Haiti Reconstruction: USAID Infrastructure Projects Have Had Mixed Results and Face Sustainability Challenges
Published: 2013-06-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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.
section_title: What GAO Recommends
paragraphs: 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 GAOs recommendations.

section_title: Letter
paragraphs: On January 12, 2010, an earthquake centered near Port-au-Prince, Haiti,  caused physical, social, and economic devastation to the poorest country  in the Western hemisphere. The earthquake is estimated to have caused  approximately 230,000 deaths, resulted in 300,000 injuries, and displaced  approximately 2 million people from their homes. According to the United  Nations (UN), the earthquake killed more than 16,000 of Haiti’s civil  service employees and destroyed almost all ministry buildings. The World  Bank reported that the earthquake caused $7.8 billion in damage (about  120 percent of Haiti’s 2009 gross domestic product). Following the  earthquake, the country received unprecedented pledges of support from  around the globe. The UN Office of the Special Envoy for Haiti reported in  December 2012 that, to help Haiti recover from the earthquake, bilateral  and multilateral donors, including the United States, have allocated $13.3  billion and so far disbursed $6.4 billion. Individuals, private firms, and  others gave an additional $3.1 billion in private donations.
In July 2010, the U.S. Congress passed the Supplemental Appropriations  Act, 2010 (the Act), which provided more than $1.14 billion in  reconstruction funds for Haiti, $651 million of which was provided to the  U.S. Agency for International Development (USAID) for bilateral  reconstruction activities. The Act required the Department of State (State)  to provide periodic reports to Congress on funding obligated and  disbursed and program outputs and outcomes. USAID has allocated  approximately 40 percent of its supplemental funding, as well as other  funds, to support the construction of (1) a power plant that will provide  electricity for the new Caracol Industrial Park (CIP) in northern Haiti near  Cap-Haïtien; (2) a new port along Haiti’s northern coast near the CIP; and  (3) permanent housing in new settlements in the Port-au-Prince, St-Marc,  and Cap-Haïtien areas.
You asked us to examine U.S. reconstruction efforts in Haiti. This report  addresses (1) USAID’s progress in obligating and disbursing program  allocations and State’s periodic reporting to Congress on the status of the  U.S. reconstruction efforts; (2) USAID’s progress in planning and  constructing the CIP-related power plant and port; and (3) USAID’s  progress in planning and constructing permanent housing.
To address these objectives, we reviewed reports, documents, and  funding data and interviewed officials from USAID and State in  Washington, D.C., and Haiti. To assess the reliability of funding data, we  examined USAID and State data sources and conducted interviews with  cognizant officials from USAID and State. We determined that the data  we used were sufficiently reliable for our purpose of reviewing U.S.  funding provided for Haiti reconstruction. In Haiti, we visited sites under  construction or planned for construction for the power plant, port, and  permanent housing, and visited the CIP. To address the sustainability of  these projects, we used the Organisation for Economic Co-operation and  Development’s definition of sustainability—”the continuation of benefits  from a development intervention after major development assistance has  been completed.” We operationalized this definition by specifying that  sustainability is the ability of the Haitian government and individuals to  operate and maintain the new infrastructure in such a condition as to  produce the projected benefits.
We conducted this performance audit from August 2012 through June  2013 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: More than 75 percent of Haiti’s population lives on less than $2 a day,  and Haiti’s unemployment rate is estimated at 60 to 70 percent. These  conditions were exacerbated when a large earthquake devastated parts  of the country, including the capital, on January 12, 2010. Since the  earthquake, Haiti has suffered from a cholera epidemic that, as of March  2013, had affected almost 650,000 persons and caused over 8,000  deaths. In March 2013, the International Organization for Migration  estimated that, of the original 2 million persons affected, about 320,000  individuals remained displaced in camps from the earthquake.
In response to the earthquake, Congress provided more than $1.14 billion  in reconstruction funds for Haiti in the Fiscal Year 2010 Supplemental  Appropriations Act. Of this amount, USAID received $651 million through  the Economic Support Fund for its bilateral reconstruction activities, as  shown in table 1.
The Act required State to provide periodic reports to Congress on the  program. Specifically, the Act required State to submit five reports to the  Senate Committee on Appropriations, beginning in October 2010 and  every 180 days thereafter until September 2012, on funding obligations  and disbursements and program outputs and outcomes. In addition, the  Senate Committee on Appropriations, in its Committee Report  accompanying the Act, directed that State’s reports include, among other  things, (1) a detailed program-by-program description of USAID’s  activities; (2) a description, by goal and objective, and an assessment of  the progress of U.S. programs; and (3) amounts of funding obligated and  expended on the programs during the preceding 6 months.
In our November 2011 report on Haiti reconstruction, we reported that  USAID had difficulties securing staff—particularly technical staff such as  contracting officers and engineers—who were willing to live and work in  the country after the earthquake and who could bring the expertise  necessary to plan and execute large, complex infrastructure projects. We  also reported that such difficulties had contributed to delays in U.S.  efforts. As of December 2012, the USAID mission in Haiti (the mission)  had increased its direct-hire staff positions filled from 7 of 17 (41 percent)  soon after the earthquake to 29 of 36 (81 percent) positions filled.
The overall 5-year U.S. reconstruction strategy for Haiti, known as the  Post-Earthquake USG Haiti Strategy: Toward Renewal and Economic  Opportunity, is consistent with the government of Haiti’s development  priorities in that it seeks, among other goals, to encourage reconstruction  and long-term economic development in several regions of the country.  These areas, known as “development corridors,” include the Cap-Haïtien  region on Haiti’s northern coast and the St-Marc region on Haiti’s western  coast; these areas were not close to the earthquake epicenter but were  where some people from Port-au-Prince were displaced after the  earthquake. The strategy notes that 65 percent of Haiti’s economic  activity was located in greater Port-au-Prince and that the U.S.  government’s intent is to support new economic opportunities in other  development corridors, in addition to assisting with reconstruction in the  Port-au-Prince corridor, which suffered the most damage from the  earthquake (see fig. 1).
On January 11, 2011, the U.S. government, the government of Haiti, the  Inter-American Development Bank (IDB), and a private South Korean  garment manufacturer, Sae-A Trading Co. Ltd. (Sae-A), signed an  agreement to support development of the CIP that included the following  commitments:  the IDB committed to provide funding to the Haitian government to  build the CIP and some associated facilities;  the U.S. government committed to build a power plant, contribute  toward the building of a nearby port, and support the construction of  5,000 nearby housing units with associated site infrastructure; and
Sae-A committed to be the anchor tenant and hire 20,000 local  employees at the CIP.
