Haitian Companies Bypassed in Favor of DC Area Contractors with Poor Track Records
An excellent Associated Press article by Martha Mendoza yesterday looks at how Haitian contractors have fared since the earthquake. The verdict: not so well at all. Beltway contractors on the other hand have made out extremely well. The AP report found that:
Out of every $100 of U.S. contracts now paid out to rebuild Haiti, Haitian firms have successfully won $1.60, The Associated Press has found in a review of contracts since the earthquake on Jan. 12. And the largest initial U.S. contractors hired fewer Haitians than planned.
The article focuses on the two largest recipient of post-earthquake contracts, Development Alternatives Inc.(DAI) and Chemonics, both based in the Washington, DC area. We first reported on these two organizations and the millions in contracts they had received back in February and March. Chemonics has past ties to one of the companies most responsible for the invasion of Miami Rice into Haiti in the 80s and 90s, while DAI has its own questionable past. We also questioned the disbursement of funds to a company that the Government Accountability Office and USAID Inspector General have found to have a poor track record of program implementation. In addition to the Cash-for-Work programs that Chemonics is implementing in Haiti, they have also received agricultural aid contracts. Yet this is the same area for which they have come under scrutiny in Afghanistan. As we wrote in March:
Chemonics has been tapped by USAID in Afghanistan as well, in an effort to improve the agricultural sector. Chemonics received a $153 million contract in 2003.
In 2005 the Government Accountability Office found that Chemonics had failed to "address a key program objective", and that "consequently, during its first 15 months, the project`s progress in strengthening Afghanistan`s market chain was limited."
Despite this, Chemonics received a contract in 2006 for $102 million. Once again, the USAID Inspector General found significant problems with the program:
Chemonics reported results for all eight indicators for the first year of the program. However, the audit identified that for two of the eight indicators, reported results fell considerably short of intended results. Targets had not been established for the other six indicators making it difficult to tell how well the project was proceeding. In addition, Chemonics did not have documentation to adequately support reported results for six indicators. In two of the six cases, the support was inadequate, while in four cases there was no support at all. For example, Chemonics had inadequate support for the reported result that 1,719 individuals had received short-term agricultural training, and no support for the reported result that project activities had generated an economic value in excess of $59 million. In addition, the audit found that a major program activity—the Mazar foods initiative—was behind schedule. This $40 million initiative to cultivate 10,000 hectares for a commercial farm was not finalized in time to take advantage of the summer planting season as initially planned.
So it is of little surprise that, as AP reports, Chemonics has failed to live up to their obligations in Haiti as well:
And an audit this fall by US AID's Inspector General found that more than 70 percent of the funds given to the two largest U.S. contractors for a cash for work project in Haiti was spent on equipment and materials. As a result, just 8,000 Haitians a day were being hired by June, instead of the planned 25,000 a day, according to the IG.
Both Chemonics and DAI benfited from no-bid contracts, as did many other Washington area contractors (25 percent of the contracts were no-bid according to the AP). One organization that has been advocating for the procurement of local products and use of local contractors is Peace Dividend Trust. The AP reports:
"Frankly, it's a shame and a serious opportunity lost," says Edward Rees of the Peace Dividend Trust. His organization put together a business portal, offering everything from security services to catering, and is training Haitians on how to bid for contracts and grants. "No one is systematically tracking how many contracts have gone to Haitian companies."