In order to ensure that Department of Defense (DOD) funds are not awarded to individuals or groups that actively oppose United States (U.S.) and Coalition Forces, Congress included Section 841 in the 2012 National Defense Authorization Act. Section 841 permits DOD to restrict, terminate for default, or void a DOD grant[1] with a group or individual determined to be “actively supporting an insurgency or otherwise opposing the United States or coalition forces in a contingency operation in the United States Central Command theater of operations.”[2] The SIGAR report issued in July 2013 recommends the expansion of this authority and procedure to the Department of State (State), and the United States Agency for International Development (USAID).[3] This analysis describes the procedure adopted by DOD to implement Section 841, the current vetting procedures employed by State and USAID and implications of the potential expansion of the DOD program for international nongovernmental organizations (NGOs) and grant and contract awardees in Afghanistan.
A lot of money is involved. According to John F. Sopko, the Special Inspector General for Afghanistan Reconstruction (SIGAR), Afghanistan will need an estimated $70 billion in foreign assistance through 2024 in order to fill its budget gap.[4] In 2012 alone, the United States (U.S.) provided more than $16 billion for Afghan reconstruction, twice the amount given to the next four largest foreign assistance beneficiaries combined.[5] The United States government will provide much of this assistance through government grants and contracts issued to Afghani nationals for Afghani goods.
I. SUMMARY OF SECTION 841 AND POWER THE CANCEL GRANTS AND CONTRACTS
Section 841 authorizes the DOD, pursuant to a request from the Commander of the US Central Command (CENTCOM), to restrict, terminate, or void a grant when the Commander determines that it would provide funding directly or indirectly to a person or group identified as actively supporting an insurgency or otherwise actively opposing U.S. or coalition forces in the CENTCOM theater of operations.[6] Section 841 also allows DOD to terminate for default any DOD grant, contract or cooperative agreement upon a written determination by the Head of a Contracting Activity (HCA)[7] that the awardee has failed to exercise due diligence to ensure that no funds are provided to prohibited parties.
DOD instituted a two-phase process in order to comply with Section 841. The first phase involves targeting, reviewing, and designating a Section 841 person or group, and then notifying the head of the contracting activity regarding the findings. In phase two, the key heads of the relevant contracting authorities determine if they have any contracts with the designated group or person. The process concludes when the head of the agency or contracting authority responds to CENTCOM with information on the number and value of any contracts with the prohibited person or group, and the actions taken on the contracts. This process will be considered more fully in Section V, which discusses due process concerns.
CENTCOM issued four notification letters between the implementation of the Section 841 procedure and January 18, 2013. These letters identify five companies and their associates as supporters of enemy groups. No prime contracts have been terminated as a result of these Section 841 designations, but at the direction of the U.S. Army Corps of Engineers and the Air Force Civil Engineering Center’s contracting officers, prime contractors terminated eight active subcontracts, valued at around $12 million. Of this, DOD paid out about $5 million to the awardees before terminating the contracts.
In his July 2013 report, the Special Inspector General for Afghanistan Reconstruction (SIGAR) recommended that Congress expand this DOD program and Section 841 authorization to both the State Department and USAID.
II. POTENTIAL EXPANSION OF SECTION 841 POWER / DOD PROGRAM TO STATE AND USAID
Despite the many administrative weaknesses of the DOD program,[8] SIGAR recommended expansion of the program to State and USAID in order to facilitate their ability to restrict, terminate, or void their grants based on a Section 841 designation. DOD provides State and USAID with information on its Section 841 designations, as it has since November 2012. Both agencies take the information into consideration during their vetting process, but neither relies on this information exclusively when making grant decisions. Similarly, neither State nor USAID is prohibited from awarding grants or contracting with persons or groups designated under Section 841, though neither State nor USAID currently maintains active prime contracts with any Section 841 designees.
Unlike DOD, State and USAID lack the authority to terminate contracts for default with Section 841 designees. Therefore, under existing procedures, the agencies would likely have to pay up to the full cost of the contract to terminate an agreement with a Section 841 designee. They would also likely incur additional costs to complete the required work under the contract. To this end, SIGAR recommended that Congress consider expanding Section 841 to grant government-wide authority to allow senior procurement executives and commanders to void, terminate for default, or restrict future awards to persons or groups defined as enemies of the U.S.
