Foreign Assistance
USAID's Earthquake Recovery Program in El Salvador Has Made Progress, but Key Activities Are Behind Schedule Gao ID: GAO-03-656 May 15, 2003In early 2001, two major earthquakes struck El Salvador, causing more than 1,100 deaths and $1.7 billion in damage to property and infrastructure. GAO has been periodically monitoring the recovery program being implemented by the U.S. Agency for International Development (USAID), the lead U.S. agency. The House Appropriations Committee's Subcommittee on Foreign Operations, Export Financing, and Related Programs asked GAO to review USAID's (1) oversight and accountability measures, (2) progress and factors affecting progress, and (3) coordination with other donors and the government of El Salvador.
USAID is implementing a $159 million recovery program to assist El Salvador in recovering from two earthquakes in 2001. Nearly two-thirds of the funding is allocated for the construction of approximately 26,000 houses for low-income families who lost homes in the earthquakes. Because of concern that recovery funding could be susceptible to misuse or corruption, USAID established oversight measures, such as conducting concurrent audits of host country expenditures. USAID also applied lessons learned from its recovery program in Central America following Hurricane Mitch in 1998, including using implementing organizations with a proven record in accounting for funds and implementing disaster recovery activities. USAID has made progress in implementing the recovery program but some activities are behind schedule or did not meet original target dates. As of March 31, 2003, USAID had expended $58 million (36 percent) of its $159 million in program funding and is making progress in implementing some activities. For example, USAID-funded private voluntary organizations had completed all of the houses scheduled during the first phase of the program. Other implementers had installed potable water systems for more than 70,000 recipients in rural areas and assisted micro- and small businesses that were damaged or destroyed. Due to a number of factors, however, some USAID construction activities, such as repairing and rebuilding schools, health facilities, municipal buildings, and local markets, are behind schedule. Also, as of March 31, 2003, El Salvador's housing agency (FONAVIPO) had completed less than two-thirds of the nearly 3,000 houses it was originally scheduled to complete by September 2002. USAID revised its agreement with FONAVIPO but the new agreement does not establish milestones to benchmark progress and determine whether housing construction will be completed as scheduled. At its current pace, it may be difficult for USAID to complete the recovery program by the end of September 2004, as planned. USAID coordinated its earthquake recovery efforts with other donors at the international, national, and local levels; the government of El Salvador; and community members. During our review, we found no evidence that USAID was duplicating other donors' recovery efforts.
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Director: Team: Phone:GAO-03-656, Foreign Assistance: USAID's Earthquake Recovery Program in El Salvador Has Made Progress, but Key Activities Are Behind Schedule
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Report to the Subcommittee on Foreign Operations, Export Financing, and
Related Programs, Committee on Appropriations, House of
Representatives:
May 2003:
Foreign Assistance:
USAID's Earthquake Recovery Program in El Salvador Has Made Progress,
but Key Activities Are Behind Schedule:
GAO-03-656:
GAO Highlights:
Highlights of GAO-03-656, a report to Subcommittee on Foreign
Operations, Export Financing, and Related Programs, Committee on
Appropriations, House of Representatives
Why GAO Did This Study:
In early 2001, two major earthquakes struck El Salvador, causing more
than 1,100 deaths and $1.7 billion in damage to property and
infrastructure. GAO has been periodically monitoring the recovery
program being implemented by the U.S. Agency for International
Development (USAID), the lead U.S. agency. The House Appropriations
Committee‘s Subcommittee on Foreign Operations, Export Financing, and
Related Programs asked GAO to review USAID‘s (1) oversight and
accountability measures, (2) progress and factors affecting progress,
and (3) coordination with other donors and the government of El
Salvador.
What GAO Found:
USAID is implementing a $159 million recovery program to assist El
Salvador in recovering from two earthquakes in 2001. Nearly two-
thirds of the funding is allocated for the construction of
approximately 26,000 houses for low-income families who lost homes in
the earthquakes.
Because of concern that recovery funding could be susceptible to
misuse or corruption, USAID established oversight measures, such as
conducting concurrent audits of host country expenditures. USAID also
applied lessons learned from its recovery program in Central America
following Hurricane Mitch in 1998, including using implementing
organizations with a proven record in accounting for funds and
implementing disaster recovery activities.
USAID has made progress in implementing the recovery program but some
activities are behind schedule or did not meet original target dates.
As of March 31, 2003, USAID had expended $58 million (36 percent) of
its $159 million in program funding and is making progress in
implementing some activities. For example, USAID-funded private
voluntary organizations had completed all of the houses scheduled
during the first phase of the program. Other implementers had
installed potable water systems for more than 70,000 recipients in
rural areas and assisted micro- and small businesses that were damaged
or destroyed. Due to a number of factors, however, some USAID
construction activities, such as repairing and rebuilding schools,
health facilities, municipal buildings, and local markets, are behind
schedule. Also, as of March 31, 2003, El Salvador‘s housing agency
(FONAVIPO) had completed less than two-thirds of the nearly 3,000
houses it was originally scheduled to complete by September 2002.
USAID revised its agreement with FONAVIPO but the new agreement does
not establish milestones to benchmark progress and determine whether
housing construction will be completed as scheduled. At its current
pace, it may be difficult for USAID to complete the recovery program
by the end of September 2004, as planned.
USAID coordinated its earthquake recovery efforts with other donors at
the international, national, and local levels; the government of El
Salvador; and community members. During our review, we found no
evidence that USAID was duplicating other donors‘ recovery efforts.
What GAO Recommends:
To ensure that USAID achieves its goal of building over 26,000 houses
by September 2004, we recommend that the USAID Administrator take
action to accelerate construction activities and establish interim
milestones to benchmark progress and determine whether construction
will be completed as scheduled. Also, if warranted and to the extent
possible under existing agreements, USAID should consider reducing the
number of houses to be built by FONAVIPO and increasing the number of
houses to be built by private voluntary organizations with a proven
record of meeting construction goals.
www.gao.gov/cgi-bin/getrpt?GAO-03-656.
To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Jess Ford at (202) 512-4268 or
fordj@gao.gov.
Letter:
Results in Brief:
Background:
USAID Established Additional Oversight and Applied Lessons Learned:
USAID Has Made Progress in Some Activities, but Others Are Behind
Schedule or Did Not Meet Original Target Completion Dates:
USAID Coordinated with Other Donors and the Government of El Salvador:
Conclusions:
Recommendation for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the U.S. Agency for International
Development:
GAO Comments:
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: U.S. Agencies with Agreements to Assist with USAID's Earthquake
Recovery Program and Budgeted Funding Amounts:
Table 2: USAID Earthquake Recovery Assistance Budgeted and Expended, as
of March 31, 2003:
Table 3: USAID-Funded Houses to Be Built and Completed during Phase I,
as of March 31, 2003:
Table 4: Status of Other Construction Activities and Key Dates:
Figures:
Figure 1: Areas Affected by the January and February 2001 Earthquakes in
El Salvador:
Figure 2: Earthquake Recovery Activities, by Amount and Percentage of
Funds Budgeted:
Figure 3: Municipalities in El Salvador Where USAID Is Constructing
Houses during Phase I, and Municipalities Visited by GAO:
Figure 4: Houses under Construction, Being Inspected, and Completed:
Figure 5: Timeline of USAID's Housing Program and the Number of Houses
Scheduled and Completed:
Figure 6: USAID-Funded Houses in the Community of El Guarumal:
Abbreviations:
CDC: Centers for Disease Control and Prevention:
FONAVIPO: El Salvador's National Popular Housing Fund:
ILP: El Salvador's Institute for Freedom and Progress:
PVO: private voluntary organization:
USACE: U.S. Army Corps of Engineers:
USAID: U.S. Agency for International Development:
Letter May 15, 2003
The Honorable Jim Kolbe
Chairman
The Honorable Nita M. Lowey
Ranking Minority Member
Subcommittee on Foreign Operations,
Export Financing, and Related Programs
Committee on Appropriations
House of Representatives:
In January and February, 2001, two major earthquakes struck El
Salvador, leaving over 1,100 persons dead and thousands more injured.
