Public Transportation
Use of Contractors is Generally Enhancing Transit Project Oversight, and FTA is Taking Actions to Address Some Stakeholder Concerns Gao ID: GAO-10-909 September 14, 2010Many states, cities, and localities are building or planning mass transit projects to meet the nation's transportation needs. The New Starts program--administered by the U.S. Department of Transportation's (DOT) Federal Transit Administration (FTA)--is an important source of new capital investment in mass transportation, providing grants to project sponsors (e.g., state and local government authorities), for the construction of major transit facilities. FTA uses contractors--known as project management oversight contractors (PMOC) and financial management oversight contractors (FMOC)--to help oversee the planning, construction, and financing of major capital projects, including those funded under the New Starts program. This report, as mandated by law, discusses (1) how FTA uses PMOCs and FMOCs to oversee New Starts projects and how the agency procures, monitors, and evaluates the contractors' services; and (2) the benefits of FTA's oversight approach and the challenges FTA faces in conducting its oversight. GAO reviewed applicable statutes, FTA guidance, regulations, and budget data, and interviewed DOT officials, project sponsors, contractors, and industry stakeholders. GAO is not making any recommendations in this report. DOT officials generally agreed with GAO's findings and provided technical comments, which we incorporated as appropriate.
FTA procures PMOC and FMOC services to provide critical input into FTA's decisions regarding New Starts projects. Specifically, the reviews that PMOCs conduct keep FTA informed of a project's status and support the agency's decision on whether to advance or fund the project. Separately, financial assessments conducted by FMOCs help the agency ensure that project sponsors--which can be state or local government authorities that implement New Starts projects--have sufficient financial capacity to build and operate their projects. Although PMOCs and FMOCs have different oversight roles, services for both are procured in accordance with the Federal Acquisition Regulation (FAR). FTA recently changed how it procures PMOC services. Prior to 2009, FTA awarded PMOC contracts only to architectural and engineering firms for their services using specialized procedures in the FAR; however, in part to expand the pool of available PMOCs, FTA revised its procurement approach and now uses the competitive negotiation procedures in the FAR which permit cost and noncost tradeoffs. Using competitive negotiations has increased the pool of contractors available for FTA projects, and while some PMOC officials expressed concerns that the changes have affected the quality of staff provided for FTA work and put more emphasis on cost, FTA officials said that they have not observed any negative effects. FTA monitors PMOCs and FMOCs by setting performance expectations and using a multilayered system to evaluate their performance. Recently, FTA has taken steps to improve its contractor performance evaluation system to help ensure that its regional offices conduct evaluations consistently. FTA officials, contractors, and project sponsors identified benefits of FTA's oversight approach. For example, FTA officials and project sponsors said that FTA's oversight approach has improved project management, supplemented existing FTA staff, and provided insights through technical assistance and expertise from PMOCs and FMOCs. However, FTA's oversight program faces some challenges, including balancing project management oversight and advancing projects, managing the larger, more complex projects entering the New Starts portfolio, and communicating with project sponsors. FTA has taken some actions to address these challenges. To more effectively balance oversight and project advancement, FTA developed procedures to assist PMOCs with their oversight responsibilities and issued an Advance Notice of Proposed Rulemaking on, among other things, the extent to which the level of its oversight should be based on risk. As part of FTA's effort to oversee larger, more complex projects, FTA has directed its PMOCs and FMOCs to conduct oversight activities earlier in project development, helping identify potential problems earlier. To improve communications, FTA developed checklists which project sponsors found helpful in understanding FTA's oversight requirements. However, some project sponsors we spoke with said that FTA's communications were not consistently timely or clearly documented, thus delaying sponsors' responses and, sometimes, project time frames. FTA recognizes that the New Starts process can be lengthy, but officials indicate that project sponsors do not always provide FTA needed information.
GAO-10-909, Public Transportation: Use of Contractors is Generally Enhancing Transit Project Oversight, and FTA is Taking Actions to Address Some Stakeholder Concerns
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
September 2010:
Public Transportation:
Use of Contractors is Generally Enhancing Transit Project Oversight,
and FTA is Taking Actions to Address Some Stakeholder Concerns:
GAO-10-909:
GAO Highlights:
Highlights of GAO-10-909, a report to congressional committees.
Why GAO Did This Study:
Many states, cities, and localities are building or planning mass
transit projects to meet the nation‘s transportation needs. The New
Starts program-”administered by the U.S. Department of
Transportation‘s (DOT) Federal Transit Administration (FTA)-”is an
important source of new capital investment in mass transportation,
providing grants to project sponsors (e.g., state and local government
authorities), for the construction of major transit facilities. FTA
uses contractors-”known as project management oversight contractors
(PMOC) and financial management oversight contractors (FMOC)”-to help
oversee the planning, construction, and financing of major capital
projects, including those funded under the New Starts program. This
report, as mandated by law, discusses (1) how FTA uses PMOCs and FMOCs
to oversee New Starts projects and how the agency procures, monitors,
and evaluates the contractors‘ services; and (2) the benefits of FTA‘s
oversight approach and the challenges FTA faces in conducting its
oversight. GAO reviewed applicable statutes, FTA guidance,
regulations, and budget data, and interviewed DOT officials, project
sponsors, contractors, and industry stakeholders. GAO is not making
any recommendations in this report. DOT officials generally agreed
with GAO‘s findings and provided technical comments, which we
incorporated as appropriate.
What GAO Found:
FTA procures PMOC and FMOC services to provide critical input into
FTA‘s decisions regarding New Starts projects. Specifically, the
reviews that PMOCs conduct keep FTA informed of a project‘s status and
support the agency‘s decision on whether to advance or fund the
project. Separately, financial assessments conducted by FMOCs help the
agency ensure that project sponsors”which can be state or local
government authorities that implement New Starts projects”have
sufficient financial capacity to build and operate their projects.
Although PMOCs and FMOCs have different oversight roles, services for
both are procured in accordance with the Federal Acquisition
Regulation (FAR). FTA recently changed how it procures PMOC services.
Prior to 2009, FTA awarded PMOC contracts only to architectural and
engineering firms for their services using specialized procedures in
the FAR; however, in part to expand the pool of available PMOCs, FTA
revised its procurement approach and now uses the competitive
negotiation procedures in the FAR which permit cost and noncost
tradeoffs. Using competitive negotiations has increased the pool of
contractors available for FTA projects, and while some PMOC officials
expressed concerns that the changes have affected the quality of staff
provided for FTA work and put more emphasis on cost, FTA officials
said that they have not observed any negative effects. FTA monitors
PMOCs and FMOCs by setting performance expectations and using a
multilayered system to evaluate their performance. Recently, FTA has
taken steps to improve its contractor performance evaluation system to
help ensure that its regional offices conduct evaluations consistently.
FTA officials, contractors, and project sponsors identified benefits
of FTA‘s oversight approach. For example, FTA officials and project
sponsors said that FTA‘s oversight approach has improved project
management, supplemented existing FTA staff, and provided insights
through technical assistance and expertise from PMOCs and FMOCs.
However, FTA‘s oversight program faces some challenges, including
balancing project management oversight and advancing projects,
managing the larger, more complex projects entering the New Starts
portfolio, and communicating with project sponsors. FTA has taken some
actions to address these challenges. To more effectively balance
oversight and project advancement, FTA developed procedures to assist
PMOCs with their oversight responsibilities and issued an Advance
Notice of Proposed Rulemaking on, among other things, the extent to
which the level of its oversight should be based on risk. As part of
FTA‘s effort to oversee larger, more complex projects, FTA has
directed its PMOCs and FMOCs to conduct oversight activities earlier
in project development, helping identify potential problems earlier.
To improve communications, FTA developed checklists which project
sponsors found helpful in understanding FTA‘s oversight requirements.
However, some project sponsors we spoke with said that FTA‘s
communications were not consistently timely or clearly documented,
thus delaying sponsors‘ responses and, sometimes, project time frames.
FTA recognizes that the New Starts process can be lengthy, but
officials indicate that project sponsors do not always provide FTA
needed information.
View [hyperlink, http://www.gao.gov/products/GAO-10-909] or key
components. For more information, contact David J. Wise at (202) 512-
2834 or wised@gao.gov.
[End of section]
Contents:
Letter:
Background:
FTA Procures Contractor Services to Provide Input into Its Decisions
and Monitors These Contractors through Various Methods:
Stakeholders Identified Benefits of and Challenges to FTA's Oversight,
and FTA Is Taking Actions to Address Some Stakeholder Concerns:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: List and Description of Project Management Oversight
Contractor Reviews:
Appendix III: Funding Obligated for Project Management Oversight and
Financial Management Oversight, Fiscal Years 2000-2009:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Description of Main PMOC Oversight Reviews:
Table 2: New Starts Projects Selected:
Table 3: List and Description of Project Management Oversight
Contractor Reviews:
Table 4: Funding Obligated for Project Management Oversight and
Financial Management Oversight for FTA Grant Programs, Fiscal Years
2000-2009[A]:
Figures:
Figure 1: PMOC and FMOC Input into the New Starts Project Development
Process:
Figure 2: FTA's Performance Evaluation Approach for PMOCs:
Abbreviations:
ANPRM: Advance Notice of Proposed Rulemaking:
APTA: American Public Transportation Association:
AQL: acceptable quality levels:
CPS: Contractor Performance System:
DCAA: Defense Contract Audit Agency:
DOD: Department of Defense:
DOT: Department of Transportation:
FAR: Federal Acquisition Regulation:
FFGA: full-funding grant agreement:
FMOC: financial management oversight contractor:
FTA: Federal Transit Administration:
GSA: General Services Administration:
ISTEA: Intermodal Surface Transportation Efficiency Act of 1991:
LPA: locally preferred alternative:
NEPA: National Environmental Policy Act of 1991:
PMOC: project management oversight contractor:
PMO rule: Project Management Oversight rule:
PMP: Project Management Plan:
PPIRS: Past Performance Information Retrieval System:
SAFETEA-LU: Safe, Accountable, Flexible, Efficient Transportation
Equity Act: A Legacy for Users:
SBA: Small Business Administration:
SSMP: Safety and Security Management Plan:
STURAA: Surface Transportation and Uniform Relocation Assistance Act:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 14, 2010:
The Honorable Christopher J. Dodd:
Chairman:
The Honorable Richard C. Shelby:
Ranking Member:
Committee on Banking, Housing, and Urban Affairs:
United States Senate:
The Honorable James L. Oberstar:
Chairman:
The Honorable John L. Mica:
Ranking Member:
Committee on Transportation and Infrastructure:
House of Representatives:
Many states, cities, and localities are building or planning mass
transit projects to replace aging infrastructure or add new capacity
to meet the nation's transportation needs. The federal government
contributes funding to a number of major mass transit projects each
year, primarily by covering a share of the capital costs through the
Federal Transit Administration's (FTA) New Starts grant program.
