The document discusses the contracting environment in Afghanistan as foreign forces withdraw and foreign aid declines. Major donors have committed to continuing aid at current levels but are concerned about effective and transparent use of funds. As direct contracting ends, donors are shifting funding to Afghan government agencies and multilateral trust funds. Continued monitoring of projects will require innovative approaches as security risks grow. Major infrastructure projects like CASA-1000 energy agreement signed last week will provide opportunities, but the environment remains challenging for private investment until conditions improve.

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» Currently
» Contracting Environment
» Monitoring
» Pluses and Minuses
» Two Donors: USAID, DFID
» Two Multi‐lateral Trust Funds: AITF, ARTF
» CASA‐1000
» Conclusions

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» The drawdown of coalition forces in Afghanistan is
concurrent with a steep decline in foreign funding
» The effects of a substantial reduction in foreign
aid on the Afghan economy are a significant
concern for Afghans, and for the international
community
» At the London Conference last week, major donor
countries again committed to continuing their aid
funding for Afghanistan, including the US and UK
» Donor countries are concerned about how
continued development assistance can be used
effectively and transparently
» Donor relationships with the new GIRoA
administration are cautious
˃ “Wait and see” attitude, project postponement
» Security conditions have continued to worsen
» DoD contracts concluding
» Donors have shifted away from direct contracting
and to on‐budget funding
˃ Funding to ADB and WB trust funds
˃ Funding to Afghan ministries and state‐owned
enterprises

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» The continuation of contracting management and
oversight, to oversee and audit contractor
performance, will require innovative approaches
to monitoring and evaluation efforts
˃ There will not be enough, or any, soldiers to escort
evaluators and auditors safely around unsecure,
risky areas
» Many millions of dollars have already been spent
on donor‐funded projects and programs, which
could be wasted if the Afghan government cannot
or will not commit the funds, staff, and expertise
to operate and maintain them
˃ Some donors may attempt to increase funding for
sustainment, but probably only at the expense of
funding for new projects
» Donor government acquisition personnel
should now be available in sufficient numbers
to manage and oversee contractors
» Criminalization of civil contract disputes
remains a disincentive for foreign construction
firms with valuable expertise and capability
» The declining supply of services and materials
required by Coalition government agencies will
affect firms engaged directly providing and
indirectly supporting this demand
˃ No more demand for gym equipment, and less
demand for construction materials and equipment

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» Support for Afghanistan from USAID “will
extend past the 2014 security transition…”
» Top program priorities for 2015:
˃ Agriculture
˃ Democracy and Governance
˃ Economic Growth
˃ Education
˃ Gender & Participant Training
˃ Health
˃ Infrastructure
˃ Stabilization
Project Title Brief Description
Estimated
$ Range
Award Type
Estimated
Solicitation
Date
Afghan Agriculture Research &
Extension Development Program
Afghan Agriculture Research & Extension Development
Program
$25,000,001-
$75,000,000
Contract TBD
Gender Monitoring, Learning &
Evaluation Services
The objective of this award is to to conduct periodic evaluations
of the different components of PROMOTE to determine whether
or not a component is on track to achieve its stated objectives
and, if not, to identify corrective measures to improve
performance.
$10,000,001-
$24,999,999
Contract TBD
Early Grade Reading and Demand-
side Monitoring
Early Grade Reading and Demand-side Monitoring
$4,000,001-
$10,000,000
TBD 1/21/2015
Youth Empowerment (BELT-TVET) Youth Empowerment (BELT-TVET)
$25,000,001-
$75,000,000
TBD 1/15/2015
Improving Nutrition Outcomes
through Multi-sectoral Approaches
Improving Nutrition Outcomes through Multi-sectoral
Approaches
$10,000,001-
$24,999,999
TBD TBD
Strengthening Pharmaceutical
Systems Follow-on
Strengthening Pharmaceutical Systems Follow-on
$25,000,001-
$75,000,000
TBD TBD
Supporting Afghanistan’s Fight
against Corruption (SAFAC)
The overall goal of this project is to improve the performance
and legitimacy of GIRoA. Project interventions will contribute to
this goal through the project purpose to have citizens hold the
GIRoA accountable and strengthen governance at the national
and subnational level.
$25,000,000-
$74,999,999
Contract TBD
IDLG Capacity Building Project
(Governance)
IDLG Capacity Building Project (Governance)
$10,000,001-
$24,999,999
TBD TBD
Afghanistan Public Financial
Management
Afghanistan Public Financial Management
$10,000,001-
$25,000,000
TBD TBD
Sources: USAID website, USAID Mission Competitive Forecast

