WASHINGTON — Understaffing combined with unwieldy budgets on rushed schedules in an active war zone have severely undercut the U.S. Agency for International Development’s ability to deliver nearly $10 billion in aid for development projects in Afghanistan.

A new report by USAID’s inspector general raises serious questions about how U.S. taxpayer dollars are being spent — or misspent — in Afghanistan on the construction of roads, bridges, schools and other projects.

A dramatic shortage of program officers as well as auditors and investigators and poor security conditions on the ground have all conspired, the 128-page report concludes, to “significantly impair” the objectives of USAID’s mission, which is to provide economic development and humanitarian assistance in Afghanistan and around the world.

The summary report is based on numerous individual audits and at least 14 active investigations, but it offers few specific details on the fraud, bribery, extortion and kickback schemes which involve at least $150 million in taxpayers’ money.

The failure of USAID to effectively monitor the development projects threatens to undermine the U.S. military’s new counterinsurgency strategy and troop surge, which is built upon the effective delivery of aid in the struggle against the Taliban for hearts and minds.

“We are sending too much money, too fast with too few people looking over how it is spent,” said one official knowledgeable of the USAID inspector general’s auditing process for the $9.4 billion obligated to Afghanistan in the last seven years.

“We end up not knowing where the money is going,” added the official, who is pushing for a deeper investigation into alleged abuses by contractors and subcontractors and widespread corruption from the highest levels of the Afghan government to the lowest level of subcontractors in the field.

That push for a further investigation is joined by the House Foreign Affairs Committee which is examining the delivery of foreign aid and the need for more USAID auditors and investigators to be assigned to the field.

The committee's interest was spurred in part by a special report by GlobalPost that highlighted how USAID funds are going to Afghan subcontractors who are allegedly paying protection money to the Taliban.

Following the GlobalPost report on how subcontractors are purportedly being extorted by the Taliban, the USAID inspector general’s spokeswoman Dona Dinkler said the agency was conducting a probe into those allegations. In a recent briefing, she declined comment on the status of what she described as an “active” investigation.

The probe comes amid an overall rethinking in Washington of how the restructuring of USAID has left the agency vastly ill-equipped to deal with the challenges it faces, particularly in Afghanistan.

Wendy Chamberlin, the former U.S. ambassador to Pakistan and former assistant administrator in the Asia/Near East bureau of USAID, said, “The development community has no model for Afghanistan.”

Ashraf Ghani, the former Afghan finance minister and a presidential candidate, said the system of delivering U.S. aid to Afghanistan was “broken.” Ghani and Chamberlin both called for a fundamental restructuring of the program during a discussion this month at the U.S. Institute of Peace in Washington, D.C.

Many critics in the U.S. and Afghanistan have observed that U.S. President Barack Obama’s speech last week calling for 30,000 troops was noticeably lacking detail on a civilian strategy for the effective delivery of aid.

By the USAID inspector general’s own assessment, a lack of security in the war-torn country has made it impossible for U.S. officials to effectively carry out development.

The lack of eyes in the field has made it difficult to substantiate allegations of corruption, including the report by GlobalPost that the Taliban may be running a protection racket in which subcontractors are forced to pay as much as 20 percent of a contract to the Taliban. Failure to pay, according to several Afghan contractors who spoke to GlobalPost on the condition of anonymity, means employees are targeted for killing or the projects are bombed.

One official knowledgeable of the details of the report said that large contractors in Afghanistan are suspected of hiring private security firms who investigators believe may be the ones paying protection money to local Taliban leaders.

But USAID project chiefs, auditors and investigators are often unable to thoroughly investigate such claims because there is no paper work to substantiate them and because investigators are too frequently trapped inside the U.S. Embassy compound in Kabul, prohibited from going into the field to assess progress due to strict rules governing the movement of U.S. government staff in the war zone.

Obama recently nominated Rajiv Shah to head the agency. At confirmation hearings earlier this month, Shah recognized deep problems in the agency and said the administration had secured funds to hire more than 300 additional foreign officers, including program officers and auditors.

But Dinkler said, “An increase of officers will be of little help if they are unable to get out and monitor the projects. They have to be able to get into the field and the U.S. Embassy has to be a partner in helping the USAID officers to do that.”

In addition, bloated USAID project budgets are being spent on rushed schedules with too few auditors and project managers in place to watch over them. According to the report, USAID has fewer than 14 auditors and two investigators, who are based in Manila, the Philippines, and provide oversight to programs in 22 other countries in the region, including Pakistan and Afghanistan. Now there is only one auditor and one investigator on the ground in Afghanistan, Dinkler said, although USAID says they will soon be adding three more staff to that team.

