You are given two reports by the government agency.  

Report 1:
The Veterans Access, Choice, and Accountability Act of 2014 provided up to $10 billion in funding for veterans to obtain health care services from community providers through the Choice Program when veterans faced long wait times, lengthy travel distances, or other challenges accessing care at VA medical facilities. The temporary authority and funding for the Choice Program was separate from other previously existing programs through which VA has the option to purchase care from community providers. Legislation enacted in August and December of 2017 and June 2018 provided an additional $9.4 billion for the Veterans Choice Fund. Authority of the Choice Program will sunset on June 6, 2019. In October 2014, VA modified its existing contracts with two TPAs that were administering another VA community care program—the Patient- Centered Community Care program—to add certain administrative responsibilities associated with the Choice Program. For the Choice Program, each of the two TPAs—Health Net and TriWest—are responsible for managing networks of community providers who deliver care in a specific multi-state region. (See fig. 1.) Specifically, the TPAs are responsible for establishing networks of community providers, scheduling appointments with community providers for eligible veterans, and paying community providers for their services. Health Net’s contract for administering the Choice Program will end on September 30, 2018, whereas TriWest will continue to administer the Choice Program until the program ends, which is expected to occur in fiscal year 2019. VA’s TPAs process claims they receive from community providers for the care they deliver to veterans and pay providers for approved claims. Figure 2 provides an overview of the steps the TPAs follow for processing claims and paying community providers. VA’s contracts with the TPAs do not include a payment timeliness requirement applicable to the payments TPAs make to community providers. Instead, a contract modification effective in March 2016 established a non-enforceable “goal” of processing—approving, rejecting or denying—and, if approved, paying clean claims within 30 days of receipt. To be reimbursed for its payments to providers, the TPAs in turn submit electronic invoices—or requests for payment—to VA. TPAs generate an invoice for every claim they receive from community providers and pay. VA reviews the TPAs’ invoices and either approves or rejects them. Invoices may be rejected, for example, if care provided was not authorized. Approved invoices are paid, whereas rejected invoices are returned to the TPAs. The federal Prompt Payment Act requires VA to pay its TPAs within 30 days of receipt of invoices that it approves. The VA MISSION Act of 2018, among other things, requires VA to consolidate its community care programs once the Choice Program sunsets 1 year after the passage of the Act, authorizes VA to utilize a TPA for claims processing, and requires VA to reimburse community providers in a timely manner. Specifically, the act requires VA (or its TPAs) to pay community providers within 30 days of receipt for clean claims submitted electronically and within 45 days of receipt for clean claims submitted on paper. In December 2016, prior to enactment of the VA MISSION Act of 2018, VA issued an RFP for contractors to help administer the Veterans Community Care Program. The Veterans Community Care Program will be similar to the current Choice Program in certain respects. For example, VA is planning to award community care network contracts to TPAs, which would establish regional networks of community providers and process and pay those providers’ claims. However, unlike under the Choice Program, under the Veterans Community Care Program, VA is planning to have medical facilities—not the TPAs—generally be responsible for scheduling veterans’ appointments with community providers. From November 2014 through June 2018, VA’s TPAs paid a total of about 16 million clean claims—which are claims that contain all required data elements—under the Choice Program, of which TriWest paid about 9.6 million claims and Health Net paid about 6.4 million. Data on the median number of days VA’s TPAs have taken to pay clean claims each month show wide variation over the course of the Choice Program—from 7 days to 68 days. As discussed previously, in March 2016, VA established a non-enforceable goal for its TPAs to process and, if approved, pay clean claims within 30 days of receipt each month. Most recently, from January through June 2018, the median number of days taken to pay clean claims ranged from 26 to 28 days for TriWest, while it ranged from 28 to 44 days for Health Net. (See fig. 3.) In addition to the 16 million clean claims the TPAs paid from November 2014 through June 2018, during this time period they also paid approximately 650,000 claims (or 4 percent of all paid claims) that were classified as non-clean claims when first received after obtaining the required information. Non-clean claims are claims that are missing required information, which the TPA must obtain before the claim is paid. From November 2014 through June 2018, TriWest paid around 641,000 non-clean claims (or 6 percent of all paid claims) while Health Net paid about 9,600 non-clean claims (or less than 1 percent of all paid claims). Data on the median number of days VA’s TPAs have taken to pay non- clean claims each month also show wide variation over the course of the Choice Program—from 9 days to 73 days. (See fig. 4.) The data on the time TPAs have taken to pay approved clean and non- clean claims do not fully account for the length of time taken to pay providers whose claims are initially rejected or denied, as, according to the TPAs, providers are generally required to submit a new claim when the original claim is rejected or denied. Thus, providers that submit claims that are rejected or denied may experience a longer wait for payment for those claims or may not be paid at all. In some cases, providers’ claims may be rejected or denied multiple times after resubmission. VA and its TPAs identified three key factors affecting the timeliness of claim payments to community providers under the Choice Program: (1) VA’s untimely payments of TPA invoices; (2) Choice Program contractual requirements related to provider reimbursement; and (3) inadequate provider education on filing Choice Program claims, as discussed below. VA’s untimely payments of TPA invoices. According to VA and TPA officials, VA made untimely invoice payments to its TPAs—that is, payments made more than 30 days from the date VA received the TPAs’ invoices—which resulted in the TPAs at times having insufficient funds available to pay community providers under the Choice Program. A VA Office of Inspector General (OIG) report estimated that from November 2014 through September 2016, 50 percent of VA’s payments to its TPAs during this time frame were untimely. VA officials stated that VA’s untimely payments to the TPAs resulted from limitations in its fee-basis claims system, which VA used at the beginning of the Choice Program to process all TPA invoices. In addition, the VA OIG found that VA underestimated the number of staff necessary to process Choice Program invoices in a timely manner. Choice Program reimbursement requirements. According to VA and TPA officials, three Choice Program requirements, some of which were more stringent than similar requirements in other federal health care programs, led to claim denials, which, in turn, contributed to the length of time TPAs have taken to pay community providers when the providers did not meet these requirements: 1. Medical documentation requirement. Prior to a March 2016 contract modification, VA required providers to submit relevant medical documentation with their claims as a condition of payment from the TPAs. According to TriWest officials, those Choice Program claims that did not include medical documentation were classified by TriWest as non-clean claims and placed in pending status until the documentation was received. When community providers did not provide the supporting medical documentation after a certain period of time, TriWest typically denied their claims. According to Health Net officials, Choice Program claims that did not include medical documentation were denied by Health Net. 2. Timely filing requirement. VA requires providers to file Choice Program claims within 180 business days from the end of an episode of care. TPAs deny claims that are not filed within the required time frame. 3. Authorization requirement. VA requires authorizations for community providers to serve veterans under the Choice Program and receive reimbursement for their services; however, if community providers deliver care after an authorization period or include services that are not authorized, the TPAs typically deny their claims. According to TPA data, denials related to authorizations are among the most common reasons the TPAs deny community provider claims. Inadequate provider education on filing Choice Program claims. According to VA and TPA officials as well as providers we interviewed, issues related to inadequate provider education may have contributed to the length of time it has taken the TPAs to pay community providers under the Choice Program. These issues have included providers submitting claims with errors, submitting claims to the wrong payer, or otherwise failing to meet Choice Program requirements. For example, some VA community care programs require the claims to be sent to one of VA’s claims processing locations, while the Choice Program requires claims to be sent to TriWest or Health Net. Claims sent to the wrong entity are rejected or denied and have to be resubmitted to the correct payer. Ten of the 15 providers we interviewed stated that that they lacked education and/or training on the claims filing process when they first began participating in the Choice Program, including knowing where to file claims and the documentation needed to file claims that would be processed successfully. Four of these 10 providers stated that they learned how to submit claims through trial and error. At the infancy of the Choice Program, November 2014 through March 2016, VA was unable to monitor the timeliness of its TPAs’ payments to community providers because it did not require the TPAs to provide data on the length of time taken to pay these claims. Effective in March 2016, VA modified its TPA contracts and subsequently began monitoring TPA payment timeliness, requiring TPAs to report information on claims processing and payment timeliness as well as information on claim rejections and denials. However, because VA had not established a payment timeliness requirement, VA officials said that VA had limited ability to penalize TPAs or compel them to take corrective actions to address untimely claim payments to community providers. Instead, the March 2016 contract modification established a non-enforceable goal for the TPAs to process and pay clean claims within 30 days of receipt. As of July 2018, according to VA officials, VA did not have a contractual requirement it could use to help ensure that community providers received timely payments in the Choice Program. Officials from VA’s Office of Community Care told us that VA’s experience with payment timeliness in the Choice Program informed VA’s RFP for new contracts for the Veterans Community Care Program, which includes provisions that strengthen VA’s ability to monitor its future TPAs. For example, in addition to requiring future TPAs to submit weekly reports on claim payment timeliness as well as claim rejections and denials, VA’s RFP includes claim payment timeliness standards that are similar to those in the Department of Defense’s TRICARE program. Specifically, according to the RFP, TPAs in the Veterans Community Care Program will be required to process and pay, if approved, 98 percent of clean claims within 30 return claims, other than clean claims, to the provider with a clear explanation of deficiencies within 30 days of original receipt, and process resubmitted claims within 30 days of resubmission receipt. The RFP also identifies monitoring techniques that VA may employ to assess compliance with these requirements, including periodic inspections and audits. VA officials told us that VA will develop a plan for monitoring the TPAs’ performance on these requirements once the contracts are awarded. We found that VA has made system and process changes that improved its ability to pay TPA invoices in a timely manner. However, while VA has modified two Choice Program requirements that contributed to provider claim payment delays, it has not fully addressed delays associated with authorizations for care. Furthermore, while VA and its TPAs have taken steps to educate community providers in order to help prevent claims processing issues, 9 of the 15 providers we interviewed reported poor customer service when attempting to resolve these issues. VA has taken steps to reduce untimely payments to its TPAs, which contributed to delayed TPA payments to providers, by implementing a new system and updating its processes for paying TPA invoices so that it can pay these invoices more quickly. Specifically, VA has made the following changes: In March 2016, VA negotiated a contract modification with both TPAs that facilitated the processing of certain TPA invoices outside of the fee basis claims system from March 2016 through July 2016. According to VA officials, due to the increasing volume of invoices that the TPAs were expecting to submit to VA during this time period, without this process change, VA would have experienced a high volume of TPA invoices entering its fee basis claims system, which could have exacerbated payment timeliness issues. In February through April 2017, VA transitioned all TPA invoice