Foreign Assistance: Actions Needed to Help Ensure Quality and Sustainability of USAID Road in Indonesia
Published: 2012-07-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In December 2004, an earthquake in the Indian Ocean caused a major tsunami that devastated several countries, affecting Indonesia most severely. In May 2005, Congress appropriated $908 million for aid to the affected countries. USAID budgeted $245 million of this amount to rehabilitate and construct a 150-mile paved coastal road in Aceh Province, Indonesia, with a planned completion date of September 2009. After reducing the projects scope, USAID completed a 91-mile road in April 2012 at an estimated cost of $256 million. GAO was asked to (1) describe USAIDs construction operations as well as factors that delayed the roads completion, (2) assess USAIDs efforts to ensure the roads quality, and (3) examine factors that could affect the roads sustainability. GAO reviewed USAID documents, interviewed USAID and Indonesian officials, and traveled the entire length of the road.
section_title: What GAO Found
paragraphs: From August 2005 to September 2010, the U.S. Agency for International Development (USAID) awarded five contracts to reconstruct a major coastal road in Aceh Province, Indonesia. Three of the contracts were for construction, one contract was for design and supervision, and one contract was for project management. Several factors delayed the roads completion and increased costs. For example, according to USAID, when one contractor did not make acceptable progress, the agency reduced the scope of work, terminated construction of an 8-mile road section, and hired another contractor to complete the section. Other factors included the Indonesian governments difficulty in acquiring land for the road and local opposition to the new road alignment.
USAID took several actions to ensure quality in the roads design and construction. For example, USAID hired an experienced, U.S.-registered professional engineer as Project Manager and hired a U.S.-based engineering firm to design the road and supervise most construction. USAID also required contractors to remain liable for any quality defects for 1 year after completing road sections. In addition, USAID required the Project Manager and the engineering firm to perform routine inspections, including final inspections when the warranties ended. Some inspections revealed poor-quality work that the contractors corrected. However, the engineering firms and Project Managers contracts ended in March 2012 and April 2012, respectively, leaving no qualified staff to inspect around 50 milesmore than half of the completed roadstill under warranty. USAID told GAO it is considering rehiring the Project Manager on an intermittent basis, but USAID has not finalized this arrangement and has no mechanism to ensure quality in these sections.
USAID also took several actions to help ensure the roads sustainability, such as designing it to withstand heavy weights and providing a maintenance plan and equipment to the Indonesian Directorate General of Highways. However, various factors could affect the roads sustainability for its intended 10-year design life. For example, according to USAID and Indonesian officials, the Directorate lacks resources needed to maintain the road. Also, according to USAID, the Indonesian government has not taken certain actions, such as using portable scales to prevent overweight vehicles that could cause pavement failure and prohibiting construction in the road right-of-way that could obstruct drainage.
section_title: What GAO Recommends
paragraphs: GAO recommends that USAID (1) ensure that road sections still under a 1-year warranty are inspected in a timely manner and require the construction contractor to make any needed repairs and (2) work with the Indonesian government to develop and implement a process addressing factors that could affect the roads sustainability. USAID stated that it concurred with GAOs first recommendation and concurred with the intent of GAOs second recommendation.
View a video of GAOs March 2012 inspection of the road. h ttp://www.gao.gov/multimedia/video#video_id=592299.

section_title: Letter
paragraphs: The tsunami of December 2004, caused by an earthquake in the Indian  Ocean near Indonesia, widely devastated 12 Asian and East African  countries. In May 2005, Congress appropriated approximately $908  million in assistance for tsunami relief, reconstruction, and related  programs. Using about $350 million of these funds, the U.S. Agency for  International Development (USAID) began its overall tsunami  reconstruction program in Indonesia—which sustained the greatest  estimated damage—later in fiscal year 2005 with activities such as  constructing shelters and small-scale infrastructure. USAID also  announced plans to further assist Indonesia by constructing a 150-mile  coastal road in Aceh Province, on the island of Sumatra, with a planned  completion date of September 2009 and an estimated cost of $245  million. After encountering numerous obstacles, in fiscal year 2006  USAID reduced the planned road length to 91 miles, extended the  estimated completion date to February 2010, and increased the estimated  cost to $254 million. USAID completed the 91-mile road in April 2012 at  an estimated cost of $256 million.
In response to your request, this report (1) describes USAID’s  construction operations as well as factors that delayed the road’s  completion, (2) assesses USAID’s efforts to ensure the road’s quality, and  (3) examines factors that could affect the road’s sustainability.
