Although the tsunami’s effects were concentrated in the countries closest to the earthquake’s epicenter in the Indian Ocean, about 100 miles off the coast of Sumatra, it also destroyed communities along some coastlines thousands of miles away. A year later, in December 2005, more than 40,000 persons were still listed as missing and tens of thousands remained in temporary housing. Figure 1 shows the most-affected countries, the numbers of people dead, missing, and displaced, and the estimated damage as a result of the tsunami. Responding to the magnitude of the disaster, the international donor community, including the United States, pledged approximately $13.6 billion to assist with tsunami relief and reconstruction efforts in all of the affected countries. National governments and the European Union pledged $6.2 billion of this amount (45 percent), private individuals and companies pledged $5.1 billion (38 percent), and international financial institutions pledged $2.3 billion (17 percent). These funds are being provided to a wide range of entities involved in implementing relief and reconstruction efforts (see fig. 2). USAID and the U.S. Department of Defense (DOD) and its component services provided immediate assistance to tsunami survivors and to the governments of many of the affected countries, largely completing these efforts by the end of 2005. USAID’s Office of U.S. Foreign Disaster Assistance (OFDA), Office of Transition Initiatives (OTI), and other USAID offices assisted survivors by providing food, water, temporary shelter, and other critical needs. Soon afterward, USAID initiated economic reactivation projects, such as paying people to remove debris in many affected areas. USAID’s emergency relief budget totaled approximately $101 million, including $32 million in Indonesia and $47 million in Sri Lanka. In addition, several DOD component services, including the U.S. Air Force and Navy, provided important emergency relief. For example, the Air Force rescued survivors and airlifted supplies, and a Navy hospital ship provided medical support. The supplemental tsunami appropriations law provided up to $226 million to reimburse DOD for its emergency relief activities. As of January 2006, DOD expended approximately $125 million (55 percent), including nearly $79 million for airlift and other flying costs and slightly more than $7 million for health- and medical-related services. Of the remaining $101 million, DOD had not completed a final reconciliation of $47 million, $40 million had been reprogrammed to help cover DOD’s costs in other disaster assistance efforts, and $14 million had lapsed. Table 1 shows U.S. tsunami emergency relief funds budgeted and expended. Of the $908 million appropriated for tsunami relief and reconstruction assistance, $581 million, or 64 percent, was budgeted for reconstruction and other postemergency relief activities. Of this amount, USAID was budgeted $496 million for reconstruction, and other U.S. agencies were budgeted $85 million for various other activities. (See table 2.) USAID’s planned reconstruction efforts in Indonesia and Sri Lanka include its signature projects, such as road and bridge construction; small-scale infrastructure projects, such as rebuilding schools and clinics; technical assistance for good governance; and transition assistance to improve survivors’ livelihoods and, in Indonesia, to build houses. In addition, USAID, through a transfer of funds to the Department of the Treasury, is funding debt relief to the governments of Indonesia and Sri Lanka; in exchange for deferral of a portion of their debt, both governments agreed to use the resources freed by debt deferral for relief and reconstruction-related programs (see app. II for a more detailed description of this aspect of the program). Table 3 shows the funds budgeted for ongoing and planned U.S. reconstruction assistance in Indonesia and Sri Lanka. Initial USAID plans call for completing its nonsignature activities in both countries by September 2007 and its signature projects in Indonesia and Sri Lanka by September 2009 and March 2008, respectively. Section 4102 of the supplemental appropriations act requires that, beginning in December 2005, the Secretary of State report to Congress every 6 months on tsunami-related progress, expenditures, and schedules. The report due in December 2005 was provided to Congress on March 22, 2006. Figure 3 shows USAID’s projected timeline for completing its tsunami reconstruction programs in Indonesia and Sri Lanka. USAID has obligated some, and expended small percentages, of its reconstruction funding in both countries and has initiated some of its planned activities. However, USAID may have difficulty completing its reconstruction projects—particularly its large-scale signature projects—within initial cost estimates and schedules because of, among other factors, increased demand and higher costs for construction materials and labor in both Indonesia and Sri Lanka. In Indonesia, USAID has begun many of the reconstruction projects that it plans to complete by September 2007. USAID has obligated about