USAID Infrastructure Projects Have Had Mixed Results and Face Sustainability Challenges
GAO-13-558: Published: Jun 18, 2013. Publicly Released: Jun 25, 2013.
What GAO Found
As of March 31, 2013, the U.S. Agency for International Development (USAID) had obligated $293 million (45 percent) and disbursed $204 million (31 percent) of $651 million in funding for Haiti from the Supplemental Appropriations Act, 2010 (the Act). The Department of State (State) submitted four of five periodic reports to Congress, as required by the Act. The reports included information on funding obligated and disbursed and anecdotal information on outputs and outcomes of some activities, as the Act required. The Senate Appropriations Committee, in its Committee Report accompanying the Act, had also directed State to report more detailed information on funding and sector activities in Haiti, which State did not include in the reports. Although most funds have not been disbursed, State's reporting requirement ended in September 2012. As a result, Congress lacks information on the amounts of funds obligated and disbursed and program-by-program progress of U.S. reconstruction activities.
USAID has allocated $170.3 million to construct a power plant and port to support the newly developed Caracol Industrial Park (CIP), with mixed results. According to USAID documents and external studies, the sustainability of the CIP, power plant, and port are interdependent; each must be completed and remain viable for the others to succeed. USAID completed the power plant's first phase with less funding than allocated and in time to supply power to the first CIP tenant. Port construction will not begin until at least 2 years later than originally planned due in part to a lack of USAID expertise in port planning in Haiti. In January 2011, the mission made an unsuccessful attempt to solicit a person to fill a vacant port engineer position but made no additional attempts prior to May 2013 and this position currently remains unfilled. As a result, planning has been hindered by (1) unrealistic initial timeframes, (2) delays in awarding the contract for a feasibility study, and (3) incomplete information in the feasibility study. According to initial estimates of port construction costs, USAID funding will be insufficient to cover a majority of projected costs. The estimated gap of $117 million to $189 million is larger than initially estimated, and it is unclear whether the Haitian government will be able to find a private sector company willing to finance the remainder of the project.
USAID has reduced its permanent housing construction targets in Haiti. USAID initially underestimated the funding needed for its New Settlements housing program. As a result, the agency increased the amount allocated by 65 percent, from $59 million to $97 million, and decreased the projected number of houses to be built by over 80 percent, from 15,000 to 2,649. The estimated number of beneficiaries was reduced from 75,000 to 90,000 to its current estimates of approximately 13,200 to 15,900. Cost increases resulted from inaccurate original estimates that used inappropriate cost comparisons and from the Haitian government's request for larger houses with improvements such as flush toilets. USAID currently estimates construction will be completed almost 2 years later than initially scheduled. Delays occurred due to the difficulties of securing land titles and coordination issues with partner donors. USAID is attempting to mitigate potential sustainability risks, such as the possible lack of economic opportunities, affordability of housing and services, and community cohesion, but gaps in the support of community development mechanisms may increase these risks.
Why GAO Did This Study
On January 12, 2010, an earthquake in Haiti caused about 230,000 deaths, resulted in 300,000 injuries, and displaced about 2 million persons. Following immediate relief efforts, Congress provided $1.14 billion for reconstruction in the Supplemental Appropriations Act, 2010. USAID is responsible for implementing $651 million of this amount, and it has allocated about $268 million of this and other funding to construct a power plant and port to support the CIP in northern Haiti and permanent housing in several locations. The Act required State to report periodically to Congress on funding obligated and disbursed and program outputs and outcomes. GAO was asked to review USAID's efforts in Haiti. This report examines USAID's (1) funding obligations and disbursements and State's reports to Congress on funding and progress; (2) USAID's progress in two CIP-related activities--a power plant and port; and (3) USAID's progress in constructing permanent housing. GAO reviewed documents and interviewed U.S. officials in Washington, D.C., and Haiti, and visited planned and active sites.
What GAO Recommends
Congress should consider requiring State to provide it with periodic reports on reconstruction progress, funding, and schedules until most funding for each program sector has been disbursed. Also, GAO is recommending USAID (1) hire a port engineer to oversee port planning and construction and (2) provide timely community support mechanisms for each new settlement to help ensure sustainability of its permanent housing program. USAID agreed with GAOs recommendations.