[Footnote 1] Under the New Starts program, FTA identifies and
recommends new fixed guideway transit projects or extensions to
existing projects to Congress for grants, and provides such grants to
project sponsors, which can be state or local government authorities,
including transit authorities.[Footnote 2] Many New Starts projects
require large federal investments, take years to construct, and can be
complex because of unique design or construction elements.
To strengthen the management and monitoring of major capital transit
projects, in 1987, the Surface Transportation and Uniform Relocation
Assistance Act of 1987 (STURAA) authorized FTA's project management
oversight program.[Footnote 3] Furthermore, in 1990, Congress
authorized, and in 1991 FTA established, the financial management
oversight program to help mitigate the financial risks associated with
transit projects.[Footnote 4] FTA's project and financial management
programs use contractors--known as project management oversight
contractors (PMOC) and financial management oversight contractors
(FMOC)--to help FTA oversee the planning, construction, and financing
of major capital projects, including those projects funded under the
New Starts program.[Footnote 5]
In response to a requirement in the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU)
that we review FTA's New Starts program annually,[Footnote 6] this
report discusses (1) how FTA uses contractors to oversee New Starts
projects and how the agency procures, monitors, and evaluates the
contractors' services; and (2) the benefits of FTA's oversight
approach and the challenges FTA faces in conducting its oversight.
To address how FTA uses and monitors PMOCs and FMOCs to oversee New
Starts projects and the benefits and challenges to oversight, we
reviewed relevant legislation establishing project management
oversight responsibilities and the funding available for these
oversight activities. Additionally, we reviewed applicable federal
statutes and regulations for the procurement of oversight contractors,
and FTA procedures and guidance for PMOCs and FMOCs. We focused our
review on the oversight activities that informed FTA's recommendation
for federal funding for 10 New Start projects.[Footnote 7] We
judgmentally selected these 10 projects to include a range in (1)
transit mode (i.e., heavy rail, light rail, commuter rail, or bus),
(2) the total project cost, (3) the amount of federal funding, and (4)
geographic areas. Our sample also includes project sponsors who have
been recommended for multiple full-funding grant agreements (FFGA) by
FTA. For each of these 10 projects, we interviewed New Starts project
sponsors, PMOCs, FMOCs, and FTA headquarters and regional officials.
The information from the interviews is intended to provide views on
oversight from stakeholders involved in a range of New Starts projects
and is not generalizable to all New Starts projects. Appendix I
contains additional information on our scope and methodology.
We conducted this performance audit from January to September 2010 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.
Background:
Project sponsors can begin constructing and operating New Starts
projects upon the successful completion of specific project
development milestones and upon obtaining an FFGA from FTA.[Footnote
8] To obtain an FFGA, project sponsors are required by law to go
through a planning and project development process, which is divided
into three phases: alternatives analysis, preliminary engineering, and
final design, followed by construction. In the alternatives analysis
phase of the New Starts process, project sponsors identify the
transportation needs in the corridor and evaluate a range of modal and
alignment alternatives to address the locally identified problems in a
specific corridor.[Footnote 9] Project sponsors complete the
alternatives analysis phase by selecting a locally preferred
alternative (LPA), which is the New Starts project that FTA evaluates
for funding. During the preliminary engineering phase, project
sponsors refine the design of the LPA, taking into consideration all
reasonable design options and estimating each option's costs,
benefits, and impacts (e.g., financial or environmental). When the
preliminary engineering phase is completed and federal environmental
requirements are satisfied, FTA may approve the project's advancement
into final design, after which FTA may recommend the project for an
FFGA. To help inform administration and congressional decisions about
which projects should receive federal funding, FTA distinguishes among
proposed projects by evaluating and assigning ratings to various
statutorily prescribed evaluation criteria--including both project
justification and local financial commitment criteria--and then
assigning an overall project rating.[Footnote 10] Once a project
obtains an FFGA, the project sponsor can begin constructing and,
subsequently, operating it.
PMOCs oversee project sponsors' management of New Starts projects,
starting when a project prepares to enter the preliminary engineering
phase and continuing through the beginning of operations. The main
oversight reviews that a PMOC conducts before FTA recommends a project
for an FFGA include an evaluation of the project's risk, scope, cost,
schedule, and project management plan, as well as the project
sponsor's technical capacity and capability. (See table 1.) In
addition, PMOCs conduct monthly and quarterly oversight reviews. For
some reviews that PMOCs conduct, such as real estate reviews, PMOCs
retain the services of subcontractors with specific industry
experience.
Table 1: Description of Main PMOC Oversight Reviews:
Main PMOC oversight review: Project management plan review;
Description of review: Assesses the adequacy and soundness of the
project management plan, which is the project sponsor's overarching
implementation plan for the entire project.
Main PMOC oversight review: Technical capacity and capability review;
Description of review: Evaluates the project sponsor's organization,
personnel qualifications, and experience, as well as the sponsor's
policies, procedures, and implementation methods.
Main PMOC oversight review: Capital cost estimate review;
Description of review: Assesses the soundness of the project sponsor's
cost-estimating methods and processes;
confirms that the cost estimate adequately reflects the project's
scope, schedule, and anticipated market conditions;
and reviews the reliability of the cost estimate for procurements and
contracts.
Main PMOC oversight review: Project schedule review;
Description of review: Reviews the completeness and reliability of the
project sponsor's schedule, assesses the schedule's usefulness as a
management tool, and assesses the extent to which the schedule
reflects the project's scope, cost, management practices, and method
of project delivery.
Main PMOC oversight review: Risk assessment review;
Description of review: Evaluates the reliability of the project
sponsor's project scope, cost estimate, and schedule, focusing
specifically on the uncertainty associated with project implementation
and surrounding project conditions.
Main PMOC oversight review: Readiness reviews;
Description of review: Integrates findings and recommendations from
other PMOC reviews to determine whether a project is ready to enter
into the next project phase, such as the preliminary engineering,
final design, or FFGA phase.
Source: GAO analysis of FTA information.
[End of table]
PMOCs perform many of these reviews repeatedly throughout the New
Starts process, tailoring them to the stage of a project's
development. For example, FTA directs PMOCs to review a project
sponsor's technical capacity and capability three times--before the
project enters the preliminary engineering phase, enters the final
design phase, and again when the sponsor requests an FFGA. According
to FTA guidance, some reviews, such as the technical capacity and
capability review, require more detail during the early stages of a
project (i.e., during preliminary engineering); however, during later
stages of a project (i.e., during final design or FFGA) these same
reviews may only require an update of earlier findings. See appendix
II for a full list and description of the reviews PMOCs conduct.
In contrast to PMOCs, who focus on project management oversight, FMOCs
oversee how project sponsors will fund the capital and operating costs
of the proposed project as well as the existing systems. FMOCs conduct
two types of financial assessments:
* Local financial commitment assessments are short, less detailed
reviews which evaluate whether a project is supported by a stable and
reliable capital financial plan and whether the project sponsor can
fund the operations and maintenance of an existing transit system once
the new transit project is built. These assessments also review the
amount of funding that comes from sources other than New Starts, such
as federal formula grants and state and local funding.
* Financial capacity assessments, which are more detailed reviews,
analyze a project sponsor's financial condition and capability to
fulfill its current and future financial obligations.[Footnote 11]
While PMOCs provide continuous oversight of projects, FMOCs have
oversight responsibilities at defined points in the project
development process. Specifically, FMOCs conduct financial assessments
before a project enters preliminary engineering and final design
stages and before an FFGA is awarded.[Footnote 12] Figure 1
illustrates the New Starts project development process and shows when
PMOCs and FMOCs conduct their oversight.
Figure 1: PMOC and FMOC Input into the New Starts Project Development
Process:
[Refer to PDF for image: illustration]
Alternatives analysis:
Alternatives analysis[A]:
Project Sponsor selects LPA[B];
FTA decision on entry into preliminary engineering[B]. (FMOC
oversight[C]); (PMOC oversight).
Preliminary engineering:
Preliminary engineering[A]:
FTA decision on entry into final design[B]; (FMOC oversight[C]); (PMOC
oversight)[A].
Final design: (PMOC oversight)[A].
Final design[A]: FFGA; (FMOC oversight[C]); (PMOC oversight)[A].
Construction:
Construction. (PMOC oversight).
Source: GAO and FTA.
[A] Project sponsor or FTA decision point.
[B] Project development stage.
[C] In addition to conducting oversight assessments prior to entry
into the preliminary engineering and final design stages, and at the
time an FFGA is awarded, FMOCs also conduct annual assessments for
FTA's Annual Report on Funding Allocations.
[End of figure]
FTA Procures Contractor Services to Provide Input into Its Decisions
and Monitors These Contractors through Various Methods:
PMOCs and FMOCs Provide Critical Input to FTA on Decisions to Advance
and Fund New Starts Projects:
FTA officials rely on PMOCs and FMOCs to provide critical input into
FTA's decisions on project advancement and funding. This input--
including the PMOCs' and FMOCs' findings, recommendations, and
professional opinions--comes through reports that PMOCs and FMOCs
submit to FTA on the results of their reviews, as well as through
discussions that these contractors have with FTA officials on these
results.
PMOC oversight efforts help FTA ensure that a federally funded transit
project's scope, schedule, and cost are well developed and that the
project's design and construction conform to applicable statutes,
regulations, and guidance. Furthermore, these efforts keep FTA
informed of a project's status and support FTA's decision on whether
to advance the project to the next phase of development or recommend
the project for an FFGA. For example, FTA officials said that based on
a PMOC's technical capacity and capability review, they determined
that a project sponsor did not have sufficient staff--such as
engineers and senior project managers--with the requisite
qualifications and experience to advance the project from the
preliminary engineering to the final design phase.