payments from its fee basis claims system to an expedited payment process under a new system called Plexis Claims Manager. VA officials told us that instead of re-adjudicating community provider claims as part of its review of TPA invoices, Plexis Claims Manager performed up front checks in order to pay invoices more quickly, and any differences in billed and paid amounts were addressed after payments were issued to the TPAs. In January 2018, VA transitioned to a newer version of the Plexis Claims Manager that enabled VA to once again re-adjudicate community provider claims as part of processing TPA invoices, but in a timelier manner compared with the fee basis claims system. According to VA officials, this is due to the automation of claims processing under Plexis Claims Manager, which significantly reduced the need for manual claims processing by VA staff that occurred under the fee basis claims system. Based on VA data, as of July 2018, VA is paying 92 percent of TriWest’s submitted invoices within 7 days, with payments being made in an average of 4 days, and 90 percent of Health Net’s invoices within 7 days, with payments being made in an average of 4 days under the newer version of Plexis Claims Manager. In addition to steps taken to address untimely payments to the TPAs under the current Choice Program contracts, VA has taken steps to help assure payment timeliness in the forthcoming Veterans Community Care Program. Specifically, the RFP includes a requirement for VA to reimburse TPAs within 14 days of receiving an invoice. VA officials stated that to achieve this metric, they are implementing a new payment system that will replace Plexis Claims Manager and will no longer re-adjudicate TPA invoices prior to payment. VA has issued a contract modification and waivers for two Choice Program contract requirements that contributed to provider payment delays—(1) the medical documentation requirement and (2) the timely filing requirement. However, while VA issued a contract modification to amend the requirements for obtaining authorizations for Choice Program care, provider payment delays associated with requesting these authorizations may persist, because VA is not ensuring that VA medical centers review and approve these requests within required time frames. Elimination of medical documentation requirement. Effective beginning March 2016, VA issued a contract modification that eliminated the requirement that community providers must submit medical documentation as a condition of receiving payment for their claims. Data from one TPA showed a reduction in non-clean claims following the implementation of this contract modification. For example, starting in April 2016, after this modification was executed, almost 100 percent of claims submitted to TriWest were classified as clean claims, as opposed to 49 percent of claims submitted in March 2016. However, when the modification first went into effect in March 2016, TriWest and Health Net officials stated that they processed a large amount of claims from community providers that had previously been pended or denied because they lacked medical documentation and, in turn, submitted a large number of invoices to VA for reimbursement. As previously discussed, to help address the increased number of TPA invoices, VA issued lump-sum payments to the TPAs during this time period. Modification of timely filing requirement. In February and May 2018, VA issued waivers that gave TPAs the authority to allow providers to resubmit rejected or denied claims more than 180 days after the end of the episode of care if the original claims were submitted timely—that is, within 180 days of the end of the episode of care. VA officials stated that the waivers were intended to reduce the number of rejected and denied claims by giving community providers the ability to resubmit previously rejected or denied claims for which the date of service occurred more than 180 days ago. VA’s waivers were implemented as follows: In February 2018, VA issued a waiver that allowed community providers to resubmit certain claims rejected or denied for specific reasons when the provider or TPA could verify that the provider made an effort to submit the claim prior to the claims submission deadline. In May 2018, VA issued a second waiver that removed the 180 day timeliness requirement for all Choice Program claims. The waiver also provided instructions to the TPAs on informing providers that they may resubmit claims rejected or denied for specific reasons and how the TPAs are to process the resubmitted claims. In regards to the first waiver, TPA officials stated that the processing of those resubmitted claims adversely affected the timeliness of the TPAs’ payments to community providers because the waiver resulted in a large influx of older claims. As the second waiver was in the process of being implemented by the two TPAs at the time we conducted our work, we were unable to determine if the second waiver affected the TPAs’ provider payment timeliness. Changes to authorization of care requirement. VA issued a contract modification in January 2017 to expand the time period for which authorizations for community providers to provide care to veterans under the Choice Program are valid. In addition, in May 2017, VA expanded the scope of the services covered by authorizations, allowing them to encompass an overall course of treatment, rather than a specific service or set of services. According to VA officials, the changes VA made related to the authorization of care requirement were also intended to reduce the need for secondary authorization requests (SAR). Community providers request SARs when veterans need health care services that exceed the period or scope of the original authorizations. Community providers are required to submit SARs to their TPA, which, in turn, submits the SARs to the authorizing VA medical facility for review and approval. Both Health Net and TriWest officials told us that since VA changed the time frame and scope of authorizations, the number of SARs has decreased. Despite efforts to decrease the number of SARs, payment delays or claim denials are likely to continue if SARs are needed. We found that VA is not ensuring that VA medical facilities are reviewing and approving SARs within required time frames. VA policy states that VA medical facilities are to review and make SAR approval decisions within 5 business days of receipt. However, officials from one of the TPAs and 7 of the 15 providers we interviewed stated that VA medical facilities are not reviewing and approving SARs in a timely manner. According to TriWest officials, as of May 2018, VA medical facilities in their regions were taking an average of 11 days to review and make approval decisions on SARs, with four facilities taking over 30 days for this process. According to an official from VA’s Office of Community Care, VA does not currently collect reliable national data to track the extent of nonadherence to the VA policy to review and make SAR approval decisions within 5 business days. The official told us that instead, VA relies on employees assigned to each Veterans Integrated Service Network to monitor data on VA medical facilities’ timeliness in making these SAR approval decisions. If a VA medical facility is found not to be in adherence with the SAR policy, the official told us that staff assigned to the Veterans Integrated Service Network attempt to identify the reasons for nonadherence, and perform certain corrective actions, including providing education to the facility. Despite these actions, the official told us that there are still VA medical facilities not in adherence with VA’s SAR approval policy. According to a VA official, VA is in the process of piloting software for managing authorizations that will allow VA to better track SAR approval time frames across VA medical facilities in the future. However, even after this planned software is implemented, if VA does not use the data to monitor and assess SAR approval decision time frames VA will be unable to ensure that all VA medical facilities are adhering to the policy. Standards for internal control in the Federal Government state that management should establish and operate monitoring activities to evaluate whether a specific function or process is operating effectively and take corrective actions as necessary. Furthermore, monitoring such data will allow VA to identify and take actions as needed to address any identified challenges VA medical facilities are encountering in meeting the required approval decision time frames. Without monitoring data to ensure that all VA medical facilities are adhering to the SAR approval time frames as outlined in VA policy, community providers may delay care until the SARs are approved or provide care without SAR approval. This in turn increases the likelihood that the community providers’ claims will be denied. Further, continued nonadherence to VA’s SAR policy raises concerns about VA’s ability to ensure timely approval of SARs when VA medical facilities assume more responsibilities for ensuring veterans’ access to care under the forthcoming Veterans Community Care Program. We found that VA and its TPAs have taken steps to educate community providers in order to help prevent claims processing issues that have contributed to the length of time TPAs have taken to pay these providers. Despite these efforts, 9 of the 15 providers we interviewed reported poor customer service when attempting to resolve claims payment issues. While VA’s contracts with the TPAs do not include requirements for educating and training providers on the Choice Program, both TPAs have taken steps to educate community providers on how to successfully submit claims under the Choice Program. Specifically, TriWest and Health Net officials told us that they have taken various steps to educate community providers on submitting claims correctly, including sending monthly newsletters, emails, and faxes to communicate changes to the Choice Program; updating their websites with claims processing information; and holding meetings with some providers monthly or quarterly to resolve claims processing issues. Officials from both TPAs also told us that they provided one-on-one training to some providers on the claims submission process to help reduce errors when submitting claims. In addition, VA’s RFP for the Veterans Community Care Program contracts includes requirements to provide an annual training program curriculum and an initial on-boarding and ongoing outreach and education program for community providers, which includes training on the claims submission and payment processes and TPA points of contact. VA and the TPAs have also made efforts to help providers resolve claims processing issues and outstanding payments. For example, VA launched its “top 20 provider initiative” in January 2018 to work directly with community providers with high dollar amounts of unpaid claims and resolve ongoing claims payment issues. This initiative included creating rapid response teams to work with community providers to settle unpaid claim balances within 90 days and working with both TPAs to increase the number of clean claims paid in less than 30 days. In addition, VA has developed webinars on VA’s community care programs and—in conjunction with trade organizations and health care systems—has delivered provider education on filing claims properly. TriWest officials stated that it has educated the customer service staff at its claims processing sub-contractor, who field community provider calls regarding claims processing issues, to help ensure that the staff are familiar with Choice Program changes and can effectively assist community providers and resolve claims processing issues. Internal TriWest data show that providers’ average wait time to speak to a customer service representative about claims processing issues decreased from as high as 18 minutes in 2016 to as low as 2.5 minutes in 2018. Health Net officials were unable to provide data, but stated that since the fourth quarter of 2017, Health Net has decreased the time it takes for a community provider to speak with a customer service representative by adding additional staff and extending the hours in which providers can call with questions. In addition, Health Net officials stated that they have required customer service staff to undergo additional training related to resolving claims processing issues. Despite these efforts, 7 of the 10 providers that participate in the Health Net network and 2 of the 7 providers that participate in the TriWest network we interviewed between April and June 2018 told us that when they contact the TPAs’ customer service staff to address claim processing questions, such as how to resolve claim rejections or denials, they experience lengthy hold times, sometimes exceeding one hour. In addition, 7 of the 15 providers we spoke with told us they typically reach employees who are unable to answer their questions. According to these providers, this experience frustrated them, as they often did not understand why a claim had been denied or rejected, and they required assistance correcting the claim so it could be resubmitted. One community provider stated that their common practice to resolve questions or concerns was to call customer service enough times until they received the same answer twice from a TPA representative. In addition, 5 of the 10 Health Net providers we interviewed stated that they have significant outstanding claim balances owed to them. One of these providers—who reported over $3 million in outstanding claims—stressed the importance of being able to effectively resolve claims issues with TPA customer service staff, as the administrative burden of following up on outstanding claim balances takes time away from caring for patients. The issues concerning customer service wait times and TPA staff inability