To address these objectives, we reviewed USAID and contractor  documents and reports. We also interviewed USAID officials in  Washington, D.C., and Indonesia as well as Indonesian government  officials and contractors, including engineers and project managers, in  Indonesia. In addition, we traveled the length of the 91-mile road with  USAID officials in March 2012, when the construction was nearly  completed. During our travel, we observed several ongoing activities,  such as contractors removing a section of faulty pavement and building a  retaining wall, as well as completed road sections, bridges, and other  features. We based our assessment of the road’s quality on the use of  established design and construction standards and practices by USAID  and its contractors. For this report, we defined sustainability, based on the  Organization for Economic Cooperation and Development’s definition, as  the ability of the Indonesian government to operate and maintain the  USAID-constructed road in such a condition as is required to produce the  projected benefits for the road’s intended 10-year life expectancy.appendix I for a more detailed description of our scope and methodology.
We conducted this performance audit from January 2012 to July 2012 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: The December 26, 2004, earthquake and tsunami in the Indian Ocean  near Indonesia left more than 200,000 dead and 40,000 reported missing  and caused an estimated $10 billion in damages to property and  infrastructure such as buildings, roads, and bridges. The Indonesian  province of Aceh, about 150 miles from the epicenter of the earthquake,  experienced the heaviest loss of lives and damage to property and  infrastructure, largely along the west coast. Figure 1 shows the tsunami- affected countries; numbers of dead, missing, and displaced persons; and  estimated damage.
In Indonesia, the affected infrastructure included a major road and  numerous bridges along the west coast—a key transportation artery in  the region—that was destroyed in many locations and severely damaged  in many others. Figure 2 shows two of the destroyed road sections in  December 2005, 1 year after the tsunami.
We began monitoring USAID’s delivery of assistance to the tsunami- affected countries, including its reconstruction of the Indonesian coastal road, in May 2005, and issued reports on our work in 2006 and 2007.
In April 2006, we reported that USAID planned to construct and  rehabilitate 150 miles of paved road between Banda Aceh and  Meulaboh at an estimated cost of $245 million, or $1.6 million per  mile, with an estimated completion date of September 2009. We  noted that the initial plans and cost estimates for rehabilitating and  constructing the road were based on limited site information because  much of the road’s planned route was inaccessible. We also reported  that costs and schedules for the road construction project might  exceed initial estimates owing to several factors, including growing  costs for materials and labor, long-standing civil conflict in the region,  and difficulties that the Indonesian government might encounter in  acquiring land parcels needed for the road right-of-way.
The Japanese government agreed to rehabilitate the coastal road from Calang to  Meulaboh. activities. In 2005 USAID allocated $245 million of this amount for the  coastal road, and in 2006 USAID increased its allocation to $254 million.  USAID reported that the final estimated cost, as of July 2012, was $256  million, or $2.8 million per mile.
Figure 3 shows USAID’s initial and revised plans and completed results  for the Indonesia coastal road.
section_title: USAID Constructed Road under Several Major Contracts, with Numerous Factors Delaying Completion
paragraphs: From August 2005 to September 2010, USAID awarded five contracts to  reconstruct the coastal road in Aceh Province, Indonesia—three contracts  for construction, one contract for design and supervision, and one  contract for project management. Factors related to contractor  performance as well as local conditions delayed USAID’s progress in  designing and constructing the road and led to increased costs.
subsections: section_title: Road Construction, Design and Supervision, and Project Management Were Performed under Five Contracts
paragraphs: Construction of the 91 miles of road completed in April 2012 took place  under two contracts—designated by USAID as the “priority” and “prime”  contracts—for a combined estimated 83 miles of the road, and under a  third “8-mile” contract for the remaining 8 miles. USAID also awarded two  additional contracts for, respectively, the design and supervision of the  road construction and the management of the project.
Priority construction contract. In August 2005, USAID awarded a  contract to an Indonesia firm, PT Wijaya Karya (WIKA).initially expected to take place from August 2005 to August 2006,  WIKA’s construction work did not begin until October 2006. To  expedite construction on certain “priority” sections of the road, USAID  modified the contract to include, among other things, expanding the  scope from 3 miles to 26 miles and extending the completion date  from August 2006 to December 2007 for the 26 miles. In May 2008,  USAID partially terminated the priority contract, removing 8 miles from  the contract’s scope.
Design and supervision contract. In November 2005, USAID  awarded a contract to Parsons Global Services (Parsons), a U.S.- based multinational engineering firm, to design most of the road  sections—about 88 miles—and supervise construction of 91 miles of  road work.