Separately, FMOCs help ensure that project sponsors have sufficient
financial capacity to build and operate the proposed project as well
as the existing system. Specifically, FTA uses the analyses and
reports that FMOCs prepare, such as local financial commitment
assessments, to develop each project's local financial commitment
rating[Footnote 13]. FTA also uses FMOCs' financial assessments to
anticipate financing problems and to foster dialog with project
sponsors about their ability to carry out planned projects. For
example, one FMOC we interviewed said its cash flow analysis of a
project found that the sponsor's forecast of the project's schedule
and cost would result in a cash flow shortfall. As a result, the
relevant FTA regional office had an early indication of possible
problems, and both FTA and the sponsor were able to proactively
address the project's financing issue[Footnote 14]s. In another
instance, the FMOC determined that the project sponsor, as part of the
review of one of the 10 projects in our sample, did not have the
financial capacity to move forward on a project, and because of this
FMOC's recommendation to FTA, FTA did not advance the project to the
next phase of development.
FTA Procures PMOC and FMOC Services Using Federal Acquisition
Regulation Procurement Procedures, and Recently Revised Its
Procurement Approach:
FTA procures project management and financial management oversight
services in accordance with the Federal Acquisition Regulation (FAR),
which prescribes uniform policies and procedures for all executive
agencies to acquire goods and services. Under these contracts, PMOCs
and FMOCs provide oversight services, such as those described earlier,
to support FTA's oversight of a number of grant programs, including
New Starts. FTA awards contracts for PMOC oversight services for 5
years and for FMOC oversight services for a base year, with four 1-
year options to extend, for a maximum of 5 years.[Footnote 15] Funding
for these contracts is provided through statutory set-asides made
available annually for specific FTA grant programs.[Footnote 16] FTA
is currently authorized to use up to 1 percent of section 5309 capital
investment program funds for oversight, which includes PMOC and FMOC
activities.[Footnote 17]
Federal agencies have discretion to determine what services they need
to procure and, based on the services being procured, what procurement
procedures are appropriate. One of the guiding principles of the FAR
is to deliver products or services that represent the "best value"--
that is, the acquisition outcome that provides the greatest overall
benefit in response to the agency's requirements. An agency can obtain
"best value" by using, for example, the General Services
Administration's (GSA) Multiple Award Schedule program[Footnote 18] or
using competitive negotiations.[Footnote 19]
To acquire the services of FMOCs, FTA follows procedures prescribed in
the FAR. For local financial commitment assessments, it uses GSA's
Multiple Award Schedule, as described in the FAR, and for financial
capacity assessments, FTA uses eligible firms certified under the
Small Business Administration's (SBA) 8(a) Business Development
Program.[Footnote 20]
FTA recently revised its approach to procuring PMOC services for two
primary reasons, the first of which was to expand the pool of
available PMOCs. Prior to 2009, FTA awarded contracts for PMOC
services to architectural and engineering firms in accordance with the
Brooks Act and its implementing regulations in the FAR, which
prescribe specialized policies and procedures for procuring "architect-
engineer services."[Footnote 21] However, during the August 2004
through September 2009 contract period, a growing number of mergers
and acquisitions reduced the pool of available architectural and
engineering firms from 16 to 13. Partly in response to this decrease
in the number of contractors, FTA officials reviewed the services its
PMOCs were providing and determined that they did not constitute
"architectural and engineering services" within the meaning of the
Brooks Act and the FAR. Accordingly, FTA stopped using Brooks Act
procedures and, in 2009, began using the competitive negotiation
procedures described in the FAR.[Footnote 22] Negotiated acquisitions
allow trade-offs between cost or price and noncost factors and allow
the government to accept other than the lowest priced proposal,
provided that each factor's relative importance is clearly stated in
the contract solicitation. As part of the 2009 procurement process,
FTA officials said, they separately evaluated the technical and cost
proposals of potential contractors and considered both qualifications
and cost before starting negotiations, whereas under the Brooks Act
and its implementing regulations, they had ranked competing firms on
the basis of their qualifications and then started negotiations on
cost.
FTA's second primary reason for changing its procurement procedures
was to reduce the potential for conflicts of interest. Many of the
contractors who FTA could potentially use as PMOCs have the knowledge
and skills not only to oversee transit projects for FTA, but also to
support project sponsors directly through an independent contract
between the contractor and a project sponsor. When a project sponsor
contracts directly with a contractor for work, this contractor becomes
ineligible to oversee that sponsor's project for FTA as a PMOC, since
this dual role working for the project sponsor and providing oversight
of the project for FTA would constitute a conflict of interest.
[Footnote 23] As a result, FTA identifies conflicts of interest among
its PMOCs before assigning a PMOC to a New Starts project by analyzing
whether a PMOC has contracted to work for a project sponsor. According
to FTA officials, FTA's flexibility in assigning PMOCs to New Starts
projects was increasingly limited as mergers and acquisitions reduced
the pool of available firms during the 2004 through 2009 contract
period. However, FTA officials indicated that their flexibility with
assigning contractors has increased with this new group of contractors.
The change in FTA's PMOC procurement procedures has increased the
number of available contractors. In 2009, when FTA first used the
FAR's competitive negotiation procedures to procure PMOCs, the pool of
available contractors increased from 13 to 19, an increase of over 46
percent. According to FTA officials, this increase in the size of the
PMOC pool has helped increase competition when the contractors in the
pool compete for assignment to a New Starts project.[Footnote 24] FTA
officials noted further that the change in procurement procedures did
not exclude professional architectural and engineering firms from
competing for the contracts, but rather opened the competition to a
wider group of contractors. According to FTA officials, of the 19
contractors in the 2009 pool, 11 are contractors who worked as PMOCs
during the 2004 through 2009 contract period,[Footnote 25] and 8 are
project management contractors who are participating for the first
time as prime contractors.
Additionally, the change in FTA's PMOC procurement procedures has had
the benefit of expanding small businesses' participation in the PMO
program, according to FTA officials. They noted that during the 2004
through 2009 contract period, one PMOC was a small business and one
additional small business participated in the PMO program as part of a
mentor/protégé program. But as part of the change in its procedures,
FTA reduced the minimum number of hours required of PMOCs over the 5-
year contract period, which encouraged participation from small
businesses. Under the most recent procurement, conducted using
competitive negotiations, 3 PMOCs were small businesses.
However, the change in FTA's procurement procedures may have some
negative effects, according to PMOCs. In their view, the competitive
negotiation process has affected their staffing for FTA work and puts
more emphasis on cost than did the Brooks Act process. For example,
two contractors we spoke with said PMOCs may have to use less
experienced personnel to provide oversight, and spend more time and
money training them, because they perceive that FTA now places
increased emphasis on cost as an evaluation factor during its
procurement process. According to these contractors, the most recent
contract awards resulted in ceiling prices for hourly compensation
that were both lower than expected and lower than the rates under the
previous contracts. With the lower ceiling prices, they said, some
contractors may have to provide less experienced staff to FTA to avoid
exceeding the ceiling price per hour. For example, officials from one
PMOC noted that under the previous contract, the firm regularly used a
leading industry expert to perform New Starts risk management reviews.
However, under the new contract, the expert's hourly labor rate
exceeded FTA's ceiling price and the PMOC had to use a different
consultant from the same firm who was less qualified and could not
provide the same level of quality. In addition, PMOC officials stated
that more documentation is required under the new procedures but the
additional requirements have not added value to the process. For
example, they said that FTA asked the PMOCs to propose prices and
identify staff for 44 labor categories, but noted that 95 percent of
PMOC activities are completed using only a handful of the 44 labor
categories. Finally, two of the contractors we spoke with speculated
that FTA's use of competitive negotiations could discourage some
contractors from offering proposals for future PMOC solicitations.
Despite these concerns, FTA officials maintain that the use of
competitive negotiations has not affected staffing or put greater
emphasis on a contractor's price. FTA officials stated that there
should be no decline in the quality of the personnel provided by PMOCs
because prior to any change in the personnel assigned to a contract,
FTA officials review the résumés of the incoming and outgoing staff to
ensure any personnel changes will meet FTA's qualification
requirements. For example, an FTA official noted that, for one PMOC
contract, FTA recently rejected 20 percent of the proposed changes to
contractor staff because the proposed personnel did not meet the
qualifications specified in the contract that was awarded.
Additionally, although FTA officials acknowledged that cost was an
evaluation factor reviewed in the award of the 2009 PMOC contracts,
they noted that it was weighed fifth among the eight factors and
subfactors considered during the evaluation of proposals. Furthermore,
despite contractors' concerns about ceiling prices, FTA officials
explained that the ceiling prices were negotiated and agreed to by the
PMOCs and FTA, and were based on rates that had been audited by the
Defense Contract Audit Agency (DCAA).[Footnote 26] FTA officials also
noted that if a PMOC's overhead rates increase, the contractor may
have an opportunity to negotiate new contract rates, subject to a
review by DCAA.
FTA Sets Contractor Expectations, Uses a Team Approach to Monitor
Contractor Activities, and Evaluates Contractor Performance through an
Improved System:
FTA sets expectations for contractors through contracts, task orders,
and written guidance. After signing a contract with a contractor, FTA
issues task orders[Footnote 27] which it expects the contractor to
complete over the term of the contract. FTA provides guidance for
PMOCs--known as Project Management Oversight Procedures--and guidance
for FMOCs to assist the contractors in the oversight reviews that they
are required to conduct.[Footnote 28] FTA further defines its
expectations for PMOCs through work orders, which identify shorter-
term products and deadlines, along with expected labor hours. For
example, one task order covering 5 years directed the PMOC to deliver
up to three project management plan (PMP) reviews, among other
reviews, in accordance with the Project Management Oversight
Procedures. The related work order refines this expectation by
directing the PMOC to complete one of these reviews within the first
12 months and estimates the number of labor hours needed to do so. The
scope of the work defined in the work order depends on the phase of
the sponsor's project development, prior oversight work done, and
other factors.
Both FTA regional and headquarters project management officials are
involved in monitoring PMOCs, while the FTA Office of Planning and
Environment at headquarters monitor FMOCs. The regional Task Order
Manager has the day-to-day responsibilities for overseeing PMOC
products and activities. For example, the Task Order Manager regularly
reviews contractor vouchers and invoices and monitors the status of
PMOC activities. Furthermore, both headquarters and regional
officials, including planners and engineers, review the reports for
accuracy and approve the reports that PMOCs develop to document the
results of their oversight activities. FTA program management
officials at headquarters also ask specialists within FTA, such as
officials from FTA's Office of Civil Rights, the Office of the Chief
Counsel, and other offices as needed, to review PMOC reports.
