Audit Reports

The Federal Highway Administration (FHWA) oversees more than $40 billion in annual Federal aid for national highway and bridge projects. Federal law requires aid recipients to competitively award contracts for such projects unless some other method is more cost-effective or an emergency exists. One such method is force account work, which involves the noncompetitive use of State or local resources to execute highway projects. Given the inherent risk of higher costs associated with noncompetitive practices, we initiated an audit to (1) determine the scope and magnitude of force account projects funded through the Federal-aid Highway Program and (2) assess FHWA’s processes for overseeing compliance with Federal force account requirements.

 

FHWA officials have designated force account as a low-risk activity. As a result, FHWA does not track force account activity and thus cannot readily identify which federally funded projects used force account or the amount and type of activity that received Federal funding. In addition, the Agency provides minimal oversight, does not monitor whether States comply with force account regulations, and has gaps in its guidance. For example, while Federal regulations detail when staff can waive a cost-effectiveness determination for use of force account, the Agency’s guidance does not. Consequently, States may be using force account to perform permanent repairs when there may be a more cost-effective approach. FHWA does have a risk-based stewardship and oversight framework that gives it discretion in determining the scope of its oversight, as long as it is based on objective data and information. However, without adequate policies and procedures, FHWA cannot ensure that States comply with force account requirements and expend Federal dollars in a cost-effective manner.

 

We made four recommendations to improve FHWA’s oversight of States’ compliance with Federal force account requirements. FHWA concurred with recommendations 1, 2 and 4, and partially concurred with recommendation 3—stating that it neither agrees nor disagrees with our $22.3 million estimate of unsupported costs but will take the necessary corrective actions. We consider recommendations 1 through 4 resolved but open pending completion of the planned actions.