Memorandum on audit of transportation restoration project

Although SBS was to have provided the first five buses -- repowered with new diesel engines, installed with rear doors and stepwells, and fully lubricated -- by 1/7/81 (later extended to 2/7/81) and ship the remainder by 4/25/81, as of 6/5/81 only 17 buses had arrived. Further, due to bureaucratic delays the GOES had not distributed any of the buses. Although USAID/ES proceeded to amend the SBS contract to stipulate full delivery by 6/30/81, by 10/15/81 only 66 of the 80 had arrived. The rest were due in 11/81 even though SBS"s contract had never been extended past the 6/30/81 delivery date. On 5/15/81, the GOES proposed a decree and draft plan requiring potential bus owners to deposit 10,000 colones ($4,000) in a Special Fund to Finance Passenger Transportation set up under the Fondo de Financiamiento y Guarantia para la Pequena Empresa (FIGAPE). Of each payment, 8,000 colones is set aside for working capital and equipment needs; the remainder is used by FIGAPE to cover the cost of managing the project. Monitoring of the fund appears adequate. FIGAPE has provided USAID/ES with a description of the accounting system for the Fund, a status report on bus distribution, and an evaluation of project implementation. In response to a draft of this audit, USAID/ES will also request from FIGAPE bimonthly status reports on the Fund. In addition, minor mechanical defects found on the buses (bald tires, dead batteries, poorly placed fan blades, inoperable rear doors) have all been corrected. It is recommended that USAID/ES initiate the required action to extend SBS"s delivery schedule from 6/30/81 to a realistic deadline.