Public Transportation
New Starts Program Challenges and Preliminary Observations on Expediting Project Development Gao ID: GAO-09-763T June 3, 2009The New Starts program is an important source of new capital investment in mass transportation. As required by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, the Federal Transit Administration (FTA) must prioritize transit projects for funding by evaluating, rating, and recommending projects on the basis of specific financial commitment and project justification criteria, such as cost-effectiveness, economic development effects, land use, and environmental benefits. To be eligible for federal funding, a project must advance through the different project development phases of the New Starts program, including alternatives analysis, preliminary engineering, and final design. Using the statutorily identified criteria, FTA evaluates projects as a condition for advancement into each project development phase of the program. This testimony discusses the (1) key challenges associated with the New Starts program and (2) options that could help expedite project development in the New Starts program. This testimony is based on GAO's extensive body of work on the New Starts program and ongoing work--as directed by Congress. For this work, GAO reviewed FTA documents and interviewed FTA officials, sponsors of New Starts projects, and representatives from industry associations. The FTA reviewed the information in this testimony and provided technical comments.
Previous GAO work has identified three key challenges associated with the New Starts program. First, frequent changes to the New Starts program have sometimes led to confusion and delays. Numerous changes have been made to the New Starts Program over the last decade, such as revising and adding new evaluation criteria and requiring project sponsors to collect new data and complete new analyses. Although FTA officials told GAO that changes were generally intended to make the process more rigorous, systematic, and transparent, project sponsors said the frequent changes sometimes caused confusion and rework, resulting in delays in advancing projects. Second, the current New Starts evaluation process measures do not capture all project benefits. For example, FTA's cost-effectiveness measure does not account for highway travel time savings and may not capture all economic development benefits. FTA officials have acknowledged these limitations, but noted that improvements in local travel models are needed to resolve some of these issues. FTA is also conducting research on ways to improve certain evaluation measures. Third, striking the appropriate balance between maintaining a robust evaluation and minimizing a complex process is challenging. Experts and some project sponsors GAO spoke with generally support FTA's quantitatively rigorous process for evaluating proposed transit projects but are concerned that the process has become too burdensome and complex. In response to such concerns, FTA has tried to simplify the evaluation process in several ways, including hiring a consulting firm to identify opportunities to streamline or simplify the process. As part of ongoing work, GAO has preliminarily identified options to help expedite project development within the New Starts program. These options include tailoring the New Starts evaluation process to risks posed by the projects, using letters of intent more frequently, and applying regulatory and administrative changes only to future projects. While each option could help expedite project development in the New Starts process, each option has advantages and disadvantages to consider. For example, by signaling early federal support of projects, letters of intent and early systems work agreements could help project sponsors use potentially less costly and time-consuming alternative project delivery methods, such as design-build. However, such early support poses some risk, as projects may stumble in later project development phases. Furthermore, some options, like combining one or more statutorily required project development phases, would require legislative action.
GAO-09-763T, Public Transportation: New Starts Program Challenges and Preliminary Observations on Expediting Project Development
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Testimony:
Before the Subcommittee on Housing, Transportation, and Community
Development, Committee on Banking, Housing, and Urban Affairs, U.S.
Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 2:00 p.m. EDT:
Wednesday, June 3, 2009:
Public Transportation:
New Starts Program Challenges and Preliminary Observations on
Expediting Project Development:
Statement of A. Nicole Clowers, Acting Director:
Physical Infrastructure Issues:
GAO-09-763T:
GAO Highlights:
Highlights of GAO-09-763T, a testimony before the Subcommittee on
Housing, Transportation, and Community Development, Committee on
Banking, Housing, and Urban Affairs, U.S. Senate.
Why GAO Did This Study:
The New Starts program is an important source of new capital investment
in mass transportation. As required by the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users, the Federal
Transit Administration (FTA) must prioritize transit projects for
funding by evaluating, rating, and recommending projects on the basis
of specific financial commitment and project justification criteria,
such as cost-effectiveness, economic development effects, land use, and
environmental benefits. To be eligible for federal funding, a project
must advance through the different project development phases of the
New Starts program, including alternatives analysis, preliminary
engineering, and final design. Using the statutorily identified
criteria, FTA evaluates projects as a condition for advancement into
each project development phase of the program.
This testimony discusses the (1) key challenges associated with the New
Starts program and (2) options that could help expedite project
development in the New Starts program. This testimony is based on GAO‘s
extensive body of work on the New Starts program and ongoing work”as
directed by Congress. For this work, GAO reviewed FTA documents and
interviewed FTA officials, sponsors of New Starts projects, and
representatives from industry associations. The FTA reviewed the
information in this testimony and provided technical comments.
What GAO Found:
Previous GAO work has identified three key challenges associated with
the New Starts program.