Separately, for FMOCs, FTA's Office of Planning and Environment
officials are responsible for monitoring FMOC work and use monthly
FMOC status reports to do so. These reports include information on
work completed and scheduled, problems encountered, FMOC labor hours,
and items requiring FTA action. FTA officials provide feedback to
PMOCs and FMOCs on these work products, including edits, questions,
and corrections to reports provided to FTA.
In addition to reviewing reports, FTA officials meet with PMOCs and
FMOCs to monitor their performance. According to FTA officials, these
meetings keep FTA informed of PMOCs' findings, issues of concern, and
recommendations for FTA or project sponsor action. For example, FTA
meets quarterly with the PMOCs as a group for a briefing on major
issues of concern and provides an opportunity for PMOCs to ask
questions. FTA regional officials and PMOCs indicate that in addition
to these meetings, FTA regional staff talk with PMOCs as needed.
Several FTA regional managers we spoke with hold scheduled biweekly
teleconferences and monthly meetings with the PMOCs, and according to
FTA officials, many PMOCs participate in the biweekly calls between
FTA and the project sponsors. FTA officials discuss a project's
progress and items to keep it on track, and review PMOC reports with
PMOCs prior to project sponsor meetings. For example, FTA officials
noted that PMOCs may contact the FTA task order manager for
clarification of an oversight requirement. In addition, according to
FTA officials, FTA provides training to PMOCs on FTA's expectations
and the administration of the oversight contracts usually through
annual PMOC conferences, quarterly PMOC conference calls, webinars,
and the annual engineers' meeting. Furthermore, according to FTA
officials, some regions provide additional training during meetings
with PMOCs. Because of the periodic nature of FMOC oversight, FTA
holds meetings with FMOCs, as needed, when the FMOC is performing a
specific task. FTA indicated that if FMOCs have questions they can e-
mail or phone FTA.
FTA officials have recently taken steps to improve their multilayered
performance evaluation system for PMOCs. FTA annually evaluates its
PMOCs on four criteria--cost, quality, timeliness, and business
relations. In the past, FTA found that the performance levels for
these four criteria were not defined with enough specificity and were
not applied consistently to PMOCs. To improve the application of these
criteria, FTA headquarters officials organized a team from the
regional offices and developed a worksheet in 2008 that defined these
four criteria and related levels of performance to help improve
consistency in the application of the criteria. For example, prior to
this improvement, a "good rating" for timeliness of performance was
defined simply as "there are no, or minimal, delays that impact
achievement of contract requirements." With the enhancements due to
the worksheet, FTA could evaluate, among other things, the extent to
which the PMOC identified problems early, the PMOC provided the
project sponsor with timely technical assistance that added value to
the project, and the PMOC met the original completion date for task
assignments or deliverables. In addition, for the 2009 contract, FTA
developed Acceptable Quality Levels (AQL) to improve the objectiveness
of the quality criterion. FTA applies AQLs to evaluate the quality of
PMOC reports against FTA's Oversight Procedures. According to FTA
officials, the AQLs are a means of documenting FTA's quality
expectations for reports and oversight activities. FTA incorporates
the results of the AQLs into its worksheet and uses the results of the
worksheet and the AQLs to assign a numerical rating for each of the
four evaluation criteria. FTA contracting officials have indicated
that if there is a performance issue with a contractor, the contractor
is notified, either by phone or by letter, and that such action has
resulted in rectification of the performance issue.
FTA also informally obtains feedback on contractor performance from
project sponsors. While some project sponsors provided both solicited
and unsolicited feedback, others indicated they would like to have a
more formal mechanism for evaluating contractor performance.
Once FTA officials have gathered performance information and evaluated
a contractor, using the AQLs and the internally developed worksheet,
they annually place the evaluation and supporting information into the
Contractor Performance System (CPS)--a multiagency system used to
collect, maintain, and disseminate contractor performance evaluations
for federal departments and agencies. According to FTA officials,
contractors are forwarded a copy of the completed evaluation form.
[Footnote 29] A contractor has 30 days to respond to or appeal an
evaluation, whereupon FTA again reviews the evaluation. After 30 days,
the evaluation is considered official and CPS delivers the finalized
evaluation into the Past Performance Information Retrieval System
(PPIRS)--a federal system that collects information on contractor
performance across all federal agencies.[Footnote 30] See figure 2 for
FTA's current performance evaluation approach for PMOCs.
Figure 2: FTA's Performance Evaluation Approach for PMOCs:
[Refer to PDF for image: illustration]
Evaluation:
FTA Regional Manager: Acceptable Quality Level (AQL) tables for each
oversight procedure (Recent addition to FTA‘s evaluation of PMOC
performance);
* FTA headquarters organizations;
* Informal feedback from project sponsors.
FTA-developed worksheet (Recent addition to FTA‘s evaluation of PMOC
performance).
CPS:
Multi-agency system used to collect, maintain, and disseminate
contractor performance evaluations based on the following criteria:
cost, quality, timeliness, and business relations.
PPIRS:
Federal system that collects information on contractor performance
across all federal agencies.
Source: GAO.
[End of figure]
In general, PMOCs considered the reviews, evaluations, and feedback
provided by the FTA as positive and helpful in improving their ability
to carry out their oversight responsibilities. The evaluation and
feedback process is still new and implementation is still underway
and, as such, two regional managers noted they had not yet used AQLs
to evaluate PMOCs. Similarly, one PMOC indicated that FTA had not gone
over AQLs with them.
FTA's Office of Planning and Environment directs and evaluates FMOC
work. FTA indicated that because there are fewer reports and the FMOC
work is periodic and not continuous, the Office of Planning and
Environment handles all contractor assignments and performance
evaluations. According to the FTA's Office of Planning and
Environment, it has determined that the use of an AQL worksheet for
consistency in evaluations is not necessary since one office reviews
all of the FMOCs' work. The Office of Planning and Environment
provides the contractor evaluation form to the Office of Procurement,
which enters the data into CPS.
Stakeholders Identified Benefits of and Challenges to FTA's Oversight,
and FTA Is Taking Actions to Address Some Stakeholder Concerns:
Stakeholders Cited Benefits of FTA's Use of PMOCs and FMOCs, Including
Improved Management and Access to Additional Expertise and Technical
Assistance:
FTA officials, contractors, and project sponsors cited numerous
examples of how FTA's use of oversight contractors has improved
project and financial management. For example, one project sponsor
noted that feedback from the PMOC on the project management plan
helped ensure that the plan documents were complete and covered
project costs adequately. On a different project, officials from the
project sponsor noted that the PMOC's risk management review helped
identify program risks that might have affected the project's budget.
These stakeholders also noted that the FMOC's financial oversight has
helped improve projects. For example, an FMOC's independent assessment
of a New Starts project confirmed that the project sponsor had the
resources to construct and operate the project, despite a complex
financing approach. In another case, an FMOC determined that the New
Starts project did not have the financial capability to continue and
recommended to FTA that the project not advance to the next project
development stage. Furthermore, we have previously reported on how
FTA's use of PMOCs and FMOCs has benefited both project sponsors and
FTA.[Footnote 31] Specifically, we observed that FTA's oversight
program has helped improve project sponsors' controls over project
costs, schedules, quality, and safety. We noted that the PMO program
has provided FTA with a better understanding of the issues surrounding
complex construction projects and an increased awareness of potential
problems that could lead to schedule delays or cost increases.
PMOCs and FMOCs also provide FTA with additional expertise. Since the
inception of its Project Management Oversight program, FTA has
supplemented its own staff as well as used the expertise of PMOC
staff, and later, FMOC staff, who have specialized areas of expertise
beyond that of most FTA staff, to help oversee New Starts projects.
Since the New Starts program has grown significantly while FTA's staff
size has stayed the same, FTA officials have used these oversight
contractors to help compensate for this human resource gap. For
example, FTA officials noted that while PMOCs are not FTA employees,
the PMOCs help serve as FTA's "eyes and ears" at project sites.
Finally, in addition to oversight services, PMOCs occasionally provide
technical assistance on behalf of FTA to project sponsors. Such
assistance may include providing information and instruction in
project management and project analysis practices, or sharing
technical expertise in transit project design and construction. In the
course of providing oversight, PMOCs are to notify FTA about any
opportunities for project sponsors to benefit from technical
assistance. FTA officials stated that New Starts projects have
benefited from the technical assistance that PMOCs and FMOCs provided
to project sponsors. However, while PMOCs and FMOCs can provide
technical assistance in the form of examples or best practices,
project sponsors are responsible for deciding how to proceed. For
example, FTA assigned a PMOC to provide guidance to a project sponsor
to help clarify safety requirements. As part of this process, the PMOC
provided the project sponsor with examples of best practices used to
meet safety requirements. The project sponsor used these best
practices to resolve its safety issues and noted that having access to
the PMOC and its specialized skills provided clarity and helped
resolve the safety issue quickly.
Finding the Appropriate Balance between Oversight and Advancing
Projects Is Challenging; FTA Is Taking Actions to Help Address This
Challenge:
Finding the right balance between protecting federal investments
through project management oversight and advancing projects through
the project development process is challenging. As noted above, FTA's
project management oversight program is intended to strengthen the
management and monitoring of major transit projects. However,
determining the appropriate level of oversight that is needed for a
project is a delicate task, since in certain cases, too much or too
detailed oversight could slow a project's progress. We have previously
reported that one option FTA could consider to reduce the burden
placed on project sponsors and move projects more quickly through the
New Starts project development process is to tailor the level of
oversight to the risks of a New Starts project (indicated, for
example, by the project's cost or complexity).[Footnote 32]
FTA has developed procedures to assist PMOCs in ensuring that a
project's scope, schedule, and cost are in balance and that the
project follows applicable federal requirements, but FTA has indicated
that it also tailors PMOC oversight to each project. Specifically,
FTA's Oversight Procedures for PMOCs serve as guidance on how PMOCs
should conduct their work; however, according to FTA officials, the
Oversight Procedures are written to allow flexibility in the
assignment of task and work orders based on the specific needs of a
project. According to FTA officials, while some reviews in the
Oversight Procedures are conducted for all projects that undergo PMOC
oversight, such as project management plan reviews, FTA officials may
decide not to have a PMOC conduct certain reviews or may ask the PMOC
to conduct a more detailed review than is described in the Oversight
Procedures. For example, FTA officials in an FTA region told us that
they did not require the PMOC working on a project in their region to
conduct a technical capacity and capability review because the PMOC
was familiar with the project sponsor's technical capacity and
capability, the project sponsor had recently completed three other New
Starts projects on time and within budget, and there was no change in
project sponsor staff. In another example, an FTA official in another
region asked the PMOC overseeing one of the projects in that region to
conduct a real estate review that was not completely specified at that
time in the Oversight Procedures because of concerns about the project
sponsor's real estate management approach. FTA officials noted that it
is impossible to anticipate all requirements and cover them all in the
Oversight Procedures. Therefore, FTA officials stated, it is possible
to deviate from the Oversight Procedures if the deviations are clearly
documented in the work order.
