What happens when your project drags on eight years after its deadline and costs nearly five times its original budget? If you're the Transportation Department's Maritime Administration (MARAD), you get rewarded with more projects.
Federal investigators said Tuesday that they have uncovered evidence of poor planning and oversight in MARAD's supervision of a modernization project for the Port of Anchorage in Alaska, which was begun in 2003 and supposed to be finished in 2005. But the project is still unfinished and has ballooned in cost from its original $211 million tab to more than $1 billion.
"There have been significant setbacks, including construction problems and schedule delays," the Transportation Department's inspector general wrote in a report.
Now, the department's internal watchdog is worried that similar problems could plague two other MARAD projects: ports in Hawaii and Guam. The Hawaii project was awarded in 2005 as Anchorage was slipping behind schedule and Guam was approved in 2008, long after Alaska's deadline had passed.
"Until MARAD strengthens its planning, oversight and contracting processes, ongoing and future port projects will continue to be at risk of cost overruns and schedule delays," the inspector general said.
The problem, investigators say, is that MARAD largely washed its hands of the construction, relying instead on local authorities to complete the work. For instance, MARAD officials at the Anchorage project didn't have a method to track ongoing work and spending, and were unable to tell investigators just how much money had been given to contractors.
The lead contractor for the project, Integrated Concepts and Research Corp., wound up suing the government for delayed work and shifting contract requirements. MARAD settled the case, costing taxpayers $11.3 million more.
Paul Jaenichen, the acting maritime administrator, agreed with the inspector general's findings and said there were problems with the port's modernization. But, he said, the agency is making major changes to make sure such waste doesn't happen again.
"MARAD no longer operates in this manner," he wrote in response to the investigative report. "This administration has taken action to increase oversight, assign dedicated project and program staff, and increase its level of engagement with local partners."
The new Port Infrastructure Development Program will address many of the inspector general's concerns and provide a robust system for oversight and project management, Mr. Jaenichen said.
A former Navy captain, Mr. Jaenichen is relatively new to the agency, having served as deputy maritime administrator since July 2012 and acting administrator since June.
Investigators agreed that MARAD was starting to change and implementing new practices, but said that until port infrastructure program is in place, the potential for waste remains high.
The inspector general noted that it took the agency seven years to develop a risk-management approach to the Anchorage port, a common business practice to plan for the unforeseen and to mitigate emergencies. Meanwhile, the project in Hawaii, started in 2005, still doesn't have a risk-management plan.
Other stakeholders that would benefit from the port, such as the state of Alaska, were also expected to pitch in funds for the port, but MARAD officials failed to get written agreements from them, the inspector general said. The stakeholders did pay, but investigators said a lack of written agreements was an unnecessary risk.
Now attention has shifted to whether similar mismanagement will occur at the agency's other projects in Hawaii and Guam. The $117 port modernization in Guam is considered especially important because of a planned relocation of U.S. Marine Corps forces from Japan to the island territory.
Delegate Madeleine Bordallo, Guam's nonvoting representative in Congress, said the inspector general's report raises "significant issues" about MARAD's infrastructure development programs, but she is glad the agency is working to address the issues.
"I appreciate that MARAD took a cautious approach and has addressed many issues with the infrastructure program as they implemented the Guam Port modernization effort," she said. "MARAD, working with the Port Authority of Guam and other local leaders, is making significant progress on improving the port to support and sustain economic development and goods during the military build-up."
MARAD was created in 1950 with a mission "to improve and strengthen the U.S. marine transportation system to meet the economic, environmental and security needs of the Nation," according to the agency's website.
The president's budget proposal for the 2014 fiscal year is requesting $365 million for MARAD. The office also oversaw more than $100 million in Recovery Act funds to help improve the nation's infrastructure and create jobs. It also receives some money from its fellow federal agencies.
"To date, MARAD has received over $263 million in federal funding for port infrastructure development projects from agencies such as the Department of Defense, the Federal Transit Administration and the Federal Highway Administration," the inspector general noted.
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