Project management contract. In April 2006, approximately 6  months after hiring its design and supervision contractor, USAID hired  a U.S.-registered professional engineer as its overall Project  Managerto the Project Manager. The Project Manager served as the project’s  chief technical officer; was USAID’s principal interface with Indonesian  government officials; advised in the development of the project’s  design and, to ensure its conformance with design specifications,  inspected construction work and directed changes as required prior to  road sections being turned over to the Indonesian government.  for the road construction project. Parsons reported directly
Prime construction contract. In June 2007, USAID awarded the  prime contract to SsangYong-Hutama Karya Joint Association  (SsangYong-Hutama), a collaboration between a Korean firm and an  Indonesian firm, for 65 miles of road construction in five  noncontiguous sections. USAID had expected to award the prime  construction contract in September 2006. However, its initial  solicitation was restricted under USAID policy to U.S. firms, and  USAID received only a single proposal, which the agency was unable  to negotiate to an acceptable price. issued a second solicitation that, in an approved deviation from  USAID policy, was opened to international firms. According to USAID  officials, the second solicitation attracted interest from several  prospective offerors and included a revised estimated completion date  of March 2010, 6 months later than originally planned.
In December 2006, USAID
Eight-mile construction contract. In September 2010, USAID  awarded a third construction contract to SsangYong Engineering &  Construction (SsangYong) for the 8 contiguous miles removed from  the priority contract, which was completed in January 2012.
Table 1 shows the five major contracts that USAID awarded for the  construction, design and supervision, and overall project management of  the 91-mile road, as well as the contractors’ completed activities.
USAID originally intended that the “prime” contract would be used to construct the  majority of the originally planned 150-mile road. However, the inability to award the  contract based on the initial solicitation caused USAID to both increase the scope of  construction under the “priority” contract to 26 miles and reduce the scope of construction  under the “prime” contract to 65 miles, reflecting the revised project goal of building a 91- mile road.
Legend: N/A = not applicable.
WIKA designed the initial 3-mile “priority” road section; Parsons designed the remaining 88-mile road  sections.
Figure 4 shows road sections, key features, and funding levels for each of  the three road construction contractors.
Figure 5 shows a timeline of events related to the five contracts.
Factors related to contractors’ performance delayed USAID’s progress in  designing and constructing the road and led to increased costs.
Priority construction contractor. Lack of acceptable progress by  the priority contractor resulted in USAID’s reducing the scope of the  work, partially terminating the contract, and hiring a third construction  contractor to complete the unfinished work. According to USAID, the  mission determined that WIKA was not making satisfactory progress,  owing in part to financial constraints and lack of equipment as well as  WIKA’s changing its project leader three times. WIKA’s limited  progress was primarily evident in one of the sections that comprised  the priority contract. By May 2008, this 8-mile section was about 20  percent complete compared with other sections that were  approximately 50 percent to 90 percent complete. Work in this section  lagged in all areas of production including earthwork, concrete  placement, and bridge and culvert construction. As a result, USAID  eliminated this section from the scope of the priority contract through  a termination action. USAID’s decision to eliminate this section from  the priority contract enabled WIKA to concentrate resources on  remaining sections and continue making progress. USAID later  awarded the 8-mile section to another contractor, SsangYong.  However, because of the lengthy processes involved in terminating its  contract with WIKA and procuring a new contract, USAID did not  award its contract with SsangYong until September 2010.
Prime construction contractor. Slower-than-expected progress, as  well as the correction of work that did not comply with specifications,  contributed to delays in the prime contractor’s completion of the 65  miles of road construction. In addition, SsangYong-Hutama’s project  leader was changed five times, according to USAID, which may also  have contributed to the contractor’s repeatedly missing key schedule  milestones.
In addition, several local factors affected construction progress and costs.
Delays in land acquisition. According to USAID, the Indonesian  government had difficulty acquiring over 4,000 parcels of land needed  for the new road alignment and right-of-way. The land was needed  because, in many areas, the tsunami had changed the entire  landscape such that parts of the road alignment, as it existed prior to  the tsunami, were now underwater or otherwise inaccessible or  unusable. In its efforts to acquire the land parcels, the Indonesian  government experienced delays in determining ownership and  locating owners because many owners had died in the tsunami. Also,  in some instances, ownership documents, which were the only  existing ownership records, were destroyed by the tsunami. Delays  also occurred because, in some instances, the land parcels that were  acquired were not contiguous and, as a result, construction  contractors did not have a sufficient amount of land on which to  initiate construction and store equipment and materials. For example,  initiation of work to construct the priority 3-mile segment was delayed  for approximately a year because the Indonesian government had  acquired less than a quarter mile of right-of-way, significantly less land  than USAID had expected to be available.