Despite FTA's efforts to tailor its oversight, four project sponsors
we spoke with said that the level of oversight and PMOC involvement in
a project sometimes seem excessive or detailed, making it difficult
for them to spend time developing the project. For example, one
project sponsor we interviewed said that FTA has layered additional
oversight on projects in response to problems that FTA faced in other
projects in other regions. In this case, project sponsor officials
said that some of the additional oversight was not applicable to its
project and that the project ended up spending time and resources
addressing additional oversight requirements rather than developing
the project. In addition, this project sponsor said that the level of
PMOC involvement on their projects is also excessive because PMOC
oversight is detailed. For example, rather than providing broad
oversight over the project's schedule, the project sponsor officials
said that the PMOC requested very detailed information regarding the
schedule. According to the project sponsor, as a result of this level
of oversight, they had to hire more staff, which increases project
costs.
FTA currently oversees project sponsors in accordance with the Project
Management Oversight Rule (PMO rule).[Footnote 33] In September 2009,
FTA issued an Advance Notice of Proposed Rulemaking (ANPRM) to obtain
public comment on proposed modifications to the rule intended to
increase the effectiveness of its oversight approach.[Footnote 34] As
part of the ANPRM, FTA is considering changes to the PMO rule that
could potentially base the level of oversight on risk.[Footnote 35]
According to FTA officials, amending the rule to emphasize its risk-
informed process would formalize and standardize FTA's current
practice of tailoring its PMOC oversight to each project. A few
project sponsors who provided comments to FTA on the ANPRM said that
the level of oversight could be tailored to the experience of the
project sponsor, with sponsors with more experience in the New Starts
process undergoing less detailed oversight. Two of these project
sponsors also suggested that oversight could be tailored to the level
of federal investment. FTA is currently evaluating comments it
received from stakeholders on this ANPRM, and expects to issue the
Notice of Proposed Rulemaking in late 2010.[Footnote 36]
FTA Is Taking Actions to Address Challenges Related to Projects'
Growing Complexity and Is Seeking Stakeholder Input on Other Potential
Changes to the PMO Program:
FTA faces challenges in ensuring that it has specialized expertise and
staff to oversee the growing number of complex capital projects,
including New Starts projects. FTA, in its 2009 ANPRM, noted that the
agency is participating in a larger number of megaprojects.[Footnote
37] These megaprojects often involve technology, design, or
construction elements, such as tunnels, that make a project more
complex. For example, one megaproject that is currently seeking New
Starts funding from FTA requires the construction of two new tunnels
under a river. To ensure that technologies, design, or construction
elements, such as tunnels, do not increase the costs and schedules of
the complex projects, FTA requires oversight by individuals who have
specialized knowledge and experience in these areas. Furthermore, FTA
officials said that the number of projects in FTA's Small Starts
program is growing and some Small Starts are fairly large, complex
projects, particularly those nearing the $250 million total capital
cost threshold of the program.[Footnote 38] Thus, demand for FTA
oversight resources is growing. The challenges associated with the
growing number of large projects and the additional demands they place
on FTA's oversight are particularly significant given that FTA's
staffing levels have remained about the same since 1982.
The financing of New Starts projects has also become more challenging.
To cover the large dollar amounts of some New Starts projects,
particularly the megaprojects, project sponsors are borrowing more
money to finance their projects and are increasingly relying on
innovative financing methods, such as public-private partnerships and
value capture strategies.[Footnote 39] In addition, because of the
current economic climate, state finances are stretched, forcing state
project sponsors to finance these projects through multiple sources or
less traditional means. For example, another New Starts project we
reviewed is using an innovative approach to finance an extension of an
existing system. This project is funded through a variety of new
revenue sources, including bonds backed by future revenue collections
from a toll road. As states use such new funding methods for projects,
the financial capacity oversight work that FMOCs conduct for FTA also
becomes more involved, requiring more effort and time to understand
the funding approaches and ensure that project sponsors can
sufficiently fund their proposed projects, and also maintain and
preserve their current transit systems.
As noted earlier, PMOCs and FMOCs provide FTA with access to
specialized experience and knowledge and additional staff support, and
FTA has taken actions to use these contractors to a greater extent to
address the challenges related to the growing size and complexity of
New Starts projects. For example, FTA is involving PMOCs and FMOCs
earlier in the project development process. FTA, beginning in 2006,
began to assign PMOCs to oversee New Starts projects when the sponsor
applies to enter into preliminary engineering, rather than waiting
until the project is already in that stage.[Footnote 40] FTA officials
said that identifying and addressing problems at an earlier stage has
helped them ensure that the projects are more likely to stay within
budget and on schedule. According to project sponsors we spoke with,
ensuring that a project is on schedule is important because delays can
significantly increase project costs. Minimizing the potential for
increased project costs and delays is particularly relevant for large
projects that present greater risks of project cost increases or
schedule delays because they use unique technology, design, or
construction elements. Additionally, in 2008, FTA began to ask its
FMOCs to conduct financial capacity assessments before projects
entered into final design (with an update performed at the FFGA
stage), rather than waiting until the projects were at the FFGA stage.
FTA officials told us that this change helps them identify financing
problems earlier, allowing project sponsors more time for corrective
actions. Specifically, FTA officials stated that a project sponsor may
need additional time to identify additional sources of funding if
FTA's review found that there was insufficient funding or financial
capacity to undertake the project.
In addition, FTA noted in its 2009 ANPRM that it is considering a
potential revision to the PMO rule that would better reflect the
current environment of a larger federal transit program and an
increased number of larger, more complex projects. Specifically,
through this ANPRM, FTA is seeking comments from stakeholders on how
FTA should best use its PMOCs to provide specialized expertise when
needed; how the agency should use PMOCs to supplement its limited
staff in overseeing increasingly complex, major capital projects;
whether the use and role of PMOCs should be expanded to overseeing
projects other than major capital projects; and at what stage FTA
should assign PMOCs to New Starts projects, among other things.
[Footnote 41] FTA is also considering whether it should expand the PMO
rule to include a focus on project management, in addition to its
current focus on project oversight. FTA officials explained that the
expanded focus would establish performance expectations for project
sponsors on certain project management areas. For example, the PMO
rule could be expanded to include a requirement that project sponsors
have sufficient staff in place to demonstrate that they have the
capacity and capability to develop their project.[Footnote 42] FTA
officials explained that by ensuring that project sponsors have the
appropriate project management skills, the sponsors can better control
their project costs and schedules.
FTA and PMOCs Have Multiple Ways to Communicate with Project Sponsors
during the Oversight Process, but Project Sponsors Say Communication
Challenges Still Exist:
Effective oversight management of FTA's New Starts program and project
sponsors' advancement of transit projects through the New Starts
program depend, in part, on effective communication. We have noted
that an effective communication strategy should facilitate an honest
two-way exchange with, and allow for feedback from, stakeholders. Such
communication is central to forming the effective internal and
external partnerships that are vital to a program's success.[Footnote
43] GAO has also noted that relevant and timely information is needed
for an agency to achieve its objectives.[Footnote 44]
FTA has multiple avenues through which it communicates with project
sponsors about its oversight activities. Among its efforts, FTA
informs project sponsors of the steps they need to take in the New
Starts funding process; addresses New Starts issues through training
workshops, guidance letters, circulars, and quarterly meetings with
the project sponsor and the PMOC in attendance; and provides feedback
on PMOCs' reports on sponsors' projects. Furthermore, in 2008, FTA
developed checklists to provide detailed information to project
sponsors on the submittals required for each project development
phase. Sponsors have indicated they found this tool and the meetings
to be very helpful in understanding FTA's and PMOC's oversight
requirements.
However, three project sponsors we spoke with stated that
communications with FTA and PMOCs were not consistently timely, which
delayed their response to FTA's concerns. For example, one project
sponsor we interviewed noted that during final design the sponsor was
informed of a level boarding issue pertaining to the Americans with
Disabilities Act, which negatively affected the project's schedule and
cost. The project sponsor said that these effects might have been
avoided if FTA had raised the issue with the project sponsor earlier
in the preliminary engineering stage. In addition, another project
sponsor we interviewed said that waiting for FTA to approve its
readiness reviews led to additional costs, since the project
consultants were idle during this time. Some of the consultants cost
the project up to $50,000 to $200,000 per month and the project
sponsor risked losing these consultants to other projects. A third
sponsor indicated that it gets final reports months later, by which
time the reports can be outdated. This practice can raise issues that
may have already been addressed, can affect relations with other
funding sources, and can result in late project delivery.
These apparent delays may occur for a number of reasons. FTA officials
noted that project sponsors sometimes provide information that is
incomplete or inaccurate, resulting in additional review time and
delays. An FTA headquarters official explained that they may delay
providing sponsors with final oversight reports until they make a
decision, positive or negative, to move to the next phase of project
development. Similarly, an FTA regional official we spoke with stated
that they have delayed sharing reports with project sponsors when the
reports included sensitive information, such as the impact of risk
assessment on cost estimates used as the basis for FTA funding
decisions, which affect ongoing funding negotiations between the
project sponsor and FTA. In addition, an FTA regional official and a
PMOC noted that because FTA uses a team approach to oversee the New
Starts program, there are many people involved in reviewing these
final reports, which might increase the time needed for reviews. For
example, after the FTA regional office initially reviews a report
focused on a capital cost estimate review, the report is reviewed by
FTA headquarters officials, including those from the program
management office who supervise the regional officials and PMOC
technical work. Furthermore, FTA's Office of Planning and Environment
as well as other officials, including representatives from the Office
of Chief Counsel and Office of Civil Rights, also review PMOC reports
as needed. FTA has acknowledged that its current New Starts process
can be lengthy and frustrating. In an October 2009 speech, the FTA
administrator stated that FTA currently has a decision-making process
that is frustrating, lengthy, and incomprehensible, and that FTA is
working on a streamlined decision-making process; he cautioned
however, that the decision may not always be to approve a project.
