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EXECUTIVE SUMMARY

In 2014, the Special Inspector General for Afghanistan Reconstruction (SIGAR) developed a High-Risk List to call attention to program areas and elements of the U.S.-funded reconstruction effort in Afghanistan that are especially vulnerable to significant waste, fraud, and abuse.

This High-Risk List has been updated to identify and address systemic problems facing U.S.-funded reconstruction efforts in Afghanistan. The report highlights program areas where SIGAR believes implementing agencies need to focus. It also discusses how specific agencies are failing to mitigate risks in areas that involve their operations.

The current report differs from the 2014 report in that it has separated contract management and oversight into two areas in recognition of the increased risk to both. The eight current high-risk areas are:

AFGHAN SECURITY FORCES CAPACITY AND CAPABILITIES

Afghanistan needs a stable security environment to prevent it from again becoming a safe haven for al-Qaeda or other terrorists. More than half of all U.S. reconstruction dollars since 2002 have gone toward building, equipping, training, and sustaining the Afghan National Defense and Security Forces (ANDSF). However, the ANDSF has not yet been capable of securing all of Afghanistan and has lost territory to the insurgency. As of August 28, 2016, USFOR-A reported that only 63.4% of the country’s districts were under Afghan government control or influence a reduction from the 72% as of November 27, 2015. Capability gaps in key areas such as intelligence, aviation, and logistics are improving, but still hinder effectiveness.2

CORRUPTION

Corruption continues to be one of the most serious threats to the U.S.-funded Afghanistan reconstruction effort. Corruption has eroded state legitimacy, weakening the government’s ability to enlist popular support against the insurgency, discouraging foreign investment and economic growth, as well as seriously diminishing Afghan military capability.

SUSTAINABILITY

Much of the more than $115 billion the United States has committed to reconstruction projects and programs risks being wasted because the Afghans cannot sustain the investment—financially or functionally—without massive, continued donor support. Donors were expected to finance approximately 69% of Afghanistan’s $6.5 billion fiscal year (FY) 1395 national budget (December 22, 2015–December 21, 2016), mostly through grants. At 2016 conferences in Warsaw and Brussels, the United States and other donors pledged to maintain assistance to Afghanistan at or near current levels through 2020.

ON-BUDGET SUPPORT

On-budget assistance includes direct assistance (also referred to as bilateral, governmentto-government assistance) and assistance that travels through multi-donor trust funds before reaching the Afghan government. On-budget assistance is intended to reduce costs, increase Afghan government ownership, and build the Afghan institutional capacity for managing their own budget. However, on-budget assistance, whether delivered directly or through multilateral trust funds, leads to reduced U.S. control and visibility over these funds. Given the evidence that the Afghan government still cannot manage and protect these funds and may not use them appropriately, the Department of Defense is planning to reduce some of its on-budget assistance.

COUNTERNARCOTICS

The cultivation and trafficking of illicit drugs puts the entire U.S. investment in the reconstruction of Afghanistan at risk. Although the United States has committed more than $8 and a half billion to counternarcotics efforts in Afghanistan, the country still leads the world in opium production, and Afghan farmers are growing more opium than ever. The Afghan insurgency receives significant funding from participating in and taxing the illicit narcotics trade, raising the question of whether the Afghan government can ever prevail without tackling the narcotics problem.

CONTRACT MANAGEMENT

The scope of contracting in support of U.S. objectives in Afghanistan is enormous, but contracting represents a high risk to the success of Afghanistan reconstruction. The usual difficulties of contract management are magnified and aggravated by Afghanistan’s remoteness, active insurgency, widespread corruption, limited ministerial capability, difficulties in collecting and verifying data, and other issues.

OVERSIGHT

The ability for trained professionals to conduct site visits is a critical part of effective reconstruction oversight. Unfortunately, accessing reconstruction project sites and programs in Afghanistan has grown increasingly difficult with the U.S. and Coalition military drawdown.
Oversight has also been weakened by instances of poor documentation, failure to monitor contract compliance and work quality, and inattention to holding contractors and grantees accountable for unsatisfactory performance.

STRATEGY AND PLANNING

A lack of emphasis on planning and developing related strategies means the U.S. military and civilian agencies are at risk of working at cross purposes, spending money on nonessential endeavors, or failing to coordinate efforts in Afghanistan.