The report offers “investigative summaries” in which it describes some successes by USAID in thwarting corruption and finding savings, but it offers scant details on these cases.

Leading experts with years of experience in delivering development aid to Afghanistan have told GlobalPost that the most recent individual audits and investigation summaries are more forthright than most, but still offer a glimpse at only the tip of the iceberg of corruption and misspending.

USAID was founded under President John F. Kennedy and in the late 1960s had staffing levels that reached 17,500 employees. By 2005, that number had shrunk to just 2,400, according to research by Middlebury College Professor Allison Stanger.

As a result, USAID is increasingly reliant on a web of contractors and subcontractors to deliver foreign aid. It's become "a check-writing agency," said U.S. Sen. Patrick Leahy (D-Vt.), chairman of an appropriations panel that allocates foreign aid.

Andrew Wilder, who worked for 10 years on the delivery of aid in Pakistan and Afghanistan for Mercy Corps, the International Rescue Committee and Save the Children, is an an aid effectiveness expert. Discussing overall US development assistance in Afghanistan, Wilder observed that the US government is “recklessly pouring money into Afghanistan with perverse incentives.”

He said too many of the projects have budgets of $50 million and sometimes as high as $100 million and insufficient staff on hand to monitor the contracts. He pointed to the successes of smaller projects, such as those coordinated under the National Solidarity Program, funded by the World Bank and a host of other donors, in which $20,000 grants are distributed in coordination with village elders.

“The big contracts become faceless and more open to corruption. They tend to have little or no connection to the community,” explained Wilder, who is now a professor at Tufts University heading up research into the effective use of aid.

Referring to projects with budgets that run into the tens of millions, he added, “It’s hard to spend that kind of money” effectively and accountably.

“There is a reckless process that rushes to spend … and it is based on perverse incentives for spending the money. They [USAID] look at burn rates that are high as a favorable thing," he said, without sufficient attention to their actual impact.

“We should spend money where we have oversight capacity to spend effectively. The needs of Afghanistan are great, but we can’t program delivery of aid based on need, we have to program delivery of aid based on the capacity to effectively deliver that aid,” Wilder added.

There are no easy solutions to the problem.

For years, Washington, particularly under the leadership of President George W. Bush, pushed for a system known as the Partner Vetting System, which calls for all subcontractors to be fully vetted. A pilot program is underway in Gaza in an effort to prevent aid from going to projects affiliated with Hamas.

The approach is practical in theory, according to Paul O’Brien, who has spent five years in Afghanistan as director of aid effectiveness for Oxfam America, but in practice it can severely inhibit the delivery of aid.

“It has a chilling effect on the way NGOs do business and the ability of local partners to work with NGOS. It would shut down the system,” O’Brien said.

He warned that amid the challenges to an unwieldy bureaucracy the tendency has been to turn to private contractors as they are liberated from many of the rules of regulation that are imposed on contracts directly managed by USAID.

That is a process that also can be perilous, he said. That’s because in the private sector, where companies are seeking to maximize profit, grant management officers who should be managing no more than $10 million projects are often being put in charge of $50 million projects. The severe understaffing on these projects creates ripe conditions for corruption and waste.

O’Brien said, “The real problem is not the smaller amounts of money being wasted through fraud and abuse, but the huge amounts of money being lost due to a lack of focus on a development plan. The metric has been delivering aid and goods and services, and not effective development. We have to come up with a way to focus on development that works.”

Wilder said the best way to do that is to live by a simple axiom: less is more.

Smaller and more effective projects, he said, are an important way to cut out corruption and deliver much-needed aid to the country.

The large-scale, profligate spending of USAID can in fact be counterproductive to the U.S. effort in Afghanistan, according to Wilder.

“The current strategy of aid in Afghanistan is built around wishful thinking, an assumption that big aid has a benefit,” he said, hastening to add, “There is remarkably little evidence that aid has a stabilizing impact. And there is some argument that it may in fact have a destabilizing impact.”

He said large, unaudited aid projects can often pit tribes against each other and line the pockets of corrupt warlords and give them a tighter grip on power. All of that, he said, can serve to disrupt local balances of power and increase instability in the country.

Wilder said, “It is not necessarily true that aid wins hearts and minds. For something so fundamental to our overall counter-insurgency strategy, we are very uncritical of the central assumption in that strategy.”

(GlobalPost's Kabul correspondent Jean MacKenzie contributed to this article.)

Editor's note: This story was updated to clarify the details of understaffing in Afghanistan. In addition, Wilder's interview was placed in the larger context of all U.S. aid in Afghanistan. Details of Wilder's career were also corrected — he worked for the International Rescue Committee, not the International Red Cross. The dateline was also updated to reflect significant reporting done in Washington.

