	Background

In response to the destruction caused by the earthquake, Congress  provided more than $1.14 billion in reconstruction funds for Haiti. 1). The IDB committed to provide funding to the Haitian government to  build the CIP and some associated facilities;  the U.S. government committed to build a power plant, contribute to  the building of a nearby port, and support the construction of 5,000  nearby housing units; and
Sae-A committed to be the anchor tenant and hire 20,000 local  employees at the CIP. Most of USAID’s 2010 Supplemental Funds Have Not Been Disbursed

As of June 30, 2013, almost 3 years after passage of the 2010  Supplemental Appropriations Act, USAID had obligated $336.0 million  (52 percent) and disbursed $229.5 million (35 percent) of the $651 million  it allocated for bilateral earthquake reconstruction activities in Haiti. Figure 2 shows the percentage of funding obligated and disbursed. USAID Completed Power Plant’s First Phase, but Port Is Delayed and Their Sustainability Depends on CIP’s Success

		USAID Completed First Phase of Power Plant in Time to Deliver Power to CIP

As of June 30, 2013, USAID had allocated $98.1 million to the CIP power  plant project and had obligated 22 percent of these funds. Port Project Is Delayed, and Current Estimates for Construction Costs Are Higher Than Expected

USAID has allocated $72.5 million to plan and contribute toward building  a new port in northern Haiti; however, as of June 2013, the agency had  obligated only $4.3 million (6 percent) because of planning delays. A lack  of staff with technical expertise in port planning, construction, and  oversight, such as a port engineer, at the USAID mission in Haiti  contributed to these delays. According to a USAID planning document  for the port sector, the agency planned to complete a feasibility study by  March 2012, to initiate construction in spring 2013 through a private  company that would supplement USAID’s funding contribution for port  construction, and to complete construction in fall 2015. As a result of these planning delays, port construction will not  begin until more than 2 years later than initially planned. USAID does not  know what portion of this funding is needed for the additional planning  and design; however, it is clear that the amount remaining will be a  significantly smaller portion than USAID had initially planned to contribute  to the port’s total construction cost, given the estimated funding gap of at  least $117 million to $189 million. Sustainability of CIP, Power Plant, and Port Are Interdependent and Rely on Haitian Government Capacity

The sustainability of the CIP, port, and power plant are interdependent in  several respects. These cost increases  stemmed primarily from the inaccuracy of USAID’s original estimates,  which were based in part on costs reported by the World Bank and an  NGO that was building houses in northern Haiti. As of August 2013, USAID had reduced the number of houses it expects  to complete, and therefore the number of beneficiaries, by more than 80  percent. Of the 15,000 houses that it originally planned, USAID expects  that only 2,649 will be completed across eight settlement sites. USAID also reduced the total number of projected beneficiaries, from an  original estimated range of 75,000 to 90,000 to its current estimated  range of approximately 13,200 to 15,900. Difficulties partnering with NGOs and other donors. According to USAID officials, that partnership did  not develop as planned because of the delays in securing land title  and because of turnover in Red Cross leadership that resulted in  shifting approaches to housing in Haiti. Specifically, beneficiaries will face site-specific  issues such as affordability and community cohesion. In addition, it is unclear whether such partnerships will be  available to support all of the remaining settlements. In our June report, we recommended that the USAID Administrator direct  the mission in Haiti to ensure that each new settlement has community  support mechanisms in place prior to beneficiary occupation, including by  making funds available as necessary to help ensure this support. USAID  agreed with this recommendation and noted that the mission is prepared  to provide additional resources if they are needed to finance community  development activities.
Why GAO Did This Study

On January 12, 2010, an earthquake in Haiti is estimated to have caused about 230,000 deaths, resulted in 300,000 injuries, and displaced about 2 million persons. Following immediate relief efforts, Congress provided $1.14 billion for Haiti reconstruction in the Supplemental Appropriations Act, 2010. USAID, which is responsible for implementing $651 million of this amount, has allocated about $268 million of this and other funding to construct a power plant and port to support the CIP in northern Haiti and permanent housing in several locations in the Port-au-Prince, St-Marc, and Cap-Haitien areas.
This testimony draws from GAO's June 2013 report on Haiti reconstruction and further examines (1) USAID's funding obligations and disbursements; (2) USAID's progress in two CIP-related activities--a power plant and port; and (3) USAID's progress in constructing permanent housing. For this statement, GAO updated funding information and data regarding progress, based on information from USAID and Department of State officials.

What GAO Found

As of June 30, 2013, the U.S. Agency for International Development (USAID) had obligated $336 million (52 percent) and disbursed $229.5 million (35 percent) of $651 million in funding for Haiti earthquake reconstruction from the Supplemental Appropriations Act, 2010.
USAID has allocated $170.6 million to construct a power plant and port to support the newly developed Caracol Industrial Park (CIP). According to USAID documents and other studies, the CIP, power plant, and port are interdependent; each must be completed and remain viable for the others to succeed. USAID completed the first phase of the CIP power plant in time to supply the first CIP tenant with power. Port construction will begin more than 2 years later than originally planned, in part because of a lack of USAID expertise in port planning at the Haiti mission. According to current estimates of port construction costs, USAID funding will be insufficient to cover a majority of projected costs. The estimated gap of more than $117 million to $189 million is larger than initially estimated, and it is unclear whether the Haitian government will be able to find a private sector company willing to finance the remainder of the project.
USAID has reduced the targets for its permanent housing program in Haiti, to which it has allocated $97.3 million. The agency decreased the projected number of houses by more than 80 percent, from 15,000 to 2,649. The estimated number of beneficiaries was reduced from a range of 75,000 to 90,000 to its current estimate of approximately 13,200 to 15,900. These reductions resulted from inaccurate original cost estimates that used inappropriate cost comparisons and from the Haitian government's request for larger houses with improvements such as flush toilets. USAID currently estimates that construction will be completed more than 2 years later than initially scheduled. Delays occurred primarily because of difficulties in securing land titles and coordinating with partner donors. USAID is attempting to mitigate potential sustainability risks, such as affordability and community cohesion, through community development mechanisms. However, it is uncertain whether these mechanisms will fully cover all sites.

What GAO Recommends

GAO is not making new recommendations in this testimony. In its June 2013 report, GAO recommended that USAID (1) hire a port engineer to oversee port planning and construction and (2) provide timely community support mechanisms for each new settlement to help ensure the sustainability of its permanent housing program. USAID agreed with both recommendations.