Surface Transportation: Action Needed to Guide Implementation of Build America Bureau and Improve Application Process
Fast Facts
State and local governments or other transportation authorities who want project funding from the Department of Transportation used to face long journeys through multiple programs and offices.
A 2015 law sought to create a one-stop shop for applicants. It required DOT to consolidate key programs into one bureau—the Build America Bureau—and simplify the application process.
We found that the bureau has tried to streamline its application process but doesn't have a way to evaluate progress.
We recommended that the bureau assess its efforts to streamline the application process and find out what customers think.
This photo shows the Department of Transportation headquarters building.
Highlights
What GAO Found
The Department of Transportation (DOT) has taken initial steps to establish the Build America Bureau's (Bureau) organizational structure and to create a process to help the Bureau carry out some of its responsibilities since it was created in 2016. However, the Bureau lacks a plan to guide its ongoing and future efforts. Initial steps included creating a consolidated process to evaluate applications for three financing programs: Transportation Infrastructure Finance and Innovation Act (TIFIA), Railroad Rehabilitation and Improvement Financing (RRIF), and Private Activity Bonds (PAB). DOT largely based this consolidated process on prior practices used for individual programs but also sought to improve and streamline the process. For example, DOT formed a decision-making body that meets more frequently than a predecessor group to quickly address issues and to decide when to advance projects through the process. However, progress has been more limited in implementing other responsibilities, such as promoting best practices for innovative financing. While some of the lack of progress can be attributed to factors such as changes in leadership and staff, the Bureau lacks a plan with implementation goals and a timeline to guide its ongoing and future efforts and also lacks performance indicators to assess its progress. Without these tools, the Bureau may face difficulties prioritizing work to carry out other responsibilities and maintaining momentum throughout continued implementation efforts and any future changes in leadership and staff.
While the Bureau has taken steps to improve and streamline the application evaluation process, it does not have a mechanism to assess how well the process works—including what is challenging and what works well. Project sponsors GAO interviewed had mixed views on the Bureau's application evaluation process and whether it was streamlined. Selected sponsors that applied for TIFIA and RRIF financing identified challenges with the process, including the length of the process and changes to requirements or terms for a loan. For example, sponsors said the Bureau took longer than it had estimated to procure external advisors to help conduct its evaluation of applications. According to the sponsors, such delays and uncertainty led to cost increases for two projects and construction delays for one project. Bureau officials noted that many factors outside the Bureau's control influence the length of the application evaluation process, such as changes to a project's scope and construction cost estimates. However, the Bureau has not taken steps, such as consistently soliciting feedback from sponsors, to assess how to further improve and streamline its process. Without taking such steps, the Bureau is missing an opportunity to further streamline the process and to ensure that any challenges do not discourage sponsors from seeking the Bureau's financing programs.
GAO found that the Bureau provided a clear rationale for decisions to advance or approve projects in the TIFIA and RRIF programs but did not do so for the PAB program. While DOT did document the decisions made in each step of the application evaluation process for the PAB program, the lack of a documented rationale to support these decisions leaves that program open to questions about the integrity of its process, as it is not immediately clear how the Bureau determined that an application satisfied requirements and what information was used to support decisions that advanced projects.
Why GAO Did This Study
Constructing surface transportation projects can be long endeavors and involve multiple DOT offices. The 2015 Fixing America's Surface Transportation Act (FAST Act) required DOT to establish a finance bureau to consolidate certain funding and financing programs. The FAST Act further required that DOT improve procedures for evaluating applications for these programs—including providing a clear rationale for decisions and streamlining the process. The FAST Act also gave this finance bureau other responsibilities such as promoting best practices for innovative financing. In response, DOT opened the Build America Bureau in July 2016.
The FAST Act included a provision for GAO to review the Bureau. This report assesses, among other things, (1) progress DOT made to establish the Bureau and carry out its responsibilities, (2) the Bureau's process for evaluating applications, and (3) whether the Bureau provided a clear rationale for decisions in that process. GAO reviewed federal laws and Bureau documents and interviewed DOT officials and selected stakeholders, including 28 project sponsors selected so projects varied by mode, cost, and outcome.
