Recovery Act
The Department of Transportation Followed Key Federal Requirements in Developing Selection Criteria for Its Supplemental Discretionary Grants Program Gao ID: GAO-09-785R June 30, 2009The Recovery Act established relatively few requirements for the design of the TIGER grant program. In addition to the requirements outlined in the opening paragraph of this report, the act requires that the department (1) award grants of no less than $20 million and no more than $300 million with no more than $300 million awarded for projects in any one state; (2) give priority to projects that are expected to be completed by February 17, 2012; (3) give priority to projects that require a contribution of federal funds in order to complete an overall financing package, although the federal share of the costs for which expenditure is made may be 100 percent; and (4) ensure a balance in addressing the needs of rural and urban communities and an equitable geographic distribution of funds. In its May 18 interim notice, the department created two tiers of selection criteria--primary and secondary. The primary selection criteria are (1) long-term outcomes (state of good repair, economic competitiveness, livability, sustainability, and safety) and (2) jobs creation and economic stimulus. The secondary criteria are innovation and partnership. Within each criterion, the department has created several factors to be considered, such as how an investment is expected to provide long-term outcomes by improving the asset's condition (state of good repair) and contribute to community livability.
In our opinion, the information in the department's interim notice generally adheres to the requirements in three key pieces of federal guidance for communicating important elements associated with funding opportunities and awarding grants that support economic recovery and transportation infrastructure, as well as complying with Recovery Act requirements. We found that the department's interim notice follows OMB's guidance because it provides a description of the primary selection criteria, secondary selection criteria, and program-specific selection criteria. The primary selection criteria are applied to assess a project's impact on desirable long-term outcomes for the nation, a metropolitan area, or a region, as well as its ability to quickly create and preserve jobs and stimulate rapid increases in economic activity. The secondary selection criteria are applied to assess the extent to which a project uses innovative technology and receives financial commitment from or otherwise involves state and local governments, and other public, private, or non-profit entities. The interim notice also states that the department will use program-specific criteria to assign priority among similar projects within a mode, such as similar bridge replacement projects.
GAO-09-785R, Recovery Act: The Department of Transportation Followed Key Federal Requirements in Developing Selection Criteria for Its Supplemental Discretionary Grants Program
This is the accessible text file for GAO report number GAO-09-785R
entitled 'Recovery Act: The Department of Transportation Followed Key
Federal Requirements in Developing Selection Criteria for Its
Supplemental Discretionary Grants Program' which was released on June
30, 2009.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
GAO-09-785R:
United States Government Accountability Office:
Washington, DC 20548:
June 30, 2009:
The Honorable Patty Murray:
Chairman:
The Honorable Christopher Bond:
Ranking Member:
Subcommittee on Transportation, Housing and Urban Development, and
Related Agencies:
Committee on Appropriations:
United States Senate:
The Honorable John W. Olver:
Chairman:
The Honorable Tom Latham:
Ranking Member:
Subcommittee on Transportation, Housing and Urban Development, and
Related Agencies:
Committee on Appropriations:
House of Representatives:
Subject: Recovery Act: The Department of Transportation Followed Key
Federal Requirements in Developing Selection Criteria for Its
Supplemental Discretionary Grants Program:
The American Recovery and Reinvestment Act of 2009 (the Recovery Act)
was enacted in response to a serious economic crisis.[Footnote 1] The
act aims to preserve and create jobs, promote economic recovery, and
invest in transportation infrastructure that will provide long-term
economic benefits, among other things. Title XII of the Recovery Act
appropriated $1.5 billion for supplemental discretionary grants for the
national surface transportation system. These grants to states, local
governments, and transit agencies must be awarded competitively for
capital investments in surface transportation projects that will have a
significant impact on the nation, a metropolitan area, or a region.
Eligible projects include, but are not limited to, highways and
bridges, public transportation, passenger and freight rail, and ports.
On May 18, the department published an interim notice in the Federal
Register describing the criteria it plans to use to assess applications
for supplemental discretionary grants.[Footnote 2] It asked for
comments on the notice by June 1. The deadline for submitting
applications is September 15, and the department contemplates making
awards for what it calls "TIGER" (Transportation Investment Generating
Economic Recovery) grants as soon as possible thereafter, but no later
than February 17, 2010.
