Audit Reports

 
May 17, 2010

Final Report on Actions Needed to Mitigate Risks Associated with the Access to the Region's Core (ARC) Project

Project ID: MH-2010-066
 
 
 

Summary

On May 17, 2010, we issued our final report on FTA's oversight of the Access to the Region's Core (ARC) Project.   New Jersey Transit's (NJT) ARC project is one of the largest transit infrastructure projects in the United States.  Project costs are estimated at more than $9 billion and FTA plans to commit $3 billion through its New Starts program.  For the report, we evaluated FTA's oversight by: (1) determining whether project risks were identified and strategies were implemented to mitigate the risks; (2) identifying any challenges faced in ensuring sufficient funding was available for the project; and, (3) assessing NJT’s controls for combating fraud, waste, and abuse.

We found that FTA’s ARC oversight activities provided reasonable assurance that significant project risks have been identified and it has taken proactive steps to increase its oversight of ARC.  However, FTA did not have finalized project documents from NJT—project management plan, project execution plan, master schedule, and financial plan—that describe strategies for mitigating identified risks.  We also found that NJT needs to address certain ARC funding resource challenges including the uncertainty over the long-term availability of local funding.  In addition, we found the project’s controls were insufficient to detect fraud and ensure contractor integrity.

We recommended that the Federal Transit Administrator identify FTA's planned actions to: (1) work with NJT to promptly finalize incomplete project documents; (2) ensure that NJT continues to coordinate with other stakeholders to address the watch list risk items in a timely and effective manner; (3) obtain amended project agreements between NJT and the Port Authority and the Turnpike Authority regarding distribution of responsibilities for any future cost overruns; (4) work with NJT to update the project's master schedule and ensure it ties together the work of all contracts; (5) include a fraud and contractor integrity chapter in the project management plan and assess whether NJT has adequate controls in place to prevent fraud, waste, and abuse; and (6) issue written guidance on developing a project execution plan for major New Starts projects.  Based on FTA's response to our draft report, we consider the actions FTA has taken or plans to take as being fully responsive to our recommendations. 

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