The Department of State responded negatively to this recommendation, stating that they “do not believe that the Department has been hindered by a lack of Section 841 authority,” and further stated that “the pre-award vetting process, which considers DOD Section 841 determinations, provides reasonable assurance against awards to offending contractors or grantees.” State welcomed further dialogue to improve their existing measures, but expressed concern with proposals that would indiscriminately expand the DOD contracting provisions to the Department of State.[9]
USAID likewise expressed a belief that their agency’s efforts are not hindered by a lack of Section 841 authority, but stated that they would welcome an independent grant of authority to terminate contracts for default to ensure that no U.S. funds go to prohibited parties. USAID also expressed concern that any new procedures and responsibilities could disrupt the effective programs currently in place, and would indiscriminately expand DOD contracting provisions to the agency.
USAID emphasized that USAID and DOD have different purposes and modalities for contracting, resulting in the need for different vetting processes. In addition, as discussed below, USAID recently adjusted its vetting procedure to incorporate a lower vetting threshold, expanded its definition of “prohibited parties,” and increased responsibility for prime awardees to verify the information provided regarding key individuals involved in each proposed sub-award.
III. WHAT ARE THE CURRENT PROGRAMS EMPLOYED BY STATE AND USAID?
While State and USAID are not subject to Section 841, both currently employ grantee and contractor vetting processes to prevent the distribution of U.S. funds to those who threaten U.S. security and foreign policy interests. Vetting is a term used by the counterterrorism community to describe the process of screening the names of individuals and organizations against various lists of terrorists and their supporters. The purpose of the vetting process is to practice due diligence to ensure that U.S. Government funds are not inadvertently awarded to terrorists or terrorists sympathizers.[10]
State vets all non-U.S. companies competing for U.S. funded grants and contracts through the Office of Risk Analysis and Management. Information provided by the grantee is compared to various databases to determine whether derogatory information exists that links the company or its key officials to enemy groups. This information is forwarded to the assistant secretary of the office funding the activity, who makes the final decision regarding whether the grantee and personnel are eligible for a grant or contract.
USAID similarly vets all non-U.S. prime contractors and subcontractors in the competitive range to receive grants valued at over $25,000. USAID produced an updated Mission Order (201.05) on July 8, 2013 immediately preceding the recommendations of SIGAR to expand the DOD Section 841 procedure and authority to State and USAID. This new Mission Order lowers the previous vetting threshold from $150,000 to $25,000 and makes this threshold amount cumulative over all awards granted to a particular entity. Mission Order also changes the definition of “Prohibited Party” from:
“An individual or entity for which there are reasonable grounds to believe that such individual or entity is or was engaged in criminal, terrorist, or intelligence activities that are inconsistent with the interests of the US national security or the integrity of the USAID programs” (Mission Order 201.04), [11]
to:
“An individual or entity that USAID knows or has reasonable grounds to suspect:
i) Supports or has supported terrorist activities,
ii) Is or has been engaged in terrorist activities,
iii) Poses a significant risk of committing terrorist activities, or
iv) Is or has been engaged in other activities which are contrary to the national security or foreign policy interests of the United States.”[12]
This much-expanded definition of “prohibited parties” allows the USAID Office of Security wider latitude in determining whether a party qualifies as a prohibited party, and is therefore ineligible to receive a USAID grant or contract.