* First, frequent changes to the New Starts program have sometimes led
to confusion and delays. Numerous changes have been made to the New
Starts Program over the last decade, such as revising and adding new
evaluation criteria and requiring project sponsors to collect new data
and complete new analyses. Although FTA officials told GAO that changes
were generally intended to make the process more rigorous, systematic,
and transparent, project sponsors said the frequent changes sometimes
caused confusion and rework, resulting in delays in advancing projects.
* Second, the current New Starts evaluation process measures do not
capture all project benefits. For example, FTA‘s cost-effectiveness
measure does not account for highway travel time savings and may not
capture all economic development benefits. FTA officials have
acknowledged these limitations, but noted that improvements in local
travel models are needed to resolve some of these issues. FTA is also
conducting research on ways to improve certain evaluation measures.
* Third, striking the appropriate balance between maintaining a robust
evaluation and minimizing a complex process is challenging. Experts and
some project sponsors GAO spoke with generally support FTA‘s
quantitatively rigorous process for evaluating proposed transit
projects but are concerned that the process has become too burdensome
and complex. In response to such concerns, FTA has tried to simplify
the evaluation process in several ways, including hiring a consulting
firm to identify opportunities to streamline or simplify the process.
As part of ongoing work, GAO has preliminarily identified options to
help expedite project development within the New Starts program. These
options include tailoring the New Starts evaluation process to risks
posed by the projects, using letters of intent more frequently, and
applying regulatory and administrative changes only to future projects.
While each option could help expedite project development in the New
Starts process, each option has advantages and disadvantages to
consider. For example, by signaling early federal support of projects,
letters of intent and early systems work agreements could help project
sponsors use potentially less costly and time-consuming alternative
project delivery methods, such as design-build. However, such early
support poses some risk, as projects may stumble in later project
development phases. Furthermore, some options, like combining one or
more statutorily required project development phases, would require
legislative action.
View [hyperlink, http://www.gao.gov/products/GAO-09-763T] or key
components. For more information, contact A. Nicole Clowers at (202)
512-2834 or clowersa@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
We appreciate the opportunity to provide testimony on the Federal
Transit Administration's (FTA) New Starts program. As you know, since
the early 1970s, a significant portion of the federal government's
share of new capital investment in mass transportation has come through
the New Starts program. Through this program, FTA identifies and
recommends new fixed-guideway transit projects--including heavy, light,
and commuter rail; ferry; and certain bus projects--for full-funding
grant agreements (FFGA).[Footnote 1] Over the last decade, the New
Starts program has provided state and local agencies with over $10
billion to help design and construct transit projects throughout the
country.
As required by the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users (SAFETEA-LU),[Footnote 2]
FTA must prioritize transit projects for funding by evaluating, rating,
and recommending potential projects on the basis of specific financial
commitment and project justification criteria--including mobility
improvements, cost-effectiveness, economic development effects, land
use, environmental benefits, and operating efficiencies. Using these
statutorily identified criteria, FTA evaluates potential transit
projects annually and as a condition for advancement into each phase of
the process, including preliminary engineering, final design, and
construction.[Footnote 3] FTA refers to projects in the preliminary
engineering or final design phases as the "pipeline" through which
successful projects advance to receive funding.
FTA's New Starts program is often cited as a model for other federal
transportation programs because of its use of a rigorous and systematic
evaluation process to distinguish among proposed New Starts
investments. However, we and others have also identified challenges
facing the New Starts program. For example, our past reviews found that
many program stakeholders thought that FTA's process for evaluating New
Starts projects was too complex and costly and did not effectively use
all of the criteria outlined in SAFETEA-LU and previous legislation to
account for different project benefits, such as economic development.
My testimony discusses the (1) key challenges associated with the New
Starts program and (2) options that could help expedite project
development in the New Starts program. My comments are based on our
extensive body of work on the New Starts program as well as our ongoing
work for the Senate Committee on Banking, Housing, and Urban Affairs
and the House Committee on Transportation and Infrastructure.[Footnote
4] We will complete our ongoing work and report to the committees this
summer. For our ongoing work--as directed by Congress--we reviewed
SAFETEA-LU and other New Starts statutory requirements, FTA guidance
and regulations governing the New Starts program and other FTA
documents, including the annual New Starts report, and interviewed
experts, consultants, project sponsors, industry associations, and FTA
officials about the time it takes for a New Starts project to move
through the New Starts process, as well as options to address the
elements that cause delays.[Footnote 5] We conducted our ongoing work
from January 2009 through May 2009 in accordance with generally
accepted government auditing standards. Those standards require that we
plan and perform the audit to obtain sufficient, appropriate evidence
to provide a reasonable basis for our findings and conclusions based on
our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives. The FTA reviewed the information in this testimony and
provided technical comments, which we incorporated.
