USAID’s Lack of Expertise, Reliance on Contractors Puts Sustainability of Caracol in Doubt

07/02/2013 12:00am

Despite having “not constructed a port anywhere in the world since the 1970s”, USAID allocated $72 million dollars to build one, according to a Government Accountability Office (GAO) report released last week.  The port is meant to help support the Caracol Industrial Park (CIP) which was constructed with funding from the Inter-American Development Bank (IDB) and $170 million in funding from the U.S. for related infrastructure.  The CIP has been held up as the flagship reconstruction project undertaken by the international community in Haiti. Even after putting aside criticisms of the location, types of jobs and the environmental impact of the CIP, the “success” of the entire project hinges on the new port. A prior study found that, “the CIP will only succeed if expanded, efficient port facilities are developed nearby.”

Despite a lack of experience in building ports, USAID decided to take on this critical project. However, over two years since it began the project is delayed, is over budget and its sustainability has been thrown into doubt. The GAO found that USAID “lacks staff with technical expertise in planning, construction, and oversight of a port,” and a ports engineer and advisor position has been empty for over two years. Additionally, the feasibility study for the port, contracted out by USAID, was delayed and “did not require the contractor to obtain all the information necessary to help select a port site.” As a result, while construction was set to begin in the spring of 2013, USAID “has no current projection for when construction of the port may begin or how long it will take because more studies are needed before the port site can be selected and the port designed,” reports the GAO.

Without any in-house expertise in port construction at USAID, the mission turned to private contractors. HRRW reported in January 2012 that MWH Americas was awarded a “$2.8 million contract to conduct a feasibility study for port infrastructure in northern Haiti.” The expected completion date was May 2012. MWH Americas had previously been criticized for their work in New Orleans, with the Times-Picayune reporting that MWH had “been operating for more than two years under a dubiously awarded contract that has allowed it to overbill the city repeatedly even as the bricks-and-mortar recovery work it oversees has lagged.”

In Haiti, MWH quickly subcontracted out much of the work on the feasibility study. As HRRW reported in February, “[w]ithin 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.” USAID staff told the GAO that the study was completed as required in May 2012, but that “multiple environmental issues not adequately addressed in the initial study needed additional examination.” MWH was awarded another $1 million and the completion date was extended.  Overall, the GAO reports that “the feasibility study was amended six times and extended by 9 months.”

The study was finally completed in February of 2013, after USAID consulted with other government agencies with experience in port construction. In the end, the amount awarded to MWH increased by $1.5 million. Yet even after all of this, the GAO found that “other studies strongly recommended” by other agencies “still need to be performed.” Without any expertise to oversee the contractors, the work done was inadequate, expensive and took far longer than anticipated, revealing the pitfalls of being “more of a contracting agency than an operational agency with the ability to deliver,” as Hillary Clinton described USAID during her Senate confirmation hearing in 2009. 

Now, the prospect of having a new port at all is questionable, putting the sustainability of the U.S.’s largest post-earthquake investment in jeopardy. The plan originally envisioned USAID finding a private partner to help fund a portion of the costs associated with the port in return for a multi-year concession to run the port.  However after all the delays and the increased cost estimate, the GAO found that the amount USAID will allocate for construction is a “significantly smaller portion” than planned and will leave a funding gap of between $117-$189 million. As a result, the Haitian government may need to secure other donor support in order to attract a private operator, according to the GAO.  However even if a port is eventually constructed it may be far too late.

While the initial estimate was that it would take 2.5 years to construct and would be completed in 2015, after consulting with the Army Corp of Engineers, USAID has “learned that port construction may take up to 10 years.” The CIP has been touted as source of a massive amount of jobs; the three current tenants of the park aim to employ 21,000 by 2016 and the Haitian government is in discussions with four other potential tenants. However, many of these investments were based on the construction of a new port. According to the U.S. State Department’s Senior Advisor for the CIP, “additional port capacity would be needed by 2015 to accommodate projected freight traffic to and from the CIP.” Without all the benefits promised by the U.S. and IDB, Haiti faces the prospect of these new firms simply leaving to find cheaper costs elsewhere. The IDB’s José Agustín Aguerre told the New York Times in July 2012 that, “Yes, it’s low-paying, yes, it’s unstable, yes, maybe tomorrow there will a better opportunity for firms elsewhere and they will just leave. But everyone thought this was a risk worth taking.”

But, with the risks well known, the financial commitment significant and the success of the international community’s flagship reconstruction project at stake, an agency that hadn’t built a port anywhere in the world in over 40 years got the job.


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