In fiscal year 2019, the Federal Highway Administration (FHWA) received about $45 billion for its Federal-aid highways program to support State and local Governments in the design, construction, and maintenance of the Nation’s highway system. While FHWA may delegate responsibility for project oversight to State Departments of Transportation, the Agency is ultimately accountable for ensuring projects meet Federal requirements.
Modifications to a project’s contract specifications are frequently done through change orders, which can impact project cost and schedule. We have previously reported on a lack of cost analysis documentation for change orders that should serve as the basis for negotiating fair and reasonable prices. Price negotiations without such bases can adversely impact Federal funding amounts provided.
Given the large Federal investment in highway projects and the possible effects of change orders on projects’ Federal costs, we are initiating this audit. Our objective will be to assess FHWA’s oversight of project change orders.