HIGHWAY 

INFRASTRUCTURE

Federal-State 

Partnership Produces 

Benefits and Poses 

Oversight Risks

Report to the Ranking Member, 

Subcommittee on Highways and Transit, 

Committee on Transportation and 

Infrastructure, House of Representatives

April 2012

GAO-12-474

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-474, a report to the 

Ranking Member, Subcommittee on Highways 

and Transit, Committee on Transportation and 

Infrastructure, House of Representatives 

April 2012 

HIGHWAY INFRASTRUCTURE

Federal-State Partnership Produces Benefits and 

Poses Oversight Risks

Why GAO Did This Study

The U.S. Department of Transportation 

(DOT) provides about $40 billion to the 

states annually to build and maintain 

highways and bridges through the 

federal-aid highway program. While 

this program has grown and changed 

over time, the federal-state relationship 

has been consistently one of 

“partnership” since 1916. DOT’s FHWA 

has offices in all 50 states that have 

developed close working relationships 

with states. Legislation approved by 

the Senate in March 2012 would 

establish a more performance-based 

highway program, introducing 

performance measures for highways 

and bridges and requiring FHWA to 

monitor states’ progress in meeting 

those measures. As requested, GAO 

examined (1) how the federal-aid 

highway program and FHWA’s 

oversight have changed over time; 

(2) the extent to which FHWA’s 

partnership approach produces 

benefits; (3) the extent to which 

FHWA’s partnership approach poses 

risks; and (4) how FHWA’s partnership 

with state DOTs could affect a 

transition toward a performance-based 

highway program. To do this work, 

GAO conducted site visits and a 

survey, reviewed relevant 

documentation, and interviewed FHWA

and state officials. 

What GAO Recommends

Congress should consider restructuring 

federal surface transportation 

programs. Based on GAO’s review, 

there may be areas where national 

interests are less evident and where 

opportunities exist to narrow FHWA’s 

responsibilities. Also, DOT should 

address the risks posed by its 

partnership approach. DOT generally 

agreed with the recommendation. 

What GAO Found 

Over the years, the federal-aid highway program has expanded to encompass 

broader goals, more responsibilities, and a variety of approaches. As the 

program grew more complex, the Federal Highway Administration’s (FHWA) 

oversight role also expanded, while its resources have not kept pace. As GAO 

has reported, this growth occurred without a well-defined overall vision of evident 

national interests and the federal role in achieving them. GAO has recommended 

Congress consider restructuring federal surface transportation programs, and for

this and other reasons, funding surface transportation remains on GAO’s highrisk list.

FHWA benefits from using recognized partnership practices to advance the 

federal-aid highway program and conduct program oversight—such as clear 

delineation of roles and responsibilities between FHWA and its state partners

and formal and informal conflict resolution—that are recognized as leading 

practices. FHWA’s partnership approach allows it to proactively identify issues 

before they become problems, achieve cost savings, and gain states’ 

commitment to improve their processes. 

FHWA’s partnership approach also poses risks. We observed cases where

FHWA was lax in its oversight or reluctant to take corrective action to bring states 

back into compliance with federal requirements, potentially resulting in improper 

or ineffective use of federal funds. For example, while FHWA has made it a 

national priority to recoup funds from inactive highway projects—projects that 

have not expended funds for over 1 year—FHWA officials in three states we 

visited were reluctant to do so because of concerns about harming their 

partnership with the state. In other cases, FHWA has shown a lack of 

independence in decisions, putting its partners’ interests above federal interests. 

For example, FHWA allowed two states to retain unused emergency relief 

allocations to fund new emergencies, despite FHWA’s policy that these funds are 

made available to other states with potentially higher-priority emergencies. In 

some instances, FHWA became actively and closely involved in implementing 

solutions to state problems—this can create a conflict when FHWA later must 

approve or review the effectiveness of those solutions. 

If proposals for a performance-based highway program are adopted, FHWA 

would have to work with states to develop measures and take corrective action if 

states do not meet them. FHWA’s partnership could help states develop 

measures, but it would need to mitigate the risks posed by its partnership to

ensure corrective action was effective when needed. The fundamental 

reexamination of surface transportation programs, including the highway 

program, that GAO previously recommended presents an opportunity to narrow 

FHWA’s responsibilities so that it is better equipped to transition to a 

performance-based system. GAO identified areas where national interests may 

be less evident but where FHWA expends considerable time and resources—

areas where devolving responsibilities to the states may be appropriate. 

View GAO-12-474. For more information, 

contact Phillip R. Herr at (202) 512-2834 or 

herrp@gao.gov. 
Page i GAO-12-474 Highway Infrastructure

Letter 1 

Background 3

FHWA’s Partnership Role Was Established a Century Ago, but over 

Time Its Responsibilities Have Expanded 6

FHWA Benefits from Using Recognized Partnership Practices 11

FHWA’s Partnership with States Poses Risks in FHWA’s Oversight 20

Partnering Could Help FHWA Implement a Performance-Based 

System, but Long-standing Challenges Would Remain 32

Conclusions 40

Matter for Congressional Consideration 42

Recommendations for Executive Action 42

Agency Comments 42

Appendix I FHWA Organization 44

Appendix II Scope and Methodology 46

Appendix III GAO Contact and Staff Acknowledgments 49

Figures

Figure 1: FHWA and State Oversight and Approval Activities for 

Full and Delegated Projects 5

Figure 2: Locations of FHWA’s Offices 45

Contents
Page ii GAO-12-474 Highway Infrastructure

Abbreviations

DBE Disadvantaged Business Enterprise

DOT Department of Transportation

FHWA Federal Highway Administration

MAP-21 Moving Ahead for Progress in the 21st Century

MPO Metropolitan Planning Organization

NRT National Review Team

Recovery Act American Recovery and Reinvestment Act of 2009

TMA Transportation Management Area

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Page 1 GAO-12-474 Highway Infrastructure

United States Government Accountability Office 

Washington, DC 20548

April 26, 2012

The Honorable Peter A. DeFazio

Ranking Member

Subcommittee on Highways and Transit

Committee on Transportation and Infrastructure

House of Representatives

Dear Mr. DeFazio:

Federal funding for highways is provided to the states mostly through a 

series of formula grant programs collectively known as the federal-aid 

highway program. Over the years, in response to changing transportation, 

environmental, and societal goals, the highway program has expanded to 

encompass broader goals, more responsibilities, and a variety of grant 

structures. As the highway program grew more complex, the federal 

government’s responsibility to oversee the program expanded as well. 

The role of the Department of Transportation’s (DOT) Federal Highway 

Administration (FHWA) has grown from overseeing the construction of 

highway projects to a wide range of activities including overseeing states’ 

transportation planning processes; assessing environmental impacts; and 

monitoring states’ compliance with property acquisition, contracting, civil 

rights, and other requirements.1 As we have reported, FHWA has faced 

challenges in ensuring that federal funds are efficiently and effectively 

used because the highway program is one in which there is limited 

federal control—it is a state-administered, federally assisted program.2

To adapt to its evolving role, FHWA has relied on its historical partnership 

with the states in which FHWA and the states work collaboratively to 

Funds are largely apportioned by formula, and the states enjoy broad 

flexibility in deciding which projects are supported. Furthermore, for nearly 

half of federal-aid highway funds, FHWA’s responsibility to oversee the 

design and construction of projects has been assumed by the states.

 

1

Prior to 1967, the federal-aid highway program was administered by the Bureau of Public 

Roads, then a bureau in the Department of Commerce. These responsibilities were 

transferred to the Secretary of Transportation in 1967. Department of Transportation Act, 

Pub. L. No. 89-670, § 6(a), 80 Stat. 931, 937 (1966), eff. April 1, 1967, 32 Fed. Reg. 5453.

2

GAO, Federal-Aid Highways: FHWA Needs a Comprehensive Approach to Improving 

Project Oversight, GAO-05-173 (Washington, D.C.: Jan. 31, 2005).

 
 

Page 2 GAO-12-474 Highway Infrastructure

construct highway infrastructure. Specifically, FHWA division offices, which 

are located in every state, the District of Columbia, and Puerto Rico, have 

developed close working relationships with state departments of 

transportation (state DOTs). (For a complete list of division offices, see 

appendix I.) We have reported that this partnership approach offers benefits, 

such as more efficient project delivery, but can also create challenges. When 

an overseer becomes an active partner in a project, the independent 

perspective important to effective project oversight can be lost.3

Legislation approved by the Senate in March 20124

You asked us to examine how FHWA’s partnership with state DOTs 

affects its oversight of the highway program and, in particular, how it 

might affect the transition to a more performance-based highway 

program. This report addresses (1) the basis for FHWA’s partnership and 

oversight role in relation to the states, and how the federal-aid highway

program and FHWA’s oversight have changed over time; (2) the extent to 

which FHWA’s partnership approach produces benefits; (3) the extent to 

which FHWA’s partnership approach poses risks; and (4) how FHWA’s 

partnership with state DOTs could affect a transition toward a 

performance-based highway program.

would establish 

performance measures for highways and require FHWA to monitor states’ 

progress in meeting these measures. As a consequence, FHWA’s 

oversight approach could undergo significant change, as FHWA would 

need to work with the states to develop measurable goals to improve the 

condition and performance of the nation’s highway system and take 

action when performance measures are not met. Given its history, FHWA 

is likely to use its partnership with the states to implement such a system. 

Also, administering a performance-based system would be an addition to 

FHWA’s other duties.

To achieve these objectives, we reviewed and analyzed relevant laws 

and regulations, historical documentation, and stewardship agreements 

between FHWA and state DOTs that delineate oversight responsibilities. 

We conducted site visits to 9 of FHWA’s 52 division offices, which are 

located in all 50 states, the District of Columbia, and Puerto Rico, chosen 

based on a range of criteria, including the size of the state’s 

 

3

GAO-05-173. 

4

S. 1813 §§ 1106, 1112, 112th Cong. (as adopted by the Senate March 14, 2012).
 

Page 3 GAO-12-474 Highway Infrastructure

transportation program and proportion of federal funding, the rural and 

urban composition of the state, and geographic distribution. During our 

site visits, we interviewed FHWA division office leadership as well as 

state officials, when possible, to understand how they characterize their 

relationship. To obtain a broader perspective than site visits provide, we 

designed and conducted a survey of the division administrators from each 

of the 52 FHWA division offices; our response rate was 100 percent. We 

also conducted 4 discussion groups that included representatives from 38 

of 52 state DOTs. Through a literature review, we identified best practices 

and risks associated with partnering, and used these criteria to assess 

FHWA’s current oversight approach by reviewing information from our 

audit work. We also analyzed available results from states’ 2010 Single 

Audit findings to independently identify areas of concern in oversight 

activities. See appendix II for more details on our scope and 

methodology.

We conducted this performance audit from April 2011 to April 2012 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.

Federal assistance for highway and bridge infrastructure—about $40 

billion each year—is distributed through multiple formula and 

discretionary grant programs collectively known as the federal-aid 

highway program. The federal-aid highway program is financed through 

the Highway Trust Fund, a dedicated source of federal revenue based on 

the “user-pay principle”—that is, users of transportation systems pay for 

the systems’ construction through the federal tax on motor fuels, tires, 

and trucks.

FHWA uses a decentralized organizational structure to administer the 

federal-aid highway program, meaning that decision-making authority is 

largely delegated to FHWA’s 52 division offices. FHWA division offices 

have 10 to 61 staff each, depending on the size of the state’s highway 

program. While there are variations in division office organizational 

structures, each typically has teams that cover areas such as planning, 

environment, engineering, technical services, finance, and civil rights. As 

of February 2012, FHWA had 2,960 staff—1,962 in the field and 998 at 

headquarters.

Background
 

Page 4 GAO-12-474 Highway Infrastructure

FHWA’s responsibilities for the federal-aid highway program fall into two 

broad categories: (1) advancing the program and (2) ensuring compliance 

with federal law and regulations. To advance the program, FHWA 

engages in a range of activities to encourage the effective and efficient 

use of federal-aid highway funding and assist states in progressing 

projects through construction to improve the highway system. To 

accomplish these tasks, FHWA works with states to identify issues, 

develop and advocate solutions, approve and obligate project funding for 

eligible activities, and provide technical assistance and training to state 

DOTs.5 To ensure that states comply with federal laws and regulations, 

FHWA, through its division offices, conducts oversight of federally funded 

projects and reviews state DOT capacity and systems used to administer 

approved projects. Actual project-level oversight is divided or shared 

between FHWA and the state. FHWA oversees major interstate highway 

projects. FHWA division offices and states jointly decide how to divide 

oversight responsibility for other National Highway System projects.6

For those projects where both FHWA and the state make decisions about 

oversight responsibilities, the respective responsibilities are generally 

mapped out in a “stewardship agreement.” This agreement defines which 

projects will receive “full” oversight, in which FHWA oversees most 

aspects of the construction process, or projects in which states assume 

oversight responsibility (we refer to these as “delegated” projects). Figure 

1 describes aspects of oversight that are led by FHWA or the state 

depending on the status of the project.