Background:
FTA generally funds New Starts projects through FFGAs, which are
required by statute to establish the terms and conditions for federal
participation in a New Starts project.[Footnote 6] FFGAs also define a
project's scope, including the length of the system and the number of
stations; its schedule, including the date when the system is expected
to open for service; and its cost. For projects to obtain FFGAs, New
Starts projects must emerge from a regional, multimodal transportation
planning process. The first two phases of the New Starts process--
systems planning and alternatives analysis--address this requirement.
The systems planning phase identifies the transportation needs of a
region, while the alternatives analysis phase provides information on
the benefits, costs, and impacts of different options, such as rail
lines or bus routes, in a specific corridor versus a region. The
alternatives analysis phase results in the selection of a locally
preferred alternative, which is the New Starts project that FTA
evaluates for funding. After a locally preferred alternative is
selected, the project sponsor submits an application to FTA for the
project to enter the preliminary engineering phase. When this phase is
completed and federal environmental requirements under the National
Environmental Policy Act are satisfied, FTA may approve the project's
advancement into final design, after which FTA may recommend the
project for an FFGA and advance the project into construction. FTA
oversees grantees' management of projects from the preliminary
engineering phase through the construction phase.
To help inform administration and congressional decision makers about
which projects should receive federal funds, FTA currently
distinguishes among proposed projects by evaluating and assigning
ratings to various statutory evaluation criteria--including both local
financial commitment and project justification criteria--and then
assigning an overall project rating.[Footnote 7] (See fig. 1.) These
evaluation criteria reflect a range of benefits and effects of the
proposed project, such as cost-effectiveness, as well as the ability of
the project sponsor to fund the project and finance the continued
operation of its transit system. FTA has developed specific measures
for each of the criteria outlined in the statute. On the basis of these
measures, FTA assigns the proposed project a rating for each criterion
and then assigns a summary rating for local financial commitment and
project justification. These two ratings are averaged together to
create an overall rating, which is used in conjunction with a
determination of the project's "readiness" for construction to
determine what projects are recommended for funding. Projects are rated
at several points during the New Starts process--as part of the
evaluation for entry into the preliminary engineering and the final
design phases, and yearly for inclusion in the New Starts Annual
Report. As required by statute, the administration uses the FTA
evaluation and rating process, along with the development phases of New
Starts projects, to decide which projects to recommend to Congress for
funding.
Figure 1: New Starts Evaluation Criteria and Rating Development:
[Refer to PDF for image: illustration]
Overall project rating: consists of two parts:
* Local financial commitment summary rating (50% of total weight);
which has the following components:
- Capital finance plan (50% weight);
- Operating finance plan (30% weight);
- Non-New Starts share (20% weight);
* Project justification summary rating (50% of total weight);
which has the following components:
- Cost effectiveness (50% weight);
- Land use (50% weight);
- Environmental benefits (0% weight)[A];
- Mobility improvements (0% weight)[A];
- Other factors (0% weight)[A].
Source: GAO analysis of FTA data.
[A] These criteria are not currently assigned a weight in the
evaluation framework.
[End of figure]
Previous GAO Work Has Identified Key Challenges in Managing New Starts
Program:
Frequent Changes to the New Starts Program Have Sometimes Led to
Confusion and Delays:
Numerous changes have been made to the New Starts program over the last
decade. These changes include statutory, regulatory, and administrative
changes to the program. For example, we reported in 2005 that FTA had
implemented 16 changes to the New Starts application, evaluation,
rating, and project development oversight process since the fiscal year
2001 evaluation cycle.[Footnote 8] Additional changes have been made to
the program since 2005. Examples of these changes made to the program
over the last 10 years, in chronological order, include the following.
* New data collection requirements: Starting with the fiscal year 2004
evaluation cycle, FTA required project sponsors seeking an FFGA to
submit a plan for the collection and analysis of information to
determine the impacts of the project and the accuracy of the forecasts
that were prepared during project planning and development. SAFETEA-LU
subsequently codified this "before and after" study requirement.
* Evaluation measures revised: FTA revised its cost-effectiveness and
mobility improvements criteria by adopting the Transportation System
User Benefits (TSUB) measure that includes benefits for both new and
existing transit system riders. Although project sponsors generally
view the new cost-effectiveness measure of cost per hour of TSUB as an
improvement over the previous measure of cost per new rider, we have
reported that some project sponsors have had difficulties correctly
calculating the TSUB value for their projects, resulting in delays and
additional costs as they conduct multiple iterations of the TSUB
measure.[Footnote 9]
* New analysis requirement added: Starting with the fiscal year 2005
evaluation cycle, FTA required project sponsors to complete risk
assessments. Since implementation, the form and timing of the risk
assessments have evolved since 2003, but the intent of the assessments
remains to identify the issues that could affect the project's schedule
or cost.
* Policy on funding recommendations changed: In 2005, the
administration informed the transit community that it would target its
funding recommendations to projects that achieve a cost-effectiveness
rating of medium or higher. Previously, the administration had
recommended projects for funding that had lower cost-effectiveness
ratings, if they met all other criteria.[Footnote 10]
* New programs established: SAFETEA-LU established the Small Starts
program, a new capital investment grant program, simplifying the
requirements imposed for those seeking funding for lower-cost projects.
