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Discretionary Transportation Grants: Actions Needed to Improve Consistency and Transparency in DOT's Application Evaluations

GAO-19-541 Published: Jun 26, 2019. Publicly Released: Jul 18, 2019.
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Fast Facts

The Department of Transportation awarded over $1.5 billion in grants for nationally significant freight and highway projects for 2017-2018. We reviewed its grants process.

We found DOT's application reviews for the Infrastructure for Rebuilding America program lacked consistency and transparency. For example, after DOT found 97 applications were missing information, it followed up with 42. It did not sufficiently document why it only contacted some applicants.

Since 2011, we have recommended DOT improve its grant programs. In this report, we recommended, among other things, that Congress consider requiring DOT to enact transparency measures.

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Highlights

What GAO Found

The Department of Transportation's (DOT) process for reviewing applications for grants to fund projects under the Infrastructure for Rebuilding America (INFRA) program lacked consistency and transparency in aspects related to following up with applicants and evaluating applications.

Following up with applicants. DOT must determine that an applicant's project meets statutory requirements in order for the project to be eligible for an INFRA award. DOT initially found that 97 applications had insufficient information for an eligibility determination. DOT followed up with 42 of the 97 applicants to request additional information. DOT did not sufficiently document why it followed up with certain applicants over others. If DOT does not clearly communicate and document its process regarding applicant follow-up, the process lacks transparency and the assurance of fairness.

Evaluating applications. In addition to the statutory requirements, DOT established merit criteria (e.g., economic vitality) to evaluate projects against, and stated that competitive projects would substantively address all of the criteria. DOT teams scored the projects on how well they addressed each criterion. However, DOT forwarded the information on all 165 projects that were found to be statutorily eligible to the Secretary for potential award, regardless of how well they scored on the merit criteria. In the end, DOT awarded some projects that did not address all of the criteria. Several applicants told GAO they were uncertain how DOT determines which projects should receive awards. In addition, DOT's documentation does not provide insight into why projects were selected for awards, an issue GAO has previously noted and recommended DOT address.

The above limitations reflect long-standing issues GAO has identified in DOT's discretionary grant programs. Specifically, since 2011, GAO has recommended actions to increase consistency and transparency. In some cases, DOT implemented the recommendations for one program, but GAO later found similar problems in other programs. After finding repeated issues, GAO recommended in 2016 that DOT develop a department-wide directive that would, among other things, require that key decisions be documented. DOT agreed with the recommendation. In a March 2019 memo, DOT directed offices to implement GAO's recommendation by June 2019. However, it is unclear how this action will improve transparency and consistency because, among other things, DOT did not communicate how offices should sufficiently document decisions to ensure that the rationale for decisions is clear. The next reauthorization of surface transportation programs provides Congress the opportunity to build requirements for greater consistency and transparency into DOT's grant programs. This is particularly important as DOT has two additional rounds of INFRA funding to award under the FAST Act, and the President's Budget proposal proposed providing an additional $1 billion to INFRA. Absent effective action by DOT going forward, the recurring and long-standing issues GAO has identified could continue to affect DOT's competitive discretionary grant programs.

Why GAO Did This Study

The cost to repair and upgrade the nation's surface transportation system to meet current and future demands is estimated in the hundreds of billions of dollars. In December 2015, Congress established a DOT discretionary grant program to fund nationally significant freight and highway projects. DOT awarded $1.54 billion for such projects for fiscal years 2017 and 2018. GAO was asked to review DOT's process for evaluating and selecting applications for awards.

This report discusses the consistency and transparency of DOT's process for evaluating and awarding INFRA grants for the fiscal-year 2017–2018 round of funding, among other objectives. GAO reviewed DOT's documentation of its evaluation process, and interviewed DOT staff and officials, as well as 11 INFRA applicants selected to ensure diversity in projects' size, type, location, and award status, as well as type of applicant.

Recommendations

GAO is making three recommendations, including that DOT should communicate and document the rationale for asking specific applicants for more information and provide information to applicants on how, if at all, DOT uses merit criteria scores to advance projects through its evaluation and selection process. Also, Congress should consider directing DOT to develop and implement transparency measures in the next surface-transportation reauthorization bill. DOT concurred with GAO's recommendations and provided technical comments that GAO incorporated as appropriate.