States assume oversight responsibility for projects that are not on the 

National Highway System. These can include locally administered 

projects, which are projects in which a state DOT has given approval to a 

local public agency (e.g. a city or county) to administer a project or phase 

of a project such design, property acquisition, or construction.

 

5

FHWA’s mission to advance the program is articulated in its national leadership strategic 

goal, which states that FHWA “leads in developing and advocating solutions to national 

transportation needs” as well as in its stewardship agreements.

6

The National Highway System consists of approximately 160,000 miles of roadway 

important to the nation’s economy, defense, and mobility. It includes Interstates, principal 

arterials, roads, and connectors important to the United States’ strategic defense policy. 

These roadways provide access, continuity, and emergency capabilities for defense 

purposes, and connect to major intermodal facilities, such as airports or transit hubs. 
 

Page 5 GAO-12-474 Highway Infrastructure

Figure 1: FHWA and State Oversight and Approval Activities for Full and Delegated Projects

To evaluate state DOTs’ systems and capacity to administer approved 

projects, FHWA division offices assess internal controls and processes 

across programmatic areas such as construction, finance, property 

acquisition, and locally administered projects. A common tool for this type 

of oversight is a “process review,” which involves an analysis of key 

program components and processes employed by the state DOT. 

Typically, this includes a file review of a sample of projects, interviews 

with relevant state DOT staff, and field reviews when applicable. In 

addition, FHWA, in conjunction with the Federal Transit Administration, 

performs a federal certification review of Metropolitan Planning 

Organizations (MPO), which are responsible for transportation planning in 
 

Page 6 GAO-12-474 Highway Infrastructure

urban areas with populations larger than 50,0007 every 4 years,8 meaning 

that periodically FHWA determines if the organization complies with 

applicable federal requirements. FHWA division offices have a range of 

corrective actions they can use if a state does not comply with federal 

requirements. Among other things, it may withhold funding from all or part 

of a project, deobligate inactive funds, withhold approval until an issue is 

resolved, or require corrective action plans.

Over the years, the federal-aid highway program has grown to 

encompass broader goals, more responsibilities, and a variety of 

approaches; however, the concept of a federal-state partnership has 

been an integral feature of the highway program since it was established 

by the Federal Aid Road Act of 1916.9

 

7

Federal and state governments oversee this regional planning process. At the federal 

level, the Federal Transit Administration and FHWA work together to perform federal 

certification reviews—certifying that each Transportation Management Area (TMA) has 

carried out its planning according to the applicable federal statutes. More specifically, the 

certification review requires that the federal government assess TMAs every 4 years to 

determine how well they are working with the transportation-related organizations, local 

governments, public transportation operators, and citizens in their area, as well as with the 

state DOTs, to meet the many statutory and regulatory requirements applicable to the 

planning process. Additionally, the certification review assesses the quality of the required 

planning documents. The certification review includes a desk review of the MPO’s plans 

and a site visit, among other things. Additionally, all MPOs, including both TMAs and nonTMAs, must also self-certify that their planning process meets the federal requirements. 

This and other early highway 

legislation established federal-state responsibilities, wherein states select 

the placement of roads, construct, and maintain them, and the federal 

government sets standards and provides a portion of the funding. The 

Federal-Aid Highway Act of 1973 further refined the federal-state 

relationship by stating that “the authorization of the appropriation of 

Federal funds...shall in no way infringe on the sovereign rights of the 

States to determine which projects shall be federally financed” and 

defined the federal-aid highway program as a “federally assisted State 

8

Required by 23 U.S.C. § 134(k)(5). 

9

Act of July 11, 1916, ch. 241, § 4, 64th Cong., 39 Stat. 355, 357.

FHWA’s Partnership 

Role Was Established 

almost a Century Ago, 

but over Time Its 

Responsibilities Have 

Expanded
 

Page 7 GAO-12-474 Highway Infrastructure

program.”10 This language helped shape FHWA’s interpretation of the 

federal-state relationship, leading to an understanding of its role that 

anchors FHWA’s approach to oversight in partnership and is cited today 

in FHWA’s policy documents.11 Almost all the division administrators we 

surveyed described their work with states as a partnership and in ways 

that emphasized the importance of partnership in carrying out FHWA’s 

mission to advance the transportation program. In addition, as we 

previously reported, both FHWA and state officials believe that over the 

years the partnership has helped to build trust and respect between state 

transportation agencies and FHWA, ensuring that as partners they can 

accomplish tasks such as planning and building projects more efficiently 

and effectively.12

The goals and scope of the federal-aid highway program expanded 

during much of the 20th century, as did the roles and responsibilities of 

FHWA. Initially, the highway program was administered by the 

Department of Agriculture through the Bureau of Public Roads, a 

predecessor to FHWA.13

 

10The act also referred to the federal-state relationship as contractual and authorized 

withdrawal of a portion of the San Antonio North Expressway as a federal-aid highway 

project upon repayment into the Highway Trust Fund of funds previously paid by the 

federal government. Texas’ desire to withdraw the Expressway stemmed from an impasse 

over routing to minimize environmental impact by complying with the National

Environmental Policy Act of 1969, Pub. L. No. 91-190, 83 Stat. 852 (1970) (codified, as 

amended at 42 U.S.C. ch. 55). Congress has enacted legislation authorizing states to 

withdraw highways from the program in other specific instances as well. 

The bureau focused oversight at the project 

level to ensure that materials and construction methods met federal 

standards. The bureau also brought engineering expertise to the states, 

many of which either lacked skilled engineers or were not ensuring that 

11FHWA policy documents and officials have altered this language slightly and widely 

refer to the program today as a “federally assisted state-administered program.” 

12GAO-05-173. 

13Responsibility for public roads was at various times with the Department of Agriculture 

(Act of July 11, 1916, § 1, 39 Stat. 355), Federal Works Administration (Reorganization 

Plan No. 1 of 1939, § 302, 53 Stat. 1423, 1427), and the Department of Commerce 

(Reorganization Plan No. 7 of 1949, 63 Stat. 1070). The Department of Transportation Act 

established a Federal Highway Administration, headed by an administrator, into which 

was transferred the Department of Commerce Bureau of Public Roads reporting to its 

former administrator, retitled the Director of Public Roads. (Pub. L. No. 89-670, §§ 3(d), 

(4), 80 Stat., 932-933 (1066)). The position of Director of Public Roads was abolished by 

the Federal-Aid Highway Act of 1970, Pub. L. No. 91-605, § 114, 84 Stat. 1713, 1722-

1723.
 

Page 8 GAO-12-474 Highway Infrastructure

federal dollars were being used to produce quality construction. The 

Defense Highway Act of 1941 extended the 1916 act to fund a strategic 

network of highways, including secondary and feeder routes. Eligibility 

was extended again in 1944 to include an array of other secondary roads, 

including rural farm-to-market roads, rural mail and bus routes, county 

roads, and others that became eligible for post-war federal aid.14 In 1950, 

Congress made additional roads—including county, township, and urban 

roads—eligible for aid.15 By then, however, the focus of the highway 

program was turning increasingly to constructing the Interstate Highway 

System. Designated as mandated in 1944,16 construction of the system 

began in earnest with passage of the Federal-Aid Highway Act of 195617

and establishment of the Highway Trust Fund, a dedicated funding source 

deriving revenue primarily from taxes on motor fuels, tires, and trucks to 

finance the construction of the Interstate system.18

Construction of the Interstate remained the focus of the federal-aid 

highway program in the years that followed, and Congress continued to 

expand the types of projects eligible for federal funds. In the 1970s, 

Congress expanded the federal role in bridge infrastructure by making 

highway bridges located on public roads and longer than 20 feet eligible 

for federal funds.19 Congress also expanded the eligibility of federal aid 

beyond initial construction. Under the 1916 Act and Interstate 

authorizations, the federal government was to fund the construction of 

highways while maintenance was the states’ responsibility. However, as 

the Interstate began to age, Congress allowed states to use federal funds 

for road maintenance on Interstate highways and all eligible bridges by 

redefining certain activities—such as resurfacing, rehabilitation, and 

reconstruction—as capital investments rather than maintenance.20

 

14Act of December 20, 1944, ch. 626, §§ 1, 3(b), 58 Stat. 838-839. Federal-aid-Secondary 

Program (1952-1991), Urban Extensions (1944-1976).

By 

15Federal-Aid Highway Act of 1950, ch. 912, § 1(b), (c), 64 Stat. 785, 786 (1950), See,

also, the Federal-Aid Highway Act of 1948, ch. 732, 62 Stat. 355 (1948).

16Act of December 20, 1944, § 8, 58 Stat., 842.

17Federal-Aid Highway Act of 1956, ch. 462., Title I, 70 Stat. 374.

18Highway Revenue Act of 1956, ch. 462, Title II, 70 Stat. 387.

19Highway Safety Act of 1970, 91-605, Title II, § 204(a), 84 Stat. 1739, 1741 (1970).

20Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), Pub. L. No. 102-240, 

§ 1007(b)(1), 105 Stat. 1914.
 

Page 9 GAO-12-474 Highway Infrastructure

1991, as a result of changes over the years, use of highway funds was 

authorized to fund a wide range of transportation enhancement activities, 

including activities connected with highway beautification, historic 

preservation, and the establishment of bicycle and pedestrian trails.21

In addition to expanding the types of projects eligible for federal highway 

funds, over time Congress adopted legislation to achieve social goals 

such as advancing civil rights and environmental protection, and 

enhancing urban planning and economic development, which affected the 

federal-aid highway program and FHWA’s role and responsibilities. For 

example, the National Environmental Policy Act of 196922 required grant 

recipients to comply with federal environmental requirements by 

conducting environmental reviews for federally funded transportation 

projects. The Federal-Aid Highway Act of 1962 established urban 

transportation planning as a matter of national interest and required all 

construction projects to be part of a continuing, comprehensive, and 

cooperative planning process.23

In the early 1990s, Congress revised FHWA’s role and responsibilities. 

With the Interstate Highway System nearly complete, Congress created 

the National Highway System and subsequently states began to assume 

authority from FHWA. In addition, FHWA’s staff was reduced from 3,556 

Other federal requirements have included 

requiring compliance with prevailing wage standards applicable to federal 

contracts under the Davis-Bacon Act, a Disadvantaged Business 

Enterprise program to enhance participation of women- and minorityowned businesses, and Buy America provisions for acquiring steel and 

other materials. As the goals of the highway program expanded, FHWA 

added expertise in its division offices beyond civil engineers and hired 

economists, right-of-way specialists, planners, historians, ecologists, 

safety experts, civil rights experts, and others.

 

21ISTEA, Pub. L. No. 102-240, § 1007(c), 105 Stat. 1914, listed these as making 

“provision of facilities for pedestrians and bicycles, acquisition of scenic easements and 

scenic or historic sites, scenic or historic highway programs, landscaping and other scenic 

beautification, historic preservation, rehabilitation and operation of historic transportation 

buildings, structures, or facilities (including historic railroad facilities and canals), 

preservation of abandoned railway corridors (including the conversion and use thereof for 

pedestrian or bicycle trails), control and removal of outdoor advertising, archaeological 

planning and research, and mitigation of water pollution due to highway runoff.” 

22Pub. L. No. 91-190, 83 Stat. 852 (1970) (codified as amended at 42 U.S.C. ch. 55).

23Pub. L. No. 87-866, § 9, 76 Stat. 1148 (1962). 
 

Page 10 GAO-12-474 Highway Infrastructure

in 1998 to 2,960 in February 2012.24 Recognizing its changing roles, 

responsibilities, and decline in staff levels, FHWA continued to adapt its 

oversight approach. In 2006, it began adopting a risk management 

approach to its oversight, recognizing in part that, while its role had 

expanded, its resources had not.

25

FHWA has adapted to changes in demands for its oversight, but its role 

and responsibilities are complicated by the fact that the current federal 

approach to surface transportation in general—and to highways in 

particular—is not working well.26 The expansion of the program did not 

result from a specific rationale or plan, but rather an agglomeration of 

policies and programs since the 1950s without a well-defined overall 

vision of the national interest and federal role in our surface transportation 

system.27 Federal goals and programs are now numerous and sometimes 

conflicting, and federal roles are unclear. Furthermore, although DOT and 

FHWA establish national goals and priorities, federal highway funding is 

apportioned to states without regard to the accomplishment of specific 

outcomes or the performance of grantees. This makes it difficult to assess 

the extent to which funding is achieving transportation goals. For these 

and other reasons, funding surface transportation remains on GAO’s 

high-risk list.28

 

24Congress authorized the final funding apportionments to complete the construction of 

the Interstate Highway legislation and created the National Highway System, consisting of 

the Interstate Highway System and other roadways connecting to major transportation 

hubs such as ports, airports, international border crossings, and public transportation and 

transit facilities. ISTEA, §§ 2, 1001, 1003(a)(2),1006, 105 Stat. 1914. DOT and the states 

cooperatively identified these roads and selected 160,000 miles of interstate and other 

roads that by 1996 carried more than 40 percent of all highway traffic, 75 percent of heavy 

truck traffic, and 90 percent of tourist traffic. Once the roads were selected, Congress 

formalized this plan in the National Highway System Designation Act of 1995. Pub. L. No. 