While USAID automatically performs vetting on all non-U.S. recipients of USAID grants in excess of $25,000, Mission Order 201.05 makes it clear that “even if vetting would not otherwise be required under these rules, vetting will be conducted whenever USAID has reason to believe that the Awardee, or Sub-awardee could be a Prohibited Party.” [13]
Whenever an entity is vetted, each of its “key individuals” who are not U.S. citizens or permanent legal residents must also be vetted.[14] The Mission Order makes clear that vetting is required for key individuals, but is not required for the “ultimate beneficiaries of the cash or in-kind assistance, such as food, water, medical care, micro-enterprise loans and shelter.”[15] Entities applying directly to USAID for the award are required to submit a detailed information package for each “key individual,” including copies of government-issued photo identification, a copy of each individual’s passport and tazkera,[16] and information regarding the individual’s tribal affiliation, father and grandfather’s names, place and date of birth, occupation, residence and pseudonyms.[17] These prime awardees are also responsible to take reasonable steps to verify the required information contained in the information forms, and submitting the information to the Vetting Support Unit (VSU).[18]
USAID’s Vetting Support Unit then reviews the information package from the grantee or contractor for completeness and accuracy. If there are no problems in the information package, the USAID mission forwards the package to the agency’s Office of Security in Washington, D.C. for additional investigation. The security office will them submit a recommendation of eligibility for the contract if the office does not identify any derogatory information regarding the person or entity. The USAID Senior Deputy Mission Director makes the final determination as to whether to declare a contractor eligible for a contract.
IV. PROPOSED LEGISLATION INCORPORATES SOME SIGAR RECOMMENDATIONS BUT NOT EXPANSION OF SEC. 841 TO STATE AND USAID
In proposed legislation, the House and Senate each incorporated some SIGAR findings and recommendations into their drafts of the National Defense Authorization Act (NDAA) for the fiscal year (FY) 2014. The proposed bill would expand Section 841 authority within the DOD. However, neither the House nor the Senate expanded the legislation to grant State or USAID Section 841 authority, or require compliance with a Section 841 determination.
The House, which passed its version of FY 2014 NDAA on June 14, 2013, expanded Section 841 to apply not only to the United States Central Command in Afghanistan, but also to the U.S. European Command, the U.S. Southern Command, and the U.S. Pacific Command, excluding only U.S. Northern and Africa Commands. The House bill also repeals the sunset provision of the NDAA 2012, which is currently set to expire December 31, 2014.[19]
The Senate Armed Services Committee, which reported its version of the FY 2014 NDAA on June 20, 2013, likewise proposed an expansion of Section 841. The Senate Committee recommends extending the provision to all combatant commanders.[20] These combatant commanders would, in consultation with the Under Secretary of Defense for Policy, the Under Secretary of Defense for Acquisition, Technology and Logistics, and the relevant US embassy, determine an appropriate plan of action to mitigate the flow of funds to designated persons or entities. When that plan of action includes contract actions, the head of the contracting activity may terminate or void the grant, contract or cooperative agreement, and restrict future awards to such persons or entity.
The Senate Committee also recommends providing for post-deprivation due process for the listed group within 30 days of the receipt of notification of the entities failure to satisfy Section 841 requirements.[21]
The current use of Section 841 by DOD, and potential expansion of this authority to State and USAID raises serious concerns, both for NGOs and potential Section 841 designees. The lack of clearly defined guidelines to determine when a person or entity is “actively supporting an insurgency or otherwise opposing United States or coalition forces” and the failure of the DOD to provide information to parties regarding the reasons for their Section 841 designation raise serious due process concerns for those whose grants are voided. A negative Section 841 determination could also appear on a grantee’s Past Performance Evaluation, which would make it nearly impossible for the grantee or contractor to receive any government contracts for a period of three years or longer. Likewise, the lack of a clear definition and guidelines as to when a person will qualify for a Section 841 designation could create a culture of fear amongst potential grantees and cause a chilling effect in the awardees protected right to freedom of association and freedom of expression.
Additionally, requiring NGOs, USAID and State to provide personal information and potentially actionable intelligence regarding their key personnel and sub-grantees to the DOD may risk the neutrality of the NGOs, putting their immunity under International Humanitarian Law at risk, and risking the safety of its members on the ground.
A. DUE PROCESS CONCERNS
While it appears that the designation undergoes many levels of internal informational and legal review, the reasons for the designation, and information upon which the designation is based, are not available to the designees. Although Section 841 designation itself is unclassified, the information CENTCOM uses to make a determination may be classified and is not automatically shared with contractors. As a result, the prime grantees cannot share with subcontractors the reasons for the termination of the contract, and prime awardees may not know themselves the reasons for their Section 841 designation. Such information, according to Section 841, may only be shared pursuant to a protective order issued by a court of law.[22]
Not only do these situations constitute a potential violation of due process for the designees, but they may expose prime awardees to litigation for breach of contract under the domestic law of the host country. Similarly, prime grantees may be forced to absorb the cost of finding new subcontractors to complete the desired work under the terminated contract.