[Footnote 11] This program is intended to advance smaller-scale
projects through an expedited and streamlined evaluation and rating
process. FTA subsequently introduced a separate eligibility category
within the Small Starts program for Very Small Starts projects. Very
Small Starts projects qualify for an even simpler evaluation and rating
process.
* New evaluation criteria introduced: Given past concerns that the
evaluation process did not account for a project's impact on economic
development, SAFETEA-LU added economic development to the list of
project justification criteria that FTA must use to evaluate and rate
New Starts projects.
Although the impetus for each change varied, FTA officials stated that,
in general, all of the changes the agency has initiated were intended
to make the process more rigorous, systematic, and transparent. This
increased rigor, in turn, helps FTA and project sponsors deliver more
New Starts projects within budget and on time, according to FTA.
However, frequent changes to the New Starts program create challenges
for project sponsors. For example, we have previously reported that
some project sponsors told us that FTA did not create clear
expectations or provide sufficient guidance about certain changes.
[Footnote 12] In addition, we reported that project sponsors said some
changes made the application process more expensive and required them
to spend significantly more time to complete the application. We have
heard similar concerns from project sponsors during our ongoing review.
Specifically, some project sponsors we interviewed told us that they
have had to redo completed analyses because FTA applies regulatory and
administrative changes to projects in the pipeline. In general,
according to project sponsors and other stakeholders we have spoken to,
this rework adds time and costs to completing the New Starts project
development process.
FTA's Project Evaluation Process Does Not Currently Capture All Project
Benefits:
FTA currently assigns a 50 percent weight to both the cost-
effectiveness and the land use criteria when developing the project
justification summary rating. The other project justification criteria
are not weighted, although the mobility improvements criterion is used
as a "tiebreaker." FTA officials have told us that they do not
currently use the environmental benefits and operating efficiencies
criteria in determining the project justification summary rating
because the measures do not, as currently structured, provide
meaningful distinctions among competing New Starts projects. FTA does
not use the economic development criterion because of difficultly
developing a measure that is separate and distinct from the land use
criterion. We have found in the past that many project sponsors had
similar views, noting that individual projects are too small to have
much impact, in terms of, for example, air quality, on the whole region
or the whole transit system.[Footnote 13] In contrast, FTA officials
have told us that the cost-effectiveness and land use measures help to
make meaningful distinctions among projects. For example, according to
FTA, existing transit supportive land use plans and policies
demonstrate an area's commitment to transit and are a strong indicator
of a project's future success. Furthermore, according to many FTA
officials, experts, and the literature we have consulted, FTA's cost-
effectiveness measure accounts for most secondary project benefits,
including economic development, because these benefits are typically
derived from mobility improvements that reduce users' travel times.
Therefore, developing new measures for these other criteria may result
in the double-counting of certain project benefits.
However, in 2008, we reported that FTA's evaluation measures could be
underestimating total project benefits.[Footnote 14] FTA's measure of
cost-effectiveness, for instance, considers how the mobility
improvements from a proposed project will reduce users' travel times.
Although this measure can capture most secondary project benefits, it
does not account for benefits for non-transit users (e.g., highway
travel time savings) or capture any economic development benefits that
are not directly correlated to mobility improvements. The omission of
these benefits means proposed projects that convey significant travel
time savings for motorists, for example, are not recognized in the
selection process. Beyond the cost-effectiveness measure, we reported
that project sponsors and experts expressed frustration that FTA does
not include certain criteria in the calculation of project ratings,
such as economic development and environmental benefits. They noted
that this practice limits the information captured on projects,
particularly since these are important benefits of transit projects at
the local level. As a result, FTA may be underestimating projects'
total benefits, particularly in areas looking to use these projects as
a way to relieve congestion or promote more high-density development.
In these cases, however, the extent to which FTA's current approach to
estimating benefits affects how projects are ranked in FTA's evaluation
and ratings process is unclear.