In concert with its economic growth efforts, USAID, in coordination with  State’s Office of the Haiti Special Coordinator in Washington, D.C.,  developed the New Settlements program to address the severe post- earthquake permanent housing shortage in Haiti. USAID’s goal was to  construct up to 15,000 new permanent houses on previously  undeveloped sites in three designated development corridors—10,000 in  Port-au-Prince and St-Marc, and 5,000 in Cap-Haïtien. In part, USAID’s  program aimed to support the Haitian government’s goal of decentralizing  economic growth outside Port-au-Prince by increasing the housing stock  in communities near the industrial park planned for northern Haiti. USAID  planned to provide funding for the preparation of all the settlement sites,  to include activities such as grading the land and providing proper  drainage, access roads, pedestrian pathways, and infrastructure for  delivery of utility services. Each new settlement site would include a  certain number of plots on which USAID or a partner nongovernmental  organization (NGO) would then construct a house. Of the 15,000 plots it  planned to develop, USAID planned to build 4,000 houses, while NGOs  and other donor partners would build 11,000 houses. USAID estimated  that, when completed, about 75,000 to 90,000 people would benefit.
section_title: Most of USAID’s 2010 Supplemental Funds Have Not Been Obligated or Disbursed, and State’s Reports to Congress Generally Met Requirements but Were Incomplete and Not Timely
paragraphs: As of March 31, 2013, the majority of supplemental funding for USAID’s  program sector activities had not been obligated or disbursed. The  Department of State submitted four of five reports to Congress, as  required in the Supplemental Appropriations Act of 2010, but did not  submit them in a timely manner. State did not include some information  that the Senate Committee on Appropriations had directed State to  include in the report on funding, program sector activities, and progress  toward achieving the goals and objectives of the program. All reporting  requirements have now ended.
subsections: section_title: The Majority of Supplemental Funding Has Not Been Obligated and Disbursed
paragraphs: As of March 31, 2013, 31 percent of the supplemental funding provided  for Haiti reconstruction efforts had been disbursed. Of the $651 million in  funding from the 2010 Supplemental Appropriations Act that USAID has  allocated for bilateral earthquake reconstruction activities, USAID had  obligated about $293 million (45 percent) and disbursed about $204  million (31 percent). The amount of funds obligated and disbursed varies  among activities in the six sectors of activities to which supplemental  funds were allocated. For example, the majority of funding obligated to  date has been obligated in just two sectors (shelter and governance and  rule of law), as shown in table 2.
In its periodic reports to Congress, State reported on the general amounts  of supplemental funding obligated and disbursed, as required in the Act.  State also included some anecdotal information on program outputs and  outcomes, which the Act also required. For example, the report submitted  by State in January 2013 noted that work had begun to rehabilitate  damaged irrigation systems and that reconstruction of earthquake- damaged health infrastructure was underway. However, State’s reports  did not include, among other things, (1) a detailed program-by-program  description of USAID’s activities; (2) a description, by goal and objective,  and an assessment of the progress of U.S. programs; and (3) amounts of  funding obligated and disbursed on the programs during the preceding 6  months, as directed by the Senate Committee on Appropriations in its  report accompanying the Act. For example, none of State’s reports  included a program-by-program description of USAID’s sector activities,  such as shelter and energy, or an assessment of sector progress. In  particular, State’s final report, submitted to Congress in January 2013, did  not mention that USAID had substantially reduced the number of  permanent shelters it had planned to construct. Further, State’s January  2013 report did not mention that USAID had not generated any outputs or  outcomes for the port construction project, even though the report did  mention that USAID had experienced significant delays in planning the  project, including a feasibility study that was initially scheduled to be  completed 7 months earlier in May 2012. Finally, while State’s reports  included overall cumulative amounts of funding obligated and disbursed,  they did not provide such information for specific programs during the  preceding 6 months. State’s inclusion of such information, as well as  sector-specific funding information directed by the Senate committee,  could have been useful in informing Congress of USAID’s progress.
section_title: State Prepared Four of Five Required Reports to Congress but Did Not Submit Them in a Timely Manner
paragraphs: State submitted four of the five required reports to Congress on the status  of U.S. efforts in Haiti, but none of the submitted reports was delivered in  a timely manner. The Act required State to submit the five periodic reports  beginning in October 2010 and approximately every 6 months thereafter  until September 2012. State did not submit the first report, required in  October 2010, because, according to State officials, the supplemental  funds had just been received, there was little to no activity to report, and  the Post-Earthquake USG Haiti Strategy had not yet been approved.  State submitted its initial report in July 2011—more than 2 months after  its April 29, 2011, due date for the second required report—included  funding and activities through March 31, 2011. The three subsequent  reports were submitted in January 2012, June 2012, and January 2013.  The submission dates for all four reports ranged from more than 1 month  to nearly 4 months late. In addition to the late submission of the reports,  the “as of” date of funding data presented in the reports was not timely.  For example, the report submitted in January 2013 included funding data  as of September 30, 2012—nearly 4 months earlier than the date the  report was submitted. All reporting requirements under the Act have  ended.
We discussed the reports with State officials, who noted that State and  USAID routinely provide funding and progress information to Congress  through other reporting mechanisms. For example, State and USAID  arrange oral briefings and periodic conference calls with congressional  staff about every 2 months, and other meetings as requested by  members of Congress. State officials emphasized that they considered  the reports to Congress to be only one tool in its range of reporting  mechanisms.
section_title: USAID Completed the Power Plant for Less Than Allocated but the Port Was Delayed; Their Sustainability Depends on the CIP’s Success
paragraphs: USAID has committed $170.3 million to construct a power plant and port  to support the newly developed CIP, with mixed results to date. In June  2012, the USAID mission completed the first phase of the CIP power  plant for $17.0 million, 11 percent less than the $19.1 million allocated,  and in time to supply the first CIP tenant with power. Planning for the port  is behind schedule and will result in port construction beginning at least 2  years later than initially planned. The mission has had a vacant port  engineer position for more than 2 years, having made one unsuccessful  attempt to fill this position prior to May 2013 when it issued a second  solicitation to fill the position. As of June 2013, this position remains  unfilled. The lack of port expertise at the mission has contributed to (1)  unrealistic initial time frames, (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 approximately $117 million to $189 million of  projected costs, 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. Sustainability of the port and power plant depend on the  viability of the industrial park, which will generate a substantial portion of  the revenue for both facilities, as well as other factors such as the  government of Haiti’s capacity to manage or oversee these investments.
subsections: section_title: U.S. Government Supports Power Plant and Port on the Basis of Some Analysis of CIP’s Impact
paragraphs: The U.S. government supports a public-private partnership to develop the  CIP in northern Haiti with $170.3 million in funding allocations to projects  related to a nearby power plant ($97.9 million) and port ($72.4 million).  According to State officials, the U.S. government’s decision to provide  funding for the power plant and port was bolstered by review of an  economic impact study of the CIP commissioned by the IDB and State’s  own calculations. State officials acknowledge that the limited availability  of credible data for Haiti can introduce significant margins of error into  assessments of the CIP’s impact on the region’s net employment or  income. Therefore, such estimates are subject to considerable  uncertainty. The findings from the IDB study and State’s calculations  included the following:
The IDB-commissioned study estimated that the CIP would increase  total employment by about 75,000 jobs, including 37,000 permanent  jobs at the CIP, and generate $360 million in annual income, including  approximately $150 million to CIP employees, most of whom are  projected to receive the minimum wage.