Community opposition. Community opposition to the new road  alignment resulted in delays, according to USAID. For example,  construction was delayed because of disagreement between the  Indonesian government and individuals and communities about the  prices for land parcels. Also, for example, the proposed new  alignment involved laying pavement over more than 600 gravesites.  Upon learning that gravesites would be affected, some individuals and  communities erected roadblocks and conducted demonstrations in  opposition. To resolve the situation, Indonesian government officials,  with USAID coordination assistance, had to negotiate settlements and  identify and acquire new sites for the graves.
Security problems. According to USAID, delays occurred because of  security concerns and violence. For example, security threats caused  delays in areas with a 30-year history of civil conflict between an  insurgency group and the Indonesian government. Also, delays  occurred when contractors received security threats, equipment was  intentionally damaged, and workers were assaulted in land-value  disputes. Figure 6 shows examples of community opposition that  involved community protests, in some cases resulting in damage to  contractor equipment.
Flooding. During construction, delays resulted from flooding, caused  by unusually heavy rains that destroyed temporary access to  construction sites and to construction facilities where materials and  equipment were located. In some instances, according to USAID,  roads flooded even though drainage culverts had been built according  to design specifications (see fig. 7). Subsequent to this flooding, the  contractor corrected inaccurate design assumptions, caused by a lack  of reliable historical climatological data for the area, and increased the  capacities of some culverts.
section_title: USAID Took Several Actions to Ensure Quality of Indonesia Road Design and Construction but Lacks Quality Assurance Mechanism for Sections Still under Warranty
paragraphs: USAID’s actions to ensure the Indonesia road’s quality included, among  others, hiring an experienced project manager and requiring 1-year  warranties for completed road sections. USAID also required that the  road’s design adhere to established quality standards and required  inspections of road sections during and after construction. However, as of  July 2012, USAID had not arranged for final inspections to ensure the  quality of around 50 miles—about 55 percent—of the completed road that  are still under warranty.
subsections: section_title: USAID Established Organizational and Operational Controls to Help Ensure Quality
paragraphs: To help ensure the quality of the road’s design and construction, USAID  established organizational and operational controls by contracting with  experienced personnel for key management positions and including a 1- year warranty in each construction contract.
Project Manager. In April 2006, USAID hired a U.S.-registered  professional engineer as its Project Manager for the entire road  construction project. The Project Manager had previous experience  managing several USAID infrastructure projects overseas as well as  managing regional operations with a U.S. state’s department of  transportation. The Project Manager served as the project’s chief  technical officer and USAID’s principal interface with  design/construction supervision and construction contractors and  Indonesian government officials.
Design and supervision. Approximately 6 months before hiring its  Project Manager, USAID contracted with Parsons as the project’s  construction management contractor to complete the design of most  of the road and manage the supervision of its construction.  According to a Parsons official, USAID’s hiring of a single firm to  complete the design and management of construction supervision  facilitated communication between design engineers and construction  supervision staff and promoted quality in construction. USAID  required that key Parsons design personnel have appropriate  qualifications. For example, geotechnical, pavement, and structural  designers were all required to be registered professional engineers  with a minimum of 5 years experience on projects of a similar scope.  In addition, USAID required that key Parsons’ staff in Indonesia have  certain qualifications, such as skills and experience in contract  administration, inspection, and quality monitoring, to help ensure that  the work complied with specifications and conformed to standard  construction practices.
One-year warranty. USAID included a 1-year warranty period in all of  its contracts with construction firms. Specifically, for a period of 1 year  after each road section is completed, the contractor is required to  correct any poor-quality or faulty work that USAID or Parsons finds  during inspections.the Indonesian government until the contractor completes the  corrective actions, and contractors are not released from their  responsibilities until the Indonesian government formally accepts the  section of road.
section_title: USAID Required That Road Design Adhere to Established Quality Standards
paragraphs: To promote quality in the road’s design, USAID required that Parsons  adhere to established engineering standards. These standards define,  among other things, key parameters such as lane and right-of-way  widths, pavement structure, curve geometry, and weight-carrying  capacity. To design pavement and bridge structures that would be  capable of carrying anticipated vehicle loads, for example, design  engineers used the widely accepted U.S. standards of the American  Association of State Highway and Transportation Officials (AASHTO) as  well as regionally and locally applicable Indonesian standards, such as  those of the Association of Southeast Asian Nations. Use of AASHTO  pavement design standards enabled engineers to determine the  thickness of the road’s layers (aggregate base layers covered with an  asphalt surface) that would be needed to sustain anticipated traffic  volumes and vehicle weights over its 10-year design life. In addition, use  of AASHTO and Indonesian bridge standards allowed engineers to  determine appropriate structural configurations for bridges in  consideration of site-specific traffic, thermal, and seismic conditions.