104–59, § 101(a), 109 Stat. 568 (1995).

25FHWA’s risk management approach requires field offices to identify risks to the federalaid highway program, assess the risks on the basis of the potential impact and the 

likelihood that they will occur, develop response strategies for key risks, and include these 

strategies in the offices’ planned oversight activities.

26GAO, Surface Transportation: Restructured Federal Approach Needed for More 

Focused, Performance-Based, and Sustainable Programs, GAO-08-400 (Washington, 

D.C.: Mar. 6, 2008).

27GAO, Surface Transportation: Principles Can Guide Efforts to Restructure and Fund 

Federal Programs, GAO-08-744T (Washington, D.C.: July 10, 2008).

28GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 2011).
 

Page 11 GAO-12-474 Highway Infrastructure

In the face of its evolving roles and responsibilities, FHWA has relied on 

its historical partnership with the states in which FHWA and the states 

work collaboratively to construct highway infrastructure. FHWA uses 

partnering activities and practices with the states that are, based on our 

review and synthesis of partnering literature, recognized as best 

practices. These activities and practices enable parties to achieve 

individual and mutually beneficial goals and results, such as expedited 

project time frames and cost savings. We observed the following 

examples of successful partnerships:

• Open and regular communication includes clear and candid 

discussions among partners as well as an understanding of the inner 

workings and decision-making processes of participating 

organizations. FHWA division and state DOT officials reported having 

regular formal and informal meetings (at leadership and working 

levels) as well as frequent contact by e-mail and telephone.

• Clear delineation of roles and responsibilities involves understanding 

individual partner roles as well as articulating responsibilities for joint 

actions and tasks. FHWA stewardship agreements describe the roles 

of FHWA divisions and state DOTs. Some stewardship agreements 

that we examined include detailed matrices addressing factors such 

as work activities and their frequency, legal authority, and specific 

division office and state DOT responsibilities.

• Proactive issue identification and resolution, in a mutually agreeable 

way, is closely linked to open and regular communication between 

partnering members. FHWA officials in several division offices told us 

that they work closely with their state DOT counterparts to identify 

problems early and develop solutions. For example, one division 

administrator explained that, at times, the division office is forced to 

tell the state DOT that, because of its approach, a certain portion, or 

an entire construction project, is not eligible for federal funding.

However, the administrator stated that the next question the division 

staff asks is, “How can we do this?” to work with the state DOT to 

bring the project into compliance with federal requirements, and 

therefore allowing the state DOT to use federal funds.

FHWA Benefits from 

Using Recognized 

Partnership Practices

Partnering Activities and 

Practices
 

Page 12 GAO-12-474 Highway Infrastructure

• Conflict resolution processes include formal (documented protocols or 

escalation procedures) and informal (verbal agreements between 

parties) procedures for how to handle disagreements. FHWA division 

and state officials discussed their commitment to collaborative 

problem solving and using informal issue escalation procedures, for 

example, by elevating problematic issues to the leadership level for 

resolution. One FHWA division incorporated conflict resolution 

protocols into its formal partnering agreement with the state DOT. The 

agreement advocated using face-to-face communication for conflict 

resolution and outlined procedures for escalating issues.

In our survey and interviews, FHWA division administrators reported that 

FHWA uses its partnering relationship with state DOTs to advance the 

federal-aid highway program by ensuring that projects move to 

construction in a timely fashion, facilitating knowledge transfer, and 

promoting federal transportation priorities. Specifically, 51 of 52 survey 

respondents stated that their partnering relationship with their state was 

very or somewhat important to their ability to achieve the mission of the 

federal-aid highway program. Most division administrators (44 of 52) also 

indicated that the partnering relationship produces multiple benefits. 

Some of these benefits—such as expedited project time frames and cost 

savings—were noted as positive outcomes of partnership in the literature 

we reviewed. For example, FHWA officials in a northern state with a short 

summer construction season told us they work closely with state DOT 

officials to make timely decisions and move projects along to ensure that 

construction can be completed during the warmer months. FHWA officials 

in this state generally conducted non-construction-related process 

reviews in the winter season so that they and state DOT officials could 

focus on construction inspections and construction-related process 

reviews during the warmer months. Similarly, in another state, FHWA and 

state officials told us that by working together to resolve issues 

expediently, they were able to complete the environmental review and 

approval process for a large-scale project to reduce congestion on an 

important regional highway in about half of the time normally required.

Forty-four of 52 division administrators indicated in response to our 

survey that partnering was very helpful in facilitating the transfer of 

technical knowledge. In our site visits, FHWA officials explained that 

partnering helps FHWA to use technical knowledge transfer to advance 

the federal-aid highway program by assisting states in addressing 

technical or programmatic concerns, closing skill gaps, enhancing 

compliance, and informing decision making. FHWA division officials in 

Partnership Benefits in 

Advancing the Federal-Aid 

Highway Program
 

Page 13 GAO-12-474 Highway Infrastructure

one state told us that they had financed a trip by state DOT officials to 

learn about an alternative interchange design. As a result, the state DOT 

was able to make interchange improvements without removing and 

replacing an existing bridge, reducing costs from estimated $10 to $15 

million to $3 million. Similarly, when FHWA officials observed crumbling 

materials used for retaining walls and supporting structures, they brought 

in the technical expertise of the FHWA Resource Center, which resulted 

in the state DOT revising its materials specifications to ensure higherquality materials are used.

Forty-nine of 52 division administrators also indicated in response to our 

survey that partnering helps the agency to advance federal transportation 

priorities. One respondent stated that “partnering helps us advance more 

federal priorities and achieve greater public benefit than simply being 

parochial authoritarians that refuse to discuss anything that doesn’t 

directly involve a federal dollar or regulation.” For example, officials in one 

FHWA division office developed a business case for an approach to 

address congestion in a key section of highway as an alternative to the 

state’s planned solution. FHWA promoted its alternative to the state DOT 

and other stakeholders, and ultimately the state accepted FHWA’s 

approach because the data showed it would be more effective and less 

costly. In another example, FHWA division officials believed they 

influenced the state DOT to improve safety by using higher-quality 

barriers and rumble strips on highways to alert drivers straying off the 

road. Likewise, to improve safety, officials in another FHWA division office 

promoted cable barriers on highway medians as a risk-based, lower-cost 

alternative to concrete barriers.

Similarly, during our site visits, some FHWA officials said that their 

partnering relationship creates an opportunity to promote projects of 

national or regional significance within a state. For example, FHWA 

officials in one division office persuaded the state to address congestion 

around a toll plaza on a major interstate route. The state did not consider 

the project a high priority, because it did not affect most state residents as 

much as out-of-state drivers traveling through the state. However, FHWA 

division officials were able to persuade the state to construct the project 

when funding from the American Recovery and Reinvestment Act of 2009 

(Recovery Act)29

 

29Pub. L. No. 111-5, Title XII, 123 Stat. 115 (2009).

became available. One of the FHWA officials 
 

Page 14 GAO-12-474 Highway Infrastructure

commented, “Without partnerships, you lose opportunities to do things 

that would be good for the taxpayer.” 

FHWA relies on its partnering approach with state DOTs to facilitate 

oversight of the federal-aid highway program by engaging states in open 

dialogue about risks and obtaining their buy-in on program improvements. 

In our survey, 50 of 52 FHWA division administrators said that their 

division office’s partnering relationship was very or somewhat helpful in 

producing more effective oversight. Officials we spoke with during our site 

visits offered several illustrations of how partnership improves oversight. 

One FHWA division administrator told us that the state DOT proactively 

brings problems to FHWA’s attention rather than waiting for FHWA to 

discover them. We observed that this open dialogue about risks allows 

FHWA to address issues in a timely fashion and adopt a more responsive 

and problem-solving attitude. According to one FHWA division official, 

FHWA worked collaboratively with the state DOT to determine which 

process reviews to conduct during the year and then conducted the 

majority of those reviews jointly. According to the FHWA official, this 

practice strengthened oversight by helping to gain the state DOT’s buy-in 

and commitment to improving its processes, facilitating honest 

communication about risk areas, and creating an opportunity for FHWA to 

provide on-the-spot training when problems were identified. In another 

example, an FHWA division office holds annual meetings with state DOT 

officials where the two parties determine which projects should receive 

full oversight and which should be assumed by the state. We observed 

that this approach can strengthen oversight by allowing FHWA to 

incorporate the state’s perception of risk and weaknesses into their 

oversight plan by engaging in open dialogue with state officials about 

risks. Additionally, for each summer construction season, the two parties 

identify one of the state’s regions as a focus for full oversight. This allows 

each region and their project managers to receive training while their 

projects, primarily related to pavement preservation, are being reviewed 

by FHWA.

FHWA’s partnership with state DOTs also affects its use of corrective 

action. FHWA emphasizes working with state DOTs to bring them back 

into compliance through less stringent corrective action instead of more 

punitive action. Responses to our survey of division administrators 

showed that the most frequently used corrective action in the last 3 fiscal 

years was withholding approval of a particular request until an issue was 

resolved. According to one division administrator, withholding approval 

provides the greatest ability to address and resolve a particular issue and 

Partnership Benefits in 

Oversight and Effects on 

Corrective Action 

Decisions
 

Page 15 GAO-12-474 Highway Infrastructure

encourages the state to take corrective action in a timely manner. 

Additionally, 43 of 52 division administrators reported that in the last 3 

fiscal years they have used the threat of a corrective action, which helps 

to achieve compliance without actual punitive actions. Reportedly, the 

threat of a corrective action is effective because it communicates the 

consequences of not complying with federal requirements and helps to 

bring about problem resolution. In addition, to address deficiencies, 51 of 

52 division administrators reported that they had required state DOTs to 

develop a corrective action plan to outline how the state would change a 

process or program to comply with federal requirements.

When FHWA moves toward a more punitive corrective action, it is most 

likely to withhold funding from a part of a project. Withholding partial 

funding often amounts to not paying for a line item in a project’s budget. 

For example, one division administrator explained that when the state 

purchases proprietary equipment, such as certain types of light posts or 

signs, when a less expensive nonproprietary option is available, FHWA 

withholds funds for the purchase. The federal-aid highway program is a 

reimbursement program. As a consequence, if FHWA withholds funds, 

state DOTs must replace federal funding with state funding. All 52 division 

offices indicated they withheld partial federal funding from a project in the 

last 3 fiscal years, and withholding partial funding was the second most 

frequently used tool for corrective action.

FHWA division offices reported that they rarely use their most punitive 

corrective actions, such as withholding funding for an entire project or 

organization. Although 30 division administrators we surveyed reported 

that they had withheld federal funding from an entire project during the 

past 3 fiscal years, none listed this action as one of their three most 

frequently used corrective actions. According to FHWA officials, such 

action is damaging to the state’s federal-aid highway program and 

provokes tension with state DOTs. FHWA officials stated that they see 

this measure as a last resort and try to use their partnership with the 

states to elicit compliance. Furthermore, division offices periodically 

review MPOs, which can receive federal-aid highway funding and 

implement construction projects. If the office declines to certify an MPO, 

federal funds for that organization are withheld until the deficiencies 

identified are corrected.
 

Page 16 GAO-12-474 Highway Infrastructure

FHWA division officials use partnering practices, such as open and 

regular communication, with state DOT officials as they exercise 

administrative discretion30 in situations where the rules and how to apply 

them are not clear—situations we refer to as “gray areas.” In 

administering the federal-aid highway program, FHWA often has 

discretion to take a less stringent action even when the law permits a 

harsher one, if circumstances warrant. Such an approach is embodied in 

a stewardship agreement from one division office, which states that the 

division office “will make use of available regulatory flexibility when in the 

public interest.” FHWA officials spend time and effort addressing gray 

areas, as they seek to make a decision that is not only consistent with 

federal regulations but also appropriate to the particular facts and 

circumstances of the situation. For example, the federal regulations 

governing federal-aid contracts call for state DOTs to use reasonable 

judgment in evaluating contractors’ good faith effort to hire women- and 

minority-owned businesses but do not specify the type of documentation 

contractors must submit to demonstrate their effort.31

In our interviews and observations, we noted that FHWA officials rely on 

partnering practices with states when federal regulations and FHWA 

policies leave room for interpretation and discretion, creating gray areas 

for FHWA officials to resolve. For example, routine roadway maintenance 

is not eligible for federal reimbursement,

Because there are 

no specifications on the type of documentation demonstrating a good faith 

effort, FHWA and state DOT officials must work through this gray area to 

determine how best to demonstrate their efforts.

