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Summary

On December 1, 2010, we issued our report on improper payments in the Federal Aviation Administration's (FAA) Airport Improvement Program (AIP).  In fiscal year 2008, FAA provided over $4 billion dollars to more than 1,500 grantees in the Airport Improvement Program (AIP) for airports considered significant to national air transportation. The Department of Transportation (DOT) has determined that AIP is susceptible to improper payments.  Accordingly, our audit objectives were to: (1) determine the extent to which improper payments were made during the period reviewed; and, (2) assess FAA's oversight approach to preventing and detecting improper payments.

We found that FAA's risk-based approach to AIP grant oversight is inadequate and does not effectively prevent or detect improper payments. AIP payments totaling over $13 million (more than 5 percent) made to 17 of the 26 grantees we reviewed were improper.

We made seven recommendations to improve FAA's oversight of its AIP payments. FAA fully concurred with four recommendations and provided acceptable actions and timeframes for these four.  We request that FAA re-evaluate its positions on the remaining three recommendations, and provide a written response within 30 days of the issuance of this report.