BearingPoint Revisited: Don’t Ask, Don’t Tell
By PHK
Here we go again.
BearingPoint, the KPMG spin-off that’s been raking in the dough for providing “expertise” in financial services and Iraq oil contract legislation, including contracts from 14 different branches of the US government, just landed a $218.6 million five-year omnibus contract from USAID for Afghanistan. This contract, announced on March 13 on USAID’s website, is very likely the largest single USAID contract awarded for work in Afghanistan to date. BearingPoint, Inc. is also the same company that has been awarded over $288 million for Iraq contracts between 2003-2005 and now administers the State Department’s process of administering US foreign policy in Iraq for a mere $2 million.
The announcement of BearingPoint Inc.’s latest foreign affairs windfall came with as little publicity and as few details as possible. It was all but ignored by the “don’t-bother-me-with-the-details” MSM with the exception of tiny articles in the Business Section of the WaPo on March 14 and 18. This despite the unprecedented number of investigatory hearings the new US Congress is now holding that focus on political corruption and contractor abuse "in Iraq and other foreign policy and national security matters” (in Norman Ornstein and Thomas Mann’s words in Foreign Affairs online.)
On January 6 when I first wrote about the problems of outsourcing US foreign policy to the private sector, BearingPoint, Inc. came up as one of ten top companies that have most profited from the Iraq invasion and occupation. This company is not only a major Pentagon and Homeland Security contractor, but it features prominently as a major USAID recipient as well as the winner of that controversial $2 million contract from the State Department to administer the department’s Iraq office.
Now, the miniscule announcements hidden in the March 14 and 18 WaPo’s Business Section and a couple of short articles in financial/technology publications online indicate that USAID has further enriched BearingPoint, Inc. by awarding it one of its largest Afghanistan infrastructure rebuilding grants ever.
USAID’s own March 13, 2007 announcement of the five year $218.6 million contract that will run through January 2012 states that it is for the purpose of: strengthening “the performance of ministries, businesses, non-governmental organizations, universities and local governments; establish(ing) permanent, sustainable capacity in the public, private and high education sectors; and build(ing) the skills of key personnel in the Afghan public and private sectors, through scholarship.”
For a company that is still correcting, according to the Washington Business Journal, its financial reports for accounting errors,
Unanswered Questions
This latest USAID contract raises more questions than it answers, particularly given BearingPoint’s track record since the company’s birth in October 2002.
Was the USAID proposal for this contract open for competition? Or did BearingPoint, Inc. receive the contract as a sole source grant? Or if the proposal was “competed,” who wrote the specifications, was the competition fair or was it limited to a pre-selected few with close ties to the current administration? Has anyone, for that matter, seen the original Federal Register Announcement – if there was one?
As I pointed out in January, BearingPoint, Inc. wrote the specifications for USAID’s contract for the initial Iraq economic project which, unsurprisingly, the company “won” over the nine other competitors - who had only a single week to read the specifications and respond with full-blown proposals.
At least as questionable as the procedures by which BearingPoint won this latest Afghanistan contract is its substance. Someone should investigate what this new Afghanistan project is designed to accomplish.
The USAID announcement speaks in glowing and high-falutin' terms regarding the tasks BearingPoint, Inc. has said it will undertake, but is improving educational systems really within BearingPoint’s expertise – if that is, in fact, what this contract is all about?
This is, after all, not about writing an oil law to benefit foreign companies as BearingPoint, Inc. agreed to do in Iraq.
And what does “strengthening the performance of ministries” mean – beyond that of the ministry which administers Afghanistan’s educational system?
In addition, we should question how much of the $218.6 million will really be spent in and on Afghanistan. When I worked on international academic exchanges in the 1990s, I discovered that about 85 percent of US government funding for such exchanges went to US companies and institutions: in particular, the US airlines, the then USIA contract agencies (now administered by the State Department) and US universities.
A similar situation with USAID funds in Afghanistan is suggested by Ann Jones in her thoughtful Common Dreams August 28, 2006 article “Why It’s Not Working in Afghanistan”. She asks: Where does the AID money go?
Her answer: Begin with lavish salaries and perks for high-priced international contractors whose salaries are directly deposited into their American bank accounts. Another aspect of American government enrichment of domestic corporations is the forcing of recipient countries to “buy America” products even when equivalent or better products are available at a cheaper price. In reality, the billions of dollars the Bush administration claims that it sends to Afghanistan is, in Jones’ words, a sham.
It’s no wonder the Afghans have gone back to the poppy growing business and the Taliban is resurgent – with a vengeance.
On the Hill: more garden variety oversight still needed at the bazaar
The new Democratic Congress is spending time on past waste, fraud and abuse of previous contracts but it needs to focus on current and pending contracts as well.
Veteran Congressional analysts Norman Ornstein and Thomas Mann argue forcefully in their March 21, 2007 Foreign Affairs article “The Hill is Alive with the Sound of Hearings” that: “The investigative oversight we have seen so far. . . still has to be matched by more garden variety oversight of programs and the implementation of policies through normal authorization and appropriations processes. .. . . Over the past 15 years, Congress has gotten out of the habit of reauthorizing programs and agencies on a regular basis. And the appropriations process, usually the best source of good vigorous oversight, has turned in more recent times into a kind of bazaar for allocating earmarks.”
It’s a lot easier to keep a horse in the barn if the door is closed before – not after – it has already left.
This post was prepared with assistance form Washington attorney Elizabeth D. Dyson who worked in the General Counsel’s Office at the US Office of Personnel Management for 15 years.
Exactly right. If people bothered to find out how little "aid" ever makes it to the country in question they would storm Capitol Hill with torches and pitchforks. The whole aid system is dysfunctional.
Even when money is allocated to something "concrete," like a road, the contracting system overwhelmingly results in foreign companies getting the contracts (as if Iraq had no engineers capable of building roads) and they, in turn, hire foreign laborers (usually Indian or Filipino). The bemused locals are then treated to the sight of foreign companies employing foreign nationals to build roads in their country, as if the residents weren't even there.
How about this: letting contracts for reconstruction in Iraq to Iraqi firms. If no such firms exist, they almost certainly will within a few days. I cannot imagine the results would be any worse than what we have. But the attraction of "aid" is twofold: it allows you to outflank the liberals by throwing money at the deserving poor, and it allows you to funnel the money to politically-connected firms who will recycle some of it into campaign contributions.
Anyone interested in the ugly underside of the aid business can read "Lords of Poverty" by Graham Hancock. It's a hate letter to UN aid officials in limousines, clueless do-gooders pursuing bewildering projects (I visited one village in Uganda where roughly half the children couldn't attend school but a local aid group decided that what the villagers really needed was a pottery kiln; the whole story was enough raw material for a farce), and the whole edifice of Western governments and Western electorates who pat themselves on the back for giving money without ever asking what it goes for or if it does any good.
Or, for another view, ask an African economist:
http://tinyurl.com/yxblal
The real question is, can the aid system be fixed? I am pessimistic, but reducing the size of projects would be a start. Large projects tend to become the "legacy projects" of important politicians and senior bureaucrats, which causes them to filter out objective analysis that might be critical of the project's utility. Large pools of money also attract corruption. Surely we've learned that much from our adventure in Iraq, at least.
Posted by: James | Thursday, 22 March 2007 at 12:08 PM