MAJURO — The Marshall Islands Auditor General questioned nearly $1 million in Kwajalein Atoll Development Authority spending in fiscal year 2000, but the agency says its desire to settle these questioned costs has been stymied by an unresponsive U.S. Interior Department.
The Kwajalein Atoll Development Authority is a government-established agency that was created to oversee infrastructure development for Marshall Islanders who live next to the U.S. Army’s missile testing range at Kwajalein, where high-profile missile defense testing is being carried out. It receives about $4 million annually through a Compact of Free Association with the U.S.
The Marshall Islands audit report questions KADA’s use of a total of $955,962:
• $188,106 for administration costs, saying that Compact funding for capital projects limits administration costs to 1.5 percent of the total funds received. This would limit KADA administrative costs to $65,606, but KADA spent $253,712, resulting in the questioned cost.
“Noncompliance” with the project administration requirements has been identified in every audit since 1988.
• $624,774 for operations and maintenance of a dive resort, power plant, causeway, workboats, economic development, community relations and personal development.
The audit contends that the funds are required to be spent on “construction” not operations and maintenance.
• $143,082 in Compact funding advanced to KADA employees. A total of more than $1.9 million in questioned costs have been reported in previous years, though recently $161,663 was resolved through negotiations with the Department of the Interior, so the past total has been reduced to $1.8 million. With the 2000 questioned costs added, the total KADA questioned costs has now risen to $2.7 million. In its reply to these questioned costs, KADA officials said that the limit on the percentage of the Compact funding that can be used for “project administration” has been an ongoing dispute since the beginning days of the Compact in the late 1980s. “The fact is our desire to settle and clear this matter once and for all had gone unheeded” by the Interior, KADA said.
KADA’s position is that the 1.5 percent allowable amount is far too low and impractical for project administration. It has issued letters on this topic since it was first questioned by audits at the start of the Compact period.
On the issue of money spent for “operations and maintenance” as opposed to “construction,” KADA officials acknowledged that this also has been in dispute. “We would like to reiterate that these projects being questioned stand on a thin line that separates repairs and maintenance and actual project costs,” KADA said. “Unless a clear line is drawn and these projects can be completed, only then can we safely identify between a project and maintenance cost.”
