Memorandum audit report on USAID/Kenya"s on-farm grain storage project

Audit report covers the period 6/81-6/83 and is based on document review, discussions with USAID/K and Government of Kenya (GOK) officials, and site visits. Implementation is a year behind schedule due to the GOK"s failure to conclude a contract for technical assistance (TA). A contract was negotiated and approved by the GOK Attorney General"s office in 9/82, but it was rejected for undetermined reasons and a contract review ordered. With minor revisions, the contract was approved a second time by the Attorney General"s Office in 4/83 and a GOK official expressed optimism that the contract would be signed soon, provided that necessary GOK funds are budgeted. In an effort to avoid the housing shortages constraining other A.I.D. projects in Kenya, USAID/K took the risk of signing engineering service and construction contracts for project housing and a laboratory prior to the signing of the TA contract. Construction of the facilities is almost complete but they will not be occupied for 2-12 months even if the TA contract is signed in the near future. If the contract is not signed, it is possible that the facilities, constructed at a cost of $600,000, will not be used as planned. USAID/K has informed the GOK of a two-phase deadline for approving the TA contract. If either of the deadlines is not met, USAID/K will deobligate remaining funds, call for accelerated repayment by the GOK of funds used for facility construction, and ensure that the completed facilities are used by the GOK for general development activities.