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» “Afghanistan is one of the UK’s top foreign
policy priorities”
» The Afghanistan program budget is $278.6
million per year for 2013/14 and 2014/15,
and “will remain at current levels beyond
transition”
» Top program priorities for 2015:
˃ supporting peace, security and political stability
˃ promoting economic stability, growth and jobs
˃ helping the state to deliver improved services
˃ supporting women and girls
Sources: DFID website, DFID Operational Plan for Afghanistan
» ARTF was established to provide a coordinated
financing mechanism for the GIRoA budget
and priority national investment projects
» It is supported by 33 donors and administered
by the World Bank
» ARTF is the largest source of on‐budget
financing for Afghanistan’s development
» The new Financing Strategy for 2015‐2017
should be in place, endorsed by the Afghan
Government and ARTF donors this month,
December 2014

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» The Ministry of Finance and World Bank
reached agreement this year on specific
actions to address implementation bottlenecks
» Key sectors supported by ARTF are
˃ Education
˃ Health
˃ Agriculture
˃ Rural development
˃ Infrastructure
˃ Governance
» AITF is a multi‐donor trust fund to support
infrastructure investment projects and related
technical assistance in Afghanistan
» Afghanistan's infrastructure requirements are
estimated by ADB at $4 billion over the next 3
years – far more than GIRoA or any single donor
agency will provide
» The identified key areas of need are:
˃ Stronger transport links
˃ Energy facilities and security
˃ Irrigation systems
˃ Development of mineral resources
˃ Private sector development

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» AITF provides grant cofinancing alongside ADB‐
funded infrastructure projects, with resources
supplementing those provided by ADB through its
own operational budget (primarily the Asian
Development Fund)
» ADB will provide needed operational and project
management expertise with staff and contractors
to assist the Afghan government to implement the
AITF infrastructure development projects
» AITF invests heavily in Energy Sector Development
and Transport Network Connectivity
» The Central Asia South Asia Electricity
Transmission and Trade Project (CASA‐1000)
hydroelectric energy agreement was signed on
last week between the Afghanistan, Pakistan, the
Kyrgyz Republic, and Tajikistan
» Completion of the CASA‐1000 project, now
scheduled in 2018, will create a regional energy
market connecting South and Central Asia
» When completed, the project will result in annual
export of 1,000 MW of energy to Pakistan while
Afghanistan will receive 300 MW

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» The Islamic Development Bank agreed in October
to finance the balance of the CASA‐1000 project,
after the World Bank agreed to finance a little less
than half of the total estimated $873M cost
» There will be a significant amount of power
transmission and distribution work needed in
Afghanistan to complete the project
» Afghan construction, transportation, security and
logistics firms, among others, will benefit from the
contracts for this massive project
» Power equipment manufacturers from other
countries will also benefit
» There will be a dramatic change in the number
and types of contractors needed during the
“transition” period
» Foreign assistance will continue from donors, but
private direct investment will continue to be
limited until more favorable conditions emerge
» The Ghani‐Abdullah administration needs to
continue on a positive path to avoid donor fatigue
and create more private investment opportunities
» Some major construction opportunities will
remain, such as CASA‐1000 and Kabul New City,
while new contracts will be extremely competitive

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Thank You