FTA officials have acknowledged these limitations, but noted that
improvements in local travel models are needed to resolve some of these
issues.[Footnote 15] In particular, many local models used to estimate
future travel demand for New Starts are incapable of reliably
estimating highway travel time savings as a result of the proposed
project, according to FTA officials. There is great variation in the
models local transportation planning agencies use to develop travel
forecasts (which underlie many of the New Starts measures), producing
significant variation in forecast quality and limiting the ability to
assess quality against the general state of practice. In 2008, we made
a series of recommendations designed to address the limitations of
FTA's current evaluation process, including recommending that (1) the
Secretary of Transportation seek additional resources to improve local
travel models in the next authorizing legislation to improve the New
Starts evaluation process and the measures of project benefits; (2) FTA
establish a timeline for issuing, awarding, and implementing the result
of its request for proposals on short-and long-term approaches to
measuring highway user benefits from transit improvements; (3) the
Administrators of FTA and Federal Highway Administration collaborate in
efforts to improve the consistency and reliability of local travel
models; and (4) the Administrator of FTA establish a timeline for
initiating and completing its longer-term effort to develop more robust
measures of transit projects' environmental benefits.[Footnote 16] FTA
is working to address these recommendations. For instance, FTA
conducted a colloquium on environmental benefits of transit projects in
October 2008, which resulted in a discussion paper on the evaluation of
economic development. Further, in a Federal Register Notice published
on January 26, 2009, FTA issued and sought comments on a discussion
paper on new ways of evaluating economic development effects.[Footnote
17] FTA is now reviewing comments on that paper.
In May 2009, FTA also took steps to address concerns about the
exclusion of some project justification criteria from the evaluation
process. In a Notice of Availability for New Starts and Small Starts
Policies and Procedures and Requests for Comments in the Federal
Register, FTA proposed changing the weights assigned for the project
justification criteria for New Starts projects.[Footnote 18]
Specifically, FTA proposes to set the weights at 20 percent each for
the mobility, cost-effectiveness, land use, and economic development
criteria, and 10 percent each for operating efficiencies and
environmental benefits.[Footnote 19] According to FTA, these changes
reflect statutory direction that project justification criteria should
be given "comparable, but not necessarily equal, numerical weight" in
calculating the overall project rating.[Footnote 20] FTA is currently
soliciting public comments on these proposed changes.
Striking Appropriate Balance between Maintaining a Robust Evaluation
Process and Minimizing Complexity Is Challenging:
We reported in 2008 that experts and some project sponsors we spoke
with generally support FTA's quantitatively rigorous process for
evaluating proposed transit projects but are concerned that the process
has become too burdensome and complex, and as noted earlier, may
underestimate certain project benefits.[Footnote 21] For example,
several experts and transportation consultants told us that although it
is appropriate to measure the extent to which transit projects create
primary and secondary benefits, such as mobility improvements and
economic development, it is difficult to quantify all of these
projected benefits. Additionally, several project sponsors noted that
the complexity of the evaluation process can necessitate hiring
consultants to handle the data requests and navigate the application
process--which could increase the project's costs. Our previous reviews
of the New Starts program have noted similar concerns from project
sponsors. For example, in 2007, we reported that a majority of project
sponsors told us that the complexity of the requirements--such as the
analysis and modeling required for travel forecasts--creates
disincentives for entering the New Starts pipeline.[Footnote 22]
Sponsors also said that the expense involved in fulfilling the
application requirements, including the costs of hiring additional
staff and consultants, discourages agencies with less resources from
applying for this funding.
In response to such concerns, FTA has tried to simplify the evaluation
process in several ways. For example, as previously mentioned, FTA
established the Very Small Starts eligibility category within the Small
Starts program for projects less than $50 million in total cost. This
program further simplifies the application requirements in place for
the Small Starts program, which funds lower-cost projects, such as bus
rapid transit and streetcar projects. Additionally, in its New Starts
program, FTA no longer rates projects on the operating efficiencies
criterion because, according to FTA, operating efficiencies are already
sufficiently captured in FTA's cost-effectiveness measures, and the
measure did not adequately distinguish among projects. Thus, projects
no longer have to submit information on operating efficiencies.
Likewise, FTA no longer requires project sponsors to submit information
on environmental benefits because it found that the information
gathered did not adequately distinguish among projects and that EPA's
ambient air quality rating was sufficient. FTA also commissioned a
study by Deloitte in June 2006 to review the project development
process and identify opportunities for streamlining or simplifying the
process.[Footnote 23] This study identified a number of ways that FTA's
project development process could be streamlined, including revising
the policy review and issuance cycle to minimize major policy and
guidance changes to every 2 years and conducting a human capital
assessment to identify skill gaps and opportunities for reallocating
resources in order to enhance FTA's ability to review and assist New
Starts projects in a timely and efficient manner. According to FTA, the
agency has implemented 75 percent of Deloitte's recommendations; some
of the other recommendations are on hold pending the upcoming
reauthorization of the surface transportation program, including the
New Starts program.
Potential Options to Expedite Project Development in the New Starts
Program:
As part of our ongoing work, we are reviewing existing research,
including past GAO reports, analyzing data on the length of time it
takes for projects to complete the New Starts process, and interviewing
project sponsors, industry stakeholders and consultants, and
transportation experts to identify options to expedite project
development in the New Starts program. Using these sources, we have
preliminarily identified the following options. While each option could
help expedite project development, each option has advantages and
disadvantages to consider and some options could require legislative
changes. In addition, each option would likely require certain trade-
offs, namely reducing the level of rigor in the evaluation process in
exchange for a more streamlined process. The discussion that follows is
not intended to endorse any potential option, but instead to describe
some potential options for expediting project development. We will
continue to work with FTA and other stakeholders to identify other
options as well as examine the merits and challenges of all identified
options for inclusion in our report later this summer.
