USAID awarded a $343 million contract to Louis Berger Group in 2007 to help Iraqi farmers by promoting crop diversity, improving farmers’ access to information systems and providing technical assistance. An audit by the USAID inspector general has determined that the contractor mismanaged the program and couldn't account for almost $10 million in costs.
The Louis Berger Group failed to implement measurements for agricultural productivity, completely lacked results to demonstrate agribusiness loan increases, reported inaccurate results and millions in unsupported program costs.
The agribusiness contract was supposed to increase agricultural productivity by specific percentages with targeted crops, but the contractor never developed a method of measuring or reporting results. The program was also supposed to generate at least 40,000 agricultural jobs, but fell short of the minimum goal by 10,000. The contractor did not differentiate between full-time or part-time jobs and lacked documentation supporting job creation.
Louis Berger reported $172 million in increased sales for agriculture businesses, short of the $300 million goal, but did not provide adequate documentation for sales. Another aspect of the program was increasing agribusiness loans, which was completely absent from the contractor’s report.
“The lack of supportable agribusiness program results can be attributed to several factors, foremost among them mismanagement,” the inspector general said.
USAID originally described proper result reporting in the contractor’s performance monitoring plan, which both mission and contractor failed to implement. USAID officials did not receive results, enforce reporting requirements or ensure the contractor’s results had adequate documentation. The inspector general also criticized the lack of field monitoring and quality assessments done by USAID.
“Without such knowledge, the mission was unable to manage the contract effectively or measure the impact that activities had on the achievement of program goals,” the inspector general said.
The inspector general also identified $9.8 million in questionable or unsupported costs, which went to fund subcontracts. The subcontractor agreements lacked the required documents to account for program costs.
“The absence of supporting documentation has made Louis Berger program procurements susceptible to unintentional errors, loss, misappropriation, and fraud.”
In one case, the company said it distributed $540,900 worth of seeds to 900 farmers and projected the harvest would be worth a whopping $67 million.
“The contractor derived gross sales based on the assumption that 100 percent of the seeds planted would yield vegetables and would be sold at an estimated price. However, the contractor could not provide support for this estimated price, the yields, or the amount of land planted,” the IG said.
According to USAID/Iraq, it is “aggressively rectifying” program problems with the contractor.
FAST FACT: The revitalization of a tomato canning factory cost $5,078,631, provided to a subcontractor, even though an expert said the facility was not fit to process food for humans. Reports from Louis Berger showed no monitoring or evaluation of the grantee’s performance.