Damages to infrastructure, houses, and other property were estimated at
more than $1.7 billion. The United States and other donors initially
responded by providing emergency relief, such as food, water, medical
supplies, and temporary shelter. In March 2001, the international donor
community pledged $1.3 billion to assist in the recovery and
reconstruction of earthquake-affected areas of the country. The
Congress and the administration made available approximately $159
million for the U.S. Agency for International Development (USAID) to
carry out earthquake-related disaster recovery activities--$59 million
and $100 million in fiscal years 2001 and 2002, respectively. USAID, in
coordination with several other U.S. departments and agencies, is
currently implementing the recovery program. USAID officials have
stated that the program will be completed and the funds expended by
September 30, 2004.
Because of congressional concerns about potential corruption and prior
misuse of foreign aid for relief and reconstruction, you asked us to
monitor the delivery of the assistance through frequent visits to El
Salvador. We agreed to review USAID's (1) oversight of, and
accountability measures associated with, the recovery program; (2)
progress in the recovery program and factors affecting its progress;
and (3) coordination of recovery efforts with other donors and the
government of El Salvador.
This is an interim report on the progress of the earthquake recovery
program. To address these matters, we reviewed the objectives and
oversight strategy of the program and made five trips to El Salvador
between July 2001 and January 2003. On our trips, we visited numerous
project sites, traveling to some of the most remote areas of the
country, talking with many people affected by the earthquakes, and
monitoring the progress of USAID projects across a wide range of
sectors. We briefed USAID officials on our findings during these trips
so that they could take corrective actions, if needed. (For details of
our scope and methodology, see app. I.):
Results in Brief:
USAID established oversight measures for its earthquake recovery
program, including concurrent audits of host country expenditures, to
augment the standard financial controls that it requires for
development assistance programs, and it applied lessons learned from
its work after Hurricane Mitch. Specifically, the Court of Accounts, a
government of El Salvador audit institution, is conducting concurrent
audits of more than $50 million in USAID funds for construction
activities being implemented by the government. In addition, USAID's
Regional Inspector General reviewed USAID's housing program and is
conducting other audits. We reviewed numerous reports issued by the
oversight organizations, and, to date, they have found no substantive
problems except for delays in housing construction. Also, USAID applied
lessons it had learned in carrying out the disaster recovery program
following Hurricane Mitch in 1998. It contracted with implementing
organizations it had worked with successfully after the hurricane and
with four U.S. government agencies to provide technical assistance and
quality control for various activities.
USAID has made progress in implementing the earthquake recovery
program, but several activities are behind schedule and housing
construction did not meet its initial target completion date. As of
March 31, 2003, USAID had expended approximately $58 million (36
percent) of its $159 million in earthquake recovery funding, building
houses, installing potable water systems for more than 70,000
beneficiaries in rural communities, and providing financial support to
micro-and small businesses that were damaged or destroyed. For example,
private voluntary organizations have completed all of the houses they
were scheduled to complete during the initial construction phase.
However, several USAID construction activities, including the
rebuilding of schools, health facilities, municipal buildings, and
local markets, are behind schedule. Also, housing construction by
FONAVIPO (El Salvador's government housing agency) did not meet its
original target completion date. Specifically, as of the end of March
2003, FONAVIPO had completed only about two-thirds of the houses it was
originally scheduled to finish in September 2002. In November 2002,
USAID approved a revised plan that established September 2003 as the
new date for FONAVIPO to complete its Phase I houses. The revised plan
includes some financial and other changes but does not establish
interim milestones so that USAID will be able to benchmark FONAVIPO's
progress in building and completing houses. At current construction
rates, it may be difficult for USAID to achieve its goal of completing
the earthquake recovery program by September 30, 2004. Delays in
housing construction resulted from several factors, including the
lengthy process of ensuring that housing beneficiaries had clear title
to their property and initial difficulties regarding payments to some
contractors. In addition, the organizations implementing USAID's
housing construction program have not consistently built houses
completely and correctly, which has necessitated repeated inspections
by U.S. Army Corps of Engineers personnel. USAID reports that
implementers have been making slow but positive progress in improving
the quality of houses.
USAID is coordinating its earthquake recovery efforts with other donors
and with the government of El Salvador. USAID has worked with donors at
the international, national, and local levels to prevent duplication of
recovery activities. USAID also has coordinated with government of El
Salvador ministries, municipal officials, and community members. During
our periodic visits to El Salvador, we found no evidence that USAID was
duplicating the activities of others because, in part, the country's
reconstruction needs exceed the amount of support that has been pledged
and provided by other donors.
We are recommending that, to increase the likelihood of meeting USAID's
housing construction goals, the USAID Administrator take action to
accelerate the pace of construction activities and establish interim
milestones to benchmark progress and determine whether construction
will be completed as scheduled. Also, if warranted and to the extent
possible under existing agreements, the USAID Administrator should
consider reducing the number of houses to be built by FONAVIPO and
increasing the number to be built by private voluntary organizations
that have performed well to date. In commenting on a draft of this
report, USAID agreed with our recommendation that it accelerate the
pace of construction activities. On the basis of comments USAID
provided on the draft, we modified our recommendation to state that
USAID should establish interim milestones to benchmark progress and
determine whether FONAVIPO and other housing implementers are making
progress in meeting the overall goal of constructing 26,400 houses by
September 30, 2004.
Background:
On January 13, 2001, a severe earthquake measuring 7.6 on the Richter
scale caused major loss of life, injuries, and damage in El Salvador.
The earthquake was centered about 65 miles off the country's Pacific
coastline and particularly affected six of the country's departments
that border the ocean. One month later, on February 13, another
devastating earthquake struck. It was centered about 20 miles east of
the capitol of San Salvador and measured 6.6 on the Richter scale. Both
earthquakes are estimated to have damaged the dwellings, economic
livelihoods, and health conditions of about 1.5 million people, nearly
a fourth of the country's population. As shown in figure 1, these
earthquakes affected much of the country.
Figure 1: Areas Affected by the January and February 2001 Earthquakes
in El Salvador:
[See PDF for image]
[End of figure]
U.S. relief efforts began immediately after the first earthquake, and
USAID began providing some recovery assistance using redirected program
funds and funds from other sources. The Congress and the
administration, recognizing the need for longer term assistance for
recovery and reconstruction, made available approximately $159 million-
-$137 million in newly appropriated funds and $22 million in funds
redirected from other sources.
The overall objective of USAID's earthquake recovery program is to
improve the lives of earthquake victims, using the guiding principle of
"building back better." For example, houses built by USAID include
reinforced construction designed to better withstand future seismic
events. Specific efforts within USAID's overall program include:
* restoring community infrastructure and housing for the rural poor,
* reconstructing municipal government infrastructure,
* reactivating economic activities, and:
* mitigating the effects of future natural disasters.
USAID's recovery program also included an emphasis on ensuring the
sustainability of its efforts. For example, USAID required that housing
implementers include stone or block retaining walls, when needed, to
ensure that houses are not affected by erosion. USAID also required
that other implementers perform sustainability analyses to assess the
financial viability of projects when USAID funding ends.