32

 

30Administrative discretion is a public official’s ability to decide whether a particular 

administrative act is to be implemented, and in what manner. 

but preventive maintenance 

3149 C.F.R. Part 26, Appendix A. When a state DOT sets Disadvantaged Business 

Enterprise contract goals on individual U.S. DOT-assisted contracts, bidders on those 

contracts must make good faith efforts to meet those goals. The bidder can meet this 

requirement in one of two ways: (1) meet the goal on the individual U.S. DOT-assisted 

contract, or (2) document that it made an adequate good faith effort—meaning that the 

bidder took the necessary and reasonable steps to achieve the goal even though it did not 

succeed in obtaining enough DBE participation to do so. State DOTs are responsible for 

evaluating whether bidders made good faith efforts to meet their goals, and according to 

U.S. DOT officials, this evaluation is subject to FHWA review as appropriate.

3223 U.S.C. § 116(a).

Navigating the “Gray 

Areas” 
 

Page 17 GAO-12-474 Highway Infrastructure

can be.33

We also observed FHWA using partnering practices to negotiate the gray 

areas that may arise when the rules are clear, but practical considerations 

complicate implementing the rule. When implementing a rule, public 

officials may need to consider cost-benefit implications, time frames, local 

economic conditions, or other local circumstances that are not necessarily 

dealt with explicitly in rules or regulations. For example, FHWA officials in 

one division office explained that FHWA’s regulations require roadside 

guardrails on National Highway System routes to be a minimum height of 

27 3⁄4 inches from the top of the guardrail to the top of the pavement. The 

height of a guardrail governs its effectiveness. However, as states overlay 

pavement with new asphalt to address road deterioration, the height of 

the guardrail relative to the road surface decreases and the guardrail 

becomes less effective. This creates practical trade-offs with regard to the 

costs of guardrail replacement and safety, raising questions regarding 

whether to use funds to improve the pavement condition of, for example, 

20 miles of road without replacing guardrails or to pave fewer miles of 

road but replace the guardrails to ensure they are at the full height 

prescribed in the regulation. Both approaches offer safety benefits. 

Determining the best course of action requires navigating a gray area and 

According to an FHWA division administrator in one state, there 

is room for interpretation and discretion between the two types of 

maintenance. This division administrator told us that in recent years the 

state DOT has sought reimbursement from FHWA for roadway 

maintenance activities that are typically ineligible for reimbursement—a 

situation he attributed to the economic environment affecting state 

budgets. This required time and effort by both FHWA and the state DOT 

to work through their different interpretations of the regulation. Ultimately, 

FHWA and the state agreed to develop asset management systems to 

identify and prioritize preventive maintenance needs in a systematic way. 

The division administrator explained that this approach would show and 

document how the maintenance strategies would extend the roadway life 

and prevent deterioration and higher maintenance costs later, which 

would make these costs eligible for federal funding.

 

3323 U.S.C. § 116(d). Routine maintenance is defined as work that is planned and 

performed on a routine basis to maintain and preserve the condition of the highway 

system at an adequate level of service. Preventive maintenance is defined as a planned 

strategy of cost-effective treatments to an existing roadway system that preserves the 

system, retards future deterioration, and maintains or improves the functional condition of 

the system.
 

Page 18 GAO-12-474 Highway Infrastructure

requires FHWA to understand the state’s priorities, weigh the safety 

outcomes, and use its partnership with the state to agree on an approach 

that meets transportation needs and federal responsibilities.

While FHWA officials largely viewed their partnering relationship with 

state DOTs in positive terms, state officials offered a more tempered 

response. Specifically, our interviews and discussion groups with officials 

from 38 state DOTs revealed that while states acknowledged having good 

working relationships with their FHWA division counterparts, they also 

expressed some frustrations. On the positive side, state DOT officials 

appreciated regular and ongoing communication with FHWA officials and 

characterized FHWA staff as accessible, responsive, and solutionoriented. State DOT officials told us that stewardship agreements were 

helpful in clarifying roles and expectations and that they consider riskbased oversight to be a strength of the FHWA-state relationship. Officials 

also appreciated FHWA’s help in navigating federal requirements and 

sharing technical expertise and industry best practices. Furthermore, 

state officials appreciated that FHWA officials recognized the unique 

needs, context, and features of their state. State DOT officials 

participating in our discussion groups asserted that they do not want a 

“one size fits all” FHWA.

However, state DOT officials’ positive feedback about FHWA was 

tempered with other perspectives on partnering and FHWA decision 

making. We noted three themes among the comments of state DOT 

officials when voicing perspectives different from FHWA.

1. State officials viewed partnership less favorably than FHWA. Many 

state DOT officials characterized FHWA’s role as providing oversight 

and enforcing regulations rather than acting as a partner. Some 

officials indicated FHWA began emphasizing enforcement over 

partnership around the time of the completion of the Interstate 

Highway System, as FHWA responded to legislative changes, 

adopting what many state officials viewed as an audit-focused 

approach to oversight. According to some state DOT officials, the 

sense of camaraderie between state DOT and FHWA officials that 

existed during the building of the Interstate is no longer there, and 

currently there is “less partnership and more regulation.” Reflecting 

the states’ more tempered perspective, one state DOT official 

characterized the relationship with FHWA as “a partnership within an 

arranged marriage.” 

States’ Perspectives on 

Partnering and Oversight
 

Page 19 GAO-12-474 Highway Infrastructure

2. State officials viewed FHWA as imposing personal preferences. Many 

state DOT officials told us that FHWA officials routinely imposed 

personal preferences—for example, questioning particular design 

solutions—and would threaten to withhold federal funds or approval 

even though, in the states’ view, the approach the state had 

developed complied with federal standards and regulations. State 

DOT officials pointed out that these preferences are not covered in 

the regulations but rather involve professional judgment regarding 

such factors as cost, appearance, and durability that are not 

prescribed in regulation and are often unique to a particular 

construction project. For example, according to officials at one state 

DOT, FHWA had a preference for sequencing construction activities 

in a particular way rather than leaving the decision up to the state 

DOT, and on this particular project FHWA made its preference a 

requirement. Some states also said that FHWA gives too much focus 

to smaller issues and is overly involved in routine matters.

3. State officials were frustrated by inconsistencies in FHWA’s decision 

making across states. Many state DOT officials expressed frustration 

about the inconsistencies they perceived in FHWA’s decisions across 

states. Specifically, several noted that FHWA division offices in other 

states had been more permissive of certain solutions or requirements 

compared to the FHWA division office in their state and stated that 

FHWA does not always use the maximum flexibility it has at its 

disposal in interpreting federal rules. For example, a state DOT official 

told us that the division office in his state did not approve a certain 

material for markings on the state’s highways, but he learned that the 

same material had been approved in 17 other states.

The inconsistencies experienced by state DOTs may not be 

unreasonable and could stem from the decentralized nature of the 

federal-aid highway program and the fundamental challenge FHWA and 

the states face in navigating gray areas on complex projects with unique 

political, financial, engineering, and other challenges. These complexities 

likely contribute to FHWA and state DOTs’ differing perspectives. For 

example, we previously reported a case in which a state DOT planned to 

construct new soundwalls on an existing highway. FHWA noted that the 

state was planning to widen the road a few years later and that the walls 

would likely have to be destroyed and rebuilt. FHWA recommended that 

the state construct the walls at the location envisioned for the widening 

project, but state DOT officials resisted because of the additional costs to 

acquire property. FHWA then informed the state that it would only fund 

construction of the walls once—either at the location along the existing 
 

Page 20 GAO-12-474 Highway Infrastructure

highway as the state had planned or at the location needed once the road 

was widened.34 This example illustrates a case in which state officials 

may have viewed FHWA as imposing its personal preferences and may 

have been aware of similar situations in other states in which FHWA 

officials made different decisions inconsistent with this approach. FHWA, 

on the other hand, may have viewed its decision as exercising 

professional judgment to promote the most long-term cost-effective 

solution, consistent with its role as a steward of federal funds.

While successful partnering relationships offer benefits, they also present 

potential risks, according to the literature we reviewed. First, one partner 

may grow lax in holding the other to standards. Second, one partner can 

lose independence in its decisions. We observed cases where FHWA 

was lax in its oversight by trusting but not verifying state activities and 

cases where FHWA demonstrated reluctance to take corrective action to 

bring states back into compliance, which can result in ineffective, 

wasteful, and potentially improper use of federal funds. We also observed 

instances in which FHWA sometimes showed a lack of independence in 

decisions, putting the states’ interests above federal ones, and other 

instances in which FHWA took extraordinary measures to advance the 

program to the point of becoming actively and closely involved in 

implementing solutions to state problems. This can create an inherent 

conflict when FHWA later must review and approve those actions or 

review their effectiveness. Despite the risks partnership poses, FHWA 

has good oversight practices in several areas of the federal-aid highway 

program.

We have expressed concerns about the risks posed by FHWA’s 

partnership approach in the past. The Central Artery/Tunnel project in 

Boston, Massachusetts, provides examples of both lax oversight and a 

lack of independence that resulted in ineffective and inefficient use of 

federal funds and damaged FHWA’s credibility.35

 

34GAO, Transportation Infrastructure: Managing the Costs of Large-Dollar Highway 

Projects, 

This highway project—

one of the largest, most complex, and expensive ever undertaken—

GAO/RCED-97-47 (Washington, D.C.: Feb. 27, 1997).

35GAO, Federal-Aid Highways: FHWA Needs a Comprehensive Approach to Improving 

Project Oversight, GAO-05-173 (Washington, D.C.: Jan. 31, 2005), 5.

FHWA’s Partnership 

with States Poses 

Risks in FHWA’s 

Oversight

Partnership Created 

Challenges for FHWA in 

the Past
 

Page 21 GAO-12-474 Highway Infrastructure

experienced widely reported cost increases, growing from around $2.3 

billion in the mid-1980s to almost $15 billion in 2004. From 1995 through 

1997, we reported concerns about cost growth and funding gaps on the 

project and weaknesses in FHWA’s efforts to address them and to hold 

the state accountable.36 In March 2000, an FHWA task force charged with 

reviewing FHWA’s oversight of the project concluded that “FHWA’s long 

history of strong Federal/State partnerships failed” and that FHWA “had 

failed to maintain an independent enough relationship with the state to 

adequately fulfill its oversight role.” The task force attributed lax oversight

to FHWA placing too much trust in the state, reporting that FHWA’s 

partnership approach failed to achieve independent and critical oversight 

of the project.37

As this example illustrates, although FHWA has experienced partnership 

risks to its programs in the recent past, FHWA division administrators 

generally do not recognize the risks of partnering as significant. In our 

survey, more than half (29) stated they did not believe that partnering 

creates any risks to their oversight of the federal-aid highway program. Of 

the remainder, 5 said it may create “some risk,” 17 said there was a 

“slight risk,” and only one stated partnering was a “significant risk” to 

oversight.

In some instances, FHWA was lax in its oversight in that it did not verify 

compliance with the requirements of the federal-aid highway program, 

instead trusting states to ensure its actions were in compliance, which 

could have resulted in ineffective, wasteful, and potentially improper use 

of federal funds. For example:

• Our November 2011 report on the Emergency Relief program (which 

provides funds to states to repair roads damaged by natural disasters 

and catastrophic failures) found that many of the project files reviewed 

 

36GAO, Transportation: Central Artery/Tunnel Project, GAO/RCED-95-213R (Washington, 

D.C.: June 2, 1995), Transportation Infrastructure: Central Artery/Tunnel Project Faces 

Financial Uncertainties, GAO/RCED-96-131 (Washington, D.C.: May 10, 1996), 

Transportation Infrastructure: Progress On and Challenges to Central Artery/Tunnel 

Project’s Costs and Financing, GAO/RCED-97-170 (Washington, D.C.: July 17, 1997), 

and GAO/RCED-97-47. 

37FHWA, Federal Task Force on the Boston Central Artery Tunnel Project: Review of 

Project Oversight and Costs (Mar. 31, 2000).

FHWA Sometimes Was Lax 

in Its Oversight or 

Reluctant to Take 

Corrective Action
 

Page 22 GAO-12-474 Highway Infrastructure

did not contain documentation to support FHWA decisions that 

projects met program eligibility requirements.38 Specifically, of the 83 

projects reviewed, 81 projects (representing $193 million in federal 

funds) had missing or incomplete documentation. As a result, we were 

unable to determine the basis of FHWA’s eligibility decisions for many 

of the projects reviewed. We also found that FHWA divisions relied 

heavily upon the information provided by states to make FHWA 

eligibility decisions without verifying that information. For example, 

one FHWA division office reported that it reviewed preliminary cost 

estimates for about one-third of the projects included in our review 

before determining that projects were eligible.39

• In the Disadvantaged Business Enterprise (DBE) program, which 

aims to increase the participation of small businesses owned and 

controlled by socially and economically disadvantaged individuals, 

state DOTs are among those entities responsible for certifying firms to 

participate.