Recommendations
GAO is making five recommendations, including that the Bureau develop a plan to guide its efforts and assess ways to further improve the application evaluation process. DOT concurred with two but did not fully concur with three of the recommendations and provided no rationale. GAO continues to believe the recommendations are valid as discussed in the report.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Transportation | The Under Secretary of Transportation for Policy should ensure that the Build America Bureau develop a detailed implementation plan that sets goals and a timeline for the Bureau's continued efforts, fills vacancies in the Bureau, and prioritizes and sequences work to carry out the multiple responsibilities given to the Bureau in the FAST Act. (Recommendation 1) |
Closed – Implemented
The 2015 Fixing America's Surface Transportation Act (FAST Act) required DOT to establish a finance bureau to consolidate and administer surface transportation funding and finance programs. The FAST Act also outlined several specific responsibilities for this new bureau such as streamlining approval processes for finance programs and developing best practices for innovative financing. In response, DOT opened the Build America Bureau (Bureau) in July 2016. In 2019, GAO reported that DOT established internal committees and hired a consultant to produce an initial implementation plan to establish the Bureau. However, after implementing the initial plan, the Bureau made more limited progress addressing additional responsibilities assigned to it by the FAST Act. In addition, the Bureau had a number of vacant positions from 2016 through 2019. GAO reported that Bureau officials were unable to provide written plans or timelines for these additional efforts or filling vacant positions. Key practices for organizational transformations state that an agency must set implementation goals and a timeline and ensure that top leadership drives the transformation. Bureau officials have developed general priorities and approaches that they said have been communicated to staff through regular meetings and use specific performance plans to guide work in certain areas. However, without detailed written plans with implementation goals and timelines, the Bureau risks not being able to sustain the limited progress it had made and ensure that it implements all of its statutory responsibilities in a timely manner. Therefore, GAO recommended that the Bureau develop a detailed implementation plan that sets goals and a timeline for the Bureau's continued efforts, to fill vacancies in the Bureau, and to prioritize and sequence work to carry out the multiple responsibilities given to the Bureau in the FAST Act. In April 2022, GAO confirmed that the Bureau had taken sufficient action to implement this recommendation. First, in December 2020, the Bureau issued a report on the status of responsibilities assigned to it in the FAST Act. Specifically, the Bureau reported that it had completed 45 of 53 responsibilities, including completing 34 ongoing responsibilities, such as developing and promoting best practices for innovative financing. In August 2021, the Bureau created a staffing plan to fill vacancies that included targeted start dates for each vacant position. Regarding the remaining responsibilities given to it in the FAST Act, the Bureau shared with GAO its plans and timeline for completing these responsibilities-such as establishing procurement benchmarks-in March 2022. Taken together, these most recent documents served as a detailed implementation plan to guide the Bureau's continued efforts, which met the intent of GAO's recommendation. As a result, the Bureau has been able to sustain its progress to complete multiple responsibilities to serve as a "one-stop shop" for federal transportation financing and technical assistance.
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| Department of Transportation | The Under Secretary of Transportation for Policy should ensure that the Build America Bureau develop performance indicators to assess the Bureau's progress toward meeting its guiding principles or mission as a "one-stop shop." (Recommendation 2) |
Closed – Implemented
The 2015 Fixing America's Surface Transportation Act (FAST Act) required DOT to establish a finance bureau to consolidate and administer certain surface transportation funding and finance programs. This bureau was envisioned to be a "one-stop shop" where project sponsors could access these funding and financing sources and associated technical assistance. As such, the FAST Act outlined several specific responsibilities for this new bureau such as streamlining approval processes for finance programs. In response, DOT opened the Build America Bureau in July 2016. In 2019, GAO reported that the Bureau had taken steps to carry out some of its responsibilities and had established guiding principles. However, GAO found that the Bureau had not established any indicators or measures to track progress in accomplishing its guiding principles or mission to be a "one-stop shop." This was despite a consultant's report recommending that the Bureau develop indicators to track its performance. Federal standards for internal control and key practices for organizational transformations stress the importance of setting measurable objectives and developing performance measures to assess progress. The consultant's initial implementation plan identified a number of potential performance indicators for the Bureau. According to Bureau officials, they did not want to use certain indicators as they could create incentives to move projects ahead before they were ready. However, GAO's prior work shows that to counter such incentives an agency could use multiple indicators rather than any one indicator to assess progress. Therefore, GAO recommended that the Bureau develop performance indicators to assess its progress toward meeting its guiding principles or mission. In December 2020, the Bureau identified six performance indicators to track the Bureau's progress in carrying out its mission including, for example, an indicator related to whether loans are closed on an expedited timeline. In March 2021, GAO confirmed that the Bureau was tracking these indicators internally across fiscal years. As a result of its actions, the Bureau has enhanced its ability to know whether it is achieving its guiding principles or meeting its mission.