to resolve some claims processing issues reported by community providers appear to be inconsistent with VA contractual requirements. VA’s current Choice Program contracts require the TPAs to establish a customer call center to respond to calls from veterans and non-VA providers. The contract requires specified levels of service for telephone inquiries at the call center. For example, VA requires TPA representatives to answer customer service calls within an average speed of 30 seconds or less and requires 85 percent of all inquiries to be fully and completely answered during the initial telephone call. However, VA officials explained that VA does not enforce the contractual requirement for responding to calls from community providers. Furthermore, according to these officials, VA allows the TPAs to prioritize calls from veterans. Officials from VA’s Office of General Counsel, Procurement Law Group, confirmed that this requirement does apply to the TPAs’ handling of calls from community providers. Because VA does not enforce the customer service requirement for providers, VA has not collected data on or monitored the TPAs’ compliance with these requirements for providers’ calls. As previously stated, standards for internal control in the Federal Government state that management should establish and operate monitoring activities to evaluate whether a specific function or process is operating effectively and take corrective actions as necessary. Without collecting data and monitoring customer service requirements for provider calls, VA does not have information on the extent to which community providers face challenges when contacting the TPAs about claims payment issues that could contribute to the amount of time it takes to successfully file claims and receive reimbursement for services under the Choice Program. This, in turn, poses a risk to the Choice Program to the extent that community providers who face these challenges decide not to serve veterans under the Choice Program. Looking forward, VA has included customer service requirements in its RFP for the Veterans Community Care Program contracts, and VA officials have told us that these requirements are applicable to provider calls. For example, the RFP includes a requirement for its future TPAs to establish and maintain call centers to address inquiries from community providers and has established customer service performance metrics to monitor call center performance. Monitoring data on provider calls under the contracts will be important as Veterans Community Care Program TPAs will continue to be responsible for building provider networks, processing claims, and resolving claims processing issues. The Choice Program relies on community providers to deliver care to eligible veterans when VA is unable to provide timely and accessible care at its own facilities. Although VA has taken steps to improve the timeliness of TPA claim payments to providers, VA is not collecting data or monitoring compliance with two Choice Program requirements, and this could adversely affect the timeliness with which community providers are paid under the Choice Program. First, VA does not have complete data allowing it to effectively monitor adherence with its policy for VA medical facilities to review SARs within 5 days of receipt, which impacts its ability to meet the requirement. To the extent that VA medical facilities delay these reviews and approvals, community providers may have to delay care or deliver care that is not authorized, which in turn increases the likelihood that the providers’ claims will be denied and the providers will not be paid. Second, VA requires the TPAs to establish a customer call center to respond to calls from veterans and non-VA providers. However, VA does not enforce the contractual requirement for responding to calls from community providers and allows the TPAs to prioritize calls from veterans. Consequently, VA is not collecting data, monitoring, or enforcing compliance with its contractual requirements for the TPAs to provide timely customer service to providers. As a result, VA does not have information on the extent to which community providers face challenges when contacting the TPAs about claims payment issues, which could contribute to the amount of time it takes to receive reimbursement for services. To the extent that these issues make community providers less willing to continue participating in the Choice Program and the forthcoming Veterans Community Care Program, they pose a risk to VA’s ability to successfully implement these programs and ensure veterans’ timely access to care. We are making the following two recommendations to VA: Once VA’s new software for managing authorizations has been fully implemented, the Undersecretary for Health should monitor data on SAR approval decision time frames to ensure VA medical facilities are in adherence with VA policy, assess the reasons for nonadherence with the policy, and take corrective actions as necessary. (Recommendation 1) The Undersecretary for Health should collect data and monitor compliance with the Choice Program contractual requirements pertaining to customer service for community providers, and take corrective actions as necessary. (Recommendation 2) We provided a draft of this report to VA for review and comment. In its written comments, reproduced in appendix I, VA concurred with our two recommendations and said it is taking steps to address them. For example, VA plans to implement software in spring 2019 that will automate the SAR process and allow for streamlined reporting and monitoring of SAR timeliness to ensure ongoing compliance. Additionally, VA has included provider customer service performance requirements and metrics in its Veterans Community Care Program RFP, and will require future contractors to provide a monthly report to VA on their call center operations and will implement quarterly provider satisfaction surveys. We are sending copies of this report to the Secretary of Veterans Affairs, the Under Secretary for Health, appropriate congressional committees, and other interested parties. This report is also available at no charge on the GAO Web site at http://www.gao.gov. If you or your staff have any questions about this report, please contact Sharon M. Silas at (202) 512-7114 or silass@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs are on the last page of this report. GAO staff who made major contributions to this report are listed in appendix II. In addition to the contact named above, Marcia A. Mann (Assistant Director), Michael Zose (Analyst-in-Charge), and Kate Tussey made major contributions to this report. Also contributing were Krister Friday, Jacquelyn Hamilton, and Vikki Porter.

 

 Report 2:
WMATA was created in 1967 through an interstate compact—matching legislation passed by the District of Columbia, state of Maryland, and Commonwealth of Virginia, and then ratified by Congress—to plan, develop, finance, and operate a regional transportation system in the National Capital area. A board of eight voting directors and eight alternate directors governs WMATA. The directors are appointed by the District of Columbia, Virginia, Maryland, and the federal government, with each appointing two voting and two alternate directors. WMATA operates six rail lines—the Red, Orange, Blue, Green, Yellow, and Silver Lines—connecting various locations within the District of Columbia, Maryland, and Virginia. WMATA’s rail system has 118 linear miles of guideway: 51 miles of subway, 58 miles at ground level, and 9 miles on aerial structures. WMATA’s capital investments are funded through multiple sources. These include a combination of grants it receives from the federal government, along with matching funds and other contributions it receives from the states and local jurisdictions in which it operates (see fig. 1). From fiscal years 2011 through 2017, WMATA received about $5.8 billion in capital funding. Over half of this funding came from the federal government ($3.2 billion), and state and local jurisdictions provided 41 percent ($2.4 billion). WMATA also took on about $230 million in long- term debt to finance its capital program during this time period. The federal funding included grant awards, in addition to annual appropriations authorized under PRIIA. In 2008, PRIIA authorized $1.5 billion to WMATA, available in increments over 10 years beginning in fiscal year 2009, or until expended, for capital improvements and preventive maintenance. PRIIA funding and certain federal grants require state or local jurisdictions to provide matching funds. Additionally, a large portion of funding from state and local jurisdictions is governed by capital-funding agreements, which are periodically negotiated between WMATA and the states and localities. From fiscal years 2011 through 2017, state and local jurisdictions contributed on average about $340 million annually to WMATA, generally for capital purposes. The annual capital contributions from the jurisdictions are expected to more than double as a result of the recent legislation enacted by the District of Columbia, Maryland, and Virginia in 2018. In addition, WMATA officials told us that it will have the ability to further leverage this dedicated funding and issue debt to finance its capital projects. WMATA has several steps in its capital planning process. These include developing the following: Capital Needs Inventory. WMATA periodically identifies its capital investment needs in this inventory. WMATA issued a Capital Needs Inventory in February 2010 and another in November 2016, each covering a 10-year period. According to WMATA, Capital Needs Inventories help inform the annual capital budget and capital improvement program. Annual Capital Budget. Each year, WMATA prepares an annual capital budget, which identifies projects WMATA plans to undertake in the next fiscal year. WMATA’s fiscal year 2019 annual capital budget was approved by the board of directors at $1.3 billion. Six-Year Capital Improvement Program. Within WMATA’s annual capital budget, WMATA includes a Six-Year Capital Improvement Program identifying capital projects WMATA plans to implement over a 6-year period. WMATA’s most recent Six-Year Capital Improvement Program (covering the fiscal year 2019—2024 period) was approved by the board of directors at $8.5 billion. According to WMATA officials, WMATA is currently implementing a new capital planning process through which it will develop its fiscal year 2020 Capital Budget and fiscal year 2020-2025 Six-Year Capital Improvement Program. WMATA adopts and implements the capital budget by June 30 for the new fiscal year, which begins on July 1. The fiscal year 2020 Capital Budget is scheduled to be adopted and implemented by June 30, 2019. Among other things, the goals and objectives of this new capital planning process are to construct an objective, data-driven, and risk-based approach to estimate major rehabilitation and capital asset replacement needs; build a capital investment prioritization methodology aligned with WMATA’s strategic goals and grounded in asset inventory and condition assessments; and develop a process that will support the construction and ongoing stewardship of its Transit Asset Management Plan. The latter is discussed in more detail below. WMATA has also recently undertaken efforts to address issues related to the condition and maintenance of its track. After SafeTrack concluded in June 2017, WMATA implemented what officials describe as its first track preventive maintenance program designed to incorporate industry-wide best practices related to track maintenance, in order to improve the rail system’s long-term safety and reliability. The new program commenced in June 2017, and WMATA’s board reduced late-night service to allow for longer maintenance work hours. To make the best use of the extra maintenance hours, WMATA focused its new program on six separate initiatives that together would address what WMATA viewed as its two most pressing track maintenance concerns—electrical fires caused by cable and insulator defects along the track wayside, and defects to the track itself, including unsecured rail fasteners and worn track switches (see table 1). These initiatives are planned to cover the entire transit system and will take various amounts of time to complete. FTA also plays a role in WMATA activities by providing and directing the use of federal funds, overseeing safety, and requiring transit asset management. FTA provides grants that support capital investment in public transportation, consistent with locally developed transportation plans, and has provided such funding to WMATA as noted above. Additionally, though states play a role in safety oversight of rail transit systems through state safety oversight programs, FTA also has the authority to conduct various safety oversight activities such as inspections and investigations. Furthermore, FTA has the authority to assume temporary, direct safety oversight of a rail transit system if it finds the state safety oversight program is inadequate, among other things. After FTA conducted a safety management inspection and issued a safety directive with 91 required actions, it found WMATA’s state safety- oversight program to be inadequate and assumed direct safety-oversight of WMATA in October 2015. Finally, FTA is responsible for assisting public transportation systems to achieve and maintain their infrastructure, equipment, and vehicles in a state of good repair. Specifically, in July 2016, FTA issued regulations establishing a National Transit Asset Management System. Applicable transit agencies were required to have an initial transit asset management plan completed by October 1, 2018. For “tier I providers,” such as WMATA, this plan is to contain nine elements, including an inventory of the number and type of capital assets, and a condition assessment of