As a result, we could 

not determine the basis of FHWA’s eligibility decisions for those 

project cost estimates it did not review and as such, FHWA ran the 

risk of providing funds to ineligible projects.

40

 

38GAO, Highway Emergency Relief: Strengthened Oversight of Eligibility Decisions 

Needed,

In an interview with one FHWA division office, the FHWA 

official said that he knows that the state DOT official is very 

experienced with the DBE certification process and, because of that, 

relies on the state to make certification decisions consistent with 

federal regulations. As a result, the official stated that FHWA is 

generally not involved in verifying the eligibility of DBE firms certified 

by the state. Although FHWA is not required to review every 

certification, in this instance FHWA’s partnering relationship with the 

state influenced the level of oversight conducted in this area and 

exposed FHWA to the risk that ineligible firms might be certified as 

DBEs. 

GAO-12-45 (Washington, D.C.: Nov. 8, 2011).

39FHWA told us that this risk-based approach was appropriate since states have assumed 

oversight responsibility for design and construction of many federal-aid highway projects, 

including emergency relief projects. However, we found that this approach did not appear 

to be consistent with FHWA’s procedures as outlined in its Emergency Relief Manual.

40GAO, Disadvantaged Business Enterprise Program: Assessing Use of Proxy Data 

Would Enhance Ability to Know if States Are Meeting Their Goals, GAO-12-78

(Washington, D.C.: Oct. 13, 2011).
 

Page 23 GAO-12-474 Highway Infrastructure

• Officials from the FHWA division offices we spoke to said they tended 

not to do unannounced inspections. Instead, FHWA alerts the relevant 

construction sites and offices of an inspection ahead of time. Officials 

from one FHWA division office explained that they rely primarily on 

announced visits because they do not want to create a “gotcha” 

environment, which might hurt their relationship with the state. 

Division officials from another office explained that announcing 

inspections gives state DOT staff time to do things like assemble the 

appropriate records or personnel for FHWA’s inspection or allows 

FHWA to observe specific activities, such as materials testing, on the 

day that particular activity is occurring. While there are some 

advantages to announced inspections, the Institute of Internal 

Auditors includes unannounced visits as a common practice used by 

firms to mitigate risks associated with partnering.41

The partnering relationship between FHWA and state DOTs at times may 

have also resulted in FHWA being reluctant to require corrective action to 

bring a state back into compliance with program requirements. 

Specifically, FHWA staff acknowledged that, in their daily decision 

making, they have to think about how to preserve their relationship with 

their state counterpart and that they view taking corrective action as 

potentially damaging to that relationship. For example:

 By not conducting 

unannounced inspections, FHWA is essentially trusting the state and 

its contractors to put compliance with federal requirements over 

meeting competing demands like cost and schedule. In doing so, it 

may be missing the opportunity to more accurately verify compliance 

with federal requirements, observe normal operations, and create an 

environment conducive to compliance.

• We and the DOT Office of Inspector General have reported multiple 

times on the problem of funds committed to inactive federal-aid 

highway projects.42

 

41Institute of Internal Auditors Research Foundation, Managing Strategic Alliance Risk: 

Survey Evidence of Control Practices in Collaborative Inter-organizational Settings (2006), 7.

FHWA has made it a priority to decrease nationally 

the number of outstanding inactive projects to ensure that federal funds 

are being used in a timely and effective way. For example, FHWA had 

42Inactive projects are state and local construction projects to which federal funds have 

been obligated, but which have not had any expenditures over a 1-year period or for which 

funds are available but are unlikely to be obligated by FHWA within 1 year, as certified by 

the state. 
 

Page 24 GAO-12-474 Highway Infrastructure

reduced the percent of funds obligated to inactive projects to about 3.4 

percent of all obligations by March of 2012—this percentage had stood 

at around 8 percent as recently as September 2010.43

• One state identified serious compliance issues with one of its major 

cities dating as far back as 2003, including federal construction 

specifications not being followed, insufficient field equipment, and lack 

of appropriate construction supervision. In 2009, FHWA withheld 

funding from the city for about 2 weeks while the state DOT drafted a 

corrective action plan. FHWA approved the plan and resumed 

funding. However, nearly 2 years later, as of August 2011, there were 

still points in the plan that had not been addressed. As a result, 

In 2008, it 

established a Financial Integrity Review and Evaluation program 

requiring division offices to conduct a quarterly review of inactive 

projects and determine the validity of the amount obligated for each 

project. FHWA division offices have the authority to de-obligate funds 

from inactive projects. However, FHWA division officials with oversight 

responsibility for three states we visited expressed reluctance to use 

this authority because of concerns that it would negatively affect their 

working relationship with the state. Instead, these division offices 

negotiated with state officials to get them to explicitly agree to allow 

FHWA to de-obligate funds. FHWA officials acknowledged that this is a 

long, time-intensive process. For example, over the course of 6 months, 

one FHWA division office sent reminder letters with specific deadlines 

for the state to provide a rationale for allowing inactive funds to remain 

obligated. Yet at the end of this process there were still outstanding 

inactive projects that had not been resolved. In another state, FHWA 

finance personnel described having ongoing conversations with their 

state counterparts, asking them the status of inactive projects and 

negotiating to de-obligate those funds. The FHWA division office 

described the process as “walking the tightrope” with the states when 

making decisions to de-obligate. The amount of time officials we spoke 

with devoted to addressing inactive funds raises questions about 

whether, on the whole, division offices could have moved more quickly 

to make these funds available to other needed projects had officials not 

had to consider the impact of withdrawing funds on their partnership 

with the state.

 

43FHWA tracks data on inactive projects and, although it does not publish these data, it 

provided them to us in commenting on this report.
 

Page 25 GAO-12-474 Highway Infrastructure

federal funds continued to flow to projects that may not have fully met 

federal requirements.

• FHWA can delegate to the state the responsibility of approving 

consultant contracts to ensure compliance with federal regulations. 

One state DOT lacked FHWA-approved written procedures for how it 

selects consultants, which are necessary to comply with federal 

regulations. The FHWA division office had given the state an 

extended opportunity—about 5 years—to address the compliance 

issue, allowing it to use interim procedures as long as the state DOT 

was developing final procedures and planning to have them approved 

by FHWA. After 5 years, due to the failure of the state to develop final 

procedures, the FHWA division office suspended all state DOT 

contract approvals and temporarily re-assumed the responsibility of 

approving consultant contracts to ensure compliance with federal 

procurement regulations. Once the state DOT developed written 

procedures and they were approved, FHWA restored consultant 

contract approval authority to the state DOT.

As discussed earlier, FHWA division administrators reported that they

rarely use their most punitive corrective action tools such as cutting off 

funding for a program or organization. While FHWA, in cooperation with 

the Federal Transit Administration, is responsible for certifying that MPOs 

meet federal requirements, as we reported in September 2009, FTA and 

FHWA officials were unaware of any instance in which an MPO was not

certified due to noncompliance in the previous 10 years.44

 

44GAO, Metropolitan Planning Organizations: Options Exist to Enhance Transportation 

Planning Capacity and Federal Oversight

In our survey of 

division administrators, for fiscal years 2009 through 2012, one FHWA 

division administrator reported that he withheld certification of an MPO 

due to issues in its congestion mitigation plan. However, FHWA still 

allowed project approvals to move forward. The FHWA division office put 

together a corrective action plan with the MPO, identifying action steps, 

deadlines, and people responsible. According to the FHWA division 

administrator, as long as the state is making progress toward resolving 

the issue, FHWA will not prevent the MPO from obtaining project 

approvals and moving construction forward. He noted that MPOs have a 

4-year window to become recertified, and if an MPO reached the end of 

its window but still had not taken sufficient action for FHWA to certify it, 

GAO-09-868 (Washington, D.C.: Sept. 9, 2009). 
 

Page 26 GAO-12-474 Highway Infrastructure

FHWA would likely provide an extension and grant the MPO “conditional” 

certification, rather than decertify it.

Similarly, none of the 52 FHWA division administrators stated they had 

not approved their state’s bridge program any time in the past 3 fiscal 

years. In 2010, the DOT Office of Inspector General found some cases 

where FHWA bridge engineers reported that a state’s bridge program 

substantially complied with federal regulations despite deficiencies that 

could have posed serious risks to public safety.45 For example, one 

FHWA bridge engineer judged a state to be substantially compliant 

despite reporting that the state failed to close 96 bridges, as required. A 

bridge engineer in another state reported that 47 bridges were not closed 

as required, but concluded that the state was substantially compliant. In 

two other cases, FHWA bridge engineers reported states as substantially 

compliant even though 200 bridges in one case and over 500 bridges in 

the other case were not posted with maximum weight limit signs, as 

required.

FHWA’s partnership relationship with the state may have made it 

vulnerable to a lack of independence in decisions to advance the program 

in some cases, resulting in it putting the states’ interests above federal 

interests. For example:

• The Recovery Act required that projects from economically distressed 

areas be given priority for project selection. The Public Works and 

Economic Development Act of 1965, as amended, defined these 

areas, and FHWA supplemented it with guidance to address 

determination questions. However, as we reported previously, three 

states developed their own guidelines to determine eligibility.46

 

45DOT, Assessment of FHWA Oversight of the Highway Bridge Program and the National 

Bridge Inspection Program (Washington, D.C.: Jan. 14, 2010), 9-10.

FHWA 

eventually determined that the states’ efforts to determine eligibility 

did not meet the federal criteria, but it did so after obligating nearly all 

46GAO, Recovery Act: States’ and Localities’ Uses of Funds and Actions Needed to 

Address Implementation Challenges and Bolster Accountability, GAO-10-604

(Washington, D.C.: May 26, 2010).

FHWA Sometimes Showed 

a Lack of Independence in 

Decisions
 

Page 27 GAO-12-474 Highway Infrastructure

the funds in those states, meaning FHWA’s determination was too 

late to affect project selection.47

• Our November 2011 report on the Emergency Relief program found 

instances in which two division offices funded new emergency events 

with allocations that were no longer needed from previous 

emergencies.48

• We have previously expressed concerns about the Emergency Relief 

program prioritizing state’s interests in other instances as well.

FHWA’s procedures specify that FHWA division 

offices are to identify, and then withdraw, unused program funding 

allocations so that FHWA can direct these funds to other 

emergencies. This provision exists because Emergency Relief 

program funding is often insufficient to fund emergency needs and a 

“backlog” list of projects exists. These two FHWA division offices gave 

priority to the state’s interest in maintaining control of funds over the 

federal interest of ensuring that scarce unused Emergency Relief 

funds were made available to other states with potentially higherpriority emergencies. In response to our recommendation that it do so, 

FHWA instructed its division offices in January 2012 to no longer 

permit states to transfer unobligated allocations from one emergency 

event to a new event.

49

 

47

In 

1996, we questioned the use of Emergency Relief funding in 

relocating and bettering the Cypress Viaduct, an elevated highway 

that collapsed in a catastrophic earthquake in Oakland, California.

FHWA’s regulations limit the use of emergency relief funds for 

improvements to or changes in the character of a destroyed facility. 

The regulations allow for funding “betterments”—such as relocation, 

replacement, upgrades, or added features that did not exist prior to 

the disaster—only when they are clearly economically justified to 

prevent recurring damage. In 1991, FHWA and the California 

Department of Transportation decided, as a result of environmental 

and community concerns, to replace the collapsed 1.5 mile 

connection with roughly 5 miles of new freeway segments. We 

GAO-10-604 and GAO, Recovery Act: Opportunities to Improve Management and 

Strengthen Accountability over States’ and Localities’ Uses of Funds, GAO-10-999

(Washington, D.C.: Sept. 20, 2010). 

48GAO-12-45. 

49GAO, Emergency Relief: Status of the Replacement of the Cypress Viaduct, 

GAO/RCED-96-136 (Washington, D.C.: May 6, 1996). 
 

Page 28 GAO-12-474 Highway Infrastructure

questioned funding these improvements and additional costs through 

the Emergency Relief program, rather than through the annual 

formula funding states receive from the federal-aid highway program. 

This decision provided California with over $1 billion in additional 

funding that it then did not have to utilize from regular federal-aid 

funds or state sources. In 2007 and 2011, we reported additional 

cases of FHWA using the Emergency Relief program to fund projects 

that had grown in scope and cost as a result of environmental and 

community concerns. In 2007, we recommended that FHWA revise its 

regulations to tighten eligibility criteria and place limits on the use of 

Emergency Relief program funds to fully finance projects with scope 

and costs that have grown as a result of environmental and 

community concerns. FHWA has not acted on this recommendation.

