AUDIT REPORT NO. 2-492-81-1 : BICOL PROGRAM - PHILIPPINES

Audit report is based on document review, interviews with project personnel, and site visits; timeframe is not specified. USAID/P monitoring of the projects has been exemplary. The IRD I Project (4920303) was designed to increase private agribusiness investment and labor-intensive rural industry and to train Bicol planning and implementation staff. Fourteen Joint Project Implementation Letters (JPIL"s) were issued to finance host-country contracts for consultant services such as regional economic data collection and analysis and maintenance management training, and to finance subprojects. So far, 10 JPIL"s are completed or in progress. Although no progress reports have been submitted and no formal joint evaluations have been conducted, discussions on project performance have been held daily between the consultants and project staff. It is suggested that either the requirement for formal evaluations be eliminated or that a simple evaluative statement be included in the contract. Extensions of subcontracts were appropriately based on satisfactory performance and need. Delays in grant disbursement and expenditures led to a need to extend the project for one year. This back-up was due to delayed implementation of five AID-assisted loan projects supported by TA from this project and to difficulties in recruiting staff. In the IRD II project, road and irrigation construction has progressed slowly due to poor workmanship by contractors. As a result, construction will be handled by the Ministry of Agrarian Reform (MAR), which has, however, little experience in this area. Also, loan funds were not made available in a timely manner, and funds not spent by the end of the year were returned to the Government of the Philippines (GOP) treasury. (A recent policy change allows unexpended funds to be carried over.) It is suggested that MAR be given a timeframe in which to rectify current problems, under pain of deobligation of loan funds. The IRD III project (4920289), though still in the design stage, is proceeding on schedule. It is suggested that GOP plans for agroforestry and watershed development be incorporated into the project, and that the IRD I forest research subproject be transferred to IRD III.