DOD implemented a two-phase procedure in order to exercise the authority granted under Section 841. In phase one, DOD’s Task Force 2010 (TF2010) compiles a package of information on potential designees to determine whether a person is “actively supporting an insurgency or otherwise opposing the U.S. or coalition forces.” This information package includes known civil and criminal activity, affiliations and associations with malign actors, and known terrorism and insurgent ties, and may include classified and unclassified date. TF2010 uses this information to ultimately determine whether the potential awardee is actively supporting an insurgency or otherwise opposing U.S. or coalition forces based on the quality, quantity, timeliness, and level of corroboration of the evidence.
Once a person or group is designated by TF2010, the information package undergoes an external legal review. TF2010 also conducts a contract impact analysis to identify any potential second tier or third order effects to determine the consequences in the area of operations if the designated person or group could not perform under the contract based on a Section 841 designation.
The information package, if approved, is routed through a series of coordinating agencies within the International Security Assistance Force (ISAF) Joint Command for review and agreement before it reaches CENTCOM for a final decision. The Section 841 designation package receives a number of senior level approvals, including approvals by the Deputy Chief of Staff of ISAF Joint Command, the Commander of the ISAF Joint Command, and the Commander of the ISAF / U.S. Forces – Afghanistan, before finally reaching CENTCOM. Once at CENTCOM, the package is subject to another intelligence review and legal evaluation from the CENTCOM Judge Advocate. The CENTCOM Commander then reviews the package and all of the information compiled up to this point and makes the final determination as to whether to designate the person or entity as a prohibited party. If the CENTCOM Commander approves the package, the Commander creates an unclassified Section 841 notification letter listing the person or groups identified, along with a request that the head of agencies, or heads of contracting activities exercise the authority granted by Section 841 to restrict, terminate, or void contracts with those designated as “prohibited parties” under Section 841. CENTCOM will then distribute the notification letter to the key heads of agency and select heads of contracting authorities.
In phase two, the key heads of impacted agencies and select heads of the contracting authorities determine if they have any contracts with the person or group designated in the CENTCOM notification letter. There is no formal procedure to determine whether the contracting authorities are engaged with prohibited parties. The policies used by these entities to determine whether they are engaged in contracts with designated parties ranges from formal to ad hoc, according to a survey conducted by SIGAR. The process concludes when the head of the contracting authority responds to CENTCOM with information on the number and value of any contracts with the prohibited person or entity, and the actions taken on the contracts.[23]
B. NEUTRALITY OF INTERNATIONAL NGOS
According to the International Committee of the Red Cross (ICRC), under customary International Humanitarian Law (IHL), civilian humanitarian relief personnel are protected against attack according to the principle of distinction. This requires the parties to any conflict to distinguish between civilians and combatants at all times. Attacks may only be directed against combatants, and must not be directed against civilians, unless and for such a time as the civilians take a direct part in the hostilities.[24] Likewise, under the Statute of the International Criminal Court, intentionally directing attacks against personnel involved in a humanitarian assistance mission during an international armed conflict is a war crime, as long as the humanitarian organizations are operating in accordance with the Charter of the United Nations, and such personnel are entitled to the protection given to civilians under IHL.[25] These humanitarian organization rely on their neutrality and separation from “participation in the hostilities” in order to claim protection as “civilians” under International Humanitarian Law. The provision of actionable intelligence to a party to the conflict may threaten the organization’s neutrality, classification as civilian, and therefore, protection under IHL.
The collection of actionable intelligence by U.S. funded humanitarian organizations also places these organizations at serious risk of retaliatory attacks from the members of the communities they are trying to serve. These humanitarian organizations rely largely on community acceptance, and the perception of independence and neutrality, in order to function safely in their respective communities. Should these communities believe that the organizations are providing intelligence to the U.S. or any party to an armed conflict, the ability of that organization to function in a principled and safe manner may be gravely threatened, not only by the loss of protection under IHL, but also by retaliatory action by those who perceive the organization as an agent of the United States government. Therefore, Congress should exercise caution in expanding this program to State and AID, and should consider carefully the impact that the expansion of this program will have on the safety of the humanitarian organization and their employees serving the communities on the ground.