those inventoried assets for which a provider has direct capital responsibility. WMATA completed its Transit Asset Management plan, dated October 1, 2018. This plan outlines WMATA’s policy, approach, and targeted actions to improve its asset management practices over the next 4 years. WMATA expends its capital funds on a variety of capital assets as part of its capital budget and Capital Improvement Program. From fiscal year 2011 through 2017, WMATA expended approximately $5.9 billion on capital investments. Of this amount, WMATA expended the largest portion on assets related to the replacement, rehabilitation, and maintenance of its revenue vehicles (railcars, buses, and vans) and lesser amounts on other categories of assets, as discussed below and shown in figure 2. Rail and Bus Vehicle Fleet: WMATA expended approximately $2.16 billion (36 percent) of the total $5.9 billion on projects related to its rail and bus fleet from fiscal years 2011 through 2017. The $2.16 billion included approximately $1.1 billion (51 percent) on replacing, expanding, and rehabilitating its rail fleet and approximately $956 million (44 percent) on its bus fleet. According to WMATA, it initiated its railcar replacement program in 2005 to increase capacity and reduce maintenance costs. In addition, a June 2009 Red Line collision of two trains near Fort Totten resulted in nine deaths and led the NTSB to recommend that WMATA retire and replace all 1000 series railcars. From fiscal year 2011 through 2017, WMATA expended almost $656 million on replacing these and other railcars and expanding its overall fleet. This effort includes WMATA’s planned purchase of a total of 748 new 7000-series railcars (see fig. 3). Approximately $530 million was expended on replacing vehicles from fiscal years 2015 through 2017. For example, in fiscal year 2017 WMATA accepted delivery of about 50 percent (364 railcars) of its planned purchase of 748, 7000-series railcars. WMATA expects to complete its current railcar replacement program by fiscal year 2024, with an estimated total program cost of about $1.7 billion. Fixed Rail Infrastructure: WMATA expended about $1.23 billion of the total $5.9 billion (21 percent) to maintain its fixed-rail infrastructure. Of this $1.23 billion, WMATA expended about $650 million (53 percent) on rail infrastructure and rehabilitation projects and $573 million (47 percent) on improvements to its track and structures (e.g., bridges and tunnels). According to WMATA, the rail infrastructure and rehabilitation projects began in 2009 and were the first comprehensive rehabilitation of WMATA’s rail infrastructure in its history. Typical projects included rehabilitating WMATA’s water drainage pumps and tunnel ventilation, fire, and communications systems, among other things. WMATA work related to track and structures involved the maintenance and rehabilitation of the steel rail that guides railcars, the cross ties and fasteners that hold the rail in place, the third rail that provides power to trains, and the bridges and tunnels the track runs on or through. The share of WMATA’s total capital expenditures going to track and structures increased from about $80 million in fiscal year 2016 to $158 million in fiscal year 2017. This expenditure was primarily to implement SafeTrack. Maintenance Facilities and Equipment: WMATA expended approximately $1.1 billion of the total $5.9 billion (19 percent) on assets related to maintenance facilities and equipment, which include rail yards, bus garages, and equipment used to rehabilitate and maintain WMATA’s track and vehicle fleet. For example, from fiscal years 2011 through 2017 WMATA expended approximately $75 million in constructing the Cinder Bed Road bus maintenance facility in Lorton, Virginia. Passenger and Other Facilities: WMATA expended about $814 million of the total $5.9 billion (14 percent) on passenger, business, and security support facilities. Such facilities include rail and bus stations, police facilities, and elevator and escalator rehabilitation. Business Systems and Project Management Support: WMATA also expended about $628 million of the total $5.9 billion (11 percent) on assets related to operations and business support software and equipment. From fiscal years 2011 through 2017, WMATA frequently over-estimated in its annual budgets the annual amount of capital investments it could implement (see fig.4). Out of the approximately $7.5 billion that WMATA budgeted for capital investments over this period, it expended approximately $5.9 billion (80 percent). WMATA’s ability to fully expend its capital budget has varied from year to year. Specifically, WMATA expended about 65 percent ($700 million) of its $1.1 billion capital budget in fiscal year 2015, compared with 85 percent ($1.1 billion) of its $1.2 billion capital budget in fiscal year 2016. In fiscal year 2017, WMATA expended nearly 100 percent of its $1.18 billion capital budget. WMATA attributed the increased expenditures to intensified efforts to address deferred maintenance, primarily through the SafeTrack initiative and an increased delivery and acceptance rate for the new 7000-series railcars, among other things. The total amount expended in fiscal year 2017 to replace the older railcars with new vehicles totaled about $335 million. According to WMATA, there are a number of reasons why it has not fully expended its capital budget in any given year: Contracting and Scheduling Issues: WMATA officials stated that there were contract and scheduling delays in the implementation of planned capital projects. For example, WMATA officials said contracts were sometimes not executed during the fiscal year in which funds were originally budgeted for the work, and in other instances contract work was not carried out according to schedule and expenditures were delayed. Changing Priorities: WMATA officials stated that in some instances, the reevaluation and reprioritization of contracted projects affected WMATA’s ability to expend its capital budget. In such cases, new capital needs were sometimes identified and prioritized over other needs, which caused delays in work schedules and potential financial claims by contractors due to delays. For example, WMATA stated that in fiscal year 2011 the initiation of the Red Line rehabilitation program was delayed as a result of the prioritization of the safety needs in response to the 2009 Fort Totten accident. Federal Reimbursement Restrictions: WMATA officials cited FTA restrictions on its reimbursement of federal funds between fiscal years 2014 and 2015 as a reason for its inability to expend budgeted capital funds in those years. In a financial management oversight review completed by FTA in 2014, FTA found material weaknesses and significant deficiencies in WMATA’s financial management controls, policies, and procedures regarding its receipt of federal grant funds. Based on these preliminary findings, FTA restricted WMATA’s ability to automatically access federal grant reimbursements until WMATA undertook corrective actions. During these years, WMATA reported its management slowed expenditures on targeted capital projects due to concerns over reimbursement of grants. By October 2017, after WMATA implemented an action plan to improve its financial controls, FTA reinstated WMATA’s ability to automatically receive all awarded federal funds on a regular schedule. Unpredictable Funding: WMATA officials stated that unpredictable funding affected the level of its capital expenditures from year to year. Since WMATA had multi-year capital projects with multi-year procurements, according to WMATA officials, uncertainty with regard to how much capital funding would be received on an annual basis affected the implementation of projects. Inadequate Capital Planning Process: WMATA attributed some of its inability to expend budgeted capital funds to the absence of a uniform and efficient capital planning process. According to WMATA, it lacked formal procedures to initiate projects and newer projects often experienced delays in implementation, which delayed expenditures on these projects. Later in this report, we discuss WMATA’s efforts to develop a new capital planning process. Although WMATA expended more of its capital budget in fiscal year 2017 than it had in prior years, it estimated that capital spending will need to increase even more to address state-of-good-repair needs. In 2016, WMATA projected that its state-of-good-repair needs amounted to about $17.4 billion from 2017 through 2026. This level is almost $10 billion more than WMATA estimated for its state-of-good-repair needs from 2011 through 2020 in its February 2010 Capital Needs Inventory. WMATA officials attributed the increase to a capital planning process insufficient to identify capital needs and an increase in cost of needs that were previously unmet. In addition, WMATA officials said the quality and quantity of asset data had improved over time. To address its state-of- good-repair needs, in November 2016 WMATA estimated that it will need to expend about $1.74 billion annually on capital expenditures from 2017 through 2026. This is more than twice the $845 million average annual capital expenditures from fiscal year 2011 through fiscal year 2017. WMATA’s new capital planning process could address some of the weaknesses it identified in the previous process, such as better distinguishing capital needs (investments in groups of related assets) from capital projects (investments in specific assets). However, WMATA has not established documented policies and procedures to guide the developed performance measures to assess capital projects and the capital planning process; and developed a plan to obtain complete information about the inventory and condition of WMATA assets. These remaining weaknesses could hinder sound capital investment decisions. WMATA’s new capital planning process could facilitate better identification of capital investment needs. Leading practices for capital planning, among other things, call for an organization to conduct a comprehensive assessment of its needs to meet its mission. WMATA uses the Capital Needs Inventory to assess its capital needs over a 10- year period across its various assets and help identify specific projects to include on subsequent capital improvement programs. In November 2016, WMATA issued its most recent Capital Needs Inventory, covering calendar year 2017 through 2026, and reported there were weaknesses and limitations in the process used to prepare the previous Capital Needs Inventory, issued in 2010. Those weaknesses and the actions WMATA has taken to address them include the following: Distinguishing capital needs from capital projects. WMATA reported in 2016 that the 2010 Capital Needs Inventory was primarily a list of proposed projects and did not provide proper attention to evaluating WMATA’s overall asset needs and the readiness of projects for programming in the capital improvement program. WMATA has taken actions to potentially address this weakness. In April 2016, WMATA issued a policy/instruction document that established policies and procedures for preparing capital needs inventories. This document defined the process for capital needs identification and established a framework evaluating and prioritizing capital investment needs. Among other things, this framework requires that WMATA departments develop capital needs justification packages and that these packages be reviewed by the Capital Program Advisory Committee for completeness and accuracy before being forwarded for further review. The guidance also requires that WMATA’s strategic objectives be considered when identifying and prioritizing capital projects. Qualitative rather than quantitative prioritization of needs. In 2016, WMATA reported that the prioritization of capital needs in the 2010 Capital Needs Inventory was primarily based on qualitative assessments by management rather than being driven by quantitative information and condition assessments. According to WMATA, the 2010 Capital Needs Inventory was largely based on the professional judgment of staff in consideration of WMATA’s strategic goals but was not data-driven. WMATA has taken actions to address this weakness by issuing a policy that requires WMATA’s senior management serving on the Capital Program Advisory Committee to use a more quantitative-based capital prioritization formula in preparing the Capital Needs Inventory. For example, the November 2016 Capital Needs Inventory used a quantitative approach to rank and prioritize capital needs. This approach included the use of four criteria—asset condition, safety and security, service delivery, and ridership impact— to numerically score capital needs and WMATA then used a risk- based weighting approach to combine these criteria into a single overall prioritization score. While WMATA has addressed some weaknesses it identified in its prior planning, it has not established documented policies and procedures to guide the annual capital planning process, or developed measures to assess capital project and program performance and a plan to obtain complete information on its assets and their physical condition. Although WMATA established policies and procedures for prioritizing capital needs—that is, investments in groups of related assets—for the 2016 Capital Needs Inventory, it has not established documented policies and procedures for the new capital planning process, including how WMATA will rank and select individual projects to address those needs through its annual capital budgets and Six-Year Capital Improvement Program. For example, through its Capital Needs Inventory WMATA stated it needed to invest $17.4 billion over a 10-year period to address its state-of-good-repair needs, including replacing vehicles, rehabilitating stations, and investing in other types of assets. WMATA uses the annual capital budget and Six-Year Capital