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. 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. Separately, FMOCs help ensure that project sponsors have sufficient  financial capacity to build and operate the proposed project as well as the  existing system. 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. The change in FTA’s PMOC procurement procedures has increased the  number of available contractors. 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. FTA officials have recently taken steps to improve their multilayered  performance evaluation system for PMOCs. 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. PMOCs and FMOCs also provide FTA with additional expertise. 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. 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. 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. 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. Sponsors have  indicated they found this tool and the meetings to be very helpful in  understanding FTA’s and PMOC’s oversight requirements. FTA has acknowledged that its current New Starts process can be lengthy  and frustrating. 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. DOT officials generally agreed with our findings and provided technical  comments, which we incorporated as appropriate. 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.
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.