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    Posted: 03-Mar-2017 at 3:50pm
ASM JV (Joint Venture comprising three companies: Aziz Wali Construction Company (AWCC), Shamshad Baden CC and Megayapi)
$99 M Contract Termination

Investigation Results in $99 Million Contract Termination

 In 2015, the Afghan Ministry of Public Works (MOPW) used a sole-source selection process to award a contract for the construction of sections 1 and 2 of the Qaisar to Laman Ring Road Project. The sole-source entity selected ASM JV, a joint venture comprising three companies: Aziz Wali Construction Company (AWCC), Shamshad Baden CC and Megayapi. The contract, funded by grants from the Asian Development Bank (ADB), with major contributions from the U.S. government, was budgeted by the Afghan Ministry of Public Works (MOPW) with a final bid amount of $99 million by ASM JV. (According to ADB’s website, the U.S. government has contributed $27 billion to the ADB since 1966 and is ADB’s largest contributor. The ADB also claims to have awarded more than $3.3 billion in grants to Afghanistan.) 

 SIGAR initiated a criminal investigation in May 2016 based on allegations that ASM JV was paying bribes and secretly enlisting the help of officials at both the ADB and MOPW in order to secure the contract award; that ASM JV lacked the technical and financial capacity to competently perform this large, complex project; and, that it had failed a December 2015 prequalification evaluation conducted by Hill International (Hill), an American engineering consultant firm MOPW had hired to help administer the project. Despite this, elements in ADB and MOPW continued advocating for ASM JV to be awarded the contract. In July of 2016, ASM JV was given a request for proposal (RFP) for the contract; the two companies who scored higher in pre-qualification were not given an RFP. 

 In August 2016, after an extensive investigation involving numerous interviews and reviews of emails and official records associated with MOPW, ADB, and Hill, SIGAR officials notified Afghan President Ghani, via official letter, of the investigative findings, including evidence indicating corruption surrounding the award selection process. 

 After submitting the written notice to President Ghani, SIGAR held meetings with relevant high level officials at the palace, including members of the National Procurement Authority (NPA) and presidential advisors at the palace. All the officials expressed appreciation for SIGAR’s investigative work and pledged to work closely with SIGAR to root out the corruption in the contracting process. 

 Officials of the NPA worked closely with SIGAR special agents. Their expertise and knowledge provided useful information which greatly assisted in identifying the issues of corruption and other irregularities in the matter. Advisors to President Ghani stated that SIGAR’s investigation confirmed their suspicions that there was something “fishy” about the contract process and subsequent sole-source selection of ASM JV. They said SIGAR’s investigative findings and continued support would prove helpful toward addressing the allegations of corruption and toward recommending a new open bidding for the project. 

 Afghan officials acknowledged they were facing extreme, high-level political pressure in this matter and that SIGAR’s findings would help in responding to it. Officials at the MOPW agreed the award process could not move forward as planned and that ASM JV appeared to have an inappropriate relationship with individuals representing ADB. 

 In October 2016, officials from the presidential palace notified SIGAR that the palace had terminated the sole source selection of ASM JV. The palace determined that the contract for Ring Road Project sections 1 and 2 would go to an open tender in which any company could bid and compete in a transparent and honest process. 

 As a result of SIGAR’s investigation and subsequent close coordination with officials of the NPA and the Palace, a $99 million, improperly awarded, sole-source contract was terminated, avoiding excessive costs to the financing entity, to which the United States is a lead contributor. 

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