COMPREHENSIVE REVIEW OF THE GRAIN SILOS PROJECT - AID LOAN 263-K-028 AT ALEXANDRIA AND CAIRO, EGYPT - IMPLEMENTED UNDER HOST COUNTRY CONTRACTING MODE

Evaluation covers the period 6/29/75-5/29/80 and is based on an audit review of project records, site inspections, and visits to the contractor"s home office. De Laureal Engineering, Inc. of New Orleans was contracted for architectural and engineering services. Delay in signing the contract postponed start-up of the project. De Laureal is negotiating an 18-month extension to its contract, which was to end in mid-1981. To date, phase I construction (earthworks, pilings, and foundations) has been completed at each site. USAID management has been far too passive. Although AID/W questioned the selection of de Laureal, USAID made no effort to increase its supervision. An outside engineering review included as part of this audit was quite critical of de Laureal. Of major concern was whether the coarse aggregates (gravel) used in the concrete foundations would be harmful to the concrete. Use of the gravel was subsequently allowed. This was the first time that the gravel had been tested. USAID was also lax in monitoring contributions by the Government of Egypt (GOE). The GOE was to finance improvements to the Port of Alexandria (enlargement of the quay and deepening of the channel), but failed to do so. USAID claims that because no AID/W funding was involved, it has no say in the matter. In addition, USAID approved the expenditure of $3.5 million in loan funds for piling work, without either a notificaton to U.S. businesses or a waiver of the requirement. USAID replied that the notification requirement did not apply because the services were obtained under a subcontract. In addition, the piling subcontractor procured the equivalent of $200,000 of commodities/services from a non-U.S. source -- despite prohibitions in the loan agreement. De Laureal"s most recent estimate of final dollar costs is $38 million, although the loan is for $44 million. In line with the above, auditors include 13 recommendations to improve USAID management of the project.