Audit Reports

 
April 02, 2014

ARRA Lessons Learned: FTA Needs To Improve Its Grant Oversight To Prevent Improper Payments

Self-Initiated
Project ID: FI-2014-034
 
 
 

Summary

In February 2009, the Federal Transit Administration (FTA) received $8.4 billion from the American Recovery and Reinvestment Act of 2009 (ARRA) for economic stimulus and recovery grants. FTA and other Federal agencies reimburse grantees for project costs, and ARRA, along with the Improper Payments Information Act of 2002 (IPIA), requires agencies to hold grantees accountable for their expenditures. Further, in 2010, the Office of Management and Budget (OMB) directed agencies to increase their oversight of grantees.

FTA’s oversight of its ARRA grantees did not prevent or detect approximately $7.3 million in improper payments to 10 of the 16 grantees in our sample. Approximately $5.9 million, or 80 percent, was paid for charges that grantees did not sufficiently document. While a lack of documentation does not necessarily mean a payment was invalid, it raises questions about the payment’s eligibility as well as the overall effectiveness of internal controls.

FTA’s oversight also did not ensure that grantees justified the use of their own labor forces, known as force account work, for preventive maintenance. FTA’s November 2008 Circular required grantees to develop plans for work performed by their own labor on capital projects, and listed preventive maintenance as a capital project. However, of the transactions we reviewed, FTA reimbursed over $253.5 million for force account work for preventive maintenance without complete plans or, in some cases, without any plans. FTA later modified its Circular to no longer require plans for this type of work.

FTA generally concurred with our recommendations to strengthen its oversight of grantees to prevent and detect improper payments for current and future Federal-aid projects and assist the Agency in recovering improper payments. Upon completion of these actions by FTA, we will assess their effectiveness in meeting the intent of our recommendations.

.