This report, prepared under the Comptroller General's authority to
conduct evaluations on his own initiative, assesses the extent to which
the department's interim notice follows key federal guidance in
developing funding opportunity information and selection criteria to
prospective applicants for its TIGER grants. To carry out our work, we
compared the information in the interim notice to the requirements in
three key pieces of federal guidance: (1) a 2003 directive from the
Office of Management and Budget (OMB) that establishes the information
requirements that federal agencies should communicate to applicants for
discretionary grants; (2) a March 2009 administration memorandum that
provides the overarching goals that executive departments and agencies
should follow when developing transparent, merit-based selection
criteria to award Recovery Act funds; and (3) a 1994 executive order
that outlines several principles that executive departments and
agencies should follow when developing and implementing plans for
infrastructure investment and management.[Footnote 3] We also discussed
with the department how it created the interim notice. Finally, we
discussed the interim notice with several transportation stakeholder
associations representing highways, ports, and railroads.[Footnote 4]
On June 17, after we had completed our audit work, the department
published a supplemental notice.[Footnote 5] This supplemental notice
contained additional guidance and clarification, but did not affect our
assessment of the extent to which the department followed key federal
guidance in developing funding opportunity information and selection
criteria to prospective applicants for its TIGER grants. We did not
assess the merits of the program's design or selection criteria.
We conducted this performance audit from April through June 2009 in
accordance with generally accepted government auditing standards. These
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.
Background:
The Recovery Act established relatively few requirements for the design
of the TIGER grant program. In addition to the requirements outlined in
the opening paragraph of this report, the act requires that the
department:
* award grants of no less than $20 million and no more than $300
million with no more than $300 million awarded for projects in any one
state; [Footnote 6]
* give priority to projects that are expected to be completed by
February 17, 2012;
* give priority to projects that require a contribution of federal
funds in order to complete an overall financing package, although the
federal share of the costs for which expenditure is made may be 100
percent; and:
* ensure a balance in addressing the needs of rural and urban
communities and an equitable geographic distribution of funds.
In its May 18 interim notice, the department created two tiers of
selection criteria--primary and secondary. (See table 1.) The primary
selection criteria are (1) long-term outcomes (state of good repair,
economic competitiveness, livability, sustainability, and safety) and
(2) jobs creation and economic stimulus. The secondary criteria are
innovation and partnership. Within each criterion, the department has
created several factors to be considered, such as how an investment is
expected to provide long-term outcomes by improving the asset's
condition (state of good repair) and contribute to community
livability.
Table 1: Interim TIGER Grant Primary and Secondary Selection Criteria:
Selection criterion: Primary: Long-term outcomes;
Factors to be considered:
* State of good repair: improving the condition of existing
transportation facilities or systems;
* Economic competitiveness: contributing to long-term, high-value
economic activity;
* Livability: improving qualitative measures of community life;
* Sustainability: promoting environmentally sustainable systems;
Safety.
Selection criterion: Primary: Job creation and economic stimulus;
Factors to be considered:
* Job creation and equal opportunity measures, such as opportunities
for small and disadvantaged businesses;
* Readiness to proceed rapidly upon receipt of a TIGER grant.
Selection criterion: Secondary: Innovation;
Factors to be considered:
* Use of innovative technology to further long-term outcomes and/or to
significantly enhance performance of the transportation system;
* Innovations that demonstrate new approaches to transportation funding
and finance, contracting, project delivery, congestion management,
safety management, asset management, or long-term operations and
maintenance.
Selection criterion: Secondary: Partnership;
Factors to be considered:
* Partnership with nonfederal entities and use of nonfederal funds;
* Support from nontransportation public agencies that are pursuing
similar objectives.
Source: Federal Register.
[End of table]
In assessing long-term outcomes, the department generally plans to
require that applicants compare a project's expected benefits to its
costs. The benefit-cost analysis can include factors such as the
project's impact on fuel savings, travel time, greenhouse gas
emissions, water quality, and public health. Applicants requesting more
than $100 million are required to provide an analysis of expected
benefits and costs, including the methodological standards used for
analysis. Applicants seeking between $20 million and $100 million are
required to include estimates of a project's expected benefits for the
five factors considered in long-term outcomes. Finally, the department
is not requiring a benefit-cost analysis for applicants seeking less
than $20 million. Department officials told us that they adopted a risk-
based approach: the size of the prospective grant determines the extent
of the benefit-cost analysis required. In addition, they told us that
applicants in smaller jurisdictions may not have the capability to
perform a rigorous benefit-cost analysis. The department's risk-based
approach is similar to the approach the department developed and
applied to its New Starts (fixed guideway transit[Footnote 7]) program,
in which the benefit-cost analysis requirement is simplified for
smaller-dollar-value projects.
The interim notice states that the department must rate a project as
"highly recommended" in at least one of the five long-term outcome
factors (or "recommended" in multiple factors) for it to proceed. If
the department determines that a project demonstrates a likelihood of
significant long-term benefits, it then plans to evaluate the project
against the other primary selection criterion--jobs creation and
economic stimulus. The department plans to use this primary criterion
to assess a project's ability to promote the short-or long-term
creation or preservation of jobs and to promote new or expanded
business opportunities during the project's construction or thereafter.
