27 April 2014

The Real Winner of the Afghan War Is This Shady Military Contractor

The State Department paid out $4 billion to rebuild Afghanistan. Some $2.5 billion of that went to a single firm with a bad, bad past.

For over a decade, the State Department gave 69% of its funding for Afghanistan to a single company—a company with a particularly checkered history. 

DynCorp, one of the largest corporations working in the government’s army of private contractors, has long been known for corruption scandals and a questionable performance record. But none of that seems to have discouraged the U.S. government from awarding the company new contracts. 

The State Department paid nearly $4 billion for projects to aid in Afghan reconstruction from 2002 to 2013. $2.5 billion of that went to DynCorp—69% of all the money awarded by the State Department over almost the entire duration of the war. 

The figures on DynCorp’s earnings come from a report by the Special Inspector General for Afghanistan (SIGAR), an auditing agency created by Congress to provide oversight on government spending in Afghanistan. 

According to the SIGAR report, 89% of State Department funding, $3.5 billion, went to supporting large, so-called "rule-of-law" projects, like training and equipping the Afghan police force. And that was DynCorp’s primary focus in Afghanistan, too—although the firm also handled jobs like providing bodyguards for Afghanistan’s president, Hamid Karzai. 

“The interior minister expressed deep concerns that lives could be in danger if news leaked that DynCorp hired ‘dancing boys’ to perform for them.” 

“Dyncorp contracts dealt principally with training and equipping the Afghan National Police and counternarcotics forces. DynCorp contracts included police trainers, construction of police infrastructure, and fielding police equipment and vehicles,” the SIGAR report states. 

The list of DynCorp’s job responsibilities, particularly in counter-narcotics and training the Afghan police force, gives a short rundown of some of the most difficult problems for the U.S. mission in Afghanistan. But for all the billions the company has received to resolve these problems, there has been precious little progress. In the case of narcotics, it’s actually gotten worse in recent years, with opium production reaching record highs in 2013. 

It might raise alarms that so much of the State Department’s budget was funneled directly into one entity. But DynCorp—which is owned by Cerberus Capital Management LP, a private equity firm based in New York—is used to relying on federal cash. With more than 96% of the company’s $3 billion in revenue coming from government contracts, DynCorp is basically a private subsidiary of Uncle Sam. 

By itself, that might not be so bad; there are plenty of private companies that bring in public funds. The real problem with DynCorp is the company’s well-documented history of corruption investigations and subpar performance. 

In July 2009, Forbes wrote that “Dyncorp has emerged as one of the big winners of the wars in Iraq and Afghanistan, which now generate 53% of Dyncorp’s $3.1 billion of annual revenue.” Not long after, the “big winner” was called out in 2010 by the inspector general for Iraq for being unable, along with the State Department, to account for $1 billion spent training the Iraqi police force. 

In 2011, the company was hit even harder in a joint report from Department of State and Department of Defense inspector generals citing failures that “placed the overall mission at risk by not providing the mentoring essential for developing the Afghan Government and Police Force.” 

And that’s not even mentioning the allegations that DynCorp employees procured child prostitutes to entertain Afghan officials. It’s a claim that the company and State Department have both denied, but was serious enough to prompt worried emails from an Afghan politician asking that the story be kept secret. 

The child prostitution story first publicly emerged through a diplomatic cable revealed by Wikileaks. The document describes “a May 2009 meeting” in which “interior minister Hanif Atmar expresse[d] deep concerns that lives could be in danger if news leaked that foreign police trainers working for US commercial contractor DynCorp hired ‘dancing boys’ to perform for them.” 

The “dancing boys” story went away without causing too many problems for DynCorp. But it wasn’t the first time the company had been implicated in a sexual abuse case; an earlier incident inspired the Hollywood movie “The Whistleblower.” In that incident, a group of DynCorp employees working as peacekeepers in Bosnia were accused of sex trafficking by a colleague. The whistleblower, Kathryn Bolkovac, was fired by DynCorp after coming forward to them with her report. She then successfully sued the company in British court. Another DynCorp employee who worked in the Balkans during the same period as Bolkovac filed a separate lawsuit against the company. In his suit Ben Johnston claimed he “witnessed coworkers and supervisors literally buying and selling women for their own personal enjoyment, and employees would brag about the various ages and talents of the individual slaves they had purchased.” 

More recently, in 2013, Dyncorp was found to have done a subpar job on a construction project for the Afghan National Army in Kunduz province. The company and the American government eventually reached an agreement after being investigated for the botched job in Afghanistan—an agreement that saw Dyncorp receive nearly $70 million despite the shoddy work. The head of SIGAR,John Sopko, said of the outcome: “That wasn’t a settlement, it was a mugging.” 

Whether America ought to be outsourcing its foreign policy to for-profit corporations is an issue that has been debated elsewhere—probably not enough, but we won’t get into it here. The immediate question is how a company with so many bad marks on its record keeps getting bigger and bigger slices of the federal pie. DynCorp has emerged as one of the only big winners in Afghanistan. 

87% of all contracts awarded by the State Department in Afghanistan went to only five companies, with DynCorp being the biggest of the five. The remaining 13% of contracts were split between another 766 recipients, who received on average less than a million dollars each—a relative pittance compared to the payout the top five received. That’s the kind of structure—with the vast bulk of contracts going to a small group of insider corporations—that can create accountability problems. When the same small group of big companies keeps getting the big contracts, it can threaten the competitive advantage that’s one of the rationales behind contracting out government work in the first place. 

In Dyncorp’s case, performance and accountability seem to have been no obstacle to keeping the work and paychecks flowing from the government. 

If this is the point in the story where you’re shaking your head at the strangeness and impenetrable stupidity of it all, this is the point where I tell you: 

Forget it, Jake. It’s Afghanistan.

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