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Matter for Congressional Consideration
Status: Closed - Implemented
Comments: In response to GAO's suggestion, Congress passed legislation in January 2014 that, among other things, required the Secretary of State to continue to submit a report on earthquake reconstruction activities in Haiti as originally required by the Act, every 180 days until the funds are expended. A July 2013 Senate committee report attached to an earlier version of the passed legislation referred to the matter for congressional consideration in GAO's June 2013 report as the basis for the Congress requiring State to continue to issue reports on Haiti earthquake reconstruction activities. In June 2014, State issued its first additional report in response to this requirement.
Matter: To ensure that Congress has current information on the status of Haiti earthquake reconstruction activities and is able to provide appropriate oversight at a time when most funding remains to be disbursed, Congress should consider requiring State to reinstitute the requirement to provide it with periodic reports until most of the funds in each sector are disbursed. In these reports, Congress should consider requiring State to provide information such as progress in U.S. program sectors; amounts of funding obligated and disbursed in each specific sector; sector and project cost increases; changes in project schedules; and existing difficulties and challenges to successful project completion.
Recommendations for Executive Action
Comments: In December 2014, the USAID mission in Haiti issued a solicitation for a ports project manager to oversee the mission's updated plans to rehabilitate the Cap-Haitien port instead of building a new port in northern Haiti. USAID had not found suitable candidates for a port engineer through previous solicitations made in January 2011 and May 2013.
Recommendation: To strengthen USAID's ability to complete its projects in Haiti and to maintain their sustainability, and to ensure proper oversight over the continued planning for and construction of a new port in northern Haiti and to enable the project to move forward in a well planned and timely manner, USAID should fill the vacant port engineer position at its Haiti mission within time frames that avoid future project delays.
Agency Affected: United States Agency for International Development
Status: Closed - Implemented
Comments: GAO reported that the U.S. Agency for International Development (USAID) faced numerous challenges to the sustainability of the housing sites built through its New Settlements Program in Haiti, including issues related to affordability and community management. To mitigate such issues, USAID had allocated $9.8 million to community development efforts for the New Settlements Program, including $5 million it allocated to site-specific community development efforts at the eight sites planned for the program at that time. Of the $5 million, USAID had already allocated about $1.5 million for efforts at the Caracol-EKAM site and $0.5 million for its DLA 1.5 site. Therefore, GAO concluded that the remaining settlement sites faced the possibility of delayed or reduced support, and recommended that the USAID Administrator direct the USAID Haiti mission to ensure that each new settlement has community support mechanisms in place prior to beneficiary occupation. As part of that process, we suggested that the mission should consider making additional funds available, as needed, to help ensure this support. USAID agreed with this recommendation and in July 2014 wrote a memo to GAO further outlining steps that USAID took to implement this recommendation. Since the issuance of our June 2013 report, USAID has revised its number of planned sites under this program to five of the previously planned eight sites. For the Caracol-EKAM and DLA 1.5 sites, community support mechanisms were in place prior to beneficiary occupation in 2013 and USAID has allocated additional funding to these mechanisms, including an additional $1.3 million (about $2.8 million in total) for the Caracol-EKAM site and an additional $750,000 (about $1.3 million in total) for the DLA 1.5 site as of the end of fiscal year 2014. Of the three remaining sites, USAID has a memorandum of understanding through which a Haitian government entity and a nongovernment organization are responsible for community development activities at two of the sites. For one of these sites, USAID signed an agreement in February 2015 through which construction and community development of the site will be undertaken by a single partner organization, and $514,250 of the agreement amount was dedicated to community development efforts. In summary, as of February 2015, USAID is providing community development support to three New Settlements Program sites, including by providing more funding than initially allocated at two of these sites and having this support in place before beneficiaries move in, and has entered into an agreement for other organizations to provide community development support at the three remaining sites.
Recommendation: To strengthen USAID's ability to complete its projects in Haiti and to maintain their sustainability, and to promote the sustainability of the New Settlements permanent housing program, and to protect the significant investments already made, the USAID Administrator should direct the USAID Haiti mission to ensure that each new settlement has community support mechanisms in place prior to beneficiary occupation. As part of that process, the mission should consider making additional funds available, as needed, to help ensure this support.
Agency Affected: United States Agency for International Development