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

Requested By
Self-Initiated
Project ID
FI2014034
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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.

Recommendations

Closed on $7,343,100
No. 1 to FTA
Determine if improper payments identified in this report are recoverable, and develop and implement a plan to maximize the return of these payments.
Closed on
No. 2 to FTA
Provide training to regional office personnel on topics specific to force account plans that addresses and clarifies FTA's requirements for reimbursement.
Closed on
No. 3 to FTA
Modify existing FTA Circulars, instructions to oversight contractors, and training for grantees to reinforce program requirements, including those addressing such certifications as Federal Motor Vehicle Safety Standards and Buy America.
Closed on
No. 4 to FTA
Implement preventive measures to guard against improper payments, such as periodically requesting payment documentation (i.e. force account plans and current contracts), prior to reimbursing grantees for expenditures.
Closed on
No. 5 to FTA
Implement controls governing payments to grantees for preventive maintenance force account activities.