USAID's program consists largely of construction activities. More than
$135 million (85 percent) of USAID funding is budgeted for
construction, including about $104 million (65 percent) allocated to
build approximately 26,000 houses. Other planned construction
activities include rebuilding approximately 35 schools, 30 child care
centers, 6 health clinics, 40 municipal buildings, and 5 local markets
and rehabilitating or repairing potable water systems. Nonconstruction
activities, which account for more than $20 million (15 percent) of
USAID's program, include providing training and equipment to micro-and
small businesses; providing technical assistance to farmers; and
working with communities to improve their disaster preparedness,
mitigation, and response. Figure 2 shows earthquake recovery activities
by amount and percentage of funds budgeted.
Figure 2: Earthquake Recovery Activities, by Amount and Percentage of
Funds Budgeted:
[See PDF for image]
[A] Approximately $2.4 million for USAID program management is included in
nonconstruction costs.
[End of figure]
Nearly two-thirds of USAID's earthquake recovery funding is allocated
to build new houses for low-income recipients in more than 300
communities in approximately 90 earthquake-affected municipalities.
Many of the communities are in rural areas that are dispersed
throughout the country. During our periodic visits to El Salvador, we
visited numerous communities in 17 of the 50 municipalities in which
USAID implementers were building houses during the initial phase of the
program, as shown in figure 3. During the first and second phases of
housing construction, work will take place in 90 municipalities,
according to USAID.
Figure 3: Municipalities in El Salvador Where USAID Is Constructing
Houses during Phase I, and Municipalities Visited by GAO:
[See PDF for image]
[End of figure]
To implement its housing activities, USAID signed agreements with
FONAVIPO and eight private voluntary organizations (PVOs), some of
which were implementing other USAID development activities in El
Salvador prior to the earthquakes. Although housing layouts and
construction techniques differ by housing implementer, all of the
implementers are required to build basic structures that are a minimum
of 40 square meters in size and are reinforced to minimize damage and
bodily harm in the event of earthquakes. The houses typically have two
bedrooms, a living room, a concrete porch, and a separate kitchen. For
houses without access to municipal sewage connections, contractors must
construct a latrine as well. USAID's program also requires that
beneficiaries be provided with access to water and sanitation and that
environmental and disaster mitigation measures, such as stone or block
retaining walls, be included, if necessary. The average cost of each
house is approximately $3,800. Figure 4 shows examples of typical
USAID-funded houses under construction, being inspected, and completed.
Figure 4: Houses under Construction, Being Inspected, and Completed:
[See PDF for image]
[End of figure]
The houses or housing sites undergo inspections at three intervals.
Specifically, the U.S. Army Corps of Engineers (USACE):
1. inspects the site prior to construction to ensure that houses will
not be built in disaster-prone areas, such as in flood plains or near
steep hills;
2. performs a second inspection during construction to examine the
quality of materials and workmanship and, if necessary, recommend
corrective actions; and:
3. conducts a final inspection to assess whether site mitigation
measures were implemented correctly and completely and to detect
problems with structural components (walls, roofs, doors, or windows).
When USACE staff identify incomplete or incorrect work, implementing
organizations must correct the problems before the houses can receive
final approval.
USAID Established Additional Oversight and Applied Lessons Learned:
In addition to the measures USAID normally uses to monitor its
development programs, the agency established additional oversight
measures to ensure accountability of recovery funds, and it applied
lessons learned from its work after Hurricane Mitch. USAID's normal
oversight measures include preaward surveys and audits of prospective
awardees, standard audits as required by U.S. government acquisition
regulations, and management and oversight of the program by USAID
mission staff. To address concerns about funds' susceptibility to
misuse or corruption, USAID also required concurrent audits of some
activities. In addition, USAID's Office of the Regional Inspector
General for Latin America performed risk assessments and conducted
oversight of USAID's housing program. We reviewed numerous periodic
reports issued by these oversight organizations and, to date, they have
found no major weaknesses or misuse of funds, other than delays in
housing construction. USAID applied lessons learned from its recently
completed hurricane recovery program, such as working with
organizations that had successfully administered USAID-funded projects
and contracting with a few key U.S. government agencies that had
previously worked on disaster reconstruction programs.
USAID Set Up Additional Oversight Measures:
At the outset of the earthquake recovery program, USAID reached an
agreement with the Salvadoran government's Corte de Cuentas (Court of
Accounts) to concurrently audit over $50 million in funds provided to
the government of El Salvador. USAID has certified that the Court of
Accounts is qualified to perform audits of U.S. funds. The USAID
Regional Inspector General is responsible for overseeing the audit work
of the Court of Accounts and conducts on-site reviews and periodic
visits to ensure quality. USAID officials told us that the quality of
the work performed by the Court of Accounts has been satisfactory, and
that they plan to continue to rely on the Court of Accounts for further
financial oversight.[Footnote 1]
Other monitoring efforts are being conducted by USAID's Regional
Inspector General for Latin America. The Inspector General conducted a
review of USAID's housing activities from the outset of the program
through July 2002 and issued a report in November 2002.[Footnote 2] The
Inspector General reported that USAID's housing implementing
organizations were selecting beneficiaries appropriately, with no
evidence of discrimination on the basis of religious or political
affiliations. The Regional Inspector General is tentatively planning to
begin a follow-on review of the housing program during late 2003.
USAID also required that a private accounting firm conduct a concurrent
audit of a USAID-funded health clinic being implemented by AmeriCares,
a U.S.-based PVO that provides medical supplies overseas. According to
USAID officials, this was done because AmeriCares had no experience
implementing a USAID-funded program and was working through a
Salvadoran nongovernmental organization to carry out the construction.
USAID Applied Lessons Learned from Hurricane Recovery Program:
When the two earthquakes struck El Salvador in early 2001, the USAID
mission was winding down its recovery efforts associated with Hurricane
Mitch, which struck Central America in November 1998. As it had done:
for the hurricane recovery program,[Footnote 3] USAID contracted with
numerous PVOs that had previously worked for the mission. USAID also
contracted with fewer U.S. agencies to help implement the program than
it had hired during the hurricane recovery program that began in 1999.
USAID contracted with at least five PVOs that it had previously worked
with to implement earthquake recovery projects because, according to
USAID officials, using organizations that have proven to be capable and
reliable reduces the likelihood of misuse of funds and corruption.
USAID had previous or ongoing agreements with some of these
organizations under its regular development program. As a result, USAID
was familiar with the capabilities and qualifications of staff that
would be carrying out the projects.
Also on the basis of its hurricane recovery program experience, USAID
signed agreements totaling about $5.8 million with four U.S. government
agencies (see table 1). These agencies provide technical assistance,
training, disaster mitigation, and quality control for numerous project
activities. USAID officials told us that they selected these agencies
because they had (1) experience working abroad; (2) staff that
possessed Spanish-language skills; or (3) technical skills and
expertise that supported USAID's program.
Table 1: U.S. Agencies with Agreements to Assist with USAID's
Earthquake Recovery Program and Budgeted Funding Amounts:
[See PDF for image]
Source: USAID.
[A] USAID funding to USACE expires December 31, 2003. According to
USAID officials, additional funding will be needed to enable USACE to
continue its work through the end of the program because some
construction projects are not scheduled to be completed until the end
of September 2004.
