VZCZCXRO3667
RR RUEHDBU RUEHPW RUEHSL
DE RUEHBUL #0561/01 0460549
ZNR UUUUU ZZH
R 150549Z FEB 10
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 5593
INFO RUCNAFG/AFGHANISTAN COLLECTIVE

UNCLAS SECTION 01 OF 02 KABUL 000561 
 
SIPDIS 
 
DEPARTMENT FOR S/SRAP, SCA/FO, SCA/A, EUR/RPM 
STATE PASS TO AID FOR ASIA/SCAA 
USFOR-A FOR POLAD 
 
E.O. 12958: N/A 
TAGS: AFIN EAID AF
SUBJECT:  LAUNCHING QUICK RESPONSE FUNDS FOR FIELD OFFICERS 
 
Ref: A) 12/18/2009: Email and attachments Nickerson to Hogan 
"Justification of Two-Tracked Approach" (NOTAL) 
B) 1/19/2009: Email and attachments Nickerson to Hogan, et al; "QRF 
- prep for the Wednesday call" (NOTAL) 
 
¶1. This is an action request.  See paragraphs 2, 9 and 10. 
 
¶2. Summary and Action Request: Embassy Kabul Interagency Provincial 
Affairs (IPA) and the Financial Management Office (FMO) have been 
working to design a mechanism to disburse USD30 million in 2009 
Supplemental Economic Support Funds (ESF) designated for use by 
State Department field officers for "Quick Reaction Funds" (QRF). 
During her November visit to Afghanistan, the Secretary highlighted 
this funding as a key State Department priority.  As envisioned in 
the Congressional Budget Justification, these funds would be used 
for "small, quick impact projects... to support the activities of 
local neighborhood organizations, government organizations, and 
community-based organizations, including nonprofits, small 
businesses, professional associations, charitable organizations, and 
educational institutions."  Embassy appreciates Washington's support 
for our proposed two-tracked approach to spending the money, which 
would allocate USD 24.5 million to USAID to help fund the District 
Delivery Program (DDP) and the remaining USD 5.5 million to "Field 
Operational Funds for Governance."  Embassy urgently requests 
technical assistance from Department to design the most appropriate 
mechanism for launch of the Field Operational Funds.  End Summary. 
 
--------------------------------- 
Bulk of QRF for District Delivery 
--------------------------------- 
 
¶3.  The District Delivery Program (DDP) is being designed in an 
interagency consultative process with the Government of Afghanistan 
(GIRoA), and will provide basic service packages to high priority 
districts throughout Afghanistan.  The DDP is being carefully 
planned with GIRoA, the U.S. Mission, and other donors, in 
accordance with the Counterinsurgency and Afghan First principles 
encompassed in the USG civ-mil strategy toward Afghanistan.  GIRoA 
will implement the DDP, with most funding from the U.S. side coming 
from USAID and DOD. 
 
¶4.  Embassy recommended transferring the bulk of the QRF funds - USD 
24.5 million - to USAID in support of the DDP, in order to reinforce 
our efforts to build capacity of local and district governments. 
Embassy reasoned the DDP would provide a strategically planned 
mechanism for assistance that would have immediate and far-reaching 
effects at the local level, in accordance with QRF goals.  Embassy 
appreciates Department support for this plan, and understands that 
SCA/A has a Congressional Notification in the pipeline. 
 
--------------------------------------------- ----- 
Remaining Field Operational Funds More Challenging 
--------------------------------------------- ----- 
 
¶5.  Embassy has dubbed the remaining USD 5.5 million as "Field 
Operational Funds for Governance."  USD 5 million would be set aside 
for use by field officers, and USD 500,000 would be allocated to 
maintenance of an oversight and tracking database.  Embassy and 
SCA/EX have agreed to model the database after the database used in 
Iraq for a similar QRF program, which NEA/I-Assist manages. 
 
¶6.  We have drafted two possible mechanisms for the use of the USD 5 
million in the field: the first would entail drafting an obligating 
instrument that would allow the creation of a pool of Afghan 
contractors as part of a larger indefinite quantity contract (IQC) 
(reftel B).  The second would be modeled closely to the Iraq QRF 
program, whereby an "imprest fund" would be set up for cash advances 
to the field not to exceed USD 10,000 per PRT field officer with 
designated duties, and micro purchases up to USD 3,000 per project 
(reftel A). 
 