Parsons also included several safety features in the design—for example,  guardrails, warning signs, pavement markings, and protected walkways  on bridges—that contributed to the road’s quality. Figure 8 illustrates  these features.
During construction, USAID’s Project Manager and Parsons took actions  to help ensure quality by observing ongoing work, witnessing tests by  construction contractors, conducting their own inspections, and requiring  that the contractor correct any deficiencies or substandard work. For  example, after determining that use of improper materials had resulted in  the deterioration of approximately 6 miles of paved lanes, USAID directed  the prime contractor to remove and replace these sections of the road.  Parsons’ staff were involved in performing daily quality tests and  conducting inspections. Parsons provided information to USAID’s Project  Manager through frequent communication, correspondence, joint site  reviews, and periodic reporting.
USAID’s Project Manager and Parsons inspected road sections during  construction, when construction was completed, and when the completed  sections were handed over to the Indonesian government following the 1- year warranty period. Key project stakeholders—USAID’s Project  Manager, Parsons, the construction contractor, and Indonesian  government officials—attended these inspections. When an inspection  identified deficiencies, USAID and Parsons ensured that they were  corrected before the road section was formally turned over to the  Indonesian government. For example, during our March 2012 visit to  Aceh Province, Indonesia, we observed one of the construction  contractors repairing defective pavement that USAID’s Project Manager  had identified during an inspection near the end of the 1-year warranty for  the affected section. Figure 9 shows a contractor using a milling machine  to remove pavement on this section in preparation for corrective repaving.
USAID currently lacks the capacity to ensure the quality of several  sections of recently completed road that are still within the 1-year  warranty period. Several sections totaling approximately 50 miles in  length, or about 55 percent of the recently completed road, are currently  under warranty—about 25 miles with warranties expiring at various times  through the end of 2012 and about 25 miles with warranties expiring from  January 2013 through April 2013. Figure 10 shows the locations of road  sections with unexpired warranties, as of June 2012, and section  expiration dates.
USAID officials in Jakarta told us in April 2012 that USAID was  considering rehiring the former Project Manager on an intermittent basis  to perform inspections of the approximately 50 miles of road sections  prior to expiration of the sections’ 1-year warranties. However, as of July  2012, USAID had not yet reached an agreement with the Project  Manager or made other arrangements to inspect the sections.
section_title: USAID Took Actions to Enhance Indonesia Road’s Sustainability, but Several Factors Could Decrease Its Life Expectancy
paragraphs: To enhance the Indonesia road’s sustainability, USAID designed and  constructed it to withstand heavy weights, included in the design several  features intended to minimize environmental impact, and provided  assistance to the Indonesian Directorate General of Highways (the  Directorate). However, several factors, such as the Directorate’s limited  capacity and resources and failure to restrict overweight vehicles, could  lessen the road’s sustainability during its intended 10-year life  expectancy.
subsections: section_title: USAID Took Numerous Actions Intended to Enhance Road’s Sustainability
paragraphs: USAID took several actions intended to enhance the road’s sustainability  for the intended 10-year life expectancy. For example, in designing and  constructing the road, USAID anticipated the effects of heavy trucks—the  most significant factor affecting the rate of pavement deterioration.  USAID also included in the road’s design the following features intended  to enhance sustainability and minimize environmental impact:  rock placement, known as armoring, along the shoreline to protect  road from storm surges; shaped slopes and rock-fall retaining walls in mountainous areas to  protect the road from damage; retainer and drainage systems to protect the road from rock falls and  prevent flooding;  concrete lining of drainage channels to prevent erosion;  slope stabilization using Gabion baskets; galvanized steel bridge structures that do not require periodic  painting.
Figure 11 illustrates these features intended to enhance the road’s  sustainability.
In addition, USAID’s Project Manager developed an operations and  maintenance plan for the Directorate. The plan included recommended  practices such as establishing road maintenance facilities and placing  equipment at three locations to maintain the road, with specific  maintenance responsibilities for each site. The plan also outlined  necessary maintenance tasks, such as patching pavement, repairing  guardrails, and cleaning culverts and drains, and it provided a checklist of  equipment needed by the Directorate. Further, USAID’s Project Manager  suggested, among other things, that the Directorate limit the width and  size of vehicles permitted to pass through narrow mountainous road  sections. Figure 12 shows a truck passing through a narrow mountainous  section of road that was repaved.