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| Department of Transportation | The Under Secretary of Transportation for Policy should ensure that the Build America Bureau develop a mechanism to assess the Bureau's application evaluation process for TIFIA and RRIF and identify and address opportunities to improve and further streamline the process. This evaluation should include mechanisms to solicit feedback from project sponsors that sought financing. (Recommendation 3) |
Closed – Implemented
The 2015 Fixing America's Surface Transportation Act (FAST Act) required DOT to establish a finance bureau to consolidate its two credit finance programs: the Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation and Improvement Financing (RRIF) programs. The FAST Act further required, among other things, that DOT improve and streamline the application evaluation process for these finance programs. In 2019, GAO reported that DOT had taken initial steps to consolidate and improve application procedures for its funding and financing programs as required by the FAST Act. Specifically, DOT opened the Build America Bureau (Bureau) in July 2016 and moved both TIFIA and RRIF into the Bureau. DOT also created a consolidated process for the Bureau to use when working with project sponsors pursuing TIFIA and RRIF financing, including standardized steps for evaluating applications. Sponsors and stakeholders GAO interviewed had mixed experiences and identified challenges with the application evaluation process for TIFIA and RRIF and offered some suggestions to improve the process, including how to further streamline the process. The Bureau had also not determined how it would improve or streamline its process by, for example, consistently soliciting feedback from sponsors for TIFIA and RRIF. Given the challenges identified by sponsors, GAO found that the Bureau had not developed a mechanism to assess how effectively its application evaluation process works for TIFIA and RRIF, including what in the process is challenging and what works well. Without a mechanism to formally examine how to improve and further streamline the process, the Bureau may be missing an opportunity to address any recurring challenges with the process that could discourage sponsors from the seeking financial assistance from these programs. Therefore, GAO recommended that DOT ensure that the Build America Bureau develop a mechanism to assess the Bureau's application evaluation process for TIFIA and RRIF and identify and address opportunities to improve and further streamline the process, including mechanisms to solicit feedback from project sponsors that sought financing. In August 2020, the Bureau created written procedures to conduct interviews with sponsors of projects that close TIFIA or RRIF loans and Bureau staff to solicit feedback on the Bureau's processes, identify lessons learned, and implement improvements to these processes. The Bureau also began to use these procedures in August 2020. The Bureau's actions have enhanced its ability to address any recurring challenges that may undermine the purpose and availability of its financing programs and to take advantage of further opportunities to streamline its processes.
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| Department of Transportation | The Under Secretary of Transportation for Policy should ensure that the Build America Bureau develop and adopt a public statement that outlines DOT's and the Bureau's policy goals and appetite for risk for the TIFIA and RRIF financing programs. (Recommendation 4) |
Open
As of July 2023, DOT developed a strategy that outlines the Bureau's policy goals, but does not intend to issue a public statement that outlines DOT's and the Bureau's appetite for risk. According to DOT, a risk appetite statement would not be feasible given that the loan programs in the Bureau cover a diverse portfolio of publicly and privately funded projects covering a range of transportation modes that range widely in size, complexity, and financial structure. We informed DOT that we continue to believe that a risk appetite statement is both feasible and needed. We will continue to monitor the Department's actions and determine the extent to which they fulfill our recommendation.
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| Department of Transportation | The Under Secretary of Transportation for Policy should ensure that the Build America Bureau establish a policy to document a clear rationale to support decisions made in the PAB application evaluation process to explain why an allocation should or should not be approved. (Recommendation 5) |
Closed – Implemented
In March 2019, GAO reported that DOT had taken initial steps to meet requirements of the 2015 Fixing America's Surface Transportation Act (FAST Act). The FAST Act required, among other things, DOT to establish a finance bureau to consolidate and improve application procedures for three programs: Transportation Infrastructure Finance and Innovation Act (TIFIA), Railroad Rehabilitation and Improvement Financing (RRIF), and Private Activity Bonds (PAB). In response, DOT opened the Build America Bureau (Bureau) in July 2016. The FAST Act also required the Bureau to document major decisions in the application evaluation process through a mechanism that provides a clear rationale for its decisions. GAO found that the Bureau provided a documented clear rationale for its decisions to advance or approve projects in the TIFIA and RRIF programs but did not do so for the PAB program. For example, GAO found that the Bureau's documents were not clear regarding how it determined that an application satisfied PAB allocation requirements and what information was used to support decisions that advanced projects. GAO found that this occurred because the Bureau lacked a policy to document the rationale for how a project meets statutory and DOT requirements in order to advance a PAB application. Therefore, GAO recommended that DOT ensure that the Bureau establish a policy to document a clear rationale to support decisions made in the PAB application evaluation process to explain why an allocation should or should not be approved. By October 2019, the Bureau revised a PAB application evaluation checklist to more clearly describe the type of statutory eligibility category a project satisfies and amount of PAB allocation requested. The revised application checklist requires the Bureau to articulate and verify how the information submitted from an applicant demonstrates why a PAB allocation should be approved and to file supporting documentation before the application can be approved. Due to these actions, the Bureau has strengthened the integrity of the PAB application evaluation process by creating more trust in these decisions and transparency for the program.
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