Summary

Financial losses in federally administered savings and loan and housing programs have raised questions about the adequacy of management and internal controls protecting federal programs. In response, GAO has been reviewing 16 federal programs to help ensure that areas vulnerable to waste, fraud, abuse, and mismanagement are identified and appropriate corrective actions taken. This report presents the results of one of several GAO reviews of the Federal Transit Administration (FTA) and examines (1) grantee compliance--including the Chicago Transit Authority in FTA's Region V--with federal requirements and (2) the effectiveness of FTA's oversight of Region V grantees. GAO concludes that grantees' inadequate controls and the region's ineffective oversight have left Region V grants vulnerable to a myriad of problems. Region V's monitoring lacks the scope, depth, and timeliness to reasonably ensure the proper use of funds.

GAO found that: (1) two of the largest Region V grantees, the Chicago Transit Authority (CTA) and Metra, a Chicago commuter train system, have experienced significant problems in managing their capital improvement programs, procurement actions, and inventories; (2) the Department of Transportation (DOT), project management oversight contractors, and others have reported numerous deficiencies in grantees' management systems and noncompliance with federal grant requirements; (3) DOT identified $58.2 million in grant funds wasted, misspent, or mismanaged by Region V grantees; (4) Region V has recovered over $6 million in wasted, misspent, or mismanaged grant funds, initiated actions to recover another $15 million, and taken alternative corrective actions for about $17 million; (5) despite repeated recommendations to expand the scope of triennial reviews, its primary monitoring tool, FTA continues to narrowly administer the reviews; (6) as a result, a 1989 triennial review did not detect the $12.6 million in bus parts that CTA procured but did not include in its inventory; (7) for 1989 and 1990, 65 percent of Region V did not timely complete triennial reviews and did not demonstrate whether grantees had corrected previously identified deficiencies; (8) despite the significant and long-standing deficiencies in CTA capital program management, procurement, and inventory controls, Region V has taken no action to stop the flow of new grants to CTA or otherwise compel CTA to implement effective internal controls over its use of federal funds; and (9) Region V did not coordinate its oversight activities with those of state and local agencies that monitor transit funds and did not take advantage of information available from those agencies to augment its own oversight.