Federal-State Partnership Produces Benefits and Poses Oversight Risks
GAO-12-474: Published: Apr 26, 2012. Publicly Released: May 29, 2012.
What GAO Found
Over the years, the federal-aid highway program has expanded to encompass broader goals, more responsibilities, and a variety of approaches. As the program grew more complex, the Federal Highway Administrations (FHWA) oversight role also expanded, while its resources have not kept pace. As GAO has reported, this growth occurred without a well-defined overall vision of evident national interests and the federal role in achieving them. GAO has recommended Congress consider restructuring federal surface transportation programs, and for this and other reasons, funding surface transportation remains on GAOs high-risk list.
FHWA benefits from using recognized partnership practices to advance the federal-aid highway program and conduct program oversightsuch as clear delineation of roles and responsibilities between FHWA and its state partners and formal and informal conflict resolutionthat are recognized as leading practices. FHWAs partnership approach allows it to proactively identify issues before they become problems, achieve cost savings, and gain states commitment to improve their processes.
FHWAs partnership approach also poses risks. We observed cases where FHWA was lax in its oversight or reluctant to take corrective action to bring states back into compliance with federal requirements, potentially resulting in improper or ineffective use of federal funds. For example, while FHWA has made it a national priority to recoup funds from inactive highway projectsprojects that have not expended funds for over 1 yearFHWA officials in three states we visited were reluctant to do so because of concerns about harming their partnership with the state. In other cases, FHWA has shown a lack of independence in decisions, putting its partners interests above federal interests. For example, FHWA allowed two states to retain unused emergency relief allocations to fund new emergencies, despite FHWAs policy that these funds are made available to other states with potentially higher-priority emergencies. In some instances, FHWA became actively and closely involved in implementing solutions to state problemsthis can create a conflict when FHWA later must approve or review the effectiveness of those solutions.
If proposals for a performance-based highway program are adopted, FHWA would have to work with states to develop measures and take corrective action if states do not meet them. FHWAs partnership could help states develop measures, but it would need to mitigate the risks posed by its partnership to ensure corrective action was effective when needed. The fundamental reexamination of surface transportation programs, including the highway program, that GAO previously recommended presents an opportunity to narrow FHWAs responsibilities so that it is better equipped to transition to a performance-based system. GAO identified areas where national interests may be less evident but where FHWA expends considerable time and resourcesareas where devolving responsibilities to the states may be appropriate.
Why GAO Did This Study
The U.S. Department of Transportation (DOT) provides about $40 billion to the states annually to build and maintain highways and bridges through the federal-aid highway program. While this program has grown and changed over time, the federal-state relationship has been consistently one of partnership since 1916. DOTs FHWA has offices in all 50 states that have developed close working relationships with states. Legislation approved by the Senate in March 2012 would establish a more performance-based highway program, introducing performance measures for highways and bridges and requiring FHWA to monitor states progress in meeting those measures. As requested, GAO examined (1) how the federal-aid highway program and FHWAs oversight have changed over time; (2) the extent to which FHWAs partnership approach produces benefits; (3) the extent to which FHWAs partnership approach poses risks; and (4) how FHWAs partnership with state DOTs could affect a transition toward a performance-based highway program. To do this work, GAO conducted site visits and a survey, reviewed relevant documentation, and interviewed FHWA and state officials.
What GAO Recommends
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Matter for Congressional Consideration
Comments: As of February 2015, Congress has not yet considered narrowing FHWA's responsibilities. The Moving Ahead for Progress in the 21st Century Act (MAP-21), which authorizes surface transportation programs, will expire in May 2015. Congress will be developing legislation to reauthorize federal surface transportation programs during 2015.
Matter: As we have previously recommended, Congress should consider reexamining and refocusing surface transportation programs, including establishing well-defined goals with direct links to identified federal interests and roles. Based on this review, there may be areas where national interests are less evident and where Congress may wish to consider narrowing FHWA's responsibilities.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: In 2012, GAO reported that the Federal Highway Administration (FHWA) benefits from using recognized partnership practices to advance the federal-aid highway program and to conduct program oversight. FHWA's partnership approach allows it to proactively identify issues before they become problems, achieve cost savings, and gain states' commitment to improve their processes. GAO also noted that FHWA had good oversight practices that complemented its partnership, for example, by using an independent, third party review by National Review Team (NRT) during the implementation of the Recovery Act. However, FHWA's partnership approach also poses risks. We observed cases where FHWA was lax in its oversight or reluctant to take corrective action to bring states back into compliance with federal requirements, potentially resulting in improper or ineffective use of federal funds. In other cases, FHWA has shown a lack of independence in decisions, putting its partners' interests above federal interests. GAO reported that, given that partnership produces benefits, the solution does not lie with eliminating FHWA's partnership approach. Rather, a strategy built around leveraging the strengths of the partnership approach while managing its risks could provide a better way for FHWA to verify the states' use of federal funds. Therefore, GAO recommended that the Secretary of Transportation direct the FHWA Administrator to develop a strategy based on the NRT model to mitigate the risks associated with its partnering approach. In March 2014, FHWA announced an enhanced risk-based approach to its stewardship and oversight of the federal-aid highway program. This approach included adapting the NRT model by establishing data-driven compliance assessments, centrally coordinated by an independent team to ensure transparency and consistency. Additionally, FHWA's approach incorporates enhanced oversight of projects of elevated risk using a consistent set of criteria. While not explicitly targeting the risks of partnership with the states, FHWA's approach addresses the overall intent of the recommendation by enhancing oversight of the federal-aid highway program through an independent team's role in compliance reviews as well as risk-based project oversight. As a result, this approach has the potential to be an effective vehicle to mitigate risks associated with partnering between FHWA division offices and state DOTs.
Recommendation: The Secretary of Transportation should direct the FHWA Administrator to develop a strategy based on the National Review Team model to mitigate the risks associated with its partnering approach with state DOTs, while maintaining the strengths that the partnership approach brings to the program. This strategy should address existing risks and, if Congress directs FHWA to move to a performance-based system, partnering risks that could affect the successful implementation of such a system.
Agency Affected: Department of Transportation