In addition, FHWA has on occasion taken extraordinary measures, 

expending considerable resources to advance the program, to the point of 

becoming actively and closely involved in developing and implementing 

solutions to state problems. When an overseer becomes part of the 

solution, the arms-length, independent perspective may be lost, as 

agencies that are responsible for implementing program improvements 

face an inherent conflict when they later approve those actions or review 

their effectiveness. For example:

• FHWA spent a substantial amount of time and effort with state DOT 

personnel and others trying to determine if funds used on a private 

bridge were eligible for use to help the state meet its matching 

requirement for federal funding. According to division office officials, 

the state was struggling to meet the 20 percent funding match 

required of states in order to receive the 80 percent federal-aid 

highway funding, due to the economic recession and poor fiscal 

situation of the state. Division office officials further explained that had 

it not met the match, the state could have lost about $200 million in 

federal funds in fiscal year 2012. States may receive “toll credits”—

funds that can be credited by FHWA toward the state’s federal 

match—if it can demonstrate that toll revenues were spent on facility 

improvements and meet other requirements. In an effort to meet its 

match, officials explained that the state identified a private toll bridge 

that it repaired and improved using toll revenue, but had never 

claimed the revenues as federal toll credits. The FHWA division office 

committed staff, including their financial manager, to work with the 

state DOT, the private bridge company, and an outside auditing firm 

to determine the eligibility of the toll credits. Together they identified 

more than $50 million in eligible toll expenditures, finding individual 

line item expenditures in areas such as preventative maintenance and 
 

Page 29 GAO-12-474 Highway Infrastructure

capital improvements related to tolling equipment and real estate 

acquisition. The eligible toll credits helped the state meet its fiscal 

year 2012 federal match requirement. While FHWA officials 

characterized the Division’s activities as appropriate technical 

assistance that was needed because the state did not have the skills 

to identify these credits, it placed the agency in a position of approving 

actions it was actively and closely involved in developing.

• In one state, an FHWA division office detailed a staff person to work 

full-time on-site at the state DOT to help bring the state into 

compliance with the requirements of the Highway Beautification Act of 

1965.50 Division office officials had identified ongoing compliance 

issues with the state’s outdoor advertising program, including multiple 

examples of signs that were not in compliance with the state’s 

agreement with DOT.51 As a result, FHWA could have withheld 10 

percent of the state’s federal-aid funds. However, the division did not 

withhold these funds. The division adopted an approach that entailed 

considerable time and effort on the part of FHWA by detailing a staff

person to (1) research sign regulations on federally controlled routes 

to determine compliance with the federal-state agreement and the 

Highway Beautification Act, (2) review the state’s outdoor advertising 

inventory to determine the status of signs, and (3) provide 

interpretations, clarifications, and authoritative determinations 

concerning FHWA policy, among other activities.

Despite the risks partnership poses, in several areas of the federal-aid 

highway program, FHWA has good oversight practices. The Institute of 

Internal Auditors has identified segregation of duties in the type of 

partnership FHWA has with state DOTs as one of the most common 

practices used in managing partnership-related risks.52

 

50Highway Beautification Act of 1965, Pub. L. No. 89-285, Title I, 79 Stat. 1028 (1965) 

(codified as positive law in 23 U.S.C. § 131). 

During the 

administration of the Recovery Act, FHWA developed the National 

Review Teams (NRT) composed of FHWA staff—separated from the rest 

51The 1965 act requires each state DOT to enter into a formal agreement with DOT to 

control signs adjacent to the Interstate System and other routes included on what is now 

the National Highway System.

52Institute of Internal Auditors Research Foundation, Managing Strategic Alliance Risk: 

Survey Evidence of Control Practices in Collaborative Inter-organizational Settings. 

Despite Partnership Risks, 

FHWA Has Good Oversight 

Practices in Several Areas
 

Page 30 GAO-12-474 Highway Infrastructure

of the FHWA—to act as a neutral third party to conduct oversight. The 

NRTs were able to maintain their neutrality and objectivity in part because 

they did not have to concern themselves with preserving a partnering 

relationship while conducting oversight and making recommendations for 

action. In addition, the findings and recommendations of the NRTs were 

reported both to the FHWA division office, which was responsible for 

developing action items in response, and the responsible FHWA Director 

of Field Services, who was responsible for ensuring the action items were 

completed within the established time frames. This practice of providing 

an independent review had several benefits. According to FHWA officials, 

it provided

• a consistent, comparative perspective on the oversight regularly 

conducted by division offices, and it gathered information at the 

national level on both best practices and recurring trouble spots 

across FHWA division offices;

• additional “boots on the ground” for project-level oversight and 

increased awareness of federal oversight activity among states, 

MPOs, and other transportation organizations receiving Recovery Act 

funds; and

• an independent outside voice to examine the Recovery Act projects 

and point out problems, keeping the partnering relationship between 

the division offices and the state DOTs intact.

The response to the NRT reviews from both division office and state 

officials with whom we spoke was positive. For example, division office 

officials said that the NRT reviews often echoed their own observations of 

weaknesses in the state DOT’s program, but they said the state DOT 

seemed more inclined to act because the NRT was a fresh voice 

presenting the observations. Division office officials also told us that 

having the NRT point out deficiencies was helpful to them in maintaining 

their partnering relationship with the state. State DOT officials we spoke 

with in our discussion groups generally agreed that the NRT reviews, 

while they created an additional burden, provided an independent thirdparty perspective during the implementation of the Recovery Act.

In administering the federal-aid highway program, FHWA makes use of 

two practices that facilitate good oversight:

• A risk management approach to oversight. Conducting risk 

assessments, which are part of FHWA’s approach, to identify both 
 

Page 31 GAO-12-474 Highway Infrastructure

internal and external risks to an agency is another best practice for 

agencies.53 In particular, by targeting areas of risk at both the state 

and national level, FHWA can focus on specific program areas of 

concern and better utilize limited resources. Division offices conduct 

annual assessments of their states to identify the greatest risks and 

vulnerabilities, and FHWA headquarters uses this information to 

identify common risk areas across the nation. FHWA officials in 

several division offices we spoke with stated that they use the risk 

assessment to inform their oversight activities throughout the year and 

take specific steps, when applicable, to address the risks. In 2009, we 

reported that FHWA had improved its use of risk assessments by 

proactively identifying risks and their potential impact, as well as 

developing specific response strategies to inform its planned oversight 

activities. Our report concluded that FHWA’s guidance and training 

reflected best practices in risk management in three of four key 

areas.54

• Random sampling to review documentation of various financial 

transactions—a practice that is in keeping with its risk-based 

approach. This approach ensures that FHWA can assess compliance 

with financial requirements in a systematic way when it is impossible 

for FHWA to survey all occurring financial transactions. Furthermore, 

selecting transactions randomly protects the sample from selection 

bias, to which FHWA division offices could potentially be vulnerable 

because of their partnering relationship with the state. For example, in 

its Financial Integrity Review and Evaluation system, FHWA 

headquarters selects a random sample of transactions for each 

division office to check for compliance with the Improper Payments 

Information Act of 2002.55 FHWA headquarters also randomly selects 

billing transactions each quarter to determine if there is sufficient 

documentation to support the billing item and amount.

 

53GAO, Standards of Internal Control in the Government, GAO/AIMD-00-21.3.1

(Washington: D.C. November 1999), 10.

54GAO, Federal-Aid Highways: FHWA Has Improved Its Risk Management Approach, but 

Needs to Improve Its Oversight of Project Costs, GAO-09-751 (Washington, D.C.: 

July 24, 2009).

55Pub. L. No. 107-300, 116 Stat. 2350 (2002).
 

Page 32 GAO-12-474 Highway Infrastructure

Legislation has been approved in the Senate that would move the federalaid highway program toward a more performance-based approach. 

FHWA’s partnership—its close working relationship with the states—

could be useful in making the transition to such a system; however, 

FHWA would need to effectively address the risks posed by such a close 

partnership—lax oversight and lack of independence. In addition, it would 

have to address other existing weaknesses that we have identified in 

previous reports, including improving the transportation planning process 

and data collection and evaluation. Finally, long-standing challenges 

stemming from the growth in the number of responsibilities and 

complexity within the federal-aid highway program, as well as the lack of 

well-defined federal goals and roles, would remain. Reexamining and 

refocusing surface transportation programs, which we have previously 

recommended, presents an opportunity to narrow the scope of FHWA’s 

responsibilities so that it is better equipped to transition to a performancebased system. This review identified areas where FHWA expends 

considerable time and resources but exercises little effective control—

areas where devolving responsibilities to the states may be appropriate.

A performance-based system is critical to the reexamination and 

restructuring of surface transportation programs that we and others have 

recommended.56 Currently, most highway grant funds are distributed 

through formulas that have only an indirect relationship to infrastructure 

needs and many have no relationship to outcomes or the performance of 

the grantees. Because funds are distributed without regard to 

performance, it is difficult to know whether federal spending is improving 

the performance of the nation’s highway infrastructure.57

Under Moving Ahead for Progress in the 21st Century (MAP-21)—FHWA 

would develop performance targets for minimum condition levels in two 

areas: (1) pavement on the Interstate and non-Interstate highways on the 

National Highway System and (2) bridges on the National Highway 

System.58

 

56

If a state did not to meet the minimum condition levels for 2 

consecutive years, it would be required to commit a specific percentage 

GAO-08-744T. 

57GAO-08-400. 

58S. 1813 §§ 1106, 1112.

Partnering Could Help 

FHWA Implement a 

Performance-Based 

System, but Longstanding Challenges 

Would Remain

Legislation Approved by 

the Senate for a 

Performance-Based 

Highway Program
 

Page 33 GAO-12-474 Highway Infrastructure

of its federal-aid highway funding to the deficient area. For other areas, 

MAP-21 directs states to develop performance targets related to national 

priorities identified in the legislation,59 document these targets in their 

statewide transportation improvement programs, and link investment 

priorities to these targets. FHWA would have to (1) work with the states to 

develop performance goals that represent real improvements relative to 

the state’s current conditions and will improve the performance of the 

nation’s transportation system, and (2) monitor and measure states’ 

progress and take corrective action should states not meet performance 

targets. Legislation approved by the House Transportation and 

Infrastructure Committee and the President’s fiscal year 2013 budget 

proposal also refer to states developing performance measures and goals 

to improve safety, congestion, and other areas.

FHWA’s partnership with states could offer several benefits in moving 

toward a performance-based program. In particular, through the 

partnership’s collaborative approach, FHWA could provide technical 

assistance to help states develop performance goals and targets and 

establish data collection methodologies to evaluate and track their 

progress. States participating in our discussion groups found the technical 

assistance, knowledge transfer, and policy advice that FHWA provides a 

highly valuable benefit of the partnership relationship. Likewise, FHWA 

division office personnel recognized the benefit partnership offers in 

facilitating technical assistance.

Developing effective performance goals and targets and the data 

collection methods to track targets poses challenges that technical 

expertise can address. As we have reported, the more specific, 

measurable, achievable, and outcome-based the goals are, the better the 

foundation for allocating resources and optimizing results.60

 

59These priorities include (1) safety, (2) infrastructure condition, (3) system reliability, (4) 

freight movement and economic viability, and (5) environmental sustainability (S. 1813, § 

1203).

Also, goals 

must be linked to project selection and funding decisions, and without 

specific and measurable outcomes for federal involvement, policymakers 

will have difficulty determining whether certain parts of the federal-aid 

highway program are achieving the desired results. In addition, 

60GAO-08-400. 

FHWA’s Partnership 

Approach Could Facilitate 

a Transition to a 

Performance-Based 

Program
 

Page 34 GAO-12-474 Highway Infrastructure

developing data collection methods that consistently and reliably capture 

the metrics needed requires technology, planning, and training staff to 

ensure high-quality data.

FHWA has recently developed performance metrics and revamped its 

data collection approach for the National Bridge Inventory System. 

Specifically, it adopted a new risk-based, data-driven approach that 

incorporates the review of 23 individual performance metrics, and, where 

appropriate, makes use of random sampling of the state’s bridges to 

evaluate the metrics.61 This recent experience, coupled with its technical 

expertise in other areas and division office officials’ relationship with, and 

knowledge of, their state, would help to facilitate knowledge transfer and 

have the potential to create an effective performance-based program.

Moving to a more performance-based approach means monitoring and 

measuring states’ progress, holding states accountable for meeting 

performance targets, and taking corrective action objectively and 

consistently across states when needed. However, this can only be 

achieved if the risks posed by partnership discussed earlier—lax 

oversight, reluctance to take corrective action, and lack of independence 

in decision making—are overcome.

