Last week showed that U.S. Government contracting in Afghanistan is more problematic than ever. According to an October 27 audit report by the Special Inspector General for Afghanistan Reconstruction (SIGAR), U.S. government agencies, including DOD, State, and USAID, have paid nearly $18 billion to roughly 7,000 contractors for reconstruction work in Afghanistan; however, SIGAR is unable to determine who is being hired for what or the financial mechanisms used. Earlier this year, SIGAR was itself audited and got a failing grade on management and standards. Contractors, too, are reportedly failing according to another October 27 SIGAR audit showing that several Afghan National Police facilities recently built by U.S. Army Corps of Engineers contractors were so poorly constructed that they are unusable. All of this is likely to translate into more scrutiny for companies doing reconstruction work–assuming they are not forced out by President Karzai’s imminent ban on security contractors first.

President Karzai has yet to bow to international concerns regarding his intention to oust all security contractors, but he has relaxed his original December 17 deadline for their expulsion. On October 27, he announced that a special committee–led by the Ministry of Interior and including representatives of NATO and international donors–would prepare a timetable by November 15 for disbanding companies that guard development projects. Once each company is told its dissolution date, it will have up to 90 days to move out. Details are still sketchy, however, and the plans are likely to evolve significantly over the coming weeks.

Several development contractors are saying that, without security contractors, they will have no choice but to leave because there simply are not enough Afghan police or military officers to provided needed protection. Those that do leave may be faced with contract termination and a host of related legal consequences. Those that stay may have contract claims, tort claims, and Defense Base Act issues to contend with. Either way, the security, political, and legal environment for Afghan reconstruction contractors is fraught with practical and legal risk.

Watch this space for news about an upcoming Crowell & Moring event on these topics, featuring Ambassador Zalmay Khalilzad.