Taxpayer Funding of Terrorists

Audit: U.S. funds may have paid for contracts with terrorists in Afghanistan

April 11, 2013

The U.S. government may have awarded taxpayer-funded contracts to terrorists and those who support the insurgency in Afghanistan, according to an audit issued Thursday by the Special Inspector General for Afghanistan Reconstruction (SIGAR).

The audit found several weaknesses in DoD’s process to ensure U.S. contracting dollars are not being provided to persons and entities supporting the insurgency, according to SIGAR.

The audit, titled "Contracting with the Enemy," found that the Defense Department has failed to implement fail-safes aimed at ensuring U.S. funds do not flow to terrorists and other enemies.

Nearly $2 billion in contracts were awarded in 2012 alone, though it is unclear how much of that may have benefited the insurgency.

"The possibility that taxpayer money could be supporting the insurgency is alarming and demands immediate action," lead inspector John Sopko said in a statement Thursday. "Every effort should be made to implement stronger controls that protect our troops and ensure the success of our reconstruction efforts."

"DoD has limited assurance that contractors with links to enemy groups are identified and their contracts terminated" despite a law in the 2012 National Defense Authorization Act (NDAA) mandating this take place.

That law only applies to contracts exceeding $100,000. However, roughly 80 percent of contracts awarded in Afghanistan fall below this threshold, according to SIGAR.

The State Department and the American aid group USAID are not required to adhere to this law, known as Section 841.

Some lead contracting officials either did not receive or did not follow a notification issued by U.S. Central Command (CENTCOM) identifying supporters of enemy groups, according to SIGAR.

CENTCOM had released four "notification letters identifying five companies and their associates as" suspect individuals who should not be awarded contracts.

SIGAR found "several weaknesses in DoD’s process for implementing Section 841 that prevent the department from having reasonable assurance that U.S. government contracting funds are not being provided to persons and entities supporting the insurgency and opposing U.S. and coalition forces," according to its report.

"As a result, millions of contracting dollars could be diverted to forces seeking to harm U.S. military and civilian personnel in Afghanistan and derail the multi-billion dollar reconstruction effort."

Congress allocated more than $16 billion to Afghan security forces and reconstruction projects just last year. This is nearly twice as much as was given to "the next four largest foreign assistance beneficiaries—Israel, Iraq, Pakistan, and Egypt—combined," SIGAR has noted.

SIGAR additionally found during its investigation that certain contractors were not even told they must adhere to the law barring them from working with the enemy.

Additionally, some lead U.S. contractors did not inform their principals Section 841 even existed.

SIGAR is recommending that Congress tighten regulatory measures aimed at ensuring this does not continue.

The United States is expected to have to commit some $70 billion to Afghanistan in the coming decade.

Senators Kelly Ayotte (R., N.H.) and Richard Blumenthal (D., Conn.) responded to SIGAR's audit on Thursday by introducing legislation aimed at ensuring no U.S. funds reach terrorists.

The "Never Contract With The Enemy" act would give the Pentagon increased flexibility "to more expeditiously sever ties with contractors who funnel taxpayer resources to those who oppose the United States," according to a joint statement released by Ayotte and Blumenthal.

"This common sense legislation will help ensure that all federal contracting officials have the ability to move quickly to terminate contracts that are diverting money to groups that are working against America’s interests," Ayotte said in a statement. "These authorities have been helpful to our troops in Afghanistan, and it makes sense to extend them to contracting officials in all federal departments."