Federal employees were required to report suspected waste and fraud in billions of dollars worth of tax-funded grants to build high-speed trains, but not their managers, at least not until an internal watchdog pointed it out recently.
That was just one of multiple oversight problems that prompted the Department of Transportation’s inspector general to conclude in a report made public late Friday that the Federal Railroad Administration lacks essential grant-monitoring tools in its $10 billion High Speed Intercity Passenger Rail program.
“As a result, the agency may place federal funds dedicated to the creation of the nation’s high speed rail transportation system at risk and make the system’s intended benefits more difficult to achieve,” the inspector general said.
The railroad administration’s grant policies have been updated five times since 2012 when the agency began managing the high-speed rail program, but it was only after Feb. 2, 2015, when managers reviewed a draft inspector general report that they added a requirement to report suspected waste, fraud and abuse to the watchdog.
The rail administration has approved more than $5.5 billion in grants for 65 projects that are underway or have been completed, with an additional five projects for approximately $1 billion expected to be started in the next six month.
While grant monitors are required to report such suspicions to their supervisors or anonymously to the inspector general, it is up to managers’ discretion to tell the watchdog.
“As a result, FRA cannot be certain that it is appropriately safeguarding federal investments,” the inspector general said.
The inspector general also found that grant monitors aren’t required to document corrective actions taken by grantees’ actions when waste, fraud and abuse problems are identified.
“This lack of documentation makes it difficult for FRA to follow up that grantees have taken actions to resolve problems,” the inspector general said.
In addition, railroad administration staff gets no guidance on how to determine when a grantee is at risk of wasting funds, nor does the administration have procedures in place detailing how to mitigate such risks, despite federal laws that require such procedures to be in place.
“Because FRA has not determined its risk tolerance … or setting response strategies when amending grant agreements, the agency may be exposing federal investments to unacceptable levels of risk,” the inspector general said.
Investigators also found that the administration would not document its reasoning for grant amendments. For example, one grant was amended without justification to provide 100 percent federal funding, instead of requiring a grantee to share or match expenses.
The rail administration’s grant monitoring policies do not explain when a grant may be amended to provide additional tax funds to the recipient, which could result in excessive funding and a violation of the Anti-deficiency Act. The Anti-deficiency Act makes it illegal for any federal worker to spend funds not authorized by Congress.
Other Department of Transportation agencies, such as the Federal Aviation Administration, “have developed guidance after committing violations that stemmed from weaknesses in their internal controls,” the inspector general said.
The rail administration said it planned to update its policies in light of the inspector general’s findings.