[End of table]
USAID Has Made Progress in Some Activities, but Others Are Behind
Schedule or Did Not Meet Original Target Completion Dates:
USAID has spent a substantial amount of its funding for the earthquake
recovery program and made progress in implementing a number of the
program's components, but USAID did not meet its initial schedule for
constructing houses and most of its other construction projects are
behind schedule, including health facilities, municipal buildings, and
local markets. As of March 31, 2003, USAID had expended about $58
million (36 percent) of its $159 million in earthquake recovery
funding. USAID has made progress in several earthquake recovery
construction projects, including housing, potable water systems, and
child care centers. USAID also has made progress in some
nonconstruction projects, such as supporting micro-and small businesses
and assisting farmers. However, as of the end of March 2003, FONAVIPO,
the government housing implementer responsible for building the largest
number of houses, had completed only about two-thirds of the houses it
was initially scheduled to finish by September 2002. In November 2002,
USAID revised FONAVIPO's scheduled completion date for the initial
building phase to September 2003. Several factors have affected USAID's
implementation of some program activities, particularly housing
construction. At the start of the program, for example, USAID
encountered difficulties certifying land titles, getting approval for
locations of building sites, and attracting qualified contractors to
build small numbers of houses in remote communities that were widely
dispersed throughout the earthquake-affected areas. Later, USACE
inspectors found that housing implementers consistently had problems
constructing houses completely and correctly.
USAID faces challenges that may lead to increased health and security
risks at a particular housing site as well as difficulties sustaining
the operations of a USAID-funded health clinic that AmeriCares is
implementing. USAID is aware of these challenges and has taken some
actions to address them. USAID is coordinating with local government
and nongovernment officials in an effort to assist families at the
housing project to pay for water and electricity services through
monthly installments. Additionally, in recognizing the potential
sustainability challenge of the health clinic, USAID required that the
implementing organization conduct extensive analyses during its
planning and design phases so that a solution can be reached prior to
the cessation of USAID support.
USAID's earthquake recovery program consists of about $159 million that
it plans to expend by September 30, 2004. USAID was able to begin some
recovery activities soon after the earthquakes struck by redirecting
ongoing project funding into earthquake recovery projects.[Footnote 4]
Expenditures vary considerably by activity. Table 2 explains the
earthquake recovery activities, funds budgeted, and funds expended as
of March 31, 2003.
Table 2: USAID Earthquake Recovery Assistance Budgeted and Expended, as
of March 31, 2003:
[See PDF for image]
Source: USAID.
Note: Figures do not add to total due to rounding.
[A] Includes various funding for training, technical assistance,
purchases of computers and other equipment, and operating costs for
some health activities.
[End of table]
USAID Has Made Progress in Some Projects:
USAID has made progress in several earthquake recovery construction
projects, including housing, potable water systems, and child care
centers. As of the end of March 2003, about 7,500 houses had been
completed and 27 potable water systems, serving nearly 70,000 persons
in rural communities, had been built. The water systems, some of which
include wells and underground pipes that are particularly vulnerable to
earthquakes, are crucial in maintaining health standards and
controlling diseases. USAID also has made progress in repairing and
reequipping 11 child care centers serving poor families. USAID plans to
complete 30 of these centers, which allow low-income mothers to work
outside the home and school age girls, who otherwise might have to stay
home and care for younger siblings, to attend school. As of the end of
March 2003, USAID had expended about $267,000 (30 percent) of the
$900,000 budgeted for the centers.
In addition, USAID has made progress in some nonconstruction projects,
which typically can be started more quickly because they do not require
lengthy design, procurement, and construction phases. These projects
provide loan programs, training, and technical assistance.
Specifically, to assist micro-and small businesses recover from
earthquake damages, USAID provided grants that have helped more than
2,500 persons, including nearly 2,000 women, in earthquake-affected
departments. We interviewed microentrepreneurs who were able to restart
their home-based businesses, including bakers whose ovens were
destroyed and seamstresses whose sewing machines were no longer usable.
Progress also has been made in assisting farmers in earthquake-affected
areas, including providing technical assistance to broaden the farmers'
opportunities to export agricultural products.
USAID Construction Projects Have Not Progressed as Planned:
Despite some progress, USAID construction activities, notably housing,
have not progressed as originally planned and many are currently behind
schedule. In particular, by the end of March 2003, after about 15
months of construction, FONAVIPO had completed fewer than 2,000 of
approximately 3,000 houses it was originally scheduled to finish in
September 2002. Construction projects involving schools and health
facilities also are behind schedule, in part because USAID and the
government of El Salvador had differing positions regarding facility
designs and items to be included in the projects. Construction of
municipal buildings and local markets has not started because the
selection, design, and contracting processes took longer than
originally anticipated.
Housing Activities Did Not Meet Original Target Dates:
USAID's housing construction program did not meet its original
completion dates, as planned. Overall, approximately 26,400 houses are
scheduled to be completed in two phases, including about 7,500 during
Phase I and 18,900 during Phase II. Table 3 provides a detailed
breakdown of progress in meeting Phase I of the housing construction
program.
Table 3: USAID-Funded Houses to Be Built and Completed during Phase I,
as of March 31, 2003:
Housing implementer:
FONAVIPO (government of El Salvador's housing agency); Houses to be
built during Phase I: 3,050; Phase I houses completed[A] as of: March
31, 2003: 1,973; Percentage completed: 65.
Private voluntary organizations; Houses to be built during Phase I:
[Empty]; Phase I houses completed[A] as of: March 31, 2003: [Empty];
Percentage completed: [Empty].
Cooperative Housing Foundation; Houses to be built during Phase I:
1,315; Phase I houses completed[A] as of: March 31, 2003: 1,315;
Percentage completed: 100.
Samaritan's Purse; Houses to be built during Phase I: 1,248; Phase I
houses completed[A] as of: March 31, 2003: 1,248; Percentage
completed: 100.
CARE; Houses to be built during Phase I: 1,009; Phase I houses
completed[A] as of: March 31, 2003: 1,009; Percentage completed:
100.
World Vision; Houses to be built during Phase I: 325; Phase I houses
completed[A] as of: March 31, 2003: 325; Percentage completed: 100.
Catholic Relief Services; Houses to be built during Phase I: 300; Phase
I houses completed[A] as of: March 31, 2003: 300; Percentage
completed: 100.
Save the Children; Houses to be built during Phase I: 300; Phase I
houses completed[A] as of: March 31, 2003: 300; Percentage
completed: 100.
Subtotal; Houses to be built during Phase I: 4,497; Phase I houses
completed[A] as of: March 31, 2003: 4,497; Percentage completed:
100.
Total; Houses to be built during Phase I: 7,547; Phase I houses
completed[A] as of: March 31, 2003: 6,470[B]; Percentage completed:
86.
Source: USAID.
[A] Completed houses are those that implementing organizations have
submitted to USAID for inspection; some may not have been inspected or
given final approval.
[B] As of March 31, 2003, PVOs had also completed an additional 1,014
houses under Phase II. Thus, the total houses completed for the entire
program was 7,484.
[End of table]
The PVOs' Phase I deadlines for completing houses varied between June
and October 2002. Some of the PVOs completed their Phase I houses on
time but others did not. As of the end of February 2003, PVOs had
completed all 4,500 of the Phase I houses they were responsible for
building. In contrast, FONAVIPO was initially scheduled to complete
over 3,000 houses by September 2002 but, at that time, had only
completed 600, less than 20 percent.[Footnote 5] Recognizing that
FONAVIPO had experienced problems in meeting its original September
2002 completion date for completing its Phase I houses, USAID met with
FONAVIPO in November 2002. On the basis of these discussions, USAID
approved a revised plan that established September 2003 as the date
when FONAVIPO is to complete its Phase I houses. The revised plan
includes additional financial requirements and other minor
modifications. However, the revised plan does not include interim
milestones for USAID to benchmark FONAVIPO's progress in building and
completing houses.
FONAVIPO did not complete its construction of Phase I houses as
initially scheduled for several reasons. Specifically, its housing
construction process involved more planning and coordination than did
the PVOs' process. Unlike the PVOs, FONAVIPO was required to plan and
coordinate its program with a local nongovernmental organization, which
involved more time than PVOs needed for similar activities. According
to USAID officials, FONAVIPO's planning and coordination has improved
as the program has evolved.
