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Summary

On July 15, 2011, we issued a final report on the Federal Highway Administration's (FHWA) oversight of federal-aid and Recovery Act projects administered by Local Public Agencies (LPA).  We initiated the audit since LPAs received up to $8 billion in Recovery Act highway funds and FHWA previously acknowledged that LPAs were an internal control weakness.  Our audit objectives were to assess: (1) the extent of LPA compliance with Federal requirements; and (2) the effectiveness of FHWA's actions in ensuring that states have adequate LPA oversight programs.  We found at least one instance of noncompliance with Federal requirements in 88 percent of the 59 LPA projects reviewed in four states and identified $5 million in unsupported costs.  Most prevalent were shortcomings related to construction management requirements.  Our report has identified weaknesses in the actions FHWA has taken in addressing state LPA oversight weaknesses.  We made four recommendations for improving FHWA oversight.  FHWA concurred with all four recommendations.