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Summary

Congress has appropriated over $10 billion for the Federal Railroad Administration’s (FRA) High Speed Intercity Passenger Rail (HSIPR) program—a grant program that supports development of high speed and intercity passenger rail networks. As of December 2014, FRA had disbursed approximately $2.8 billion in grants. Grantees may be required to contribute portions of their projects’ funding in what is known as matching shares. Congress has raised concerns that payment arrangements that differ from those in most grant agreements, even though allowed by agreement amendments, may put Federal HSIPR funds at risk. Because of these concerns, the Chairman of the House Subcommittee on Railroads, Pipelines, and Hazardous Materials requested that we conduct an audit of FRA’s grant amendment and oversight processes. Our audit objectives were to assess FRA’s policies and procedures for (1) amending HSIPR grants and (2) overseeing compliance with HSIPR grant requirements.

FRA has implemented a policy that describes requirements for grantees requesting tapered matching—an alternative method of paying matching funds that gives the grantee flexibility in payment timing. However, other amendment policies are either missing or incomplete. FRA also lacks policies and procedures requiring staff to document in the Agency’s electronic systems grantees’ corrective actions to resolve problems identified during monitoring. Furthermore, FRA’s grant monitoring policies do not require staff to report fraud, waste, and abuse to OIG. A lack of comprehensive procedures weakens FRA’s internal controls and may expose Federal funds to greater risk. FRA concurred with all of our five recommendations.