In addressing the risks posed by its partnership, FHWA can draw on 

some of its existing organizational structures. For example, during the 

implementation of the Recovery Act, FHWA used its NRTs to augment 

the oversight provided by division offices by conducting additional 

programmatic reviews and project inspections. Officials stated that the 

NRTs were able to maintain their neutrality and objectivity while 

conducting oversight and making recommendations, and that NRT 

personnel provided a consistent, comparative perspective to the oversight 

regularly conducted by division offices. Officials also explained that the 

NRTs’ observations often reinforced those of division staff while also 

allowing the partnering relationship between the division offices and state 

DOTs to remain strong.

 

61However, at the moment the National Bridge Inspection Standards’ random sampling 

selection does not use a stratified approach that may be beneficial in this case. As a 

result, it is equally likely that a small, low-traffic, locally owned bridge would be selected 

for inspection as a large, high-volume, load-rated bridge on the Interstate.

FHWA Would Need to 

Mitigate Risks of 

Partnership
 

Page 35 GAO-12-474 Highway Infrastructure

Although FHWA would have to work with the states to develop 

performance goals and monitor and measure states’ progress, we have 

reported weaknesses in federal oversight of both the statewide and 

metropolitan area planning processes that prevent effective measurement 

and tracking of performance outcomes. For example, we found that 

FHWA’s oversight of statewide planning focuses on process, rather than 

specific transportation outcomes.62

We recommended to Congress that FHWA more closely review states’ 

transportation improvement programs to assess whether states’ 

investments are achieving intended outcomes, rather than limiting its 

evaluation to whether the state complied with federal processes for 

developing the plan. We also recommended that Congress make the 

metropolitan planning processes more performance-based in order for 

FHWA to better assess the MPOs’ progress in achieving results and 

better understand whether federal funds are being used to achieve 

national goals.

As such, FHWA cannot assess 

whether states’ investment decisions are improving the condition and 

performance of the nation’s transportation system. Similarly, pursuant to 

federal law, federal oversight of metropolitan planning is process-oriented 

rather than outcome-oriented, making it difficult to determine whether this 

oversight was improving transportation planning. Specifically, FHWA’s 

oversight is geared toward determining whether MPOs are in compliance 

with federal laws and regulations, and this procedural focus, coupled with 

the fact that FHWA rarely withholds certification of MPOs, makes it 

difficult to use the certification process as a performance indicator for 

MPOs. In addition, we found that while FHWA identifies corrective actions 

to bring MPOs into compliance, it does not routinely assess the progress 

MPOs are making toward completing those corrective actions.

63

In addition, FHWA would need to improve its ability to collect nationallevel data on highway performance to hold states accountable. Although 

When we completed our review, Congress has not yet 

approved a multi-year surface transportation reauthorization measure, 

which could potentially address these recommendations.

 

62GAO, Statewide Transportation Planning: Opportunities Exist to Transition to 

Performance-Based Planning and Federal Oversight, GAO-11-77 (Washington, D.C.: Dec. 

15, 2010). 

63GAO-09-868. 

FHWA Would Need to 

Address Existing Oversight 

Weaknesses in Planning 

and Data Collection
 

Page 36 GAO-12-474 Highway Infrastructure

the Government Performance and Results Act of 199364 requires 

agencies to measure performance toward the achievement of program 

goals and objectives,65 we have stated previously that the federal 

government is not equipped to implement a performance-based approach 

to transportation funding because it lacks comprehensive data.66 For 

example, during the administration of the Recovery Act we recommended 

that DOT assess the long-term benefits of Recovery Act investments in 

transportation infrastructure. In its response, DOT said it expected to be 

able to report on Recovery Act outputs, such as the miles of road paved, 

but not on outcomes, such as reductions in travel times. We have found 

other areas in which the lack of comprehensive, national- level data would 

hinder any move toward a performance-based system. For example, in 

administering the on-the-job training program, FHWA does not collect 

consistent national-level data on the number and demographics of 

program participants, the trades involved, and status of trainees. As a 

result, FHWA is not able to assess program results and hold states 

accountable.67 In another example, our review of statewide transportation 

planning found that while FHWA division offices were collecting data on 

progress made by states to advance projects on their statewide 

transportation improvement programs to their construction phase, the 

data were unreliable to the point of being unusable because they were 

collected inconsistently across states and could not be used to compare 

states’ progress.68 We have made numerous recommendations to DOT 

related to the need for national-level data—a number of which DOT has 

yet to implement.

 

64Pub. L. No. 103-62, 107 Stat. 285 (1993) (codified at 31 U.S.C. §§ 1115-1116).

65GAO, Executive Guide: Effectively Implementing the Government Performance Results 

Act, GAO/GGD-96-118 (Washington, D.C.: June 1996).

66GAO-08-744T. 

67GAO-11-703. 

68GAO-11-77. 
 

Page 37 GAO-12-474 Highway Infrastructure

FHWA’s success in transitioning to a performance-based program is 

dependent not only on addressing risks posed by its partnering 

relationship, but also by factors it cannot control. A performance-based 

program represents new responsibilities at a time when the growth in the 

number and complexity of its responsibilities and the lack of well-defined 

federal goals and roles leave FHWA, to a large extent, with a broad 

mandate in an increasingly constrained budget environment. As we have 

reported previously, a performance-based system is one part of the 

broader need to reexamine and restructure the program. A clearer 

definition of the federal role and, in turn, FHWA’s responsibilities is under 

Congress’s purview, and therefore beyond FHWA’s or its partners’ ability 

to address.

In 2008, we recommended that Congress consider a fundamental 

reexamination and reform of surface transportation programs that would 

potentially result in a more clearly defined federal role in relation to other 

levels of government and thus a more targeted federal role focused 

around evident national interests. For issues in which there is a strong 

national interest, ongoing federal financial support and direct federal 

involvement could help meet federal goals. Where national interests are 

less evident, other stakeholders could assume more responsibility, and 

some programs and activities may better be devolved to other levels of 

government. In some cases, it may be appropriate to “turn back” activities 

and programs to state and local governments if they are best suited to 

perform them.69

Devolving parts of the federal-aid highway program may be appropriate in 

cases where not only national interests are less evident, but also where 

FHWA expends considerable time and resources yet exercises little 

effective control. During this review, we identified two such areas: (1) 

delegated projects and (2) locally administered projects. By law, the 

states assume oversight responsibility for delegated projects—that is, all 

projects that are not on the National Highway System, and are thus off 

the federal-aid system and not the focus of the national program.70

 

69

In 

fiscal year 2011, about 48 percent of federal-aid funds were obligated for 

projects for which oversight could be assumed by the states. Even though 

the states are responsible for oversight of the design and construction of 

GAO-08-400. 

7023 U.S.C. § 106(c)(2).

Long-standing Challenges 

and the Need to 

Reexamine and Reform the 

Federal-Aid Highway 

Program Remain
 

Page 38 GAO-12-474 Highway Infrastructure

these projects, FHWA is still expected to evaluate state DOT capacity 

through a number of processes and reviews. Division office officials told 

us that these activities require a considerable amount of time and effort 

on the part of their staff.

Locally administered projects are projects in which a state DOT has given 

approval to a local public agency (e.g., a city or county) the responsibility 

to administer a project or phase of a project such as design, property 

acquisition, or construction. These projects can either receive full 

oversight from FHWA or that responsibility can be assumed by the state. 

During our review, FHWA did not have national-level information on the 

number of projects or amount of federal funds spent on locally 

administered projects. However, it began requiring division offices to 

collect this information for newly authorized projects on March 12, 2012, 

so such data will be available in the future. Nevertheless, locally 

administered projects are ranked by FHWA’s risk assessments as among 

the highest-risk areas in FHWA’s oversight portfolio at both the state and 

national levels. For example, at least 33 division offices included risks 

related to locally administered projects as their most pressing risk areas 

in 2010. These risks included a lack of understanding of federal-aid 

construction contract requirements and use of innovative or nontraditional 

construction techniques by inexperienced local agencies. Likewise, 

FHWA headquarters identified locally administered projects as high risk. 

According to FHWA division and state officials, local agencies struggle to 

meet federal regulations that accompany federal-aid funding because of 

high staff turnover at the local level and the infrequency with which local 

agencies receive federal funding.

These challenges were reiterated throughout the discussion groups we 

conducted, as well as at the site visits to FHWA division offices that we 

conducted across the country. FHWA officials from two states described a 

wide range of risks posed by locally administered projects, including use 

of outdated design standards, lack of quality control and assurance, lack 

of standard documentation and recordkeeping, and insufficient knowledge 

of the right-of-way acquisition requirements. One FHWA division office 

provided examples of locally administered projects in their state that did 

not conduct construction inspections or materials testing or bought 

supplies from foreign countries, actions that are out of compliance with 

federal regulations. According to officials in three of the FWHA division 

offices we visited, locally administered projects require considerable time, 

attention, and resources. For example, according to officials in three 

division offices, FHWA staff expend a good deal of time and effort 
 

Page 39 GAO-12-474 Highway Infrastructure

providing technical assistance and capacity-building to enhance the ability 

of local agencies to successfully administer federal-aid projects.

Further, our analysis of the 2010 state Single Audits71 showed that 

insufficient monitoring of subrecipients,72

As we have reported, devolving parts of the federal-aid highway program 

would have many implications and would require careful decisions to be 

made at the federal, state, and local levels. Since the federal-aid highway 

program has a dedicated source of funding (in that it is funded from fuel 

taxes and other fees deposited into the Highway Trust Fund), devolving 

parts of the highway program could entail reducing revenues into the 

Highway Trust Fund. The decision to reduce revenues at this time would 

be difficult because the Congressional Budget Office estimates, as of 

March 2012, that to maintain current spending levels plus inflation 

between 2013 and 2022, the Highway Trust Fund will require over $125 

billion more than it is expected to take in over that period.

such as on locally administered 

projects, was one of the most common findings and that 18 of 47 

reporting states had findings related to monitoring of subrecipients. Our 

analysis also showed that state DOTs did not properly communicate 

federal requirements in their awards to or contracts with subrecipients 

and that their monitoring of subrecipients during the award was 

inadequate. Specifically, state DOTs’ monitoring of subrecipients for 

compliance with federal and state requirements lacked procedures for or 

had poor compliance with existing procedures for regular site visits, risk 

assessments, and performance reporting.

73

 

71A Single Audit is a required audit of states, local governments, and nonprofit entities that 

expend at least $500,000 per year in federal awards. Single Audits include determinations 

on whether the audited entity met the compliance requirements listed in the Office of 

Management and Budget’s Circular No. A-133 Compliance Supplement for each major 

program. There are 14 types of compliance requirements which include allowable 

costs/cost principles, activities allowed or unallowed, and subrecipient monitoring.

At the federal 

level, it would need to be determined what functions would remain and 

how federal agencies would be structured and staffed to deliver those 

72A subrecipient is an entity that receives a grant award from the prime recipient of an 

award and is accountable to the prime recipient for the use of the federal funds provided 

by the subaward. For the federal-aid highway program, this is generally a local public 

agency that administers a federal-aid project, but may also be a nonprofit, educational 

institution, and in some cases, another federal agency.

73Congressional Budget Office-March Fiscal Year 2012 Baseline Projections for the 

Highway Trust Fund. 
 

Page 40 GAO-12-474 Highway Infrastructure

programs. At the state and local levels, it would need to be determined 

whether to replace federal revenues with state taxes and what types of 

programs to finance. Deciding whether to replace federal revenues with 

state taxes would be difficult because states also face fiscal challenges 

and replacing revenues would have different effects on different states.74

FHWA’s partnership approach with the states allows it to proactively 

identify issues before they become problems, achieve cost savings, and 

gain states’ commitment to improve their processes. In some areas, 

FHWA division offices have good oversight practices that complement its 

partnership, including using a risk-based approach to its oversight and 

using an independent, third- party review (the NRTs) to augment its 

oversight activities during the implementation of the Recovery Act.

However, FHWA’s partnership also poses risks that it has not to date 

directly addressed, that can potentially result in improper or ineffective 

use of federal funds and the loss of independence necessary for effective 

oversight. Should Congress direct FHWA to move to a performancebased system, holding states accountable for achieving performance 

measures—and taking action when they do not—would be essential. 

Because of the nature of their partnership with the states, FHWA’s 

division offices may not be in the best position to mitigate partnership 

risks. Given that partnership produces benefits, the solution does not lie 

with eliminating FHWA’s partnership approach. Rather, a strategy built 

around leveraging the strengths of the partnership approach while 

managing its risks could provide a better way for FHWA to verify the 

states’ use of federal funds.

