GAO reviewed the development status of the rapid transit system of Metropolitan Dade County, Florida (MDC). The project is proceeding with assistance grants from the Urban Mass Transportation Administration (UMTA). The review identified significant cost increases and problems with the project development sequence. UMTA is entering into a full-funding contract with MDC, with additional Federal funding limited to extraordinary costs.

MDC cost estimates for the construction of the rapid transit system have increased by about $71.8 million since the project was approved by UMTA in 1977. The scheduled review operations date has been extended 16 months. GAO found that MDC is using the program reserve account to offset increases in other accounts. GAO believes that the MDC cost estimate is still understated by about $81.4 million, and further increases are possible because of potential schedule delays. UMTA officials disagree that the project cost estimate is understated by about $81.4 million, based upon some recent contract awards. However, GAO noted that a large number of contracts, which are yet to be awarded, could involve unexpectedly high procurement costs. UMTA officials stated that the GAO estimate does not take into consideration the fluctuating rate of inflation. Delays in right-of-way acquisition and lack of the specified rail and test track also pose project problems. UMTA officials advised GAO that MDC is taking all possible actions to obtain rights-of-way and avoid construction delays. UMTA is also coordinating closely with MDC on negotiated rail procurements.