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OFFICE OF THE NATIONAL PUBLIC AUDITOR Audit of Ta Outer Island Airport Project Fiscal Years 1990 to July 31, 2004 _______________________________________________________________________________________
EXECUTIVE SUMMARY The total funds appropriated by the FSM Congress for the Ta Airport Project, as of July 31, 2004, were $982,000. The airport runway was cleared in 1991 by the Civic Action Team with the assistance of the local residents of Ta Municipality. The dimensions of the runway were 3,000 feet long by 75 feet wide. The FSM Department of Transportation, Communications and Infrastructure is responsible for the administration of all infrastructure projects funded by the FSM Congress where the FSM President or the Secretary of the Department of TC&I is the allottee. On March 17, 1999, a waiver for $200,000 was approved by the former FSM President for the “renovation and paving of Ta Airport Runway”. The waiver exempted all requirements under the Public Contract Act and the Financial Management Regulations. FINDINGS A waiver was inappropriately issued for the project. The nature of an emergency and the danger to the public health, safety, or convenience caused by the delay, to the extent necessary, to meet the emergency without open bidding was not provided and documented to justify the issuance of the waiver. The waiver was not effective due to inadequate planning and the management of the waiver. Contracts were executed totaling $334,989 that was $134,989 in excess of the original authorized amount of $200,000 in the waiver. In addition, there was lack of high-level oversight of the management of the waiver. The Allottees did not submit the required semi-annual reports to the Congress and the Secretary of the Department of Finance & Administration. The absence of timely and detailed project status reports resulted in a lack of overall project oversight and accountability. These reports should be the basis upon which the FSM Congress and the Department of Finance & Administration are updated on the progress of Congressional appropriated projects. There was an overall lack of adequate review and monitoring of contracts terms and conditions as well as payments to contractors. A contractor was paid a total of $35,232 although the contractor did not fully comply with the contract’s terms and conditions. Additionally, there was an overall lack of accountability of all the project’s assets. Some assets are either missing or not properly recorded and labeled. The shipments of assets to the project site are not consistently accompanied by adequate and accurate documentation. Once transported to the project site, not all assets are properly safeguarded. Finally, there was a lack of segregation of duties between the role of Project Manager and that of Project Inspection Official. Effectively, there was a lack of adequate management, oversight, and independent assessment of the status of the project. RECOMMENDATIONS The waiver should be withdrawn and all future contracts be subjected to competitive bidding as set out in the Financial Management Regulations. Future waiver requests should be thoroughly documented to justify their approval with sound situational analysis and recommendations. Project status reports should be submitted to the Congress and the Secretary of the Department of Finance & Administration to enhance overall high-level oversight and accountability. All contracts should be adequately monitored and managed to ensure that they comply with all contracts’ terms and conditions. All assets acquired for the project should be properly recorded, accounted for, and adequately safeguarded. The duties of a Project Manager and that of a Project Inspection Official should be adequately segregated to ensure that there is adequate accountability and no apparent conflict-of-interest. CLICK HERE TO VIEW THE ENTIRE AUDIT REPORT!! |
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