Thursday, July 28, 2011

Feds: ‘Here’s some stimulus money.’ Locals: ‘Thanks!’

This just in from the Bureau of Not Surprising: the feds have lacked oversight over stimulus funds issued to local agencies for transportation projects. Equally not surprising is that the unchecked local agencies have wasted some of it or have spent money without authorization.

The U.S. Department of Transportation’s Office of Inspector General shed light on the noncompliance and lack of proper oversight in an audit of local projects authorized under the American Restoration and Recovery Act – or ARRA – commonly known as the stimulus act of 2009.

Remember ARRA? It was supposed to be big on transportation, but it ended up being more about bailouts for automakers and banks wrapped up in a $787 billion package. Just 6 percent of the total actually went toward transportation by the time everybody piled on for a share. Still, 6 percent of $787 billion is $47 billion, and that’s a lot of money by anyone’s standards.

So where did the transportation money go? Some of it remains unspent, as we found out during a recent congressional hearing. But of the money that has been spent, the Department of Transportation’s Office of Inspector General has found waste or noncompliance in a high percentage of the local shovel-ready projects.

It was proof positive that the Federal Highway Administration wasn’t holding the locals’ feet to the fire to spend the money on target and according to ARRA guidelines.

It’s nothing new.

The OIG began finding similar noncompliance and lack of oversight in preliminary findings shortly after ARRA funds started flowing in 2009. The most recent audit is just a continuation of that finding and with more research.

OIG auditors studied 59 projects carried out by local public agencies in California, Texas, Louisiana and Tennessee. Of those projects, 52 of them had compliance issues. That’s 88 percent for those keeping score.

In a nutshell, some of those compliance issues involved overpayment to contractors. Examples cited in the audit explained how a contractor would bid a certain amount for a project, win the bid, begin the work, and then ask for more money from the local agency.

While it may not be uncommon for a project to run over budget, the OIG pointed out that some of the local public agencies were not even asking why the project was over budget or filling out the proper paperwork to account for the cost increase. Some agencies were simply writing checks for the cost overruns and moving on.

Just in those 52 projects, the OIG found $5 million in noncompliance or waste. Imagine how that would project out to the thousands of projects that received ARRA money?

It’s the Federal Highway Administration’s job to hold feet to the fire where necessary, and the audit shows the agency still isn’t doing a good job.

The public certainly deserves better oversight than they’ve been getting.

Click here to read the full OIG report.