State officials calculated that the CIP will create up to 65,000 jobs on  site by using an estimate of the average number of square meters per  factory worker observed in light manufacturing facilities worldwide.  This simple calculation assumes that all available factory space in the  CIP would be filled and that the tenants would be from those same  types of industries.
However, these estimates may overstate the impact on total employment  and income in Haiti because they do not account for the possibility that  people employed in CIP-related jobs might otherwise be employed in the  formal or informal sector in absence of the CIP.
The IDB’s progress in building the CIP and filling it with tenants is still  ongoing (see fig. 2). Sae-A moved in to the first CIP building in March  2012. By December 2012, it had shipped its first container of clothes to  the United States and, by January 2013, was employing approximately  1,300 Haitian employees from the surrounding communities. Two other  companies, a paint manufacturer and a textile manufacturer, have also  moved into the CIP. According to the State Senior Advisor for the CIP,  these three tenants project they will together create approximately 21,000  jobs in the CIP by 2016. As of May 2013, according to State officials, the  government of Haiti was progressing in talks with four other potential  tenants.
The USAID mission completed the first phase of the CIP power plant, with  a designed capacity of 10 megawatts, for $17.0 million, 11 percent less  than the $19.1 million allocated (see table 3). The power plant project  benefited from the mission having a Senior Energy Advisor on staff from  April 2011 through February 2013 who used his background in electrical  engineering to oversee and manage the project.
The power plant was commissioned in June 2012, 5 months later than  initially planned, but in time to provide power to the CIP as needed (see  fig. 3).
A contractor completed a required environmental assessment of the  power plant project in June 2011, prior to the award of the construction  contract for Phase I. The assessment produced more than 200  suggested mitigation measures to reduce the plant’s potential  socioeconomic and environmental impacts, all of which USAID has or  plans to have implemented. The contractor that performed the design  and oversight of construction for Phase I oversaw the implementation of  mitigation measures relevant to the construction phase. According to  USAID officials, relevant mitigation measures are also incorporated into  the operations and maintenance contract for the first 3 years of the plant’s  operations, making this contractor responsible for any measures needed  to mitigate the impact of the plant on the surrounding environment during  that time.
Future plans for the plant include:
Distribution of electricity outside the CIP: USAID plans to distribute  electricity to as many households, local businesses, and public  buildings in local communities as feasible over the next 2 years, with  an interim goal of connecting 1,800 residences by May 2013. The first  several residences were connected in October 2012, and 243  residences and businesses were connected by February 2013.
Plan for future expansion: To accommodate the CIP’s future energy  needs once it has expanded and the needs of local communities once  more of them are connected, USAID has plans (1) to build an  adjacent solar energy farm with 2-megawatts capacity and (2) to  expand the power plant to at least 25-megawatts capacity, including  power from any renewable sources. The time frame for these  expansions is dependent on the pace of development of the CIP and  its energy needs.
Transfer of operations to Haitian government: After the first 3 years,  the Haitian government will take over plant operations and therefore  will be responsible for implementing any mitigation measures,  including those needed to mitigate additional emissions from the  plant’s future expansion.
section_title: Lack of USAID Mission Technical Expertise Contributed to Port Planning Delays
paragraphs: USAID has allocated $72.4 million to plan and contribute toward building  a new port in northern Haiti; however, only $4.3 million (6 percent) was  obligated as of March 2013 due to planning delays (see table 4). In an  August 2011 draft Activity Approval Document (AAD) for the port sector,  USAID planned for a feasibility study to be completed by the second  quarter of fiscal year 2012, with construction to begin in spring 2013 by a  private company that would supplement USAID’s funding contribution for  construction and then operate the port once it is completed in fall 2015.  However, the feasibility study was not completed until February 2013, and  the mission 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. Nevertheless,  as a result of these planning delays, port construction will not begin until  at least two years after initially planned. In addition, USAID officials had  initially estimated that port construction would take 2.5 years; however,  USAID officials have since learned that port construction may take up to  10 years, depending on the complexity of the port designed.
The USAID mission in Haiti lacks staff with technical expertise in  planning, construction, and oversight of a port, as there is a vacant  position for a port engineer on staff. According to USAID officials, USAID  has not constructed a port anywhere in the world since the 1970s, and  USAID does not have a port engineer or port project manager among its  direct-hire staff. In January 2011, the mission in Haiti put out a solicitation  to fill the vacant port engineer position. This solicitation produced two  applicants, one of which was offered the position but declined it in May  2011. Since then, no attempts were made to fill the position until another  solicitation was sent out in May 2013 to which interested parties were to  respond by June 7, 2013. As a result, as of June 18, 2013, the position  remains unfilled.  According to mission officials, it is difficult to find  someone with the right skill set who is willing to work in Haiti, although  USAID officials have also commented that, in hindsight, more effort  should have been put into ensuring that the mission had port expertise  earlier in the port planning process.
This lack of a USAID mission staff person with port expertise has  contributed to the port project being behind schedule. Delays in the port  feasibility study were caused by:
Unrealistic initial time frames: Without port expertise, USAID  initially estimated that the planning and design process for the port,  including the port feasibility study, would take a little over 1 year to  complete. Since then, USAID officials have learned from the U.S.  Army Corps of Engineers (USACE), which has extensive port  expertise, that they expect the port planning and design process to  take 2.5 to 5 years. According to USAID officials, this estimate is  consistent with the time frames used by the Millennium Challenge  Corporation, which has rehabilitated ports in developing countries.
Delays in awarding the feasibility study: The contract for the  feasibility study was awarded 3 months later than initially planned  because at the time, according to USAID officials, mission staff were  focused on the CIP power plant. None of these staff had primary  responsibility for the port, so the port project did not move forward  simultaneously. In addition, USAID needed to clarify the technical  requirements and revise the statement of work for the port feasibility  study four times, thereby lengthening the time before companies  could submit proposals.  Incomplete information in the feasibility study: Without a port  engineer or project manager to contribute to the statement of work for  the feasibility study, USAID did not require the contractor to obtain all  the information necessary to help select a port site. According to  USAID officials, when the study was completed as planned in May  2012, the contractor had met the requirements in its statement of  work. However, the Mission Environmental Officer determined that  multiple environmental issues not adequately addressed in the initial  study needed additional examination. Subsequently, the contract for  the feasibility study was amended six times and extended by 9  months to obtain more information. USAID officials stated that, in  retrospect, they realized it would have been helpful to involve other  U.S. agencies with port expertise when writing the original statement  of work to have avoided the need for so many revisions. In November  2012, the contractor submitted another draft of the study that USAID  environmental staff determined to have some gaps. USAID then met  with officials from USACE, the U.S. Environmental Protection Agency  (EPA), and the National Oceanic and Atmospheric Administration  (NOAA) in December 2012 to identify the additional economic,  environmental, technical, and other information needed to select a  site. Further information was added to the study before it was finalized  in February 2013. However, other studies strongly recommended by  USACE, EPA, and NOAA, such as building oceanographic navigation  models and completing marine mitigation work to protect endangered  species in the area, still need to be performed.