USAID also took other actions, such as employing local workers and  donating used vehicles, that could enhance the road’s sustainability.  USAID encouraged contractors to employ Indonesian workers from Aceh  Province during the construction work to enhance local skills and  experience. For example, construction contractors employed Indonesian  heavy equipment operators and truck drivers, and Parsons trained  Indonesians to fill several key positions such as Finance Manager and  Public Information/Media Specialist. Also, according to USAID officials,  after the construction work was completed, USAID and Parsons provided  the Directorate with used vehicles for use in maintaining the road.
section_title: Several Factors Could Affect Road’s Sustainability during Intended 10-Year Life Expectancy
paragraphs: Several factors—the Directorate’s limited capacity and resources, failure  to restrict overweight vehicles, construction in the road right-of-way, and  unauthorized access roads—could lessen the road’s sustainability for its  intended 10-year life expectancy.
Limited capacity and resources. Although the Directorate has  provided a 5-year funding plan for the road and taken some actions to  replace missing guardrails, the Directorate lacks some equipment as  well as a sufficient number of staff for maintenance and repairs,  according to USAID and Directorate officials. For example, USAID  recommended in its checklist that the Directorate keep a jackhammer,  compressor, and four vibrator rollers at each of three proposed  maintenance facilities, but as of May 2012, the Directorate had not  established the maintenance facilities and had not provided the  equipment. Also, according to Directorate officials in Banda Aceh, the  Directorate has a limited number of staff to maintain existing roads  throughout Aceh Province.
Overweight vehicles. The Directorate has not taken action to restrict  the use of overweight vehicles on the road, which could reduce the  road’s life expectancy. USAID’s design of the road with a 10-year life  expectancy is based on certain assumptions concerning the impact of  the number and weight of vehicles on the road’s deterioration. For  example, USAID’s design assumes that the heaviest trucks  anticipated (100,000-pound, 3-axle trucks) on the road will comprise  less than 1 percent of total traffic; however, this low volume of heavy  truck traffic will cause more than 60 percent of the road’s deterioration  over its 10-year design life. A greater than expected volume of heavy  truck traffic, or use of the road by trucks that exceed 100,000 pounds,  will lead to a higher amount of deterioration and reduced life for the  road. To thwart acceleration of pavement damage resulting from  overweight vehicles using the road, USAID recommended that the  Directorate use portable scales to weigh suspected overweight  vehicles. However, as of May 2012, the Directorate had not taken any  actions to weigh vehicles. During our March 2012 inspection of the  road, we observed several heavily loaded trucks but saw no   permanent weigh stations and saw no vehicles being weighed with  portable scales.
Construction in right-of-way. The road’s intended 10-year life  expectancy is also based on keeping drainage culverts in the right-of- way clear of blockage, according to USAID’s Project Manager.  However, the Directorate has not taken action to prevent the  construction of buildings and has not removed existing buildings that  have been constructed in the right-of-way. Such construction could  obstruct drainage channels and cause erosion and flooding.  According to USAID officials, USAID informed the Directorate of  numerous instances where buildings had been or were being  constructed in the right-of-way, but as of May 2012, the Indonesian  government had not taken any actions to remove or prevent such  construction. When we traveled the length of the road in March 2012,  we observed a completed building that had been constructed in the  right-of-way over the drainage channel.
Unauthorized access roads. As of March 2012, according to  USAID’s Project Manager, the Directorate had not taken action to  prevent the creation of unauthorized access roads, which also can  prevent proper drainage and cause erosion and flooding. These  unauthorized access roads have been constructed by removing  guardrail or moving soil, rocks, and other materials; in some  instances, these access roads may obstruct drainage channels and  cause erosion and flooding. During our March 2012 inspection of the  road, we saw several access roads that had been built by removing  guardrails and moving soil and other materials.