USAID's Regional Inspector General reported that FONAVIPO fell behind
schedule because it had inflexible payment procedures that caused
liquidity problems for some of its contractors. FONAVIPO initially did
not pay its contractors until houses had been inspected by USACE and
approved by USAID. As a result, the contractors lacked the resources to
continue to work. USAID worked with FONAVIPO to develop a system that
provided contractors with incremental payments. In addition, FONAVIPO
was slow in assigning supervisors to monitor the performance of its
contractors. USACE inspectors identified the problem, and USAID
officials immediately discussed the issue with FONAVIPO. The situation
improved when FONAVIPO increased supervisors' accountability by
establishing a list of supervisors assigned to each work site.
To Achieve Overall Housing Goal, USAID Must More Than Double Output:
To achieve USAID's goal of completing more than 26,400 houses by the
end of September 2004, USAID housing implementers will need to complete
over 1,000 houses per month. However, for the 1-year period ending in
February 2003, an average of only about 410 houses per month were
completed by all of the housing implementers combined. As previously
shown in table 3, FONAVIPO had completed fewer than 2,000 houses after
about 15 months of construction, averaging about 130 houses per month.
However, FONAVIPO is scheduled to complete nearly 7,000 more houses in
the upcoming 1-1/2 year period, an average of nearly 400 houses per
month. USAID Mission officials told us they are confident that FONAVIPO
can meet its goal as scheduled because they expect the pace of housing
construction to increase substantially during 2003 and to continue more
quickly throughout the remainder of the program. Nevertheless, it may
be difficult for USAID to reach its goal by September 30, 2004, given
the limited progress it has made to date. Figure 5 shows a timeline of
USAID's housing program, with the number of houses scheduled and
completed.
Figure 5: Timeline of USAID's Housing Program and the Number of Houses
Scheduled and Completed:
[See PDF for image]
[End of figure]
Several Factors Have Slowed Housing Construction:
USAID housing implementers have experienced difficulties in their
housing construction efforts because of several factors. At the start
of the program, the difficulties included certifying land titles,
getting approval for locations of building sites, and attracting
qualified contractors to build small numbers of houses in remote
communities that were widely dispersed throughout the earthquake-
affected areas. As Phase I neared completion, USACE found that housing
implementers have consistently had problems constructing houses
completely and correctly. Also, implementers have not consistently
applied environmental and disaster mitigation measures in the
communities we visited, provided health and sustainability training to
beneficiaries, or ensured that beneficiaries build retaining walls and
perform other environmental and disaster mitigation measures, as
required.
Title Certification Caused Delays:
USAID experienced initial delays in its housing program because of its
requirement that houses be built only for beneficiaries with clear
title to their property. Many Salvadorans whose houses were destroyed
in the earthquakes had no legal proof that they owned the property on
which their house had stood. Many other potential beneficiaries who had
documentation provided incomplete or incorrect information to the
Institute for Freedom and Progress (ILP), a Salvadoran government
agency responsible for investigating and certifying land titles and
other legal documents. Further, at the outset of the program, ILP was
burdened with a large number of applications as many implementers tried
to start their programs. Housing starts were delayed because
implementers had to wait weeks for approval to begin construction. As
the program moved forward, USAID, its housing implementers, applicants,
and ILP improved their processes and coordination. According to USAID
officials, the processes for identifying potential beneficiaries,
submitting applications, and approving land titles has improved
substantially. USAID officials stated that, because ILP has expedited
its processes, it currently has little or no backlog.
Establishing a USACE Office in El Salvador Took Time:
USAID housing construction activities also did not proceed as quickly
as USAID had planned because of delays in USACE's establishing a full-
time, in-country presence and hiring staff. As a result, some
implementing organizations were not able to begin construction as
planned because they had to wait for USACE site inspections and
approvals.
USAID officials told us that they had expected USACE to hire a program
manager and at least three staff engineers soon after the two agencies
signed an agreement in July 2001. However, although temporary USACE
personnel visited El Salvador frequently, the permanent manager and
staff were not hired until November 2001, and USACE's El Salvador
office was not fully staffed until March 2002. USAID officials added
that, during the period when the USACE office was not fully established
and staffed, the backlog of site inspection requests grew. According to
USACE officials, an interim manager temporarily managed USACE's efforts
until the permanent position was advertised and filled. USACE officials
added that the delays in establishing the office and staff resulted
from administrative processes required by the U.S. embassy. :
Housing Implementers Have Had Difficulty Ensuring Houses Are Built
Completely and Correctly:
USAID has had difficulty getting housing implementers to ensure that
contractors build houses correctly and completely. In our review of
USACE inspection reports and our periodic visits to housing sites, we
found few indications of major problems with materials used to build
USAID houses (e.g., cracked floors or walls made from poorly
manufactured blocks). However, we frequently found substantial
problems, such as roof supports that were improperly connected to
walls, and other problems, such as metal windows and doors that were
not functioning properly. Also, USACE inspectors have frequently found
houses (1) in which some key elements had not been painted completely;
(2) where sinks and latrines had not been installed; (3) where
retaining walls had not been completed; and (4) with adjacent older
damaged buildings that had not been destroyed, as required. In
addition, on follow-up visits, USACE inspectors have repeatedly found
that problems they had previously pointed out to implementers had not
been corrected. During our visits to housing sites, we noted instances
in which the implementer had failed to provide required components,
such as latrines, washbasins, and retaining walls to protect houses
from erosion. We also visited a community in which the housing
implementer had sealed the wastewater collection pits, preventing
beneficiaries from adhering to the requirement that the pits be
periodically cleaned to minimize environmental impact. (USAID did not
renew its contract with this implementer for Phase II housing
construction.) Despite such problems, however, during our site visits,
beneficiaries expressed satisfaction with the new houses and stated
that the houses were better than the ones they lived in prior to the
earthquakes.
USAID and USACE officials have taken actions to improve the quality of
houses that implementers are building. During our October 2002 visit to
El Salvador, we raised concerns about USACE's methodology for selecting
houses for inspection and then submitting them to USAID for final
approval. Following our visit, USAID issued detailed procedures that
USACE and the implementers are required to follow in their work. USAID
also conducted additional quality control training that implementers
were required to attend. USAID officials stated that the training was
useful in reinforcing the principle of "building back better" and that,
since this training was given, the quality of construction by all
implementers has improved.
USAID's housing implementing organizations have sometimes neglected
their responsibilities to ensure that beneficiaries comply with USAID
disaster mitigation guidelines. Beneficiaries of the housing program
agree to (1) build retaining walls, if needed, to keep rainwater from
causing site erosion and (2) demolish damaged structures near new
houses that may present danger in the event of another tremor or
earthquake. During our site visits, we found communities in which three
PVO housing implementers had not enforced requirements. We discussed
this issue with several officials of housing implementing organizations
who told us they had informed the beneficiaries of the requirements but
that it was the beneficiaries' responsibility to do the work. Many of
the beneficiaries told us that they had not destroyed the damaged
structures, particularly ones that were still partially intact, because
the structures were useful for storing food, tools, and equipment.
Implementers' training of housing beneficiaries has been inconsistent.
Soon after the program started, some beneficiaries told us that the
implementers had not provided the required health and sanitation
training. Also, during our visits to five different implementers'
housing sites, some beneficiaries told us that they had never cleaned
their wastewater collection pits and did not know how often they should
do so. In contrast, beneficiaries in numerous other communities told us
they had been trained in, and were complying with, all other
requirements, such as periodically cleaning the pits. We discussed this
issue with USAID officials, who reminded the implementers of their
training responsibilities. During our subsequent discussions with
housing recipients, we found that the training had improved
substantially.
