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Friday, August 9, 2013
Report: Feds Have No Idea Why $200M Hawaii Harbors Contract Doubled in Cost
By News Release @ 3:08 AM :: 6548 Views :: National News, Hawaii State Government, Jones Act

MARAD Has Taken Steps To Develop a Port Infrastructure Development Program but Is Challenged in Managing Its Current Port Projects

News Release from US DoT OIG August 02, 2013 Project ID: CR-2013-117

LINK: Download Full PDF Document (Hawaii mentioned 57 times)

Summary

In 2003, the Maritime Administration (MARAD) was authorized to administer funds for developing and modernizing the Port of Anchorage, the main seaport in Anchorage, AK. MARAD has since been authorized to administer two other port projects in Hawaii and the Port of Guam. Given significant setbacks at the Port of Anchorage project, including construction problems and schedule delays, we evaluated MARAD’s

(1) oversight and risk management of port infrastructure development projects, and

(2) oversight of port infrastructure projects’ contract planning and administration.

We found that MARAD did not establish effective oversight mechanisms when it initiated its port infrastructure development responsibilities. For example, MARAD did not adequately define its oversight responsibilities or establish a sound risk management process. MARAD has recently taken steps to more clearly define its role in the Port of Guam project. While MARAD has taken steps to develop a congressionally mandated Port Infrastructure Development Program, it has not yet completed it. Our review also determined that MARAD did not effectively manage its port project contracts. Between 2003 and 2011, the Port of Anchorage project’s cost estimate grew over four and a half times from $211 million to $1 billion, with scheduled completion slipping 8 years. The Port of Anchorage project had significant contracting problems stemming from MARAD’s inadequate planning, lack of reliable cost estimates, and noncompliance with Federal contracting requirements when awarding and administering the port contracts.

MARAD concurred with all nine of our recommendations. For six recommendations, MARAD provided appropriate action plans. For the remaining three recommendations, we are requesting that MARAD provide additional information.

Related Library Item 05.09.2011:  Audit Initiated of MARAD's Oversight and Coordination of Port Infrastructure Development Projects

From Text of Report

...the plans contained identical statements regarding the projects’ budget and market research without adequate supporting documentation.  We question these identical statements because the projects are unique—having different sizes, locations, and requirements. For example, the Port of Guam project involves 1 port, while the Hawaii Harbors project, located 3,800 miles away, may include work at up to 10 ports. In addition, the Hawaii Harbors project includes added work requirements, such as new geographic information systems and an expansion of terminal yard space....

MARAD ... lacks adequate documentation to support the cost estimates for the Hawaii Harbors and Port of Guam projects. With the exception of the port estimate for the Port of Guam project, MARAD could not provide documentation showing who developed the various port project estimates or explain why they doubled over time, as shown in table 5.

Table 5. Varying Cost Estimates for the Port of Guam and Hawaii Harbors Projects

Port of Guam  Hawaii Harbors
Source  Cost Estimate  Year  Cost Estimate  Year
Port $195M 2007 $200M unk
Acquisition Plan $400M 2008 $200M 2008
Max Contract Award Value $400M 2009 $400M 2009

In Hawaii, MARAD is wrapping up its Federal contract and is negotiating an assistance agreement to administer any future Federal funding....

  *   *   *   *   *

WT: Alaska’s harbor of waste: Federal port project behind schedule, badly over budget

PNC: MARAD Provides Reassurances That Guam's Port Modernization Is “On Time and On Budget"

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