KABUL—The Afghan government's plan to phase out private security firms has "increased the uncertainty over security" for U.S.-funded aid projects and increased the cost of guarding them, an audit released Friday by a U.S. government watchdog agency said.
The Special Inspector General for Afghanistan Reconstruction, or Sigar, said security costs for more than a dozen major development projects could increase by over $55 million over one year as contractors switch to the Afghan Public Protection Force, a state-owned security force that is replacing private firms.
"Security costs are likely to increase and could be substantial," the report states.
The Sigar was created in 2008 to oversee the billions of taxpayer dollars spent on reconstruction projects in Afghanistan. It conducts both audits and criminal investigations.
The audit describes an uneasy transition, as some new Afghan guards show up with inadequate uniforms and equipment, submit invoices for projected hours instead of actual work, and demand additional benefits beyond those outlined in their contracts.
The audit, for instance, quotes a U.S. Agency for International Development contractor as saying officers in the Afghan force demanded trips to the Afghan capital to visit family, plus a car and fuel, items not agreed to in their contract.
The transition from private to state-run security has also driven up costs, the audit says. In some cases, the audit states, labor costs could rise by as much as 200% as contractors bring in expatriate security consultants to supervise the transition, it says. The cost of hiring Afghan guards could increase by 46%, the report adds.
U.S. contractors in Afghanistan rely on private security for a range of services, from night watchmen and armed guards at housing compounds to more high-end escorts who protect convoys or provide bodyguard services to VIPs.
The costs of security in war-torn Afghanistan are high. According to the audit, at least $300 million of the $2.9 billion spent on some of USAID's largest projects in 2009 to 2011 went directly to security.
A USAID official said the agency had been closely monitoring the creation of the new force and hadn't witnessed a sharp cost increases in the first months of transition. "Security costs have not markedly increased, but we continue to monitor the cost and level of security services provided by the APPF," the official said.
Hired guns have been deeply unpopular in Afghanistan because of perceptions that they operate with impunity. Afghan President Hamid Karzai, after pledging to disband the private security companies, issued a decree in March 2011 that set a timeline for the dissolution of most of the firms.
While the U.S. initially expressed reservations about the plan to disband the firms, U.S. advisers are now helping assist in the creation of the new force.
As the audit suggests, the transition to state-provided security has been anything but smooth. The Afghan government has extended the licenses of some private security firms because of delays in the transition. Two top officials at the Afghan Public Protection Force, the organization's deputy minister and the business director, resigned recently—doing so, according to a person familiar with the matter, because of troubles in the transition.
The force was supposed to be a one-stop shop for everything from weapons registration to vehicle licensing, but had stumbled on issues such as assuming responsibility for convoy protection, this person said. "They have not even gotten the convoy [transition] implemented, which was the issue…that resulted in the release of the deputy minister and the business director," the person said.
The Afghan Ministry of Interior, which oversees the new force, didn't immediately respond to a request to comment on the resignations and audit.
In addition to the management upheaval, the audit underscores some of the bureaucratic hurdles still faced by aid contractors and their security providers.
According to the audit, contractors reported cases in which it took as long as 24 months to clear vehicles for importation to Afghanistan. One Afghan official "attempted to charge an additional $10,000 to register the company's vehicles," according to one of the contractors quoted. The audit offers no further explanation.
The report comes ahead of a conference in Tokyo that will outline the international community's long-term commitment to rebuilding Afghanistan. The report, which underscores the potential cost of the new security arrangement, is likely to put the spotlight on the costs of reconstruction.
The Afghan Public Protection Force is "a large, brand new organization, so the challenges get in the way," said a U.S. official.
Write to Nathan Hodge at email@example.com
A version of this article appeared June 30, 2012, on page A9 in the U.S. edition of The Wall Street Journal, with the headline: Afghan Phaseout Of Security Firms Draws Concerns.