Memorandum audit report no. 1-525-81-11 : grain and perishable marketing system project, loan project no. 525-0178

Evaluation covers the period 1/1/79-1/31/81 and is based on an audit of correspondance and accounting files and interviews with Mission personnel. The project is several years behind schedule and has not met its objectives. The major delay has been in the provision of infrastructure, e.g., buying points and storage centers, without which price stabilization and market regulation of production cannot take place. Among the numerous problems faced by the project are the need to redesign facilities; procedural, technical, and legal problems in the bidding for construction contracts; and delays in receiving plans and specifications. USAID and the Panamanian Agricultural Marketing Institute (IMA), the implementing agency, signed a Memorandum of Understanding (MOU) in 8/80 which stipulated that IMA adopt the recommendations of a Kansas State University survey. As a result of the MOU, the number of planned grain storage facilities was reduced from four to three, and IMA agreed to acquire a full-time staff; to contract for technical assistance in management, market analysis, commodity procurement, and other areas; and to submit design and bid documents to USAID by 1/5/81. As of 2/81, however, IMA has not complied fully with any of the MOU agreements. In particular, no construction contracts have yet been signed, nor have design and bid documents been submitted for USAID approval. As a result, $4.1 million in loan funds remain undisbursed with only a few months remaining to the project. It is therefore recommended that USAID determine the current status of all project activities and assess the progress IMA has made in implementing them. This assessment should be made prior to approving the invitation for construction bids. If satisfactory progress has not been made, USAID should consider deobligating unused funds. In view of the significant delays already incurred in this project, no major extensions of the terminal dates should be made.