Port construction costs remain uncertain because the port site, design,  and needed mitigation measures have not been determined. However,  rough estimates in the February 2013 feasibility study project that the cost  of port construction at the two locations still under consideration ranges  from $185 million to $257 million. In addition to funding for the port  feasibility study, USAID has $68.1 million allocated toward port planning  and construction. USAID does not know what portion of this funding is  needed for the additional studies and design; however, it is clear that the  amount remaining for construction will be a significantly smaller portion  than USAID had initially planned to contribute to the project’s total  construction cost. As a result, USAID officials recognize that there is a  risk that no private company interested in operating the port would be  willing to cover the entire remaining costs of construction, particularly  given the political risks of operating in Haiti. Therefore, the Haitian  government may need to secure additional donor funding to increase the  public sector contribution to building the port.
section_title: Sustainability of the CIP, Power Plant, and Port Are Interdependent and Depend on Haitian Government Capacity
paragraphs: Sustainability of the CIP, port, and power plant are interdependent. We  identified a number of key issues to the sustainability of each of these  projects.
The CIP depends on a functioning power plant and port access:  Before USAID began its CIP-related investments, northern Haiti did  not have reliable energy infrastructure or sufficient port capacity to  support a completed industrial park. Other power plants in the region  produce intermittent power. The existing ports in Haiti have high port  costs and those in the Dominican Republic that currently  accommodate cargo traffic are distant from the CIP, raising the cost of  doing business at the CIP (see fig. 4). In addition, according to the  port feasibility study, the Cap-Haïtien port, the closest current port to  the CIP, has limited capacity. The study concluded that the CIP will  only succeed if expanded, efficient port facilities are developed  nearby.
The port and power plant depend on revenues from the CIP: CIP  tenants will generate a substantial portion of the revenue for the  power plant and port, so the sustainability of these projects will  depend on the Haitian government finding additional tenants and  maintaining the park. Potential tenants may be wary of moving to the  CIP because of Haiti’s history of instability and corruption or the lack  of Haitian government capacity, although as noted earlier, according  to State officials, there were four additional potential tenants for the  CIP as of May 2013.
All three projects depend on Haitian government capacity: The  Haitian government will be responsible for maintaining and managing  the CIP and power plant and for overseeing the private company that  will operate the new port. Studies of the CIP have cited concerns  about the relevant Haitian government ministry’s ability to manage  and maintain the infrastructure in and around the CIP given their  limited staff and technical resources. Aware of such concerns, the CIP  has contracted a professional industrial facility management firm to  operate and maintain the park. According to the September 2011 AAD  for the energy sector, the sustainability of investments in the Haitian  energy sector depends on legal, regulatory, and management reforms  to improve the commercial viability of Haiti’s electrical system and  provide resources for its maintenance and operations. To address this  for its first 3 years, USAID will pay for a contractor to operate and  maintain the power plant, and to prepare the Haitian electricity  department to take over these functions after the 3 years. According  to USAID documents, Haiti will need institutional and regulatory  reforms to ensure efficient customs operations and competitive port  charges, to curtail monopolistic practices, and to facilitate private  investment in the port sector.
Obtaining revenue for the power plant from electricity  distribution outside the CIP: As of February 2013, the few  customers connected to the power plant outside the CIP had largely  paid their initial bills on time. However, according to a 2010 report on  the Haitian energy sector, 64 percent of Haitians do not pay their  electricity bills in a timely manner and 33 percent do not pay at all. In  addition, USAID officials have recognized that it is common  throughout Haiti to tap into lines without paying, and this practice is  unlikely to have repercussions. As a result, the USAID operations and  maintenance contractor plans to provide training to local communities  on the use and value of electricity.
Attracting a private company to construct and operate the port:  The government of Haiti has considered charging $260 for each  container coming into the northern port to use the revenues generated  for social programs. However, the port feasibility study concluded that  such a government surcharge would make the project financially  infeasible. State officials have communicated this information to the  Haitian government to encourage them to lower the surcharge to  allow the port to be successful. Given this and other risks associated  with the port listed above, it is unclear whether the Haitian  government will be able to find a private company interested in  investing in port construction and operations. This uncertainty will  remain until USAID and the Haitian government begin work on the  solicitation for a private company after all port studies are completed,  the site is selected, and the port design is completed.
section_title: USAID’s Development of New Housing Settlements in Haiti Has Been More Costly and Slower Than Expected; Sustainability Challenges Remain
paragraphs: Since its initial planning and cost estimating began in 2010, USAID’s  funding for the New Settlements program has significantly increased,  while the number of permanent houses USAID projects will be completed  has been reduced by over 80 percent. USAID underestimated  construction costs at the time the New Settlements program was  developed, and construction costs further increased after the Haitian  government requested design changes that included larger houses with  features such as flush toilets. USAID experienced problems securing  clear land title for the new housing sites and in coordinating with NGOs  and other partner donors. These issues have resulted in delays, with the  program currently expected to be completed nearly 2 years later than  initially scheduled. Moreover, the sustainability of these new settlements  will depend heavily on the capacity of the Haitian government to provide  key services and the ability of residents to maintain their homes. In  addition, there is a potential gap in service to support the community  management mechanisms that USAID officials consider crucial to the  sustainability of each new settlement. If such support is reduced or  delayed for some settlements, sustainability risks may increase.
subsections: section_title: USAID’s Cost Estimates Increased Sharply
paragraphs: USAID underestimated the construction cost of its New Settlements  program. These costs are comprised of two main categories: (1) cost of  site preparation per plot and (2) cost of construction per house. In its  planning documents, USAID originally estimated costs at $1,800 per plot  and $8,000 per house. As of April 2013, average costs based on awarded  contracts have increased to $9,598 per plot and $23,409 per house.  Overall, the cost for USAID to prepare a plot and build a house increased  from original estimates of $9,800 to average costs of $33,007. These cost  differences stem primarily from the inaccuracy of USAID’s original  estimates, and secondarily from Haitian government requests for design  changes. Figure 5 compares the original estimates, initial contract costs,  and revised contract costs.