* Tailor the New Starts evaluation process to risks posed by the
projects: Project sponsors, consultants, and experts we interviewed
suggested that FTA adopt a more risk-based evaluation process for New
Starts projects based on the project's costs or complexity, the federal
share of the project's costs, or the project sponsor's New Starts
experience. For example, FTA could align the level of oversight with
the proposed federal share of the project--that is, the greater the
financial exposure for the federal government, the greater the level of
oversight. Similarly, FTA could reduce or eliminate certain reviews for
project sponsors who have successfully developed New Starts projects in
the past, while applying greater oversight to project sponsors who have
no experience with the New Starts process. We have noted the value in
using risk-based approaches to oversight. For example, we have
previously reported that assessing risks can help agencies allocate
finite resources and help policy makers make informed decisions.
[Footnote 24] By adopting a more risk-based approach, FTA could allow
select projects to move more quickly through the New Starts process and
more efficiently use its scarce resources. However, the trade-off of
not applying all evaluation measures to every project is that FTA could
miss the opportunity to detect problems early in the project's
development.
* Consider greater use of letters of intent and early systems work
agreements: The linear, phased evaluation process of the New Starts
program hampers project sponsors' ability to utilize alternative
project delivery methods, such as design-build, according to project
sponsors.[Footnote 25] These alternative project delivery methods have
the potential to develop a project cheaper and quicker than traditional
project delivery methods can. However, project sponsors told us it is
difficult to attract private sector interest early enough in the
process to use alternative project delivery methods because there is no
guarantee that the project will ultimately receive federal funding
through the New Starts program. The Deloitte study also noted that New
Starts project sponsors miss the opportunity to use alternative project
delivery methods because of the lack of early commitment of federal
funding for the projects. To encourage the private sector involvement
needed, project sponsors, consultants, and experts we interviewed
suggested that FTA use letters of intent or early systems work
agreements. Through a letter of intent, FTA announces its intention to
obligate an amount from future available budget authority to a project.
A challenge of using letters of intent is that they can be
misinterpreted as an obligation of federal funds, when in fact they
only signal FTA's intention to obligate future funds should the project
meet all New Starts criteria and requirements. In contrast, an early
systems work agreement obligates an amount of available budget
authority to a project. The challenge of using an early systems work
agreement is that FTA can only use these agreements with projects that
will be granted an FFGA, thus limiting FTA's ability to use these
agreements for projects in the pipeline.
* Consistently use road maps or similar project schedules: Project
sponsors said that FTA should more consistently use road maps or
similar tools to define the project sponsor's and FTA's expectations
and responsibilities for moving the project forward. Without
establishing these expectations, project sponsors have little
information about how long it will take FTA to review its request to
move from alternatives analysis to preliminary engineering, for
example. This lack of information makes it difficult for the project
sponsor to effectively manage the project. Given the benefits of
clearly setting expectations, Deloitte recommended that FTA use road
maps for all projects. FTA has used road maps for select projects, but
the agency does not consistently use them for all projects. A
limitation of using road maps is that expected time frames are subject
to change--that is, project schedules often change as a project evolves
throughout the development process. Furthermore, every project is
unique, making it difficult to set a realistic time frame for each
phase of development. Consequently, the road maps can provide only
rough estimates of expected time frames.
* Combine two or more project development phases: Project sponsors and
consultants told us that waiting for FTA's approval to enter
preliminary engineering, final design, and construction can cause
delays. While FTA determines whether a project can advance to the next
project development phase, work on the project essentially stops.
Project sponsors can advance the project at their own risk, meaning
they could have to redo the work if FTA does not subsequently approve
an aspect of the project. The amount of time it takes for FTA to
determine whether a project can advance can be significant. For
example, one project sponsor told us that FTA's review of its
application to advance from alternatives analysis to preliminary
engineering took 8 months; about the same amount of time it took the
project sponsor to complete alternatives analysis. FTA officials told
us the length of time for reviews depends on a number of factors, most
importantly the completeness and accuracy of the project sponsor's
submissions. To reduce the "start/stop" phenomena project sponsors
described, FTA could seek a legislative change to combine two or more
of the statutorily required project development phases--for example,
combining the preliminary engineering and final design phases. The
Deloitte study also recommended that FTA redefine or more clearly
define the project phases to more accurately reflect FTA's current
requirements and to better accommodate alternative delivery methods.
* Apply changes only to future projects: Project sponsors told us that
the frequent changes to the New Starts program can result in additional
costs and delays as project sponsors are required to redo analyses to
reflect the changes. In an attempt to create a process that provides
more stability for project sponsors, in May 2006, FTA modified its
policy to allow a project that has been approved for entry into final
design not be subject to changes in the New Starts policy and guidance.