Four Nonhousing Construction Activities Did Not Begin on Schedule:
Besides housing, four other construction activities did not start as
USAID had scheduled. These projects, which are budgeted to receive
approximately $29 million, include rebuilding schools, health
facilities, municipal buildings, and local markets. Reconstruction for
all four of these activities was scheduled to begin from July to
November 2002. However, as of March 31, 2003, reconstruction of seven
schools had just started and the other three activities had not begun,
as shown in table 4.
Table 4: Status of Other Construction Activities and Key Dates:
Construction: activity: 35 schools to be rebuilt and reequipped;
Scheduled: start date: July 2002; Status and comments: Status:
Started February 2003; Comments: * USAID found that some schools
not affected by the earthquakes had been submitted for reconstruction;
* USAID and the government of El Salvador had differing viewpoints on
the designs; * USACE rejected some proposed designs
Construction: activity: 5 public health facilities to be rebuilt;
Scheduled: start date: August 2002; Status and comments: Status: Not
yet started; Comments: * Four facilities are in the bidding process
and one is being designed; * USAID and the government of El Salvador
had differing viewpoints on the designs
Construction: activity: 5 local markets to be rebuilt; Scheduled: start
date: October 2002; Status and comments: Status: Not yet started;
Comments: * A bid protest involving one market is currently under
review by the El Salvador Supreme Court; * Four markets are still
being designed
Construction: activity: 22 municipal buildings to be rebuilt or
repaired; Scheduled: start date: November 2002; Status and comments:
Status: Not yet started; Comments: * USAID originally planned to
rebuild 40 municipal buildings; * Some municipalities rebuilt the
buildings on their own; * Some funds will be reprogrammed to other
activities
Source: GAO synthesis of USAID information.
[End of table]
USAID's program to reconstruct and reequip approximately 35 schools,
originally scheduled to begin during late 2002, did not start on
schedule. USAID officials stated that the process for planning and
designing school buildings was more lengthy than anticipated because
they had difficulty reaching agreement with the Salvadoran government's
Ministry of Education on some of the designs and building
specifications. Specifically, the Ministry submitted some schools for
reconstruction that had not experienced earthquake damage, and its
designs for school buildings did not include the handicap access ramps
that USAID required. In contrast, according to Salvadoran government
officials, USAID's designs did not include certain recreational and
community-oriented facilities that the government wanted to enhance the
schools' function as a center for community activities. These issues
were resolved and in early February 2003 school construction started.
Construction of health facilities has not begun as scheduled. As
previously shown in table 4, USAID planned to begin repairing or
rebuilding five clinics in August 2002. The process of designing the
facilities and hiring contractors has been lengthy, and, as of March
2003, work had not begun.[Footnote 6]
As noted in table 4, USAID's plan to reconstruct five local markets
also has not proceeded as planned, in part because of delays resulting
from USAID's preconstruction requirements. The requirements for the
markets included hiring supervisory firms; awarding contracts for
designs; and soliciting, reviewing, and awarding bids for construction.
Construction of one market was delayed because of a bid protest and is
currently being reviewed by El Salvador's Supreme Court.
Finally, USAID's original plan to repair and reconstruct up to 40
municipal buildings, scheduled to begin in November 2002, is behind
schedule, and the planned number of buildings has been reduced. Under
the original plan, the Salvadoran government was to construct 10
buildings and PVOs were to construct 30 buildings. Several
municipalities performed their own reconstruction work, and some
buildings were found to have suffered less damage than was initially
assessed. Therefore, USAID has scaled back its plans to repair or
reconstruct 22 buildings. Eight buildings that suffered more severe
damage will be rebuilt by the government, and 14 buildings requiring
fewer repairs will be contracted out through local nongovernmental
organizations. According to USAID officials, work was expected to begin
in March 2003.
USAID Faces Potential Sustainability Challenges in Two Projects:
USAID faces challenges regarding the long-term sustainability of two of
its recovery activities. In one community where USAID built houses, the
residents may experience increased health and security risks because
they cannot afford the cost of potable water and electricity. In
another area, a health clinic that AmeriCares is building with recovery
program funds may not be able to sustain its operations after September
2004, when USAID funding ends. USAID officials told us that they are
aware of these challenges and have been reviewing potential solutions.
Housing Settlement Could Face Increased Health and Security Risks:
The residents of El Guarumal, a newly created resettlement community
comprising 270 houses, may face future health and security problems
because of a lack of electricity and water. The houses in this
community, built for some of the poorest victims of the earthquakes,
have indoor flushing toilets and hookups for electricity and potable
water. (Fig. 6 shows USAID-funded houses in El Guarumal.):
Figure 6: USAID-Funded Houses in the Community of El Guarumal:
[See PDF for image]
[End of figure]
In January 2003, we found that most of the houses had been completed
and that some of the beneficiaries had already moved in. However,
according to USAID, only 34 percent of the residents had connected to
the electricity and none had connected to the potable water system
because the costs of connecting to the electricity and water are
roughly $90 and $300 per household, respectively. These costs are
prohibitive for poor families because they had to earn less than $288
per month to qualify for the program. Without electricity, residents
face potential safety risks, particularly at night. Without water,
residents also face increased health risks due to unsanitary living
conditions. We discussed these concerns with USAID officials, who told
us that they had contacted government and nongovernment organizations
and were currently coordinating with them to find a solution to the
problem, including making financing arrangements so that residents
could make monthly installments to pay for the connecting costs.
Health Clinic Could Face Sustainability Challenge:
USAID provided AmeriCares with $2 million to build a new health clinic
in the city of Santiago de Maria, provide the clinic with equipment and
supplies, and help operate the facility through September 2004.
However, after that date, USAID assistance ends. The clinic is
currently under construction and scheduled to be completed and equipped
by June 2003. USAID and AmeriCares both acknowledged that the clinic is
likely to require additional funding to continue operating at its
planned level, in large part because the fees it will charge for
services are not likely to generate sufficient revenues to cover
operating costs. They also stated that raising fees would likely make
the facility unaffordable for many of the clients it is intended to
serve.
USAID recognized the sustainability problem from the project's outset.
As a result, USAID required AmeriCares to include detailed
sustainability analyses in its project proposal before the project
began. In the analyses, AmeriCares examined various demographic aspects
of the community, such as the income level of clients, the existence of
other health facilities in the area, and other relevant data. As of
March 31, 2003, however, no additional sources of funding had been
identified. Without such funding, the clinic will likely face
difficulties operating with the planned level of services after
September 2004.
USAID Coordinated with Other Donors and the Government of El Salvador:
USAID coordinated with other international donor organizations at
various levels and with various El Salvador government ministries and
institutions to assist with disaster preparation, mitigation, and
response. USAID coordinated its program activities in an effort to
ensure that it was not duplicating others' projects. During our
periodic visits to El Salvador, we met with numerous government and
nongovernment organizations and community members and found no evidence
that USAID was duplicating the efforts of other donors.
USAID participated in the international response and coordination of
earthquake recovery efforts. In March 2001, the international donor
community, including USAID, met in Madrid, Spain, to discuss how to
assist El Salvador in recovering from the estimated $1.7 billion in
damages caused by the two earthquakes. The meeting, chaired by the
Inter-American Development Bank, provided a forum for the government of
El Salvador to present a comprehensive list of damages and estimated
recovery costs. At the meeting, the United States and other bilateral
and multilateral donors pledged $1.3 billion in assistance, consisting
of $300 million in funds redirected from existing programs and $1
billion in pledges of new funds. Approximately $700 million of the new
funds pledged consists of loans and $300 million consists of donations.
Also, USAID periodically meets with other key donors, including the
European Community and Spain. USAID officials told us that these
meetings enhance their understanding of others' activities and prevent
duplication of effort.