More details on the reasons for cost differences in this program are  outlined below.
Original estimates: By November 2010, USAID had developed its  original cost estimates for the New Settlements program. Prior to the  earthquake, the mission had no housing programs in Haiti, and as a  result did not have its own historical data on construction costs and  few existing relationships with potential shelter sector partners. The  mission hired a Senior Shelter Advisor and staffed a shelter team to  develop the original cost estimates, layouts, and design concepts for  what would become the New Settlements program. According to  USAID officials, these estimates were not adequately supported; they  did not document the sources of data or the methodologies used to  derive these estimates. Rather, the original estimates were based in  part on the USAID shelter team’s calculations and costs reported by  the World Bank and an NGO that was building houses in northern  Haiti. USAID mission officials noted that these original cost estimates  were used to develop the budget and projected goals of the New  Settlements program. However, to meet certain technical and financial  planning requirements, the shelter team prepared independent  government cost estimates prior to issuing solicitations for bids for  each site preparation and each housing construction project. The first  independent government cost estimates for site preparation and  housing construction were conducted in September and November  2011, respectively. Those efforts provided the shelter team with more  detailed and accurate information to guide them through the  procurement process.  Initial contract costs: By April 2012, USAID awarded multiple  contracts for construction projects at two settlement sites, where costs  exceeded the original estimates. In particular, site preparation per plot  increased from $1,800 to $6,165, a 242-percent increase. The  inaccuracy of the site preparation estimates had a more substantial  impact on USAID’s program budget and goals than the inaccurate  estimates of housing construction costs because USAID planned to  finance all site preparation costs, while NGOs and other partner  donors would finance and build the majority of houses. According to  USAID officials, original estimates did not adequately consider the  stringent international building codes and disaster resistance  standards planned for New Settlement houses and did not take into  account the extent or complexity of service infrastructure USAID  intended to provide. Furthermore, USAID officials noted that, as  multiple reconstruction efforts have progressed, the demand and cost  for construction materials has increased.
Revised contract costs: By July 2012, USAID signed a revised  contract to accommodate design changes requested by the Haitian  government, which also increased costs. Specifically, the design  changes called for an increase in the size of housing units, from about  275 square feet to about 450 square feet, and the inclusion of flush  toilets, rather than a more traditional dry toilet system. USAID agreed  to these changes and revised the initial contracts to include these  modifications and allow for the increased costs. The Haitian  government’s design changes drove total cost increases up from the  initial contract costs by 34 percent, from $24,625 to $33,007. Officials  noted that providing housing with higher earthquake and hurricane  resistance standards and with electricity, plumbing, and flush toilets,  takes longer to construct and costs more than options provided by  other donors.
section_title: Program Funding Has Significantly Increased
paragraphs: Based on original estimates, the New Settlements program was allocated  approximately $59 million under USAID’s Shelter AAD. However,  USAID increased the program budget after receiving multiple bids from  private sector contractors for both site preparation and housing  construction. USAID also dedicated additional funds to institutional  strengthening to support local organizations’ beneficiary selection, and  added a community development component. All together USAID  increased program funding to approximately $97 million, about a 65- percent increase. As of March 31, 2013, USAID had obligated about $48  million and had disbursed about $32 million for New Settlements  permanent housing activities (see table 5).
USAID has reduced its program targetss a number of times. As of April  2013, it had reduced the number of houses it expects USAID and its  partners  to complete, and therefore the number of beneficiaries, by over  80 percent. Of the 15,000 houses originally planned, only 2,649 are  expected to be completed, with USAID building 906 houses and NGOs  and other partner donors estimated to build 1,743 (see fig. 6). USAID  officials noted that USAID would commit no further funds to housing  construction and will only commit funds for site preparation if USAID has  written agreements with partner donors. Therefore, the estimated number  of houses and completion dates may vary from current projections.
USAID also reduced the total number of projected beneficiaries from an  original estimate of 75,000 to 90,000 to its current estimate of  approximately 13,200 to 15,900. USAID originally planned for new  settlements to be distributed geographically with 5,000 houses to be built  in the northern Cap-Haïtien corridor and 10,000 houses to be built in the  Port-au-Prince and St-Marc corridors, closer to where the earthquake’s  epicenter occurred. In addition to the overall decline in housing numbers,  the distribution of these houses between the north and south also shifted.  Current projections are for the Cap-Haïtien corridor to have 1,967 houses,  or 74 percent of the total. A combined 682 or 26 percent of the total are to  be built in the Port-au-Prince and St-Marc corridors. Of those houses in  the Cap-Haïtien corridor, over 90-percent are planned to be within a 13- mile radius of the CIP (see fig. 7).
USAID is nearing completion of two settlement sites, Caracol-EKAM in  the Cap-Haïtien corridor and DLA 1.5 in the St-Marc corridor. The  Caracol-EKAM settlement is projected to provide permanent houses to  approximately 3,750 to 4,500 residents, and the DLA 1.5 settlement is  projected to provide permanent houses to approximately 780 to 936  residents. Beneficiaries will begin to occupy houses once all construction  is complete. The planned move-in date for beneficiaries at both  settlements is July 2013 (see fig. 8).
The U.S. government’s January 2011 strategy projected that all USAID  permanent housing construction and site preparation under the New  Settlements program would be completed by July 2012, but the current  estimated completion date for planned sites is March 2014, nearly 2 years  later. Housing construction began at Caracol-EKAM and at DLA 1.5 in  April 2012. NGO and other partner donor financed housing construction  on USAID prepared sites is planned but has not yet begun.
According to State and USAID officials, USAID faced difficulties trying to  secure proper land title for permanent housing, which resulted in delays.  These delays affected the implementation of the program and availability  of NGO and other partner donor financing. For example, according to  USAID officials, USAID spent a substantial amount of time trying to  secure clear title to private and government-owned land but was able to  acquire only one site through private owners because of difficulties in  confirming legitimate ownership. USAID discontinued attempts to partner  with private owners in August 2011. Additionally, land titling issues arose  with government-owned land. For example, although USAID officials  reported that the agency had conducted due diligence and approved 15  potential housing sites in November 2010, USAID later found that the  secure land titles for some of these sites could not be confirmed due to  unclear or disputed ownership, and thus reduced the number of site  options and further delayed site selection.