Improvement Program to identify the specific projects to be funded to meet the 10-year investment needs. However, because WMATA has not established documented policies and procedures for the new capital planning process, it has not yet identified the specific methodologies to rank and select projects for funding on an annual basis. According to WMATA officials, the legacy annual capital planning process was based on implementing the list of projects that resulted from its 2010 Capital Needs Inventory and WMATA did not have a documented capital planning process that it followed on an annual basis. WMATA officials told us that the legacy capital planning process was “ad hoc” in nature, in part because WMATA was reacting to emergencies. For example, because WMATA needed to address the NTSB recommendation to replace the 1000-series railcars and address FTA safety directives after the 2015 smoke incident at the L’Enfant Plaza Station, it did not adhere to a formal annual-planning process. The COSO internal control standards point out the importance of organizations documenting their processes to facilitate retention and sharing of organizational knowledge. Leading practices contained in the Executive Guide also recommend that organizations have defined processes for ranking and selecting projects for capital funding. In addition, the Executive Guide noted that organizations find it beneficial to rank projects because the number of requested projects often exceeds available funding. Officials from all five of the peer transit agencies we spoke with told us they had or planned to develop documented processes for making capital investment decisions. For example, officials from four of the five peer transit agencies we spoke with said they use a project scoring and ranking system in their capital planning process, and officials from the fifth agency told us it plans to develop such a system. Officials from one agency provided us with its project evaluation and scoring system that assigns scores using eight selection criteria that are tied to the agency’s strategic business plan and state priorities. The selection criteria include such things as system preservation, safety, and cost-effectiveness. Officials from another agency told us they use an analytical tool to score projects and that every project (new or existing) gets re-scored annually. As a result of WMATA not having documented policies and procedures for its capital planning process, it is unclear how important parts of the process will work and the basis for WMATA’s investment decisions. WMATA has outlined some high-level policies for the capital planning process and prepared limited guidance for certain parts of the process. For example, WMATA officials told us that its recently issued Transit Asset Management Plan contains asset management policies that address the ranking and selecting of capital projects. Although the Transit Asset Management Plan discusses the process for estimating and prioritizing capital needs and, which are precursors of projects, the plan does not specifically address how projects would be selected for annual capital budgets and the capital improvement program. In addition, WMATA developed limited guidance for staff to use in developing new capital projects. Under this guidance, capital funds could be provided to evaluate, plan, and develop projects. While this guidance may be useful for developing projects, it does not establish the policies and procedures WMATA will follow to decide which projects will be funded through the annual capital budget and the capital improvement program. Further, the documentation prepared by WMATA to date does not establish policies and procedures for the entire capital planning process and how decisions will be made throughout the process. WMATA reported in its fiscal year 2019 annual budget that it had created a capital program manual that identifies the roles, responsibilities, processes, and calendars of events to inform the fiscal year 2020 capital program. WMATA officials told us that the previous Director of the Capital Planning and Program Management Department had included this information in the draft budget proposal when these documents were being developed. However, WMATA officials told us that these documents were not completed, and that the information was mistakenly not removed from the budget before the previous director of the department left the agency. WMATA officials told us they plan to formalize policies, procedures, and manuals for the fiscal year 2021–2026 capital-investment program cycle. The current leadership of the Capital Planning and Program Management Department told us that given the time-constraints facing WMATA in the current fiscal year 2020 planning cycle, WMATA decided not to formally document the new capital planning process until after WMATA has had a chance to test it through the current planning cycle to see how it works. According to the official, the department’s leadership has instructed staff to document steps taken in implementing the new process so that WMATA will have the opportunity to learn from the new process and make necessary changes before developing formal, written procedures that will guide future planning cycles. Although delaying formal development of policies and procedures may provide an opportunity to learn from the process while implementing it, it does not provide the guidance necessary now as WMATA uses its new capital planning process to develop the fiscal year 2020 capital program. In particular, because WMATA has not established policies and procedures for ranking and selecting projects, WMATA does not have a framework or clear criteria for programming projects in the annual capital budget for fiscal year 2020. WMATA has proposed a fiscal year 2020 capital budget of $1.4 billion. In addition, WMATA’s plan to document steps taken in implementing the new process as it is occurring does not provide reasonable assurance that WMATA is making decisions using a consistent process to direct investments toward WMATA’s highest priority needs. A consistent process is all the more important to ensure that WMATA does not continue to use an ad-hoc process for capital investment decisions, as it did in its legacy process. WMATA’s annual capital spending is anticipated to increase substantially over the fiscal year 2020-2025 period, as WMATA expects to be programing the additional $500 million annually for capital purposes committed by the District of Columbia, Maryland, and Virginia. Without a documented planning process that includes procedures for ranking and selecting projects for funding in the fiscal year 2020 capital budget, WMATA’s stakeholders lack reasonable assurance that WMATA’s capital investment decisions will be made using a sound and transparent process. WMATA has also not developed performance measures to assess capital projects and the capital planning process. Leading practices from the Executive Guide suggest that one way to determine if a capital investment achieved the benefits that were intended when it was selected is to evaluate its performance using measures that reflect a variety of outcomes and perspectives. By looking at a mixture of measures, such as financial improvement and customer satisfaction, managers can assess performance based on a comprehensive view of the needs and objectives of the organization. Leading organizations we studied in preparing the Executive Guide, such as private sector companies, use financial and non-financial criteria for success that are tied to organizational goals and objectives. According to the Executive Guide, project-specific performance measures are then used to develop unit performance measures and goals, which are ultimately used to determine how well an organization is meeting its goals and objectives. WMATA officials told us they have not developed performance measures for assessing the performance of individual projects or the capital planning process as a whole. One WMATA official told us that WMATA would like to evaluate results of the new capital planning process to determine whether organizational goals have been met. The official suggested that WMATA would work with a consultant to demonstrate a linkage between capital planning goals and WMATA’s organizational goals. However, the official did not indicate when this step would occur or provide additional information. Moreover, it is unclear whether the official’s intentions for this effort would result in measures for assessing individual projects as well as the overall capital planning process. By developing measures, WMATA will be better positioned to assess whether specific capital investments met their intended outcomes or if the capital planning process itself is helping WMATA achieve its strategic goals and objectives and effectively using taxpayer funds. WMATA also does not have a complete inventory or physical condition assessments of its assets. Leading practices for good capital decision- making call for organizations to conduct a comprehensive assessment of their needs and identify the organization’s capabilities to meet these needs. This process includes taking an inventory of assets and their condition and assessing where there are gaps in meeting organizational needs. The Transit Cooperative Research Program has also identified asset inventory and condition assessments as the first step in determining what asset rehabilitations and replacements are needed as transit providers address their state-of-good-repair requirements. Asset inventories and condition assessments provide critical information for capital-investment decision making. WMATA has initiated various efforts to obtain better information about its assets and their condition. These efforts have included: Transit Asset Inventory and Condition Assessment Project. In 2016, WMATA began this project to provide a physical inventory of WMATA assets and their condition, in part to comply with FTA’s Transit Asset Management regulations. According to WMATA, this project was to be the cornerstone in ensuring a complete, consistent, accurate, and centralized repository of relevant asset-related data. However, WMATA officials said that the project primarily focused on obtaining an inventory and condition assessment of WMATA facilities and equipment. A February 2018 WMATA memo to senior management stated that even when the project was completed, WMATA would still lack a robust database of track, guideway, infrastructure (e.g., tunnels and bridges), systems, and communication assets—elements that the November 2016 Capital Needs Inventory noted were the largest gaps in the asset information used to support capital needs forecasting. According to WMATA, this project produced inventory and condition assessments for about 30 percent of WMATA’s asset base. As of October 2018, WMATA considered the project complete since it provided information to help prepare WMATA’s completed Transit Asset Management Plan, dated October 1, 2018. WMATA officials noted that they will continue to develop their asset inventories and condition assessments through its new Enterprise Asset Management Program, described below. Enterprise Asset Management Program. In December 2017, WMATA began development of an Enterprise Asset Management Program. According to WMATA, this program is an effort to institutionalize asset management practices that are aligned with industry best practices to provide, among other things, high quality asset data for informed decision-making, including for capital planning. Expected program tasks include updating asset records and improving and consolidating asset inventories in WMATA’s asset system of record (called Maximo). WMATA’s efforts to develop more complete asset inventory and condition assessments are not complete. Among other things, WMATA documentation on the Enterprise Asset Management Program cited “inattention, poor standardization, and organizational silos” as factors that have resulted in WMATA having multiple sets of asset records in various states of accuracy and usefulness. The Enterprise Asset Management Program, according to WMATA, is an effort to help address this situation and improve asset data quality, including inventory and condition assessments. Although WMATA is developing a new Enterprise Asset Management Program, it has yet to develop a plan for obtaining a complete inventory or physical condition assessments of its assets. The Project Management Institute’s Guide to the Project Management Body of Knowledge, PMBOK® Guide describes the elements of good project management and their importance in achieving organizational goals. Among these elements are: Having a project charter that formally authorizes a project, that commits resources to the activity, and that provides a direct link to organizational strategic objectives; Preparing a project plan to define the basis of the project’s work and how the work will be performed; and Establishing a monitoring and control process to track, review, and report overall progress in meeting the plan’s objectives. WMATA has prepared draft documents that describe how it will implement the Enterprise Asset Management Program and that contain some elements of good project management. For example, in January 2018 WMATA circulated a proposed charter that once approved would authorize the Enterprise Asset Management program, identify needed resources, and link to WMATA’s strategic goals. As of October 2018, this proposed charter had not yet been finalized. Draft program documents also indicate there would be a monitoring and control process that would establish regular reporting to internal stakeholders to assess program accomplishments and progress implementing the program. While WMATA has developed a proposed charter and a monitoring and control process for its Enterprise Asset Management Program, it has not established a plan for collecting asset