In El Salvador, USAID mission officials at various levels have
coordinated with the government of El Salvador and with other donors.
USAID has routinely participated in periodic meetings hosted by the
government's Ministry of Foreign Affairs, the lead agency for donor
coordination. These meetings provide a forum to discuss ongoing and
planned earthquake recovery projects. In addition to these higher level
meetings, USAID staff routinely meets with leaders and residents of
communities and municipalities to discuss needs and concerns in
earthquake-affected areas.
During our periodic visits to El Salvador, we met with numerous
government and nongovernment organizations and community members and
found no evidence that USAID was duplicating the efforts of other
donors. USAID's recovery program has not duplicated others' efforts
due, in part, to the overwhelming reconstruction needs of El Salvador,
many of which remain unmet. Following the earthquakes, an assessment
undertaken to determine the extent of damages had found that over
300,000 houses, 1,200 schools, and 150 health facilities were damaged
or destroyed. Prior assessments had shown that, even before the
earthquakes, El Salvador had a serious housing shortage for low-income
people. During our periodic visits to El Salvador, we visited numerous
communities where USAID projects were under way and met with community
leaders and members. During these visits and discussions, we found no
evidence that USAID was duplicating the recovery efforts of the
government of El Salvador or other donors.
Conclusions:
Although USAID's earthquake recovery program in El Salvador has made
some progress, several key efforts are currently behind schedule or did
not meet their original completion dates. As of the end of March 2003,
reconstruction of local markets and municipal buildings had not
started, as planned, and school reconstruction had just gotten under
way. In addition, housing construction--the largest activity in terms
of scope and budget--did not meet its initial target completion dates.
Much of the delay in housing construction is with the Salvadoran
government housing agency, FONAVIPO, which is responsible for building
the largest number of USAID-funded homes. In November 2002, USAID
extended the Phase I target completion date for FONAVIPO to September
2003. However, USAID's revised agreement did not establish interim
milestones to benchmark FONAVIPO's progress in building and completing
houses. Over the past 12 months, FONAVIPO and the PVO implementers
hired to do this work had completed about 400 houses per month.
Implementers will have to significantly accelerate the pace of their
efforts and complete more than 1,000 houses a month if USAID is to meet
its overall goal of constructing nearly 26,400 houses by September 30,
2004. Thus, it may be difficult for USAID to complete its recovery
program within this time frame, as planned.
Recommendation for Executive Action:
To ensure that USAID achieves its goal of constructing over 26,000
houses by September 30, 2004, we recommend that the USAID Administrator
take action to accelerate construction activities and establish interim
milestones to benchmark its progress and determine whether program
goals will be met. Also, if warranted and to the extent possible under
existing agreements, USAID should consider reducing the number of
houses to be built by the government of El Salvador's housing agency
(FONAVIPO) and increasing the number of houses to be built by private
voluntary organizations with a proven record of meeting construction
goals.
Agency Comments and Our Evaluation:
USAID provided written comments on a draft of this report (see app.
II). USAID concurred with the report's findings regarding its oversight
and accountability measures and its coordination efforts. USAID agreed
with our recommendation that it take action to accelerate construction
activities and indicated that it has already taken corrective action to
accelerate the pace of FONAVIPO's housing construction. USAID said that
its current revised plan will permit completion of the housing program
within the overall time frames. In reviewing the November 2002
agreement between USAID and FONAVIPO, we found that no interim
milestones had been established against which to measure progress.
Accordingly, we modified our recommendation to state that USAID should
establish interim milestones to determine whether FONAVIPO and other
housing implementers are making progress in meeting the overall goal of
constructing 26,400 houses by September 30, 2004. USAID also provided
technical suggestions and clarifications that we have incorporated into
this report where appropriate.
In addition to USAID, we requested comments from the U.S. Army Corps of
Engineers. Although the Corps did not provide written comments, they
provided technical suggestions and clarifications that we have
incorporated into this report as appropriate.
We will send copies of this report to interested congressional
committees as well as the Administrator, USAID; Commander, U.S. Army
Corps of Engineers; and the heads of other agencies participating in
the recovery assistance program in El Salvador. We will also make
copies available to others upon request. In addition, this report will
be available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please
contact me at (202) 512-4268 or at fordj@gao.gov. Other contacts and
staff acknowledgments are listed in appendix III.
Jess T. Ford
Director, International Affairs and Trade Issues:
Signed by Jess T. Ford:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To determine whether the program and projects funded by the U.S. Agency
for International Development (USAID) and the other U.S. departments
and agencies addressed the intended purposes of disaster recovery and
reconstruction, we conducted work at the headquarters offices of USAID
and the U.S. Army Corps of Engineers (USACE).[Footnote 7] We also made
five trips to El Salvador between July 2001 and January 2003.
The specific details of our work and visits are discussed below.
* In Washington, D.C., we met with officials of USAID's Bureau for
Latin America and the Caribbean and with USACE officials to discuss
program oversight and the status of their activities.
* In San Salvador, El Salvador, we coordinated with USAID's Office of
the Regional Inspector General to minimize duplication of effort and
share information.
* In El Salvador, we reviewed USAID's strategies, work plans, and
applicable contracts, grants, and cooperative agreements and discussed
with USAID and other U.S. officials how their respective programs
addressed reconstruction needs. During our visits, we monitored USAID's
activities in all sectors of the earthquake-affected areas. In many
instances, we visited and photographed sites before the projects began,
during implementation, and after completion to provide a basis for
comparison.
During these trips, we interviewed representatives of contractors,
nongovernmental organizations, El Salvador government ministries and
other organizations, and other entities responsible for day-to-day
project implementation. Our Spanish-speaking staff interviewed the
intended recipients of U.S. assistance. We asked how their homes,
livelihoods, and communities had been affected by the earthquakes and
how the U.S.-funded projects were helping them rebuild their
infrastructure, restore their livelihoods, and provide basic services.
We also reviewed USAID's procedures for oversight and financial
controls and met regularly with the firms and organizations hired by
USAID to provide program oversight. We followed up with USAID mission
staff and USACE staff to determine whether concerns raised by us and
others were being addressed.
To determine whether USAID had coordinated with other U.S. departments
and agencies and other international donors, we met with USAID
officials in Washington, D.C., and at its mission in El Salvador to
discuss USAID's procedures for incorporating the activities of the
other agencies into USAID's programs and coordinating with multilateral
and other bilateral donors. Finally, we met with host government
officials, including mayors and other local officials, to discuss their
procedures for ensuring that donor activities did not conflict or
overlap and their views on donor coordination.
[End of section]
Appendix II: Comments from the U.S. Agency for International
Development:
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT:
MAY 1 2003:
Mr. Jess T. Ford Director International Affairs and Trade General
Accounting Office:
441 G Street, N.W. Washington, D.C. 20548:
Dear Mr. Ford:
I am pleased to provide the U.S. Agency for International Development's
(USAID) response on the draft GAO report entitled "Foreign Assistance:
USAID's Earthquake Recovery Program in El Salvador Has Made Progress,
but Key Activities Are Behind Schedule" dated April 15, 2003.
We found the report positive and well documented. We were also pleased
with GAO's recognition of USAID's successful oversight and
accountability measures for the recovery program and USAID's
coordination of recovery efforts with other donors and the Government
of El Salvador.
The report further recognizes that progress has been made in the
implementation of this high profile $159 million program,
($170 million when you include USDA when you include 2001 funding)
but expresses concern that several infrastructure activities--
in particular, the FONAVIPO housing program--are behind schedule. It
is important to recognize that when considering the overall program
schedule, that USAID El Salvador received $100 million of the
$159 million over a three month period from April to July 2002, less
than one year ago. The final obligation of these funds was made in
September 2002. Current progress of the program must be evaluated in
terms of when the program funding was made available to the mission.
