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How Many Beltway Contractors Does it Take to do a Feasibility Study?

On September 23, 2011 MWH Americas, previously alleged to have overcharged the city of New Orleans on reconstruction projects, was awarded a $2.8 million contract from the United States Agency for International Development (USAID) to conduct a “feasibility study of northern ports in Haiti.” The study is likely linked to the new, much touted Caracol Industrial Park in northern Haiti, which includes plans for new port facilities.

Within two weeks of receiving the $2.8 million contract, MWH Americas turned around and gave out $1.45 million in subcontracts to four different firms, all headquartered in Washington DC or Virginia. MWH gave $363,540 to Nathan Associates to perform “economic and financial studies on potential port projects,” including a review “of previous studies and existing conditions.” URS Group received $438,670; the project description for that subaward is simply “feasibility study of northern ports in Haiti,” the same as is listed for MWH. Meanwhile TEC Inc. (which later became Cardno-TEC Inc.) was awarded $620,123 to provide the “Senior Port Engineer,” “Senior Environmental Specialist” and the engineering and support staff to “perform” the feasibility study. Finally, GW Consulting Inc., was given $26,932 for security and logistics. At this point, there were five U.S. firms based in the DC area working on the feasibility study, each with its own staff and associated overhead costs. Firms are allowed to allocate a percentage of their contract to headquarters to cover general operating costs of the firm; this is known as the indirect cost rate. Although this information is not disclosed (and has been redacted in contracts obtained through the Freedom of Information Act), according to those familiar with the process it is generally around 20 percent.

Despite the millions already spent on the feasibility study, when the expected project completion date came, MWH was awarded $1 million to cover additional costs and the completion date was changed. Subsequently, MWH was awarded $435,000 in September 2012 and the completion date was pushed back to November 30, 2012. Since then, the completion date has been pushed back two more times and is now set for the end of February 2013. Of the additional $1.44 million awarded to MWH, they gave out some $550,000 in subcontracts. In total, as can be seen below, nearly 50 percent of the total award to MWH was spent on subcontracts to other U.S. firms.

MWH Subcontractors

The contract with MWH Americas is, however, commendable in one way.  It is the only USAID contract in Haiti for which there is information on subcontractors, thanks to the fact that MWH actually reported their sub-awards to USASpending.gov. While MWH Americas is the only contractor to have done this, it is likely that many others are also required to do so. For example, Chemonics, the largest USAID contractor in Haiti (and the world) is required to report on their use of subcontractors, according to a copy of their contract acquired through a Freedom of Information Act request. Yet no information from any other contracts for work in Haiti appears on the USAspending.gov website. Additionally, there is legislation which now requires prime contractors to report sub-awards: the Federal Funding Accountability and Transparency Act, which was passed in 2006. Under the legislation, as of March 2011 all sub awards over $25,000 must be reported to a centralized system.

Jake Johnston / February 12, 2013