After assessing an application against the primary selection criteria,
the department plans to use two secondary selection criteria: (1)
innovation, which assesses a project's use of innovative technology to
pursue the long-term outcomes and/or significantly enhance the
operational performance of the transportation system; and (2)
partnership, which assesses a project's involvement of nonfederal
entities and use of nonfederal funds, and support from
nontransportation public agencies that are pursuing similar objectives.
Finally, if several similar projects are rated similarly based on the
primary and secondary selection criteria, the department plans to
consider program-specific criteria--measures that are currently in
place for evaluating similar projects in a particular mode (such as
highways or transit). For example, the department plans to use
evaluation factors relevant to bridges, such as total daily truck and
nontruck traffic and bridge sufficiency ratings,[Footnote 8] if it
needs to differentiate between several similar bridge replacement
projects. The department also plans to use this approach for transit
projects and projects involving port infrastructure investments.
The Department Followed Key Elements of Federal Guidance in Developing
Selection Criteria for Awarding TIGER Grants:
In our opinion, the information in the department's interim notice
generally adheres to the requirements in three key pieces of federal
guidance for communicating important elements associated with funding
opportunities and awarding grants that support economic recovery and
transportation infrastructure, as well as complying with Recovery Act
requirements. (See table 2.)
Table 2: Degree to Which the Department Communicated TIGER Grant
Selection Criteria:
Objective: Communicating important elements associated with funding
opportunities;
Requirement: Provide full description of funding opportunity, including
eligibility; Provide full description of basis to award grant including
information regarding:
* statutory, regulatory, or other preferences with an explicit
indication of their effect;
* all criteria, including sub-criteria to be considered and their
weights, if they differ in importance; and;
* any program policy or other factors to be used other than merit
criteria (e.g., program balance or diversity);
Communicated: Yes.
Objective: Supporting responsible spending of Recovery Act funds;
Requirement: Consider long-term public benefits; Consider economic
stimulus achieved by creating or preserving jobs;
Communicated: Yes.
Objective: Supporting transportation infrastructure;
Requirement: Base infrastructure investments on systematic analysis of
expected benefits and costs;
Communicated: Yes.
Source: GAO analysis of interim TIGER grant and other federal guidance.
[End of table]
The Department Communicated Important Elements Associated with Funding
Opportunities:
OMB's 2003 guidance requires that federal agencies communicate to
applicants for discretionary grants (1) a description of the agency's
funding priorities or the technical or focus areas in which the agency
intends to provide assistance, and (2) any factors that make an
applicant or application eligible or ineligible for consideration. We
found that the department's interim notice follows OMB's guidance
because it provides (1) the department's funding priorities, which are
capital investments in surface transportation infrastructure that have
a significant impact on the nation, a metropolitan area, or a region;
and (2) the department's focus areas, which include, but are not
limited to, highway or bridge projects, public transportation projects,
passenger and freight rail transportation projects, and port
infrastructure projects. The notice also delineates the organizations
that are eligible to apply: state and local governments, U.S.
territories, tribal governments, transit agencies, port authorities,
other political subdivisions of state or local governments, and
multistate or multijurisdictional applicants.
OMB's 2003 guidance also requires that a financial assistance
announcement ensure that the selection process is as fair and equitable
as possible. Specifically, announcements should include (1) a
description of all criteria that will be used to evaluate applications,
(2) a detailed explanation of any statutory or regulatory preferences,
and (3) any program policy or other factors that may be used in
selecting applications, including geographical dispersion, program
balance, or diversity.
We found that the department's interim notice follows OMB's guidance
because it provides a description of the primary selection criteria,
secondary selection criteria, and program-specific selection criteria.
The primary selection criteria are applied to assess a project's impact
on desirable long-term outcomes for the nation, a metropolitan area, or
a region, as well as its ability to quickly create and preserve jobs
and stimulate rapid increases in economic activity. The secondary
selection criteria are applied to assess the extent to which a project
uses innovative technology and receives financial commitment from or
otherwise involves state and local governments, and other public,
private, or non-profit entities. The interim notice also states that
the department will use program-specific criteria to assign priority
among similar projects within a mode, such as similar bridge
replacement projects.
The interim notice also provides a description of statutory preferences
from the Recovery Act. For example, the department is to give priority
to projects that are expected to be completed by February 17, 2012, and
that require a contribution of federal funds in order to complete an
overall financing package, although the federal share of the costs may
be 100 percent.
Finally, the interim notice, as required by the Recovery Act, provides
other factors for consideration when selecting applicants, such as
ensuring an equitable geographic distribution of funds and an
appropriate balance in addressing the needs of rural and urban
communities.
