VICE News, March 5, 2015
After the devastating earthquake that hit Haiti in January 2010, the US government responded with an ambitious plan to build 15,000 new houses in the country. But the ensuing program to put roofs over the heads of displaced Haitians has included a boondoggle of epic proportions at one $35 millionhousing development, where shoddy construction practices and faulty sewage systems are currently the subject of an ongoing investigation.
On February 3, the US-based company Thor Construction was suspended from receiving government contracts because of its work in Haiti. Another contractor with close ties to the Haitian president has so far escaped punishment.
As the relief effort’s flagship housing project comes under increased scrutiny, interviews with involved parties and an analysis of contract documents, independent reports, and congressional testimony reveals that the problem is far from a simple case of contractor malfeasance. Rather, USAID, the government agency responsible for administering foreign civilian aid, simply failed to provide meaningful oversight of its contractors and ensure adequate results for US-taxpayer financed projects.
In April 2012, Thor received $18.4 million to build 750 houses at a site on Haiti’s northern coast called Caracol-EKAM, part of the international community’s high-profile reconstruction project at the Caracol Industrial Park. At a star-studded inauguration of the park in October 2012, then Secretary of State Hillary Clinton toured the new buildings and spoke of “affordable homes with clean running water, flush toilets, and reliable electricity… built to resist hurricanes and earthquakes.”
In June 2013, the Government Accountability Office (GAO) found that the initial target of 15,000 total houses in Haiti had been reduced to just 2,600 while at the same time costs increased from $53 million to more than $90 million. USAID Assistant Administrator Beth Hogan explained to Congress that the high costs were “because of the requirements” that the contractor “meet international building codes, that it comply with federal building standards,” and “that these materials would be disaster- and hurricane-proof.” Hogan added that she was “very happy with the quality” of the houses.
But a year and a half later, Hogan’s story is coming apart at the seams. In November, USAID awarded a $5 million no-bid contract to US-based Tetra Tech to provide remediation services for the Caracol houses. An independent assessment conducted in August 2014 “revealed numerous deficiencies,” with the houses, including roofs not being fastened, use of “sub-specification” materials, and “other structural and drainage issues,” according to a contract document. Given the location’s susceptibility to hurricanes and other extreme weather events, the document noted repairs must be “carried out immediately in order to prevent possible harm to residents.”
Yvon St-Martin, who lived in the Caracol houses until this past December, said in an interview that there were a number of meetings with representatives for USAID where residents voiced concerns, but by the time he moved, there had been no efforts to repair the houses.
At a congressional hearing in December, under questioning from Rep. James McGovern about the poor construction practices, Hogan acknowledged that USAID had “an active investigation underway” to look at the Caracol housing project. A spokesman for USAID’s Office of the Inspector General said the agency could only acknowledge that there was an ongoing investigation into the project.
Richard Copeland, the president of Thor Construction, has fought back, saying in an interview that USAID accepted and signed off on the houses, and that the agency started a “witch-hunt” only after the fact.
“We are being treated like we did something wrong, cut corners or used unauthorized materials,” Copeland said. “This simply is not the case.”
Without extensive experience in Haiti, Thor turned to a local construction company V&F, one of the largest in the country, to actually build the houses. “We hired the largest contractor in Haiti… to oversee the construction. We oversaw and supervised their work,” Copeland told the Miami Herald in January.
After the earthquake, V&F partnered with DRC, Inc., an Alabama-based company that specializes in disaster recovery projects. DRC’s general counsel, when asked in 2012 about the company’s relationship with V&F, responded, “because of various agreements, DRC’s relationships with its customer is confidential.” In August 2014, DRC and its Haitian affiliate were barred from receiving government contracts after they were found to have improperly benefitted from tornado cleanup contracts in Joplin, Missouri.
While Thor has taken the brunt of the criticism thus far, another contractor is also reportedly under investigation. In September 2011, CEEPCO, a Maryland-based firm, won a no-bid contract for more than $9 million to provide services for USAID’s housing program, including construction management at the Caracol site. CEEPCO’s CEO is Harold Charles, a Haitian-American who was formerly one of the Haitian government’s representatives to the Interim Haiti Reconstruction Commission (IHRC), run by Bill Clinton and meant to be in charge of the $10 billion in earthquake relief. The IHRC had initially approved the USAID shelter program back in December 2010.
Charles also enjoys a close, personal relationship with Haitian President Michel Martelly. In an interview in 2013, Charles said, “I do know and have very close friends up through the highest ranks of government,” adding, “Martelly is a childhood friend of mine.” One former government official in Haiti said in an interview, “this was seen as a deal that would please Martelly.” Requests for the document justifying the lack of competition for CEEPCO’s contract have not been answered.
