While the ambitions of the projects funded by the United States contracting process are noble and the intentions are to elevate the economic and social conditions of the Afghan people are genuine, in many cases the reality is that it is having the opposite effect.

1. Contracting Practices
and Methods
W. Gregory Kleponis, Ph.D, L.L.M, MA
Colonel, USAF (ret)
Colonel Kleponis served as the former
Senior Advisor to the Deputy Minister of
the Interior for Security 2010-2011. He has
also served as Principal and Government
Liaison for several private companies
contracted with the US Government in the
areas of security, reconstruction and
agricultural assistance. He presently resides
in Kabul and Greece.
 “AT LEAST DO NO
HARM
 The Negative Effects and Unforeseen
Consequences of US Contracting
Practices on the Afghan Local
Community and its Influence on the
Perception of US Forces and
Americans”
 The Afghanistan Summit
 Dubai, UAE
 12-13 June 2012

2. - There is a disconnect between what the US is “Trying” to do and
what is actually happening economically on the ground in
communities.
- The cultural divide and misunderstandings that present so many
problems elsewhere are manifest in our US/Local National
contracting relationships.
- 2nd, 3rd, 4th order effects on social structures
- Large US Prime contractors executing harmful business practices
Reversing otherwise practical works

3. Capitalization
Most small & medium sized Afghan companies are undercapitalized
Access to capital through normal channels is limited
Unable to build larger, long term capacities
“Pay check to Pay check” payment, bookkeeping and invoicing

4. This capital challenge is exacerbated by:
 Net 30 (Really Net 40-60)
 Failure of Primes to pay subs
“When paid by” Contract Clauses
Delay tactics
Delayed notice of rejection of invoice submittals
 Failure of Primes to timely invoice government on time
 Government delays in paying Net 30

5. Incongruent Systems – Cultural Biased in Favor of West
- Result – East Suffers- “Golden Rule”
Credit Culture
Western
Cash Culture
Eastern
???
???

6. Here’s the Problem
 Commercial Sector and Government large scale objectives not necessarily aligned
Culture of East operate in the present- Western in the Future. Concept of “inshallah”
 “Noblesse Oblige” vs. Business realities and pecuniary responsibility to shareholders
 Some Contractor behavior creating just the opposite effect than that of national and
coalition strategy
 Tendency of contracting office and contractors to get overly focused on process and
product – What is the end result really supposed to be?
Focus on “INPUT METRICS” rather than “OUTCOME METRICS” – We can control
and report inputs but outcomes are sometimes difficult to quantify on powerpoint.
Contracting Office has little oversight on commercial practices and behaviors of US
Prime on Afghan Subs
 What good is constructing a building or base if 20,000 people around the project
remain unpaid directly or indirectly ? Your building is now a constant reminder of that
fact.
 COIN Strategy states that it’s often a good idea to keep the people on side in the
community that you intend to live in and operate in!

7. Quick Illustration
Not just the workers affected!
Patrilineal Kin-ship based society
Approximately a 1:7/8 Ratio
Push whole communities “off-sides”
“Run off” Industries compounds the problem!

8. Gen Petraeus developed contracting for COIN guidance.
We have to ask ourselves are we really following its intent?
Mainly aimed at Contracting Offices but where does private
Industry play a part?- What is our corporate responsibility?
To the Taxpayers?
To Our Local Implementation Partners?
To the Afghan Community?

9.  Only in Economic Development lie the seeds of real success in
Afghanistan.
 Formation and development of small and medium size Afghan
business is elemental in moving forward.
 Small & Medium sized business are the key employers as in most
economies
 Small & Medium sized businesses are developed and sustained by
the entrepreneurial class

10. Formation of a “Middle Class” is built upon a healthy small to
medium sized business community and economic opportunity
Afghan society is bifurcated- Very Wealthy – Very poor.
Middle Classes historically have been the drivers of both economic
and also importantly social and political change. (US, India, China
etc)

11. Need to develop better oversight over who gets paid
and if and when!
Need to establish capital access to develop capacity
across all industry groups
Afghan First- Kind of working?
Privity of Contract Clause- Boy does that steam me!
We have got to get involved
Its our MONEY!- Our MISSION- Their COUNTRY!