The sustainability of the first two concluded compacts of the Millennium Challenge Corp. is uncertain, even as certain targets were revised, according to a new report of the Government Accountability Office.
GAO found key challenges in MCC projects in Cape Verde and Honduras, whose five-year implementation period ended in 2010, particularly in planning and maintaining infrastructure projects.
For instance, GAO revealed that the upgrading and expansion of a major port in Cape Verde, which represents about half of the country’s $110.1 million compact, faced increased cost due to inaccurate planning assumptions.
In Honduras, meanwhile, MCC was able to construct only about half of the planned highway and all re-scoped secondary roads by the end of its $205 million compact.
GAO also reported a delay in MCC’s impact evaluations for the two compacts, and that the updated economic rate of return analyses of the largest compact projects have not been well-documented or linked to revised targets.
GAO recommended that MCC work with partner countries to make project planning, design and construction decisions that reduce long-term maintenance needs and costs, ensure updated ERR analyses are well-documented and consistent with revised targets and develop guidance for updating economic analyses upon compact completion.
MCC agreed with GAO’s recommendations, saying that the report “will serve as an important learning tool for management as we continue to improve the investment of taxpayer dollars.”
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