Weaknesses Identified in Volpe’s Cost Accounting Practices for the V-TRIPS Contract
The U.S. Department of Transportation’s (DOT) Volpe National Transportation Systems Center (Volpe) performs transportation-related systems research and applications development for DOT and other Federal and non-Federal sponsors. To provide the needed information technology support services, Volpe relied on its Transportation Information Project Support (V-TRIPS) contract—a 5-year, $234 million, multi-award service contract. Because Volpe puts all sponsor funds into a working capital fund, it is critical that its cost accounting and financial reporting systems track costs by project and charge sponsors accurately—especially for contracts like V-TRIPS with multiple projects and sponsors. Our prior reviews of Volpe have identified problems with its accounting practices, including weaknesses in how it allocates indirect costs among sponsors. Accordingly, we conducted this follow-on audit to assess the reliability of Volpe’s accounting practices for administering the V-TRIPS contract.
Overall, Volpe’s cost and general accounting practices were not always reliable or sufficiently transparent to verify that V-TRIPS funds were appropriately administered. Specifically, 36 of the 129 transactions we tested—totaling nearly $8.7 million—were not properly recorded. Additionally, Volpe did not follow current DOT policy or maintain transparency when collecting indirect costs from sponsors for its risk mitigation account, resulting in the approved cap being exceeded by as much as $7.4 million in 2014. These errors occurred because Volpe does not have formal cost accounting policies and procedures or strong internal management controls. DOT has been challenged to ensure Volpe takes needed corrective actions, due largely to Volpe’s complex funding arrangement and shifting departmental oversight resulting from several reorganizations over the last 12 years. We made four recommendations to improve Volpe’s cost and general accounting practices. The Department concurred with all four recommendations.