one-third, and expended a small percentage, of the funding budgeted for reconstruction in that country. In addition, USAID has begun to design, and performed preliminary site work on, a 3-mile segment of its large-scale signature infrastructure project, a 150-mile paved road; however, because of a variety of factors, the overall road construction project may overrun cost and time estimates. Similarly, USAID is currently planning and designing its small-scale infrastructure projects and has begun its transition assistance projects, both of which may also exceed cost and schedule projections. As of January 31, 2006, USAID had obligated $111 million (32 percent) and expended $9 million (3 percent) of the $349 million budgeted for its reconstruction projects in Indonesia (see table 4). These activities include the signature road construction, small-scale infrastructure construction, technical assistance for good governance, and transition assistance. USAID awarded an initial contract and began work on a segment of its signature road construction project in Indonesia in August 2005, but, owing to various factors, the project may overrun initial cost estimates and schedules. The proposed project, budgeted at $245 million, consists of building a 150-mile paved two-lane road and more than 100 bridges and culverts along the western coast of Aceh Province on the island of Sumatra, from the provincial capital of Banda Aceh to the city of Meulaboh. The tsunami’s impact destroyed or badly damaged much of the original road, a vital transportation route for the region. USAID agreed to reconstruct the road to support the Indonesian government’s overall reconstruction strategy, with the goal of helping to restore the economic strength of the area and promoting the redevelopment of the affected communities. According to an Indonesian government report, the road is key to revitalizing the economy of Aceh Province and to successfully initiating other reconstruction efforts. Figure 4 shows the approximate route of the planned road and photos of damage caused by the tsunami. USAID plans to design and construct the signature road in three distinct phases, with separate contracts for each phase. USAID also entered into interagency agreements with USACE for technical support. In early 2005, USACE and USAID conducted a preliminary assessment of site conditions and prepared the cost estimate that USAID submitted to Congress. The three phases for the signature road project are as follows (see app. III for more details): 1. Maintain a rehabilitated 50-mile temporary segment and construct a short segment. In August 2005, an Indonesian firm began maintaining a temporary 50-mile road segment, from Banda Aceh to Lamno, and designing and constructing a new 3-mile segment. This maintenance work is intended to ensure that the temporary segment, recently rehabilitated by the Indonesian army, remains passable until permanent construction is completed. 2. Design the signature road and supervise its construction. The second contract, for designing most of the 150-mile road and supervising construction work, was awarded to a U.S. firm in November 2005. The firm will supervise construction of the 3-mile segment, develop plans and specifications for the remaining 147 miles, and assist USAID in awarding and supervising construction of the signature road. 3. Construct the signature road. USAID plans to award a third contract by September 2006 to construct the 147-mile segment of the signature road. However, several factors—limited site information, rising materials and labor costs, and land acquisition issues—may increase the signature road project’s total costs and the difficulties of completing it within the intended time frame. Limited site information. A joint USAID-USACE team initially assessed conditions and developed a cost estimate for building the road. The estimate was based on using undamaged sections of the existing road and large segments of the temporary road placed by the Indonesian Army. A 20 percent contingency was included in the cost estimate because much of the road’s planned route was inaccessible, resulting in the team approximating site conditions and developing plans based on their assumptions. However, actual costs may still exceed the estimate because plans for routing the road have changed. According to USACE, current plans show that large segments of the road are now planned to be placed along new undeveloped routes—not along existing routes as initially planned. This change is expected to result in the need for more earthwork and related construction activities than originally anticipated. Rising costs. Increasing costs for materials and labor will also likely affect the road construction project’s overall cost. Demand for construction labor and materials has risen dramatically in Aceh Province and, according to USAID officials, will likely continue to rise. For example, a USAID official reported that the price of fuel oil used for construction equipment had risen more than 250 percent, from $0.17 per liter in February 2005 to $0.60 per liter in December 2005.