[Footnote 26] However, this policy change does not apply to projects
approved for entry into preliminary engineering, which is the New
Starts project development phase that has the most requirements for
project sponsors and the phase where project sponsors told us that
frequent changes to the project by sponsors and to the New Starts
process by FTA result in additional costs and delays. Furthermore,
another project sponsor noted that new requirements cause delays
because each element of a proposed project is interrelated, so changing
one requirement can stop momentum on a project. To avoid this rework,
some project sponsors, consultants, and experts we interviewed
suggested that FTA apply changes only to future projects, not projects
currently in preliminary engineering. However, by not applying changes
to projects in preliminary engineering, FTA could miss the opportunity
to enhance its oversight of these projects.
Mr. Chairman, this concludes my statement. I would be pleased to answer
any questions that you or other members of the subcommittee may have at
this time.
GAO Contact and Staff Acknowledgments:
For further information on this testimony, please contact A. Nicole
Clowers, Acting Director, Physical Infrastructure Issues, at (202) 512-
2834, or ClowersA@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this statement. Key contributors to this testimony were Kyle
Browning, Gary Guggolz, Raymond Sendejas, and Carrie Wilks.
[End of section]
Related GAO Products:
Public Transportation: Improvements Are Needed to More Fully Assess
Predicted Impacts of New Starts Projects. [hyperlink,
http://www.gao.gov/products/GAO-08-844]. Washington, D.C.: July 25,
2008.
Public Transportation: Future Demand Is Likely for New Starts and Small
Starts Programs, but Improvements Needed to the Small Starts
Application Process. [hyperlink,
http://www.gao.gov/products/GAO-07-917]. Washington, D.C.: July 27,
2007.
Public Transportation: New Starts Program Is in a Period of Transition.
[hyperlink, http://www.gao.gov/products/GAO-06-819]. Washington, D.C.:
August 30, 2006.
Public Transportation: Preliminary Information on FTA's Implementation
of SAFETEA-LU Changes. [hyperlink,
http://www.gao.gov/products/GAO-06-910T]. Washington, D.C.: June 27,
2006.
Opportunities Exist to Improve the Communication and Transparency of
Changes Made to the New Starts Program. [hyperlink,
http://www.gao.gov/products/GAO-05-674]. Washington, D.C.: June 28,
2005.
Mass Transit: FTA Needs to Better Define and Assess Impact of Certain
Policies on New Starts Program. [hyperlink,
http://www.gao.gov/products/GAO-04-748]. Washington, D.C.: June 25,
2004.
Mass Transit: FTA Needs to Provide Clear Information and Additional
Guidance on the New Starts Ratings Process. [hyperlink,
http://www.gao.gov/products/GAO-03-701]. Washington, D.C.: June 23,
2003.
Mass Transit: FTA's New Starts Commitments for Fiscal Year 2003.
[hyperlink, http://www.gao.gov/products/GAO-02-603]. Washington, D.C.:
April 30, 2002.
Mass Transit: FTA Could Relieve New Starts Program Funding Constraints.
[hyperlink, http://www.gao.gov/products/GAO-01-987]. Washington, D.C.:
August 15, 2001.
Mass Transit: Implementation of FTA's New Starts Evaluation Process and
FY 2001 Funding Proposals. [hyperlink,
http://www.gao.gov/products/GAO/RCED-00-149]. Washington, D.C.: April
28, 2000.
Mass Transit: Status of New Starts Transit Projects With Full Funding
Grant Agreements. [hyperlink,
http://www.gao.gov/products/GAO/RCED-99-240]. Washington, D.C.: August
19, 1999.
Mass Transit: FTA's Progress in Developing and Implementing a New
Starts Evaluation Process. [hyperlink,
http://www.gao.gov/products/GAO/RCED-99-113]. Washington, D.C.: April
26, 1999.
[End of section]
Footnotes:
[1] Fixed-guideway systems use and occupy a separate right-of-way for
the exclusive use of public transportation services. These systems
include fixed rail, exclusive lanes for buses and other high-occupancy
vehicles, and other systems. An FFGA establishes the terms and
conditions for federal funds available for the project, including the
maximum amount of federal funds available.
[2] Pub. L. No. 109-59 (2005).
[3] During the preliminary engineering phase, project sponsors refine
the design of the proposal, taking into consideration all reasonable
design alternatives and estimating each alternative's costs, benefits,
and impacts (e.g., financial or environmental). Final design is the
last phase of project development before construction and may include
right-of-way acquisition, utility relocation, and the preparation of
final construction plans and cost estimates.
[4] See the Related GAO Products section at the end of this testimony
for a listing of previous reports on these programs. We conducted these
performance audits in accordance with generally accepted government
auditing standards.
