In Georgia, Quality and Sustainability Issues Jeopardize the Long-Term Usefulness of the Samtskhe- Javakheti Road Project

In Georgia, MCC funded the rehabilitation of about 217 kilometers of  road linking the previously isolated Samtskhe-Javakheti region with  Tbilisi, the country’s capital. However, the urgency to meet fixed time  frames resulted in problems implementing the quality assurance  framework and led to construction defects in parts of 5 of the 11 road  lots. Furthermore, while MCC took steps to ensure the road project’s  sustainability, the Georgian government has demonstrated limited ability  to keep the road operational and maintained up to this point. The  purpose of the rehabilitation was to improve transportation for regional  trade to  increase exports from the region; increase social, political, and economic integration of the people in the  region with those in the rest of Georgia; expand international trade by providing a more direct link from Tbilisi  and eastern and southern Georgia to Turkey and Armenia; develop the tourism potential of Vardzia, a 13th century rock-cut  monastery. In addition, problems identified by  MCC’s independent engineer were not adequately addressed. However,  several sections of the road had pavement defects and structures such as  drainage systems and retaining walls that are deteriorating. We observed in December 2012 that much repair work remained to  be done. In Benin, Port Construction Is Generally Good Quality, but Full Operability of Port Components Is Uncertain

In Benin, MCC constructed several infrastructure improvements to the  Port of Cotonou, including a jetty, a wharf, internal port roads, a railway,  and security and electricity distribution systems. The project was intended  to increase the efficient transport and volume of goods flowing through  the port. At project completion, the quality of construction generally met  established quality standards. The government of Benin’s inability to supply the resources,  manpower, or policies needed to operate all of the port’s components  calls into question whether the port project will meet expected compact  results or be sustainable for the life of the infrastructure. Although MCC took steps to ensure the port project’s sustainability, many  of the project’s key components—the south wharf, the security system,  the electricity distribution system, and the fire station—were either not  operational or only partially operational at the end of the compact. These steps included conducting a feasibility study, incorporating  conditions precedent into the compact, hiring a port advisor, requiring a  compact closure plan, and identifying steps the government of Benin  should take to support sustainability in the compact letter of completion. Although MCC funded a new south wharf to increase tonnage moving  through the port, and ensured that the Port Authority contracted a  concessionaire to operate the south wharf, to increase private investment  and generate income for the Port Authority, it is not in operation because  the Port Authority has not completed additional dredging and the  concessionaire has not finished the landside works, such as paving the  wharf area or installing cranes (see fig. As a result, the road had  significant pavement defects and numerous quality issues at compact  completion. Recommendations for Executive Action

To maximize the quality and sustainability of future projects, we  recommend that the MCC Chief Executive Officer take the following  actions:  To ensure that its quality assurance framework is fully implemented and  to ensure that transportation infrastructure projects are built to the  established quality standards, MCC should  review how MCC uses information and professional recommendations  provided by its independent engineers to address identified  deficiencies and to ensure projects are constructed to the quality  standards set out in contracts, and develop a mechanism to maintain influence through contracts’ defects  liability periods when they extend beyond the compact end date. To ensure sustainability of compact projects, MCC should evaluate the  effectiveness of the tools it uses (such as its feasibility studies and  conditions precedent) to ensure that partner countries have adequate  infrastructure, staff, and policies necessary to operate and maintain MCC- funded infrastructure following the compact. Our selection universe was  those compacts ending in 2010 and 2011 that had a transportation  infrastructure project. To assess the quality and longer-term sustainability for compacts in  Georgia and Benin, we analyzed MCC, MCA, and other documents;  interviewed MCC officials and stakeholders; and observed project results  in both countries. We reviewed the compact agreement for Georgia and Benin. Millennium Challenge Corporation: Progress and Challenges with  Compacts in Africa.
Why GAO Did This Study

MCC was established in 2004 to help developing countries reduce poverty and stimulate economic growth through multiyear compact agreements. As of June 2012, MCC had signed 26 compacts totaling about $9.3 billion in assistance. Seven compacts, including those with Georgia and Benin, closed in 2010 or 2011. Most had a transportation infrastructure project (a road or a port) that received about 50 percent of the compacts total funding. This report, prepared in response to a congressional mandate to review compact results, examines how MCC ensured the quality and sustainability of MCCs two transportation infrastructure projects in Georgia and Benin. GAO analyzed MCC documents, interviewed MCC officials and stakeholders, and observed the transportation infrastructure projects in those countries.

What GAO Found

In Georgia, quality and sustainability issues jeopardize the long-term usefulness of the Samtskhe-Javakheti road project. The Millennium Challenge Corporation (MCC) funded the rehabilitation of about 217 kilometers of road linking the previously isolated Samtskhe-Javakheti region with Tbilisi, the countrys capital, and reducing the driving time from 8 ¼ hours to 2 ¾ hours. The project was intended to increase exports from the region, integrate people in the region with the rest of Georgia, and expand trade with Turkey and Armenia. However, the urgency to meet fixed time frames resulted in problems implementing the projects quality assurance framework. For example, the construction supervisor did not have enough staff to properly monitor construction and ensure quality. Despite several recommendations from MCCs independent engineer, MCC and its Georgian counterpart, the Millennium Challenge Account (MCA-Georgia), did not adequately increase the number of construction supervisors, which resulted in pavement defects in parts of 5 of the 11 road sections and deterioration of structures such as drainage and retaining walls. One 15-kilometer section contained enough defects that the road had to be completely repaved. Furthermore, much of the repair work was to be done in the contracts 1-year defects liability period, after the compact closed and at a time when MCC no longer had oversight authority. Although MCC took steps to ensure the road projects sustainability, the Georgian government has demonstrated limited ability to keep the road operational and maintained.
In Benin, construction for the Port of Cotonou project generally met established quality standards, but several components were not in operation at the compacts end. MCC funded the construction of several port infrastructure improvements, including a jetty, a wharf, internal port roads, a railway, and security and electricity distribution systems. The project was intended to increase the efficient transport and volume of goods flowing through the port. However, several componentsincluding the new south wharf, the port security system, and the electricity distribution systemwere not in operation at compact completion because the Port Authority had not ensured that the necessary infrastructure, staffing, or policies were in place to operate them. For example, the new south wharf, which was intended to increase the cargo tonnage moving through the port, is not in operation in part because the Port Authority does not have the funds to complete the dredging needed to allow large vessels to access the new wharf. Even though MCC took steps to ensure that the government of Benin could sustain the operations and maintenance of the projectsuch as conducting a feasibility study, incorporating conditions precedent into the compact, hiring a port advisor, requiring a compact closure plan, and identifying steps the government of Benin should take to support sustainability in the compact letter of completionthey were not sufficient. As a result, Benins inability to supply the resources, manpower, or policies needed to operate all of the ports components calls into question whether the port project will achieve expected compact results or be sustained throughout the life of the infrastructure.

What GAO Recommends

To ensure that compact projects are implemented to established quality standards, GAO recommends that MCC (1) review how it uses information from its independent engineers, and (2) develop a mechanism to maintain influence on contractor repairs after compact closure. To ensure sustainability of compact projects, GAO recommends that MCC evaluate the tools it uses to ensure that partner countries have adequate resources to operate and maintain MCC-funded infrastructure. MCC agreed with all three recommendations but did not commit to taking any actions to address them.