------------------------------------------ 
Two Possible Mechanisms and Action Request 
------------------------------------------ 
 
¶7.  After a series of conference calls, emails and memos, we 
understand that the Office of the Procurement Executive has made a 
policy determination that the IQC option is not viable for us 
because "letting a contractor execute/manage grants unacceptably 
permits contractors to perform inherently governmental functions, 
per the Federal Acquisition Regulation (FAR) part 7.502(a)."  SCA/EX 
has recommended that the Embassy follow the model used by U.S. 
Mission Iraq for its own State Department quick response program, 
which is implemented through micro purchases, grants, and expedited 
procurements.  Embassy Kabul has told the Department, there are a 
number of challenges that may make the "Iraq model" impractical. 
These include, but are not limited to the following: 
 
- Setting up and managing the "Iraq model" would require a minimum 
 
KABUL 00000561  002 OF 002 
 
 
of one temporary FMO and two locally employed staff in Kabul (which 
we anticipate would become permanent positions) and one officer in 
SCA/A.  This seems excessive for a $5 million program in a universe 
in which strapped Embassy offices are handling some $2.4 billion in 
civilian assistance.  Costs associated with these new personnel 
would also be equivalent to a large share of the entire fund. 
 
- A limited number of our field officers have grant and contract 
training, but overall our field staff lacks the capacity and 
training to manage foreign assistance funds. 
 
- Moving money in Afghanistan's cash-based economy is extremely 
complex.  Unlike Iraq, the use of U.S. Treasury checks is not an 
option because the military does not provide this level of 
cashiering services in either U.S- or coalition-led field locations 
and have no plans to do so within their current, massive 
uplift/battlefield preparations.  Afghanistan's banking 
infrastructure is not sufficiently developed to allow electronic 
funds transfers (EFTs) to the vast majority of field locations in 
Afghanistan.  Embassy is exploring possible use of cash-courier 
services through Standard Chartered Bank, which would carry a 
transaction cost per service, but we are not yet sure this will be 
possible. 
 
- The daily cash counts associated with this approach, in addition 
to the project design, tracking, justification and implementation, 
will be a time-consuming process for our field officers, who already 
face multiple and intricate demands on their time.  We believe it 
would also put an unreasonable burden on them to be personally 
responsible for the cash - an average of $2000 to $3000 per grant. 
 
¶8.  With barely more than seven months remaining to obligate the USD 
30 million in Economic Support Funds designated for use by State 
Department Field officers, it is becoming critical that we begin 
spending in order to contribute to our governance goals in the 
field.  Our field officers are anxious to begin implementing small 
projects ranging from shuras to rule of law capacity training.  This 
will also support our efforts to bring governance to the districts 
in support of the imminent uptick in military operations. 
 
¶9.  Action Request:  We have tried here at post to design a 
mechanism that takes into account the realities in the field as well 
as Department requirements.  While we have consulted with a range of 
qualified grant and contracting officers here in Kabul, we have 
reached the limits of our technical capacity to launch this program. 
 We therefore request that Department select a mechanism or design 
an alternate that will allow the most expeditious, cost-effective 
launch of the Field Operational Funds, considering all the points 
raised in paragraph 5.  Specifically, Post requests that the 
Department reconsider the IQC approach, which Embassy Kabul 
continues to believe is the most efficient option in the long term. 
We believe it would significantly reduce the administrative burden 
on field staff and introduce an acceptable level of contract/grant 
management capacity without burdensome training requirements on 
field officers who are not accustomed to managing foreign assistance 
money.  No matter which approach is ultimately implemented, we 
recommend the Department fund and establish the oversight database 
based on the Iraq database.  This will be far more cost-effective 
and expedient than tendering for an entirely new database, which we 
understand could cost $2 million. 
 
¶10.  Action Request, continued.  If for policy reasons the 
Department chooses to model the Afghanistan QRF program on the Iraq 
system, we recommend the following actions as an integral part of 
that plan: 
 
- Extend all grant and contract training waivers that were granted 
in Iraq, and define the training requirements for personnel in 
Afghanistan. 
 
- Provide a FMO TDY officer with specific foreign assistance grant 
and contract experience to deploy immediately to Afghanistan to set 
up the program. 
 
EIKENBERRY