war on the rocks

The Myth of the $43-Million Gas Station in Afghanistan

November 18, 2015

Last month saw another missile launched by the Special Inspector General for Afghan Reconstruction (SIGAR). In doing so, SIGAR renewed its attack on what was arguably the most catalytic wartime agent for economic development since the Marshall Plan, the Defense Department’s Task Force for Business and Stability Operations (TFBSO). This time, after a long string of SIGAR attacks on other strategic development projects, the target was a TFBSO-funded compressed natural gas (CNG) fueling station.

The CNG project was a small but critical part of the billion-dollar, multi-donor, public–private effort to bring Afghanistan’s giant Shebergan gas field back into production. That ongoing effort includes the full spectrum of gas production, processing, transmission, and distribution infrastructure, along with market development, capacity-building, and establishment of the legal, regulatory, and policy frameworks to make it all work.

TFBSO’s part of Shebergan included the Downstream Gas Utilization Project. SIGAR states that the project consisted of building and operating the CNG fueling station, but in fact the project had seven objectives. Building the station — as well as an administrative office building — was one. The other six included expert and legal support to the Afghan government, and for industry expansion, increasing CNG investment value and reducing investment risk.

SIGAR’s report fixates on the fueling station building cost. After disclosing an August 2011 construction award of under $3 million, it quotes a single sentence from page 98 of a 2014 consultant’s report that includes a figure of $42.7 million “to fund construction and supervise initial operation” of the station.

As SIGAR made clear in a May 18, 2015 inquiry letter, it has no idea what that $42.7 million actually paid for. Yet instead of first completing due diligence, SIGAR issued its investigation report with a cover letter to the Secretary of Defense telling him that “… the Task Force spent nearly $43 million to construct a … filling station.” SIGAR made no mention of the other six major elements of the project. Nor did it explain to the secretary how its allegation would have required construction costs to grow from under $3 million to $42.7 million in the mere nine months, beginning in August 2011, that it took to build the station and make it operational.

The story, of course, went viral. Media from Al Jazeera to Stars and Stripes headlined the $43-million construction cost as another example of reckless government waste. In fact it was reckless investigation and reporting, since neither SIGAR nor anyone in the echo chamber had any idea what the CNG station cost.

SIGAR sees its mission as conducting “independent, objective and strategic audits, inspections, investigations and analysis.” Its role, like that of other inspectors general, is especially difficult in the war zone where big money creates big temptation. SIGAR deserves great credit for bringing many of those guilty of financial transgressions in Afghanistan to justice. Sadly, however, SIGAR’s investigation of development projects has been far less stellar.

There are two sins in evaluating development projects. The first is asking the wrong question. Project evaluation professionals avoid this by including a “silverback” on evaluation teams — a senior sector professional with decades of experience in project design, execution, and evaluation. They’re the reality checks that contextualize projects before deciding what to ask so they can focus on strategic-level questions. The second sin is drawing the wrong conclusion. Professionals avoid this by asking the right questions and conducting the forensics required to substantiate their findings.

SIGAR routinely commits both sins. On Shebergan, SIGAR focuses on the cost of building a fueling station rather than why the U.S. government’s part of Shebergan was so slow getting started. In education, SIGAR focuses on school location data rather than why there aren’t more primary schools in the east and south to divert boys away from Pakistani-funded madrassas. In road construction, SIGAR cost-audits the contractor for USAID’s Provincial Roads Project, rather than asking why that critical project failed to achieve the counterinsurgency impact for which it was specifically designed.

In mining, SIGAR loudly proclaims that $488 million is “at risk”, but only reports on pabulum: lack of a “unified” strategy, poor coordination, low Afghan contracting capacity, and inadequate planning. What was at risk of course wasn’t $488 million; it was significant slowdown in the development of Afghanistan’s critical mining sector after TFBSO was killed off. The demise of the task force, which was ended in December 2014 (except for three months of administrative shutdown work), meant that it could no longer do its catalytic work in mining, power, agriculture and other sectors. The question SIGAR should be asking is: Who killed it off and why?

In energy, sustainable power in Kandahar City is a major strategic priority. The solution requires installing the third turbine at the Kajaki Dam and connecting the Northeast and Southeast Power Systems. But SIGAR focuses on the timing for project completion, rather than on why they aren’t already finished. It should ask how USAID failed, under the administration of Dr. Rajiv Shah (2010–2015), to have already completed those two critical infrastructure projects when both the money and the interagency mandate were in place.

More broadly, SIGAR hasn’t asked how USAID performed its national security responsibilities as the lead development agency for Afghan counterinsurgency operations. Nor has it asked what USAID’s de facto abdication of those responsibilities, as described in its June 2015 policy statement on future cooperation with the Defense Department, portends. This issue has profound implications for how the United States will conduct future irregular warfare campaigns, including who will do the strategic development work and what it will cost.

SIGAR deserves a lot of credit for catching bad guys. But its CNG fueling station report is emblematic of its many shortcomings when investigating development projects — lack of objectivity, failure to vet key data, absence of project contextualization, asking the wrong questions, and drawing the wrong conclusions. All undercut SIGAR’s ability to credibly execute the “objective” and “strategic” parts of its mission.

Strategic development is critical to both long-term Afghan stability and U.S. national security. That’s why objective evaluation of these projects is so important. Regrettably, with its CNG fueling station report, SIGAR has again proven that it isn’t up to the task.

 

Jeff Goodson is a retired U.S. Foreign Service Officer. He worked 29 years for USAID, 20 of them overseas, including three deployments to Afghanistan. He was the Chief of Staff at USAID/Afghanistan from October 2006 to October 2007 and was later seconded by USAID over to DoD at ISAF Headquarters in Kabul (September 2010–February 2012) as Director of Development under Gen. David Petraeus and his successor, Gen. John Allen. The views expressed are his alone, and not those of USAID, State or any other U.S. government entity.

 

Photo credit: Spc. Matthew Freire, U.S. Army