- New rule prevents Government contracting officers from funding projects that are not able to be safely accessed by Government civilian or military personnel, as these may pose an increased risk of fraud, corruption or waste, or lack efficient oversight.
- The Government has awarded projects in Afghanistan at locations that Government personnel have not been able to safely travel to and access, leading to inefficient oversight and a profusion of disputes and claims.
- Waivers will be available at increasing thresholds, but any project over $40 million will require waiver by the Secretary of Defense and Congressional notification
While the concept of an “unsafe” project in Afghanistan may sound redundant to many contractors, there are “unsafe” projects and then there are projects that are so “unsafe” that even the Government’s own representatives cannot travel to or otherwise effectively oversee them. To address this situation, a final Defense Federal Acquisition Regulation Supplement (DFARS) rule, codified at 48 C.F.R. 225.7705 and effective April 13, 2018, prohibits contracting officers from obligating or expending funds for construction or infrastructure projects in Afghanistan if military or civilian personnel, or their representatives, cannot safely access the program or project.
While this may seem like a common sense policy, the Government has funded numerous projects over the past 15 years in Afghanistan that could not be safely accessed—at least not routinely—by Government representatives. Indeed, numerous contracts have been—either entirely or at times—so dangerous as to prevent Government representatives from reaching the project site to conduct meetings, inspections or routine oversight. The inability of the Government to oversee its contracts leads to inefficiencies, the potential for waste and corruption, problems in communicating project status and an increase in contract disputes between contractors and the Government. Such “unsafe” projects frequently lead to claims, or terminations for convenience that have resulted, in whole or in part, from the inability of the Government to effectively oversee contracts in Afghanistan due to safety concerns. The new rule aims to put an end to the risks and inefficiencies associated with such projects by precluding their award in the first place. Accordingly, any construction or infrastructure project to be awarded in Afghanistan must be evaluated by the contracting officer to ensure it can be accessed safely by Government military and/or civilian personnel so that they can properly conduct oversight of the program or project. The new rule’s prohibition against unsafe projects permits modest waivers, but only based on the satisfaction of multiple criteria, including that:
- the project contributes to the Government’s national interest or strategic objectives;
- the Government of Afghanistan has requested or expressed a need for the project;
- the project has been coordinated with the Government of Afghanistan and other implementing agencies or international donors;
- security conditions allow for effective oversight;
- safeguards are in place to detect and prevent fraud, waste and abuse of funds;
- arrangements are in place for the sustainment of the project after completion; and
- Government and contractor have established meaningful metrics to measure the project for effectiveness and against its objectives.
The ability to issue a waiver based on such a determination varies depending on the estimated life cycle cost of the project, with larger projects requiring increasingly higher levels of approval. For projects under $1 million, a determination and waiver may be issued by the contracting officer. For projects between $1 million and $20 million, the determination must be made by the Senior U.S. Officer in the Combined Security Transition Command – Afghanistan. For projects between $20 million and $40 million, the determination must be issued by the Commander of the United States Forces – Afghanistan. Finally, for projects above $40 million, the determination must be approved by the Secretary of Defense, and Congress must be notified within 15 days.
For the construction and infrastructure programs and projects subject to the new rule, the contracting officer has additional duties after contract award. The contracting officer must review the reports of the contracting officer’s representative(s) to ensure that the project continues to be safe and to determine whether security conditions prevent effective implementation and oversight of the project. In other words, if a given project’s security situation deteriorates to the point that Government personnel can no longer provide effective implementation and oversight (e.g., they can no longer safely visit the project), then the contracting officer is to consult with the requiring activity to take appropriate actions. While such “appropriate actions” are not specified in the rule, we presume that contracting officers will consider issuing change orders for additional security, suspending work, and ultimately terminating projects for the convenience of the Government if security conditions deteriorate after award to the point where Government representatives can no longer effectively oversee the program or project.