Audit Criticizes FHWA for Lax Oversight of Federal Highway Grants to States
This story appears in the Oct. 15 print edition of Transport Topics.
Federal Highway Administration officials are not consistently meeting their congressionally mandated “stewardship and oversight” requirements to closely oversee billions of dollars in federal highway program grants to states, according to a new audit.
“While FHWA fulfilled the statutory mandate to enter into agreements with each state, the agreements do not consistently reflect federal requirements, or program risks and priorities that FHWA has identified and communicated to its division offices,” said the audit by the Department of Transportation’s Inspector General.
At stake are some of the $27 billion in stimulus funding authorized by the American Recovery and Reinvestment Act of 2009 for 13,000 highway projects nationwide and $40 billion in annual Federal-Aid Highway Program funds provided to the states annually for highway projects, the IG said.
The IG audit report, released earlier this month, found that only nine of 55 stimulus-related agreements even referred to the legislation that imposed extensive financial and reporting requirements.
In addition, the IG found that FHWA was not fully providing oversight on about 600 of 2,500 interstate highway system projects, or about $5 billion in program funding.
“For example, Texas was allowed to assume oversight of a bridge reconstruction project that included about $110 million in federal funds,” the audit said. “Collectively, these exclusions and inconsistencies reduce the ability of the division offices and states to utilize the agreements as an internal control tool to carry out ARRA and FAHP oversight responsibilities effectively.”
In a response to the audit, FHWA officials mostly concurred with the audit findings but said the IG did not accurately portray the agency’s oversight role in the agreements. They said the agreements are just one of many control documents outlining the detailed requirements, risks and priorities involved in administering funding programs.
“With the general devolution of authority for the conduct of highway projects moving from the federal government to the states over a series of surface transportation authorizations at Congress’ direction, these documents are intended to suit the needs of unique state circumstances and the FHWA division offices with which they interact,” FHWA Administrator Victor Mendez wrote to the IG.
“These agreements were intended to simply outline roles and responsibilities in whatever way was most useful to the states and division offices based on each state’s needs — they were not intended to be consistent from state to state or enforce requirements that do not add value to the program,” Mendez added.
The IG said that although FHWA delegates much of the oversight responsibility for highway projects to states, it is ultimately accountable for ensuring that projects meet established federal requirements.
FHWA and states must adhere to stimulus act time frames, accountability and reporting standards. However, because the states have limited resources, the legislation requirements further challenges their ability to oversee federal highway projects, the IG said.
But FHWA said it does not agree that the agreements should be based on a “one-size-fits-all set of prescriptive requirements.”
“In other words, one should expect that for example, the stewardship and oversight agreement with California is different from the agreement with Delaware. Stewardship and oversight agreements, as required by federal statute, are an outline of roles and responsibilities for administering the FAHP; they are not required to contain specific requirements, risks or priorities,” the agency said.