C. RESTRICTION OF FREEDOM OF ASSOCIATION AND EXPRESSION
The lack of clarity and transparency in determining which individuals and entities are designated under Section 841 as “actively supporting an insurgency or otherwise opposing U.S. and coalition forces” may have a chilling effect on the rights to free expression and association of potential DOD grantees.
According to the Universal Declaration of Human Rights, and International Covenant on Civil and Political Rights, every person has the right to freedom of opinion and expression,[26] and the right to freedom of peaceful assembly and association.[27] These rights may only be subject to restrictions which are prescribed by law and necessary in a democratic society in the interests of national security or public safety, public order, the protection of public health or morals, or the protection of the rights and freedoms of others.
According to the United Nations Office of the High Commissioner for Human Rights (OHCHR), clear safeguards must exist to ensure that the right to association is not curtailed unnecessarily. The principles of necessity and proportionality must be respected in all cases, and the principle of legality must be respected in properly defining “terrorism.” The OHCHR specifically emphasizes the need to specifically define terrorism, terrorist acts and terrorist groups, in order to ensure that groups are not criminalized without warrant. Accordingly, any decision to proscribe a group or association as “terrorist” needs to be taken on a case by case basis, and must be assessed by an independent judicial body with full notice to the affected group. This process must present the possibility of appeal.[28] The Special Rapporteur on Human Rights and Counter-Terrorism has, likewise, stressed the importance of ensuring that all decisions which limit human rights are overseen by the judiciary, so that they remain appropriate, proportionate and effective, and so that the government may ultimately be held accountable for limiting the human rights of individuals.
The DOD process lacks such oversight by an independent judicial body, fails to provide full notice to the affected individuals, and lacks any review procedure, presenting a serious threat to the enjoyment of the freedom of assembly and expression of the potential DOD grantees. Without clarity to determine which actions and contacts will render an individual ineligible to receive a DOD grant, many individuals may cease their association with even legitimate organizations and individuals, out of fear that these contacts may result in a Section 841 designation, and the loss of potential grants or contracts.
The expansion of the DOD Section 841 procedures and authority to State and USAID, while recommended by SIGAR, has so far not been adopted by either the House or the Senate. The threat of expansion has, in any event, prompted a pre-emptive response from USAID, which expanded the scope of its own vetting procedures. Congress should continue to exercise caution when considering expanding the DOD program to these agencies, due to the differences in the mission and purpose of DOD, State and USAID. In expanding the DOD program, Congress could risk interrupting the currently functioning systems at State and USAID, and risk the neutrality and safety of the humanitarian organizations on the ground in Afghanistan. In addition, the DOD program raises due process concerns, risks the freedom of association and expression of potential grantees, and could impose severe penalties on groups denied contracts or subject to termination. Due to these concerns, Congress should decline to expand the DOD Section 841 procedure and authority to the State Department and USAID.
[1] This paper will use the term “grant” to refer to grants, contracts, and cooperative agreements. Importantly, the term “grant” also refers to sub-grants and sub-awards, in accordance with the terminology included in the SIGAR reports and audits. Section 841 is aimed at preventing “indirect” as well as “direct” funding to proscribed parties. (National Defense Authorization Act 2012 Section 841(a)(1)(A))
[2] NDAA 2012, Section 841(a)(1)(A). Available at http://www.gpo.gov/fdsys/pkg/PLAW-112publ81/pdf/PLAW-112publ81.pdf
[3] SIGAR Audit 13-14: Contracting with the Enemy: State and USAID Need Stronger Authority to Terminate Contracts When Enemy Affiliations are Identified (July 24, 2013) (Available at http://www.sigar.mil/pdf/audits/SIGAR%20Audit%2013-14.pdf)
[4] SIGAR April 2013 Report, Pg. 21 (available at http://www.sigar.mil/pdf/quarterlyreports/2013-04-30qr.pdf)
[5] SIGAR April 2013 Report, Pg. 21
[6] CENTCOM Theater of Operations includes Afghanistan, Bahrain, Egypt, Iran, Iraq, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Oman, Pakistan, Qatar, Saudi Arabia, Syria, Tajikistan, Turkmenistan, U.A.E, Uzbekistan, and Yemen. (http://www.centcom.mil/area-of-responsibility-countries).