While such a strategy could take many forms, greater separation of the 

responsibilities to advance, oversee, and make corrective action 

decisions in the program would be consistent with good internal control 

practices and may help FHWA transition to a performance-oriented 

program. Specifically, a nationally focused, independent oversight entity 

modeled on the NRTs could be an effective vehicle to mitigate risks 

associated with partnering between FHWA division offices and state 

DOTs by conducting periodic evaluations of selected activities and 

making recommendations for improvement. This could be particularly 

 

74GAO-08-400. 

Conclusions
 

Page 41 GAO-12-474 Highway Infrastructure

helpful in instances in which the division offices have been reluctant to 

take corrective action because of concerns about damaging the 

partnering relationship. In addition, if Congress directed FHWA to move to 

a performance-based system, an entity modeled on the NRTs could 

assess states’ progress toward performance measures and hold states 

accountable for meeting them. Responsibilities such as technical 

assistance and knowledge transfer—areas where FHWA’s partnering 

relationship can help states develop performance goals and targets—

could remain with the division offices.

Any successful transition to a performance-based system in the highway 

program requires accurate, reliable national-level data. The partnership 

that division offices have with state DOTs could help to ensure that states 

develop data collection methods that would help determine whether the 

highway system overall was improving. Furthermore, FHWA has the 

expertise to develop and implement a rigorous national-level data 

collection effort as it recently did with the National Bridge Inventory 

System. We are not making a new recommendation to DOT on this 

matter because many of our recommendations on collecting national-level 

data remain open.

In 2008, we recommended that Congress consider reexamining and 

refocusing surface transportation programs, establishing well-defined 

goals with direct links to identified federal interests and roles, and 

consider devolving to the states and other levels of government 

responsibility for programs where national interests are less evident. The 

information we gathered during the course of this review and the pending 

transition to a more performance based federal-aid highway program 

reinforces the need to act. First, FHWA’s responsibilities have expanded 

over the years while its resources have not, and the addition of a 

performance-based system to its already broad mandate would further 

expand FHWA’s responsibilities. Reexamining and refocusing surface 

transportation programs presents an opportunity to narrow the scope of 

FHWA’s responsibilities so that it is better equipped to transition to a 

performance-based system. Second, this review has identified specific 

areas where devolving or turning back to the states the responsibilities for

managing and funding some parts of the highway program may be 

appropriate. Turnback would have many implications and would require 

careful decisions. Yet nearly half of federal-aid highway funds are spent 

on roads off the National Highway System—projects for which oversight 

has been assumed by the states—raising questions about whether 

evident federal interests are at stake. In addition, the considerable federal 

resources FHWA expends overseeing locally administered projects—
 

Page 42 GAO-12-474 Highway Infrastructure

including capacity-building activities for city and county governments—

raises questions about whether such time and effort is better spent in 

support of more nationally focused programs and objectives.

As we have previously recommended, Congress should consider 

reexamining and refocusing surface transportation programs, including 

establishing well-defined goals with direct links to identified federal 

interests and roles. Based on this review, there may be areas where 

national interests are less evident and where Congress may wish to 

consider narrowing FHWA’s responsibilities.

We recommend that the Secretary of Transportation direct the FHWA 

Administrator to develop a strategy based on the NRT model to mitigate

the risks associated with its partnering approach with state DOTs, while 

maintaining the strengths that the partnership approach brings to the 

program. This strategy should address existing risks and, if Congress 

directs FHWA to move to a performance-based system, partnering risks 

that could affect the successful implementation of such a system.

We obtained oral comments from DOT officials, including the Director of 

FHWA’s Office of Program Administration. These officials stated that DOT 

generally agreed with the findings and recommendations in the report. 

Specifically, they recognized that the agency’s partnership approach with 

the states poses oversight risks. They stated that they are implementing 

efforts based on the NRT model to provide independent reviews and 

accountability services to improve the efficiency and effectiveness of 

FHWA programs. We will monitor these efforts to assess if the 

department is responsive to our recommendation that DOT mitigate the 

Matter for 

Congressional 

Consideration

Recommendations for 

Executive Action

Agency Comments
 

Page 43 GAO-12-474 Highway Infrastructure

risks of its partnership with the states.75 DOT officials also provided 

technical comments which we incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to 

congressional subcommittees with responsibilities for surface 

transportation issues and the Secretary of Transportation. In addition, this 

report will be available at no charge on GAO’s 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 herrp@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 that made significant contributions to this report 

are listed in appendix III.

Sincerely yours,

Phillip R. Herr

Managing Director

Physical Infrastructure Issues

 

75Section 236 of the Legislative Reorganization Act of 1970 requires the head of the 

agency to submit a written statement on action taken on recommendations and submit the 

statement to the Committee on Homeland Security and Governmental Affairs of the 

Senate and the Committee on Oversight and Government Reform of the House of 

Representative within 60 days of the release of this report, and the Committees on 

Appropriations of both Houses of Congress in the first request for appropriations 

submitted more than 60 days after the date of the report. Pub. L. No. 91-510, § 236, 84 

Stat. 1140, 1171 (codified as amended at 31 U.S.C. § 720(b)). 
Appendix I: FHWA Organization

Page 44 GAO-12-474 Highway Infrastructure

The Federal Highway Administration (FHWA) has 52 division offices—

one in each state, the District of Columbia, and Puerto Rico—to carry out 

the day-to-day activities of the federal-aid highway program. These 

offices are generally located in the same city as the state departments of 

transportation (state DOTs), which is usually the state capital. In addition, 

jointly with the Federal Transit Administration, the FHWA operates four 

metropolitan offices in Philadelphia, Pennsylvania; New York, New York; 

Chicago, Illinois; and Los Angeles, California, which are extensions of 

their respective division offices. FHWA division offices are organized 

geographically under three directors of field service who provide 

administrative supervision and leadership on strategic initiatives to their 

constituent division offices. FHWA headquarters provides leadership and 

policy direction for the agency, and FHWA’s Resource Center, with five 

locations, provides technical expertise, guidance, and training to the 

states in areas such as air quality, civil rights, construction, environment, 

safety and bridges.

Appendix I: FHWA Organization
Appendix I: FHWA Organization

Page 45 GAO-12-474 Highway Infrastructure

Figure 2: Locations of FHWA’s Offices
Appendix II: Scope and Methodology

Page 46 GAO-12-474 Highway Infrastructure

To address our objectives, we reviewed and analyzed relevant laws, 

regulations, and FHWA documentation. Specifically, we reviewed 

previous and current authorizations of the federal-aid highway program, 

as well as proposed reauthorization language. We also reviewed relevant 

sections of U.S. Code that pertain to FHWA and its relationship with the 

states. Additionally, we reviewed and summarized past GAO work 

regarding FHWA’s programmatic oversight responsibilities and its 

relationship with the states.

To obtain information on current FHWA structure and oversight activities, 

we conducted site visits to nine FHWA division offices, including 

Colorado; Delaware/Maryland, which has a joint office; Maine; Michigan; 

North Carolina; Oklahoma; Virginia; and Washington, D.C. We selected 

these states to include a range of selection criteria, including the extent to 

which oversight responsibilities have been assumed by the state, the size 

of the state’s transportation program and proportion of federal funding 

relative to state funds, the type of transportation system in the state (e.g., 

primarily rural highways and interstate or primarily infrastructure in 

densely populated urban areas); and geographic distribution. We 

interviewed FHWA and state DOT officials in multiple settings to learn 

how they characterize their relationship and what role partnership plays in 

oversight.

We also reviewed selected academic literature on formal partnering 

practices and tools. To perform this analysis, GAO conducted a variety of 

literature and Internet searches, reviewed previous GAO reports, and 

analyzed literature recommended by engagement stakeholders. We read, 

analyzed, and synthesized these documents to construct a common 

definition of partnering, namely that “partnering is an approach that, 

through collaborative processes and activities, enables parties to achieve 

individual and mutually beneficial goals and results.” We also identified 

nine features of partnership from our review of the literature. Of those, we 

selected four features based on the applicability of these features to 

FHWA’s partnering relationship with state DOTs based on our 

observations of FHWA, interviews with FHWA and state DOTs, and from 

our review of documentation of formal partnering arrangements between 

states and FHWA division offices. In doing so, we developed the following 

definition of features of partnership: “Partnering processes and behaviors 

span a continuum of collaborative activities including information sharing, 

participative and consultative processes, collaborative problem solving, 

and formal team-building such as charter signing and relationship 

assessment.” Further, we reviewed literature to identify partnership risks, 

and after identifying a list of six risks, we identified two risks which were 

Appendix II: Scope and Methodology
Appendix II: Scope and Methodology

Page 47 GAO-12-474 Highway Infrastructure

most evident in our audit work and that were most relevant to FHWA’s 

partnering relationship with state DOTs: lax oversight and a lack of 

independence emerged as two primary themes of partnering risk.

To obtain an independent view of issues in FHWA’s oversight, we 

examined the results of the 2010 Single Audits—statewide audits of 

financial statements and compliance with federal program requirements for 

certain programs among recipients of federal funds. Forty-seven states 

reported their results in the Federal Audit Clearinghouse as of October 28, 

2011.1 To determine relevant findings to our work, we identified audit 

records for FHWA funding categories, which provided us with funding 

amounts that were subject to audit findings as well as the types of audit 

findings.2

In addition to these efforts, we conducted a survey of all FHWA division 

administrators, who lead the FHWA division offices located in each state, 

as well as Washington, D.C., and Puerto Rico. With all 50 states and 

Washington, D.C., and Puerto Rico, our universe was 52 division offices.

We analyzed these findings to determine the types of findings 

occurring most frequently. For subrecipient monitoring, one of the most 

frequent audit finding types, we examined full-text Single Audit reports, 

comparing them against each other to identify common themes.

3

 

1

Four of the remaining states do not submit annual Single Audit reports, and the fifth state 

did not submit any statewide Single Audit results for 2010 as of October 28, 2011.

We developed a web-based survey instrument of seven closed-ended 

questions and one open-ended question, regarding (1) FHWA’s partnering 

relationship with state DOTs, and (2) FHWA’s use of available corrective 

actions. We pre-tested the instrument with two division administrators in 

November 2011. The survey was released in December 2011. We 

received 52 completed surveys, for a 100 percent response rate.

2

Single Audit finding types include activities allowed or unallowed; allowable costs/cost 

principles; cash management; Davis-Bacon Act; eligibility; equipment and real property 

management; matching; level of effort; earmarking; period of availability of federal funds; 

procurement and suspension and debarment; program income real property acquisition 

and relocation assistance; reporting; subrecipient monitoring; special tests and provisions; 

and other. 

3

One division administrator oversees both the Puerto Rico and Florida division offices. 

The survey instrument was sent out for each individual division office, and the 

administrator was given instructions on how to determine which instrument was assigned 

to which division office, and to respond fully to both, which he has done.
Appendix II: Scope and Methodology

Page 48 GAO-12-474 Highway Infrastructure

To obtain input from states on their relationship with FHWA division 

offices and their oversight of the federal-aid highway program, we 

conducted four discussion groups of state DOT representatives. We 

worked in conjunction with the American Association of State Highway 

and Transportation Officials to speak with personnel from a variety of 

geographic locations and various programs, including personnel from the 

areas of construction, locally administered projects, engineering, bridges, 

and leadership.

To determine the extent to which FHWA’s incorporation of partnering 

practices into its oversight approach supports effective oversight, we used 

academic literature and GAO reports to identify criteria and effective 

practices for productive partnering and robust oversight. Using these 

criteria and effective practices, we assessed FHWA’s current oversight 

practices by reviewing information from interviews with FHWA 

headquarters and division offices and state DOTs; site visit observations; 

and relevant findings from recent and ongoing GAO engagements 

examining various FHWA program areas.

To determine the extent to which FHWA’s partnering approach serves as 

a foundation for moving toward a performance-based transportation 

program, we identified principles for a performance-based transportation 

system in previous GAO reports that can be applied to FHWA, including 

(1) national transportation goals, (2) performance measures, 

(3) appropriate performance targets, and (4) employing the best tools to 

emphasize return on investment. We also reviewed the proposed 

reauthorization bill, Moving Ahead for Progress in the 21st Century 

(MAP-21),4

We conducted this performance audit from April 2011 to April 2012 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.

to incorporate Congress’ expectations for moving toward a 

performance-based system.

 

4

S. 1813 §§ 1106, 1112, 112th Cong. (as adopted by the Senate March 14, 2012).
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 49 GAO-12-474 Highway Infrastructure

Phillip Herr, (202) 512-2834 or herrp@gao.gov

In addition to the individual named above, other key contributors to this 

report were Steve Cohen (Assistant Director), Joah Iannotta (Analyst-inCharge), Irina Carnevale, Kathryn Crosby, Peter Del Toro, Holly Dye, Bert 

Japikse, Thomas James, Stuart Kaufmann, SaraAnn Moessbauer, Amy 

Rosewarne, and Jeffrey Sanders.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(546046)
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