of capacity, rivalries, and poor integration. The assessment also noted that the Afghan government’s apparent unwillingness to pursue and prosecute high-level corruption, an area of particular interest to this Subcommittee, was also reported as particularly problematic.