Charles has previously defended his relationship with Martelly. Speaking at a State Department-sponsored event less than a week before securing the construction management contract, Charles referred to himself as Martelly’s “personal advisor on reconstruction,” before adding, “I am not getting paid by the Haitian government. There is no conflict of interest… there is no connection between what I’m doing to help my government as well as what I’m doing as a U.S. contractor.”
CEEPCO has thus far avoided sanctions and is still eligible to receive government contracts. In fact, in January, USAID extended CEEPCO’s contract for work at other shelter sites in Haiti. In a recent email, Charles said that USAID “established parameters for the overall project and its design,” and that CEEPCO “worked with those parameters, and provided a design that we are proud of. USAID accepted our work, and gave us more.”
He added, “I can’t comment on the investigation because USAID has not involved us in it, and has not provided us with any information regarding how it is proceeding.”
A leaked investigation into water and sanitation systems at the Caracol-EKAM site reveals significant shortcomings and dangerous problems. According to Thor’s Copeland, it was CEEPCO that was responsible for this aspect of the work. The review, conducted in October by consulting firms Northwater International and V3, found that household water pipes “were buried in the same trench with sewer pipes,” creating “serious contamination potential.” The assessment also said “overall poor construction quality” had caused a number of leaks.
But the “most critical issue” was the piping used in the sewage system. Because the piping was of such poor quality, it was collapsing and causing “sewer water backing up into the home.” The report notes that the findings are “provisional,” and “not intended… for legal purposes.” Phone calls to Global Communities, the contractor for whom the report was intended, were not returned.
St-Martin, who worked for an NGO involved in water and sanitation programs, echoed these findings in our interview. “The drainage system was a big problem, it would flood the houses when it rained,” he said. “You couldn’t even flush the toilet.”
USAID has put the blame for these issues squarely on its contractors, but independent reviews and the USAID Inspectoral General have pointed to significant deficiencies in the agency’s oversight and management of the project. The Inspector General reported in April 2014 that quality control plans were “not adequate to ensure that contractors documented, tracked, and corrected deficiencies.” Thor’s plan did not require “any testing or quality control activities.”
Rather than blame the contractor, the auditors blamed USAID. “These problems occurred because mission personnel did not review the contractor’s quality control procedures to ensure that all necessary steps were adequately documented,” the audit noted.
There was also no project manager assigned to the program. In fact, USAID didn’t even conduct required performance reviews of its contractors, as the auditors noted. “Officials had not completed the evaluations because the mission was not following the FAR [Federal Acquisition Regulation] requirement,” the audit found.
“This is what happened with a lot of projects after the earthquake, when you don’t have anybody to supervise, the contractor will try to save as much money as possible,” St-Martin, the former Caracol resident, said.
Asked if any USAID officials had been reprimanded or otherwise punished for their involvement in the project and their lack of oversight, USAID responded that they “are deeply concerned with any deficiencies in housing constructed at the Caracol-EKAM site,” and that “strong, aggressive accountability controls” had resulted in the identification of “potential problems.” The statement concluded that USAID was “aggressively pursuing solutions and accountability.”
Perhaps worst of all, the failure had been foreseen from the very beginning. An architectural peer review of the Caracol housing development, published in March 2012, just one month before USAID awarded the final construction contract to Thor, seems downright prophetic now. “The entire wood roof structure is designed to be nailed together without steel brackets. This is unacceptable in the Caribbean where residences are frequently battered by hurricane-force winds,” the authors wrote, to cite just one example.
The review concluded with a clear warning: “We strongly recommend that USAID not award the contract to build the Caracol-EKAM housing project as designed and that a complete redesign be initiated immediately.”
Months later, a USAID-sponsored study by the American Institute of Architects noted that the Caracol housing site was chosen “prior to risk and environmental assessments,” and that “as has been demonstrated by the past rainy season,” the area is prone to flooding. Despite being hours away from the 1.5 million made homeless by the earthquake, USAID pushed ahead with a political project to support the new industrial park at the site.
Now, USAID is no longer in the business of building houses in Haiti. In October, the agency backed out of an ongoing permanent housing project near Caracol, leaving their partners in the lurch.
At a special briefing in January for the five-year anniversary of the project, Hogan tried to put a positive spin on the situation while deflecting blame from USAID, telling reporters that the US “had expected many more donors” to step up, but “those funds did not materialize.”
“We have gone forward in developing shelters primarily in the north,” Hogan added. “And these are not earthquake-proof, because apparently nothing can be earthquake-proof, but they are earthquake-resistant, and that was our goal.”
For USAID, the goals are always changing, but one thing seems clear: While contractors begin to fall for their shoddy work, USAID continues to refuse to accept responsibility for the over-priced, poorly constructed buildings that thousands of Haitians now call home.
Jake Johnston is a Research Associate with the Center for Economic and Policy Research.