Mass Transit Grants:

Risk of Misspent and Ineffectively Used Funds in FTA's Chicago Region

RCED-92-53: Published: Mar 4, 1992. Publicly Released: Mar 4, 1992.

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Pursuant to a congressional request, GAO reviewed Federal Transit Administration (FTA) grant programs, focusing on: (1) whether selected grant recipients in FTA Region V, headquartered in Chicago, Illinois, complied with federal regulations; and (2) the effectiveness of FTA oversight of Region V grantees.

GAO found that: (1) two of the largest Region V grantees, the Chicago Transit Authority (CTA) and Metra, a Chicago commuter train system, have experienced significant problems in managing their capital improvement programs, procurement actions, and inventories; (2) the Department of Transportation (DOT), project management oversight contractors, and others have reported numerous deficiencies in grantees' management systems and noncompliance with federal grant requirements; (3) DOT identified $58.2 million in grant funds wasted, misspent, or mismanaged by Region V grantees; (4) Region V has recovered over $6 million in wasted, misspent, or mismanaged grant funds, initiated actions to recover another $15 million, and taken alternative corrective actions for about $17 million; (5) despite repeated recommendations to expand the scope of triennial reviews, its primary monitoring tool, FTA continues to narrowly administer the reviews; (6) as a result, a 1989 triennial review did not detect the $12.6 million in bus parts that CTA procured but did not include in its inventory; (7) for 1989 and 1990, 65 percent of Region V did not timely complete triennial reviews and did not demonstrate whether grantees had corrected previously identified deficiencies; (8) despite the significant and long-standing deficiencies in CTA capital program management, procurement, and inventory controls, Region V has taken no action to stop the flow of new grants to CTA or otherwise compel CTA to implement effective internal controls over its use of federal funds; and (9) Region V did not coordinate its oversight activities with those of state and local agencies that monitor transit funds and did not take advantage of information available from those agencies to augment its own oversight.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Over the last few years, FTA has implemented a number of GAO recommendations and other initiatives resulting in substantial improvements to its process to oversee its $4.6-billion grant management program. FTA has implemented a risk assessment program, enhanced the training and guidance provided to both staff and grantees, and made organizational changes and increased staff size to become more proactive in overseeing hundreds of federal grants. In addition, FTA has made a concerted effort to change the attitudes of its oversight staff and grantees toward safeguarding federal funds. More importantly, FTA has used its most powerful enforcement tool--withholding funds--to sanction grantees found to be mismanaging their grants. Based on these and other actions, GAO has removed FTA's high-risk designation.

    Recommendation: To provide more effective grant management and oversight and to minimize the vulnerability of Region V grants to fraud, waste, and mismanagement, the Administrator, FTA, should direct the Region V Manager to implement procedures to coordinate federal with state and local monitoring activities and explore the possibility of sharing resources to oversee grantee procurement systems, contracting procedures, and other management systems.

    Agency Affected: Department of Transportation: Federal Transit Administration

  2. Status: Closed - Implemented

    Comments: On July 14, 1992, DOT notified GAO that FTA has modified its Grants Management Information System to track quarterly progress report submission. The restructured triennial review process specifically includes the use of quarterly report information for the recommended purpose. FTA headquarters and regional project managers have been directed to track quarterly reports to identify problems.

    Recommendation: To provide more effective grant management and oversight and to minimize the vulnerability of Region V grants to fraud, waste, and mismanagement, the Administrator, FTA, should direct the Region V Manager to use quarterly progress and financial reports to identify cost, schedule, and performance problems.

    Agency Affected: Department of Transportation: Federal Transit Administration

  3. Status: Closed - Implemented

    Comments: Over the last few years, FTA has implemented a number of GAO recommendations and other initiatives resulting in substantial improvements to its process to oversee its $4.6-billion grant management program. FTA has implemented a risk assessment program, enhanced the training and guidance provided to both staff and grantees, and made organizational changes and increased staff size to become more proactive in overseeing hundreds of federal grants. In addition, FTA has made a concerted effort to change the attitudes of its oversight staff and grantees toward safeguarding federal funds. More importantly, FTA has used its most powerful enforcement tool--withholding funds--to sanction grantees found to be mismanaging their grants. Based on these and other actions, GAO has removed FTA's high-risk designation.

    Recommendation: To provide more effective grant management and oversight and to minimize the vulnerability of Region V grants to fraud, waste, and mismanagement, the Administrator, FTA, should direct the Region V Manager to require that triennial reviews evaluate, analyze, and test grantees' compliance with federal requirements.

    Agency Affected: Department of Transportation: Federal Transit Administration

  4. Status: Closed - Implemented

    Comments: Over the last few years, FTA has implemented a number of GAO recommendations and other initiatives, resulting in substantial improvements to its process to oversee its $4.6-billion grant management program. FTA has implemented a risk assessment program, enhanced the training and guidance provided to both staff and grantees, and made organizational changes and increased staff size to become more proactive in overseeing hundreds of federal grants. In addition, FTA has made a concerted effort to change the attitudes of its oversight staff and grantees toward safeguarding federal funds. More importantly, FTA has used its most powerful enforcement tool--withholding funds--to sanction grantees found to be mismanaging their grants. Based on these and other actions, GAO has removed FTA's high-risk designation.

    Recommendation: To minimize the vulnerability of mass transit grants to waste, fraud, and mismanagement, the Administrator, FTA, should direct the Region V Manager to ensure that CTA, Metra, and other grantees with identified problems have management systems that adequately account for and protect federal funds before the grantees receive additional grants. To achieve this, FTA could itself verify the grantees' systems or require grantees to use independent firms to verify their systems.

    Agency Affected: Department of Transportation: Federal Transit Administration

  5. Status: Closed - Implemented

    Comments: Over the last few years, FTA has implemented a number of GAO recommendations and other initiatives resulting in substantial improvements to its process to oversee its $4.6-billion grant management program. FTA has implemented a risk assessment program, enhanced the training and guidance provided to both staff and grantees, and made organizational changes and increased staff size to become more proactive in overseeing hundreds of federal grants. In addition, FTA has made a concerted effort to change the attitudes of its oversight staff and grantees toward safeguarding federal funds. More importantly, FTA has used its most powerful enforcement tool--withholding funds--to sanction grantees found to be mismanaging their grants. Based on these and other actions, GAO has removed FTA's high-risk designation.

    Recommendation: To provide more effective grant management and oversight and to minimize the vulnerability of Region V grants to fraud, waste, and mismanagement, the Administrator, FTA, should direct the Region V Manager to reassess the Region V practice of relying primarily on single audits to verify the appropriateness of costs when closing completed grants.

    Agency Affected: Department of Transportation: Federal Transit Administration

 

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