Figure 13 shows a building that was constructed in the right-of-way and  an unauthorized access road where the guardrail was removed.
section_title: Conclusions
paragraphs: USAID has completed the construction of a major 91-mile road in a  coastal area of northern Indonesia that was heavily affected by the  December 2004 tsunami and, in doing so, has helped to provide an  opportunity for economic growth in the region. Although USAID  completed the road construction more than 2 years later than planned,  the agency finished the work by confronting and overcoming significant  obstacles while working in a challenging environment. However, despite  taking several actions to help ensure the road’s quality, USAID currently  lacks the capacity to ensure that approximately 50 miles of recently  completed road sections—55 percent of the entire road—still under  warranty perform as intended through the 1-year warranty period, as  stipulated in USAID’s contracts with construction firms. Specifically,  although USAID officials in Jakarta told us that they are considering  rehiring the Project Manager on an interim contract, the agency has not  finalized this arrangement. Without qualified personnel inspecting these  road sections before their warranties expire, USAID cannot ensure that  the quality standards are met and that the contractor corrects any  deficiencies as required within the 1-year warranty period.
To help ensure that the road will reach its intended 10-year life  expectancy, USAID took actions such as designing the road in  accordance with established standards and supporting the Indonesian  government’s Directorate for Highways. However, the road may not  achieve its 10-year life expectancy unless the Indonesian government  properly maintains the road, restricts usage by overweight vehicles, and  prevents construction in the road right-of-way and creation of  unauthorized access roads.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Administrator of USAID take the following two  actions:
To help ensure that recently completed sections of the Indonesia road  meet quality standards as required during the 1-year warranty period,  ensure that the road sections are inspected in a timely manner and, if  deficiencies are found, require that the construction contractor repair  the sections before they are formally turned over to the Indonesian  government.
To help ensure that the constructed road remains sustainable for 10  years as intended, direct the USAID Mission in Indonesia to work with  the Indonesian government to develop and implement a process  addressing factors that could affect the road’s sustainability.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report, as well as a video of our March 2012  inspection of the road, to USAID and State for their review. USAID  provided written comments about the draft report, which are reprinted in  appendix II, and provided technical comments about the draft report and  the video that we incorporated as appropriate. State did not provide  comments on either the draft report or the video.
In its written comments, USAID stated that our report presented an  accurate assessment of its construction operations and its efforts to  ensure the road’s quality and sustainability. In addition, USAID concurred  with our recommendation that it ensure that road sections still under  warranty are inspected in a timely manner and that it require the  contractor to repair any defective sections. The agency stated that it will  retain qualified personnel who can perform inspections before the  warranties expire. USAID concurred with the intent of our  recommendation that, to help ensure the road’s sustainability for the  intended 10 years, it should work with the Indonesian government to  develop and implement a process addressing factors that could affect the  road’s sustainability. USAID noted that many of the factors that could  affect the road’s sustainability are outside the agency’s managerial  control and that, apart from the road sections still under warranty, the  road is under the Indonesian government’s administration. USAID  indicated that any additional technical assistance it might offer the  Indonesian government would be contingent on the government’s  receptiveness as well as the availability of USAID resources. We maintain  that it is essential that USAID work proactively with the Indonesian  government to develop and implement a process that addresses certain  factors, such as the use of overweight vehicles, construction in the right- of-way, and the creation of unauthorized access roads, that could affect  the road’s sustainability.
We are sending copies of this report to interested congressional  committees, the Secretary of State, and the USAID Administrator. We will  also provide copies to others on request. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff 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 the 91-mile road constructed by the U.S. Agency for  International Development (USAID) in Aceh Province, Indonesia,  following the December 2004 tsunami. This is the third report we have  conducted on USAID’s post-tsunami reconstruction efforts. Our objectives  in this report were to (1) describe USAID’s road construction operations  as well as factors that delayed the road’s completion, (2) assess USAID  efforts to ensure the road’s quality, and (3) examine factors that could  affect the road’s sustainability.
To determine the status and funding of USAID’s road reconstruction  activities in Aceh Province, Indonesia, we reviewed documents and  interviewed officials from USAID’s Bureau for Asia and the Near East and  the Department of State’s (State) Office of Foreign Assistance Resources  in Washington, D.C.; and USAID’s Office of Financial Management at its  mission in Jakarta, Indonesia. We obtained information from USAID  officials on internal controls for collection of data, reviewed consolidated  reports and mission-specific reports, and interviewed cognizant officials at  USAID and State about data reliability. In addition, we interviewed  knowledgeable USAID officials about the systems and methodology they  use to verify the completeness and accuracy of the data. We determined  that the data were sufficiently reliable for the purposes of our report.
To assess the reliability of USAID and State funding and expenditure  data, we reviewed USAID Office of the Inspector General and previous  GAO reports on USAID disaster reconstruction programs and funding  since 2002; we found that none of these sources noted any discrepancies  or concerns about the reliability of USAID’s data. Based on our  comparison of data generated from various USAID and State sources, we  found that the sources generally corroborated each other. We determined  that USAID and State funding and expenditure data were sufficiently  reliable for our report.
