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Summary Report on U.S. Direct Funding Provided to Afghanistan DODIG-2018-090

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Objective:

We summarized the systemic challenges associated with the Combined Security Transition Command-Afghanistan’s (CSTC-A’s) oversight of U.S direct funding provided to the Government of the Islamic Republic of Afghanistan identified in seven previous DoD Office of Inspector General (OIG) oversight reports.

In addition, we determined whether DoD officials implemented the recommendations from the seven prior DoD OIG reports on CSTC-A management and oversight of U.S. direct funding provided to Government of the Islamic Republic of Afghanistan.

Background:

In a February 2011 memorandum, the Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, authorized CSTC-A to provide Afghanistan Security Forces Fund resources directly to the Afghan Ministry of Defense (MoD) and Ministry of Interior (MoI) in order to sustain the Afghanistan National Defense and Security Forces (ANDSF). The goal of Afghanistan Security Forces Fund support is to develop ministerial capability and capacity in the areas of budget development and execution, acquisition planning, and procurement.

CSTC-A is the DoD command that directs U.S. efforts to train, advise, and assist the ANDSF. As part of its mission, CSTC-A officials help the MoD and MoI establish the ability to independently develop, validate, and justify their annual budgets, including the use of Afghanistan Security Forces Fund direct funding. CSTC-A and the Afghan ministries enter into annual agreements known as the Bilateral Financial Commitment Letters. In the commitment letters, CSTC-A commits to funding specified portions of each ministry’s budget, and each ministry commits to stated conditions and provisions to ensure continued funding. CSTC-A officials develop separate commitment letters with the MoD and MoI to establish the parties’ responsibilities and to enhance the transparency and accountability of the Afghanistan Security Forces Fund.

Since 2015, the DoD OIG has issued seven reports related to CSTC-A management and oversight of U.S. direct funding provided to the MoD and MoI. In these seven reports, the DoD OIG made 41 recommendations to address weaknesses in management and oversight of the U.S. direct funding provided to the MoD and MoI. Of the 41 recommendations, 35 recommendations are considered resolved and closed, and 6 recommendations are considered resolved but remain open until we verify that the proposed corrective actions are completed.

Finding:

As discussed in the previous reports, CSTC-A officials did not effectively manage and oversee U.S. direct funding provided to the MoD and MoI. CSTC-A management and oversight of U.S. direct funding is intended to increase ANDSF effectiveness and capabilities so the ANDSF can become more professional and increasingly self-sustaining. The DoD OIG’s seven reports identified systemic challenges related to CSTC-A officials’ management and oversight of the U.S. direct funding provided to the MoD and MoI to obtain and maintain items such as fuel, ammunition, vehicles, and other commodities. These systemic challenges occurred because CSTC-A officials did not consistently:

  • establish realistic and achievable conditions for the ministries within the commitment letters, and
  • enforce noncompliance penalties included in the commitment letters due to potential impacts on the ANDSF’s operation readiness.

In addition, CSTC-A officials stated that they could not oversee all Bilateral Financial Commitment Letter requirements because of inadequate staffing and security concerns.

As a result, CSTC-A officials did not have assurance that $3.1 billion in U.S. direct funding was used entirely for the intended purposes. In addition, because CSTC-A officials did not adequately assist in the development of the ministries’ self-sufficiency, the ministries continue to rely upon CSTC-A to develop future needs for commodities, such as fuel and ammunition.

Recommendations:

We recommend that the Under Secretary of Defense for Policy evaluate whether using Bilateral Financial Commitment Letters is the most effective method to manage and oversee the administering and expending of U.S. direct funding to the MoD and MoI.

If the non-binding Bilateral Financial Commitment Letter process is determined not to be the most effective method, we recommend that the Under Secretary of Defense for Policy identify and implement a more effective method.

When establishing the most effective method, we recommend that the Under Secretary of Defense for Policy incorporate more realistic and achievable terms and conditions for the MoD and MoI to accomplish and show incremental improvement, and develop a formal documented process for assessing penalties against the MoD and MoI for repeated violations of agreed upon conditions.

Management Comments and Our Response:

The Deputy Assistant Secretary of Defense (Afghanistan, Pakistan, and Central Asia), responding for the Under Secretary of Defense for Policy, agreed with the recommendation. Specifically, the Deputy Assistant Secretary of Defense (Afghanistan, Pakistan, and Central Asia) stated that the Office of the Under Secretary of Defense for Policy will work with the Combined Security Transition Command-Afghanistan and other appropriate organizations to review and evaluate whether using bilateral financial commitment letters is the most effective method to manage and oversee the administration and expenditure of U.S. direct funding to the Afghan Ministry of Defense and Ministry of lnterior. If the Office of the Under Secretary of Defense for Policy determines that the non-binding commitment letter process is not the most effective method, then the Office of the Under Secretary of Defense for Policy will work with the Combined Security Transition Command-Afghanistan to identify and implement a more effective approach.

The Deputy Assistant Secretary of Defense (Afghanistan, Pakistan, and Central Asia) addressed all specifics of the recommendation; therefore, the recommendation is resolved but will remain open. We will close the recommendation once we verify that the Under Secretary of Defense for Policy has made a determination on whether using bilateral financial commitment letters is the most effective method to manage and oversee the administration and expenditure of U.S. direct funding to the Afghan Ministry of Defense and Ministry of Interior.