US May Unwittingly Fund Terrorism in Afghanistan: Report

April 12, 2013 — -- The U.S. government may accidentally be funneling millions of dollars to the very terrorists and insurgents it's fighting in Afghanistan through sloppy contracting regulations, according to a new government report.

The report, called "Contracting With the Enemy" and published Thursday by the Special Inspector General for Afghanistan Reconstruction (SIGAR), examined the system designed to make sure that the U.S. reconstruction is not providing business for any individuals or groups associated with terrorist or insurgent organizations.

SIGAR said that due to "several weaknesses" in the long and complicated process, "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."

DOWNLOAD: SIGAR's 'Contracting With the Enemy' (PDF)

The report centered on what's known as Section 841, part of the 2012 National Defense Authorization Act that describes how the U.S. government is supposed to identify individuals or companies with suspected ties to insurgents, confirm that information, pass it along to the head of the contracting activity, then to the primary contractor and finally to the targeted subcontractors whose business deals would then be voided or restricted based on guidance from higher up.

SIGAR said Section 841 was part of a "variety of efforts" undertaken by the government to keep American contracting money out of terrorists' hands in the wake of incidents like the $2.16 billion Host Nation Trucking contract. In that instance, SIGAR said, the U.S. government paid several companies to ship more than 70 percent of food and materiel to American troops in Afghanistan, only to realize that some of those funds were "widely believed to have been funneled to insurgents."

READ: Investigation Finds US Funds Ended Up in Taliban Hands

Section 841 is still full of holes, SIGAR said, from the military not telling the head of contracting activity about potentially shady actors to the head of the contracting activity not telling their prime contractors.

The SIGAR report also notes that Section 841 only applies to contracts worth more than $100,000, even though it said approximately 80 percent of contracts awarded in Afghanistan are worth less than that.

SIGAR made seven recommendations to rectify the reporting loopholes, most to "improve visibility over active contracts" and one to ditch the $100,000 threshold on Section 841. The SIGAR report said the military in general agreed with those recommendations but plans to issue a formal response to the new report later.

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