[Footnote 45] Finally, as noted previously, FTA officials said that
they are involving PMOCs earlier in the project development process to
avoid problems.
In addition to communication delays, three project sponsors we spoke
with said that they provide a considerable amount of documentation to
the PMOCs and FTA and do not get clear written reactions to this
information. Five out of the six FTA regions we interviewed indicated
that they do not consistently provide project sponsors with draft PMOC
reports. FTA's oversight procedures for PMOCs direct the PMOCs to
discuss draft report findings with project sponsors before finalizing
reports. FTA officials stated that PMOCs are expected to confirm the
facts of the draft report with project sponsors. An FTA official
indicated that the PMOCs are expected to share the facts with the
project sponsor, and that project sponsors are "generally aware" of
the issues identified in the oversight reports because of its
communications with PMOC and FTA officials. Project sponsors believe
getting draft reports could help them (1) ensure that PMOCs and FTA
have the proper, most up-to-date information, and (2) understand the
context of concerns or requests for more information.
Agency Comments and Our Evaluation:
We provided a draft of this report to DOT for its review and comment.
DOT officials generally agreed with our findings and provided
technical comments, which we incorporated as appropriate.
We are sending copies of this report to interested congressional
committees and the Secretary of Transportation. In addition, this
report will be available at no charge on GAO's Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-2834 or wised@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 major contributions
to this report are listed in appendix IV.
Signed by:
David J. Wise:
Director, Physical Infrastructure Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Under the Safe, Accountable, Flexible, Efficient Transportation Equity
Act - A Legacy for Users (SAFETEA-LU), we are required to report
annually on the Federal Transit Administration's (FTA) New Starts
process.[Footnote 46] Accordingly, the objectives of this report were
to review (1) how the FTA uses contractors to oversee New Starts
projects and how the agency procures, monitors, and evaluates the
contractors' services, and (2) the benefits of FTA's oversight
approach and the challenges FTA faces in conducting its oversight. Our
review focused on oversight activities that project management
oversight contractors (PMOC) and financial management oversight
contractors (FMOC) conduct between the preliminary engineering stage
of the New Starts project development process and the full-funding
grant agreement (FFGA) stage that inform FTA's recommendations for New
Starts funding. Furthermore, we focused on New Starts projects, and
not on Small Starts or Very Small Starts projects, since FTA does not
generally assign PMOCs to Small or Very Small Starts projects.
To address our two objectives, we reviewed relevant legislation and
FTA documents. Specifically, we reviewed SAFETEA-LU[Footnote 47] and
other relevant legislation, such as the Surface Transportation and
Uniform Relocation Assistance Act (STURAA), which authorized the
project management oversight program and provided funding for these
oversight activities.[Footnote 48] In addition, we reviewed and
analyzed FTA documents, including procedures, guidance, and
performance evaluation criteria for PMOCs and FMOCs. We also reviewed
FTA's 1989 project management oversight rule;[Footnote 49] FTA's
Advanced Notice of Proposed Rulemaking (ANPRM), which seeks public
comment on a proposed amendment to this rule,[Footnote 50] and FTA
information on the agency's budget for its project and financial
management oversight programs.[Footnote 51]
In addition to these efforts, to determine how FTA procures oversight
contractors, we reviewed FTA's procurement solicitations for PMOCs and
FMOCs, reviewed GAO bid protest decisions, and interviewed FTA
procurement officials in headquarters. Furthermore, we reviewed
procedures for acquisition under the Brooks Act[Footnote 52] and the
Federal Acquisition Regulation (FAR), including procedures for
competitive negotiations.[Footnote 53]
We also conducted interviews on topics related to our two objectives.
In particular, we interviewed FTA officials in headquarters who are
responsible for managing and planning New Starts projects, as well as
officials familiar with the budget for FTA's project and financial
management oversight programs. Furthermore, we interviewed
representatives from associations familiar with the New Starts
program, such as the American Public Transportation Association and
the New Starts Working Group.
Finally, we focused our review on 10 New Starts projects that FTA
recommended for FFGAs between fiscal year 2006 to fiscal year 2011.
For each of these 10 projects, we conducted semistructured interviews
with the project sponsors responsible for implementing the projects
and the PMOCs, FMOCs, and FTA regional officials responsible for
overseeing the projects. We judgmentally selected the 10 projects to
include a range in (1) transit mode (i.e., heavy rail, light rail,
commuter rail, or bus); (2) total project cost (from $117 million to
$8.7 billion);[Footnote 54] (3) amount of federal funding (from 26.7
percent to 80 percent of total project costs); and (4) geographic
area. Our sample also includes project sponsors who have been
recommended for multiple FFGAs by FTA. We interviewed all of the
project sponsors by telephone except the sponsor for the Dulles
Corridor Metrorail project, which is located near enough to
Washington, D.C., for us to interview the sponsor in person. Because
the projects were selected as a nonprobability sample, the results
cannot be generalized to all projects or the New Starts oversight
process as a whole.[Footnote 55] Table 2 lists the 10 New Starts
projects we focused on for our review.
Table 2: New Starts Projects Selected:
Name of New Starts project: New Britain-Hartford Busway;
Location: Hartford, Connecticut.
Name of New Starts project: Second Avenue Subway Phase I;
Location: New York, New York.
Name of New Starts project: Access to the Region's Core;
Location: Northern New Jersey, New Jersey.
Name of New Starts project: Dulles Corridor Metrorail Extension;
Location: Northern Virginia, Virginia.
Name of New Starts project: North Shore LRT Connector;
Location: Pittsburgh, Pennsylvania.
Name of New Starts project: North Corridor LRT;
Location: Houston, Texas.
Name of New Starts project: Southeast Corridor LRT;
Location: Houston, Texas.
Name of New Starts project: Weber County to Salt Lake City Commuter
Rail;
Location: Salt Lake City, Utah.
Name of New Starts project: Central Subway LRT;
Location: San Francisco, California.
Name of New Starts project: South Corridor Phase 2;
Location: Sacramento, California.
Source: GAO.
[End of table]
We conducted this performance audit from January to September 2010 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.
[End of section]
Appendix II: List and Description of Project Management Oversight
Contractor Reviews:
Table 3 describes the oversight reviews conducted by PMOCs and
described in the Federal Transit Administration's (FTA) Project
Management Oversight Procedures, which were most recently revised by
FTA in May 2010. According to FTA officials, the procedures described
in this guidance were new to the project management oversight
contracts awarded in 2009 contracts, but are based on the program
guidance instructions for project management oversight contractors
(PMOC) used in prior contracts.
Table 3: List and Description of Project Management Oversight
Contractor Reviews:
Type of oversight review: Project Management Reviews: Project
Management Plan Review;
Description of review: Assesses the adequacy and soundness of the
project management plan, which is the project sponsor's overarching
implementation plan for the entire project.
Type of oversight review: Project Management Reviews: Technical
Capacity and Capability Review;
Description of review: Evaluates the project sponsor's organization,
personnel qualifications, and experience, as well as the sponsor's
policies, procedures, and implementation methods.
Type of oversight review: Project Management Reviews: Safety and
Security Management Plan (SSMP) Review;
Description of review: Assesses whether the project sponsor is
adequately performing the required safety and security management
activities.
Type of oversight review: Project Management Reviews: Real Estate
Acquisition and Management Review;
Description of review: Evaluates the real estate acquisition and
management plan, including acquisition of real estate and its related
schedule and cost estimate, as well as the project sponsor's
compliance with all regulatory requirements.
Type of oversight review: Project Management Reviews: Quality
Assurance/Quality Control Review;
Description of review: Assesses the adequacy and soundness of the
project sponsor's planning, implementation, verification, and
documentation of quality management activities over the course of the
project.
Type of oversight review: On-Site Monitoring and Reporting: Recurring
Oversight and Related Reports;
Description of review: Describes the meetings conducted as well as the
type and quality of reports expected as part of the PMOC recurring
oversight activities.
Type of oversight review: On-Site Monitoring and Reporting: Lessons
Learned;
Description of review: Describes the process for documenting and
sharing lessons learned on major capital projects, including New
Starts projects.
Type of oversight review: On-Site Monitoring and Reporting: Before and
After Study Review;
Description of review: Evaluates the project sponsor's plan for the
documentation and analysis of cost and scope forecasts prepared during
project development phases.
Type of oversight review: Scope, Cost, Schedule Characterization
Review: Annual New Starts Review;
Description of review: Assesses the reliability of the project
sponsor's scope, capital cost, and schedule estimates as submitted to
FTA for inclusion in its annual New Starts Report to Congress.
Type of oversight review: Scope, Cost, Schedule Characterization
Review: Project Transit Capacity Review;
Description of review: Assesses the physical capacity of the project
to accommodate the forecasted ridership and level of service;
trade-offs resulting from capacity choices;
and, if applicable, the project's impact on the capacity of the
existing transit system.
Type of oversight review: Scope, Cost, Schedule Characterization
Review: National Environmental Policy Act (NEPA) and Design Document
Comparative Review;
Description of review: Characterizes the extent to which the project
design documents reflect NEPA findings and recommendations for the
protection of the environment.
Type of oversight review: Scope, Cost, Schedule Characterization
Review: Project Scope Review;
Description of review: Assess the project sponsor's definition of the
project's scope for, among other things, adequacy, completeness,
biddability, and constructability, as well as compliance with
applicable laws and regulations.
Type of oversight review: Scope, Cost, Schedule Characterization
Review: Project Delivery Method Review;
Description of review: Verifies that the project sponsor has developed
a plan for project delivery that is based on, among other things, the
unique characteristics of the project, reflects the current and
expected conditions of the construction market, and takes into account
the project sponsor's technical capacity and capability.
Type of oversight review: Scope, Cost, Schedule Characterization
Review: Capital Cost Estimate Review;
Description of review: Assesses the soundness of the project sponsor's
cost-estimating methods and processes;
confirms that the cost estimate adequately reflects the project's
scope, schedule, and anticipated market conditions;
and reviews the reliability of the cost estimate for procurements and
contracts.
Type of oversight review: Scope, Cost, Schedule Characterization
Review: Project Schedule Review;
Description of review: Reviews the completeness and reliability of the
project sponsor's schedule, assesses the schedule's usefulness as a
management tool, and assesses the extent to which the schedule
reflects the project's scope, cost, management practices, and method
of project delivery.