inventory and condition assessment information. The draft program charter includes general tasks for updating asset records and improving and consolidating asset inventory data in Maximo. However, a plan would provide more specific details for how the work would be completed, such as the information to be collected on different assets, how and when this information would be consolidated into Maximo, milestones for completing the work, or how the effort would be funded. Without a plan to obtain asset inventory and condition assessment information WMATA will continue to lack critical information needed for good capital planning and sound investment decision-making. WMATA has reported significant progress toward its goals of reducing track defects and fire incidents, but still faces several challenges with implementing its track preventive maintenance program. WMATA defines an incident as any unplanned event that disrupts rail revenue service. According to WMATA officials, within the track preventive maintenance program WMATA seeks to reduce incidents specifically caused by electrical wayside fires and track defects each by 50 percent from fiscal year 2017 to fiscal year 2019. WMATA reported that in fiscal year 2018 it had met its goal for track defect incidents but not for electrical wayside fires. According to officials, track defect incidents—which include incidents caused by defective fasteners, switches, and “ballast”—were reduced by 50 percent from a total of 778 in fiscal year 2017 to 387 in fiscal year 2018. Electrical-wayside-fire incidents—including incidents caused by cable and insulator fires—went down 20 percent from a total of 55 in fiscal year 2017 to 44 in fiscal year 2018 (see fig.5). Although WMATA has reduced both track defect incidents and electrical fires, the track preventive maintenance program is not intended to address the full range of all defects and track fires that may occur on the system. WMATA officials told us that the track preventive maintenance program specifically seeks to reduce electrical-wayside-fire incidents, which are a specific sub-set of overall track fires, and does not include non-electrical fires or smoke incidents, such as the ones caused by railcars or debris. WMATA captures and publicly reports the non-electrical fires as part of its quarterly Metro Performance Report, but according to WMATA officials, these fires are not specifically addressed through the track preventive maintenance program. While electrical fires decreased in fiscal year 2018, non-electrical fires did not change, as WMATA reported 23 non-electrical fires for both fiscal years 2017 and 2018. Additionally the track preventive maintenance program addresses a certain sub-set of track defect incidents such as those caused by loose fasteners and defective switches. According to WMATA, these track defect incidents can be addressed through its track geometry, torqueing, and switch maintenance initiatives. WMATA addresses other types of track defects, such as rail breaks and third-rail defects, through its capital program. However, according to WMATA, track defects attributable to the capital program are still included as part of the overall goal to reduce all track defect incidents by 50 percent by fiscal year 2019. WMATA established goals for completing each of the six track preventive maintenance initiatives within a certain time period and reported that in fiscal year 2018 it was on-track to meet or exceed those goals for four of the initiatives. For example, in implementing its “cable meggering” initiative, WMATA established a goal to inspect and replace electric cables across its entire rail system within 4 years. According to WMATA, it met its target for fiscal year 2018 by completing 25 percent of the entire system in that year. In addition to cable meggering, WMATA also met its annual targets for the switch maintenance, track bed cleaning, and stray current-testing initiatives. As for the two initiatives behind schedule, the torqueing initiative was 70 percent complete and the tamping initiative stood at 90 percent for the 2018 target (see table 2). Officials told us they have developed various ways to improve efficiency with these initiatives. For instance, WMATA improved the productivity of its switch maintenance initiative by separating the work to inspect the switches from the follow-up repair work to grind and weld them. These activities had previously been conducted by the same team. However, WMATA faces challenges in implementing the track preventive maintenance program moving forward. WMATA officials described track preventive maintenance as a necessary operation that must be continuously performed and balanced in conjunction with regular train operations that provide service to their customers. According to WMATA officials, executing this new program requires regular refinements to ensure it continues to progress toward its desired outcomes. Among the implementation challenges identified by WMATA officials were the following: Securing Sufficient Track Time. WMATA officials told us that getting adequate time to perform track maintenance is difficult because it requires reducing the number of hours in which WMATA provides service to customers. Consequently, increased maintenance hours can result in lost revenue. Officials from the peer transit agencies we interviewed stated that the tension between conducting maintenance and providing service is common in the transit industry. According to WMATA officials, prior to SafeTrack, windows for performing track maintenance were not sufficient to complete all necessary work, partially because of this need to balance maintenance hours and service hours. To address this issue, WMATA increased its weekly overnight work hours from 33 hours to 39 hours during SafeTrack. After SafeTrack was complete, WMATA extended weekly overnight work hours again to a total of 41 hours. However, maintaining these extended overnight work hours past fiscal year 2019 requires approval from WMATA’s board of directors. As a result, the long-term viability of WMATA’s track preventive maintenance program is partially dependent on the board’s decision to balance the competing demands for service hours and maintenance time. Work Time Productivity. To maintain extended track-maintenance hours into succeeding years, it will be important for WMATA to demonstrate the new program’s productivity. According to WMATA officials, making the most productive use of the extended working hours is a challenge, but it will be necessary to justify the extended maintenance windows. WMATA officials told us that only a portion of overnight work hours yields productive maintenance time. For example, once a line ceases operations, it takes an additional hour for all trains to reach their final destination, and another hour after that to safely turn off all power running to the track and then establish a work zone. Once maintenance work is completed, additional time must be allotted for restoring power and allowing trains to move back into position. Because of these requirements, a five-hour work window may only yield two hours of productive work time (called “wrench time”). For this reason, WMATA began tracking its wrench time at the beginning of fiscal year 2018. As of June 2018, WMATA reported that average wrench time had increased from about 2.0 hours per day in July 2017 to 2.37 hours. Resource Constraints. According to WMATA officials, having sufficient people with the necessary skills and experience to perform track maintenance work is a significant challenge. For instance, expanded maintenance windows have increased WMATA’s workforce requirements. As a result, WMATA has used contractors to assist with its stray-current testing and track bed cleaning initiatives. In another example, WMATA’s torqueing initiative is particularly resource intensive as the entire rail system contains 135 miles of “direct fixation” track, where the torqueing work is being done, and over 504,000 fasteners to check and tighten as necessary. According to WMATA officials, bolts and fasteners are torqued during their initial installment and then again 90 days afterward as part of the initial capital expenditure. After that, any subsequent torqueing is executed as part of the new track preventive maintenance program. WMATA stated that the torqueing initiative seeks to torque all 135 miles of direct fixation track annually. WMATA officials said the torqueing initiative is a mix of contractor and in-house staff, with contractors supplementing WMATA forces as needed. WMATA’s track preventive maintenance program has followed certain leading program management practices such as establishing key performance metrics and monitoring progress toward them. Leading practices recommend that organizations establish performance baselines for their programs and communicate performance metrics to key stakeholders. For instance, as previously noted, WMATA established a measureable program goal to reduce track-defect and electrical-wayside- fire incidents by 50 percent within 2 years, and WMATA also established time periods to complete its system-wide preventive maintenance initiatives. In addition, WMATA’s Rail Services Department—which manages the track preventive maintenance program—among other things, holds a monthly “RailSTAT” meeting in which the teams leading the preventive maintenance initiatives report their progress toward these goals to WMATA’s management. However, WMATA’s program does not fully align with other applicable internal-control standards or leading program-management practices. Specifically, COSO internal control standards and leading practices identified by the Project Management Institute’s The Standard for Program Management stresses the importance of identifying and assessing program risks and developing a program management plan. COSO recommends that organizations identify risks to the achievement of its objectives and analyze risks as a basis for determining how the risks should be managed. Furthermore, the risk identification is to be comprehensive. The Standard for Program Management also recommends that when identifying risks, the assessments be both qualitative and quantitative in nature. Regarding program management plans: The Standard for Program Management recommends that organizations develop program management plans that align with organizational goals and objectives. This includes aligning the program management plan with the organization’s overall strategic plan. Elements of the plan are to provide a roadmap that identifies such things as milestones and decision points to guide program activities. In developing the track preventive maintenance program, WMATA did not fully identify or quantitatively assess risks associated with the program. WMATA officials told us that in developing the track preventive maintenance program they used their professional judgment to identify track-defect and fire incidents as the most significant risks that they needed to address through the program. However, WMATA’s risk identification was not comprehensive in nature, as it only considered two technical aspects of track maintenance: electrical fires and track defects. As previously mentioned, non-electrical fires—which were not included in the scope of the program or risk assessment—did not change from fiscal year 2017 through 2018 and represent approximately 30 percent of all fires on the system over those years. Although WMATA officials told us in designing the program they reviewed track-related incident data from 2016, they did not quantitatively analyze the impact of these incidents on service or safety. In addition, WMATA did not consider broader strategic risks to its program, such as the availability of a program’s funding and stakeholders’ support for the continuation of the program. Specifically, while WMATA has identified several challenges with implementing the program—such as securing sufficient track time, demonstrating work time productivity, and overcoming resource constraints—none of these factors, or potential mitigations, were documented in a risk assessment in developing the program. WMATA has also not prepared a program management plan for the track preventive maintenance program. Although WMATA has identified program goals, officials told us that WMATA has not formally documented the overall structure of the program or how it would be implemented. Instead, the officials said the presentations they provide to WMATA’s board of directors, along with their ongoing staff and executive team meetings, regarding the track preventive maintenance program cover the relevant information needed for running the program. While providing such information to the WMATA board of directors provides some accountability for the program, these presentations do not represent a formal program management plan that links with WMATA’s strategic plan or that identifies milestones and decision points necessary to guide the program. As we previously reported, WMATA did not develop a project management plan before starting its SafeTrack work, and due to this omission and other issues, we found that WMATA lacked assurance that the approach taken with SafeTrack was the most effective way to identify and address safety issues. Furthermore, as this is the first time WMATA has implemented a track preventive maintenance program, a program management plan could help formally establish the program, provide strategic guidance for this new program by providing accountability for both internal and external stakeholders, and ensure that program goals are met. A program management plan could also provide practical benefits, such as helping ensure that WMATA’s extended overnight work hours are efficiently implemented and that sufficient resources are devoted to the program. Without the strategic direction provided by a comprehensive risk assessment and a formal program