Mass Transit:

Challenges in Evaluating, Overseeing, and Funding Major Transit Projects

T-RCED-00-104: Published: Mar 8, 2000. Publicly Released: Mar 8, 2000.

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Pursuant to a congressional request, GAO discussed the challenges the Federal Transit Administration (FTA) faces in evaluating and overseeing proposed mass transit construction projects, focusing on: (1) FTA's process for evaluating proposed transit projects; (2) FTA's oversight of transit projects under construction; (3) the ever-increasing competition for federal transit construction dollars; and (4) the costs, schedules, and financing of six ongoing transit projects.

GAO noted that: (1) FTA has responded to the direction in the Transportation Equity Act for the 21st Century (TEA-21) that it develop a systematic process for evaluating potential New Starts projects competing for federal funding; (2) FTA's revised process uses a range of financial and project-related criteria and places proposed projects into three categories--highly recommended, recommended, or not recommended; (3) FTA uses these ratings to propose funding for New Starts projects to Congress; (4) FTA gives first preference to projects with federal grant agreements, it gives next preference to projects that are rated highly recommended or recommended and ready to complete a final design and a grant agreement within the next fiscal year (FY); (5) to prepare for the FY 2001 budget process, FTA evaluated 48 projects, rated 32 as highly recommended or recommended, and proposed that 15 new projects receive funding through grant agreements; (6) FTA has improved the quality of the federal grants oversight program since the early 1990s, when the program was placed on GAO's high-risk list because it was vulnerable to fraud, waste, abuse, and mismanagement; (7) since GAO removed the program from its high-risk list in 1995, FTA has also established a process to target its limited oversight resources; (8) GAO's ongoing work shows that FTA is improving its oversight of grantees with large-dollar transit projects; (9) FTA recently began using financial management consultants to review each proposed large-dollar project's finance plan to determine if the grantee has the financial capacity to build and operate the project; (10) the 14 ongoing projects and the additional 15 projects proposed in FTA's 2001 budget would consume more than the total New Starts commitment authority provided by TEA-21; (11) if all of these new grant agreements were executed as proposed, FTA would not be able to commit funds to any more New Starts projects during the last 2 years of TEA-21; (12) because many more projects are planning to compete for federal funds in the next several years, GAO recommends that FTA in the future prioritize the projects it rates as highly recommended or recommended and ready for New Starts funds; (13) last year, GAO reported on the costs, schedule, and financing of 14 ongoing projects with grant agreements; (14) GAO has updated information on six projects; and (15) ongoing reviews of the finance plans for two of these projects indicate that each project has secured adequate state and local funds to cover its cost growth.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: FTA implemented a new "cost-effectiveness" practice for the New Starts program in March 2005. Specifically, FTA will generally not recommend funding for a project that does not achieve at least a "medium" cost-effectiveness rating. FTA officials stated that this new practice will help FTA further prioritize and distinguish among projects for federal funding. According to FTA officials, this new practice was implemented, in part, to address GAO's recommendation.

    Recommendation: The Federal Transit Administration should prioritize the projects it rates as highly recommended or recommended and ready to receive New Starts funds.

    Agency Affected: Department of Transportation: Federal Transit Administration

 

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