[5] As required by 49 U.S.C. § 5309(k)(1), the Department of
Transportation annually reports its recommendations to Congress for the
allocation of funds for the design and construction of fixed-guideway
New Starts and Small Starts capital investments.
[6] An FFGA for a New Starts project can be for 80 percent of the net
capital project cost, unless the grant recipient requests a lower grant
percentage.
[7] The exceptions to the evaluation process are statutorily exempt
projects, which are those with requests for less than $25 million in
New Starts funding. Sponsors of these projects are not required to
submit project justification information (although FTA encourages the
sponsors to do so). These projects are exempt until such time as a
final regulation implementing certain provisions of SAFETEA-LU is
completed. FTA does not rate these projects. As a result, the number of
projects in the preliminary engineering or final design phases may be
greater than the number of projects evaluated and rated by FTA.
[8] GAO, Public Transportation: Opportunities Exist to Improve the
Communication and Transparency of Changes Made to the New Starts
Program, [hyperlink, http://www.gao.gov/products/GAO-05-674]
(Washington, D.C.: June 28, 2005).
[9] GAO, Mass Transit: FTA Needs to Provide Clear Information and
Additional Guidance on the New Starts Ratings Process, [hyperlink,
http://www.gao.gov/products/GAO-03-701] (Washington, D.C.: June 23,
2003); Mass Transit: FTA Needs to Better Define and Assess Impact of
Certain Policies on New Starts Program, [hyperlink,
http://www.gao.gov/products/GAO-04-748] (Washington, D.C.: June 25,
2004).
[10] In the fiscal year 2010 New Starts report, FTA recommends a Small
Starts project, Portland, Oregon Streetcar Loop, for a Project
Construction Grant Agreement even though it received a low cost-
effectiveness rating. According to an FTA official, FTA is advancing
the project for funding because it meets all the statutory criteria.
The official also noted that the medium rating cost-effectiveness
threshold was an "administrative requirement" of the previous
administration, and the new administration believes that the Portland,
OR project is worth funding given its other predicted benefits.
[11] Small Starts projects are defined as those that are requesting
less than $75 million in federal funding and have a total estimated net
capital cost of less than $250 million. Projects are eligible for the
Very Small Starts program if their total costs are less than $50
million.
[12] GAO, Public Transportation: New Starts Program Is in a Period of
Transition, [hyperlink, http://www.gao.gov/products/GAO-06-819]
(Washington, D.C.: Aug. 30, 2006).
[13] [hyperlink, http://www.gao.gov/products/GAO-05-674].
[14] GAO, Public Transportation: Improvements Are Needed to More Fully
Assess Predicted Impacts of New Starts Projects, [hyperlink,
http://www.gao.gov/products/GAO-08-844] (Washington, D.C.: July 25,
2008).
[15] Project sponsors estimate future travel demand and analyze the
impacts of alternative transportation investment scenarios using
computerized travel demand forecasting models. These models are used to
estimate how urban growth and proposed facilities and the associated
operational investments and transportation policies will affect
mobility and the operation of the transportation system.
[16] [hyperlink, http://www.gao.gov/products/GAO-08-844].
[17] 74 Fed. Reg. 4502 (Jan. 26, 2009).
[18] 74 Fed. Reg. 23776 (May 20, 2009).
[19] 74 Fed. Reg. 23776 (May 20, 2009).
[20] SAFETEA-LU Technical Corrections Act of 2008, Pub. L. No. 110-244,
§ 201(d), 122 Stat. 1610 (June 6, 2008). For the Small Starts program,
FTA proposes to assign the three required project justification
criteria (land use, economic development, and cost-effectiveness) equal
weights (i.e., one-third for each criterion).
[21] [hyperlink, http://www.gao.gov/products/GAO-08-844].
[22] GAO, Public Transportation: Future Demand Is Likely for New Starts
and Small Starts Programs, but Improvements Needed to the Small Starts
Application Process, [hyperlink,
http://www.gao.gov/products/GAO-07-917] (Washington, D.C.: July 27,
2007).
[23] Deloitte Development, Inc., New Starts Program Assessment, Feb.
12, 2007.
[24] GAO, Highlights of a Forum Convened by the Comptroller General of
the United States: Strengthening the Use of Risk Management Principles
in Homeland Security, [hyperlink,
http://www.gao.gov/products/GAO-08-627SP] (Washington, D.C.: April
2008).
[25] Design-build is a project delivery approach where, in contrast to
the design-bid-build approach that FTA's project evaluation process is
aligned with, the design and construction are contracted out to a
single entity. This approach is used to minimize the project risk for
an owner and to reduce the delivery schedule by overlapping the design
phase and construction phase of a project. Design-bid-build is a
project delivery approach in which the agency or owner (e.g., transit
operator) contracts with separate entities for the design and
construction of a project.
[26] This policy would not exempt a project from new statutory or
regulatory guidelines, as it is outside FTA's authority to do so.
[End of section]
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