management plan, WMATA lacks a documented vision for how the track preventive maintenance program should be structured and implemented in order to meet the agency’s strategic goals and improve track safety. Specifically, without a risk assessment that uses quantitative and qualitative data to assess risks— such as data for all fires on the system and qualitative risks such as securing sufficient time for maintenance—WMATA lacks assurance that the program is comprehensively designed to address risks affecting the safety of the rail system or other risks that could hinder the program’s success. Moreover, a program management plan that draws on information from a comprehensive risk assessment would provide WMATA officials with the assurance that they are prepared to respond to current and future challenges that could threaten the long-term viability of the program. Finally, although WMATA developed the track preventive maintenance program to prevent the need for another emergency repair project like SafeTrack, without a formal program management plan, the WMATA employees charged with managing and implementing the program lack an important document to guide their decision-making to meet that objective and the agency’s overall strategic objectives. Developing a program management plan would outline the specific requirements to successfully implement the program, including necessary track time, expected productivity of program initiatives, and required resources. Furthermore, it would provide WMATA’s board of directors with confidence that the program has a clear roadmap with milestones and decision points as the board considers maintaining the extended overnight work hours necessary to implement the program. WMATA’s rail and bus systems provide nearly a million passenger trips each day, and those passengers rely on WMATA for safe and reliable public transportation in the nation’s capital and the surrounding areas. The federal, state, and local jurisdictions that fund WMATA expect WMATA to wisely use taxpayer funds to ensure the system is safe and reliable. WMATA can better meet these expectations by establishing documented policies and procedures that outline how the new capital planning process will work and the basis of investment decisions. In addition, developing measures to assess the performance of individual projects and the capital planning process would provide greater assurance to WMATA’s funding partners that its investment decisions result in a measurable improvement in operating performance, reliability, or other metrics. Furthermore, WMATA’s recent efforts to establish an Enterprise Asset Management Program, once finalized, could help WMATA develop a more complete inventory of its assets and collect critical information on their condition—both of which are consistent with sound capital planning. However, without a plan that provides specific details for obtaining this information, WMATA will continue to lack the critical asset information necessary to make lasting improvements in its capital planning process and make sound capital-investment decisions. Similarly, track preventive maintenance plays a critical role as WMATA works to reduce the track defects and fires that have endangered safety and service reliability. WMATA could better demonstrate the direction of the track preventive maintenance program and how it can improve track safety by more comprehensively assessing the technical and broader risks facing the program and by developing a formal plan that provides greater assurance WMATA is prepared to address challenges that could threaten the long-term viability of the program. Both actions would help WMATA better focus the program on critical maintenance needs and demonstrate its value to WMATA’s board of directors and other stakeholders as WMATA endeavors to provide safe, reliable, and quality service to its riders. We are making the following five recommendations to WMATA. The General Manager of WMATA should establish documented policies and procedures for the new capital planning process. These policies and procedures should include methodologies for ranking and selecting capital projects for funding in WMATA’s fiscal year 2020 capital budget and fiscal years 2020-2025 Capital Improvement Program and for future planning cycles. (Recommendation 1) The General Manager of WMATA should develop performance measures to be used for assessing capital investments and the capital planning process to determine if the investments and planning process have achieved their planned goals and objectives. (Recommendation 2) The General Manager of WMATA should develop a plan for obtaining complete information regarding WMATA’s asset inventory and physical condition assessments, including assets related to track and structures. (Recommendation 3) The General Manager of WMATA should conduct a comprehensive risk assessment of the track preventive maintenance program that includes both a quantitative and qualitative assessment of relevant program risks. In addition to considering technical program risks, WMATA should also consider broader program risks, such as the availability of funding for the program and stakeholders’ support. (Recommendation 4) The General Manager of WMATA should prepare a formal program management plan for the track preventive maintenance program that aligns with WMATA’s strategic plan, addresses how the program is linked to overall strategic goals and objectives, and includes program milestones and decision points. (Recommendation 5) We provided a draft of this report to WMATA and the Department of Transportation for review and comment. WMATA provided written comments, which are reprinted in appendix II, and technical comments, which we incorporated as appropriate in the report. The Department of Transportation provided technical comments, which we incorporated as appropriate. WMATA concurred in part, or with the intent of four of the recommendations, and disagreed with a fifth. Specifically, regarding the first recommendation, which is that WMATA establish documented policies and procedures for the new capital planning process, and that the policies and procedures include methodologies for ranking and selecting capital projects for the fiscal year 2020 capital budget and fiscal year 2020—2025 capital-improvement program. WMATA stated that it agreed with the recommendation, in part. WMATA said it will continue its efforts to finalize and document policies and procedures for the capital planning process for fiscal year 2021 and beyond. WMATA noted that it already has in place numerous planning tools, such as the 2016 Capital Needs Inventory assessment, which helped inform the fiscal year 2020 capital planning process. According to WMATA, it is currently reviewing policies, procedures, training materials, and other documents for the fiscal year 2020 planning process, and those documents will be updated and formalized through final documentation in fiscal year 2021. WMATA noted that it anticipates that many of the elements we recommend regarding the capital planning process will be part of the process documented in fiscal year 2021. For example, WMATA expects that additional automation, decision-making, governance, and reporting capabilities, will be part of the process that will be documented for fiscal year 2021. However, while WMATA has tools available to inform the capital planning process, it has not prepared documented policies and procedures for this process in fiscal year 2020. As we reported, without documented policies and procedures, including those for ranking and selecting projects for the fiscal year 2020 capital budget, WMATA’s stakeholders do not have reasonable assurance that capital investment decisions are made using a sound and transparent process. Taking action now to establish methodologies for ranking and selecting projects for the fiscal year 2020 capital budget would provide WMATA with an opportunity to improve upon those methodologies for the fiscal year 2021 capital planning process to better ensure investments are directed to WMATA’s highest priority needs. As such, we continue to believe this recommendation is valid and that WMATA should fully implement it. Regarding the second recommendation that WMATA develop performance measures for assessing capital investments and the capital planning process, WMATA stated that it agreed with the intent of the recommendation. WMATA also stated that it has developed such measures through compliance with federal requirements, including the FTA’s performance-based planning requirements and the requirement under MAP-21 that tier I transit providers, such as WMATA, establish state-of-good-repair targets that are linked to the capital program. WMATA noted these targets are set forth in its Transit Asset Management Plan. Although WMATA’s October 2018 Transit Asset Management plan includes some broad performance measures and targets for the state-of-good-repair for its various asset classes, as we reported, WMATA has not developed performance measures to assess individual capital projects or the capital planning process itself, as suggested by leading practices in the Executive Guide. As discussed in the report, such measures are important to determine if capital investments have achieved their expected benefits and if they have achieved organizational goals. Leading practices also indicate that by using a mixture of measures managers can assess performance based on a comprehensive view of the needs and objectives of an organization. These needs and objectives can go beyond just the state-of-good-repair to include such things as measures for assessing projects that would improve service reliability, expand capacity, or achieve financial objectives. We continue to believe that fully implementing this recommendation would help ensure that capital investments meet their intended outcomes and that the capital planning process helps WMATA achieve its strategic goals and objectives. Regarding the third recommendation that WMATA develop a plan for obtaining complete information about asset inventories and condition assessments, WMATA stated that it agreed with the intent of the recommendation and that its 2018 Transit Asset Management Plan outlines plans for continuing its asset inventory update. WMATA also said that it is working to ensure it has a complete asset inventory that addresses legacy information and that includes accurate, up-to-date condition assessments. As we reported, the Enterprise Asset Management Program—the program that WMATA told us it plans to use to continue development of asset inventories and condition assessments—includes some elements of good project management, but it also lacks an established plan for collecting asset inventory and condition assessment information. Without a plan to obtain asset inventory and condition assessment information WMATA will continue to lack critical information needed for good capital planning and sound investment decision-making. Thus, we continue to believe that this recommendation is valid and that WMATA should fully implement it. Regarding the fourth recommendation that WMATA conduct a comprehensive risk assessment of the track preventive maintenance program that includes both quantitative and qualitative assessment of relevant program risks, WMATA stated that it agreed with the intent of the recommendation and is putting in place a new process that will address it. Specifically, WMATA stated it is in the process of developing a new Reliability Centered Maintenance process that will include a comprehensive risk assessment of track infrastructure that includes consideration of broader risks such as costs, funding, and track access. According to WMATA, the new process is an engineering framework that will define the maintenance regimen, including preventive maintenance, and improve safety, reliability, and cost-effectiveness. During our review, WMATA officials did not discuss the Reliability Centered Maintenance process in detail or provide documentation that allowed us to evaluate how this process might interface with the current track preventive maintenance program. As a result, we were not able to evaluate how it might address identification and assessment of risks associated with track preventive maintenance. As we reported, going forward track preventive maintenance will play a critical role as WMATA works to reduce track defects and fires. We will review WMATA’s actions to conduct a comprehensive risk assessment as part of our routine recommendation follow-up process. Regarding the fifth recommendation that WMATA prepare a formal program management plan for the track preventive maintenance program, WMATA stated that it disagreed with the recommendation. WMATA noted that specific technical details of the track preventive maintenance program are evolving as it better understands the most effective maintenance regime through implementation of the Reliability Centered Maintenance process. WMATA stated that it believes the framework of Reliability Centered Maintenance is better suited to the ongoing mission of physical asset management than traditional project and program management tools. According to WMATA, the purpose of Reliability Centered Maintenance is to ensure that all efforts are focused on the safety, reliability, and cost-effectiveness of assets through their lifecycle, which is more relevant and applicable to WMATA’s strategic plan than any individual preventive maintenance program. As stated above, WMATA did not provide details about Reliability Centered Maintenance during our review so we are not able to evaluate this process in relation to the track preventive maintenance program. We will review WMATA’s actions related to implementation of the Reliability Centered Maintenance process as part of our routine recommendation follow-up process. We continue to believe this recommendation is valid and that