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FTA Grants Draw Fire from Auditors

Monday, August 13, 2012

More items for Program/Project Management

Federal transportation officials are pouring tens of billions of dollars into state and local projects without paying enough attention to how that money is spent—or even following up on known problems, a new government audit concludes.

The Federal Transit Administration “does not provide its regions or contractors with adequate guidance or oversight to ensure they consistently identify and track grantee deficiencies,” the U.S. Department of Transportation’s Office of Inspector General (OIG) concludes in a new audit, Improvements Needed in FTA’s Grant Oversight Program.  

Photos: Federal Transit Administration

FTA funneled more than $57 billion in funding to more than 1,200 state and local grantees between FY2006 and FY2010. Recent FTA-supported projects include the $36 million Eads Bridge Rehabilitation Project in St. Louis, MO.

A close review of FTA’s Region III, based in Philadelphia, shows that that office in particular has “not effectively followed up on grantee deficiencies,” auditors said.

Keeping an Eye on $56B

From fiscal year 2006 to fiscal year 2010, the FTA provided more than $57 billion in funding to more than 1,200 state and local grantees “to enhance the effectiveness and efficiency of the nation’s transit systems,” the audit reports.

To oversee that outlay, FTA spent $75 million during the same period for contractors in its Oversight Program, which consists of 15 review areas. These focus on grantee compliance in both specific areas, such as civil rights, and broad areas, such as management of federal funds.

The bottom line, according to auditors: Oversight is falling far short.

3 Strikes

Auditors identified three key problems at FTA’s federal headquarters level.

First, they said, FTA does not provide consistent standards for data collection and reporting for review purposes, which hinders the agency’s ability to identify repeat findings, compare findings, analyze trends, and evaluate outcomes.

For example, the auditors noted, different FTA reviews “name similar findings differently—even for the same grantee—which makes it difficult for FTA to identify findings that recur across these review types.”

In April, Federal Transit Administrator Peter Rogoff attended the groundbreaking of a 10-mile extension of the Bay Area Rapid Transit (BART) rail system. The project includes $900 million in FTA funds.

Second, auditors found numerous problems with the data entered in FTA’s oversight tracking system, known as OTrak. In nearly one in five cases, oversight contractors did not enter any data whatsoever in the required “Discussion” and “Recommendation” fields, the audit said.

Third, the review said, FTA does not evaluate quality in its performance measures and assessments. For example, it noted, two key review programs focus solely on closing reviews on time, to the exclusion of other considerations.

“The guidance and oversight deficiencies we identified impede FTA’s ability to fully assess grantees’ compliance with federal program requirements and call into question the return on investment of its Oversight Program,” the auditors wrote.

Philadelphia’s Failures

FTA’s Philadelphia-based Region III also fared poorly in the audit. In almost 24 percent of cases, OIG found that the office closed cases without documenting that grantees had corrected identified problems.

For example, the auditors noted, the Philadelphia office ordered one grantee to document training of its procurement personnel. When the grantee said it had not even selected a trainer, the Philadelphia office closed the case anyway.

The same office instructed another grantee to develop an inventory of property it had purchased with federal funds. When the grantee responded with a partial list, saying it did not have all of the information, the Philadelphia office closed that case, too.

“This lack of support was primarily attributable to Region III’s practices of closing findings before they were resolved, poor recordkeeping, or both,” the audit said.

 “Closing findings before they are resolved inhibits FTA’s ability to know whether a grantee completely addressed a deficiency and distorts FTA’s performance measure” for the review programs that grade themselves entirely on timely closing of reviews.

Remedies and Sanctions

Auditors also criticized FTA’s lack of guidance on when and how to use remedies and sanctions with problem grantees. FTA has no criteria for the use of either remedies or sanctions and does not track their use, the audit said.

For example, auditors found that Region III used sanctions just once in five years against one grantee that had racked up 26 findings in a single review. Meanwhile, the same office implemented no sanctions against another grantee that had 33 findings in one Triennial Review— the most of any selected grantee in a single review over the same period—even though it had similar deficiencies as the sanctioned grantee.

Worse, the auditors said, they couldn’t even figure out whether either grantee deserved sanctions because of the lack of criteria.

6 Recommendations

Auditors recommended that the agency administrator:

• Develop uniform review data collection and reporting procedures that, “at a minimum,” will enable FTA to identify common or systemic findings and compare findings across reviews for a particular grantee, conduct trend analysis, and evaluate outcomes from the overall Oversight Program.

• Establish “more robust methods for assessing contractor performance”;

• Develop more comprehensive performance measures to assess the effectiveness of its Oversight Program;

• Develop policies and procedures to verify that cases are not closed until all findings have been resolved;

• Establish clear policies and procedures for using remedies and sanctions, including application of a risk-based approach for their use; and

• Require FTA headquarters staff to track and oversee each region’s use of remedies and sanctions.

FTA said it concurred with the recommendations. The OIG set target dates for compliance and said it would follow up.

Download the audit.

Comment from John Fauth, (8/14/2012, 8:20 AM)

I don't find anything surprising about the findings in this audit. It's representative of the same "waste, fraud and abuse" that has been identified countless times in countless agencies, and been targeted for elimination by countless bureaucrats and politicians. It's only ridiculous if you believe any of the promises. This is an inherent quality of bloated bureacracies and baseline budgeting (ie: large government is inherently inefficient).

Comment from James Johnson, (8/14/2012, 11:05 AM)

What they are saying is that there is not enough money being spent tracking the strings attached to the funding. The resolution is amazingly simple...simply block grant the funds to the state or municipality with no strings attached. But that would make sense so I doubt that will happen. Afterall, it is through the use of such strings that the government gets entities to bend to their will.