Audit Reports

-A A +A
skip-to-content

Improved FRA Decision Making and Financial Oversight Processes Could Have Reduced Federal Risks from the California High-Speed Rail Project

Requested by Chairman Jeff Denham of the House Committee on Transportation and Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials
Project ID: 
ST2020015
What We Looked At
Between 2009 and 2011, Congress cumulatively appropriated $10.2 billion for the High Speed Intercity Passenger Rail (HSIPR) program. As of April 2019, the Federal Railroad Administration (FRA), responsible for this program, has disbursed $8.5 billion of those funds, with approximately 35.5 percent dedicated to developing a corridor in California, managed by the California High Speed Rail Authority (CHSRA). The former Chairman of the House Committee on Transportation and Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials requested that we review FRA’s risk mitigation and oversight of expenditures. Accordingly, our audit objectives were to assess FRA’s (1) risk analysis, assessment, and mitigation efforts—particularly regarding the availability of non-Federal matching funds, business plans, and financial reporting—and (2) procedures for determining whether Federal funds expended complied with applicable Federal laws and regulations. Due to the significant amount of HSIPR funds dedicated to California, our audit focused on FRA’s cooperative agreements with CHSRA.
 
What We Found
While FRA took numerous actions to oversee the CHSRA agreement, FRA missed opportunities to better assess and mitigate Federal risks. Specifically, while FRA routinely found that CHSRA submissions of required planning documents were insufficient and provided CHSRA with technical assistance to improve future submissions, prior to May 2019, FRA did not document decisions on additional actions to address the repeated shortcomings. Additionally, FRA’s review of documents submitted by CHSRA did not verify underlying methodologies used to create them or make an independent assessment of their plausibility. FRA did not define minimum standards for the acceptable interim use of the project’s Central Valley segment to ensure that the initial construction segment would have independent operational utility, or ensure that CHSRA developed an acceptable interim use plan—although CHSRA missed the deadline to provide one. Finally, FRA’s review of project reimbursement requests relied on documentation that was not adequate to verify that expenditures met Federal requirements, and FRA’s review of expenditure documentation was inadequate in some cases.
 
Our Recommendations
We made four recommendations to improve FRA’s assessment and mitigation of risks, documentation of decisions, and processes for overseeing expenditures. FRA concurred with three recommendations and partially concurred with one. We consider all four recommendations resolved but open pending completion of planned actions.

Recommendations

Open

Closed

No. 1 to FRA

Revise and implement policies and procedures for when to escalate grant noncompliance issues within FRA. At a minimum, these procedures should include criteria for when to escalate noncompliance issues beyond FRA's grants management division, and documentation of FRA's decisions and rationale.

No. 2 to FRA

Revise and implement policies and procedures for defining FRA's tolerance for the risk of grantee noncompliance with specific deliverable requirements, periodically assessing those risks, and documenting the resulting risk-based agency decisions on the depth of review to conduct of deliverables.

No. 3 to FRA

Define a framework for determining the minimum acceptable standards of what an interim use plan for new infrastructure funded by FRA grants should provide, and procedures for evaluating these plans.

No. 4 to FRA

Revise and implement guidance for FRA staff to conduct detailed assessments of grantees' procedures for complying with Federal expenditure requirements. This guidance should include steps for when and how FRA staff are to test grantees' implementation of their procedures through sampling and in-depth reviews of selected expenditures.