Identifier
Created
Classification
Origin
06KABUL2298
2006-05-21 08:38:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kabul
Cable title:  

THE ARDS AND GOA PROCUREMENT PROCEDURES

Tags:  ECON ETRD EINV EFIN OPIC EAID PGOV AF 
pdf how-to read a cable
VZCZCXRO1854
RR RUEHDBU RUEHIK RUEHYG
DE RUEHBUL #2298/01 1410838
ZNR UUUUU ZZH
R 210838Z MAY 06
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 0338
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEKJCS/OSD WASHDC
RUEKJCS/JOINT STAFF WASHDC
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RUCNDT/USMISSION USUN NEW YORK 2560
RUEHGV/USMISSION GENEVA 5970
RUEHUNV/USMISSION UNVIE VIENNA 1382
RUEATRS/DEPT OF TREASURY WASHDC
RHEHAAA/NSC WASHDC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 03 KABUL 002298 

SIPDIS

DEPARTMENT FOR SCA/FO, SCA/A, EB
TREASURY FOR PARAMESWARAN
NSC FOR AHARRIMAN, KAMEND
CJTF-76 FOR POLAD, CENTCOM FOR CG CFC-A
COMMERCE FOR DFONOVICH, JNELHYBEL, SHAMROCK
USTDA FOR DSTEIN, SGREENIP

SENSITIVE
SIPDIS

E.O.12958: N/A
TAGS: ECON ETRD EINV EFIN OPIC EAID PGOV AF
SUBJECT: THE ARDS AND GOA PROCUREMENT PROCEDURES

-------
Summary
-------

UNCLAS SECTION 01 OF 03 KABUL 002298

SIPDIS

DEPARTMENT FOR SCA/FO, SCA/A, EB
TREASURY FOR PARAMESWARAN
NSC FOR AHARRIMAN, KAMEND
CJTF-76 FOR POLAD, CENTCOM FOR CG CFC-A
COMMERCE FOR DFONOVICH, JNELHYBEL, SHAMROCK
USTDA FOR DSTEIN, SGREENIP

SENSITIVE
SIPDIS

E.O.12958: N/A
TAGS: ECON ETRD EINV EFIN OPIC EAID PGOV AF
SUBJECT: THE ARDS AND GOA PROCUREMENT PROCEDURES

--------------
Summary
--------------


1. (SBU) The Afghan Reconstruction Development Service
(ARDS,) strives to conduct GOA procurement in accordance
with international standards and the GOA Procurement Law,
passed in September 2005. Though not all GOA procurement
is handled by the ARDS, this office sets a standard to
which all government Ministries will hopefully adhere when
their own procurement units are developed over the next
three years. Though the ARDS and its director, western-
educated technocrat Adib Farhadi, win no popularity
contests in Afghanistan, efforts to undermine its standards
have been thwarted, in no small part due to support from
the Minister of Finance. End summary.

--------------
The Procurement Law
--------------


2. (U) The GOAQs Procurement Law was passed in September

2005. The law establishes a transparent, competitive
procurement system for government tenders. It outlines
step by step procurement procedures, including procurement
planning, preparation of bidding documents, advertising,
evaluation, requirements for bid, performance and advance
payment securities, contract award, handling receipt of
complaints, etc.


3. (U) The law requires that available funds be certified
before procurement is initiated and that bidding documents
clearly describe requirements. It established procedures
to address grievances and created a Procurement Policy Unit
under the Ministry of Finance for policy and profession
development and performance monitoring. It also
established threshold limits for procurement approvals.


4. (U) In general, procurements totaling USD 200,000 or
more must be carried out in accordance with the principles
of International Competitive Bidding (ICB.) Procurements

for less than this amount are carried out through a
Qnational shoppingQ procedure whereby government entities
themselves may solicit a minimum of three local or
international bidders to provide quotations.


5. (U) Single-source procurement may be used only when
Qonly one contractor can fulfill the requirements within
the time required, the contract has an exclusive legal
right to the goods or services required or when there is an
emergency need for goods or services involving an imminent
threat to public welfare, health or safety.Q Single-source
procurement must be supported by a written justification
from the Procurement Committee of the entity conducting the
procurement. Procurements in excess of USD 100,000 for
goods or services USD 500,000 for works must be approved by
a Special Procurement Committee, consisting of the
Ministers of Finance, Economy and Justice.

