	Background

Federal assistance for highway and bridge infrastructure—about $40  billion each year—is distributed through multiple formula and  discretionary grant programs collectively known as the federal-aid  highway program. FHWA’s Partnership Role Was Established almost a Century Ago, but over Time Its Responsibilities Have Expanded

Over the years, the federal-aid highway program has grown to  encompass broader goals, more responsibilities, and a variety of  approaches; however, the concept of a federal-state partnership has  been an integral feature of the highway program since it was established  by the Federal Aid Road Act of 1916.legislation established federal-state responsibilities, wherein states select  the placement of roads, construct, and maintain them, and the federal  government sets standards and provides a portion of the funding. The  Federal-Aid Highway Act of 1973 further refined the federal-state  relationship by stating that “the authorization of the appropriation of  Federal funds…shall in no way infringe on the sovereign rights of the  States to determine which projects shall be federally financed” and  defined the federal-aid highway program as a “federally assisted State   This and other early highway  program.” This language helped shape FHWA’s interpretation of the  federal-state relationship, leading to an understanding of its role that  anchors FHWA’s approach to oversight in partnership and is cited today  in FHWA’s policy documents. For these  and other reasons, funding surface transportation remains on GAO’s  high-risk list. FHWA Benefits from Using Recognized Partnership Practices

		Partnering Activities and Practices

In the face of its evolving roles and responsibilities, FHWA has relied on  its historical partnership with the states in which FHWA and the states  work collaboratively to construct highway infrastructure. We also observed  instances in which FHWA sometimes showed a lack of independence in  decisions, putting the states’ interests above federal ones, and other  instances in which FHWA took extraordinary measures to advance the  program to the point of becoming actively and closely involved in  implementing solutions to state problems. This can create an inherent  conflict when FHWA later must review and approve those actions or  review their effectiveness. FHWA Sometimes Was Lax in Its Oversight or Reluctant to Take Corrective Action

In some instances, FHWA was lax in its oversight in that it did not verify  compliance with the requirements of the federal-aid highway program,  instead trusting states to ensure its actions were in compliance, which  could have resulted in ineffective, wasteful, and potentially improper use  of federal funds. The partnering relationship between FHWA and state DOTs at times may  have also resulted in FHWA being reluctant to require corrective action to  bring a state back into compliance with program requirements. FHWA division offices have the authority to de-obligate funds  from inactive projects. However, FHWA division officials with oversight  responsibility for three states we visited expressed reluctance to use  this authority because of concerns that it would negatively affect their  working relationship with the state. FHWA has not acted on this recommendation. Reexamining and  refocusing surface transportation programs, which we have previously  recommended, presents an opportunity to narrow the scope of FHWA’s  responsibilities so that it is better equipped to transition to a performance- based system. This review identified areas where FHWA expends  considerable time and resources but exercises little effective control— areas where devolving responsibilities to the states may be appropriate. Legislation Approved by the Senate for a Performance-Based Highway Program

A performance-based system is critical to the reexamination and  restructuring of surface transportation programs that we and others have  recommended. FHWA’s Partnership Approach Could Facilitate a Transition to a Performance-Based Program

FHWA’s partnership with states could offer several benefits in moving  toward a performance-based program. FHWA Would Need to Mitigate Risks of Partnership

Moving to a more performance-based approach means monitoring and  measuring states’ progress, holding states accountable for meeting  performance targets, and taking corrective action objectively and  consistently across states when needed. Conclusions

FHWA’s partnership approach with the states allows it to proactively  identify issues before they become problems, achieve cost savings, and  gain states’ commitment to improve their processes. Given that partnership produces benefits, the solution does not lie  with eliminating FHWA’s partnership approach. Matter for Congressional Consideration

As we have previously recommended, Congress should consider  reexamining and refocusing surface transportation programs, including  establishing well-defined goals with direct links to identified federal  interests and roles. Based on this review, there may be areas where  national interests are less evident and where Congress may wish to  consider narrowing FHWA’s responsibilities.
Why GAO Did This Study

The U.S. Department of Transportation (DOT) provides about $40 billion to the states annually to build and maintain highways and bridges through the federal-aid highway program. While this program has grown and changed over time, the federal-state relationship has been consistently one of partnership since 1916. DOTs FHWA has offices in all 50 states that have developed close working relationships with states. Legislation approved by the Senate in March 2012 would establish a more performance-based highway program, introducing performance measures for highways and bridges and requiring FHWA to monitor states progress in meeting those measures. As requested, GAO examined (1) how the federal-aid highway program and FHWAs oversight have changed over time; (2) the extent to which FHWAs partnership approach produces benefits; (3) the extent to which FHWAs partnership approach poses risks; and (4) how FHWAs partnership with state DOTs could affect a transition toward a performance-based highway program. To do this work, GAO conducted site visits and a survey, reviewed relevant documentation, and interviewed FHWA and state officials.

What GAO Found

Over the years, the federal-aid highway program has expanded to encompass broader goals, more responsibilities, and a variety of approaches. As the program grew more complex, the Federal Highway Administrations (FHWA) oversight role also expanded, while its resources have not kept pace. As GAO has reported, this growth occurred without a well-defined overall vision of evident national interests and the federal role in achieving them. GAO has recommended Congress consider restructuring federal surface transportation programs, and for this and other reasons, funding surface transportation remains on GAOs high-risk list.
FHWA benefits from using recognized partnership practices to advance the federal-aid highway program and conduct program oversightsuch as clear delineation of roles and responsibilities between FHWA and its state partners and formal and informal conflict resolutionthat are recognized as leading practices. FHWAs partnership approach allows it to proactively identify issues before they become problems, achieve cost savings, and gain states commitment to improve their processes.
FHWAs partnership approach also poses risks. We observed cases where FHWA was lax in its oversight or reluctant to take corrective action to bring states back into compliance with federal requirements, potentially resulting in improper or ineffective use of federal funds. For example, while FHWA has made it a national priority to recoup funds from inactive highway projectsprojects that have not expended funds for over 1 yearFHWA officials in three states we visited were reluctant to do so because of concerns about harming their partnership with the state. In other cases, FHWA has shown a lack of independence in decisions, putting its partners interests above federal interests. For example, FHWA allowed two states to retain unused emergency relief allocations to fund new emergencies, despite FHWAs policy that these funds are made available to other states with potentially higher-priority emergencies. In some instances, FHWA became actively and closely involved in implementing solutions to state problemsthis can create a conflict when FHWA later must approve or review the effectiveness of those solutions.
If proposals for a performance-based highway program are adopted, FHWA would have to work with states to develop measures and take corrective action if states do not meet them. FHWAs partnership could help states develop measures, but it would need to mitigate the risks posed by its partnership to ensure corrective action was effective when needed. The fundamental reexamination of surface transportation programs, including the highway program, that GAO previously recommended presents an opportunity to narrow FHWAs responsibilities so that it is better equipped to transition to a performance-based system. GAO identified areas where national interests may be less evident but where FHWA expends considerable time and resourcesareas where devolving responsibilities to the states may be appropriate.

What GAO Recommends

Congress should consider restructuring federal surface transportation programs. Based on GAOs review, there may be areas where national interests are less evident and where opportunities exist to narrow FHWAs responsibilities. Also, DOT should address the risks posed by its partnership approach. DOT generally agreed with the recommendation.