USAID OIG Afghanistan and Pakistan Oversight Report, April-June ...

Audit of USAID/Pakistan’s Road Rehabilitation and Reconstruction Activities Under the Quick ImpactProjects in South Waziristan (Report No. G-391-11-005-P, June 20, 2011)In 2009, the Governments of Pakistan and the United States signed a strategic agreement that provided acommitment to help generate broad-based economic growth through infrastructure development.According to the agreement, USAID is providing $55 million directly to the FATA Secretariat to implementQuick Impact Projects (i.e., rebuild roads, develop water infrastructure, and improve power systems).OIG conducted an audit of these activities in South Waziristan, part of FATA. Despite some difficulties OIGnoted with mission operations, auditors determined that the road rebuilding efforts were on track. Twosections of road totaling 215 kilometers were completed to specifications and had met all requirements forreimbursement by USAID. Although security issues caused some delays, work progressed on schedule.Multiple site visits by officials from the local satellite office in Peshawar strengthened the management ofthe road activities, and the use of fixed-amount reimbursement agreements reduced financial risk to theprogram.The FATA Secretariat hired the Frontier Works Organization (Frontier Works) of Pakistan to carry out roadactivities. For additional support, Frontier Works subcontracted with the Pakistani engineering firmNational Engineering Services Pakistan Limited (NESPAK). Both Frontier Works and NESPAK haveextensive experience building roads and other infrastructure projects, and both will work on all of the QuickImpact Projects in South Waziristan, including the water infrastructure and power systems. OIG found thatthese two entities contributed to the initial success of the road activities.Despite early successes, however, OIG found room for improvement. The scope of work for the contractor tobuild the capacity of the FATA secretariat was too broad, and subsequent changes caused deliverables to befar behind schedule. Contract files were missing critical documentation such as branding and markingplans, site visit reports, meeting notes, and correspondence with contractors, including documentationrelated to extensions and justifications. Environmental assessments did not meet regulations and causeddelays of up to 5 months. In addition, although no ethical problems arose, neither the mission nor thecontractor had ethics procedures or policies in place, as required, to ensure that employees working onprojects were aware of the USAID’s ethical standards and its position on conflicts of interest.Audit of USAID/Pakistan’s Management of Preaward Assessments (Report No. G-391-11-004-P, May 6,2011)The Enhanced Partnership with Pakistan Act of 2009 (Public Law 111-73) authorized $7.5 billion in U.S.government assistance over 5 years to promote an enhanced strategic partnership with Pakistan and itspeople. In authorizing these funds, the act encourages the use of Pakistani firms and nongovernmentalorganizations to work with local leaders to build local capacity. To facilitate this strategy, USAID estimatedthat approximately 50 percent of fiscal year 2010 funding, or $750 million, would go through Pakistanifederal and provincial agencies and local organizations.With the implementation of the strategy to build Pakistani capacity, concerns have been raised in the mediaand the U.S. Government that providing too much money to Pakistani recipients too quickly could jeopardizeU.S. funds. USAID/Pakistan recognized the challenges and took proactive steps to address the risks. A keystep taken by the mission was to contract with international and local accounting firms to conduct preaward90 USAID OIG Afghanistan and Pakistan Oversight Report