Partnering with NGOs and other donors on the planning and construction  of permanent houses was more complicated and time consuming than  USAID originally expected. According to USAID officials, NGOs and  other partner donors have their own processes, procedures, and goals  that often differ from those of USAID. According to USAID officials, the  mission shelter team was involved in negotiations with several key donor  partners as early as November 2010. In January 2011, the President of  the American Red Cross (Red Cross) announced its intention to partner  with USAID and provide $30 million to build homes on at least two sites.  Later, in June 2011, USAID signed a memorandum of understanding with  the Red Cross to build more than 3,000 houses; however, according to  USAID officials, that partnership did not materialize because of difficulties  and delays in securing land title from privately owned sites near Port-au- Prince. In addition, according to USAID officials, the partnership was  further delayed because of turnover in various Red Cross leadership  positions, resulting in shifting approaches to the development of housing  settlements. According to officials, USAID also had plans to partner with  Food for the Poor, an NGO with experience building houses in Haiti, to  build 750 of the houses at Caracol-EKAM. However, this discussion  ended in part because that NGO decided it did not want to assist in  building communities that large.
The success of USAID’s New Settlements program relied heavily on  partner NGOs. The USAID mission was confident that the program would  attract partners because one of the primary challenges NGOs faced in the  first year after the earthquake was finding suitable land with clear title.  According to one of USAID’s implementing partners, NGOs providing  housing assistance hesitate to invest in land for new housing if legal proof  of ownership cannot be secured. By securing land title, the program  would help partners avoid the complex land tenure issues that were  already seriously impeding many of their shelter programs. However,  lengthy delays in resolving land title issues contributed to difficulties in  solidifying partnerships because the delays allowed time for potential  NGO partners to change their shelter strategies or commit their funds to  other reconstruction activities.
section_title: New Housing Settlements Have Numerous Sustainability Challenges
paragraphs: According to USAID, the sustainability of the new housing settlements will  depend on broad factors such as the capacity of the Haitian government  and regional economic opportunities. USAID is attempting to ensure the  viability of settlements by locating them in areas with employment,  healthcare, education, and transportation. In the Cap-Haïtien corridor, the  United States and other international donors are making multiple  investments in new infrastructure, such as the CIP and potential port, to  create an economic growth pole in the region. If those efforts do not  successfully provide adequate economic opportunities, beneficiaries may  not be able to afford the fees and services connected with their new  homes, or may have to relocate altogether. USAID is also working with  the Haitian government in areas where capacity issues exist, such as  energy sector management.
In addition, more site-specific factors will affect sustainability. USAID has  made some limited mitigation efforts, but notes that further support for  community development is necessary to maintain the settlements over  time. Local governments and community members need to provide  ongoing support, maintenance, and management of the new settlements  to ensure their sustainability. Specifically, beneficiaries will face site- specific issues related to affordability, community management, and the  possibility of informal expansion or sprawl of shantytowns.
Affordability: According to USAID officials, the Haitian government  has indicated that beneficiaries must make some number of monthly  payments, in an amount to be determined, before title to the house is  conferred. Beneficiaries will also face charges for utilities and  services, such as electricity and sewage.
Housing payments: According to USAID officials, although  beneficiaries are scheduled to move into the Caracol-EKAM and  DLA 1.5 settlements as early as July 2013, a beneficiary  agreement has not yet been finalized, and the exact amount and  structure of the monthly payments remain uncertain. USAID  officials have said that a contract, or occupancy agreement, will be  signed before beneficiaries move in. Fees for utilities and services  may or may not be rolled into, collected, and paid through these  monthly housing payments. The monthly housing payment  structure may be flat or tiered, meaning amounts may be set at a  flat rate for every household or may be progressive depending on  income level.
Electricity: USAID plans to install electricity, with individual meters,  in each new house. USAID officials acknowledged that non- payment for electricity is a fairly common practice in parts of Haiti  where electrical grids exist. Therefore, it remains to be seen  whether the practice of non-payment may also be a challenge at  the new settlement locations.
Sewage: Prior to the January 2010 earthquake, there were no  wastewater treatment plants in Haiti. A temporary facility has been  constructed at the CIP and there are plans to build a permanent  facility there as well. In addition, a treatment plant was opened in  May 2012 near the Port-au-Prince metro area. These facilities  may be able to serve some settlements, but it is unclear if they will  be able to serve all of the facilities and at what cost to beneficiary  households. One senior USAID official acknowledged that if septic  tanks are not emptied regularly, there is a potential for a public  health risk.
Community management: The New Settlements program currently  plans to create eight new “communities,” of between 148 to 1,283  households, each with beneficiaries from various locations in Haiti and  with varied income levels. USAID officials acknowledged concerns  about issues that might arise among the beneficiaries themselves and  between the settlement and surrounding communities.
Shantytowns: There is a risk that informal dwellings, or shantytowns,  may be built around the new settlements to take advantage of the  economic opportunities or services available near those locations. If  employment opportunities at the CIP draw a large number of people,  the current housing stock may be too low to accommodate them.
To mitigate these types of site-specific sustainability concerns, USAID  obligated $4.8 million for development of the Emergency Capacity  Assistance Program to establish community management committees,  self-governing bodies made up of selected beneficiaries, and to create  other mechanisms intended to support community development. To  address issues related to affordability, USAID, through this assistance  program, worked to ensure that the household income and employment  status were criteria addressed in the beneficiary selection process. To  address other issues, USAID planned for the community management  committees to promote social cohesion, to serve as a decision-making  body, and to act as the residents’ representatives with government  counterparts. At the Caracol-EKAM settlement, a provisional community  management committee was formed and will be trained to engage with  local and national authorities to help ensure that community services such  as grounds keeping, infrastructure maintenance, and solid waste  collection are undertaken. However, funding for ECAP only allowed for  some of these initial activities to take place at the Caracol-EKAM  settlement, and, according to officials, the program ended in April 2013.
USAID allocated $5 million to support community development efforts at  the new settlements. In April 2013, USAID issued a request for  applications to find an implementing partner for a community  development program for Caracol-EKAM, at an estimated cost of $1.3 to  $1.5 million. This partner would provide support for the phased  occupation and management of the settlement and engage in an array of  activities designed to help ensure its long‐term sustainability. Although  still in the planning stage, USAID’s current budget indicates over half of  the community development funds will go toward assisting just three  sites, including Caracol-EKAM. The remaining five or more settlement  sites face the possibility of delayed or reduced support. To address that  gap, USAID plans to foster partnerships with other organizations to assist  and contribute to these activities. USAID has entered into such a  partnership with the International Federation of the Red Cross to provide  community development support at DLA 1.5. Additionally, in a  memorandum of understanding between USAID and partner donors, it is  noted that partner donor funds are to be provided for community  development activities at those settlements; however that understanding  does not fully secure such a financial commitment. Similarly, according to  USAID officials, the agreement USAID is attempting to finalize with the  Red Cross will budget for community development activities to be  covered with Red Cross funds. However, there is the possibility that such  partnerships will not be available to support all the settlements. USAID  officials responsible for key parts of the New Settlements program have  stated that it is crucial to have these support mechanisms in place to  ensure a smooth transition when beneficiaries move in, to set the tone for  interaction among beneficiaries moving forward, and to ensure that  community management needs are understood and acted upon.  Furthermore, USAID documents state that it is critical to initiate the  beneficiary organization process as soon as beneficiaries occupy their  homes because it may be difficult to work with beneficiaries before they  arrive. Failure to find an implementing partner to provide and create these  support mechanisms for each settlement may further increase the  sustainability risks inherent in large-scale housing reconstruction projects,  thus endangering the significant investments already committed to these  efforts.