Type of oversight review: Scope, Cost, Schedule Characterization
Review: Americans with Disabilities Act Review;
Description of review: Evaluates whether the project sponsor is in
compliance with the Americans with Disabilities Act of 1990 which
requires that station platforms be coordinated with the level of the
floor and the entry doors of the railcars used in the system.
Type of oversight review: Vehicle Review: Buy America Review;
Description of review: Confirms that the project sponsor is in
compliance with FTA's Buy America requirements for procurements of bus
and rail vehicles in excess of $100,000.
Type of oversight review: Vehicle Review: Fleet Management Plan Review;
Description of review: Assesses whether the Fleet Management Plan,
which includes current and anticipated vehicle requirements, is
feasible, sustainable, comprehensive, and demonstrates a plan for the
overall management of the entire vehicle fleet.
Type of oversight review: Vehicle Review: Bus and Rail Vehicle
Technical Review;
Description of review: Evaluates vehicle procurements to ensure that
they are made in accordance with applicable regulations and guidance
and to ensure that timely corrections are made to vehicle
specifications to meet program requirements.
Type of oversight review: Risk Assessments and Contingency Review:
Risk and Contingency Review;
Description of review: Evaluates the reliability of the project
sponsor's project scope, cost estimate, and schedule, focusing
specifically on the uncertainty associated with project implementation
and surrounding project conditions.
Type of oversight review: Readiness Review: Readiness to Enter
Preliminary Engineering;
Description of review: Integrates findings and recommendations from
other PMOC reviews to determine the reliability of the scope, cost,
and schedule estimates for the project;
the ability of the project sponsor to perform and manage the project's
design and construction, and the project's readiness to enter into the
preliminary engineering phase.
Type of oversight review: Readiness Review: Readiness to Enter Final
Design;
Description of review: Integrates findings and recommendations from
other PMOC reviews to determine the completeness, quality, and
accuracy of cost, schedule, budget, and design as well as the
readiness of the project to enter the final design phase.
Type of oversight review: Readiness Review: Readiness To Execute Full
Funding Grant Agreement (FFGA);
Description of review: Integrates findings and recommendations from
other PMOC reviews to confirm that all technical aspects of the FFGA
are complete and accurate, validates that all required plans and
analysis have been satisfactorily prepared and implemented, and
determines the readiness of the project to enter into an FFGA with FTA.
Type of oversight review: Readiness Review: Readiness to Bid
Construction Work;
Description of review: Integrates findings and recommendations from
other PMOC reviews to confirm that the project sponsor has developed
the design documents to an appropriate level of completion;
bid packages are complete, accurate, and align with project management
plans; the procurement plan follows best industry practices; and the
project sponsor is prepared to manage procurement and construction.
Type of oversight review: Readiness Review: Readiness for Revenue
Operations;
Description of review: Assesses whether the system conforms to
contract documents, operates as an integrated whole, and is capable of
functioning effectively to provide dependable service.
Type of oversight review: Other Reviews: Small Starts Readiness Review;
Description of review: Integrates findings and recommendations from
other PMOC reviews to evaluate the reasonableness, quality,
completeness and reliability of a Small Starts project's scope, cost,
and schedule as well as the technical capacity and capability of the
project sponsor to execute the project.
Type of oversight review: Other Reviews: American Recovery and
Reinvestment Act (Recovery Act) Project Implementation Review;
Description of review: Verifies, for Recovery Act capital construction
and vehicle procurement projects, that the project sponsor's
management and staff have the capability, policies, procedures, and
project management plans in place to successfully complete these
projects.
Source: GAO analysis of FTA information.
[End of table]
[End of section]
Appendix III: Funding Obligated for Project Management Oversight and
Financial Management Oversight, Fiscal Years 2000-2009:
Funding for PMOC and FMOC activities is provided through statutory set-
asides made available annually for specific FTA grant programs.
[Footnote 56] Federal law currently authorizes FTA to use up to 1
percent of amounts made available for its major capital investments,
including New Starts, for project management oversight, to fund the
oversight activities of both PMOCs and FMOCs.[Footnote 57] According
to FTA, this funding is pooled with funding that is authorized for
FTA's other oversight activities and then allocated across FTA's grant
programs.
FTA obligates funding upon award of a contract to a PMOC or FMOC.
Table 4 describes obligations made for project management oversight
and financial management oversight activities for the New Starts
program, as well as other FTA grant programs. According to FTA
officials, the funding amounts obligated for oversight activities
varies annually. FTA officials stated that this funding is allocated
for program management oversight and financial management oversight
activities based on where each capital project, including New Starts
projects, is in the project development process and the oversight
activities anticipated for each project in the coming budget year.
[Footnote 58]
Table 4: Funding Obligated for Project Management Oversight and
Financial Management Oversight for FTA Grant Programs, Fiscal Years
2000-2009[A]:
Project management 0versight:
Fiscal year: 2000: $26.6 million;
Fiscal year: 2001: $23.9 million;
Fiscal year: 2002: $29.3 million;
Fiscal year: 2003: $13.3 million;
Fiscal year: 2004: $33.6 million;
Fiscal year: 2005: $37.7 million;
Fiscal year: 2006: $31.2 million;
Fiscal year: 2007: $52.9 million;
Fiscal year: 2008: $26.0 million;
Fiscal year: 2009: $39.3 million.
Financial and other New Starts oversight[B]:
Fiscal year: 2000: $5.3 million;
Fiscal year: 2001: $3.7 million;
Fiscal year: 2002: $4.9 million;
Fiscal year: 2003: $5.9 million;
Fiscal year: 2004: $0.9 million;
Fiscal year: 2005: $4.0 million;
Fiscal year: 2006: $4.8 million;
Fiscal year: 2007: $4.2 million;
Fiscal year: 2008: $8.7 million;
Fiscal year: 2009: $2.1 million.
Source: GAO summary of FTA data.
[A] FTA provided us with the agency's budget for its project and
financial management oversight programs from fiscal year 2000 through
fiscal year 2009. We did not independently verify this budget
information. Furthermore, this budget information is in current
dollars, not adjusted for inflation.
[B] This category contains funding for the agency-wide financial
management oversight program, as well as other New Starts specific
oversight reviews. According to FTA officials, these other New Starts
oversight reviews include financial evaluations performed when a
project seeks entry into preliminary engineering and annually for the
Annual Report on Funding Recommendations. The reviews also include
FTA's review of project sponsor operating and maintenance cost
estimates, alternatives analyses, and travel forecasts. FTA officials
noted these reviews inform FTA's evaluation and ratings of New Starts
projects.
[End of table]
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
David Wise, (202) 512-2834 or Wised@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Catherine Colwell, Assistant
Director; Eli Albagli; Lauren Calhoun; Roshni Davé; Elizabeth
Eisenstadt; Brandon Haller; Kristine Hassinger; Matthew Voit; and
William Woods made significant contributions to this report.
[End of section]
Footnotes:
[1] 49 U.S.C. § 5309(d).
[2] Fixed guideway systems use and occupy a separate right-of-way for
the exclusive use of public transportation services. These fixed
guideway systems include fixed rail, exclusive lanes for buses and
other high-occupancy vehicles, and other systems.
[3] Pub. L. No. 100-17, § 324, 101 Stat. 132, 235 (1987), codified as
amended at 49 U.S.C. § 5327.
[4] Department of Transportation (DOT) and Related Agencies
Appropriations Act, 1990, Pub. L. No. 101-164, § 340, 103 Stat. 1069,
1099 (1989). The act amended the project management oversight funding
provision to authorize FTA to use project management oversight funds
to contract for safety, procurement, management, and financial
compliance reviews.
[5] FTA defines a major capital project as a capital project expected
to have a total estimated net capital cost of more than $100 million.
See 49 C.F.R. § 633.5.
[6] Pub. L. No. 109-59, § 3011, 119 Stat. 1144, 1585, codified at 49
U.S.C. § 5309(k)(2).
[7] During the preliminary engineering phase, project sponsors refine
the design of the project proposal, taking into consideration all
reasonable designs. When this phase is completed, FTA may approve the
project's advancement into final design, where a project sponsor works
on right-of-way acquisition and prepares final construction plans and
cost estimates. Following the final design phase, FTA may approve the
project for New Starts funding.
[8] An FFGA establishes the terms and conditions for federal funds
available for a project, including the maximum amount of government
financial assistance. An FFGA also defines 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.
[9] New Starts projects are carried out in concert with the
statutorily established state and metropolitan planning process.
[10] See 49 U.S.C. § 5309(d)(2). Project justification criteria
include: cost-effectiveness, land use, economic development effects,
environmental benefits, mobility improvements, and operating
efficiencies. FTA recently published an Advance Notice of Proposed
Rulemaking in the Federal Register, which seeks comments on how best
to measure cost-effectiveness, economic development effects, and
environmental impacts, among other things. 75 Fed. Reg. 31383 (June 3,
2010). To determine the project's local financial commitment, FTA
evaluates a project's capital finance plan, operating finance plan,
and non-New Starts share. For more information on how FTA evaluates
and assigns ratings to projects, see GAO-09-784, Public
Transportation: Better Data Needed to Assess Length of New Starts
Process, and Options Exist to Expedite Project Development
(Washington, D.C.: Aug. 6, 2009).
[11] To analyze a project sponsor's financial condition, FMOCs assess:
1) whether the project sponsor is currently in good financial standing
by reviewing audited financial statements, examining the age of the
existing fleet, and reviewing recent bond ratings; 2) whether the
project sponsor has the required funding committed to the project; and
3) whether the project sponsor has made reasonable assumptions in its
financial plan for funding the proposed project as well as the rest of
the transit system. According to FTA officials, the FMOC conducts
sensitivity testing of the sponsor's financial plan.
[12] FMOCs conduct local financial commitment assessments prior to a
project's approval into preliminary engineering and for annual
evaluation and ratings needed for preparation of the Annual Report on
Funding Recommendations. Financial capacity assessments are performed
prior to a project's approval into final design and the receipt of an
FFGA.
[13] This rating is combined with a project's justification rating to
arrive at an overall project rating. The overall project rating
factors into the agency's decision on which projects to recommend for
funding in the Annual Report on Funding Recommendations.
[14] This FMOC worked on a number of New Starts projects, including
some of the 10 projects we reviewed. The New Starts project cited in
this example was not among these 10 projects.