--------------
The ARDS, ARTF, and Procurement Unit
--------------


6. (U) The Afghan Reconstruction and Development Services
(ARDS) was established in 2003 to facilitate implementation
of development projects and programs for Afghanistan. It
is housed in the Ministry of Economy. The ARDS, through
its Procurement Unit (PU,) oversees procurement for
projects over USD 200,000 funded through the Afghan
Reconstruction Trust Fund (ARTF,) a common fund
administered by the World Bank to which international
donors contribute for reconstruction projects. The ARDS

KABUL 00002298 002 OF 003


also handles GOA procurement over this amount funded
through the core budget.


7. (U) The ARDS, with funds from the ARTF, provides
technical assistance to line Ministries to design programs
and projects suitable for funding by development partners.
The PU assists line ministries with tenders, evaluations,
negotiations and contracting, and provides advice on a
range of procurement issues. All procurement is carried
out in accordance with procedures of the respective donor,
i.e. the World Bank, the EU and the Asian Development Bank.
Procurement awards are then signed between the winning
entity and the individual line ministries, who are
responsible for monitoring the performance of the contract.


8. (U) Tenders are carried out in compliance with norms of
ICB and in compliance with the Procurement Law. All
international tender notices are distributed on the ARDS
website: www.ards.org.af and the United Nations Development
Business website: www.devbusiness.com. Firms can register
to receive procurement notices through both these sites by
sending an email to ards.procurement@ards.org.af. The
ARDS website is www.ards.org.af.

--------------
ARDS AchievementsQ
--------------


9. (SBU) Adib Farhadi, head of the ARDS, is a western-
educated technocrat who commands a great deal of respect
within the donor community for his commitment to
transparency, efficiency and donor coordination.


10. (U) In a recent meeting with commercial officer,
Farhadi indicated that the ARDS has facilitated procurement
of 348 projects valuing USD 800 million since its
inception. The unit has 15-16 Procurement Liaison
Officers, all local staff, who oversee each individual
project, all of whom have undergone a three-month World
Bank procurement training course. The PU will be phased
out over the next three years as line Ministries develop
their own capacity to handle procurement.

--------------
Qand Challenges
--------------


11. (SBU) Farhadi indicated that institutional capacity at
the ARDS is an ongoing battle: PU staff are frequently
poached by other international organizations. He also
stated that the ARDS is Qnot the most liked agencyQ because
of its stance on transparent, competitive tenders. Farhadi
stated that he has the support of Minister of Finance Anwar
Ahadi to ensure that PU tenders are carried out in the most
transparent way possible, but that his own popularity
within the GOA was low, noting that he is Qproud to have
survived.Q


12. (U) Farhadi indicated that Minister Ahady has recently
insisted that the PU handle procurement for all ministry
projects funded by the GOA core budget. Previously,
Ministry of Defense (MOD) and Ministry of Interior
procurement was handled directly by those Ministries.


13. (SBU) The first MOD procurement ARDS handled was in
February and involved an order for 2 CT scans and an MRI
machine for an MOD hospital. General Electric placed a bid
through a local intermediary, and subsequently filed an
advocacy request with the Department of CommerceQs Advocacy
Center because of incomplete bid specifications and
suspicion that the tender process was not being carried out
transparently. Farhadi freely admitted that the PU was

KABUL 00002298 003 OF 003


under intense pressure from the MOD to issue project
details on this particular tender in accordance with the
MODQs specifications, which Farhadi felt were tailor
written to ensure that the company that MOD desired would
win. Farhadi stated that after one re-tender, and a visit
to the hospital slated to receive the equipment where he
discovered not a single staff member capable of operating
the equipment, the ARDS cancelled the tender.


14. (U) With Farhadi tapped as the new director of the
Afghan National Development Strategy (ANDS),the ARDS will
move to its natural home in the Ministry of Finance and
soon be under new leadership, following a three month
transition phase. Farhadi will then focus on his pivotal
role in ensuring the effective implementation of the ANDS
and establishing successful monitoring of the Afghanistan
Compact. In this new position, Farhadi will be employed
under USAIDQs Bearing Point contract.

--------------
Comment
--------------


15. (SBU) Post applauds the efforts of the ARDS in setting
an example and way forward for GOA procurement in
accordance with international standards. Success will go a
long way in attracting foreign investors interested in
doing business with the GOA. It will, however, be
challenge to preserve this momentum when procurement
responsibilities are transferred to GOA ministries. USAID
is working with the Ministry of Finance to identify a
strong candidate who will replace Farhadi as head of the
ARDS and help guide this process.

NEUMANN