section_title: Conclusions
paragraphs: Following the January 2010 earthquake in Haiti, the U.S. government  made a strong commitment to Haiti’s reconstruction and economic  development. As of March 2013, more than 3 years after the earthquake,  USAID had obligated only 45 percent and disbursed only 31 percent of  the $651 million in supplemental funding it was provided. State’s most  recent report to Congress on program funding and progress—its final  mandated report—was submitted in January 2013. However, the majority  of reconstruction funding has not been disbursed, and a substantial  amount of progress on project activities remains to be completed. Without  complete and accurate reporting from State, Congress lacks the critical  information on program funding and progress it needs to fully oversee the  use of the Haiti reconstruction supplemental funding.
USAID’s progress in supporting the CIP-related investments of the power  plant and port have had mixed results. The power plant was completed in  time to provide electricity for the CIP’s first tenant, in part because the  USAID mission in Haiti had on staff a senior energy advisor to help plan  and oversee the project. However, the mission has not filled an equivalent  position to oversee the port project and has experienced delays and  challenges associated with this significant project. The USAID mission  continues to lack technical port expertise to oversee this project to which  more than $72 million in U.S. funding has been allocated, is at least 2  years behind schedule, and has been found to be more complex than  initially envisioned. Further, USAID’s contribution to port construction was  not intended to fund the entire port, and it is unclear whether the Haitian  government will be able to find a private sector company willing to  contribute the large amount of remaining funding through a public-private  partnership. This uncertainty puts at risk USAID’s investments in port  planning and design, as well as the sustainability of the CIP and power  plant due to the three projects’ interdependence.
USAID developed the budget and projected targets of the New  Settlements program using faulty and inaccurate cost estimates, which  has led to a significantly reduced number of USAID-funded houses for the  Haitian people. USAID agreed to the Haitian government’s request to  enlarge and upgrade the houses, further reducing the number of houses it  would build. As a result, USAID currently has plans to provide less than a  quarter of the houses it originally projected it would build, and at a much  greater cost. Difficulties in securing land title and challenges in  establishing partnerships with NGOs also delayed and further reduced  USAID’s targets. Furthermore, the sustainability of USAID’s New  Settlement program is uncertain. The agency has dedicated some  funding to help ensure sustainability through the development of  community support mechanisms; however, it is unclear if funding for  these support mechanisms will be available for each new settlement. In  addition, USAID has taken steps to secure commitments for partner  donor funding to assist in these efforts, but has not yet secured such  commitments for all planned settlements and it is uncertain whether the  partner organizations will be able to fulfill their commitments. These  community support mechanisms are essential to helping ensure that the  settlements become viable, cohesive communities and that beneficiaries  maintain them once they move in. Without this support in place,  sustainability issues may be exacerbated and USAID’s housing efforts  placed at risk of deterioration.
section_title: Matter for Congressional Consideration
paragraphs: 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.
section_title: Recommendations for Executive Action
paragraphs: To strengthen USAID’s ability to complete its projects in Haiti and to  maintain their sustainability, we recommend that the USAID Administrator  take the following two actions.
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.
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.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to USAID and State for review and  comment. USAID provided written comments on a draft of this report,  which are reprinted in appendix II. State did not provide written  comments. USAID agreed with both of our recommendations.
USAID agreed with our recommendation that it fill the vacant port  engineer position at the Haiti mission within time frames that avoid future  project delays. In its letter responding to our draft report, USAID noted  that, in May 2013, it issued a solicitation for a ports advisor, recognizing  the need to fill the position to move its program forward. In June 2013,  USAID noted that it expected to fill the position soon; however, as of June  18, 2013, the position was vacant.
USAID also agreed with our recommendation that each new permanent  housing settlement have community support mechanisms in place before  the beneficiaries occupy the houses. As noted in our report, USAID stated  that $5 million has been set aside to finance community development  activities. In its comments on this report, USAID added that the mission is  prepared to provide additional resources, if required. USAID also  elaborated on the ongoing and planned activities intended to facilitate  community development and sustainability at the first two settlement  sites. We acknowledge USAID’s efforts to provide community  development support at these two sites and support the agency’s  intentions to implement our recommendation at future settlement  locations.
State and USAID both provided technical comments. We incorporated  those comments, along with information contained in USAID’s written  response, into the report where appropriate  As agreed with your offices, unless you publicly announce the contents of  the report earlier, we are planning no further distribution until 30 days  after the report date. At that time, we will send copies  to interested  congressional committees, the Secretary of State, and the USAID  Administrator.  In addition, the report will be available at no charge on the  GAO Web site at http://www.gao.gov.
If you or any of your staffs have any questions about this report, please  contact me at (202) 512-3149 or gootnickd@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made major contributions to  this report are listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: We reviewed infrastructure-related post-earthquake reconstruction efforts  in Haiti undertaken by the U.S. Agency for International Development  (USAID). This report addresses (1) USAID’s progress in obligating and  disbursing program allocations and the Department of State’s (State)  periodic reporting to Congress on the status of the U.S. reconstruction  efforts; (2) USAID’s progress in planning and constructing two activities  related to the Caracol Industrial Park (CIP)—a power plant and port; and  (3) USAID’s progress in planning and constructing permanent housing.
In response to a congressional request to examine the Supplemental  Appropriations Act, 2010 (the Act), we focused our review on three  sectors of USAID reconstruction activities: power plant, port, and  permanent shelter. These three activities comprise about $268 million of  the overall $651 million in supplemental and other funds allocated to  USAID for bilateral reconstruction activities. We also included lesser  amounts of regular fiscal year appropriations allocated to the three  activities within our scope.
To obtain information on the appropriations, allocations, and planned and  ongoing uses of U.S. reconstruction funding for Haiti, we reviewed the  Act, enacted by Congress in July 2010; State and USAID FY 2010  Supplemental Appropriations Spending Plan, issued by State in  September 2010; and the interagency Post-Earthquake USG Haiti  Strategy: Toward Renewal and Economic Opportunity, issued by State in  January 2011. We also reviewed the Action Plan for National Recovery  and Development of Haiti, issued by the government of Haiti in March  2010. In addition, we reviewed the Haiti Reconstruction Grant Agreement,  signed by the U.S. and Haitian governments in May 2011. We met in  Washington, D.C., and in Port-au-Prince, Haiti, with officials from USAID  and State. USAID defines allocation as the identification and setting aside  of resources for a specific program action.
