Audit Reports

 
September 30, 2003

Follow-Up on Central Artery/Tunnel Project’s Owner-Controlled Insurance Program

Project ID: QR-2003-089
 
 
 

Summary

We performed a follow-up review of FHWA’s implementation of our recommendations from a July 2002 audit report regarding the recovery of excess reserves from the Owner-Controlled Insurance Program (OCIP) of the Central Artery/Tunnel Project in Boston. In response to our recommendation to cease Federal participation in OCIP, the project transferred $273 million from the Federal share of the OCIP budget to the Federal share of the project’s construction budget. The transfer was completed by May 2003. We determined that the amount transferred was appropriate and that FHWA issued final OCIP guidance as recommended.

In May 1999, we reported that the Central Artery/Tunnel Project had used Federal funds to overfund its OCIP. FHWA agreed to recover the excess reserves and implement a policy to prevent future occurrences. At Congress’s direction, we performed a follow-up audit to determine whether FHWA implemented appropriate corrective action. In July 2002, we reported the project used $153 million ($138 million Federal share) of excess reserves to offset current premiums and also withdrew $50 million from the OCIP Trust and returned the funds to Massachusetts’s Federal-aid account. However, we also found that an additional $133 million in excess Federal funds remained in the OCIP, and the project needed to complete an ongoing independent audit of the OCIP trust accounts. We recommended that FHWA cease Federal participation in the OCIP and issue final OCIP guidelines.

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