WMATA should fully implement it. We will send copies of this report to appropriate congressional committees, the Secretary of Transportation, the Administrator of the Federal Transit Administration, and the General Manager of WMATA. In addition, we will make copies available to others upon request, and the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III. This report examines: (1) How WMATA expended its capital funding from fiscal years 2011 through 2017; (2) How WMATA’s new capital planning process addresses weaknesses it identified in the previous process; and (3) WMATA’s progress toward its track preventive maintenance goals and how the program aligns with leading program management practices. For each of our objectives we reviewed pertinent federal statutes and regulations as well as WMATA and FTA policies and documents. We also selected a non-generalizable sample of five similar U.S. transit agencies based on similarity to WMATA in transit route mileage, system use, capital spending, system age, and rail fleet age. We also factored geographical diversity into our selection process. We then interviewed the officials from these selected transit agencies using a standard set of questions to learn how they utilize their capital funds, conduct capital planning, and oversee maintenance; and then we compared their processes to WMATA. Transit route mileage, system use, capital spending, and rail fleet age were measured using data from FTA’s National Transit Database. We measured system age according to data available within the American Public Transportation Association’s 2017 Public Transportation Fact Book, and geographical diversity was determined through data available from the U.S. Census Bureau. The transit agencies we selected were: (1) Bay Area Rapid Transit, Oakland, California; (2) Chicago Transit Authority, Chicago, Illinois; (3) Massachusetts Bay Transportation Authority, Boston, Massachusetts; (4) Metropolitan Atlanta Rapid Transit Authority, Atlanta, Georgia; and (5) Southeastern Pennsylvania Transportation Authority, Philadelphia, Pennsylvania. To assess WMATA’s capital spending from 2011 through 2017, we interviewed knowledgeable officials from WMATA and FTA and also reviewed WMATA annual budgets, fourth-quarter and year-end financial reports, budget reconciliation reports, comprehensive annual financial reports, and FTA grant awards. We selected fiscal year 2011 because it was the first year in which WMATA received federal funding authorized by the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), and we selected fiscal year 2017 because it was the most recent year that capital expenditure data were available at the time of our review. By analyzing this information we determined that the following sources provided the most comprehensive and reliable available data on each of the following topics for our report (see table 3): We collected the aforementioned data, analyzed them to identify errors or other anomalies, and interviewed officials to determine how the data are compiled and checked for accuracy. We determined that these data had some limitations, as an external audit report of WMATA financial information for fiscal year 2016 noted a material weakness with WMATA’s process for accounting acquisition costs of capital assets. Specifically, there were inconsistencies between WMATA’s general ledger and sub- ledger, which are used to record acquisition costs, depreciation, and other financial information related to capital assets. As a result, additional steps were required to reconcile the differences between the two sources and could have resulted in a material error. However, after interviewing WMATA officials about the weakness and assessing the available financial information, we determined that the data we used were sufficiently reliable for our purpose of showing general trends of capital expenditures. Our analysis sought to depict how WMATA allocates and expends funds according to major asset categories within its capital-improvement plan. However, these asset categories only remained consistent from 2011 through 2015, and were revised during 2016 and 2017. However, we determined that each asset category consisted of Capital Improvement Projects that were each assigned a number. These projects and their corresponding numbers remained in existence from fiscal year 2011 through 2017, even though the asset categories were updated in fiscal year 2016. Tracking by Capital Improvement Project number provided a means to report consistently through that time period. Therefore, we used the asset categories from fiscal years 2011 through 2015 as our base reporting categories. These categories consisted of: (1) Vehicles/Vehicle Parts, (2) Rail System Infrastructure Rehabilitation, (3) Maintenance Facilities, (4) Systems and Technology, (5) Track and Structures, (6) Passenger Facilities, (7) Maintenance Equipment, (8) Other Facilities, and (9) Project Management and Support. We consolidated WMATA’s nine asset categories into five asset categories in order to represent broader categories of investment: Rail and Bus Vehicle Fleet (Vehicle/Vehicle Parts), Fixed Rail Infrastructure (Rail System Infrastructure and Track and Structures), Maintenance Facilities and Equipment (Maintenance Facilities and Maintenance Equipment), Passenger and Other Facilities (Passenger Facilities and Other Facilities), and Business Systems and Project Management Support (Systems and Technology and Project Management and Support). We then reviewed WMATA’s fiscal year 2016 Fourth Quarter Report, fiscal year 2017 Fourth Quarter Report, and fiscal year 2017 Budget Reconciliation Report to match each project number from those two years to their corresponding category from fiscal year 2011 through 2015. To assess WMATA’s new capital planning process and how it addresses weaknesses WMATA identified in the previous process, we interviewed WMATA officials about their capital planning process and reviewed WMATA documentation related to the capital planning process. This included Capital Needs Inventories, WMATA’s policy for preparation of the 2010 and 2016 Capital Needs Inventories, annual capital budgets—to include capital improvement programs, and guidance documents issued by WMATA related to submitting projects for inclusion in the annual capital budget. We also reviewed the fiscal year 2018 business plan for WMATA’s Capital Planning and Program Management Department. We also interviewed officials from the Metropolitan Washington Council of Governments, the American Public Transportation Association, and FTA to discuss WMATA’s capital planning and budgeting processes. Furthermore, we compared WMATA’s capital planning practices to leading practices identified in GAO’s Executive Guide. The Executive Guide was used since it identifies leading practices for capital decision- making that are applicable to a wide variety of organizations, both public and private. For example, the Executive Guide developed leading capital planning practices by (1) identifying government and private sector organizations recognized for outstanding capital decision-making practices and (2) identifying and describing the leading capital decision- making practices implemented by these organizations. To identify leading practices for capital planning, we also reviewed Transit Cooperative Research Program Report 157. This report developed a framework for transit agencies to use when prioritizing the rehabilitation and replacement of capital assets and discusses leading practices in how to do this. We also identified project management principles from the Project Management Institute, Inc. Finally, we discussed capital planning with the peer transit agencies and prepared a summary of various aspects of capital planning in these agencies. To examine progress toward goals in WMATA’s track preventive maintenance program and how the program compares with leading program management practices, we reviewed WMATA documentation about the program, interviewed WMATA officials, and analyzed track- defect data and electrical-wayside-fire data provided by WMATA for fiscal years 2016 through 2018—which were the only years detailed track defect and electrical fire incident data were available. In order to determine whether the data provided were sufficiently reliable, we checked the data for errors, conducted interviews with knowledgeable officials to learn their procedures for collecting and analyzing the data, and performed independent tests that included verifying WMATA’s final tally of track defect and fire incidents and verifying there were no extended periods of time where data was missing. We also provided a set of data reliability questions to determine whether procedures were sufficient. After performing these steps we determined that the data were sufficiently reliable for the purposes of our report. In our interviews with WMATA, officials also described what goals they had created for the track preventive maintenance program, their progress in meeting those goals, and provided documentation to demonstrate their progress, which we reviewed. We also interviewed officials from the American Public Transportation Association and the American Railway Engineering and Maintenance-of-Way Association about best maintenance practices in the transit industry. We then compared WMATA’s track preventive maintenance program to leading program management practices identified by the Project Management Institute, Inc.’s The Standard for Program Management and internal control standards published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Project Management Institute’s, standards are utilized worldwide and provide guidance on how to manage various aspects of projects, programs, and portfolios. In particular, The Standard for Program Management provides guidance that is generally recognized to support good program-management practices for most programs, most of the time. We conducted our work from November 2017 to January 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. In addition to the contact named above, Matt Barranca (Assistant Director), Richard Jorgenson (Analyst in Charge), Melissa Bodeau, Lacey Coppage, Cory Gerlach, Erin Guinn-Villareal, Kirsten Lauber, Joshua Ormond, and Patrick Tierney made significant contributions to this report.

Question: Write a one-page summary of the report 1.

Answer: Questions have been raised about the lack of timeliness of TPAs' payments to community providers under the Choice Program and how this may affect the willingness of providers to participate in the program as well as in the forthcoming Veterans Community Care Program. You asked GAO to review issues related to the timeliness of TPAs' payments to community providers under the Choice Program. This report examines, among other things, (1) the length of time TPAs have taken to pay community providers' claims and factors affecting timeliness of payments, and (2) actions taken by VA and the TPAs to reduce the length of time TPAs take to pay community providers for Choice Program claims. GAO reviewed TPA data on the length of time taken to pay community provider claims from November 2014 through June 2018, the most recent data available at the time of GAO's review. GAO also reviewed documentation, such as the contracts between VA and its TPAs, and interviewed VA and TPA officials. In addition, GAO interviewed a non-generalizable sample of 15 community providers, selected based on their large Choice Program claims volume, to learn about their experiences with payment timeliness. The Department of Veterans Affairs' (VA) Veterans Choice Program (Choice Program) was created in 2014 to address problems with veterans' timely access to care at VA medical facilities. The Choice Program allows eligible veterans to obtain health care services from providers not directly employed by VA (community providers), who are then reimbursed for their services through one of the program's two third-party administrators (TPA). GAO's analysis of TPA data available for November 2014 through June 2018 shows that the length of time the TPAs took to pay community providers' clean claims each month varied widely—from 7 days to 68 days. VA and its TPAs identified several key factors affecting timeliness of payments to community providers under the Choice Program, including VA's untimely payments to TPAs, which in turn extended the length of time TPAs took to pay community providers' claims; and inadequate provider education on filing claims. VA has taken actions to address key factors that have contributed to the length of time TPAs have taken to pay community providers. For example, VA updated its payment system and related processes to pay TPAs more quickly. According to VA data, as of July 2018, VA was paying at least 90 percent of the TPAs' invoices within 7 days. In addition, VA and the TPAs have taken steps to improve provider education to help providers resolve claims processing issues. However, 9 of the 15 providers GAO interviewed said they continue to experience lengthy telephone hold times. According to VA and TPA officials, steps have been taken to improve the customer service offered to community providers. However, VA officials do not collect data on or monitor TPA compliance with customer service requirements—such as calls being answered within 30 seconds or less—for provider calls because they said they are not enforcing the requirements and are allowing TPAs to prioritize calls from veterans. Without collecting data and monitoring compliance, VA does not have information on challenges providers may face when contacting TPAs to resolve payment issues. GAO is making two recommendations, including that VA should collect data on and monitor compliance with its requirements pertaining to customer service for community providers. VA concurred with GAO's recommendations and described steps it will take to implement them.