To assess the quality, construction features, and sustainability of the road  construction, we traveled the full 91-mile length of the road from Banda  Aceh to Calang, Indonesia, with USAID’s Project Manager for the road  construction project. We also traveled the road from Calang to Meulaboh,  Indonesia, for comparative purposes. During our trip between Banda  Aceh and Calang, we photographed and recorded video of several road  construction features and activities, and recorded testimonyUSAID’s Project Manager on construction features, obstacles,  challenges, quality, and potential impediments to sustainability. In Banda  Aceh, we met with representatives from the Indonesian Directorate  General of Highways (the Directorate), which is responsible for  maintaining the road. To better understand construction, quality, potential  obstacles to sustainability, and general construction challenges, we met  with representatives of both SsangYong and Hutama, the two firms that  constitute the SsangYong-Hutama Joint Association.
To identify obstacles that USAID encountered, we examined USAID  Office of Inspector General and State reports which provide information  on construction status as well as summarize major construction  accomplishments and challenges. In Jakarta, Indonesia, we met with  representatives from the Directorate. We also reviewed USAID road  construction files to better understand the obstacles that led to delays and  cost increases; this review included reviewing status reports, contracts,  and correspondence.
To examine the extent to which USAID ensured quality, we reviewed  USAID road construction contracts and met with USAID’s Project  Manager to discuss oversight procedures. We also discussed USAID’s  road quality inspections and procedures for ensuring that construction  contractors make repairs to damaged sections of road within the 1-year  warranty period, as required. Members of our staff, including a U.S.- registered professional engineer, traveled the road and examined road  quality through direct observation of road conditions, construction  features, and repair work being performed.
To examine the extent to which USAID helped ensure sustainability, we  examined road operations and maintenance plans developed by USAID  for the Directorate, which included practices that the USAID Project  Manager recommended that the Directorate adopt and implement. We  also examined the checklist of equipment developed by USAID’s Project  Manager and needed by the Directorate to maintain the road. Members of  our staff, including a U.S.-registered professional engineer, made direct  observations of road features that were designed and constructed for  road sustainability.
We conducted this performance audit from January 2012 to July 2012 in  accordance with generally accepted government auditing standards.  These 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, Emil Friberg, Jr. (Assistant  Director), Michael Armes (Assistant Director, registered Professional  Engineer), Ryan Barlow, Mason Calhoun, Reid Lowe, and George Taylor  made key contributions to this report. Ashley Alley, Martin De Alteriis,  Theresa Perkins, Jeremy Sebest, Jena Sinkfield, and Cynthia Taylor  provided technical assistance.
section_title: Related GAO Products
paragraphs: Haiti Reconstruction: Factors Contributing to Delays in USAID  Infrastructure Construction. GAO-12-68. Washington, D.C.: November 16,  2011.
Haiti Reconstruction: U.S. Efforts Have Begun, Expanded Oversight Still  to Be Implemented. GAO-11-415. Washington, D.C.: May 19, 2011.
Afghanistan Reconstruction: Progress Made in Constructing Roads, but  Assessments for Determining Impact and a Sustainable Maintenance  Program Are Needed. GAO-08-689. Washington, D.C.: July 8, 2008.
Compact of Free Association: Palau’s Use of and Accountability for U.S.  Assistance and Prospects for Economic Self-Sufficiency. GAO-08-732.  Washington, D.C.: June 10, 2008.
Foreign Assistance: USAID Signature Tsunami Reconstruction Efforts in  Indonesia and Sri Lanka Exceed Initial Cost and Schedule Estimates, and  Face Further Risks. GAO-07-357. Washington, D.C.: February 27, 2007.
Foreign Assistance: USAID Completed Many Caribbean Disaster  Recovery Activities, but Several Challenges Hampered Efforts.  GAO-06-645. Washington, D.C.: May 26, 2006.
Foreign Assistance: USAID Has Begun Tsunami Reconstruction in  Indonesia and Sri Lanka, but Key Projects May Exceed Initial Cost and  Schedule Estimates. GAO-06-488. Washington, D.C.: April 14, 2006.
Foreign Assistance: USAID’s Earthquake Recovery Program in El  Salvador Has Made Progress, but Key Activities Are Behind Schedule.  GAO-03-656. Washington, D.C.: May 15, 2003.
Foreign Assistance: Disaster Recovery Program Addressed Intended  Purposes, but USAID Needs Greater Flexibility to Improve Response  Capability. GAO-02-787. Washington, D.C.: July 24, 2002.