Selection Criteria Support a Framework for Merit-Based Spending of
Recovery Act Funds:
The administration's March 2009 memorandum issued to executive
departments and agencies to guide responsible Recovery Act spending
states that merit-based selection criteria should be designed to
support projects that achieve (1) economic stimulus by optimizing
economic activity and the number of jobs created or preserved, and (2)
long-term public benefits by investing in transportation, among other
things. We found that the interim notice complies with the
administration's memorandum. As previously described, the department
evaluates a project's ability to achieve long-term economic benefits
and economic stimulus through the use of the two primary selection
criteria--long-term outcomes and jobs creation and economic stimulus.
We do observe, however, that the selection and distribution provisions
in the department's interim notice could create a tension between
funding projects with the most transportation merit and those that
quickly create and preserve jobs and that meet geographic distribution
requirements and dollar size limits.[Footnote 9] This tension is
understandable because these provisions are imposed by the Recovery Act
and the administration's March 2009 memorandum.
Selection Criteria Follows Transportation Infrastructure Investment
Principles:
The 1994 executive order establishing principles for federal
infrastructure investments states that these investments should be
based on systematic analyses of expected benefits and costs that
consider both quantitative and qualitative measures. We found that the
department's interim notice follows this guidance because the primary
selection criteria call for the applicant to assess the project's
expected benefits and costs. In conducting benefit-cost analyses, the
interim notice requires applicants to account for quantitative factors,
including the project's impact on fuel savings, travel time, greenhouse
gas emissions, and water quality, as well as factors that can be
described qualitatively, such as public health, land use, and household
budgets.
The department has taken a necessary first step in laying out interim
selection criteria for its TIGER discretionary grants in a way that
reasonably follows key federal guidelines. We recently reported on the
importance of ensuring that the selection criteria that are
communicated to users are actually those on which the department bases
its decisions.[Footnote 10] In that report, we found that the
department applied one important selection criterion that was not
communicated to potential applicants for one of its grant program
initiatives. Therefore, another important step will be for the
department to follow its stated selection criteria when it begins to
review TIGER grant applications.
Agency Comments:
The Department of Transportation had no comments on a draft of this
report.
We are sending copies of this report to other committees and
subcommittees with responsibilities for mobility issues; the Secretary
of Transportation; and the Director, Office of Management and Budget.
The report will be available at no charge on GAO's Web site at
[hyperlink, http://www.gao.gov].
If you or your staffs have any questions or comments about this report,
please contact me at (202) 512-2834 or herrp@gao.gov. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report. GAO staff who made contributions
to this report are Samer Abbas, James Ratzenberger, and Justin Reed.
Signed by:
Phillip R. Herr:
Director, Physical Infrastructure Issues:
[End of section]
Footnotes:
[1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[2] 74 Fed. Reg. 23226 (2009).
[3] 68 Fed. Reg. 37370 (2003), 74 Fed. Reg. 12531 (2009), and 59 Fed.
Reg. 4233 (1994), respectively.
[4] Despite several attempts, we were unable to discuss the interim
notice with the primary stakeholder association representing transit.
[5] 74 Fed. Reg. 28755 (2009).
[6] The department may waive the $20 million minimum grant size to fund
significant projects in smaller cities, regions, or states.
[7] A fixed guideway system is one in which vehicles operate on their
own guideways, such as rails.
[8] A bridge sufficiency rating indicates whether a bridge needs repair
or replacement.
[9] For additional discussion of the tension between undertaking higher-
cost projects, relatively limited federal funding, and approaches to
distributing federal funds, see GAO, Surface Transportation: Clear
Federal Role and Criteria-Based Selection Process Could Improve Three
National and Regional Infrastructure Programs, [hyperlink,
http://www.gao.gov/products/GAO-09-219] (Washington, D.C.: Feb. 6,
2009). In this report, we made several suggestions, such as developing
program enhancements that could help the programs meet identified
priorities and achieve the highest return on federal investments, that
Congress should consider when reauthorizing federal surface
transportation programs to help ease these tensions.
[10] GAO, Urban Partnership Agreements: Congestion Relief Initiative
Holds Promise; Some Improvements Needed in Selection Process,
[hyperlink, http://www.gao.gov/products/GAO-09-154] (Washington, D.C.:
Mar. 25, 2009).
[End of section]
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each
weekday, GAO posts newly released reports, testimony, and
correspondence on its Web site. To have GAO e-mail you a list of newly
posted products every afternoon, go to [hyperlink, http://www.gao.gov]
and select "E-mail Updates."
Order by Phone:
The price of each GAO publication reflects GAO‘s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO‘s Web site,
[hyperlink, http://www.gao.gov/ordering.htm].
Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537.
Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional
information.
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Ralph Dawn, Managing Director, dawnr@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548:
