Office of Inspector General

Audit Report

DOT HAS OPPORTUNITIES TO ADDRESS 

KEY RISK AREAS FOR PHASE 2 OF THE 

DULLES CORRIDOR METRORAIL PROJECT 

UPON APPROVAL OF FEDERAL FINANCING

Department of Transportation

Report Number: MH-2013-054

March 25, 2013
U.S. Department of

Memorandum

Transportation

Office of the Secretary

of Transportation

Office of Inspector General

Subject: ACTION: DOT Has Opportunities To Address 

Key Risk Areas for Phase 2 of the Dulles 

Corridor Metrorail Project Upon Approval 

of Federal Financing

Report No. MH-2013-054

Date: March 20, 2013

From: Calvin L. Scovel III 

Inspector General

Reply to 

Attn. of: J-1

To: Deputy Secretary 

The Dulles Corridor Metrorail Project (Dulles project) will add 11 metro stations 

and 23.1 miles to the Washington Metropolitan Area Transit Authority’s 

(WMATA) Metrorail system. The Metropolitan Washington Airports Authority 

(MWAA) is responsible for constructing both phases of the Dulles project and will 

turn over operation of the rail lines to WMATA once completed. Phase 1 has a 

total estimated cost of approximately $3.1 billion and is expected to start 

transporting passengers in 2014. Phase 2, which is not yet under construction, is 

estimated to cost $2.5 billion to $3.8 billion, with the majority of funding 

supported by revenues from the Dulles Toll Road. While Phase 1 received 

$900 million in Federal grant funds, there is no planned Federal grant funding for 

Phase 2. In response to stakeholder concerns about the cost, scope, and financing 

of Phase 2, Department of Transportation (DOT) Secretary Ray LaHood brokered 

a Memorandum of Agreement (MOA) in December 2011 between the 

Commonwealth of Virginia, Fairfax and Loudoun Counties, MWAA, WMATA, 

and DOT. The MOA called for reducing Phase 2 costs, providing a $30 million 

credit subsidy for Federal loans authorized by the Transportation Infrastructure 

Finance and Innovation Act (TIFIA), and establishing an oversight role for DOT’s 

Federal Transit Administration (FTA).

Citing concerns about the oversight of the Dulles project and the reasonableness of 

funding assumptions for the Dulles Toll Road, Representatives Frank Wolf and 

Tom Latham requested that we conduct an audit of Phase 2 of the Dulles project. 

Accordingly, our objectives were to (1) determine whether DOT’s proposed 
2

oversight role for Phase 2 adequately addresses key project risk areas—including 

cost, schedule, and financing—and (2) assess whether MWAA’s Phase 2 project 

plans rely upon reasonable assumptions of revenue from the Dulles Toll Road.

To conduct our work, we interviewed officials at the Office of the Secretary of 

Transportation (OST), FTA, MWAA, and the TIFIA Joint Program Office (JPO) 

in the Federal Highway Administration’s (FHWA) Innovative Program Delivery 

Office.1

RESULTS IN BRIEF

We reviewed laws, procedures, and guidance and collected information 

on potential TIFIA evaluation and oversight mechanisms. We also assessed the 

2005, 2009, and 2012 Dulles Toll Road traffic and revenue studies as well as the 

value of time (VOT) estimates used in the 2009 and 2012 studies. We conducted 

this audit in accordance with generally accepted Government auditing standards. 

Exhibit A describes our scope and methodology and related work. Exhibit B 

identifies the organizations we visited or contacted.

DOT has not fully developed an oversight strategy for Phase 2 of the Dulles 

project because the local funding partners2

—MWAA and Fairfax and Loudoun 

Counties—have yet to receive approval of Federal credit assistance for the project. 

Until Federal credit assistance is approved, there are no obligated Federal dollars 

to oversee. FTA has taken some oversight actions, such as requesting a Phase 2 

project management plan (PMP) from MWAA. However, according to FTA, it 

will not finalize an oversight strategy until there is clear support from all parties as 

to project structure and financing, including any Federal role. If the local funding 

partners are granted TIFIA credit assistance,3 FTA and the TIFIA JPO would 

finalize an oversight approach. Until then, we cannot determine if DOT’s 

oversight4

 1 The TIFIA JPO coordinates and manages day-to-day activities associated with implementing the program. In 

coordination with the Operating Administration, the TIFIA JPO is responsible for monitoring projects for compliance 

with credit agreement terms and conditions, and for changes in risk that may affect subsidy costs.

of Phase 2 of the Dulles Project will be sufficient. To assist FTA as it 

finalizes an oversight strategy, our prior audits of major transportation projects are 

instructive and offer opportunities for DOT to consider leveraging existing 

oversight mechanisms to address key risk areas for Phase 2, including cost and 

schedule, project financing, and stakeholder agreements. For example, effective 

2 MWAA and Fairfax and Loudoun Counties are local funding partners for Phase 2. The Commonwealth of Virginia is 

providing Phase 2 funding as well.

3 The TIFIA program is governed by the Federal Credit Reform Act of 1990, which requires DOT to establish a capital 

reserve, or “subsidy amount,” to cover expected credit losses before it can provide TIFIA credit assistance. 4 DOT oversight refers to joint FTA and FHWA activity.
3

use of a financial management oversight contractor (FMOC), a key FTA oversight 

tool,5

Our assessment of Dulles Toll Road revenue estimates suggests that the 

assumptions MWAA used to arrive at the estimates are generally reasonable. 

Because MWAA’s Phase 2 funding depends heavily on the revenue the toll road 

can produce and sustain, sound revenue forecasts are critical to the success of 

MWAA’s funding plans. We focused on the following inputs to the toll revenue 

forecasts published in a March 2012 report commissioned by MWAA: 

(1) population and employment forecasts, (2) fuel price projections, and (3) VOT 

estimates. The population and employment forecasts and fuel price projection 

match those from reputable sources. For example, the baseline population and 

employment inputs used are those reported in the most recent U.S. Census. The 

method of generating VOT estimates deviates from typical practice by 

incorporating travelers’ anti-toll sentiments and omitting consideration of 

travelers’ preferences for public transit. However, the resulting VOT estimates are 

in line with those of prior analysis. 

could help MWAA identify and mitigate financing risks.

We are not making recommendations at this time because it is premature to do so 

until the project is approved for Federal credit assistance. However, several 

lessons learned from our past audits could be instructive as DOT finalizes its 

oversight strategy.

BACKGROUND

The Dulles project will add the new “Silver Line” to the WMATA Metrorail 

system, as shown in figure 1 on page 4. Construction for the Dulles project has 

been divided into two phases:

• The first phase (Phase 1) of the Dulles project runs from near the existing West 

Falls Church Metro station through the Tyson’s Corner area to Wiehle Avenue 

in Reston, VA. Phase 1 is under construction with a current scheduled 

substantial completion date of August 30, 2013, and a projected revenue 

operations date of January 10, 2014.6

 5 FMOCs can evaluate the financial condition and financial capability of project sponsors and review and assess the 

sufficiency of their funding sources to meet future operating and maintenance costs in addition to the capital costs 

required to design and construct the project.

FTA is responsible for oversight of Phase 

1 because the project received a $900 million grant from FTA’s New Starts 

program, including $77.3 million from American Recovery and Reinvestment 

Act funds.

6 Substantial completion occurs when project activities are accomplished and the project is ready for revenue 

operations. Revenue service occurs when a vehicle is available to the general public and there is an expectation of 

carrying passengers.
4

• The planned route for Phase 2 extends Metrorail another 11.4 miles from 

Reston to Washington Dulles International Airport and into Loudoun County. 

Preliminary engineering7

Figure 1. Map of the Dulles Project, Phases 1 and 2

was completed in March 2012, and the initial designbuild contract for final design and construction is scheduled for award in May 

2013.

Source: Dulles Corridor Metrorail Project

Although the MOA was brokered in December 2011, it was not until July 2012 

that all project funding partners agreed to commit funding to Phase 2. In March 

2012, MWAA delivered preliminary engineering materials to Fairfax and 

Loudoun Counties, triggering a review period for the counties to decide whether 

they wanted to continue as project partners. The cost was estimated at 

approximately $2.7 billion, provided the counties secured financing for a Silver 

 7 Preliminary engineering provides a basis to manage project implementation risks. It includes (1) identification of all 

environmental impacts, (2) design of all major or critical project elements, (3) completion of all cost estimating, 

(4) definition of procurement requirements and strategies to deliver project service, and (5) solidification of local 

funding commitments to the project.
5

Line station and five parking garages. On April 10, 2012, the Fairfax County 

Board of Supervisors reaffirmed its commitment to Phase 2, agreeing to fund 

16.1 percent of the Phase 2 cost; the Loudoun County Board of Supervisors voted 

on July 3, 2012, to fund its 4.8 percent share of the Phase 2 cost.

Per the MOA, MWAA will assume a greater share of Phase 2 project costs than 

the counties. MWAA can potentially finance nearly two-thirds of the project with 

revenue from the Dulles Toll Road, which it operates following a 2006 transfer 

agreement from the Virginia State Department of Transportation. 

Our two prior reviews of the Dulles project have identified both project risks and 

oversight concerns. In our July 2007 baseline report, we advised FTA to closely 

monitor MWAA’s project management.8 In our July 2012 report on FTA Phase 1 

oversight, we found that more action was required to mitigate potential cost 

increases and depletion of the budget contingency.9

DOT HAS NOT FULLY DEVELOPED AN OVERSIGHT STRATEGY 

BECAUSE LOCAL FUNDING PARTNERS HAVE YET TO RECEIVE 

APPROVAL OF FEDERAL CREDIT ASSISTANCE 

Exhibit A provides additional 

details about these report findings.

As of September 2012, DOT has not fully developed an oversight strategy for 

Phase 2 because the local funding partners have not received approval of Federal 

credit assistance through TIFIA. Until DOT finalizes its oversight strategy upon 

approval of Federal credit assistance, we cannot determine if its oversight of Phase 

2 will be sufficient. However, our prior audits on major transportation projects 

point to opportunities for DOT to leverage existing oversight mechanisms to 

address key risk areas for Phase 2. 

FTA Has Not Yet Finalized a Formal Oversight Strategy

Although the MOA assigns FTA responsibility for providing Federal oversight of 

Phase 2 of the Dulles project, FTA will not finalize a formal oversight strategy 

until there is clear support from all parties as to project structure and financing, 

including any Federal role. However, FTA has taken some oversight actions to 

date. For example, FTA has requested a Phase 2 PMP from MWAA. In addition, 

FTA reported in 2012 that it assigned its project management oversight contractor 

 8 Baseline Report on Major Project Monitoring of the Dulles Corridor Metrorail Project (OIG Report Number MH2007-060), July 27, 2007. OIG reports are available on our Web site: www.oig.dot.gov. 9 Actions Needed to Improve FTA’s Oversight of the Dulles Corridor Metrorail Project’s Phase 1 (OIG Report Number 

MH-2012-155), July 26, 2012.
6

(PMOC)10

Unlike Phase 2, Phase 1 is subject to specific oversight requirements because it 

relies on New Starts grant funding from FTA. For example, FTA must approve the 

advancement of a New Starts project to the next stage, as it proceeds from 

preliminary engineering through final design to the award of a full funding 

agreement and construction. During this process, FTA obtains input on a project’s 

readiness for advancement from PMOC reviews, which can include evaluations of 

the project’s cost, schedule, and PMP. Since New Starts funding is not planned for 

Phase 2, FTA informed us it has discussed providing a different level of Federal 

oversight for Phase 2 than provided in Phase 1. However, FTA has emphasized 

that its oversight of Phase 2 will be equally robust.

from Phase 1 to review the preliminary cost and schedule information 

for Phase 2. On March 1, 2013, FTA formally authorized the PMOC’s 

involvement in Phase 2 oversight by issuing a task order to the PMOC.

Phase 2 Local Funding Partners Have Yet To Secure TIFIA Credit 

Assistance, Which Will Impact the Development of DOT’s Oversight 

Approach

Federal credit assistance for Phase 2 has not been finalized because MWAA and 

Fairfax and Loudoun Counties have not yet submitted formal applications for 

TIFIA credit assistance, a Federal credit program that the MOA committed to the 

local funding partners in December 2011. Specifically, the MOA states that DOT 

will provide Federal credit assistance to MWAA and Fairfax and Loudoun 

Counties for project components that meet TIFIA statutory and regulatory 

requirements. 

The local funding partners have taken some initial steps to request TIFIA credit 

assistance. For example, on behalf of all of local funding partners, MWAA 

submitted a Letter of Interest in late December 2011 for a total of $1.95 billion in 

credit assistance, the initial step in the TIFIA application process.11

However, local funding partners have not completed the remaining steps required 

to secure TIFIA credit assistance. Before submitting an application for TIFIA 

credit assistance, each applicant is required to provide DOT with written 

acknowledgment that it agrees to the financing structure proposed in each TIFIA 

In response to 

the Letter of Interest, DOT invited the local funding partners to submit application 

packages, the next step in the process.

 10 FTA uses PMOCs to oversee projects in accordance with FTA guidance and report regularly on needed corrective 

actions. PMOCs evaluate a grantee’s cost estimates and technical and management capacity and later monitor 

implementation. 

11 In December 2011, the local funding partners pursued total TIFIA credit assistance in an aggregate amount up to the 

maximum of 33 percent of eligible project cost. Total eligible project cost at that date was $5.894 billion, which 

includes Phase 1 and Phase 2 of the Dulles Project.
7

application submitted. As of September 2012, MWAA and Fairfax and Loudoun 

Counties had not agreed to each others’ proposed financing structures.

Upon DOT approval of TIFIA assistance, FTA would play an important role in 

overseeing the use of Federal credit assistance. According to the TIFIA JPO, it 

relies heavily on DOT Operating Administrations’ institutional knowledge and 

expertise for oversight. Specifically, an Operating Administration takes the lead in 

managing project delivery risks. In the case of Phase 2, the TIFIA JPO would 

coordinate with FTA to establish an oversight team and help develop a Project 

Oversight and Monitoring Plan. This plan, which serves as a management tool for 

each project, would be tailored based on the project’s risk profile and the 

Operating Administration’s oversight requirements. However, FTA has not fully 

developed project oversight criteria since there are no obligated Federal dollars to 

oversee until project stakeholders are approved for TIFIA assistance.

DOT Has Opportunities To Consider Addressing Phase 2 Risks By 

Leveraging Existing Oversight Mechanisms 

Because DOT will not finalize its oversight approach until project stakeholders are 

approved for Federal credit assistance, we cannot determine whether its oversight 

role will be sufficient to address concerns about cost, schedule, and financing 

issues. However, our prior audit work on other projects points to risk areas that 

DOT could consider as it finalizes its oversight strategy upon approval of Federal 

credit assistance. While we recognize that DOT intends to tailor its oversight 

approach for Phase 2 since there are no plans for the project to receive Federal 

grant funds, it could leverage existing oversight mechanisms to identify cost and 

schedule, project financing, and stakeholder agreement risks and ensure that 

MWAA develops mitigation strategies to address these risks.

DOT could help mitigate cost increases and schedule delays by encouraging 

the local funding partners to promptly address PMOC concerns and reach 

definitive agreement on project documents. Our prior work has shown that 

PMOCs can provide early warnings of cost and schedule problems, but it is 

important that FTA encourage grantees to take action before these risks affect 

project cost or schedule. For example, in our review of FTA’s oversight of the 

$4.55 billion in Federal funds provided to the Lower Manhattan Recovery 

Projects, we found that grantees had not taken sufficient action to address major 

risks that FTA’s PMOCs had identified in the prior 2 years, which increased the 

potential for more cost increases and schedule delays.

12

 12 Baseline Report on the Lower Manhattan Recovery Projects (OIG Report Number MH-2008-086), September 26, 

2008.

Should the PMOC identify 

Phase 2 cost and schedule risks, DOT may need to work with local funding 

partners to ensure that risk mitigation actions are implemented timely.
8

The importance of obtaining definitive agreement on cost and schedule documents 

is illustrated by our May 2010 audit of FTA’s oversight of the Access to the 

Region’s Core (ARC) Project. In that audit, we determined that FTA did not have 

finalized project documents from New Jersey Transit (NJT)—such as the PMP, 

various sub-plans, and the master schedule—which described strategies for 

mitigating identified risks.13

DOT could mitigate project financing risks by employing an FMOC. FMOCs 

can provide valuable input by reviewing capital and operating finance plans; 

analyzing budgets; determining if there are significant, unforeseen liabilities; and 

critiquing the reasonableness of financing assumptions. For example, we reported 

in 2002 that FTA’s FMOC raised potential concerns regarding projected operating 

reserves for the Hiawatha Corridor Light Rail Transit Project, which prompted the 

grantee to take actions such as implementing a fare increase earlier than planned 

and providing a written commitment to aggressively monitor costs and revenues. 

In addition, an FMOC validated the sufficiency of project funding for the initial 

segment of the Seattle Central link Project after we raised concerns.

The PMP was of particular importance because it 

serves as a roadmap for project implementation. The lack of finalized documents 

could have hindered FTA’s ability to oversee NJT’s risk mitigation actions. FTA’s 

request for a Phase 2 PMP is a valid initial step in mitigating project cost and 

schedule risks. However, FTA may also want to work proactively with MWAA to 

ensure the PMP is completed timely. 

14

While the MOA does not identify project financing in the scope of Federal 

oversight, Phase 2 project financing by MWAA and Fairfax and Loudoun 

Counties has generated significant public and stakeholder concern, especially as 

MWAA may finance nearly two-thirds of Phase 2 costs with revenue from the 

Dulles Toll Road. Effective use of an FMOC during the early stages of Phase 2 

project development could support MWAA in identifying and mitigating project 

financing risks, determining the sufficiency of capital funding sources, and 

providing assurance to project stakeholders that sufficient funds are available to 

complete the project.

DOT could be proactive in addressing stakeholder agreements and 

responsibilities up front. DOT faces a significant challenge in ensuring that 

project stakeholders remain committed to the MOA and agree on specific project 

issues, such as the cost estimate, scheduled completion date, final design and 

alignment, and financing. One key area the MOA does not specifically address is 

the responsibility among project stakeholders for cost overruns, which could 

 13 Actions Needed to Mitigate Risks Associated with the Access to the Region’s Core Project (OIG Report Number 

MH-2010-066), May 17, 2010. 14 Audit of the Seattle Central Link Light Rail Project’s Initial Segment (OIG Report Number MH-2003-046), 

July 7, 2003.
9

create disagreement if the project costs were to increase. In our prior work, we 

have seen insufficient coordination among key stakeholders, which impeded the 

progress of a project. For instance, based upon our review of the ARC project, we 

reported that the long-term availability of local funding was uncertain, and the 

project partners had not reached an agreement for cost overrun responsibility. 

Several months later, the Governor of New Jersey cited fiscal concerns and 

cancelled the ARC project before a final agreement for cost overruns could be 

reached. The July 2012 appointment of a DOT Accountability Officer to MWAA 

presents an opportunity for DOT to assist MWAA in overseeing stakeholder 

coordination and ensuring that all parties carry out the terms of the MOA. 

ASSUMPTIONS USED IN MWAA’S ESTIMATION OF TOLL ROAD 

REVENUES APPEAR REASONABLE

Our assessment of Dulles Toll Road revenue estimates suggests that the 

assumptions MWAA used to arrive at the estimates are generally reasonable. 

Because MWAA’s Phase 2 funding depends heavily on the revenue the toll road 

can produce and sustain, sound revenue forecasts are critical to the success of 

MWAA’s funding plans. Our review focused on the inputs and assumptions used 

in forecasting toll receipts in a March 2012 report commissioned by MWAA.15

Population and Employment Forecasts and Fuel Price Projections 

Match Those Produced by Reputable Sources

MWAA’s population and employment forecasts and gasoline price assumptions 

appear reasonable. While MWAA’s method for estimating values of time (VOT) 

does not follow typical practice, the resulting assumptions also appear reasonable.

Based on our review, the assumptions MWAA made in forecasting population and 

employment and in projecting fuel costs appear reasonable. Population and 

employment forecasts help estimate the number of travelers who will use the toll 

road, and higher population and employment forecasts support higher toll revenue 

projections. MWAA’s baseline population and employment inputs match those 

reported in the most recent U.S. Census. In addition, MWAA appears to have 

applied a relatively conservative growth rate to this baseline to forecast future 

population and employment. Specifically, the growth rates applied to the baselines 

do not differ substantially from those published by the Metropolitan Washington 

Council of Governments. Previous estimates of population and employment 

growth rates for counties along the Dulles Toll Road have proven to be 

 15 CDM Smith (under contract to MWAA), The Comprehensive Traffic and Revenue Study 2012 Update Working 

Draft, March 2012.
10

conservative, and the growth rates used in the analysis are lower for Dulles Toll 

Road counties than those produced by other sources.16

Fuel price projections also factor into forecasts of toll road use, as the number of 

travelers typically decreases when the costs of driving rise. An underestimation of 

fuel costs could result in an overestimation of the number of potential toll road 

travelers. MWAA’s contractor assumed that gasoline prices would start at $3.59 a 

gallon in 2011 and grow at an assumed inflation rate of 2.5 percent per year. We 

consider these projections to be reasonable because they are similar to those used 

in the U.S. Energy Information Administration’s Early 2012 Annual Energy 

Outlook Reference Case. The U.S. Energy Information Administration forecasts 

fuel prices under many different scenarios, and its Annual Energy Outlook 

Reference Case is in the center of these—that is, it is not the most conservative or 

the most radical prediction of fuel cost growth. The Reference Case presents a 

“business-as-usual estimate, given known technology, technological, market, and 

demographic trends.”17

MWAA’s Estimates for Travelers’ Value of Time Were Derived 

Atypically but Appear Reasonable

Overall, the VOT estimates used in MWAA’s analysis appear reasonable. 

However, some aspects of the methods used to develop them may affect their 

value. Travelers’ VOT estimates are one of the most significant components of toll 

road revenue assumptions. VOT estimates help predict whether increased tolls will 

translate into increased revenue. The higher a traveler’s VOT, the more the 

traveler is willing to pay to save time, and, therefore, the higher the toll the 

traveler would accept before seeking a more time-consuming alternative route to 

the toll road. The importance of VOT estimates is supported by sensitivity 

analyses conducted in a July 2009 Dulles Toll Road study, which determined that 

a 25-percent decrease in VOT estimates would have caused a 17-percent reduction 

in that study’s annual toll revenue projections.18 Overall, MWAA’s VOT 

estimates are similar to the VOT estimates derived in an earlier Virginia DOT 

study, which strengthens their credibility.19

 16 For example, both Woods & Poole and the Center for Regional Analysis at George Mason University predict higher 

growth rates for these counties.

However, two factors in MWAA’s 

subcontractor’s methodology raise questions about whether the most recent 

estimates represent a valid confirmation of the earlier study’s results. 

17 U.S. Energy Information Administration, Annual Energy Outlook 2011, March 2011. 18 Wilbur Smith Associates (under contract to MWAA), Comprehensive Traffic and Revenue Study Final Report, July 

2009. The 2012 study represents an update of this analysis and used the VOTs estimated in 2009. 19 Wilbur Smith Associates (under contract to the Virginia Department of Transportation), Dulles Toll Road Rate 

Adjustment Review, February 8, 2005. VOT estimates in this report were prepared using a more standard methodology 

by a different subcontractor than prepared the VOT estimates for MWAA.
11

First, when calculating VOT estimates for the Dulles Toll Road, MWAA’s 

subcontractor included a factor capturing travelers’ protest sentiments against tolls 

and toll increases—a factor not typically considered in VOT estimation. In doing 

so, the subcontractor effectively siphoned off the impact of travelers who might 

not be willing to pay as much to use the toll road from the estimates of how much 

travelers would be willing to pay for time savings. This inflated the VOT 

estimates. According to the subcontractor, this factor was included in part to 

prevent the VOT estimates from being too low; however, the subcontractor could 

not indicate the magnitude of its impact. 

Second, MWAA’s VOT estimation did not consider travelers’ preferences for 

public transit—a factor typically included in other VOT estimates in the industry. 

According to MWAA’s subcontractor, this factor was excluded due to problems in 

the estimation process.20

CONCLUSION 

It is unclear what impact excluding this factor has had on 

MWAA’s VOT estimates. However, the resulting VOT estimates are in line with 

those produced in earlier work conducted using a more standard methodology, 

leading us to conclude that they are reasonable.

By signing the December 2011 MOA, DOT recognized that it has a vested interest 

in ensuring that MWAA completes construction for both phases of the Dulles 

project and that the Metrorail system eventually reaches the federally owned 

Washington Dulles International Airport. FTA will play a key role in overseeing 

Phase 2, as it already does on Phase 1. While DOT’s approach to overseeing Phase 

2 will differ from Phase 1, it could leverage several of its existing oversight 

mechanisms to ensure that MWAA addresses cost, schedule, financing, and other 

significant risks that could impact the successful completion of Phase 2. Upon 

approval of Federal credit assistance, DOT could (1) work with the PMOC in a 

sustained capacity to proactively assess project cost and schedule risks, (2) work 

with project stakeholders to ensure timely risk mitigation actions, (3) ensure that 

all project documents are completed in a timely manner including the PMP, 

(4) enlist an FMOC to evaluate project financial risks, and (5) utilize the DOT 

Accountability Officer to address areas of potential stakeholder disagreements and 

ensure that all parties remain committed to the MOA’s terms.

 20 The subcontractor stated that survey data on travelers’ transportation preferences were unable to support the 

inclusion of a modal constant for transit preference in the VOT estimation process and also produce usable results.
12

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL

RESPONSE

We provided FTA with a draft copy of this report on February 4, 2013, and 

received its response on March 13, 2013. FTA’s response is included in its entirety 

in the appendix to this report. In its response, FTA reiterated its commitment to 

vigilant oversight and stated that it is working with MWAA to develop key 

oversight documents. We have not reviewed these oversight documents, which are 

currently in draft form.

ACTIONS REQUIRED

We made no recommendations in this report that require agency actions. However, 

the report presents several lessons learned from our past audits that could be 

instructive as DOT finalizes its oversight strategy. 

We appreciate the courtesies and cooperation of DOT representatives during this 

audit. If you have any questions concerning this report, please call me at 

(202) 366–5630 or Anthony Zakel, Program Director, at (202) 366–0202. 

#

cc: DOT Audit Liaison (M-1) 

 FTA Audit Liaison (TBP-30) 

 FHWA Audit Liaison (HAIM-10)
13

Exhibit A. Scope and Methodology and Related Work

EXHIBIT A. SCOPE AND METHODOLOGY AND RELATED WORK

We conducted this audit from March 2012 through February 2013, 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 address our first objective, we reviewed applicable laws, regulations, 

procedures, and guidance to identify criteria against which to evaluate FTA’s 

oversight of Phase 2; and collected information on potential TIFIA evaluation and 

oversight mechanisms. We interviewed OST, FHWA, FTA, and MWAA officials 

to discuss the genesis of the Federal oversight role in the MOA and how it might 

develop as the project progresses. Our interviews also included the project’s 

intended use of the TIFIA loan program, the only Federal assistance now proposed 

for the project. We reviewed the status and progress of the TIFIA application 

process, DOT project oversight requirements, and the process for disbursing 

TIFIA funds for eligible costs.

To address the second objective, we reviewed Dulles Toll Road traffic and 

revenue studies published in 2005, 2009, and 2012;21 and documentation on the 

different versions of the Metropolitan Washington Council of Governments’ travel 

demand model used in those studies. For comparison purposes, we reviewed 

multiple sources’ population and employment forecasts for counties near the 

Dulles Toll Road, and Energy Information Administration gasoline price forecasts. 

We also interviewed and requested information from CDM Smith, the contractor 

who produced the Dulles Toll Road traffic and revenue studies, as well as 

University of Leeds Professor Mark Wardman, the subcontractor responsible for 

producing the value of time estimates used in the 2009 and 2012 studies. Our work 

on toll road revenue assumptions was based on a March 8, 2012, request from 

Representative Frank R. Wolf.

 21 Wilbur Smith Associates (under contract to the Virginia Department of Transportation), Dulles Toll Road Rate 

Adjustment Review, February 8, 2005; Wilbur Smith Associates (under contract to MWAA), Comprehensive Traffic 

and Revenue Study Final Report, July 2009; and CDM Smith (under contract to MWAA), The Comprehensive Traffic 

and Revenue Study 2012 Update Working Draft, March, 2012.
14

Exhibit A. Scope and Methodology and Related Work

Related Work 

On July 27, 2007, we issued report MH-2007-060, Baseline Report on Major 

Project Monitoring of the Dulles Corridor Metrorail Project, when FTA was 

considering whether to fund Phase 1 of the Dulles project. In this report, we 

identified key risk indicators, including MWAA’s lack of experience in transit 

construction and complications related to the number of parties involved in the 

project, and emphasized the need for vigilant FTA oversight. By May 2008, FTA 

took sufficient actions to close all of our recommendations. 

In October 2009, we followed up on the Dulles project with a management 

advisory requesting that FTA review the PMOC’s performance, develop a plan 

outlining how sufficient testing of existing pier foundations would take place, and 

specify oversight enhancements. FTA responded in January 2010 that (1) the 

PMOC had requisite expertise; (2) it would require MWAA to develop a 

comprehensive testing plan involving all 11 foundations; (3) it would employ a 

full-time, on-site PMOC representative; and (4) MWAA’s testing regime was 

adequate, subject to the fulfillment of certain conditions. Two key conditions were 

that MWAA would (1) hire an inspections contractor to oversee testing and 

(2) audit the design developed by its design-build contractor to ensure the testing 

results were incorporated into the final design documents. MWAA hired CTI 

Consultants to oversee testing and assist in MWAA’s quality assurance review.

On July 26, 2012, we issued report MH-2012-155, Actions Needed to Improve 

FTA’s Oversight of the Dulles Corridor Metrorail Project’s Phase 1. We found 

that FTA implemented an oversight process for ensuring that MWAA tested the 

30-year-old pier foundations. However, when we issued our draft report in 

February 2012, FTA had yet to take sufficient follow-up actions to resolve all the 

issues that emerged from the test results. Our review of the testing reports 

identified areas where FTA’s initial review and MWAA’s quality assurance 

review overlooked omissions in the testing and errors in the test results. While 

MWAA and its design-build contractor took actions to resolve these and other 

deficiencies we brought to their attention in 2011, our later review of testing 

documents found that FTA still had not resolved two key issues: (1) FTA did not 

fully address issues we identified with the foundations’ ability to withstand lateral 

loads until June 2012, and (2) the testing process had not yet provided assurance 

that the structures will meet the service life specified in FTA guidance. 

Furthermore, as of February 2012, FTA had not taken sufficient action to mitigate 

potential cost increases or depletion of the budget contingency. In its response to 

our report, FTA agreed to direct additional testing to further ensure the 

50-year service life for the structures and to take acceptable actions to address the 

key project issues we raised.
15

Exhibit B. Organizations Visited or Contacted

EXHIBIT B. ORGANIZATIONS VISITED OR CONTACTED

Office of the Secretary of Transportation 

Federal Transit Administration 

Federal Highway Administration 

Metropolitan Washington Airports Authority 

CDM Smith 

University of Leeds - West Yorkshire, England 
16

Exhibit C. Major Contributors to This Report

EXHIBIT C. MAJOR CONTRIBUTORS TO THIS REPORT 

Anthony Zakel Program Director 

Name Title

Betty Krier Program Director 

Courtney Potter Project Manager 

Anne-Marie Joseph Senior Engineer 

Frank Schutz Senior Auditor 

Jerrod Sharpe Economist 

Chia-Mei Liu Economist 

Kang Hua Cao Economist 

Luke Brennan Senior Analyst 

Alicia McNair Auditor 

Christina Lee Writer-Editor 
17

Appendix. Agency Comments

APPENDIX. AGENCY COMMENTS

U.S. Department of

Memorandum

Transportation

Federal Transit

Administration

Subject: INFORMATION: Management Response to Office 

of Inspector General Draft Report on Oversight of 

Dulles Corridor Metrorail Project Phase 2 

Date: March 5, 2013

From: Peter M. Rogoff

Administrator

Reply to 

Attn. of: Dominique Paukowits

(202) 366-5152

To: Calvin L. Scovel III

Inspector General

The Office of Inspector General (OIG) offers a snapshot of issues relating to Phase 2 of the Dulles 

project in its draft report, which we seek to supplement with the following information that brings 

matters relating to FTA oversight up to date. FTA has been providing effective and robust 

oversight of the Dulles Phase 2 project at an unprecedented level for a project not receiving FTA 

funding. 

FTA Providing Proactive Oversight of Dulles Phase 2 Project

FTA committed to provide oversight of the project cost and schedule, and the Metropolitan 

Washington Airport Authority’s (MWAA) implementation of its project management 

responsibilities as part of the December 2011 Dulles Corridor Metrorail Project Phase 2 

Coordinating Committee Memorandum of Agreement (MOA). Subsequently the FTA 

Administrator and MWAA’s Chief Executive Officer met to discuss roles and responsibilities 

related to oversight under the MOA.

During the project development phase, FTA has been reviewing the cost, scope and schedule 

based on MWAA’s preliminary engineering plans and project cost estimates. Since the decision 

by the local funding partners to finance this project on July 3, 2012, FTA has had regular 

meetings with MWAA on project execution and the design/build procurement.

On November 27, 2012, FTA transmitted to MWAA an oversight plan for the project addressing 

project quality, schedule and cost. FTA’s oversight plan sets out a process to monitor adherence 

to the project scope, schedule and budget through the final design and construction phases of the 

project. The plan specifies that FTA will provide oversight of compliance with Federal 

requirements including the environmental process and requirements specific to any 

Transportation Infrastructure Finance and Innovation Act (TIFIA) loan. Additionally, FTA will 

provide oversight of the project management plan, the safety and security management plan, and 

the risk and the contingency management plan. 
18

Appendix. Agency Comments

Since FTA’s oversight plan was issued, MWAA and FTA have continued to move forward. 

MWAA submitted its draft Project Management Plan (PMP) to FTA on December 7, 2012, its 

draft Quality Program Plan on December 12, 2012, and its Draft Risk and Contingency 

Management Plan on December 18, 2012. These documents have been reviewed by FTA and 

comments were provided to MWAA on January 22, 2013. In addition, meetings are scheduled in 

March with MWAA to further discuss the plans. 

As the project proceeds, FTA will use the PMP as the basis against which to consider MWAA’s 

project implementation progress and management. Although our oversight efforts are underway, 

specific elements of the oversight strategy may change based on funding mechanisms, 

assignment of responsibilities among participating entities, and the continued evolution of the 

project. FTA intends to provide vigilant oversight throughout the project.

We appreciate this opportunity to offer additional perspective on the OIG draft report. We also 

appreciate the courtesies of the OIG staff in conducting this review. Please contact Dominique 

Paukowits (202) 366-5152 with any questions or requests for additional assistance.