Evaluates project to increase Egypt's fish farming capacity. Audit report covers the period 9/78-3/82 and is based on document review, site visits, and interviews with contractor, USAID/E, and Government of Egypt (GOE) personnel. The project is about 2 years behind schedule, due mainly to slowness in designing and building project facilities. Poor contractor performance and the lack of adequate supervision at start-up contributed to the delays and resulted in cost overruns. Moreover, most design and construction supervision were performed by a subcontractor, raising the question of whether the services of the U.S. engineering contractor -- Kramer, Chin & Mayo International (KCMI) -- are needed. About $500,000 could be saved if the KCMI contract were not extended. A joint venture between James M. Montgomery (JMM) and KNBS Consulting and Civil Engineers has failed to fill seven of 13 technical assistance slots. Participant training will not be completed by the end of the project due to JMM/KNBS neglect of its responsibilities in this area. In addition, JMM/KNBS has not submitted timely progress reports or maintained adequate financial and vehicle utilization records. It is recommended that USAID/E: (1) inform the GOE that reserve funds will not be released nor additional contract funding approved; (2) set target dates for assignment of key personnel and terminate funding of the JMM/KNBS contract if targets are not met; (3) draw up a precise participant training schedule; (4) require JMM/KNBS to submit semi-annual progress reports; (5) advise the GOE to make a complete accounting of funds advanced to JMM/KNBS and not to release additional funds until adequate financial controls and records are established; (6) require that project vehicles be titled in the name of the GOE and be available only for project use; (7) settle with KCMI questioned costs ($37,800 in direct charges, $7,777 in salary overpayments, LE 10,617 in per diem and fuel costs, and LE 93,589 in subcontractor's 1980 overhead payments); (8) obtain reimbursement of $3,600 from JMM/KNBS for home office salary overhead payments; (9) require JMM/KNBS to either support a $28,000 workers' compensation insurance payment or reimburse A.I.D.; and (10) have the GOE require JMM/KNBS to obtain through A.I.D. the less expensive INA workers' compensation insurance.