[15] Prior to 2009, FTA last procured the services of PMOCs in 2004.
FTA most recently procured FMOC services in 2008.
[16] See 49 U.S.C. § 5327 for a list of applicable grant programs. See
appendix III for funding obligated for project management oversight
and financial management oversight from fiscal year 2000 through
fiscal year 2009.
[17] STURAA authorized now-FTA's program management oversight program
and authorized ½ of 1 percent of funds made available for major
capital programs to oversee the construction of major capital
projects. Pub. L. No. 100-17, § 324, 101 Stat. 132, 235 (1987),
codified as amended at 49 U.S.C. § 5327. In 1990, the Department of
Transportation (DOT) and Related Agencies Appropriations Act, 1990,
created the financial management oversight program by amending the
project management oversight program funding provision to authorize
FTA to use project management oversight funds to contract for such
oversight. Pub. L. No. 101-164, § 340, 103 Stat. 1069, 1099 (1989). A
series of reauthorizations increased the amount of funding available
for these activities, and in 2002, the DOT and Related Agencies
Appropriations Act of 2002 provided 1 percent of amounts made
available to carry out oversight activities for section 5309 programs.
Pub. L. No. 107-87, § 319, 115 Stat. 833, 858 (2001). In 2005, SAFETEA-
LU reauthorized the use of 1 percent of funds to be used for oversight
activities for section 5309 programs. Pub. L. No. 109-59, § 3026(b),
119 Stat. 1144, 1622-23.
[18] GSA's Multiple Award Schedules program is an interagency
contracting mechanism used by many federal agencies. Under this
program, GSA awards contracts to multiple vendors for commercially
available goods and services, and federal agencies, such as FTA, place
orders under the contracts.
[19] Acquisitions under the GSA Multiple Award Schedule program are
governed by FAR subpart 8.4. Competitive negotiations are governed by
FAR part 15.
[20] SBA's 8(a) Business Development Program is one of the federal
government's primary vehicles to assist eligible small disadvantaged
business concerns to compete in the American economy through business
development. 13 C.F.R § 124.1. To participate in the program, a firm
must be certified as meeting several criteria, to include the
following: it must be a small business as defined by SBA; be
unconditionally owned and controlled by one or more socially and
economically disadvantaged individuals who are of good character and
citizens of the United States; and show potential for success. 13
C.F.R §§ 124.101, 124.102.
[21] 40 U.S.C. § 1101-1104; FAR subpart 36.6. Architectural-
engineering services are defined at 40 U.S.C. § 1102(2), FAR subpart
2.101, 36.601-4.
[22] Contracting by negotiation is governed by FAR part 15. GAO has
stated that "it is within the discretion of the contracting agency to
determine on a case-by-case basis, in accordance with the Brooks Act
and the FAR, whether the service being procured requires application
of Brooks Act procedures." Matter of: Photo Science, Inc., Comp. Gen.
B-296391, July 25, 2005, 2005 CPD ¶ 140. Deferring to an agency's
determination of whether Brooks Act procedures apply to the agency's
procurement has been a long-standing practice. In discussing 1988
legislation to amend the Brooks Act, the conferees stated that the
amendment "does not impair an agency's discretion to decide whether
construction manager services should be performed by an architect-
engineer firm or a construction contractor." H.R. Conf. Rep. No. 100-
1070, Sect. 742 (1988).
[23] We previously reported that reliance on contractor support to
meet agency missions can increase the risk of conflicts of interest
among companies and individuals. In such instances, there is a risk of
inappropriately influencing the government's control over and
accountability for decisions that may be based, in part, on contractor
work. See GAO, Contingency Contracting: Improvements Needed in
Management of Contractors Supporting Contract and Grant Administration
in Iraq and Afghanistan, [hyperlink,
http://www.gao.gov/products/GAO-10-357] (Washington, D.C.: Apr. 12,
2010).
[24] To create a pool of PMOC contractors, FTA awards indefinite
delivery, indefinite quantity contracts to multiple firms whose
proposals meet its solicitation criteria for PMOC services. When FTA
needs a contractor to oversee the management of a particular project
during the 5-year contract period, it either assigns a contractor from
the pool directly (when the oversight work, or task order, is valued
at $5 million or less) or notifies the contractors in the pool about
the task order and provides each one a fair opportunity to be
considered for the oversight work (when the task order is valued at
more than $5 million) using the procedures in FAR subpart 16.505(b).
Regardless of the value of the task order, FTA determines that there
are no conflicts of interest before assigning it or allowing
contractors to compete for it.
[25] According to FTA officials, two PMOC contractors who were awarded
PMOC contracts for the 2004 through 2009 contract period were not
awarded new PMOC contracts in 2009. One of these contractors did not
submit a proposal because it was acquired by a competing PMOC firm,
while the second contractor was not awarded a contract because the
contract proposal submitted to FTA did not provide the cost
information required by the solicitation.
[26] DCAA, located within the U.S. Department of Defense (DOD),
performs audits and provides financial advisory services in connection
with the negotiation, administration, and settlement of contracts and
subcontracts for DOD and other federal agencies.
[27] Pursuant to the FAR, a task order means an order for services
placed against an established contract or with government sources.
Individual orders shall clearly describe all services to be performed
by the contractor. FAR subparts 2.101, 16.505(a)(2).
[28] FTA provides guidance for FMOCs' oversight activities through its
June 2007 Guidelines and Standards for Assessing Local Financial
Commitment and its July 2002 Financial Management Oversight
Contractors' Guide for Conducting Financial Capacity Assessments.
[29] Besides these formal evaluation processes, FTA and PMOCs
indicated that FTA regional officials maintain an informal process of
providing feedback after contractors provide recurring and key reports.
[30] PPIRS assists acquisition officials by serving as the single
source for contractor past performance data. The FAR requires agencies
to post all contractor performance evaluations in PPIRS.
[31] GAO, Mass Transit: Project Management Oversight Benefits and
Future Funding Requirements [hyperlink,
http://www.gao.gov/products/GAO/RCED-00-221] (Washington, D.C.: Sept.
15, 2000).
[32] See [hyperlink, http://www.gao.gov/products/GAO-09-784] for other
options FTA could take to expedite project development.
[33] 49 C.F.R. part 633.
[34] 74 Fed. Reg. 46515 (September 2009).
[35] The ANPRM also seeks comment on other areas of FTA project
oversight, including the scope and applicability of the rule, the
setting of specific performance standards for technical capacity and
capability of a project sponsor, and the level of emphasis to be
placed on project management plans.
[36] The comment period for this ANPRM closed on January 8, 2010. FTA
received 22 comments from project sponsors, a PMOC, and associations
familiar with the transit industry (such as the New Starts Working
Group and the American Public Transportation Association).
[37] FTA defines megaprojects as projects with a total cost of $1
billion or more.
[38] In 2005, SAFETEA-LU created a new category of projects designated
as Small Starts, which are projects with a total estimated net capital
cost of less than $250 million that are requesting less than $75
million in federal funding. 49 U.S.C. § 5309(e).
[39] Value capture strategies are mechanisms designed to harness
increases in value for properties surrounding transit to help fund
investments in public transit infrastructure or related improvements.
Value capture strategies used to fund transit vary in form; however,
each typically involves a private sector contribution through an
assessment or fee, or a public sector contribution drawn from
increased property tax revenue. In July 2010, GAO addressed
experiences of transit agencies and local governments in using transit
value capture strategies in its report, GAO, Public Transportation:
Federal Role in Value Capture Strategies for Transit is Limited, but
Additional Guidance Could Help Clarify Policies, [hyperlink,
http://www.gao.gov/products/GAO-10-781] (Washington, D.C.: July 29,
2010).
[40] According to FTA officials, they first assigned a PMOC to conduct
oversight prior to entry into the preliminary engineering phase in
2006. The officials explained that at that time, this practice was
specific to one project, but that it has now become common practice.
[41] 74 Fed. Reg. 46515 (September 2009).
[42] The current PMO rule focuses primarily on requirements for
project sponsors related to project management plans, and does not
include other management areas such as technical capacity and
capability.
[43] 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).
[44] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[45] FTA Administrator Peter Rogoff, speech before the 2009 annual
meeting of the American Public Transportation Association (APTA),
Orlando, Florida, Oct. 6, 2009.
[46] 49 U.S.C. § 5309(k)(2).
[47] Pub. L. No. 109-59, 119 Stat. 1144 (2005).
[48] Pub. L. No. 100-17, § 324, 101 Stat. 132, 235 (1987), codified as
amended at 49 U.S.C. § 5327.
[49] 49 C.F.R. part 633, 54 Fed. Reg. 36708 (Sept. 1, 1989).
[50] 74 Fed. Reg. 46515 (proposed Sept. 10, 2009).
[51] FTA provided us with the agency's budget for its project and
financial management oversight programs from fiscal year 2000 to
fiscal year 2009. We did not independently verify this budget
information.
[52] 40 U.S.C. §§ 1101-1104; FAR subpart 36.6.
[53] FAR part 15.
[54] Dollar figures representing a project's total cost are in current
dollars, not adjusted for inflation.
[55] Results from nonprobability samples cannot be used to make
inferences about a population because in a nonprobability sample, some
elements of the population being studied have no chance or an unknown
chance of being selected as part of the sample.
[56] See 49 U.S.C. § 5327 for a list of applicable grant programs.
[57] 49 U.S.C. § 5327. After the original authorization in STURAA,
which authorized ½ of 1 percent of funds made available for major
capital programs to oversee the construction of major capital
projects, the project management oversight program's funding structure
was amended. Pub. L. No. 100-17, § 324, 101 Stat. 132, 235 (1987). The
Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), §
3027, 105 Stat. 1914, 2115, increased oversight funds for section 5309
programs to ¾ of 1 percent. The DOT and Related Agencies
Appropriations Act of 2002 provided 1 percent of amounts made
available to carry out oversight activities for section 5309 programs.
Pub. L. No. 107-87, § 319, 115 Stat. 833, 858 (2001). Furthermore, in
2005, SAFETEA-LU reauthorized the use of 1 percent of funds to be used
for oversight activities for section 5309 programs and altered the
funding limitations for oversight activities for a number of other
programs. Pub. L. No. 109-59, § 3026(b), 119 Stat. 1144, 1622-23.
[58] According to FTA officials, the funding provided through this
process does not include the cost or time of FTA staff.
[End of section]
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