Matter for Congressional Consideration

Matter Status Comments
During the next reauthorization for surface transportation programs, Congress should consider including language in the reauthorization bill that would require DOT to develop and implement transparency measures for DOT's review and selection process for discretionary grants. Such measures should, at a minimum, help to ensure that the evaluation process is clearly communicated, that applications are consistently evaluated, and that the rationale for DOT's decisions are clearly documented. Such measures should be developed in line with Office of Management and Budget guidance, federal internal control standards, and recommended practices for evaluating and selecting discretionary grant awards (Matter for Consideration 1)
Open
The Infrastructure Investment and Jobs Act (Pub. L. No. 117-58) was enacted on November 15, 2021 and reauthorized the surface transportation program, including what is referred to as DOT's INFRA discretionary grant program. With respect to the INFRA program, the law requires DOT to offer to provide information to eligible applicants not selected for such a grant on its evaluation of INFRA projects and an explanation why the project was not selected for funding. In addition, for proposed grant awards, the law also requires DOT to submit to specified congressional committees reports describing the evaluation and justification of such proposed grants at least 60 days prior to such grants being provided. However, the law does not require DOT to develop and implement additional transparency measures for DOT's review and selection process for its discretionary grant program that are in line with Office of Management and Budget guidance, federal internal control standards, and recommended practices. As of May 2023, Congress has not taken any additional action in this area. GAO will continue to monitor congressional action in this area.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Transportation The Secretary of Transportation should ensure that DOT, in its notice of funding opportunity and evaluation plan for each remaining INFRA-funding cycle, clarify the circumstances under which DOT may select applicants to receive requests for additional information. (Recommendation 1)
Open – Partially Addressed
In 2022, DOT issued a notice of funding opportunity for the Multimodal Projects Discretionary Grant Program, which combined the notice of funding opportunities for INFRA and two other discretionary grant programs. DOT also issued a combined evaluation plan for these three discretionary grant programs. In September 2023, we confirmed that DOT clarified, in the evaluation plan, the circumstances under with DOT may select applicants to receive requests for additional information. Specifically, the evaluation plan states that during the analysis phase of the review, if additional information is necessary to determine a project meets a requirement, DOT will reach out to that applicant to request information once from that applicant. The plan states that this approach applies to each requirement with the exception of cost effectiveness requirement. The plan also states that, during the Senior Review phase, DOT may seek clarifying information from that applicant a second time, or the first time for cost effectiveness if (1) the project received a high rating or (2) the Senior Review Team provides additional information that a project outcome area has benefits aligned with a High rating. DOT also issued a memo during the 2022 application review clarifying these processes. However, as of September 2023, DOT has not clarified the circumstances under with DOT may select applicants to receive requests for additional information in the notice of funding opportunity. GAO will continue to monitor implementation of this recommendation.
Department of Transportation The Secretary of Transportation should develop procedures for each remaining INFRA-funding cycle to ensure that when additional information is requested from an applicant, the specific rationale behind the request is documented (for example, to promote geographic diversity among projects), as well as to ensure that DOT documents the rationale if similar projects were not afforded an opportunity to provide additional information. (Recommendation 2)
Open – Partially Addressed
Previously, DOT issued a notice of funding opportunity for the Multimodal Projects Discretionary Grant Program, which combined the notice of funding opportunities for INFRA and two other discretionary grant programs. DOT also issued a combined evaluation plan for these three discretionary grant programs. In September 2023, we confirmed that DOT developed procedures to ensure that when additional information is requested from an applicant, the specific rational behind the request is documented. Specifically, in its evaluation plan, DOT states that if additional information is necessary to determine a project meets a requirement, the DOT will reach out to that applicant to request additional information one time. This applies to each requirement with the exception of cost effectiveness requirements. The procedures also establish the specific parameters for requesting additional information from applicants and documenting decisions during the Senior Review phase. These procedures provide guidance and direction on documenting the specific rationale for requesting additional information from an applicant. However, as of September 2023, DOT has not developed procedures to ensure DOT documents the rationale if similar projects were not afforded an opportunity to provide additional information. GAO will continue to monitor implementation of this recommendation.
Department of Transportation The Secretary of Transportation should ensure that DOT provides information to applicants in its notice of funding opportunity for each remaining INFRA-funding cycle regarding: (1) how scores on merit criteria are used, if at all, to determine whether projects advance to the Secretary for selection, and (2) how, if at all, DOT plans to use merit scores to determine which projects should receive an award. (Recommendation 3)
Open – Partially Addressed
In June 2023, DOT issued a notice of funding opportunity (NOFO) for the Multimodal Projects Discretionary Grant Program, which combined the notice of funding opportunities for INFRA and two other discretionary grant programs for fiscal years 2023 and 2024. The NOFO states that the senior review team will assign an overall rating to each application, of highly recommended, recommended, or not recommended, based on a number of factors, including the application's project outcome (or merit) scores. The Highly recommended projects make up the initial list of consideration. Once every project has been assigned an overall rating, the NOFO states that the senior review team will review if the list of Highly Recommended projects is sufficient to satisfy program set-asides and geographic diversity requirements. If not, 'Recommended' projects may be added to the proposed list for consideration. However, the NOFO does not describe how, if at all, merit scores may affect the decision to add a "Recommended" project to the proposed list. In addition, the NOFO states that the Secretary must prioritize selections from among the projects assigned a "Highly Recommended" Rating, but does not describe how, if at all, merit scores will be used to determine which projects will receive an award. GAO will continue to monitor implementation of this recommendation.

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Discretionary grantsFederal fundsFinancial assistanceGrant applicationsGrant awardsGrant monitoringGrant programsHighway projectsInternal controlsProgram transparencyPublic roads or highwaysQuality controlTransportationSurface transportationGrant award procedures