To determine the amounts of funding obligated and disbursed from  USAID’s supplemental funding, as well as funding from other sources for  reconstruction activities, we analyzed data reported by USAID as of  March 31, 2013. These data include information on obligations and  disbursements of supplemental appropriation funding overall, as well as  amounts provided for particular activities within our scope.
To assess the reliability of the data on planned allocations, obligations,  and disbursement, we conducted follow-up correspondence and  interviews with cognizant officials from USAID and State. We asked them  standard data reliability questions—including questions about the  purposes for which funding data were collected, the use of the data, how  the data were collected and generated, and how the agencies ensured  that the data were complete and accurate. We determined the data to be  sufficiently reliable for the purposes of this report.
To describe State’s decision for the U.S. government to support the CIP,  we interviewed State officials to determine the rationale for the decision  and reviewed portions of the framework agreement laying out the terms of  the public-private partnership to be followed by the Haitian government,  the Inter-American Development Bank (IDB), and the anchor tenant, a  private Korean garment manufacturer, Sae-A Trading Co. Ltd. (Sae-A).  We reviewed studies and reports on the Haitian economy and the  potential economic impact of the CIP that State officials had reviewed  before making this determination. We also reviewed any types of  calculations that State officials had conducted about the effect of the CIP  on job and economic growth in Haiti. When reviewing these studies,  reports, and calculations, we noted the methodologies used and any  potential limitations those methodologies may have had on their findings.  To ascertain the IDB’s progress in building the CIP, we performed a site  visit at the CIP in December 2012, interviewed the CIP’s construction  manager, and received a tour of the Sae-A facility. In addition, we  received copies of more recent photos and videos of the CIP that were  taken by IDB staff in January 2013. To determine the Haitian  government’s progress in filling the CIP with tenants, we met with State’s  Senior Advisor for Industrial Development in Haiti who works with the  Haitian government to recruit companies to the CIP to learn about the  recruitment process and its progress. From this State official, we also  received documents containing summaries of information about new and  potential tenants to the CIP.
To describe USAID’s progress with the CIP power plant, we reviewed  plans for the power plant as outlined in the September 2011 Activity  Approval Document (AAD) for the Haitian energy sector and compared  these plans with the time frames, costs, and descriptions of the power  plant project in award documents and amendments, as well as progress  reports from the construction contractor. We also interviewed USAID and  State officials in Washington, D.C., and Haiti to determine the reasons for  any differences between planned and actual costs and time frames. To  describe how USAID assessed the power plant project for its  environmental and social impact, we reviewed the June 2011  environmental assessment of the CIP that a USAID contractor had  performed. To determine how USAID followed up on mitigation measures  suggested in this environmental assessment, we interviewed USAID  officials and reviewed contracts for building, overseeing the construction  of, and operating and maintaining the power plant, as well as progress  reports from the construction and oversight contractors that included  updates on the mitigation measures being taken. To determine the  planning and progress made regarding electricity distribution from the CIP  power plant to residences and businesses outside the CIP, we  interviewed USAID officials and reviewed USAID planning documents,  the cooperative agreement for initial power distribution outside the CIP,  and progress reports from the nongovernmental organization (NGO)  responsible for this distribution.
To describe USAID’s progress with a new port for the Cap-Haïtien  corridor, we reviewed plans for the port such as those articulated in the  most recent draft of the AAD for the Haitian port sector dated August  2011, in procurement documents for the port feasibility study, and in  interviews with USAID and State officials. We then reviewed the port  feasibility study and interviewed USAID officials on the process and  results of that study to determine USAID’s progress against its initial  plans.
To describe USAID’s progress constructing permanent houses under its  New Settlements program, we reviewed plans as outlined in the August  2011 AAD and compared these plans with the time frames, costs, and  descriptions of the New Settlements program in design packages, award  documents and amendments, and progress reports from various site  preparation and construction contractors. We also interviewed USAID and  State officials in Washington, D.C., and Haiti to determine the reasons for  any differences between planned and actual costs, time frames, and  expected results. We calculated the weighted average cost of  construction per plot and per house by (1) calculating the total cost of plot  and house construction for the two sites that had awarded contracts, (2)  calculating the total number of plots and houses at both sites, and (3)  dividing the first number by the second. For the initial average cost per  plot, we used data on costs and numbers of plots and houses at each site  obtained from initial contracts. For the revised average cost per plot, we  used data on costs and numbers of plots and houses at each site  obtained from modifications to the initial contract. To discuss the role of  NGOs and other partner donors in the New Settlements program, we  reviewed various documents related to partners who had planned or  committed to building houses on USAID-developed sites. We interviewed  a partner organization housed with the Haitian government and funded by  the IDB; however, we were unable to interview other potential partner  NGOs because negotiations over the terms of agreements were ongoing.  In addition, we interviewed the implementers responsible for a  cooperative agreement with USAID related to community development  and beneficiary selection efforts for the New Settlements program and  reviewed the beneficiary selection data they had gathered for the  Caracol-EKAM site.
To determine the sustainability of the power plant, port, and new  settlements, the definition of sustainability we use is based on the  Organisation for Economic Co-operation and Development definition,  which defines “sustainability” as “the continuation of benefits from a  development intervention (such as assets, skills, facilities, or improved  services) after major development assistance has been completed.” We  operationalized this definition by specifying that sustainability is the ability  of the Haitian government to operate and maintain the USAID-funded  power plant, port, and new settlements in such a condition as is required  to produce the projected benefits. To determine issues that may affect the  sustainability of these three projects, we reviewed reports commissioned  by agencies and organizations, such as USAID, State, the International  Finance Corporation, the World Bank, and the U.S. Trade and  Development Agency, on the Haitian energy, port, and shelter sectors.  We reviewed procurement documents, assessments, and progress  reports related to these specific projects. We also interviewed USAID  officials to understand their key sustainability concerns for these projects.
We traveled to Haiti in December 2012 and met with U.S. officials from  USAID and State, and representatives from some of USAID’s partners  involved in implementing the projects in our review—including the IDB,  Sae-A, and construction firms and partner donors involved in the New  Settlements program. In the Cap-Haïtien corridor, we visited the CIP, the  CIP power plant, one of the sites for the proposed port, and all New  Settlement sites under construction or planned for future construction. In  the Port-au-Prince corridor, we visited the New Settlement sites under  construction and planned for future consideration, sites where temporary  shelters were built, and sites damaged by the earthquake.
We conducted this performance audit from August 2012 through June  2013 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the U.S. Agency for International Development
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Leslie Holen (Assistant Director),  Lynn Cothern, Heather Latta, George Taylor, and Brian Tremblay made  key contributions to this report. Ashley Alley, Etana Finkler, Justin Fisher,  Courtney LaFountain, and Mary Moutsos provided technical assistance.