Given these facts, we think that substantial progress has been made.
In the latter part of 2002, the FONAVIPO housing program was behind
initial schedules, for several of the reasons described in the draft
report. By November of 2002, the Mission had carried out a major review
with FONAVIPO of the various causes of delays in construction and took
corrective measures to put the program back on track. FONAVIPO then
developed a new construction schedule based on the program redesign and
USAID approved this plan in November (which has been acknowledged by
USAID's Inspector General). The program plan still permits completion
of the housing program within the overall timeframe of the program.
FONAVIPO's construction program has been underway only since January
2002, that is, around 14 months. As of March 31, 2003, FONAVIPO's
construction under the revised action plan is on schedule, having
completed almost 2,000 houses. The Mission will continue to closely
monitor the pace of construction under this program and will take
corrective action, as it is required.
The report recommends, with respect to FONAVIPO, that the Administrator
take action to accelerate the construction of housing, and that if
warranted, the number of houses to be constructed by FONAVIPO should be
reduced and that these houses be assigned to US PVOs. As indicated
above, the Mission has already taken corrective action to accelerate
FONAVIPO's housing construction; and as of March 31, 2003, FONAVIPO was
on the revised schedule. As USAID has already indicated to the GAO, the
Mission will closely monitor FONAVIPO's construction, and if for some
reason it should fall seriously behind schedule, USAID will then
consider other alternatives, including transferring some housing
construction to PVOs. However, we do not believe that to be necessary
at this time. As stated before, USAID believes that the earthquake
recovery program, including housing, will be completed by September,
2004.
The report also raises a concern about the sustainability of the health
clinic (not a hospital) being built by the NGO AmeriCares, and notes
that this concern
was identified by USAID early on in the program when this
Congressionally-mandated activity was starting. AmeriCares is working
on a plan, requested by USAID, for sustainability of the clinic after
USAID assistance ends. USAID management has discussed the importance of
this plan and follow on action with the President of AmeriCares.
AmeriCares is a responsible NGO, with a demonstrated record
of fund raising. They fully expect to combine the results of its
sustainability plan with its proven record for fundraising to ensure
the long-term sustainability of this important health clinic by
September 2004. USAID does not anticipate the need to provide any
additional resources for this project.
To update the information provided by the GAO in the draft report,
USAID is pleased to provide additional infrastructure results through
March 31, 2003: 7,484 low cost houses have been completed, 1,115 more
than what was noted in the draft report as of February 28th. 27 water
Systems have been completed serving 70,000 rural poor seven schools
were under construction one rural market construction contract and one
design contract have been signed and 11 child care centers have been
completed and fully equipped.
We would appreciate it, if your report would incorporate the following
factual points:
1. Page 2: FONAVIPO was not expected to complete the Phase I
construction program by July 2002 as their initial action plan only
went into effect in September 2001. FONAVIPO originally projected a one
year Phase 1 housing construction schedule which would have ended in
September 2002. Based on actual construction implementation and
experience, the action plan that was approved by USAID in late 2002,
that incorporates FY 2002 funding, commits FONAVIPO to complete Phase I
construction by September 2003.
2. Page 3-4: It would be more accurate to say that the $159 million of
funding was made available from the FY 2001 and 2002 budgets of USAID
and the State
Department, including $22 million from USAID El Salvador's budget.
Congress did not provide funding for the program.
3. Page 5: The earthquake housing construction activity is working in
more than 90 municipalities, not 50 as stated.
4. Page 6: The housing construction program requires that beneficiaries
have access to water, sanitation, and environmental and disaster
mitigation measures, but not electricity. A requirement that the
houses must have access to electricity would exclude large areas of
the rural sector from being eligible for housing reconstruction.
5. Page 10: One of the factors affecting program implementation that
should be mentioned here is the late date at which USAID El Salvador
received its FY 2002 budget.
6. Page 11: Twenty seven water systems benefiting approximately 70,000
people have been built, rather than the 23 systems cited.
7. Page 12: FONAVIPO's construction program has been in effect since
January 2002, less than 15 months and not 1 1/2 years as mentioned in
the report. Construction of municipal buildings is behind initial plans
because resources were made available to USAID in June 2002 and, given
progress achieved by different municipalities, the program had to be
redesigned and a new action plan developed.
8. Page 17: As of March 31, 2003, seven schools were under
construction. The report indicated only one school as of 2/28/03.
Thank you for the opportunity to respond to the GAO draft report and
for the courtesies extended by your staff in the conduct of this
review.
Sincerely,
John Marshall:
Assistant Administrator Bureau for Management:
Signed by John Marshall:
The following are GAO's comments on USAID's letter dated May 1, 2003.
GAO Comments:
1. We revised the text on pages 17 and 18 to note that, in November
2002, USAID extended El Salvador's housing agency (FONAVIPO) Phase I
housing construction completion date from the end of September 2002 to
September 30, 2003. In reviewing the November 2002 agreement between
USAID and FONAVIPO, we found that no interim milestones had been
established against which to measure progress. Accordingly, we modified
our recommendation to state that USAID should establish interim
milestones to determine whether FONAVIPO and other housing implementers
are making progress in meeting the overall goal of constructing 26,400
houses by September 30, 2004. We also noted that, as of March 31, 2003,
FONAVIPO had completed less than 2,000 (about two-thirds) of the nearly
3,000 houses it was scheduled to complete by July 2002.
2. We added a footnote to table 3 on page 17 indicating that 1,014
houses have been built by private voluntary organizations during Phase
II of the housing construction program. We also revised the text on
page 15 to reflect other updated information.
3. We modified the text on page 5.
4. We revised the text on page 6 to reflect that USAID was implementing
housing activities in 50 municipalities during Phase I and will expand
its work to more than 90 municipalities in Phase II of its construction
program.
5. We modified the text on page 7.
6. We modified the text on pages 2 and 15.
7. We modified the text on page 18 to reflect this updated information:
8. We modified the text on pages 22, 23, and 24 to reflect this updated
information.
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Phillip Herr (202) 512-8509
George Taylor (202) 512-9632:
Staff Acknowledgments:
In additional to the above-named individuals, Reid Lowe and Steve
Rossman made key contributions to this report. Other contributors
included Christian Cabanilla, Lyric Clark, Jeanette Espinola, Daniel
Gage, Jeff Goebel, Al Huntington, and Norman Thorpe.
(320064):
FOOTNOTES
[1] According to USAID officials, the Court of Accounts has received
USAID technical assistance and training for more than 7 years, and its
capabilities improved substantially during that period.
[2] USAID Regional Inspector General, Audit of USAID/El Salvador-
Financed Housing Reconstruction Activities, 1-519-03-001-P (San
Salvador, El Salvador: Nov. 19, 2002).
[3] For a discussion of hurricane recovery efforts, see U.S. General
Accounting Office, Foreign Assistance: Disaster Recovery Program
Addressed Intended Purposes, but USAID Needs Greater Flexibility to
Improve Its Response Capability, GAO-02-787 (Washington, D.C.: July 24,
2002).
[4] Redirected funds total $22 million (14 percent) of USAID's overall
$159 million in recovery program funding and are comprised of $12
million and $10 million for fiscal years 2001 and 2002, respectively.
[5] As shown in table 3, as of March 31, 2003, FONAVIPO had still
completed fewer than 2,000 houses.
[6] The Centers for Disease Control and Prevention (CDC), a U.S.
agency, is implementing a nonconstruction health-related activity that
also did not start as USAID planned. As of March 2003, CDC's $2 million
project to strengthen the National Health Surveillance System was just
getting under way.
[7] USACE's Mobile, Alabama, office is responsible for programs in
Central America.
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