Page last updated at 16:12 GMT, Friday, 16 May 2008 17:12 UK

US aid 'failing to reach target'

By Brajesh Upadhyay
BBC News, Washington

Afghan girl looks out of window of school in Bagram, 24 March 2008
Afghans could have seen more of the money that is earmarked for them

The US Congress provides billions of dollars for aid in Pakistan and Afghanistan but much of the money never gets there, US lawmakers have learnt.

Former ambassadors Richard Holbrooke and Thomas Pickering said large sums went on consulting fees and overhead costs and never left US soil.

Congress wants to know how much of these funds is "skimmed" in the US before reaching its target.

A USAid official said overheads were currently not more than 30%.

The official added that there was now a serious effort to cut costs by hiring locally and by local contracting of projects.


"It's strange that it's taken us all this time and billions of dollars to figure out that the money to be spent on the ground should be spent on the ground," said Gary Ackerman, a senior member of the House Foreign Affairs Committee.

I know of a case where the US company never built the schools in Afghanistan for which it was awarded a contract
Marvin Weinbaum,
Ex-state department analyst

Mr Ackerman drew comparisons with a Homeland Security case where the company that won the contract to hire screeners at airports sold the work to another company after taking a cut of 20%.

And that happened three times - the actual people doing the work received just 40% of the total amount.

Officials say that is not the case here but cite practical problems and lack of local expertise.

"If we go out on the street with a bid document for a $100m construction project, there are no firms in Afghanistan that can compete for that and there are only a couple in Pakistan that could,'' said Mark Ward of the US Agency for International Development (USAid).

But a regular complaint about USAid-funded contractors is that too much of the money that could be spent building a school or training teachers in the target country is instead spent on salaries of well-qualified experts and on overheads such as their offices in the US or Europe.

For instance, schools being built in Pakistan's Federally Administered Tribal Areas (Fata) have to be earthquake-proof as per US standards.

"That is more expensive. It needs an expertise that will probably bring with it some overhead," said Mr Ward.

The counter argument given by many is that there are standard designs for such schools and those can be implemented locally.


Marvin Weinbaum, former Pakistan analyst at the state department and also a former consultant on a project in Afghanistan, says this has been a continuing criticism of US aid agencies but there is no easy way out.

"It's a structural problem," says Mr Weinbaum, adding: "Aid agencies operate in a way that ties them to regulations that leave very little scope for flexibility."

He says as long as the US feels the need to channel money through contractors and non-governmental organisations, overheads will occur.

"Indigenous contractors can do it cheaply but it doesn't meet our standards," says Mr Weinbaum.

He says that does not mean there aren't any scandals.

"I know of a case where the US company never built the schools in Afghanistan for which it was awarded a contract and was rebidding for it," says Mr Weinbaum.

Administration officials say some of the problems can be resolved by breaking the mega-contracts into smaller ones - but for that they need more manpower.

"If we have more officers to keep an eye on a bigger number of smaller contracts, that means a lot of firms in Afghanistan and Pakistan can compete," says Mark Ward of USAid.

But for now, the fact remains that the billions of dollars directed at winning hearts and minds and creating opportunities for locals seem to be missing their mark.

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