[7] According to Defense Federal Acquisition Regulation Supplement, Subpart 202.1, a DOD contracting activity is an entity designated by the director of a defense agency with contracting authority through its agency charter. For example, the U.S. Army Corps of Engineers is considered an HCA. Large DOD agencies, such as the Dept. of the Army, may have multiple HCAs under their command.
[8] SIGAR Audit 13-6: Contracting With the Enemy: DOD Has Limited Assurance that Contractors with Links to Enemies are Identified and their Contracts Terminated, April 11, 2013 (Pg. 5) (available at http://www.sigar.mil/pdf/audits/2013-04-10audit-13-6.pdf).
[9] SIGAR Audit 13-14, Pages 8-9 (July 18, 2013 Letter from Dan Feldman, Deputy Special Representative fo Afghanistan and Pakistan, US State Department
[10] For a critique of the problems with this approach from a civil society perspective see http://www.charityandsecurity.org/PVS
[11] USAID Mission Order 201.04 (Section II “Definitions,” Page 2)
[12] Mission Order 201.05, Section II “Definitions,” (Page 2)
[13] Mission Order 201.05, Appendix A(1)(e) (Page 6)
[14] See Mission Order 201.05 (Appendix A(3)): a) any person who exercises effective control of the organization; b) A principal officer of the organization’s governing body (e.g. chairman, vice chairman, treasurer or secretary of the board of directors or board of trustees; c) a principal officer and deputy principal officer of the organization (e.g. executive director, deputy director, president or vice president); d) the program manager or chief of party for the USAID-financed program; e) any person receiving significant commissions (defined as a sum, either fixed or a set percentage of the value involved, paid to an agent or person acting in a similar role in the activity involved, or similar earnings from the Award in an amount exceeding the Vetting Threshold; and f) any other person with significant responsibilities for administration of USAID-financed activities or resources (while a comprehensive list is not possible, this would include any person acting in a rule substantially similar to those outlined in (a)-(e). For Private Security Services, this would include leadership roles down to the level of field commanders.
[15] USAID Mission Order 201.05 Appendix A(1)(d) (Page 6)
[16] Tazkeras are identity documents, confirming that citizens of Afghanistan are, in fact, citizens, and therefore have a legal relation to the state. (http://www.unhcr.org/4497b1c12.pdf)
[17] USAID Mission Order 201.05 Appendix B
[18] USAID Mission Order 201.05 Appendix A(4)(b).
[19] H.R. 1960: National Defense Authorization Act for Fiscal Year 2014, Section 821 (Page 435) (as passed by the House on June 14, 2013)(available at https://www.govtrack.us/congress/bills/113/hr1960/text/eh)
[20] Senate Proposed NDAA 2014, Section 821(a) (available at https://www.govtrack.us/congress/bills/113/hr1960/text)
[21] Senate Proposed NDAA 2014, Section 862(c)
[22] NDAA 2012, Section 841(b)(2)(c)(3)
[23] For a full description of the DOD program, see SIGAR Audit 13-6, supra note 9.
[24] International Committee Of the Red Cross, Customary International Humanitarian Law, Pg. 3 (available at http://www.icrc.org/eng/resources/documents/publication/pcustom.htm)
[25] Statute of the International Criminal Court, Art 8(2)(b)(iii) (available at http://legal.un.org/icc/statute/romefra.htm).
[26] Universal Declaration of Human Rights (UNDHR). art 19; International Covenant of Civil and Political Rights, art. 19
[27] UNDHR, art. 20; International Covenant of Civil and Political Rights, art. 22
[28] Office of the United Nations High Commissioner for Human Rights, Human Rights, Terrorism and Counter-terrorism, http://www.ohchr.org/Documents/Publications/Factsheet32EN.pdf